US firms will see 'tremendous' profits in next 18 months

During our meetings with clients and prospects in mid-June, we expressed the view that the spring market correction - driven mainly by global macro concerns - would shift to a more positive tone as the US earnings reporting season for the second quarter got underway.

Furthermore, we felt this market turnaround would have persistence as investors not only came to recognise the good results from the second quarter's profit figures, but appreciate more fully the benefits from the swiftest and deepest corporate restructuring witnessed during our careers was just starting to become evident. Guidance for profit margins and returns on capital continue to move higher on streamlined asset bases, regardless of the slow pace of economic recovery, and will do so over the next 12 to 18 months. As at 9 August 2010, positive earning surprises overwhelmed the neg...