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A Stronger Dollar Sees Its Shadow

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Hopefully by the time Q1 earnings begin in April, your memories of sub-zero temps will be long gone. Not so for c-suites. That's because weather repeatedly pops up as one of two unwanted guests for earnings season. The other? Currency market woes.

The ICE Dollar Index jumped 4.4% last year, the most since 2015. And for multinationals that sell products overseas, that dollar strength (paired with the ongoing trade war) presents a major challenge, reports Bloomberg.

  • Quantifying that challenge? Every 7% to 8% change in the dollar results in a 1% move in the opposite direction for U.S. corporate profits, per Credit Suisse.

Who's worried? Already, IBM took a larger-than-expected revenue hit. Johnson & Johnson's international growth was next to nil thanks to currency fluctuations. And United Technologies called foreign exchange a headwind in Q4.

This isn't new, though. North American firms reported a collective $11.8 billion hit in the third quarter of last year c/o negative currency impacts—which was itself nearly 12x the hit a quarter earlier.

Morning Brew

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