Perspective on the U.S. dollar 'headwind' 💵
Currency fluctuations can affect sales, but their relationship with earnings is weak 🤔
The U.S dollar has been getting stronger relative to many major foreign currencies.
The recent move can be explained by the impressive strength of the U.S. economy and the rapid rise in U.S. interest rates, among other things. (It’s a narrative similar to what we discussed in the Oct. 11, 2022, TKer.)
While this is great news for Americans vacationing abroad and U.S. businesses importing goods from overseas, it’s a headwind for multinational U.S.-based corporations doing a lot of business in non-U.S. markets.
But it’s important to understand that currency fluctuations aren’t the only force affecting these businesses.
Big U.S. companies do a lot of business abroad 🌎
The U.S. stock market is not the U.S. economy in many ways.
