Apple Inc. (AAPL) & Why The Stock Market Could Crash

Governments will be looking to tighten loopholes and take a greater share of corporate profits to sustain themselves.

Overseas profits
Surowiecki cites a study that says, on average, that an S&P 500 company earns 46% of profit from abroad. That’s a completely different picture from even a decade ago. However, America is now often cited as the strongest economy while Europe deals with its economic crises and China fights falling growth. In addition, the latest Bureau of Economic Analysis numbers show that “the rest-of-the-world component of profits decreased $33.0 billion in the first quarter, in contrast to an increase of $24.1 billion in the fourth.”

Weak labor
Surowiecki’s final point rests on a weak labor market that has lost negotiating power with employers. The result is lower wages for workers but higher profits for the company. This factor might stick around awhile, as even though the unemployment rate is falling, it’s taking a while to return to what is considered normal. Of course, there is always populist pressure to return more profits to workers. Take the Occupy protests, for example, or the Federal Minimum Wage Act of 2013, which would increase the minimum wage from $7.25 per hour to $10.10 per hour by 2015.

A profit top or a temporary dip
There were previous dips in corporate profits while they’ve marched to their historic highs, and it will take a few more data points before confirming any trends. These are definitely things to keep an eye on, as stock prices are ultimately based upon future profits.

The article Why the Stock Market Could Crash originally appeared on Fool.com.

Fool contributor Dan Newman owns shares of Apple. The Motley Fool recommends and owns shares of Apple.

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