- Commentary -

November 17, 2009 (FinancialWire) (By Philip Holmes) — Stocks gained on Monday as a weakening U.S. dollar held the prospect of a pickup in U.S. exports, and perhaps badly needed jobs. As if anticipating an end to unemployment misery, U.S. retail sales showed a pick-up. Will Walmart (NYSE: WMT) have a greener holiday season? Will Macy’s (NYSE: M)? We live in hope.

The Dow Jones industrial average ended at 10,406.96, up by 136.49 points, while the Standard & Poor’s 500-stock index gained 15.82 points to close at 1,109.30. The Nasdaq composite index rose 29.97 points, for 2,197.85.

U.S. retail sales were up 1.4% in October. Taking autos out of the mix brings a modest gain of only 0.2%.

Investors eyed the U.S. dollar, as the dollar index dropped to 74.947. Fed chairman Ben Bernanke weighed in, pledging that the central bank’s actions will keep the dollar strong. Investors may or may not be buying that, considering Fed actions of late, but they do hope that stimulus-rich Asians might buy more U.S. products.

Over at the NY Times, Paul Krugman isn’t so sure. He sees real danger in China’s policy of keeping the renminbi weak in an effort to boost exports. In his Monday column, the Nobel prize winning economist, observing that, “in recent months China has carried out what amounts to a beggar-thy-neighbor devaluation, keeping the yuan-dollar exchange rate fixed even as the dollar has fallen sharply against other major currencies.”

Krugman says that “temporary factors” have held China’s trade surplus and America’s trade deficit in check, but that, “Looking forward, we can expect to see both China’s trade surplus and America’s trade deficit surge.” He cites a new paper by Richard Baldwin and Daria Taglioni of the Graduate Institute, Geneva.

A weakening dollar should help U.S. exports, and thus U.S. employment stats, at a critical time. But if Krugman is right a mighty countervailing force might scupper that process, leaving the U.S. in a far weaker position than it’s been.

[Go to http://www.financialwire.net/?s=philip+holmes to see more commentaries by Philip Holmes.]

The FirstAlert(tm) Economics Calendar lists Weekly Chain Store Sales (8:55 a.m.), Producer Price Index (PPI) for October (8:30 a.m.), Treasury International Capital Flows (9 a.m.), Industrial Production & Capacity Utilization for October (9:15 a.m.), NAHB Housing Market Index for September (1 p.m.).

The FirstAlert(tm) Events Calendar showcases AER Investor Meeting; CORE, CVGW at BB&T Capital Markets Food Industry Conference; CVS, MHS, DNDN, ISRG at Lazard Capital Healthcare Conference; EMN Investor Day; EXP, USG, SVR, ORN at Stephens Fall Investment Conference; HEV at Dow Jones Newswires Alternative Energy Conference; HON, GNK, CSR, URI at Oppenheimer & Co. Industrials Conference; LNC Conference for Investors and Bankers; NXY, LXS at Bank of America Merrill Lynch Small & Mid Cap Conference; PAET, ACN, EPIQ at Wachovia Midwest Tech & Telecom Investor Day; PENN, EGT at Deutsche Bank Securities G2E Gaming Investment Forum; RYL, BZH, HOV at UBS Building and Building Products Conference; SEE, LZ, AVY, POL at Ingalls & Snyder Chemical Seminar; THOR Investor Meeting to Review HeartMate II Destination Therapy Trial Data; UBS Investor Day.

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Quote of the Day: “You can make more friends in a month by being interested in them than in ten years by trying to get them interested in you.”* Charles A. Allen

Today is: Homemade Bread Day.

Happy Birthday: Charles A. Allen, Titian Peale, Rock Hudson, Lee Strasberg, Gordon Lightfoot, Martin Scorsese, Tom Seaver, Daisy Fuentes.

Today in History: Queen Mary I of England died and was succeeded by her half-sister Elizabeth I of England in 1558. English explorer, writer and courtier Sir Walter Raleigh went on trial for treason in 1603. The United States Capitol building in Washington, DC held its first session of the U.S. Congress in 1800. Joseph Grew, the United States ambassador to Japan, cabled the State Department in 1941 that Japan had plans to launch an attack against Pearl Harbor, Hawaii, but his cable was ignored. Douglas Engelbart received the patent for the first computer mouse in 1970. The first edition of Phrack was released in 1985, becoming the oldest computer underground magazine still running after its 20 years of existence. Kmart Corp. announced in 2004 it was buying Sears, Roebuck and Co. for $11 billion and naming the newly merged company Sears Holdings Corporation.

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