Published: November 12, 2009 4:38 PM
The robust negative correlation between risky assets and the US dollar was back with a vengeance in NY trading. Equities could not hold on to yesterday's high close for the year and sank more than -1% before the dust settled. The decline looks to have been exacerbated late in the session by some headlines that White House Budget Director Orszag said a capital gains Medicare tax is "in play". This had the bulls running for the exit and could see the market weaken further if it gets any traction ahead of year-end. Gold made another valiant try above the $1120 area but once again failed above that important daily trendline resistance. The precious metal plunged more than $13 on the day but should still find better buying interest ahead of the $1100 mark.
Economic data continued to suggest caution. Initial jobless claims printed a better than expected 502K for the latest week (the lowest since the first week of January) but the true continuing claims tally remains at a staggering 9 million (not seasonally adjusted). The lack of improvement in the unemployment backlog suggests folks on the sidelines are still having trouble finding work. Furthermore, the politics at the moment continue to incentivize staying aboard the gravy train.
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