Futures Point To Lower Open
INTEREST RATES
OVERNIGHT
CHANGE to 4:15 AM: BONDS +5 — It would seem
that the housing starts and permits readings were basically discounted yesterday
as unimportant, as the bonds managed to forge a new high for the move, following
the much stronger than expected readings. The bulls argue that while housing
might have been strong in December, weakening consumer trends and ongoing
concerns over the economy will keep bonds firm. As we suggested yesterday the
bonds will continue to climb but might not make impressive gains.
STOCK INDICES
OVERNIGHT
CHANGE toÂ
AM
S&P
+0, NIKKEI -97,
FTSE -30 –Â The net shake of the earnings reports hitting the market
is that performance is generally meeting expectations. However, forward guidance
projections for 2003 are simply not favorable enough to keep investors
interested in the long side. With the ever present threat of war and very
restricted attitudes toward the future, the risk of being long is greater then
anticipated reward.
FOREIGN EXCHANGE
EURO: Moderately weak
equity market action coming into the opening today should make the Euro look
much better than it did Tuesday. If the Euro were overbought or vulnerable the
strong
housing stats yesterday would have caused more of a sustained correction.
Therefore, the up trend in the Euro remains firmly entrenched with the next
upside target coming in at 107.25. Euro zone CPI readings came in muted at +0.2%
but that is enough of a gain to suggest that the Euro zone has a much lower
deflation risk than the US and that also supports the bull attitude toward the
Euro.
YEN: The Yen is lacking in a clear trend
today, but we suspect that support will be respected at 84.60. With a Japanese
Business Activity Index, expected to come in slightly higher, we see no reason
why recent buyers will be chased away from the Yen. However, the Yen has been a
little overbought and might need to re-test the 84.60 level before resuming the
upside.
SWISS: The failure to make a new high for
the move this morning, is partially disconcerting for
Swiss bulls. However, we have to err with the trend and look to be a buyer on a
correction to 73.13. With war talk coming from a number of fronts and the
stock market not seeing support from the latest earnings reports, we have to
think that the flight to quality tilt will continue to support the Swiss.
POUND: The minutes of the last MPC meeting
showed that 2 votes for a rate cut were made and that merely highlights some of
the growing concern toward the
economy. Since the January Industrial output numbers improved slightly from
December, the Pound is supported but we might add that the reading was still in
a contractionary position. Furthermore, January
Capacity Utilization came in at the lowest level in 19 years! Eventually the BOE
might have to cut rates and that leaves the Pound as a lagging currency in the
rally against the Dollar.
CANADIAN: Apparently sagging macro economic
sentiment toward the
economy isn’t going to unseat the bull trend in the Canadian. In fact, if the
Dollar could keep its declines in an orderly pattern, the Canadian might manage
to forge more new highs for the move. Support is pegged at 64.94. +
METALS
OVERNIGHT CHANGE to 4:15 AM:
GLD +2.20, SLV
+3.5, PLAT +10.50;
London Gold Fix $359.25, +$3.70; LME
Copper Warehouse
stks
851,975 ton, -50 tons; Comex
Gold stocks 2.04 ml, +1,317 ounces; COMEX
Silver stks 107.3 ml oz, Unchanged;
OVERNIGHT: Renewed strength with a firm London fix & notable Asian long
interes
GOLD: The fact that the Asian trade showed
renewed interest in the long side of gold, combines
with talk that the war will take place in the second half of February.
Certainly, Russian military reports that projected a war to start in the second
half of February, sparked the buying but we have to think that the
Presidents comments yesterday, were the real catalyst behind the rise in gold
prices this week. Following a weak early trade yesterday, the gold market
certainly managed to recover around the Presidents comments.
SILVER: Trend line support comes in at $476
today in the March contract and with the renewed strength in the
gold, we would expect silver to get a slightly less
impressive lift than might be seen in gold. Near term upside targeting is seen
at $4.89. However, we are a little concerned that slack macro economic concerns
will hinder the silver in any coming rally.
PLATINUM: A strong upside breakout
documented on the charts would seem to suggest that platinum is going to get
more than its normal share of flight to quality buying. We get the sense that
excessive volatility in the base metals and ultra-sensitive action in gold plays
right into the bull camp in platinum. In fact, a German bank projected higher
platinum prices for 2003 suggesting that demand will continue to grow and that
supply from
will continue to restricted and insufficient. In fact, the German bank predicted
that platinum could rise by slightly less than 10%. Near term targeting is
$645.Â
COPPER: After seeing such an impressive gain
in US housing stats, the copper market was able to discount the continued
weakness in world equity markets. With ongoing labor problems and an earthquake
in
there is reason to fear restricted supply flow and that is holding up prices
just under the recent highs. The bullish impact of the Mexican strike is
partially offset by suggestion that a Chinese mine will attempt to expand
production by as much as 45%.
CRUDE COMPLEX
OVERNIGHT
CHG to
4:15 AM
CRUDE -35,
HEAT -84, UNGA -129 –Â Just when
it appeared that the energy complex would launch into a massive upside
extension, prices reversed off suggestions that Venezuelan strikers resolve
might be wavering. Supposedly, Oil tanker Captains decided to go back to work
and that hinted at a possible turn in the events in the Venezuelan conflict.
NATURAL GAS
Moderating weather caught the natural gas overbought and vulnerable but with
some in the trade already predicting the current cold blast, to be the last of
the year, the bears would seem to be going out on a limb. However, even with
expectations for a moderately large draw in natural gas inventories Thursday
morning, natural gas prices corrected sharply, as if the weather is the only
factor driving prices