Financials, Chocolate And Pigs Fly

January 17, 2001
Marc Dupee

Tame inflation, African ports devoid of cocoa, and an announcement by
McDonalds sent stock index futures, T-bonds, cocoa, lean hogs and pork bellies
soaring.

A tame inflation picture painted by this morning’s
Consumer Price Index (CPI) report un-caged technology stocks in a robust lap-up
opening. The subdued inflation outlook may free the Federal Reserve to move
aggressively by cutting interest rates for the second time this month when it
meets on January 30-31. Semiconductor stocks also chipped in by beating
Street estimates, encouraging selected semis and equipment-maker stocks to break
out of bases.

The Consumer Price Index (CPI) came in as expected, while
the less volatile core rate (minus food and energy) actually fell a notch. The
report implied that the Fed would not be fettered by concerns about excessive
inflationary pressures and could cut rates by as much as 50-basis points at its
upcoming meeting, January 30-31.

Interest rate futures surged with T-bonds
(
USH1 |
Quote |
Chart |
News |
PowerRating) adding more than one point before settling up 28/32 to 104 2/32.
T-bonds outperformed the shorter-term

10-year notes
(
TYH1 |
Quote |
Chart |
News |
PowerRating), up 12/32 to 104 28/32, on the perception that the
inflation report sets the tone for milder inflation in 2001. Tamer inflation
would give the Fed more room to maneuver to promote economic growth rather than
set monetary policy aimed at containing price-growth.

Stock index futures indicated they could make a
larger-than-expected move by registering on the 6/100 Low Volatility
List. Nasdaq 100 futures
(
NDH1 |
Quote |
Chart |
News |
PowerRating) lapped open 110.00 points, or 4.3%
higher, but ran up against tough resistance defined by Carolyn
Boroden in her Futures
Perspectives last night in the 2657 through 2688 area (the high of the
session was 2655). This range included a four-level Fibonacci cluster, more than
a critical mass, thereby rendering this resistance zone a key area.

Carolyn also provides intraday
analysis on financial futures (Spooz, NDH1, and T-bond future) that
TradingMarkets will soon be offering through our new TradingSubscriptions.com.
Carolyn’s intraday analysis of the NDH1 on a 15-minute basis today identified an
additional four intraday Fib levels coinciding with the 2857 area (but
expanding the zone through 2719). The intraday Fibonacci work heightened the importance of
the daily zone and the Naz sold off against this level, paring a 140.00 gain to
a net 66.00 up at 2581.50.

S&P futures
(
SPH1 |
Quote |
Chart |
News |
PowerRating) were capped below a similar resistance band
and closed up 6.20 at 1341.70.

From the Momentum-5
List, cocoa
(
CCH1 |
Quote |
Chart |
News |
PowerRating) surged toward $1000 a tonne as funds covered short
positions. Fewer trucks are arriving into ports in Ivory Coast, the nation
responsible for 40% of the world’s production and the trucks that are arriving
to fill ships are arriving approximately three weeks behind schedule. Bidding
for cash beans within the country is also reported to be fierce. March cocoa
rallied 79 to 990, just off the high.

McDonald’s said it would expand their
offerings of pork and bacon sandwiches at franchises. There is growing demand
for pork due to the Mad Cow scare across Europe and the move would also boost
domestic demand. February pork bellies
(
PBG1 |
Quote |
Chart |
News |
PowerRating) closed up 3.000, their
daily limit, at 69.025, with an unusually high number of unfulfilled orders to
buy. February lean hogs
(
LHG1 |
Quote |
Chart |
News |
PowerRating) surged 1.400 to 57.375.

Warm weather
and a weaker-than-expected draw down in inventories of
natural gas
(
NGG1 |
Quote |
Chart |
News |
PowerRating) sent the contract down 1.194 to 6.909, a loss of
14.74%. Nat Gas was on the
New 10-Day Low List.

Financials, Chocolate And Pigs Fly

BUY THE FEAR, SELL THE GREED

Quick Links

Company Info

Contact

Company Resources