Nothing like a Japanese carmaker to put the gravy on post-Thanksgiving trading.

Nissan Motor

(NSANY)

said it was shutting down its Japanese car plants for five days despite robust demand because of a shortage of steel. The news sent shares of steelmakers like

Nucor

(NUE) - Get Report

and

U.S. Steel

(X) - Get Report

flying up 6% and 7% respectively, while companies that make things out of metal, like

Maytag

(MYG)

and

General Motors

(GM) - Get Report

floundered, each losing about 1%.

Overall, the markets finished early trading on Friday virtually unchanged to end the week with modest gains. The

Dow Jones Industrial Average

added 0.6% on the week to close at 10,522.23, the

S&P 500

added 1% to 1182.65, and the

Nasdaq Composite

gained 1.5% to 2101.97.

The 10-year Treasury bond hit rougher sledding on rumors of foreign central-bank sales, as its yield rose to 4.24% from 4.20% last Friday.

The positive action in shares came amid a horrendous week for the dollar, which hit a seventh all-time low this month on Friday vs. the euro and an almost five-year low vs. the yen. Stocks can certainly gain when the dollar falls, as happened over the past two years, but the weakness certainly favors some sectors over others. And a weaker dollar will feed a growing inflation trend seen in recent earnings reports and macro stats.

The Price of Inflation

Nissan's steel stunner was just the latest indication that the huge price increases in raw materials and basic goods seen in the producer price index over the last year are percolating their way up the economic food chain. In the last PPI report on Nov. 16, crude materials prices were up 16% over the prior 12 months (5% excluding energy), while intermediate materials prices were up 9% (or 34% excluding agricultural materials).

Roger Kubarych, former chief economist at the

New York Stock Exchange

, points out that even the

Federal Reserve

was forced to tone down its rosy rhetoric on inflation in its last statement. After its Nov. 10 rate hike, the central bank said inflation and "longer-term inflation expectations remain well-contained." That was a downgrade from the Fed's view in September that "inflation and inflation expectations have eased in recent months."

According to Kubarych, now a senior fellow at the Council on Foreign Relations, inflation in 2004 has risen by virtually every measure. "So far the bond markets have largely shown considerable complacency about the medium-term outlook for inflation," Kubarych writes. "But there are powerful forces at work that will tend to lift the core rate of consumer inflation."

While the oil price increase that has been the focus of attention may have peaked, prices for natural gas and coal are now on an upswing, he says. Prices for imported goods excluding oil are up almost 3% over the past 12 months, three times the rate of increase in prior years. And a measure of worker costs included in the third-quarter GDP report, unit labor costs, rose for the first time in three years.

Inflation doesn't doom the stock market, of course. But if favors some sectors over others, as those with pricing power rise and those without fall. It also brings on higher interest rates from the Fed, which can be good for debtors and bad for lenders, subject to exceptions.

Action in the stock market over the past few weeks has been pointing toward the winners and losers in a higher-inflation scenario.

Consumer-goods makers face tremendous competition from each other as well as from the private-label brands of big retailers. "Large retailers will continue to use their leverage to limit price increases," Standard & Poor's credit analyst Kenneth Drucker said in Wednesday's rating news release titled "Consumer Products: The Squeeze Is On."

As a result, they haven't been able to raise prices enough to make up for higher materials and energy costs.

Procter & Gamble

(PG) - Get Report

,

Clorox

(CLX) - Get Report

and

Colgate-Palmolive

(CL) - Get Report

, for example, warned in their most recent quarterly reports that margins were shrinking because of the increases.

Since the Nov. 16 PPI report, P&G is off 1%, Clorox is down 2%, and Colgate dropped 4%, while the S&P 500 was essentially flat.

Meanwhile, commodities and basic materials plays are doing quite well since mid-November.

Peabody Energy

(BTU) - Get Report

is up 23% along with virtually the entire coal sector.

Freeport McMoran

(FCX) - Get Report

, the world's biggest copper producer, is up 3%. And steelmakers, as mentioned, are way up.

Over the past five days through Wednesday, the best-performing industries have been tanker operators, up 8%; coal, up 8%; and oil and gas servicing companies, up 7%, according to Morningstar. Among the worst performers were furniture retailers, down 3%; automakers, down 2%; and semiconductor makers, down 2%.

Following

last week's warning by Alan Greenspan on the dollar, more analysts have picked up the theme. Northern Trust economist Paul Kasriel has posted his annual Thanksgiving essay, but what he's thankful for may ruffle a few feathers: the Asian central banks that have kept the U.S. afloat despite its huge savings shortfall.

"If it were not for the 'kindness' of foreign central banks, we would be sitting down tomorrow to a smaller feast in a smaller house, having arrived at Grandma's house in smaller car," he writes.

"The foreign suckers who produced this bountiful harvest for us, however, should be cursing their central banks. All they are getting in return for their hard work is more paper -- that is, yuan and yen, which are reducing the value of the yuan and yen they had accumulated before. I guess that's why we celebrate Thanksgiving and they don't!"

In keeping with TSC's editorial policy, Pressman doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships. He invites you to send

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