- • More than 50% foreign revenue………122 stocks (24%)
• Less than 50% foreign revenue…….…257 stocks (52%)
• No foreign revenue……………..……....121 stocks (24%)
Source: Bespoke Investments
Influence of Europe: Of the two-thirds of S&P 500 foreign revenues that were reported by region in 2011, about 25% came from Europe, 15% from Asia, 10% from North America, 8% from Africa and 6% from South America. Thus Europe still remains the dominate U.S. export market, with a large influence on U.S. stock indexes. The emerging economies of Asia, South America and Africa have a smaller, but growing, impact.
Influence of U.S. Dollar: Increasing foreign revenues mean U.S. stock indexes are increasingly impacted by U.S. dollar fluctuations. When the dollar weakens, U.S. exports become more competitive worldwide and U.S. multinationals benefit from increased sales — and vice versa. Though not always negatively-correlated with the dollar, U.S. stock indexes are increasingly moving in step with international stock indexes.
Less Dependence on U.S. Consumer: As the U.S. population ages and domestic consumer demand falls, the success of U.S. companies depends on their ability to penetrate foreign emerging markets, especially in Asia, and to attract international consumers to their brands. And if the "stagnationists" prove correct about the future U.S. economy, these foreign revenues should provide a significant buffer for U.S. stock indexes. Your thoughts?