The Morning Ledger: Strong Dollar Cuts Into Companies’ Overseas Revenue
☀️ Good morning, and happy Friday. In today's rundown, the dollar's rebound, a look at what's happening in private credit markets, and our latest WSJ Special Access podcast, featuring Chipotle Mexican Grill .
The resurgent dollar is hitting earnings for U.S. companies doing business overseas, disappointing executives hoping for relief from the currency’s run to records.
Apple , Getty Images and United Parcel Service said the dollar’s rebound to an eight-month high is hurting sales and lowering profit margins, as goods become more expensive for customers abroad.
“If we look everywhere around the world, the U.S. is sort of like the last man standing, and the dollar is coming strong this year,” said Win Thin , global head of currency strategy at Brown Brothers Harriman .
S&P 500 companies that derive more than half of their revenue outside the U.S. are on pace to post an 18% slide in second-quarter earnings, according to FactSet data through Aug. 30 that include 98% of S&P companies. In contrast, companies with more than half of their sales in the U.S. are poised to record 4% earnings growth.
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Brookfield CFO Sees Private Credit Remaining Relevant
Private credit may be a growing area for capital raising in the wake of the regional banking crisis earlier this year, according to Nicholas Goodman , president and finance chief of Brookfield Corp. In the run-up to the spring banking turmoil, “we saw the support from U.S. banks kind of take a step back, and then we went into the regional banking crisis, and…the hole just got bigger,” Goodman said at the Mizuho America, Inc. Finance Leaders Forum in New York on Thursday.
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“I think private credit's going to continue to be very relevant. Now, as the banks come back into the market, we'll see how they can co-exist with each other, but I think the opportunity for partnership exists, as opposed to displacement of one or the other.”
Podcast
🎧 New to our WSJ Special Access podcast series: Jack Hartung, chief financial officer of Chipotle Mexican Grill, speaks with WSJ Pro’s Jennifer Williams about how rising inflation and other financial pressures impact the fast-casual restaurant’s business strategy. He also discusses how the company manages food costs, determines price increases and strategizes new menu items.
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