Hello Corporate Profits, Goodbye Worker Pay

Will investors perpetually bid up an earnings stream that has peaked and may be on the verge of shrinking? We’re about to find out… With first-quarter earnings season under way, expectations for earnings have rarely been higher. But there are many signs that corporate profits have peaked, including a surge in negative guidance from company management. Disappointment and lower stock prices are likely; it makes no sense for investors to pay ever higher prices for a shrinking earnings stream.

It's jobs day in America. This morning we learned that the U.S. economy added a measly 88,000 jobs in March.  The unemployment rate fell to 7.6 percent, but that was due to a big drop in the labor force participation rate. The jobs report was much worse than expected, and they reflect a job market that remains incredibly weak even almost four years into the economic recovery.

Now is probably the perfect time to pass immigration reform, a study from the Migration Policy Institute suggests.  An article from June 2010 by Giovanni Peri of the University of California Davis found that increased immigration during a recovery creates jobs, leaves native employment unharmed in the short run, and in the long run increases productivity and average income. 

The beginning of July often is the part of the early monsoon season in Africa, the South Western United States and South Asia. For investors it marks the beginning of earnings season for the second quarter. The upcoming season could dampen profit expectations as much as the seasonal rainfall.

The Pragmatic Capitalist submits: As we detailed a few weeks ago, this earnings season is shaping up to be another positive one. Alcoa (AA) officially kicks off the season after the bell this afternoon. Equities have rallied almost 16% in the last two months largely in anticipation of continuing strong corporate profits.

WSJ -- "Big U.S.

This White House has "vilified industries," complains the U.S. Chamber of Commerce. America is burdened with "an anti-business president," moans the Weekly Standard.