Apr 18, 2019

Chart: What stocks would look like without high profit margins

Data: Bridgewater Associates; Chart: Axios Visuals

Bridgewater Associates estimates U.S. equities would be 40% lower than where they are today without the consistent expansion of profit margins.

Why it matters: The world's largest hedge fund is warning that corporations' high profit margins are peaking, posing a risk to the stock market's rally.

  • Several factors have contributed to companies' fatter bottom lines over the last 20 years: corporate tax cuts, the rise of globalization, less anti-trust enforcement, low interest rates and workers' shrinking bargaining power for more pay.
  • But "many of these drivers of high profit margins are now under threat," Bridgewater analysts say in a new white paper, and the "long-term valuation of equities hinges heavily on what happens to margins going forward."

Of note: Without the benefit companies got from the tax cut last year, and with higher material and labor costs, analysts expect shrinking profit margins as companies release first quarter earnings.

  • Still, as of yesterday's close, the S&P 500 is just 31 points from the record high set late last year.

Go deeper: The low-wage benefit for U.S. companies is over

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This year's census may be the toughest count yet

Illustration: Eniola Odetunde/Axios

Community leaders are concerned that historically hard-to-count residents will be even harder to count in this year's census, thanks to technological hurdles and increased distrust in government.

Why it matters: The census — which will count more than 330 million people this year — determines how $1.5 trillion in federal funding gets allocated across state and local governments. Inaccurate counts mean that communities don't get their fair share of those dollars.

Live updates: Coronavirus spreads to Latin America

Data: The Center for Systems Science and Engineering at Johns Hopkins, the CDC, and China's Health Ministry. Note: China numbers are for the mainland only and U.S. numbers include repatriated citizens.

Brazil confirmed the first novel coronavirus case in Latin America Wednesday — a 61-year-old that tested positive after returning from a visit to northern Italy, the epicenter of Europe's outbreak.

The big picture: COVID-19 has killed more than 2,700 people and infected over 81,000 others. By Wednesday morning, South Korea had the most cases outside China, with 1,261 infections. Europe's biggest outbreak is in Italy, where 374 cases have been confirmed.

Go deeperArrowUpdated 51 mins ago - Health

Scoop: Census Bureau is paying Chinese state media to reach Americans

Illustration: Sarah Grillo/Axios

The 2020 Census Paid Media Campaign, which sends U.S. taxpayer dollars to community media outlets to run ads about the upcoming census, is including a Chinese state-run broadcaster as one of its media vendors.

Why it matters: After China's yearslong campaign to co-opt independent Chinese-language media in the U.S., Washington is now paying Beijing-linked media outlets in order to reach Chinese Americans.

Go deeperArrow2 hours ago - World