{"id":524817,"date":"2010-04-12T13:34:00","date_gmt":"2010-04-12T17:34:00","guid":{"rendered":"http:\/\/www.businessinsider.com\/rosenberg-corporate-profits-are-hotter-than-ever-as-financials-lead-the-charge-2010-4"},"modified":"2010-04-12T13:34:00","modified_gmt":"2010-04-12T17:34:00","slug":"rosenberg-want-to-know-why-earnings-are-soaring-theres-one-simple-answer","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/524817","title":{"rendered":"Rosenberg: Want To Know Why Earnings Are Soaring? There’s One Simple Answer"},"content":{"rendered":"

Analyst David Rosenberg<\/a> talks about the obvious this morning: corporate profits.<\/p>\n

If you take a look at Q409 or Q110 earnings from a lot of big companies, you’ll almost surely notice a sea change as losses from 2009 have turned into healthy profits. Rosenberg notes that 85% of the overall increase in corporate earnings can be attributed to the financials sector.<\/p>\n

Breakfast With Dave<\/a>: Total U.S. corporate profits (national accounts basis) rose 30.6% YoY in Q4, a huge swing from the -25.1% trend a year ago. Almost the entire story is in the Financial sector where profits have soared 240%, which is unprecedented. With the banks shrinking their asset base, the surge in earnings has been due to the ability to ‘extend and pretend’ post the FASB 157 changes a year ago and the ability to play a super steep yield curve. <\/p>\n

Financial sector profits have accounted for 85% of the overall increase in corporate earnings. Total nonfinancial earnings are up the grand total of 5.2% on a YoY basis, though this is still much better than the -17.9% pace a year ago.<\/p>\n

The financial share of total profits bottomed at 10.8% in 2008 Q4 and has since soared to 28.2%, one of the highest shares ever (and never higher before the credit bubble of the last cycle). This does not look sustainable to me.<\/p>\n

\"chart\"<\/p>\n

Not surprisingly, many of these names ar ekilling it this year.<\/p>\n

Let’s take a look at the obvious: YTD % gains of financial stocks:<\/p>\n