Natural Implosion
Continuing to roil in
volatile trade, natural gas imploded in response to a higher-than-expected
weekly storage report from the American Gas Association. The AGA said that 97
billion cubic feet were injected into storage, sparking a sharp sell-off in the
minutes immediately following the release of the report. Gas for August
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at 4.031 and set up to continue falling (see chart). Back-month gas also
declined by over 4%.
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Better-than-expected earnings from Yahoo! and the buyout of Paine Webber by
Europe’s second largest bank put Wall Street in a buying move. Stock index
futures surged, led by Internets, financials, semiconductors and biotechs.
September
NASDAQ 100 futures
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climbed 11.00 to 1505.70 and
Dow futures
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The dollar rallied to a 10-day high, up 1.02 to 107.82,
as the yen, euro and Swiss franc slumped on buyout and bankruptcy news. The
Swiss franc
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buying out Paine Webber for $10 billion, losing .0086 to .6092. The euro FX
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highly correlated with the franc, followed suit, falling .01010 to .94580.
Gold
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281.4 after the UK gold auction was bid below the spot price and
under-subscribed. Â
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In a sign that the Japanese economy remains in trouble, retail giant Sogo filed
for “court-rehabilitation.” The yen traded sharply lower on the news.
Economic failures of major business entities give the Bank of Japan (BOJ) less
leeway to increase interest rates. Low interest rates have been part of a
year-long BOJ policy aimed at reviving a lagging Japanese economy. Lower
interest rates make holding yen-denominated assets less desirable than higher
interest-bearing assets in other countries. The current rate differential
between the US and Japan is over 6%. The September yen
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.0113 to .9341.
From the
Implosion-5 List,
grains plunged to new lows with wheat sinking as many as 10 cents. But a late
rally in soybeans dragged the grain complex higher, leaving reversal tails in corn and
wheat. December wheat
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soybeans
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The perception of ample animals available for slaughter crushed pork contracts
for a second day. August lean hogs
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a second day taking their lead from a limit-down opening in August pork bellies
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The weekly cold storage report from the CME showed an unusual and unexpected net
in-flow of meat into approved warehouses. For August, hogs closed at 65.750 and
bellies closed at 84.900. Lean hogs are also set up to violate critical support
levels as shown in the chart below.
September sugar
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List, rallying .34 to 9.17, or 3.8%.