By: David Sterman of Street Authority
The chickens are coming home to roost. After a remarkable eight-month rally in the dollar, many U.S. firms are finally feeling the pinch.
In the near-term, investors need to brace for a cautious earnings season. Yet, as I'll explain in a moment, there are still ample reasons for long-term optimism, especially when the dollar loses momentum and/or the global economy starts to rebound in earnest.
The strong dollar, which blunts the competitiveness of American firms, both at home and abroad, will have a clear impact on first-quarter results and forward outlooks. According to FactSet Research, 85 companies in the SP 500 have already warned of a Q1 profit shortfall, while just 16 companies have pre-announced that results will be better than expected. If that figure of 16 holds, it will be the lowest number since the first quarter of 2006. [Read more...]
Article source: http://www.streetauthority.com/node/30539668