November 9, 2015

US Dollar strength to hurt profits of Consumer Staples

I am of the view that the U.S. dollar will continue to rise and jeopardize multinational corporate profits.

At the epicenter of the U.S. dollar pressure are consumer nondurable companies. Consumer staples also face damaged moats of more generics and cheaper non-branded products to their formerly impenetrable lines of businesses.

Look at the shares of Procter & Gamble, Colgate-Palmolive, PepsiCo and Coca-Cola today; this could be the tip of the iceberg of poor absolute and relative performance.

I have shorted Consumer Staples Select Sector SPDR ETF to get representation in this short theme.