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Data: Federal Reserve Bank of St. Louis; Chart: Chris Canipe/Axios

Companies had a stellar second quarter: profits rose more than 16 percent from last year, according to the Commerce Department. That's great news, right?

Reality check: Look at corporate profits as a share of the economy. That figure is nowhere near its 2012 high point. In fact, the number has not changed that drastically in the last few years.

What's next: The rosy earnings season helped propel stocks to record highs, but some market watchers think the good times won't last. "I really think the big story 6 to 9 months from now is going to be the colossal decline in earnings growth," said Jim Paulsen, chief investment strategist at The Leuthold Group, a research firm.

Here are a few factors that might derail the corporate boom:

  • Waning tax cut benefit: Tax cuts automatically boost earnings, but it's much harder for them to boost earnings growth.
  • Rising rates: Consumer spending sent inflation to a six-year high, which makes more of a case for the Federal Reserve to continue its plan to raise interest rates. The luxurious years of low corporate borrowing costs might be coming to an end.
  • Tariffs: Fears of an escalation of the trade war were a common theme this quarter. Jack Daniel's maker Brown-Forman trimmed its earnings forecast for the year, thanks to the trade war. Retailers, too, are monitoring the situation closely.

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Coronavirus dashboard

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  1. Politics: Chris Christie: Wear a mask "or you may regret it — as I did" — Senate Democrats block vote on McConnell's targeted relief bill.
  2. Economy: Why the stimulus delay isn't a crisis (yet).
  3. Health: The pandemic is getting worse again New York reports most cases since MayMany U.S. coronavirus deaths were avoidable.
  4. Education: Boston and Chicago send students back home for online learning.
  5. World: Spain becomes first nation in Western Europe to exceed 1 million cases — France becomes the second.

Biden says he will appoint commission on Supreme Court reform

Photo: Chip Somodevilla/Getty Images

Joe Biden told CBS' "60 Minutes" this week that if elected, he would put together a bipartisan commission to study the federal court system and make recommendations for reform.

Why it matters: Biden has come under pressure to clarify his position on court packing after some Democrats suggested expanding the court if Senate Republicans confirm President Trump's Supreme Court nominee Amy Coney Barrett.

Dion Rabouin, author of Markets
53 mins ago - Economy & Business

Wall Street still prefers bonds

Illustration: Aïda Amer/Axios. Photo: Sunset Boulevard/Getty Contributor

Investors' return on U.S. corporate bonds has been falling since its August peak, but buying has only accelerated, especially in investment grade bonds that are offering historically low yields.

The state of play: Since hitting its 2020 high on Aug. 4, the benchmark Bloomberg Barclays U.S. bond aggregate has delivered a -2.2% return. (For comparison, the S&P 500 has gained 3.9% during the same time period.)