Markets

81% of companies within the S&P500 have reported earnings recently and the numbers have again been stellar. Indeed, the blended earnings growth rate year on year is so far an impressive 23.5%, the second highest level since 2010. Furthermore, a cyclical high of 80% of the companies have outperformed analyst estimates according to Factset statistics. The S&P500 is close to its all-time highs with growth sectors performing well.  

All this is happening on the back of exacerbating trade tensions between the US and China and a depreciation of major currencies against the greenback which is adversely affecting commodity prices. The good news however is that Jean-Claude Junker, the President of the European Commission, appears to have reached an accord with President Trump during his visit to the US and there seems to be agreement to move towards a zero tariff across a range of goods. The Manufacturing PMIs data released last week is also encouraging as it indicates sustained expansion of economic activity across the US, EU and Asia.    

A rising dollar favours US companies which earn the majority of their revenue domestically compared to companies with greater international revenue. In fact it could translate into double earnings based on previous similar scenarios.