Futures Point To A Weaker Open
OVERNIGHT
CHANGE to
4:15 AM
:GLD-4.60
,SLV+1.7Â ,PLAT-4.40 Â London
Gold Fix $372.50 -$12.50 LME Copper Warehouse sts
851,550 ton -2,750 tns Comex
Gold stocks 2.147 ml Unchanged COMEX Silver stks
107.4 ml oz -609,513 oz OVERNIGHT: Another volatile session in
Asia
with
sellers dominating the action
GOLD:Â
Already the gold market has seen a $21 correction from the high Wednesday
and we are not exactly sure why the war longs are stepping back from the market.
Certainly the market sees the
US
intentions but with the Press ripping apart the
US
case, it
is clear that
France
and
Germany
will not
alter their positions. Unless the market sees the continued opposition to the
US
attack,
as a force that will delay action, it would seem that war is still a high
probability.
SILVER:
The silver market has corrected 20 cents from the high Wednesday and that has to
have damaged some bull sentiment. Considering the extensive overbought status in
silver and the continued concerns toward the macro economic condition, we fear
that silver could see more weakness. Like gold we would not carry uncovered long
futures positions.
PLATINUM:
The platinum also fell sharply overnight as its track with gold, as a flight to
quality instrument now haunts the market. There is a gap to be filled down at
$660 but we would be surprised to see the market fall all the way to $647.
Short-term technicals are also in a sell mode.
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COPPER:
The copper market should remain under pressure as German factory orders readings
fell massively and the world is now fearful of a sustained war with
Iraq
. The
copper is also partially concerned that a war decision might be delayed and that
hangs on the global economy. With
Iraq
supposedly wiring its oil fields to explode in the event of an attack, we could
see the macro economic case weigh significantly on copper prices.
CRUDE
COMPLEX
OVERNIGHT
CHG to  4:15 AM Â
:CRUDE -1Â Â ,HEAT+55Â
,UNGA-35 Â The API and DOE reports continue to support the bull case
as product stocks dropped sharply and the US refinery-operating rate also fell
significantly. Â It would certainly appear that US refiners are backing away
from production possibly because of potential price volatility and possibly
because of seasonal timing.
NATURAL
GAS
The
weekend cold isn’t that extreme, but with the regular energy complex poised for
more gains, we have to think that natural gas market will be pulled along to the
upside. The weekly inventory report is expected to show a 190 to 205 bcf
draw and we suspect that the annual deficit could rise toward 1000 bcf.
INTEREST
RATES
OVERNIGHT
CHANGE to Â
4:15 AM
:BONDS
+4 We would think that the bonds will find support in the developments of the
last 24 hours, as the outlook for the global economy seems to have worsened. In
fact, overnight German factory orders declined massively, creating a recession
concern. Furthermore, with
Iraq
supposedly wiring its
oilfields to explode in the event of an attack, the situation in
Iraq
might have shifted from a
February and early March end, to an undeterminable end.
STOCK
INDICES
OVERNIGHT
CHANGE to
4:15 AM
:S&P-30
DOW -3 NIKKEI -65 FTSE -45Â It is hard to find a reason not to sell this
market. Not only did the
US
testimony to the UN ignite a maelstrom of debate throughout the world, it also
appears to have sparked political dissention in the
US
. In
addition to the political anxiety, we also take note of stories out of
Turkey
suggesting that
Iraq
has
wired its oil wells to explode in the event of an attack and that might have
been the strongest deterrent move possible by the Iraqi regime.
FOREIGN
EXCHANGE
DOLLAR:
We are actually surprised that the Dollar isn’t under aggressive attack this
morning, considering that the UN testimony appears to have reduced
US
credibility instead of
improved it. It would seem that the
US
is going to have to go it
alone in
Iraq
and that move now looks to
come at great political and economic cost. With the Iraqis poised to destroy
their oil fields and
US
oil supplies at the lowest
level since 1975, we could easily see an oil crisis, a recession, or
deflationary spiral settle in over the
US
economy. In fact, we have to
think that the political situation has already delayed the US intention to
attack and if the political events haven’t caused the US pause then the stories
out of Turkey that the Iraqi wells are wired, will cause a delay. About the only
thing supporting the Dollar this morning, is the fact that German factory orders
were so weak that there is significant economic concern lodged toward the Euro
zone. Considering the outlook for the
US
stock market and the recent
rise off the low, the Dollar is an outright sell at current levels. Either the
US
backs down or the world will
continue to dump the Dollar.Â
EURO: The
Euro has the advantage of no competition and really no alternative flight to
quality instruments. In fact, even the gold market has failed, leaving flight to
quality players with the Euro. However, the biggest decline in German factory
orders since 1995 seems to limit the Euro on the upside. Therefore, we have to
think that the March Euro could manage a climb to 108.37 in the near term.
YEN: We
suppose that the coming weakness in the Dollar will lift the Yen. Seeing the
March Dollar fall below 99.41 could result in the Yen rising to 83.74.
SWISS:
The recent correction in the Swiss, should leave the
currency in a good technical position to resume its recent upward track.
Certainly the political uncertainty generated Wednesday, is a beneficial
development for the Swiss. Buy the March Swiss at 73.68.
POUND:
The BOE surprised the trade with a rate cut and that seemed to alter what was
beginning to be a pretty negative view toward the global economy. Some suggest
that the rate cut comes because the
UK
is preparing to attack and
that makes us concerned about buying the Pound at current levels. For most of
the last three months the Pound hasn’t been lumped into the same category as the
Dollar but that time might now be past.
CANADIAN:
Too many negatives on the plate and the Canadian economy is
too close to the
US
economy, which is becoming a
leper in the worldview. Near term corrective potential in the March C$ is now
65.00. +
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