As we noted in a post last Friday (and in today’s Chart of the Day), the dollar has staged an impressive bounce off of its early September lows. You can see the rally and break of its downtrend line in the chart of UUP below.
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The dollar fell 10.75% from the start of the year through its closing low on September 8th. That’s a massive decline, and it impacted stocks significantly. S&P 500 companies that generate more than 50% of their revenues outside of the US averaged a gain of 18.69% YTD through September 8th. Companies that generate less than 10% of their revenues outside of the US only gained an average of 3.64% over the same time period.
Interestingly, though, the dollar’s 2.53% rally since 9/8 has yet to impact S&P 500 companies based on revenue exposure. “Domestic” companies that benefit from a strong dollar are actually underperforming companies with heavy international exposure since the dollar’s current rally began. Stocks with greater than 50% international revenues are up 4.4% since 9/8, while stocks with less than 10% international revenues are up just 2.66%. It looks like the “international” momentum that’s been in place all year is proving difficult to break. Or investors simply don’t think the dollar’s current rally will have much staying power. Regardless, positioning based on revenue exposure appears to be a bit out of whack over the last month. We’d bet that “domestics” start to gain steam soon if the dollar continues to move higher.
Bespoke’s International Revenues Database allows you to find the international revenue exposure for every stock in the S&P 500 and Russell 1,000. It’s available to Bespoke Premium and Bespoke Institutional members, which you can try out here.