It seems corporate America has adopted MMT. At least that’s the conclusion you could draw by looking at this chart below.
And if that was your conclusion, then the implications are clear; The stock market is a house of cards.
Thanks to a new report from Michael Mauboussin and Dan Callahan, we know that there is more to the story than meets the eye. What’s really going on in this chart is the rise of intangible investments, which show up on the income statement and not the balance sheet. These “expenses” make more companies appear unprofitable.
Just how big are intangibles that they’re impacting the net income of a company? Very, very big. Here are Mauboussin and Callahan:
Investments in intangible assets were roughly $1.8 trillion in 2020, more than double the $800 billion in capital expenditures. These data put the lie to the assertion that companies are investing less than they used to.
Data without context can be worse than no data at all. The whole thing, as with all of their stuff, is worth taking the time to read. Hit the link below.