“Many large U.S. corporations derive 50%-65% of their revenues overseas. As the U.S. dollar rises, the foreign-exchange boost to overseas profits of the past decade will reverse.
One of the most glaring omissions in mainstream financial-media stock market commentary is the connection between the U.S. dollar’s relative value and corporate earnings. I have often commented on this bullish consequence of a weakening dollar.
50%-60%+ of global corporate earnings and profits are non-U.S., i.e. booked overseas in a currency other than the U.S. dollar (USD). As the dollar weakened, global corporate profits skyrocketed as earnings in euros, yen, etc. rose when stated in dollars.
In other words, overseas profits expand as if by magic when stated in dollars.
When the euro and the dollar were 1-to-1 back in the early 2000s, then 100 euros of profit converted to $100 when stated in dollars. When the euro rose to $1.60, then the same 100 euros of profit earned by the U.S. corporation in Europe converted to a stupendous $160 in profit when stated in dollars….”
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