Trader Talk

Great day for tech giants, but currency headwinds persist

Pisani's market open: Seattle's finest
Pisani's market open: Seattle's finest

It's a great day for Seattle, as that city's biggest stars all are opening for trade up big on good earnings reports:, Starbucks, Microsoft.

Still, you can't help but notice the continuing impact of the strong dollar on revenues. Here's Amazon and Google's revenues, then reported in constant dollars:


  • Revenues: up 15 percent
  • Constant currency: up 22 percent


  • Revenues: up 12 percent
  • Constant currency: up 17 percent

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These are huge differences, 7 percent in the case with Amazon. With Amazon, you're dealing with $22 billion in sales for the quarter. Google reported revenue of $14 billion.

Starbucks, which reported an amazing 18-percent increase in revenues, noted that its EMEA (Europe, Middle East, and Africa) segment reported net revenues down 10 percent, largely due to "unfavorable foreign currency translation."

Xerox, which this morning reported earnings in line but missed on revenues, lowered its full-year earnings guidance and said revenues would be down 6 percent (2 percent in constant currency) due to currency headwinds, as well as softer signings and an acquisition timing.

The only good news is that the dollar rise has stalled out in the last month. The Dollar Index hit a 12-year high in mid-March and is about 3 percent below those levels. The euro also bottomed at $1.05 in mid-March and is now at $1.08.

The dollar got even weaker today on the lousy durable goods number for March, up 4 percent, but the core report (ex-aircraft) was weak, down 0.2 percent, marking the sixth consecutive decline.

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Non-defense capital goods orders were down 0.5 percent, and February was revised downward as well.

Yikes. This is a significant factor in GDP. Numbers are coming down. Joe Lavorgna from Deutsche Bank announced he was reducing his first quarter GDP estimate from 1.7 percent to 0.7 percent.

Yikes. A reduction of one full percentage point!