New York’s Re-Opening

September 14, 2001
Marc Dupee

New York Board of Trade

The New York Board of Trade will open
from 7:30 to 5:30 at its back up facility in Long Island. The agricultural
contracts will open "serially," beginning with

Cocoa 7:30 AM 9:00
AM

Coffee      9:30 AM     11:00
AM

Sugar       11:30 AM    1:00
PM

Cotton      1:30 PM     3:00
PM (or 10 AM to 3 PM, the NYBOT information is ambiguous)

FCOJ        3:30
PM     5:00 PM (or 10 AM to 3 PM, the NYBOT
information is ambiguous)

NYFE & CRB 9:30 AM 4:15 PM

Under his emergency powers, NYBOT President & CEO Mark Fichtel declared
this Sunday that any open orders as of September 11 in all products at NYBOT
have been cancelled. All orders must be re-submitted.

New York Mercantile Exchange

The situation at the The New York Mercantile Exchange appears more difficult,
although the exchange is scheduled to open. Access to the exchange at One
North End Ave., at the WTC complex, will be by ferry boat only from the ferry
dock. Access to the exchange on the ferries is limited to traders and employees
who must show Exchange Identification and a second form of ID.

The Exchange will be open for open outcry trading from 11 AM to 2 PM on
Monday, September 17, 2001.

Also of note, the NYMEX held an all electronic (Access) abbreviated trading
session Friday, September 14, 2001, in an attempt at price discovery. Here are
the settlement prices from Friday afternoon.

Friday’s Access Close
Tuesday’s Close

December gold
(
GCZ1 |
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PowerRating)
292.30
280.0

December copper
(
HGZ1 |
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News |
PowerRating)
66.30
66.15

December silver
(
SIZ1 |
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Chart |
News |
PowerRating)
433.0
422.5

October crude oil
(
CLV1 |
Quote |
Chart |
News |
PowerRating)
29.53
27.63

October

heating oil
(
HOV1 |
Quote |
Chart |
News |
PowerRating)
.8327
.7961

October

unleaded gasoline
(
HUV1 |
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Chart |
News |
PowerRating)
.8586
.8187

October

natural gas
(
NGV1 |
Quote |
Chart |
News |
PowerRating)
2.552
2.392

Chicago Mercantile Exchange

Pit trading of stock index futures are scheduled to begin trading at 9:30
AM ET along with the start of equities in New York. Trading of the electronic
mini stock index futures will begin at 9:15 AM ET, which should give an indication of opening levels. Emini orders can be placed
beginning at 8:45 AM ET,

Some of the world’s most important futures exchanges
were housed in the World Trade Center complex. People are still trying to deal with
the situation, but here is the status as of 5:00 PM ET:

The New York Board of Trade plans to resume trading
using the exchange’s Long Island City disaster recovery facility. Mock
trading exercises were scheduled for Saturday, September 15, in an effort to
acclimate traders to the new trading facilities. Trading will commence
Monday morning at the Long Island alternate site. With the exception of
FINEX products, options expiration, notice days, last trading days and
delivery days for all New York
Board of Trade Exchange-related products with September expiration, deliveries have been extended two days (source: NYBOT website). Contracts
traded at the NYBOT include coffee, cocoa, sugar, orange juice, cotton,
currency cross-rates, the dollar index, the CBR/Bridge Commodity index, and
the NYSE Composite and Russell 1000 stock index futures. (Click
here to link to the NYBOT).

The New York Mercantile Exchange (Nymex), home to key
oil and gold futures markets, had no solid plan in place as to how, or if,
they would proceed on Monday. Although the electronic NYMEX Access system
was made operational between the hours of 4:00 and 6:00 PM ET, many of the
data vendors were unable to supply prices during this attempt at price
discovery. A spokesperson at the NYMEX said the exchange had “no
alternate facility,” but that the trading facility at the WTC complex
was “structurally sound, had water, and had been inspected by some key
engineering personnel.” The spokesperson also said the exchange was
arranging a “back-up generator,” but the recommencement of trading
would depend on “accessibility” in light of the rescue and
recovery mission and the “safety” of staff and traders.

As of Friday afternoon, the spokesperson said they
did could not answer whether pit trading would commence, but would likely
make an announcement by Sunday on their website at www.nybot.com.
Considering the exchange is located at ground zero, the reopening of the
exchange by Monday seems remote. Energies, including crude oil, heating oil,
unleaded gasoline, natural gas and metals such as gold, copper and silver
are traded at the Nymex.

