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The Dollar, High-Yield Bond Market And S&P 500 Revenue Growth

Published Tue, 11 Jun 2019 07:23:04 -0400 on Seeking Alpha

The two US dollar proxies followed regularly are the Invesco DB USD Bullish ETF (NYSEARCA: UUP) and the DXY. The UUP is a tradeable ETF, but it generates a K-1, therefore I stopped buying it for clients.
Both the DXY and the UUP have identical currency weightings:
Euro: 58% Yen: 14% Pound: 12% Krona: 4% Franc: 4% The dollar, as measured by the UUP, fell a little over 1% this week. The attached graph shows that despite recent dollar strength, the UUP failed to take out its early 2017 high.
A weaker dollar would be - "net, net" - a plus for the S&P 500 in my opinion.
Roughly 1/3rd of S&P 500 revenue is non-US. The dollar has been strong since early 2018, correlating closely to the flat S&P 500 since then.

Driehaus (Chicago growth manager) posted this graph (above) to twitter this weekend, on the dollar. Wasn't aware of this relationship.
Is it all "correlation without causality," i.e., the S&P 500 being flat, the dollar being strong and the Treasury curve 2-10s spread troughing?
All else being equal, I'd rather see a gradually weakening dollar than a stronger one for the rest of 2019.
Dollar's Impact on S&P 500 Revenue
"S&P 500 COMPANIES WITH MORE GLOBAL EXPOSURE COULD SEE NEAR 10% EARNINGS DECLINE IN Q2
COMPANIES AND EARNINGS
By John Butters | June 7, 2019
With a few weeks remaining in the second quarter, there are concerns in the market about the impact of trade tensions and slower global economic growth... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
CORNERSTONE TOTAL RETURN FUND 11.05   0.0 0.00 2.48 22.40
MFS INTERMEDIATE HIGH INCOME FUND 2.60   0.0 0.00 0.00 9.43
CS HIGH YIELD BOND FUND 2.55   0.0 0.00 0.00 8.94
PIONEER HIGH INCOME TRUST 9.13   0.0 0.00 0.00 8.86
WELLS FARGO ADV INCOME OPP FUND 8.15   0.0 0.00 0.00 8.71
CREDIT SUISSE ASSET MANAGEMENT INCOME FUND 3.13   0.0 0.00 0.27 8.60
ARES DYNAMIC CREDIT ALLOCATION FUND 15.06   0.0 0.00 0.00 8.57
WA HIGH INCOME FUND II 6.69   0.0 0.00 0.00 8.28
BLACKROCK CORPORATE HIGH YIELD FUND VI 10.47   0.0 0.00 0.00 8.22
FIRST TRUST STRATEGIC HIGH INCOME FUND II 12.35   0.0 0.00 0.00 7.77
BLACKROCK DEBT STRATEGIES FUND 10.70   0.0 0.00 0.00 7.68
NEUBERGER BERMAN HIGH YIELD STRATEGIES FUND 11.76   0.0 0.00 0.89 7.59
MASSMUTUAL CORP INV 16.40   0.0 0.00 1.20 7.23
SPDR BARCLAYS CAPITAL HIGH YIELD BOND ETF 108.57   0.0 0.00 6.10 5.65
ISHARES IBOXX $ HIGH YIELD CORPORATE BOND FUND 86.95   0.0 0.00 4.60 5.32
SPDR DOW JONES INDUSTRIAL AVERAGE ETF TRUST 262.56   0.0 0.00 5.67 2.18
PROSHARES ULTRAPRO SHORT S&P 500 27.77   0.0 0.00 0.00 2.13
RAYTHEON 186.98   17.2 10.87 3.77 2.03
SPDR S&P 500 ETF 292.36   0.0 0.00 5.42 1.87
PROSHARES ULTRASHORT S&P 500 30.82   0.0 0.00 0.00 1.86
FEDEX 158.10   85.5 1.85 2.60 1.67
STARBUCKS 94.70   33.6 2.82 1.44 1.50
POWERSHARES QQQ TRUST SERIES 1 182.07   0.0 0.00 1.49 0.79

CORNERSTONE TOTAL RETURN FUND - CRF
CORNERSTONE TOTAL RETURN FUND - CRF  


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