The dollar is higher this year, but it has been much higher in recent years. Yet, it is a real threat (coupled with the Fed) to the stock market rally.
There is no doubt, multinational companies without domestic pricing power are feeling the pinch from the stronger dollar. President Trump and Larry Kudlow breached the idea there is a point when the dollar gets too strong. Apparently, presidents aren’t supposed to say that kind of stuff, and in the past, just suffered the anxiety in private solitude.
Dollar Too Strong or Business Too Weak
This morning, Pepsi offered subpar guidance and blames the strong dollar. Certainly, in the quarter’s results posted this morning, we could see where the strong dollar had a negative impact (see table).
The largest issue for Pepsi is the inability to pass on cost increases and the general lack of pricing power that has pressured most consumer staple names.
Still, we are watching the dollar, and like every investor, it does play a role in some decision-making.
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