Slight Positive Bias To Open
INTEREST RATES
OVERNIGHT
CHANGE to
4:15 AM
BONDS +5 — As we suggested in yesterday’s commentary, a big break to
109-29 was to be expected, as the euphoria from the equity market forced an all
out technical washout. The fact that the economic reports were interpreted as
bearish when they were bullish, highlights the panic liquidation effort.
However, we would have to think that bond prices will attempt to consolidate
around the 110-00, unless the heavy slate of corporate earnings comes in so
positive today, that stocks resume the climb in earnest.
STOCK INDICES
OVERNIGHT
CHANGE to
4:15 AM
S&P -540, NIKKEI +48, FTSE
-21 — The optimism spinning out of the equity market for the last four sessions
is thrown into question today, by Intel earnings and by the dismal forward
guidance being offered by Intel. Supposedly, the CEO from Intel suggested that
recovery in IT spending, is still not taking place and may not take place until
well into the coming year. However, one has to be careful assuming that Intel is
leading indicator for an overall economic recovery.
FOREIGN EXCHANGE
DOLLAR: We suspect that the Dollar is going to have a little more
trouble forging gains unless the
equity market and earnings surprise with a much better performance than is
expected today. There is a flurry of earnings reports due out today and after
the close today and that probably sets more of a tone than does the single
economic report scheduled today. Since the Dollar hardly rose back above the
middle of the consolidation pattern, the Dollar probably won’t slide if the
stock market softens. Thus far, the Forex markets are not buying into the idea
from the
stock market, that the
economy is poised to recover. However, because there is no clear cut indication
on the direction of economies outside the
the sideways currency action continues. The path of least resistance in the
Dollar is down with a trade down to the 107.07 pivot point possible in the
December Dollar.
EURO: With the Euro close to technical
support of 97.65, there is a good chance of a weak profit taking bounce.
However, with Euro zone inflation readings declining in the core component,
there might be a slight amount of support seen in the Euro. If the US stock
market falls back by more than 700 to 800 points in the S&P, that could end up
giving the Euro a late lift.
YEN: Favorable factory orders and Industrial
output figures from
and the strong reversal overnight in the Yen, suggest that the selling binge in
the Yen might have ended. Certainly, the Japanese economy is given a lift by the
expectation that things in the
are improving. The BOJ suggested that the recent decline in the Yen was sparked
by the sharp rise in stock prices and not by some new financial issue.
Therefore, we expect a follow through gain in addition to bounce overnight. Near
term targeting in the December Yen is 81.20.
SWISS: Still no return to economic anxiety,
even if the stock market is weaker this morning and that means the Swiss will
remain near chart support. A trade below 66.82 today could signal a resumption
of the downward probe. However, we suspect a minor bounce in the Swiss to run
out of gas around 67.16.
POUND: The trade takes the UK payroll
readings overnight as a slight positive. However, the magnitude of the
improvement isn’t great enough to expect the Pound to climb much against a chart
with multiple resistance zones just above the current trade.
CANADIAN: As the optimism toward world
equities levels out, it would appear that the Canadian will also lose its recent
upside momentum. Near term downside targeting in the Canadian is 62.72.
METALS
GOLD: Given the overnight dialogue and the
action yesterday, it would seem that gold is still tied to the ebb and flow of
equity market developments. Supposedly, Asian traders were light buyers
overnight because of poor earnings from Intel, but buying off that issue should
be limited, as Motorola managed to post the first profit in about 2 years.
Fortunately for gold, the Yen recovered overnight or the Asian trade could have
joined the US gold sellers and punished gold further.
SILVER: As mentioned in the gold comment, it
would appear that silver is seeing a little lift from the hope that better
economic times are ahead which in turn might spark a return of high tech and
communication demand for silver. However, with the equity market softer today
and Intel reporting weaker than expected earnings and cutting forward guidance,
silver might fade toward near term support of $4.28 on the charts.
Countervailing the Intel news for silver were reports that Motorola made a net
profit after an extended period of red ink.
PLATINUM: Maybe the platinum anticipated the
big run in stocks over the last four days and is now without fresh support.
Therefore platinum is probably set for a minor correction to $570 basis the
January. However, at any time platinum could resume the climb.
COPPER: In retrospect, copper didn’t respond
as favorably as one might have expected given the ultra strong recovery in
equity prices. The head of a Mining concern in Peru, suggested that new labor
laws and rising taxes, discourage companies from entering new copper projects
and that could result in an eventual downtrend in total output from that
country. With today’s equity market action weaker and
and Asian markets impacted negatively by that action, we suspect that the
session will be weak today.
CRUDE COMPLEX
OVERNIGHT
CHG to
AM
CRUDE -4, HEAT +37,
UNGA +51 — The energy complex is losing its zing because the war
threat is being temporarily diffused. With the UN picking up the Iraqi
resolution debate we are sure the Doves in
and
are going to mount an effort to prevent the
from acting before all diplomatic efforts are exhausted.
NATURAL GAS
As
mentioned in the regular energy comment the next tropical storm was basically
headed toward the middle of the Gulf of Mexico which means that US landfall is
highly unpredictable but the odds of strengthening would seem to be high. The
natural gas trade is certainly taking note of improved macro economic conditions
and to the recent slate of cold temps as that could conspire to send prices into
an early winter rally.