Monday Malaise

Not too terribly much to say this morning.  Early equity market trading suggests that the market continues to be hampered by the growing list of economic concerns that came into focus last week.  However, this morning’s retail sales figures (up 1.20%) have proved somewhat buoyant to the market, though lower than expected revenues from home improvement giant Lowe’s likely negated a significant portion of the bounce.  Once again, the U.S. Dollar is rallying today with the Dollar Index (DXY) climbing 0.32% in the early going to 78.329.  This is clearly a continuation of the flight to quality trade that has taken off since European sovereign debt concerns began cropping up in earnest.  Gold, along with most other commodities, are trading largely unchanged and appear to be affirming the losses that were seen late last week.

With Congress about to open it lame duck session today, there will be a fair bit of focus on tax policy and whether or not current tax rates will be extended.  For now, it appears that the markets believe that these rates will be extended.  That said, this does make the market fairly vulnerable to Congressional inaction.  As such, monitoring the rhetoric out of Washington on this subject will be quite important.  Having endured a defeat of historic proportions in the recent election cycle, it seems unlikely to me that the Democrats would let tax rates rise in this environment, especially when it has such widespread voter support.  Opposing such actions would not be a good way to begin the process of luring future votes.  But as politics is a notoriously fickle and unpredictable game, nothing can be viewed as certain until the President signs the bill into law.

Until later…..