Found the following on line but don't quite know what to make of it... anybody wiser than me on currency issues who would care to comment?
Now that the greenback has defied conventional wisdom and rallied sharply, there's something new for investors to worry about
: the bite a stronger dollar will take from S&P 500 profits.
Defying Wall Street's consensus forecasts for the dollar to decline by 10% this year, the buck has so far rallied about 3% against major currencies...
"We are amazed that no one else on the Street has begun to at least tinker with their EPS estimates since very, very few were carrying $1.22 on dollar-euro or 108 dollar-yen in their top-line numbers at the start of the year," says David Rosenberg, chief North American economist at Merrill Lynch. Should the dollar fail to weaken significantly again, current earnings expectations would have to come down.
...That's because more than 30% of S&P 500 companies' revenue comes from their overseas operations.
...our research shows ... that investors may be lulled into a false sense of security thinking this market is attractive with an estimated 2006 P/E of 14.6 times when in fact the dollar's move actually means that investors are likely paying for a more neutral multiple of 16 times," the economist commented.