Why strong US growth can overcome dollar headwinds

The US economy is better than generally perceived. US real GDP is expected to grow more than 3% in 2015. This would represent the fastest pace since 2005, and is expected to exceed growth in other developed markets.

Superior growth in the US has, in part, contributed to a stronger dollar, which may present a headwind for US-based multinational companies.That said, ongoing growth in the US economy is translating into strong corporate earnings and cashflow. Earnings are expected to increase for all sectors of the S&P 500 in 2015, except energy, which has been impacted by the decline in commodity prices. Excluding energy, S&P 500 earnings are expected to increase nearly 12%. Equity valuations remain reasonable as stock prices are being supported by higher earnings. As of 31 January, the S&P 500 forw...