Is the Overseas Revenue Switch Under Way?

A year ago overseas markets were all the rage. A weaker U.S. dollar and fast-growing markets in Asia, in particular, were keeping the U.S. out of recession, despite a rapidly weakening U.S. consumer.

Fair enough. But what happens a year later? Because now we have the reverse: A strengthening U.S. dollar, and rapidly weakening overseas markets -- and a U.S. consumer who looks, post stimulus, like someone who needs to lie down for a year or two.

It's awfully hard not to argue that, with the above in mind, we are in for a weaker second half of the year. And which sectors are likely to be the sketchiest? Those sectors with the most exposure to overseas markets, followed by those needing consumers to goose 'em.

Using some recent S&P data, here is what the sectoral exposure trends look like. As always, click for a larger version.

Tech leads the way, followed closely by utilities and energy. Definitely something to watch.

Update: Apparently others are beginning to notice too, as this new Reuters piece shows.

Comments

[whidbey:]

Dear Paul

This does not look good. Obviously you are expecting no significant export sales. I think that might be right; it appears that most of the world is not decoupling from the US, and as we tumble the rest of the world get knocked around very hard indeed.
This may be why we must be concerned with US politics which could lead to a president and congress who think that foreign trade is not a good idea for Americans. I will not pull a political card, but it is sort of concerning that those of us who think trade has advantages. I am concerned over the elections.

2008 Aug 18 04:52 PM

[Steven Hansen:]

"which sectors are likely to be the sketchiest? Those sectors with the most exposure to overseas markets......."

you must have envisioned that overseas sales meant the item was produced in the usa and exported. the economic effect of a strengthening us dollar will not effect most companies doing business overseas unless their international costs are on a dollar base. when you are playing in an international market, you try to limit your costs to the currency you are doing business. what will effect both domestic and internationals is recession.

2008 Aug 20 03:38 AM