While the soaring dollar and plunging oil prices may give a boost to the economy, they aren't so hot for stocks, says Bob Doll, chief equity strategist for Nuveen Asset Management.
The dollar's rise helps the economy by keeping inflation down and attracting foreign investment. Oil's drop helps because it lowers energy costs for consumers and businesses.
But the dollar's strength hurts multinational companies by making their foreign revenue worth less in dollar terms and making their exports more expensive in foreign currency terms.
Meanwhile, lower oil prices wallop companies in and around the energy industry.
"The hit to energy and related earnings from declining oil prices is nearly immediate,"
Doll told CNBC. "The benefit to everybody else, consumers in particular, is stretched out over time."
Earnings expectations "have come down a little bit in the wake of the decline in oil prices and the rise in the dollar," he said. "They are headwinds."
Meanwhile, the four-year-old global currency war rages on.
In the latest skirmish, Singapore's Monetary Authority, which deploys its dollar as the principal policy lever, said Wednesday that it will seek slower appreciation of the currency, sending it to a four-year low against the U.S. dollar.
Singapore thus joins countries around the world — excluding the United States — that are using monetary policy to devalue their currencies. The hope is that the devaluations will boost exports, sparking the sluggish economies in these nations.
"For those countries that are engaging in this currency war, they have exhausted all the policy tools they have,"
David Woo, head of currency research at Bank of America, told The Wall Street Journal.
Many experts expect the dollar, which hit an 11-year high against the euro Monday and a seven-year high against the yen last month, to keep rising.
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