Albert Edwards suspects there may be “a big problem brewing for investors.”

That’s not unusual. If you wake up one day to a bullish Albert Edwards note, you should spin your Inception totem. Because you’re probably still asleep.

In his latest, published Wednesday, Edwards focused on inequality. He cited Thomas Piketty, and not for the first time.

At the outset, Albert blamed corporations and politicians for spiraling inequality. Naturally, he charged the Fed with being “complicit in robbing the middle-class.”

I like Albert. Albert knows that I like him. And I’m not saying anything here I wouldn’t say to him directly. But: It’s pretty rich for someone who spent an entire career collecting a paycheck signed by Wall Street to leave Wall Street off the list of villains “complicit” in fleecing the middle-class.

I dare say the only people less popular on Main Street than the politicians, bureaucrats and technocrats Edwards habitually scapegoats are Wall Street bankers. And Albert, my friend, you are a banker in the eyes of Main Street. When the villagers come with their torches and pitchforks, they’re not going to differentiate between IB and “strategy.” Nor between traders and analysts. Nor groupthinkers and contrarians. You’ll all be “bankers” in the great peasant revolt of 2029.

Edwards observed on Wednesday that consumer spending in the US is increasingly driven by high-earners. (You know, like bankers.) “No wonder anger about rising inequality is once again shaping the political discourse,” he wrote, noting that the combination of extreme inequality and record corporate profit margins, particularly when had off the backs of workers, is a combustible conjuncture, and one that’s conducive to populism.

Here again, I’m compelled to “keep it 100,” as the kids say. In the 14 years since the GFC, a motley crew of current and former bankers have taken a shine to populist politics. There’s nothing “wrong” with that, per se, but if we’re being completely honest, there’s something absurdly incongruous about bankers and — oh, I don’t know, billionaire real estate developers — pushing populism and feigning concern for middle- and lower-income voters.

I’ll pose it as a question: Do any of you honestly believe, in your heart of hearts, that Donald Trump or anyone who collects a paycheck signed by a Wall Street CEO cares about the plight of society’s downtrodden? If you believe that, I’ve got a $60, made-in-China “God Bless The USA” Bible to sell you. Don’t be a “sucker.” Wise up. Don’t vote against your own economic self-interest.

Anyway, the chart below, from Albert, shows whole economy profit margins, and they’re “absurdly high,” as he put it. It wasn’t until the pandemic-era ‘Greedflation’ that 15% was meaningfully eclipsed. The larger corporate profit share of GDP “comes at the expense of workers,” Edwards remarked.

Another question for everyone: Is the person to “fix” that problem Donald Trump? It’s hard to see how. After all, he wants to lower corporate taxes, and if asked how he plans to fund that, his answer’s generally something about future growth (i.e., voodoo economics) or tariffs (i.e., a de facto consumption tax dressed up as economic nationalism).

Edwards went on to highlight some familiar metrics and statistics which speak to one of this cycle’s most unique dynamics: The windfall that accrued to corporates “who” termed out fixed in 2020 and 2021, then enjoyed ever higher rates on corporate cash piles during the hiking cycle. The result: “Corporate net interest payments have shrunk despite interest rates surging higher,” as Albert put it.

Regular readers are very familiar with that discussion, and all of the associated visuals. Hat tip to Edwards: Much of my own coverage on that topic was inspired by his work and that of his colleague Andrew Lapthorne.

The figure above is another way to visualize it: Interest payments as a share of profits have collapsed even as Fed funds soared.

Of course, the luxury of terming out debt profiles at rock-bottom fixed rates was the purview of blue-chip companies with ready access to capital markets. And those are generally the companies with the biggest cash piles, and therefore the most to “make” from variable-rate deposits as rates rose.

That’s the “haves” / “have-nots” divide. The analogue in the household sector was (and still is) homeowners with fixed-rate mortgages and large money market fund balances. It’s the same arb: Pay low fixed, collect high and rising variable.

“Just like the household sector, the issue of inequality rears its head with corporates,” Edwards went on, before summing up: “Inequality [is] a major political issue.”

Yes, indeed it is. And I’d gently remind readers that populism, with its quick “fixes” and “final solutions” for complex, structural “problems,” has a very poor track record.