Those who follow the U.S. economy and the financial markets are accustomed to hearing investors and holders of U.S. assets complain about the weak dollar. 'The federal budget deficit is going to lead to a weak dollar and rampant inflation.' 'The Fed is going to inflate the economy to help the U.S. pay its debt, undermining the value of my portfolio.' 'The weak dollar is causing inflation, forcing up the price of oil and other commodities.'
All of the above, if certain economic conditions occur, are valid arguments regarding the implications of a weak dollar.
But how about corporations complaining about a strong dollar? This earnings season, McDonald's (NYSE: MCD), Cola Cola (NYSE: KO), Citigroup (NYSE: C), and Pfizer (NYSE: PFE), among others, have all added commentary in their earnings report complaining about the impact of a strong dollar on international sales.
Strong what?
A strong dollar? Please. The euro traded at 82 U.S. cents a decade ago. It's now fetching $1.4273. Similarly, the dollar bought about 110 yen in 2000: its presently buying only 94.80 yen.
Multi-national corporations can blame underperforming or tepid international sales on the global recession, constrained credit conditions, or consumer belt-tightening around the world, but not the dollar, 'cause the dollar is not strong.
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Reader Comments (Page 1 of 1)
7-23-2009 @ 2:51PM
Lee Gibson said...
Thank you for pointing out what should be self-evident, but what I never see in the financial press. Weird, isn't it? By the way, you are consistently the best of the ocntributors to Blogging Stocks. Posts like this show why.