U.S. multinationals have been affected by unfavorable currency translations brought about by a stronger dollar over the last two quarters. The collapse in oil prices has also had a real impact on the earnings potential of U.S. energy producers. But at the same time, those hits, absorbed in the fourth quarter of 2014 and first quarter of 2015, also mean that the same companies will face much easier comparisons when they report earnings for those periods nine to 12 months from now. Put another way, a year from now, instead of worrying about a profit recession, the financial press may once again be reporting on resumed corporate earnings growth in the United States. If coupled with strong dividend growth, that would, I believe, lead to higher U.S. stock values nine to 12 months from now.

 

1Source: Bloomberg, 5/1/15.
2Source: WisdomTree, 11/30/14.
3Source: Robert Shiller, 12/31/1957‒3/31/2015.

Important Risks Related to this Article

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