Futures Indicate A Strong Open
January 23, 2003
INTEREST
RATES
OVERNIGHT CHANGE to 4:48 AM: BONDS -12
— We understand why the bonds managed
to peak out above the 112-00 level Wednesday, as the stock market fell below
some critical chart points and the overall confidence level in the US
recovery is failing. With the
looking more and more like it is prepared to go it alone against
the concern toward the
economy is heightening. We also have to think that the mass exodus of
capital away from the US Dollar is draining capital from the stock market
and possibly setting up US equities for a dive to the October lows.
STOCK INDICES
OVERNIGHT CHANGE to 4:48 AM: S&P +620,
NIKKEI +179, FTSE -9.3
— The earnings
flow is still not directly pressuring stock prices, but generalized negative
psychology is prompting consistent long liquidation. However, with higher
overnight action we are struck by the idea that the market might be
expressing hope that an action against
might be skirted. With
and
pressuring NATO to stop war plans against
there is certainly the chance that the
will find launching an attack a little more difficult from a political cost
standpoint.
FOREIGN
EXCHANGE
DOLLAR: The setup today
feels really negative for the Dollar. With the early overnight readings it
would appear that a major washout of the Dollar is ahead. If US earnings
reports, or the
leading indicators were to show significant weakness, we might see such a
decline that the ECB and the BOJ might be forced to support the Dollar.
Furthermore, the
is losing support from around the world in its bid to attack
and
are staunchly against the
desire to attack
and have moved to force NATO to put a pause in war movements. In other
words, the sentiment toward the
politically and economically is waning aggressively and that is already
manifesting itself in a significant decline in the Dollar. If the issues we
have mentioned are driving the Dollar down, there would seem to be little to
alter the landscape. Therefore, the Dollar looks set to break the 100 level
on the downside.
EURO:
The Euro zone sits with its insulated political condition and therefore is
set to see even more flight to quality inflow. Even with the EU suggesting
that the risks to their economy remain on the downside and suggesting that
growth remains subdued, the longs are not discouraged from chasing the Euro
sharply higher. Since the prior days upside target is fulfilled on the
opening today, the next objective becomes 108.40, with gains possibly
accelerating in the near term.
YEN:
With the Nikkei rising sharply overnight there would not seem to be a
negative connotation derived from the fears of the
economy sliding back into a recession. Even with a recent METI report
suggesting that Japanese economic activity is slackening, that did not
discourage traders from buying the Yen, when it dipped in the overnight
action. As long as the Yen manages to hold above 84.50, we suspect that the
bias will remain up.
SWISS: There is more than enough flight to quality issues around to support
the Swiss. In fact with the gold rising to new highs overnight and the
at odds with key European leaders, the Swiss is a logical investment for the
coming month! Next upside target in the Swiss comes in at 74.30.
POUND: Even though the
is supposedly seen as a staunch supporter of
policy, the Pound isn’t being held back by the military policy track. We
have to think that the
economy remains slightly better positioned than the
economy and that is why the Pound is managing to claw out new highs for the
move. The Pound just isn’t the place to be short the Dollar, as it will
continue to under perform the Swiss and the Euro.
CANADIAN: It is very surprising that the deterioration of conditions and
sentiment toward the
hasn’t undermined the Canadian and that clearly suggests a distinct change
for the currency. Evidently the currency is so strong that it can
countervail the old limitations. Near term targeting in the Canadian comes
in up around 65.67.
METALS
OVERNIGHT CHANGE to
4:48 AM
GLD +3.80, SLV +2.2,
PLAT +7.80;
Gold Fix $363.30, +$4.05; LME Copper Warehouse stks 852,250 ton, +275 tons;
Comex Gold stocks 2.04 ml, Unchanged;
COMEX Silver stks 108.3 ml oz, +904,656
oz; OVERNIGHT: More new highs in
with a 72 mth high and a series of buy orders
GOLD:
Despite the open conflict between
and the
(with respect to the timing of a war with
gold prices appear to be headed sharply higher again today. Even with NATO
supposedly standing down war plans with
because of pressure from
and
gold seems undaunted. We have to think that a weak Dollar and concern over
the
equity market is providing some renewed interest in gold.
SILVER: It is a little disappointing that silver isn’t following gold prices
more conclusively. However, silver also isn’t becoming as overbought as gold
and therefore silver might see the benefit of a "metals investment" binge
into the start of
military action. Trend line support comes in at $4.77, with the top of the
up trend channel coming in up at $5.04.
PLATINUM: Despite the apparent backing down by
and
the
would seem to be moving forward with
and that is evidently providing a direct lift to platinum. Platinum is
certainly being driven almost exclusively by flight to quality and is giving
very little consideration to the slack economy or the threat of deflationary
conditions.
COPPER: Unless the copper market has a crystal ball on the economy and the
potential for a solution to the
situation, we just can’t rationalize buying this commodity at current
levels. In fact, under a more intense failure in the US stock market, we
wouldn’t be surprised to see copper slide to 74.00. However, there is no
accounting for the impact of the Dollar falling out of bed, as that could be
making US futures attractive on arbitrage.
CRUDE COMPLEX
OVERNIGHT CHG to 4:49 AM: CRUDE +11,
HEAT -28, UNGA -6
— Evidently the
market at least respects the chance that Venezuela could see a slight
tempering of labor tensions or energy prices wouldn’t have reacted at all to
the reports that some Venezuelan tanker pilots were going back to work.
While the trade seriously doesn’t expect a quick end to the strike it would
seem that some longs are being discouraged from adding to existing longs.
NATURAL GAS
Prompt gas demand boosted prices as some utilities were caught short handed
by the colder than expected temps and the anticipation that temps would
continue to plunge into Thursday evening. While it would have appeared that
most of the current cold was factored into prices already, some delivery
problems caused regional shortages, which in turn sparked fresh spot utility
buying