A Generational Reset of the Financial System is Coming.

The US economy is in dysfunction, with the system having flipped. Corporate profits have grown at an accelerated pace (5.1% annually since 2002) while personal income growth has drastically slowed (2% annually since 2002), reversing historical trends where personal income grew faster.

Personal income as a percentage of GDP has been declining since the 1980s, while corporate profits as a percentage of GDP have grown substantially. This indicates that corporations are taking a larger share of the economic pie, leading to issues like a cost of living crisis despite overall GDP growth.

Due to the divergence between the struggling real economy and thriving financial markets, there are significant opportunities for investors. A quarterly report is offered for free, detailing specific sectors, assets, and stocks that are expected to outperform.

While the current divergence could continue, a reversal is possible, primarily due to corporate tax rates. After-tax corporate profits are at a historical high, but pre-tax profits are similar to the 1940s and '50s. Historically low corporate taxes are a significant factor in the current high after-tax profits.

If corporate tax rates returned to 1950s levels, after-tax profits could shrink by half, causing short-term economic pain and leading to layoffs. However, this could also cause asset prices to take a larger hit, potentially increasing personal income's share of GDP and resulting in a transfer of wealth.

The timing of such a reversal is crucial for investors. The current administration is considered tax-friendly, making a significant tax increase before the 2028 elections unlikely. A tax-friendly president could prolong the current environment, while the opposite could trigger the discussed scenario. This analysis is presented as an economic overview, not a political opinion.