What we’re reading (1/13)
“Why The Strength Of The Dollar Matters So Much For Stock Investors” (Wall Street Journal). “[A]bout 40% of corporate earnings come from outside the U.S. ‘What happens in a strong-dollar environment is those earnings buy fewer dollars.’ [according to Marc Chandler, chief market strategist for Bannockburn Global Forex.] The same logic works in reverse. If the dollar weakens, revenue from outside the U.S. tends to be bigger in dollar terms—giving a boost to revenue and profits, if other things stay the same. From Nov. 1 to Dec. 29, the Dollar Index—which measures the value of the greenback versus other major currencies—fell 5% amid signs that inflation is moving toward the Federal Reserve’s target and that the central bank is more likely to cut rates than to raise them in coming months. That in turn helped drive a multiweek winning streak that lifted stocks near their highest levels of the year.”
“‘It’s The Only Thing That Actually Matters’: A Weaker US Dollar Would Help The Dow Rocket To 50,000” (Business Insider). “‘Our work suggests that every 10% drop [in the US dollar] should translate into a ~3% benefit to S&P 500 earnings per share via currency translation, all else equal,’ [Bank of America’s Savita] Subramanian said. Economists at Bank of America expect the US dollar will depreciate by 3% on a trade-weighted basis in 2024, representing a tailwind for corporate profits and therefore stock prices.”
“Did The Creator Of Barbie Engage In Tax Evasion?” (Dealbreaker). “In last year’s hit movie ‘Barbie,’ there is a scene where Barbie meets her creator Ruth Handler. Handler tells Barbie that she was Mattel until the IRS got to her. The creator of Barbie is not a supermodel, but instead a ‘five-foot nothing with a double mastectomy and tax-evasion issues.’ […] numerous biographies of Handler never mention her being convicted or even charged with tax evasion. Furthermore, she has not even been suspected of engaging in tax fraud. Instead, in 1978, a federal grand jury indicted her and other Mattel officers for making false statements to the Securities and Exchange Commission. This was due to an SEC investigation after Mattel reported operating losses while also claiming that the company was recovering and growing.”
“The Billionaires Spending A Fortune To Lure Scientists Away From Universities” (New York Times). “In an unmarked laboratory stationed between the campuses of Harvard and the Massachusetts Institute of Technology, a splinter group of scientists is hunting for the next billion-dollar drug. The group, bankrolled with $500 million from some of the wealthiest families in American business, has created a stir in the world of academia by dangling seven-figure paydays to lure highly credentialed university professors to a for-profit bounty hunt. Its self-described goal: to avoid the blockages and paperwork that slow down the traditional paths of scientific research at universities and pharmaceutical companies, and discover scores of new drugs (at first, for cancer and brain disease) that can be produced and sold quickly.”
“A $126 Grocery Tab That Explains The Vibes Paradox” (Axios). “If you look at the level of prices, they are way up since 2020. If you look at the rate at which prices are changing, it has returned to fairly normal levels. This intuition is crucial to understanding this confusing moment for inflation trends and public opinion around them.
