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By Mitchell Clark, B.Comm

This choppy trading action in stocks is here to stay for a while, and it could even be more pronounced once fourth quarter earnings season ends.

The numbers continue to pour in, but the unease in investor sentiment is obvious, and it's partially due to the fact that stocks didn't experience a meaningful correction last year. Whatever the reason or catalyst, further retrenchment in share prices is an eventuality that's easily in the cards this year.

While companies, especially large-cap corporations, are able to manipulate adjusted earnings and fully diluted earnings per share, the numbers are still only mediocre at best. And share prices came up so tremendously in the Fed-induced reflation that today's earnings results aren't making the case for buyers.

In the large-cap space, Clorox Company (CLX) perfectly illustrates the numbers being presented by countless blue chips.

The company beat on revenues but missed on earnings. Fiscal second-quarter sales were flat at $1.33 billion. Net earnings were down to $115 million, or $0.87 per diluted share, as compared to earnings of $123 million, or $0.93 per diluted share last year. Currency translation had a material effect on U.S. dollar sales.

The company delivered one percent in total volume growth in the most recent quarter, which is quite anemic, even for a mature blue chip consumer company.

Fiscal 2014 total sales growth is expected to be between one and two percent. Diluted earnings per share should be between $4.40 and $4.55, but management specifically cited unfavorable currency rates as a red flag.

Nothing is as troublesome in global capital markets than currency movements. The devaluation of emerging market currencies is a big deal for international U.S. companies, and it's going to affect corporate financial results (sales and earnings) materially this year.

The Clorox Company is an enterprise I like for long-term, income-seeking investors. Its major brands have tremendous staying power, and stocks like this have proven to be worth accumulating when they're down.

So the trend continues among large-cap companies. Financial results are coming in nearly in line, but companies are not generally beating on both revenues and earnings. It's one financial metric with reiterated guidance for the most part.

The outlook for dividends and share repurchases remains good among those enterprises with large cash positions, but I'm reading more and more earnings reports saying the same thing about currency translation. It's an issue this year, especially if the U.S. economy was to accelerate, which would foster a rising dollar.

Getting back to stocks, the market is convulsing on news from a myriad of sources and trading on the volatile movements in emerging markets. (See "The Greatest Risk in Today's Financial System.")

While corporate outlooks remain pretty decent and stocks have been due for a material correction for several quarters, current trading action reiterates the need for a portfolio review, tolerance for risk and the relative security that comes from dividend income.

This earnings season is quickly coming to a close, which increases the volatility of trading action from global events. Investment risk and capital preservation are two investment themes standing out so far this year.

Disclosure: None.

Source: Devaluation Of Emerging Market Currencies: How Big A Deal For U.S. Multinationals?