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Two Ways: Online Titans Benefit from Weak Dollar


Strengthen your portfolio in good times and bad.


Earnings season is set to get in full gear this week, and a number of companies are likely to report significant sequential-revenue gains due to a quarter-on-quarter drop in the US dollar, so say analysts at investment bank Jefferies Group.

In a story on Barron's, the firm named online titans Google (GOOG), Amazon (AMZN), and eBay (EBAY) as benefiting the most from the favorable currency rates.

The weak dollar should contribute about $70 million to eBay's revenue and about $26 million to operating income.

With Amazon generating 45% of its revenues outside of North America, the company should see a $33 million increase to the top line resulting in less than a penny contribution to EPS.

Google has 53% of revenues coming from outside the US, but the firm says revenue gains aren't necessarily likely to translate into the bottom line given Google's neutral hedging strategy.

From the Bull Pen: One can't deny the continued strength in the S&P 500 with every dip being bought. Bulls can use the SPY ETF. A collar strategy (long stock with put protection, and short calls) could be one method, or one can simply use a traditional sell stop near 105-106.

From the Bear Cave: There will come a point when the weak dollar/ buy stocks trade ends. A sell-off in treasuries could spark that sentiment. Bears are watching the follow-through strength in the ultra-short 20+ year ETF (TBT). In the short term, one can set a sell stop 2% below entry.

A Quick Check Around the World

Asian trading closed with the Nikkei (Closed)%, India 2.31%, Hang Seng -0.93%, Shanghai -0.59%, and Taiwan 0.37%.

Across the pond, we see the FTSE 1.25%, CAC 1.22%, DAX 1.43%

As of 8:10 a.m. EST, S&P Futures are trading +7.25 to 1075.00 and Nasdaq futures are +10.25 to 1736.00.

A Look at Commodities

Over in commodities, crude oil is +1.25 to 73.02 while gold is +7.30 to 1056.00 this morning. Silver is +0.23 to 17.92 and copper +1.700 to 285.50.

The dollar index is -0.2500 to 76.3700.

Not much on the radar today, but click here for the rest of the week's events.

Welcome back. Good luck and have a great day!

No positions in stocks mentioned.

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