Futures Point To A Slightly Weaker Open
INTEREST RATES
OVERNIGHT
CHANGE to 4:15 AM: BONDS -1 — On one hand,
the bond market would seem to be getting more than enough geopolitical issues to
keep consumer and investor sentiment off balance but on the other hand, the
consequences of soaring supply are beginning to surface. The 24 billion in
5-year supply floated yesterday was not well received and therefore the 18
billion of 10-year supply to be auctioned today, could swamp the market. We have
to think that the residual concern over the expense of war, the sagging Dollar
and a desire just to "get away from the
is also undermining interest in Treasuries.
STOCK INDICES
OVERNIGHT
CHANGE to 4:15 AM: S&P -270,
DOW -10, NIKKEI
+119, FTSE -35 — The most positive
development in the stock market Tuesday, was that the ability to avoid panic
type liquidation in the face of the "new tapes". We also have to think that the
stock market was a little disappointed by the dialogue offered by Greenspan, as
it wasn’t quite as optimistic as other Fed dialogue seen early in the week. More
importantly the stock market didn’t come away with the idea that the Fed
Chairman fully supports the Bush tax cut plan.
FOREIGN EXCHANGE
DOLLAR: After a massive overnight decline, the Dollar has apparently
bounded back and that could be a temporary development as the tension attached
to the terrorist threat seems to be gathering steam instead of abating. In fact,
it would seem that investors are moving capital to Japanese stocks instead of
newly floated US Treasury supply. We had been wondering when the international
community would reject unlimited
debt and now that US policies are conflicting with large cross section of global
money becoming even more interested in getting away from the
We would be surprised to see the US Dollar rise above the 100.64 level unless
there is some surprising diplomatic development, or a dramatic finding inside
Therefore, the rally off the low in the Dollar is a chance to get short.
EURO: While US bonds are being avoided,
European bonds are being bought in a flight to quality motion. However, with the
BOE surprised at weak European demand readings, some of the luster is coming off
the Euro. The international community might be turning its nose against the
overly aggressive political stance by
and
and investors might also realize that
has less security than the
and probably less ability to respond to biological, or chemical weapons attacks.
Seeing a trade below 107.04 could be damaging to the trend in the Euro.
YEN: While the Nikkei rose sharply
overnight, the macro economic readings from
were poor, as the annual 2002 tally was the worst ever. However, it appears
that Japanese money is repatriating back to
and that is artificially creating a better feeling than would otherwise be
present. A near term low was probably documented around 82.47.
SWISS: Considering the slack economic
readings from the Euro zone and the disdain for the
the Swiss should be in for some prime flight to quality buying interest. The
recent correction in the Swiss, should simply put it, in a better position to
rally. Trades should buy breaks to 73.11 using a stop below 72.87.
POUND: The BOE made some comments on the
recent rate cut and suggested that they have the money to pay for a war with
and that seemed to undermine the currency. With the recent weapons of mass
destruction discovered in the
the increased terrorist warnings toward the
have a chilling effect on the Pound. In fact, with the Pound close to technical
support it would appear that a roll over down is ahead. Near term targeting is
160.00.
CANADIAN: Apparently the Canadian has thrown
off the liquidating tilt for the near term and could be seen as an alternative
for money usually held in the
We suspect that money is fleeing US stocks and bonds and finding its way into
the Canadian. A rally to 65.67 would not be surprising in the near term.
METALS
OVERNIGHT CHANGE to
AM
GLD +0.90, SLV
+1.5, PLAT +11.00;
Gold Fix $363.15, +$1.00; LME Copper
Warehouse sts 834,975 ton, -3,400 tns; Comex
Gold stocks 2.156 ml, -64 oz; COMEX Silver
stks 107.5 ml oz, -5,961 oz; OVERNIGHT: Sporadic selling interest
seen in
despite Dollar weakness.
GOLD: This market continues to hover near
critical downside breakout points on the charts and it would seem that the
chance of war hasn’t improved but a concern for widespread deflation might be
ready to surface. We fear deflation because of the recent terrorist warnings.
Certainly the threat of war isn’t downgraded completely, but it continues to
suffer from a lack of imminent war expectations.
SILVER: While silver might have bounced off
the recent low, it remains in a vulnerable position. In fact, we see no reason
for silver to halt the correction until the 450 or 445 level is tested in the
May contract. While there has been some open interest liquidation in silver, it
still remains high enough at 96,903 contracts to present more liquidation
pressure on silver.
PLATINUM: Once again the action in platinum
displays that the fundamentals in platinum are good, as the delay in the war has
hardly put prices down at all. In fact, platinum looks to continue a good
balance of flight to quality and physical commodity market characteristics.
Solid support is seen around $663.8. We are a little concerned that the April
did fail to close the gap left down at $660.6 to $660.00. Be light buyers on a
correction to $677.
COPPER: While the Chinese paid up for some
purchases, we are not sure if they are big enough to prop up copper prices in
the face of sagging macro economic sentiment and rising terror anxieties. May
copper could easily fall to 76.80 support and not even forge a breakout on the
charts.
copper prices did manage to close higher but apparently some arbitrage selling
was done in
as an offset to the
buying.
CRUDE COMPLEX
OVERNIGHT
CHG to
AM
CRUDE +23, HEAT
+81, UNGA +86 — The energy complex got a
lift overnight when the IEA suggested that the previously posted OPEC production
cushion was probably smaller than the output of
In other words, in the event of war the world supply situation will rip into a
persistent deficit situation.
NATURAL GAS
The cold
in the East fueled the bull sentiment, which was helped along by Fed commentary!
We have to think that firm action in the regular complex gave the natural gas
incentive, as it appeared to start the session out weak and strengthen toward
the end of the session. Even the Fed suggested that energy prices were being
fueled by a much colder than normal winter.