Société Générale: The Federal Reserve's interest rate cuts and corporate profit growth are difficult to achieve simultaneously

Société Générale analyst Andrew Lapthorne pointed out that the paradox facing investors is the expectation of Federal Reserve interest rate cuts and the difficulty of achieving growth in U.S. corporate profits simultaneously. Historical data shows that interest rate cuts are usually accompanied by a decline in corporate profits, while the market expects earnings per share to grow by 15% next year. Although the decline in inflation provides room for interest rate cuts, slowing sales growth may lead to a decrease in profit margins. Lapthorne concluded that in 2025, there may be a scenario of strong profit growth accompanied by slight interest rate cuts, or significant interest rate cuts with limited profit growth