Friday, August 21, 2015

Oh - the dollar suddenly matters?

"Chinese growth is slowing, Hong Kong's Hang Seng is officially in a bear market, Greece is heading into elections, and emerging markets around the world are feeling the strain of the strong US dollar." Marketwatch.

Around the start of earnings season this quarter I started reading all these articles about how companies were blaming the strong dollar for their own inadequacies. At the time I thought my head would spin off because I don't have a degree in finance, but thought these people were the deepest levels of batshit stupid. I almost blogged about it a few times, but I bitch about so much stuff, and I don't have a degree in finance. Even I could figure out we were in for some huge trouble. We are an export driven economy.

One writer at Marketwatch actually said the following: "Maybe Caterpillar Inc. should stop blaming a stronger U.S. dollar for its woes, and start applauding it. " Source.  This article in particular is etched in my brain because it pissed me off so hard. In my head I was like she is going to eat those words. But you never know what the Fed is going to do, and did I mention I don't have a degree in finance? I can't even believe you have to understand currency trading to figure out the market these days. It's stupid. But we have mutually insured destruction in the markets, and you have to take the world as one market.

Another said: "Move over, harsh winter weather. This earnings season, companies have a new whipping boy for any weakness on either their top or bottom lines. It’s the dollar." Source. This writer goes into detail about how the strong dollar doesn't do anything to stocks. Which to be honest, who knows if it does? But it doesn't take a rocket scientist to understand that the strong dollar was hurting US companies bottom line and eventually that has to translate into a stock problem.

Still - there is the Fed - so you can't be sure what is going to happen. So, lets say in a normal world the market would go down because earnings were getting hit. The whole tone of these articles at the time was mocking in nature.

Who is laughing now?

4 comments:

Anonymous said...

I dont know about the rest of the economy but cheap gas prices and cutthroat import prices for games is good for the arcade delivery industry. Heres hoping the recession that were in doesnt wipe out the startups or else we are going to have a storage problem. DF

she_said said...

Luckily there is a never ending supply of startups depending on the sector. You can get those tiny house sized Public storage units pretty cheap still. Can't you? It doesn't sound like the worst problem to have if it doesn't last that long. I mean, you started during one of the most challenging times. A lot of startups don't even last as long as you have.

Anonymous said...

Luckily, We are down to 5 games on our website, so storage isnt an issue now. Its crazy to have my living room back after such a long time hoarding :) We definitely got in at the bottom. Building out the pinball side will take much longer/more expensive. On the plus side we can buy air hockey for $75 right now and can charge $150 per month for them . . . Our concern about a recession has less to do with the affordability of our product and more of what it represents and how people react to cost cutting psychologically. When our corp customers have cancelled its because management wants to project an image of austerity before lowering wages or engaging in layoffs. In this sense it gives us an early view into whether a company is bullish or bearish on their own prospects. Because the games are such a large size they stand out when you set the tone for an organization. DF

she_said said...

Now all the kids know that when the game machines disappear they should start getting worried about being paid.

That's an interesting canary in the coal mine gauge though.