On the Strength of the Dollar, Wall Street Doth Protest too Much

Adam Sarhan |


Major Disconnect Between Wall Street & Main Street

We have argued for a long time that there is a major disconnect between Wall Street and Main Street. Since the March 2009 bottom, Wall Street has enjoyed very strong gains for one simple reason: #EasyMoney from the Fed and every other major central bank in the world. Meanwhile, Main Street has largely been left behind, causing this "recovery" to be one of the weakest in history. The Fed knows that Wall Street may be ready for a rate hike, but Main Street is not, and that's why they have kept rates at zero since 2008.

Where Are The Earnings?

For the past six years, stocks have steadily rallied even though earnings remain lackluster at best. Each quarter, we are given a different "excuse" as to why earnings fail to impress. First they told us that it is too early in the recovery for earnings. Then we heard companies are cutting costs. Then we were told that earnings will come when the economy gets stronger. Of course, don't forget China, Greece, or the wind was blowing too hard on the Moon.

The Latest Excuse: A Strong Dollar

The latest excuse is that the US dollar is too strong. But a quick glance at the chart of the US dollar debunks this myth. The US dollar rallied sharply in 2014 and topped out in March of 2015. Since then (past seven months), the greenback has been drifting lower, and is now trading in the same place it was in January 2015. The dollar hasn't gone anywhere this entire year. Yet, we are told that Q3 earnings are adversely affected because the greenback is too strong. We know that in some industries there is a lag time in the exchange of currency but not for most. We just think that some of Wall Street is now in "doth protest too much" mode when it comes to the dollar. Remember, this entire 6.5 year rally on Wall Street has been due to #EasyMoney from global central banks, not organic earnings and economic growth. Be careful as we make our way through another tepid earnings season. We have found it best to avoid the temptation to get caught up with all the noise. Instead, we pay attention to how the market and leading stocks react to the news.

Sarhan Graph - 10-14_1.jpg

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer


Emerging Growth

Singlepoint Inc

SinglePoint Inc is a mobile technology company engaged in mobile payments, mobile giving, and mobile bidding. It operates mobile commerce and communications platform to accept mobile credit card payments.

Private Markets

iPRO Network, LLC

We provide the platform, tools, and resources to empower individuals and professionals to market desirable goods and services to the public, taking the place of traditional methods of commerce.


Voleo is a free download that allows you to form investment clubs with your friends, family, colleagues, classmates, teammates…basically anyone you know and trust. Invest and manage a stock portfolio…