The prospect of further disruptions to life or even
additional terrorists attacks have many pondering the case for likely
additional slowing in the US economy. The disruption to people’s lives
across the country is a factor whose economic costs have not been adequately
estimated and whose human toll is incalculable. Corporate profitability, and
thereby any rebound in US stocks, will surely be affected. Barring more
reassuring signs of the situation stabilizing, traders appear eager to flee
the uncertainty of the US economic scene by purchasing short-term government
debt and other “safe haven” assets.

Pit trading of stock index futures are scheduled to begin trading along with the scheduled 9:30 AM ET start of equities. However, trading of the electronic mini stock index futures will begin at 9:15 AM ET (orders can be placed beginning at 8:45 AM ET), which will give an indication of opening levels.

In economic news, retail sales inched up .3% in August, making their
biggest gain in four months. Of course, the data was collected prior to the
unprecedented devastation at the World Trade Center, Pentagon and in
Pennsylvania. With recent data showing a manufacturing recession and the
gross domestic product (GDP) figures last quarter showing a
near-recessionary reading (+.2%), the economy had already been struggling to
recover from its biggest slowdown in over eight years prior to the attack.

The recent tragedy will likely dampen consumer sentiment — and a
burgeoning number of unemployed individuals’ willingness to spend — in the
short-run. Consumer confidence is a key leading indicator of consumer
spending, activity that accounts for two-thirds of economic activity.

The short end of the yield curve rallied Friday, demonstrating the market
believes the disruption could be a short-term dislocation, but also that the
Fed will be aggressive in providing the liquidity to overcome the
crises.

At the beginning of September, the fed fund futures
(
FFZ1 |
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PowerRating)
was pricing in a 60% chance of a 25-basis-point cut to 3.25%. The perception
regarding likely Federal Reserve action has changed dramatically, and the
market is now fully pricing in a 75-basis-point cut as well as
a 50% chance of an additional 25 basis
points (100 basis points total) by Christmas, which would leave the
short-term rate at 2.50%. This would be below the rate of
inflation and, thereby, inflationary.

While T-bonds
(
USZ1 |
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Chart |
News |
PowerRating) would seem likely to suffer
because their longer-duration yields would suffer a greater erosion of
value over their 30-year life span during a period of higher inflation, the
contract rallied and closed at a contract high, up 12/32 at 106 4/32. Again,
safe-haven buying.

From the
New 10-Day Highs List, 10-year notes
(
TYZ1 |
Quote |
Chart |
News |
PowerRating) propelled to a
contract high and closed up 16/32 at 108 30/32.

Although Japan’s public debt is estimated to reach 130% of
GDP and government data continues to show signs that its economy is
deteriorating, the
Japanese yen
(
JYU1 |
Quote |
Chart |
News |
PowerRating) broke out to a six-month high. One of the
strongest things a market can do is continue to rally in the face of
negative news such as the yen has. The yen has rallied throughout the late
summer as Japanese corporations repatriate funds (selling dollars and buying
yen) to meet new requirements to “mark to market” or realize
losses on failed domestic investments.

Another element of the yen’s rally is the flight out of US assets in the
wake of Tuesday’s murderous tragedy, obviously, also a safe-haven buying
effect. At some point, the tremendous run-up in the yen may stabilize. One
thing to look at is shorting at the recent breakout — once the yen trades
back below the May 31 high (this would be a trade similar to a Turtle Soup
Plus One Sell pattern, but on a weekly scale). The yen rallied .0113
to .8543 Friday.

Grains at the Chicago Board of Trade (CBOT) slumped after Egypt bought
over 300,000 tonnes of French, rather than American, wheat. December wheat
(
WZ1 |
Quote |
Chart |
News |
PowerRating),
from the
New 10-Day Low List, lapped four cents lower, then consolidated in an
intraday descend triangle formation before breaking down to close at a
near-contract low, down 9 3/4 at 272 1/4.

Soybean meal
(
SMZ1 |
Quote |
Chart |
News |
PowerRating) remained relatively resilient in
the bean complex. Fresh outbreaks of hoof-and-mouth disease last week in the
United Kingdom and the first confirmed case of mad cow disease in Japan
recently could increase the demand for the protein available in soybean meal
as animal feed. Bean meal has held above the 159.20 pivot and the gap left
on June 29, an encouraging sign for the bulls.

New York’s Re-Opening

BUY THE FEAR, SELL THE GREED

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