In today’s New York Times business section I read this headline:
Weak Dollar Helps Send Profit Down at Oracle
As I read the article I found this statement:
The company attributed the declines to the effects of a stronger dollar, which makes deals done in other currencies worth less.
I wonder which statement is correct.
In general, the best relationship between the dollar and earnings growth is a negative relationship between the change in the dollar lagged about one year.
P.S. Earlier chart updated to show last year. Thanks Greg.
Note, despite all the headlines about the weak dollar, in May the dollar was 15% above its year ago level. Like bonds, late last year when the markets feared a depression scenario the dollar rallied strongly, and the recent weakness looks more like a return to normal than anything else.