WITH GREATER PRODUCTIVITY COMES HIGHER PROFITS:

Buried deep in a routine Federal Reserve report notable mainly for its numbers-heavy presentation is a data point that threatens to upend the notion that Corporate America is struggling to boost earnings. The Fed's measure of income, which happens to have moved in unison with profits for Standard & Poor's 500 Index companies 83 per cent of the time since 1992, just posted its biggest quarterly increase since 2012.

Strength in the Fed data contrasts with earnings viewed through the benchmark equity measure, where analysts are predicting the largest quarterly contraction since 2009, based on data compiled by Bloomberg. The divergence highlights what bullish investors have said is an illusion of weakness in profit signals flashed by stocks, where the biggest drop in oil-company earnings since the financial crisis is drowning out strength elsewhere.

"I simply don't see US corporate earnings peaking - quite the contrary," said Ross Yarrow, director of US equities at Robert W. Baird & Co in London. "The S&P 500 is too narrow to show the true health of corporate America; it's too skewed. Lower oil prices feed into so many raw-material costs, and that is very, very good for the rest of US corporates."

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