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Bridgewater warns of peak U.S. profit margins, lower stock prices

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Bridgewater warns of peak U.S. profit margins, lower stock prices

(Reuters) – The major drivers of high U.S. corporate profit margins are unsustainable and “now under threat”, which will eventually result in much lower equity prices, Bridgewater Associates, the world’s largest hedge fund, said on Wednesday in a report.

FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., January 29, 2019. REUTERS/Brendan McDermid

“Over the last two decades, U.S. corporate profit margins have surged and have contributed more than half of the excess return of equities relative to cash,” said Bridgewater, which oversees more than $160 billion in assets.

“Without that consistent expansion of margins, U.S. equities would be 40% lower than they are today.”

Over the last few decades, almost every major driver of profit margins has improved, Bridgewater said.

“Labor’s bargaining power fell, corporate taxes fell, tariffs fell, globalization increased, technology allowed for greater scale and lower marginal costs, anti-trust enforcement fell, and interest rates fell. These factors have produced the most pro corporate environment in history. Many of these drivers of high profit margins are now under threat.”

“Some of the forces that supported margins over the last 20 years are unlikely to provide a continued boost,” Bridgewater said. “Incentives for offshore production have been reduced as global labor costs have moved closer to equilibrium, with domestic costs and rising trade conflict increasing the risk of offshoring, while the potential tax rate arbitrage from moving abroad is now much smaller.”

At the same time, popular sentiment has begun to turn against the forces driving corporate profits, as well as against the companies that have benefited most, Bridgewater said.

“We are in the midst of a populist backlash against rising inequality and increasingly seeing a move toward more protectionism,” it said in the report. “Recent surveys show increasing animosity toward globalization and the power of companies more broadly and a bit more welcoming attitudes toward government regulation of firms.”

There is also more discussion about taxing mega-profitable firms that have benefited from current government policies, it said.

For example, Europe’s potential “digital services tax” is explicitly designed to close the tax arbitrage by introducing a sales tax on online revenues from residents.

“While the current impact of these proposed rules on the overall profitability of these tech giants is relatively small, they are a straw in the wind that the tide might be turning and that the multi-decade boost from favorable taxation policies is unlikely to be repeated,” Bridgewater said.

Reporting by Jennifer Ablan; Editing by Sonya Hepinstall

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CNN’s Anderson Cooper mocks Trump for speaking in third person: He’s ‘not supposed to talk like Elmo’

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CNN's Anderson Cooper mocks Trump for speaking in third person: He's 'not supposed to talk like Elmo'

CNN anchor Anderson Cooper closed his show on Wednesday night by mocking President Trump for his “unusual tic” of speaking in the third person, comparing him to the “Sesame Street” character Elmo.

President Trump spoke to reporters earlier in the day and attacked the Mueller probe as a “witch hunt.”

“We just went through the Mueller witch hunt, where you had, really, 18 angry Democrats that hate President Trump. They hate him with a passion,” Trump said.

Cooper cried foul on numerous fronts.

“Him! He is him! Why is he doing this?” Cooper asked. “Also, grammar aside for a moment, if he says ‘witch hunt’ one more frickin’ time, Glinda is gonna float down from Oz and tell Lee Greenwood to hit the yellow brick road because Dorothy has arrived with the Lion, the Tin Man, and the Scarecrow. Of course, the Scarecrow doesn’t have a brain, but even if he did, the third-person-in-chief wouldn’t be worried.”

The CNN anchor then played a clip of Trump boasting about China’s respect of “Donald Trump and for Donald Trump’s very, very large brain” during a 2018 news conference.

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“The president of the United States is not supposed to talk like Elmo… Speaking in the third person, it was a habit for President Trump long before he moved to 1600 Sesame Street,” Cooper continued.

He then invoked a 2012 tweet in which Trump congratulated himself for high ratings when he starred on “The Apprentice.”

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Chris Pratt ‘refused to audition’ for ‘Guardians of the Galaxy’ in the beginning, casting director says

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Chris Pratt 'refused to audition' for 'Guardians of the Galaxy’ in the beginning, casting director says

Chris Pratt almost wasn’t Peter Quill aka Star-Lord.

