I have spoke often about the consequences of a strong currency. In the case of the US, the weak dollar in the first half of the year has helped to contribute to Q2 and for some Q3 corporate earnings as well. However I strongly believe that Q4 earnings will be very bad. Partly because of the global recession and partly because of the strong US dollar.
There is an article in the Wall Street Journal today titled “Stronger Dollar Cools Sales in Overseas Hot Spots” that talk about this same theme.
But I want to show you their charts on US exports:
And now take a look at a chart of the Dollar Index:
Do you see the correlation?
Also, the strength of the Japanese Yen is a big reason why Toyota is forecasting their first loss in 7 DECADES!!
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