This is something I've been highlighting for quite a while, as the offset to the rejoicing of the "stronger dollar" - throughout the winter I was showing how multinationals were goosing earnings (revenue) not through organic growth but in large part just through a weak U.S. dollar. Now, we are only back to levels on the dollar seen in the spring and it's been a nearly decade bear market so it's all relative. But when your "14% growth" is "9% currency" and "5% reality" - it is going to look ugly for some of these companies once the tailwind goes away. The ability to "surprise" to the upside is going to be much more difficult in the coming quarters if the dollar stays where it is, or strengthens further.

Let me reiterate the dollar is still very weak historically so this is, so far, simply a correction (upward) in a long term downtrend. In theory doing massive bailouts should hurt the dollar, but theory seems to no longer matter in any markets nowadays. All that matters is where the money flow is going so academic studies mean little - if a herd of hedge funds runs into the US dollar - than 100 years of history means nothing. The dollar will go up. Even as we bailout our institutions. As I keep saying, truly historic times. (please note - the dollar is going up versus most developed countries currencies - it is still going sideways or in fact weakening against the developing countries currencies - which is ironic considering everyone says we need to flee those areas and run back to the safety of the US. The currencies say otherwise)

• Multinational companies in the U.S. that are accustomed to the tailwind of a weakening dollar are about to find out what it is like to sail in currency doldrums. For much of the past six years, and particularly in the past two quarters, the dollar's infirmity has helped pump up the results of U.S. companies with operations abroad. That is because revenues earned in other currencies have converted back into more dollars. Against the euro, for instance, the dollar has lost ground compared with a year earlier for eight quarters in a row.

• Now the currency tides are shifting. That means what had been a bonus for companies is rapidly turning into a burden, producing a jolt for investors. Some of the foreign sales volumes that would have translated better into dollars "will go from a major tailwind to no wind whatsoever, to potentially a headwind," says Tobias Levkovich, chief U.S. equity strategist at Citigroup.

• A glance at recent earnings reports shows the extent of the boost. Toy maker Mattel Inc. reported that out of an 11% rise in sales in the second quarter over the prior year, five percentage points came from favorable currency moves. Tech company Hewlett-Packard Co. said half of its 10% rise in sales was attributable to currency shifts in the quarter to the end of July.

• At fast-food company McDonald's Corp., revenue actually would have fallen 2% in the second quarter of 2008 over a year earlier if the impact of currency translation were excluded. With the currency bump, however, revenue increased 4% in that period. Currencies also contributed almost a quarter of the improvement in earnings per share.

• Although most companies employ strategies to reduce the impact of currency fluctuations on the results, "we expect recent dollar strength (if sustained) to pressure revenues and earnings growth" across the information-technology and hardware sector, wrote analysts from Deutsche Bank last month.

• Currency gains have been "a nice plus" and a "positive influence on the bottom line," says Tim Pistell, chief financial officer at Parker Hannifin Corp., a $12 billion industrial-equipment company based in Cleveland that gets more than half of its business from outside the U.S. Exchange rates produced five percentage points of the 13% growth in the company's sales in the year to the end of June -- or more than a third of the sales growth.

• In a broader sense, the dollar is still a source of competitiveness for U.S. companies that export products overseas. The dollar's recent rally, while powerful, has made only a small dent in its six-year fall. By many measures, the currency remains weak.

• Of course, gauging the impact of currency moves on the bottom line is complex, because they affect both sales and costs. For companies that receive a large chunk of their revenues from overseas but buy raw materials at home, a strengthening dollar is far from ideal. That is because it cuts into revenue growth but wouldn't affect costs. For companies that match up revenues and costs on a geographic basis, meaning their foreign operations use homemade material, not imports from the U.S., it is less worrisome. Although a stronger dollar would bring down foreign revenues, it also would lower costs, a phenomenon often called natural hedging.