Dollar Strength Reminds Wall Street
While “U.S. exceptionalism” has undoubtedly helped fuel record-breaking Wall Street earnings in recent years, it should not be confused with isolationism.
The fourth-quarter U.S. earnings season, which gets underway in earnest this week, is a reminder that American companies — no matter how great some of them are — still operate in a global marketplace. A weak economy and sluggish demand abroad, combined with a strong dollar, could erode American corporate profitability, raising questions about whether the U.S. is exceptional after all.
With the dollar appreciating broadly and rapidly, exchange rates could soon eat into corporate profitability. The question is how much.
The dollar is on a roll. It has gained 10% since the end of September and is up 7% year-to-date. It is now at its strongest in more than two years against a basket of G10 currencies, hitting multi-year highs against the pound sterling and the Canadian dollar.
Source: Investing.com
