Le billet of Monocle

The Dark Side of the Moon of the US Dollar

12 July 2022

"Money! New car, caviar, four star, daydream. Think I'll buy me a football team" - in case you don't recognise them, these are the lyrics of the first verse of Pink Floyd'sfamous 1973 song Money (the only one on the album to reach the top 20 / listen to the opening bass notes here).

Money is a worrying subject at the moment, especially if you're interested in what's happening in the foreign exchange market.

You may not have noticed, but this morning was the first time since 2002 (20 years, yes) that the dollar was stronger than the euro (this applies to the whole Dollar Index) - it may not look like it, but it's important! -.

Indeed, apart from the fact that the budget for your holiday in the Hamptons this summer is likely to be a little overweight, it is also the financial markets as a whole that could have difficulty digesting the news.

Let me explain: for several years now, the markets have been moving in line with the prospects of US growth companies - ever higher, ever more beautiful, which is what led us to the valuation peak we saw in late 2021 - early 2022.

Now, these companies are starting to have a fundamental problem: continuing to post great growth numbers. And on that last point, I'm back to my sheep, the current high dollar should make it much harder for them to do so.

Why, would you ask me?

- Because Apple makes more than half of its sales outside the United States
- Because for Nike, it's about 2/3 of the business that is international
- For Amazon, a little less than half of its results are generated outside North America
- And finally, because this observation applies to almost all the companies in the S&P 500

In short, these brands need to sell their products and services all over the world - things that we international customers should be less and less inclined to buy as the dollar becomes more valuable against other currencies.

So there is a good chance that Apple and its sister companies (who do not have the scalable margin to reallocate these currency effects to their customers outside the US - the latest iPhones and Jordans are already costing us enough, aren't they?), will see their results impacted by these outsized movements*.

"New car, caviar" or "old phone, old shoes", that's what the results and forecasts that will be released in the coming days will show us.

Have a great week,


*regardless of currency hedging positions


This presentation is a promotional document. The content of this document is communicated by and is the property of Monocle Asset Management. Monocle Asset Management is a portfolio management company approved by the Autorité des Marchés Financiers under number GP-20000040 and registered with the ORIAS as an insurance broker under number 10058146. No information contained in this document should be construed as having any contractual value. This document is produced for information purposes only. The prospects mentioned are subject to change and do not constitute a commitment or a guarantee. Access to the products and services presented here may be subject to restrictions for certain persons or countries. Tax treatment depends on individual circumstances. The fund mentioned in this document (Monocle Fund SICAV) is authorized for marketing in France and possibly in other countries where the law permits. Before making any investment, it is advisable to check whether the investor is legally entitled to subscribe to the fund. The risks, costs and recommended investment period of the funds presented are described in the KIDD (key investor information documents) and the prospectus, available free of charge from Monocle Asset Management and on the website. The KIDD must be given to the subscribers before the subscription. Past performances are not a reliable indicator of future performances. Monocle Asset Management cannot be held responsible for any decision taken or not taken on the basis of information contained in this document, nor for the use that could be made by a third party. The investor may lose all or part of the amount of capital invested, as the funds are not capital guaranteed.

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