Uncontrollable growth of the dollar is a triple threat for American companies: increases the cost of doing business abroad, reduces the cost of sales outside the United States and, most importantly, indicates a weak international demand.
“Green” has grown against six major currencies, gaining about 8% since the end of June. Most analysts believe that this impulse is unlikely to stop in the near future, as the economy of the United States is much stronger on his feet than any other, particularly European.
For companies S & P 500, this situation is not very favorable, since most of them are international, and about half of their income falls on international markets.
“Some companies failed to meet the expectations of investors due to weak performance abroad,” – said Carmine Grigoli, chief investment strategist at Mizuho Securities in New York.
Moreover, the performance in Europe “will be critical,” he said. “This is a side effect of the growth of the dollar.”
And while analysts and investors are trying to assess the negative impact of the strengthening dollar on the eve of the third reporting period, the risk for the fourth quarter and full 2015 remain unaddressed.
For example, expectations for corporate earnings growth S & P 500 fell 6.4% from 11% two months ago, reports Thomson Reuters.
In contrast, the growth forecasts for the fourth quarter declined only slightly, to 11.1% from 12.0% in July. And expectations for 2015 – and at increased, from 11.5% to 12.4%.
“If you’re trying to predict the effect of the stronger dollar on the performance of the fourth quarter, the decisive factor will be the impact of the decline of business S & P companies abroad,” – says Art Hogan, chief market strategist at Wunderlich Securities in New York.
