Futures Point To A Stronger Open
INTEREST
RATES
OVERNIGHT
CHANGE to
4:15 AM
BONDS
-2 — Coming in this morning, the bonds appear poised to breakout to the
upside as the skeptics on the recovery garnered a foothold in the
dialogue from the Fed and because there continues to be evidence of
trouble in US manufacturing. Furthermore, with the stock market not
sending off a distinctly positive tone, the bond bulls simply maintain a
slight advantage. We also have to think that the scud missile situation
and the move to authorize the use “all military means” to
defend the
US
, are situations that
take away from holiday euphoria.
STOCK
INDICES
OVERNIGHT
CHANGE to
4:15
AM
S&P -30,
NIKKEI -18,
FTSE -50 — A number of minor negatives have left
the “bear camp” generally in charge of daily price action.
From the domestic front, even regional Fed dialogue is dampening
interest in the stock market, as the Minneapolis Fed called for a
jobless recovery into 2003. Also undermining buyers is ongoing evidence
that the
US
manufacturing sector is soft and that the service sector is still
carrying the economy.
FOREIGN
EXCHANGE
DOLLAR:
A gap down trade overnight undermines sentiment and leaves the Dollar in
a downward posture. It should also be noted that short term technicals
remain in sell modes. The US Fed didn’t do the Dollar any favors with
its dialogue this week and US numbers this morning don’t look to support
the Dollar either. In fact, as we suggested at the beginning of the
week, the Dollar appears to be headed down to the November lows. At this
point we don’t see the Dollar falling below the November lows, unless
the recovery is questioned. Maybe the Dollar will see a surprise bounce
if
US
retail sales come in above .4% but in all likelihood the Dollar won’t
sustain recovery attempts.
EURO:
A new high for the move overnight projects more gains in the Euro, even
in the face of weak EU car registration readings and very unimpressive
GDP forecasts. In many respects, the Euro is gaining because of a
disdain for the
US
recovery and not because of favorable expectations for the European
economy. Initial resistance is seen at 101.53 but a new high run seems
to be in the cards.
YEN:
Talk of increased budget spending gives the Yen a little lift and we
have to think that weakness in the Dollar is also contributing to the
Yen rally. However, the Yen would appear to have heavy overhead
resistance up around 82.00 and too many problems to think that traders
will continue to bid up the currency beyond that level.
SWISS:
We didn’t think the Swiss would gather as much long interest the Euro,
as the current international situation isn’t that anxious. Therefore,
more hard fought gains are expected but solid resistance should be
respected at 68.85.
POUND:
Even with sloppy numbers reported from the CBI on the
UK
economy, the Pound has managed to forge a new high for the move.
Industrial output, order books and export orders all declined in the
October readings from the CBI but the trade is evidently more negative
on the
US
economy, than they are on the
UK
economy. Therefore, more hard fought gains will be seen in the Pound,
with solid resistance anticipated up around 158.22.
CANADIAN:
A new high for the move, suggests that the Canadian is capable of
shaking off the corrective tilt and forging higher. Initial resistance
remains at 64.39 but apparently the Canadian is in favor, at the same
time that the
US
economy is being questioned! In other words, the pattern of fundamental
reactions in the Canadian has finally changed and that could mean the
end to the long term down trend in the currency. +
METALS
OVERNIGHT
CHANGE to
4:15
AM
GLD +1.30,
SLV +2.0, PLAT +3.60;
London
Gold Fix $326.15, +$2.40; LME Copper Warehouse stks
862,850 tons, -1,600 tns;
Comex
Gold stocks 2.03 ml, +1,544 oz; COMEX Silver stocks 106.4 ml oz, -1,033 oz;
OVERNIGHT: Weak price action initially but the market appears to be
firming
GOLD:
The buzz from the action Wednesday, was that
traders were interested in long gold because of the potential
international flap over the scud missiles bound for
Yemen
and because the
US
moved to authorize the use of an “all force measure”, which in
reality makes it easier for the
US
to use nuclear weapons. The trade also has to be concerned about
Venezuela
,
where another government change might be in the offing. Therefore,
flight to quality reasoning appears to be behind the recent strength and
the recovery bounce off the December 10th low.
SILVER:
In our view, silver is under-performing compared to gold. With gold
about to reach 7 month highs, silver is only closing in on 4 month highs
and is still a full 54 cents off its 8 month highs. As we have said
before, the silver market is suspect if it rallies singularly off the
flight to quality theme.
PLATINUM:
Trend line support in the platinum comes in today at 587.6 but the net
impact off the macro economic case appears conflicted. In the end the
trend remains up in the platinum especially when one considers the
diversified nature of the fundamentals driving platinum. Platinum has an
ongoing tight supply situation as slowly growing demand. Adding to the
bull case in platinum is totally new and growing Asian jewelry demand
(coming mostly from inside
China
).
COPPER:
Short term technical indicators in the copper remain in a sell mode and
we are not picking up enough investor optimism from the stock market, to
think that copper is due to get strong support from the equities market.
The Chinese copper market was a little higher overnight and that should
help the US session respect recent consolidation support around 73.65 in
the March contract. The London market noted extremely quiet action,
which suggests that US copper might maintain prices between 74.65 and
73.65 for at least another session.
CRUDE
COMPLEX
OVERNIGHT
CHG to 4:15 AM:
CRUDE +13, HEAT +35,
UNGA +31 — The DOE confirmed almost as big of a build in US
gasoline stocks as the API and that continued to keep the Venezuelan
threat at a low idle. Also tempering bullish sentiment, were suggestions
from leading OPEC members, that OPEC output targets should be raised by
1 to 1.5 million barrels per day.
NATURAL
GAS
With
prices soaring to the highest level in 1 1/2 years, it is possible that
more stop loss selling is encountered ahead. The recent cold weather
forecast is apparently being joined by predictions that the coming
winter might be colder than normal, or at least much colder than the
last two year’s winters.