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3 Takeaways from the Dow Jones Record Highs - Blue Marble Global Payroll


3 Takeaways from the Dow Jones Record Highs
By Jason Cadle

The 30-stock index recently rose 25.61 points to close at 22,118.42. Most of the gains were contributed from Boeing and Goldman Sachs. Boeing stock grew mostly from contracts awarded in India late July 2017. The Dow also posted its ninth straight record close.

The S&P 500 climbed 0.16 percent to close at 2,480.91, its first record close since July 26. The Nasdaq composite outperformed, rising 0.51 percent to close at 6,383.77.

What insight can your company learn from these trends? Here are the top 3 takeaways for small to mid-sized companies:

1. GLOBALIZATION:

Leverage globalization for cutting operating cost or expansion.  But beware – not all countries are created equal!  Going overseas can be a great way to cut operating cost, and continue double digit growth.  Do your homework first – some lessons you can learn from the Blue Chips; not all countries are easy to operate in, the country you think is a good fit may not be the best-fit for what you’re offering, and some are just hard to work in.

Countries like Brazil, India, and East Asia can provide lower labor costs and higher profits.  However, you need to consider several other factors such as; the countries social landscape and the statutory requirements for compliance, inflation, and changes in country legislative that can make the cost of entry not advantageous. For example, is the U.K. the best fit with BREXIT going on?  Did you know it can take your business up to a year to get started in Brazil or India?

A great article written by Fortune Magazine in March of 2017 explains in further detail why GM left the EU. It offers great insight on things to consider: http://fortune.com/2017/03/06/general-motors-giving-up-europe/

To sum up the article, GM chose to sell and refocus, and second-quarter earnings outpaced Wall Street’s expectations. Expand wisely!

2. THE US DOLLAR:

The weakened U.S dollar is making it easier for companies to sell overseas, and you can capitalize on that as well. In a recent WSJ article written by Chelsey Dulaney and Riva Gold, it states “The dollar has been suffering through one of its worst stretches in years.” https://www.wsj.com/articles/investors-chase-beneficiaries-of-dollars-decline-1502103600

With the dollar being so cheap, US companies like yours have a chance to enter international markets. Overseas consumers are more willing to buy US products when the dollar is hitting record low. Countries and clients that couldn’t afford a product yesterday, potentially can now. Test it out!

3. CHANGE IN US LEGISLATION:

Don’t wait on it.  With all the drama in Washington these days, companies can’t afford to wait on legislators. You must grow regardless; companies can’t wait with the hope that corporate tax cuts will arrive anytime soon. The government has stated it does plan on making cuts to bring overseas money back home, providing U.S. companies an opportunity for reinvestment, RND, and expansion into new territories. There is a lot of work to be done if tax cuts will help corporations. An article from Bloomberg offers insight:

https://www.bloomberg.com/news/articles/2017-06-26/corporate-tax-rate-at-28-seen-as-more-likely-than-historic-cut

It would be interesting to see if we hit below the 24% corporate tax number mentioned – even if the U.S. did, it would take time for a trickle down into the bottom line.

My hope is that this post has provided takeaways for your company, your clients, or partners.  I am interested to hear your thoughts or feedback from studying larger companies.

Sources:

CNBC; https://www.cnbc.com/2017/08/07/us-stocks-dow-earnings.html

WSJ Atricles: https://www.wsj.com/articles/investors-chase-beneficiaries-of-dollars-decline-1502103600

Fortune: http://fortune.com/2017/03/06/general-motors-giving-up-europe/