Early Red…
INTEREST RATES
OVERNIGHT CHANGE to 4:15 AM: BONDS -2 — The stock market is slightly weaker this
morning and the dollar is down, which would seem to suggest that sentiment
isn’t quite as favorable to the US economic recovery as it was yesterday
morning. Therefore, the fact that US bonds failed to find support off the soft
factory orders report Monday highlights the lack
of interest on the part of the bull camp. Certainly, the strong equity market
gains Monday managed to undermine bond sentiment.
STOCK INDICES
OVERNIGHT CHANGE to
4:15 AM
+200, NIKKEI +251,
FTSE -46 — The Nikkei was simply playing catch-up to the
action Monday with the gains overnight. However, the European equity markets
were lower early this morning and that suggests a weaker
market into the opening. The stock market might be more capable of reacting to
the election than the bond market, as the trade continues to see press
reports that a GOP victory is preferred.
FOREIGN
EXCHANGE
EURO:
The euro zone posted a minor increase in its October services PMI reading and
it doesn’t take much of a gain to stand out against other G7 readings.
Typically, the magnitude of the PMI gain would be discounted, but because the
US and
are showing contractionary readings, the euro is
relatively better off. We suspect that the euro zone is headed toward the July
high of 101.29. However, later in the week when the ECB meets, the tide could
turn aggressively. Traders might consider buying a soon-to-expire November
Euro 99.50 put for 39 ticks and holding until expiration.
YEN: A
survey among major Japanese corporations suggests that the Japanese economy
is much worse off than the
economy and that the yen is probably overvalued against the dollar. The
corporate survey also showed significant skepticism toward the recent anti-deflation plan floated by the Japanese government. In other words, Japanese
traders are probably not interested in bidding up the yen, even with the
dollar pretty weak. Therefore, if the dollar begins to recover, that could
cause the yen to fall sharper than many would expect. Buy a December 82 Yen
put for 90 today.
SWISS:
The Swiss rejected the weakness yesterday, with authority and appears to be
headed toward the July high of 69.85. In other words, the Swiss is assuming
the worst for the
over the next 48 hours.
POUND:
While the
October services PMI rose by a very slight amount, the September industrial
output declined by -0.3%, in what appears to be a set of countervailing
reports. However, the Pound continues to get a lift because of the Dollar
travails. Pound resistance is seen up at 156.36, with an upward bias today and
a downward bias on Wednesday.
CANADIAN: The Canadian has recently ignored negatives spinning out of the
but volatility in the coming two sessions might be too much for the Canadian.
On the other hand, if the Canadian weaves its way through the coming two days,
without falling back below 83.80, that will clearly confirm the up trend.
Fresh longs have to at least wait for a correction to 83.95 in the Dec. +
METALS
OVERNIGHT CHANGE to
4:15 AM
+1.00, SLV
+2.8, PLAT +1.30;
Gold Fix $318.90, +1.70; LME Copper Warehouse stks
860,375 tons, -950 tons; Comex Gold stocks 1.99,
Unchanged; COMEX Silver stocks 107.1 ml oz, -250,462 oz; OVERNIGHT: Gold was
supposedly supported by US &
war preparation rumors.
GOLD:
Aussie trades were interested in gold overnight because of talk that the
was calling up reservists and that story comes on top of indications Monday
afternoon that the
was also calling up some forces. Therefore, the gold market seems to be
thinking that the upcoming UN resolution is basically a farce that both
and the
are discounting as superfluous. The international gold trade also supposedly
took support overnight, from the idea that the
is poised to cut interest rates.
SILVER:
Even the silver market appears to be maintaining the recent uptrend pattern
off the October low, but we have to think that gold will remain a critical
component of the rise in silver prices. Another moderate decline in
Comex silver stocks overnight countervails the
temporary pattern of increases seen last week and could provide a little fresh
fundamental interest in the long side of silver today. Evidently, the minor
liquidative tilt in silver from the high
Monday, was enough to technically balance silver
and allow it to continue its track higher.
PLATINUM: Given the weakness in the Dollar and the potential negative pressure
for
stock prices today we have to think that the Platinum will remain under light
to moderate selling pressure. The platinum has to come through the next 36
hours thinking that the US economy will be able to recovery or platinum might
fall toward the bottom of the September
consolidation bound by $570 and $550.
COPPER:
The copper market is certainly short term overbought technically but it would
not seem like the Chinese or the European interests are afraid to pay up for
copper at recently inflated prices. This morning Chinese copper was down
slightly, possibly because of the slight weakness
anticipated for the
equity market. Trend line support comes in today at 71.25, but we have to
think that copper maintains some capacity to
consolidate gains around 72.50 basis the December contract.
CRUDE COMPLEX
OVERNIGHT CHG to
4:15 AM
+2, UNGA +12 — The complex closed
weak Monday continuing the pattern generally seen over the last couple of
weeks. A warm up of US temps might take some of the near term heating demand
down and that could add to the weakness of the complex.
NATURAL GAS
The
January natural gas is holding just above a critical failure point on the
charts and is probably going to see more long liquidation. The coming weekend
is expected to bring much warmer weather to the
but that has already been factored in each of the last three sessions.