Today's New York Times & International Herald Tribune reports this interesting fact:
This year, for the first time, Standard & Poor's expects the 500 companies in its benchmark stock index to generate more than half of their sales outside the United States.
Much of the rest of the story is a standard discussion about how the decline in the value of the dollar is boosting exports . But there is a more subtle reason for the S&P's findings -- acknowledged late in the article:
In addition to exporting more, many U.S. companies are enlarging their operations overseas. General Motors plans to more than double production in India and build a new plant there.
This expansion is not only taking place among manufacturers. Financial services companies like Ernst & Young are growing fastest in India and China. Investment banks like Morgan Stanley, Goldman Sachs and Merrill Lynch are also going on hiring binges to meet the needs of expanding Asian companies.
That, by itself, could explain the shift. The findings are that over half of the companies' sales are overseas -- not that half are exported. As more a more companies expand their overseas operations, of course more and more of their sales will be overseas.
What the S&P is reporting is the globalization of the S&P 500 companies. Unfortunately, the story misses that point completely.
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