En svækket dollar kan styrke amerikanske virksomheders indtjening, især i de multinationale selskaber, mener Merrill. Under en tilsvarende periode i 2017 øgedes indtjeningen langt mere i selskaber med stor udenlandsk indtjening i forhold til hjemmemarkedsvirksomheder. Men det har også betydning, at teknologi- og online-selskaberne tæller meget mere end tidligere i de amerikanske indeks. De har været “vinderne” under coronakrisen.
A Weaker Dollar Could Be a Good Thing (for U.S. Earnings).
A weaker dollar represents a mild tailwind for U.S. foreign corporate profit growth. U.S. dollar strength has faded in the past few months, helping U.S. multinationals convert their overseas earnings into dollars at more favorable exchange rates.
There has been a sharp deterioration of the dollar versus the Euro, taking a broader view, on a trade-weighted basis the dollar is still elevated versus its levels a year ago (Exhibit 3).
Further weakening of the dollar could provide a moderate boost to U.S. foreign earnings. We saw a similar dynamic occur in 2017 when accelerating global growth and a softer U.S. dollar combined to boost U.S. exports and U.S. global profits.
During this period, U.S. firms with more foreign exposure handily outperformed their more domestically focused counterparts. As a footnote, keep in mind that U.S. exports of $2.5 trillion in 2019 pale in comparison to U.S. multinationals’ sales abroad through foreign affiliates, which we estimate totaled $7 trillion last year.
Weakness in the trade-weighted broad dollar occurred from the end of 2016 through February 2018. During this period, the S&P 500 Foreign Focused Index outperformed the S&P 500 Domestic Focused Index by over 20 percentage points.
And the S&P 500 Foreign Focused Index outperformed the S&P 500 by 5 percentage points.
As we have noted previously, the U.S. market has become increasingly exposed to secular industries such as technology, communications services and health care.
These three sectors plus e-commerce consumer discretionary now make up 58% of the S&P 500 index, up from 33% a decade ago. By contrast, European indices are relatively more balanced between cyclical and secular themes—Financials, Industrials, Materials and Energy stocks make up 41% of the Stoxx 600 (versus 23% in the S&P 500).
This divergence in composition may be another reason for U.S. outperformance year-to-date, as technology names and workfrom-home beneficiaries have emerged as key “winners” during the shutdown and transition phases of the economic crisis.
However, looking forward, the more cyclical tilt of European indices could be positive for performance during the recovery phase.
