Dollar Vortex Puts Chill on Earnings That May Worsen in Spring

Foreign exchange dents results at Pfizer, J&J, McDonald’s
Currency drag may have caught many companies off guard

Richard Lacaille, global CIO of State Street Global Advisors, talks about emerging-market, European and U.S. stocks.(Source: Bloomberg)

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By Misyrlena Egkolfopoulou, Liz Capo McCormick and Cécile Daurat

February 3, 2019 at 5:01 AM UTC

Updated on

February 4, 2019 at 3:30 PM UTC

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When the list of usual suspects blamed for disappointing corporate earnings is compiled for any given quarter, you can often count on two bogeymen showing up prominently: nasty weather and gyrations in currency markets.

While we’ll have to wait until the current quarter is over to see how many fingers will be pointed at the record-cold Polar Vortex, the currency market is playing a starring role as a villain in many U.S. companies’ fourth-quarter results. The ICE Dollar Index jumped more than 10 percent from its low in February 2018 to its high in November, and its average level last quarter was 3 percent higher than the previous year’s period. Call it the Dollar Vortex. And unlike the cold snap that froze much of the U.S. last week, there’s no guarantee of a spring thaw.