To many, the S&P 500 is an accident waiting to happen because profit margins are “bound to collapse” from extremely stretched levels. We are not convinced. Admittedly, the index is likely to struggle to make further headway as the Fed tapers its asset purchases and if there is renewed turbulence in emerging markets. But profit margins are higher than their long-run average for a reason – the internationalisation of Corporate America.

The reach of Corporate America has become increasingly global. One important consequence has been a secular rise in profitability, not only at US multinational companies (MNCs) which dominate the major stock markets, but also at firms which operate solely within the US.