1/3/2019
By Charles Payne, CEO & Principal Analyst

Earlier last year, the Trump administration took heat for suggesting the U.S. dollar was too strong.  There was a clumsy effort to walk those comments back, in part because there is a worry the dollar can get too strong.

I think the strong dollar was the biggest reason so many companies missed on revenue during the third quarter, and why guidance was so disappointing. For instance, Apple (AAPL) posted great financial results on November 2, but the stock plunged on guidance, which management says will be weighed down by $2.0 billion because the dollar is too strong.

Even with last night’s Apple warning, Tim Cook mentioned foreign exchange (FX) and the strong dollar (see more on that below).

Apple wasn’t alone.  In an assessment of all 30 Dow Jones components on the biggest risk to growth in the fourth quarter, 2/3 of the companies pointed to the strong dollar. The next components where raw materials and transportation costs, followed by China and Europe’s weakness. 

By the way, Hurricanes tied with tariffs have a potentially negative impact. However, you wouldn’t know that from all the talking heads that are mostly speaking for themselves with the fear-mongering over the administration’s efforts to fix trade.

The Dollar Index (DXY) hit a 17-month high at the start of November, exacerbating the broad market and stocks sold off even more.

It’s not un-American to say the U.S. dollar can get too strong. In fact, one of the biggest cheerleaders for the dollar is Steve Forbes. He told me as much on my show yesterday, saying the focus should be on a stable dollar.

The only currency the Dollar is struggling against is the Yen, which is more of an indictment of the global economy where there is an increased worry of a recession. 

Charles Payne
Wall Street Strategies

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