Sarah Finn, the casting director behind 22 Marvel movies, revealed the shocking news while attending the “Avengers: Endgame” premiere in Los Angeles on Monday.

“[Director] James Gunn has been very generous about this in saying that I, to the point of annoying him, kept insisting that Chris Pratt was the guy for the part,” Finn explained to Variety before admitting that “Chris didn’t want to play the part and refused to audition.”

CHRIS PRATT AND KATHERINE SCHWARZENEGGER ATTEND THE FIRST RED CARPET TOGETHER AT ‘AVENGERS: ENDGAME’ PREMIERE

Chris Pratt, pictured here at the "Avengers: Endgame" premiere on April 22, 2019, initially "refused to audition" as Peter Quill aka Star-Lord in the 2014 film "Guardians of the Galaxy."

Chris Pratt, pictured here at the “Avengers: Endgame” premiere on April 22, 2019, initially “refused to audition” as Peter Quill aka Star-Lord in the 2014 film “Guardians of the Galaxy.”
(Axelle/Bauer-Griffin/FilmMagic via Getty Images)

“I finally got him to audition and James Gunn said he didn’t want to see him, and that was really a challenge,” she continued.

Luckily, Finn was able to bring the two together and it all worked out perfectly.

“It was honestly one of those eureka moments that we talk about in casting when it absolutely feels right and you know it’s right. James turned to me within 10 seconds and said, ‘He’s the guy,'” she recalled.

Pratt first-appeared as Quill in the 2014 film “Guardians of the Galaxy.” Of the 39-year-old actor accepting the role, Finn said that “it was great when he decided that he was interested.”

Chris Pratt as Peter Quill aka Star-Lord in "Guardians of the Galaxy."

Chris Pratt as Peter Quill aka Star-Lord in “Guardians of the Galaxy.”
(Marvel Studios)

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“Now it’s legend. He’s the perfect person,” she noted. “But at the time we were embarking on a movie that had a raccoon and a talking tree, and a property that people weren’t familiar with.”

On Monday, Pratt stepped out with fiancée Katherine Schwarzenegger for the “Avengers: Endgame” premiere, marking their first red carpet appearance as a couple.

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Trump Fed pick Stephen Moore slams reporting from CNN, other media: ‘Pulling a Kavanaugh against me’

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Trump Fed pick Stephen Moore slams reporting from CNN, other media: 'Pulling a Kavanaugh against me'

President Trump’s pick for the Federal Reserve board, ex-CNN contributor Stephen Moore, blasted the reporting about him from his former employer and other outlets Wednesday, accusing them of “pulling a Kavanaugh” against him.

During an interview on WZFG radio, Moore, previously a Fox News contributor, was asked about CNN’s KFILE reporting on various columns he had written from 2000-2003 in which he apparently mocked women’s involvement in professional sports.

“I was so honored when I got the call from Donald Trump but you know, all it has been since then is one personal assault after another, a kind of character assassination that has nothing to do with economics,” Moore said. “You know, my divorce 10 years ago, or something I wrote 25 years ago. They have six full-time investigative reporters looking into me at The Washington Post and the New York Times, and CNN.”

“I kind of wear it as a badge of honor, that they’re so afraid of me, that they want all these people looking into my past because they’re worried that I’m going to prevail here,” he continued. “They have not attacked me on my economic ideas.”

LARRY KUDLOW: ECONOMY HAS BEEN ‘BOOMING’

Moore agreed with the radio host that the coverage of him this week has been “National Enquirer stuff” and went even further: “They’re pulling a Kavanaugh against me.”

That was in reference to the hostile coverage Brett Kavanaugh, then a Supreme Court nominee, received during his confirmation process last year.

CNN KFILE senior editor Andrew Kaczynski responded to Moore’s attack, saying, “I don’t even know what ‘pulling a Kavanaugh’ means.”

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“Look, when you’re a nominee or pick for a public administration, your record is going to get scrutinized. Things that you say, things that you did–those are going to be reported on,” Kaczynski said on CNN. “I know this morning he was referring to this as a smear campaign, covering comments he made about women, and covering things that he said in columns. That is not a smear campaign. That is reporting on his record. So, it’s a little odd that he finds just commenting things that he has done and said to be such a problem for him.”

CNN did not immediately respond to Fox News’ request for comment.

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