Retail Stocks Up On Trump Talking Down Dollar

Retail stocks jumped a bit on Tuesday (Jan. 17), the first day after a long holiday weekend, after comments from President-Elect Donald Trump pushed hopes for a weaker dollar.

As noted by Seeking Alpha, and quoting an interview with The Wall Street Journal from Friday, Trump said that companies here in the United States “can’t compete with them [China] now because our currency is too strong. And it’s killing us.”

A strong dollar hurts margins as demand slows overseas, where currencies are relatively weaker. If the dollar were to weaken, then demand would pick up, leading to increased sales and increased earnings in those foreign nations. Among the bellwethers in the sector, Walmart shares were up more than 2 percent on Tuesday, with PriceSmart up 1.8 percent and Target up about 1.3 percent. The dollar also fell to its lowest level in the past four weeks on the news of the interview, off 1.3 percent.

At the same time, and in the same interview, Trump said that the so-called “border adjustment” tax, designed to help boost exports, was “too complicated.”

Trump’s general comments on the dollar — in essence, “talking it down” — would be a break from decades of U.S. administrations rallying behind a strong currency.