Futures Indicate A Strong Open
INTEREST RATES
OVERNIGHT
CHANGE to 4:15 AM: BONDS -4 — Considering
the negative tone of economic dialogue and the economists rushing to lower
earnings and growth projections, it is surprising that Treasury prices haven’t
acted better this week. We continue to think that long-term top mentality is
robbing the bonds and notes of fresh buying interest, as the trade understands
the near term sloppiness of the economy but in a way thinks that things are set
to get better. The SARS issue is also an issue that could end up driving bonds
higher.
STOCK INDICES
OVERNIGHT
CHANGE to
4:15 AM
S&P +50, DOW +7,
NIKKEI -163, FTSE
+23 — Asian stock prices were weak overnight but European stocks were trying to
be positive as of this writing. The Street continues to voice concern over
earnings and growth and that is apparently enough to discourage would be buyers.
With the Chinese reporting 1,300 SARS cases, it would seem that the epidemic is
not coming under control, as was thought early in the week and that could begin
to play on Wall Street, if the disease continues it spread.
FOREIGN EXCHANGE
DOLLAR: The charts would make it seem like the Dollar found temporary
support around the 100.00 level and in fact it almost seems like the Dollar
rejected the sub 100 level. With
retail sales readings due out today expected to show a minor expansion, it is
possible that aggressive Dollar shorts rethink their positions or decide to take
profits. While some traders might buy the Dollar off the prospects that the
coalition forces have found weapons of mass destruction, we have to think that
buying in the Dollar will be restricted to short covering buying. In any regard,
a near term bounce to 101.18 is possible but getting beyond that level might
require some other landmark development. Two weeks ago we would have expected
wild and happy Iraqi celebrations with US troops, to be something that drove the
Dollar sharply higher, but that simply hasn’t happened so the Dollar might need
a real shocking story to alter its current bearish tilt.
EURO: The Euro has lost momentum and might
be primed to take some profits off a technical balancing act. However, one can’t
rule out the potential for
to get a black eye over its business dealings with
Many sources are already suggesting that evidence is available to prove that
was violating the UN sanctions in its oil dealings with
Therefore, some of the gloss looks to come off the Euro. However, it would seem
unlikely that the Euro would fall further than consolidation support of 106.58
unless something really shocking surfaces. As we move forward in time, the state
of the European economy is expected to show its much worse than the
and that could also undermine the Euro.
YEN: The Nikkei was down moderately
overnight and that is made worse by the fact that the SARS issue is not going
away. A G7 meeting this weekend probably won’t have much impact on the Yen but
if there is an impact, it could be for the Yen to fall. Near term support in the
Yen is 82.90.
SWISS: We think the Swiss is without a
driving force and remains a little expensive in the big scheme of things. In
fact, given such poor chart action overnight, the Swiss appears to be primed to
slide into a new low for the move. Near term targeting is seen at a gap area
down at 70.80.
POUND: We have to wonder if the Pound will
continue to rise, as it is now in a critical technical area on the charts.
companies are pushing hard for a bigger share of the
rebuilding program and that could be seen as a potential lift for a struggling
economy. Therefore the path of least resistance is up, but gains might be hard
won.
CANADIAN: The breakout is impressive and the
political and economic reasons to buy the Canadian remain in place. Near term
upside targeting is seen at 69.20.
METALS
OVERNIGHT CHANGE to
4:15 AM
GLD -1.40, SLV
-2.5, PLAT +1.90;
Gold Fix $325.05, -$.05; LME Copper
Warehouse stks 798,550 ton, -1,725 tns;
Comex Gold stocks 2.379 ml, -200 oz; COMEX
Silver stks 107.8 ml oz, +800,256 oz; OVERNIGHT: Tighter ranges this
morning with almost no upside direction posted.
GOLD: Apparently concerns for ongoing slow
economic activity is serving to undermine the recent strength in gold. We also
have to think that the SARS issue could become an additional undermine to gold,
as a Malaysian cruise line had two crewmembers come down with SARS. Overnight
reported that they have 1,300 people sick with SARS and that is certainly a drag
on consumer and investing sentiment.
SILVER: Consolidation action under the
recent highs, suggests that silver has lost its driving force. While the up
trend might return in the weeks ahead, given the downgrade of earnings and the
downgrade of growth by Wall Street, we are concerned that silver will correct to
$4.40. In fact, with an 800,000-ounce increase in COMEX stocks overnight there
are a few reasons to suspect a correction.
PLATINUM: The double top around $622 looks
to hold as resistance with the middle point of the trading range coming in at
$609.7 and the bottom coming in at $602.5. Because platinum remains in a
downtrend pattern we have to favor the downside but one would expect the
liquidation of flight to quality positions to have run its course. Seeing
platinum recoil off the lows this week seems to suggest that a solid bottom
might have been forged. However, the market could still revisit the lows.
COPPER: We are really disappointed in the
charts and the performance of copper this week but with the equity market so
weak and the economic outlook less than optimistic, the market is right in
tracking back to the recent lows.
copper stocks declined a sharp 11,219 tons in the latest week and have fallen
for five straight weeks. The trade is also seeing strong premiums for copper
prices in
and that hints at good demand and tight supplies.
CRUDE COMPLEX
OVERNIGHT
CHG to
AM
CRUDE -16, HEAT
+8, UNGA -69 — The energy complex faded
aggressively Thursday because OPEC might have admitted that the current
oversupply might be as much as 4 million barrels per day. After the initial
forecast that 1 or 2 million barrels of production might be cut, the potential
that up to 4 million barrels might have to be cut is a daunting task.
NATURAL GAS
The
natural gas market made a lot more out of the 9 bcf draw in inventories than it
should have. Furthermore, with weather warming significantly in the days ahead
and crude oil prices fading late Thursday, we suspect that natural gas is a
"prime short" around current levels.