Futures Point To Weaker Open
INTEREST
RATES
OVERNIGHT CHANGE to
4:15
AM
BONDS +4 —
A trade back below 112-22 in the December bonds could signal an even
bigger correction is ready to unfold. Considering that the Chairman of the
Fed testifies today, we have to think that bonds will see a little
pressure. However, with the prospect of war looming and another bin laden
story circulating we have to think that economic optimism will be hard to
come by today.
STOCK
INDICES
OVERNIGHT CHANGE to
4:15 AM
S&P -390,
NIKKEI -26, FTSE -38.3 — The market really isn’t paying too much attention to
the ebb and flow of corporate earnings. Luckily the market isn’t paying
too much attention to another string of recent corporate governance
issues. As in a number of other markets, the stock market is somewhat
frozen in place ahead of the
war decision.
FOREIGN
EXCHANGE
DOLLAR: There has been a
shift in sentiment toward the Dollar. Unfortunately, the shift in
sentiment comes because the competition is faltering and not because the
is producing evidence supporting recovery views. Because the trade is
beginning to talk about a double dip recession in the Euro zone and the
old deflation concerns are surfacing in
traders have to seriously question why they would want to keep pressing
the Dollar. The threat of war certainly plays a big part in the upcoming
equation and would seem to be more negative to the Dollar than to other
currencies. However, if the war threat is thrown off one might argue that
the Dollar is undervalued. In fact, if there is no war then the US Fed
might have cut rates more than they intended. We don’t see the Dollar
rising aggressively unless there is a clear capitulation by
but we do see the Dollar rising back above 106.00.
EURO: A very poor technical trade overnight in the Euro could prompt some
profit taking, especially after the trade digests the double dip recession
talk. In fact, all the same complaints seen in the
recovery effort are being lodged by the ECB.
uncertainties, waning consumer power, rising government deficits all seem
very familiar to the issues that brought the Dollar down! Even a US Fed
member suggested he would like to see stronger growth from the Euro zone.
Unless a war decision saves the Euro, we suspect that it will slide back
to parity and maybe further if the ECB continues to drag its feet on
cutting rates. If the ECB waits to cut rates, the December Euro probably
goes off the board below 99.00.
YEN: Some in the Press tried to suggest that having a GDP increase of
+0.7% versus expectations of a +0.6% increase was a real positive showing
by the Japanese economy. However, in looking at the high level of the Yen
and the downwardly revised September industrial shipments readings (-1.8%)
it is clear that
is not out of the doghouse. With the GDP deflator worsening, we have to
think that the Yen is primed to slide back below 83.00.
POUND: Regardless of the troubles seen in the Euro zone, it would seem
that the Pound might be able to retain most of its favor. However, the
recent terrorist threats are a little undertow. In the near term, the
Pound should win by default but might have to encounter a minor technical
profit taking swing down to 157.76.
CANADIAN: Failure below 63.38 suggests
a full capitulation in the Canadian to 63.00 and possibly even 62.79.
METALS
OVERNIGHT CHANGE to 4:15
AM: GLD -0.90,
SLV -1.0, PLAT +5.30;
London Gold Fix $323.20, +1.30;
LME Copper
Warehouse
stks
867,925 tons, +350 tons; Comex Gold stocks 2.00
ml, +5,111 oz; COMEX Silver stocks 107.1 ml oz,
Unchanged; OVERNIGHT: A little profit taking in
but most traders remain bullish
GOLD: While gold failed to hold all the gains posted Tuesday, they held
enough to get a little respect from the shorts. Several minor stories
continue to drift in and out of the gold market’s focus, which means that
the bull camp has a diversified structure. Perhaps the most prevalent
focus is the threat of economic problems, as the
recovery remains in doubt and both the Euro zone and the
seem to be joining the uncertain ranks along with the
SILVER: Like the gold market, silver might be a little overextended and in
need of continued war talk just to propagate
the upside swings. However, silver should really be able to transition
into a demand driven market easier than gold, but that will take true
confidence in recovery or a strong equity market. The bottom of the
uptrend channel in the March silver comes in today at 456.2 with the top
of the uptrend channel coming in at 469.7.
PLATINUM: A gap up move overnight would seem to suggest that platinum is
done with the liquidation wave seen this week. A story out overnight
indicating record 2002 demand for platinum in
prompted the rally, as the market knows that platinum supply remains
crimped. Therefore, the trade is left scrambling to secure supply rather
than paying up at much higher prices. Top of the consolidation in the
January platinum contract comes in at $589 today, and with a better stock
market $590 is possible.
COPPER: The Asian trade posted impressive platinum consumption numbers,
and that goes along with the strong copper demand already documented in
the region. While there wasn’t another big exchange stock increase like
was seen Tuesday morning, the negative tilt toward US copper prices seems
to remain in place. With the Chinese market lower overnight and LME prices
mixed but lower, we see a little retrenchment in the
market.
CRUDE
COMPLEX
OVERNIGHT CHG to
4:15 AM
CRUDE +29,
HEAT +52, UNGA +41
— The energy
complex was pretty much locked in place by indecision on Tuesday. The
Iraqi ruling Council as expected, voted to
reject the UN resolution, while the son of Saddam lobbied for the Council
to accept the resolution.
NATURAL GAS
The
natural gas market initially fell sharply Tuesday but managed to recover
into the close and into the night session. The January contract continued
to forge a consolidation pattern bound by $4.06 to $3.92 and with some
slight below normal temps in the last 24 hours, some support was seen from
trade and local interests.