Futures Point To A Flat Opening
INTEREST RATES
OVERNIGHT
CHANGE to
AM
— With world equity markets a little higher in the early going today, the bonds
have started the session out with a negative tilt. The US House passed a
spending bill Thursday for $397 billion and that combined with the UN testimony
might have some bond longs seeking to bank some profits. The bond market seems
to have an affinity for the 113-00 level in the March contract, or it is just
not able to muster additional long interest, because of one of the following:
run away spending fears, the sagging Dollar, or ideas that the US will charge
ahead with the war and in a sense remove some of the geopolitical headwinds.
STOCK INDICES
OVERNIGHT
CHANGE to
4:15 AM
S&P +190, DOW
+14, NIKKEI +102,
FTSE +17 — The market is oversold but remains vulnerable. Yesterday
we sensed the potential for a technical bounce, but with Press coverage spinning
from one potential terrorist threat to another, it was clear that few investors
were in a mood to pick up values. Certainly, the Dell earnings are giving the
market a better tone overnight but once the news machine returns to normal
operating speed this morning, we assume that more sellers will surface.
FOREIGN EXCHANGE
DOLLAR: We are actually surprised that the market isn’t attacking the
Dollar again this morning but since the beating Thursday was so severe, maybe
the market got ahead of itself. There is a chance that the
could garner some additional allies in the UN action today, but as it stands the
has made it clear it will go it alone and the rest of the world wants to avoid
the obligation, expense and potential political backlash of supporting the
against
Overnight the Nikkei forged yet another gain and that highlights the
as a flight to quality location. In other words, money still wants to be away
from the
and that should keep the Dollar in a downtrend. Near term downside targeting is
pegged at 99.15, while a rally to 100.30 should be sold.
numbers today will be positive but not strong enough to countervail the trend in
the Dollar.
EURO: Because the flight to quality flow was
dispersed away from the Euro this week (back into gold, the Yen and Swiss) the
Euro doesn’t look to get as much upside action off coming Dollar losses. In
other words, slack euro zone economic conditions and fears of an oil price
induced recession in
mean that buyers are second guessing long plays in the Euro. We suspect that the
path of least resistance to be up but that gains will not be as big as past
gains. A failure below 107.20 could undermine and expose the Euro as a
dramatically overvalued currency that is vulnerable.
YEN: The Nikkei finishes an impressive week
of gains, while the rest of the world is faltering and that means that the Yen
has an upward bias. In other words, the BOJ has a job ahead in keeping the Yen
from making an upside bid. Near term upside targeting is seen at 83.30.
SWISS: The Swiss remains a pure flight to
quality play and should continue to mirror movement in the gold and energy
complex. However, the Swiss is extensively overbought if the high anxiety
environment somehow manages to calm down. Make the March Swiss hold above 73.16.
POUND: The Pound would make a key failure on
the charts with a trade below 161.04 and we think that sentiment is turning
enough that a failure might be ahead in the Pound. In fact, the
could be considered as big of a terror target as the
they are also going to fight
in an unpopular war and their economy is softening more than the
A return to the late December and early January consolidation lows around 158.90
is possible.
CANADIAN: The Canadian is poised to breakout
to the upside, as it might be considered another country that will benefit by
staying out of the crosshairs of terrorism and by maintaining spectator status
in the Iraqi situation. Like the Yen, the Canadian is seen as an investment zone
outside of the anxiety spotlight.
METALS
GOLD: The gold market returned to bull
market status Thursday but it took an extremely visible focus of the
military deployment and rumors that the UN inspectors will slam
with more violations, to rekindle the rally. The Dollar was smashed lower
Thursday and that should provide some additional support today for gold in the
action today. However, if anything has been learned over the last week, it is
that the gold market needs war in order to rally.
SILVER: We suspect that the $4.50 level will
be the near term low, with the May contract possibly trading in a $4.50 to $4.70
trading range. However, if gold provides the leadership, silver could easily
attempt a return to the $4.80 to $4.90 trading range next week. Like gold,
silver also saw its open interest liquidate and that should leave the market in
a better technical position to rally, if the circumstances are right.
PLATINUM: Once again the platinum showed
almost no impact off the threat of war, deflation or a potential decline in
jewelry demand that would result of a return to global recession However,
platinum continues to see the war as a benefit. It is also possible that more
traders are onto the solid performance in platinum and like its risk and reward
pattern, more than either gold or silver. While platinum prices are expensive at
$676, open interest hasn’t inflated on the rally and therefore the market might
not be as overbought as gold and silver.
COPPER: The copper was punished by the fear
that both the US and the European economies stand a chance of falling back into
recession, because of the coming war with Iraq. With soaring energy prices
making the consequences of war higher by the day, we suspect that copper will
fall to the lower support level of 74.00 cents sometime soon.
copper stocks showed an increase of 1,684 tons after a two-week holiday
interruption, but that is only a minor negative to prices.
CRUDE COMPLEX
OVERNIGHT
CHG to 4:15 AM: CRUDE +16,
HEAT +52, UNGA
+41 — During the session Thursday, crude oil and heating oil prices were firm,
but gasoline prices seemed to soften, possibly because the AAA was hinting at
price gouging by some players. Opposition to the war reached a new level, with
six Congressmen actually filing a lawsuit to stop the President from waging war
against
As for the timing of war, Congressmen that are talking, seem to suggest that war
is inevitable within the next two weeks.
NATURAL GAS
The
weekly inventory reading showed a draw of 150 bcf, and that is almost in the
middle of the expected range. Cold and wet weather in the
today, might deflect concerns that warmer weather is expected next week, but the
trade is well aware of the coming seasonal warmup.