Microsoft (MSFT) shares were trading off today following the company trimming its top and bottom line expectations for the current quarter due foreign exchange currency headwinds. This follows the full-year revenue trimming for the same reason at Salesforce (CRM) just a few days ago, and at the time we remarked that we were likely to see more companies doing the same in the coming weeks.

While not a knock us out of the seat shock, we are somewhat surprised that with roughly a month to go in the quarter, Microsoft made the announcement today. In terms of the actual revenue and EPS trimming, it isn't that large:

- EPS for the current quarter is now expected to be $2.24-$2.32 vs. the prior outlook for $2.28-$2.35

- Revenue for the period is now seen coming in at $51.94- 52.74 billion vs. prior guidance of $52.4-$53.2 billion.

Those are "at the margin" cuts in our view, and again, odds are Salesforce and Microsoft won't be the only two companies revising expectations. We would expect others to follow either as the flurry of June investor conferences unfold or closer to the end of June in order to take full account for the dollar's move during the current quarter. 

A Strong Dollar

With the Fed poised to boost interest rates further in the coming months and the other central banks lagging behind, notably the European Central Bank, we are likely to see sustained strength in the dollar. This means the foreign exchange headwinds we're hearing about for the current quarter are likely to persist in the second half of the year, creating another reason EPS expectations are likely to be culled back vs. those had just a few months ago.

In our view, Microsoft's announcement about the impact of foreign exchange isn't injecting a significant level of fresh uncertainty into the stock market, rather it's another log thrown on the uncertainty fire. That's especially the case for those companies with significant international exposure. It's also another reason for us to keep our inverse ETF positions in play.

While we acknowledge this headwind, we will continue to focus on the operating businesses for the AAP portfolio constituents. In the case of Microsoft, very recent comments from HP (HPQ) and Dell (DELL) point to solid PC demand, particularly higher end models, and companies continue to embrace cloud.

While we have several portfolio holdings with U.S. centric businesses, including Chipotle Mexican Grill (CMG) , American Water Works (AWK) , United Rentals (URI) , and AMN Healthcare (AMN) , we will be reviewing the latest quarterly filings to nail down domestic vs. international exposures.