Futures Indicate A Weaker Open
INTEREST RATES
OVERNIGHT
CHANGE to
AM
BONDS
+8 — We are really surprised that the bonds managed to forge the early break
Monday, as the economic numbers were weak and the SARS issue continues to
rupture consumer and investing sentiment around the globe. While the SARS issue
hasn’t been a major concern for the
any sign that the disease is spreading in the
would be just enough to push Treasury prices higher. With the fixed income
markets somewhat poised to rally and a string of favorable
corporate earnings reports failing to spark a big equity market rally, it would
seem that the path of least resistance in bonds and notes is up.
STOCK INDICES
OVERNIGHT
CHANGE to
4:15 AM
S&P
-280, DOW -26,
NIKKEI -178, FTSE +16 — This
market is not acting like it should. We understand the concern for the economy,
as the regularly scheduled economic reports are a constant reminder of just how
weak current conditions really are. Furthermore, with the market showing almost
no reaction to a string of better than expected earnings reports, it is clear
that investors are not primed to throw money at the stock market.
FOREIGN EXCHANGE
DOLLAR: A big gap down in the Dollar overnight hints at a retest of
the March lows. The
economy just doesn’t have what it takes to put the Dollar in a favored position.
It is also clear that the
hasn’t provided the world with justification of the war and at the same time it
would seem like
officials have indicated that Saddam is still alive. In other words, Saddam and
bin laden continue to dodge US capture and that makes the Dollar look bad.
Furthermore, we have to think that the US is about to get tripped up in its
efforts to rebuild Iraq, as the UN is balking at restarting oil for aid sales
and is also balking at removing the sanctions against Iraq. Unless the SARS
issue becomes world-wide issue the
hardly looks to get any favor. However, one must to watch the SARS issue, as we
assume the
would be one of the safer places to be if the disease looks to be getting out of
control. In other words, if the Dollar is at, or below the March lows and the
world economy comes under attack because of the SARS issue that could interject
some favor back into the Dollar. Next downside targeting in the Dollar is 98.62.
Some traders are suggesting that the Dollar decline overnight is an
anticipation, or fear that Greenspan might resign after his routine prostrate
procedure today but that is pure speculation.
EURO: An upside breakout in the Euro foils
the recent topping attempt and now puts the Euro on a track to the March highs
of 110.43. We suspect that the
is about to get check mated by the UN and that the Euro is being bid up as a
result of that political potentiality. With European bonds coming into favor it
would seem that the Euro is getting diversified capital flow from money that was
usually allocated to US investments.
YEN: The Nikkei got hammered overnight but
that hasn’t undermined the yen. In fact, the Yen seems to be a focal point of
Asian investment flow. Therefore, the Yen is once again getting flight to
quality buying. Near term targeting is seen at 83.90.
SWISS: A massive range up extension,
suggests that the Swiss is headed to the March highs along with the Euro. In the
event of a global outbreak of SARS, the Swiss might be the best currency to hold
and therefore traders will probably bid up the Swiss consistently over the
coming sessions.
POUND: The undermining of the US Dollar
overnight has provided the Pound with a direct lift. Even with
lending patterns slowing, the trade isn’t concerned about the pace of the
economy. Therefore, the Pound might be capable of rising all the way up to
157.70.
CANADIAN: Even with
having documented cases of SARS, the Canadian doesn’t seem to be too negatively
impacted. However we would not like to see the June Canadian fall below 68.40
today. If SARS is going to be an issue in the
it might have to become an issue in
first. Remain long but cautious toward the Canadian Dollar.
METALS
OVERNIGHT CHANGE to 4:15 AM:
GLD +0.10, SLV
+1.0, PLAT +0.10; London
Gold Fix $333.25, +$2.00; LME Copper
Warehouse
stks
785,975 ton, -1,275 tons; Comex
Gold stocks 2.400 mil, -1,004 oz; COMEX
Silver stks 108.1 ml oz, +600,013 oz;
OVERNIGHT: Asian traders were unwilling to propagate the gains seen
Monday.
GOLD: We are not sure if the SAARS issue was
the primary force driving gold higher Monday, but it would appear to be. With
the Dollar higher Monday and copper prices falling sharply off the fears of SARS,
it is clear that SARS was an issue for a number of other markets. With another
32 infections in the last 24 hours and the total caseload of 2,158 in
the trade is justified in giving the situation some attention.
SILVER: We suspect that silver will attempt
an upside breakout today, especially if gold can maintain any upside motion.
Near term chart resistance in the July silver comes in at $4.615 with the new
middle of the channel point coming in now at $4.54. Apparently the silver market
doesn’t need optimistic macro economic conditions to move higher.
PLATINUM: Trend line resistance comes in
today at $639 and it would seem like platinum is onto the same type of upward
pattern as the silver market. Maybe platinum and silver are sensing the
potential for improved physical/jewelry demand. Until the July platinum manages
a rise to the $640 level, we expect light buying to dominate.
COPPER: Apparently Chinese copper prices
decline sharply Monday, because the Chinese government announced they would give
copper importers a 30% rebate on the 17% import tax levied on copper
concentrates. In other words, the government was making it more attractive to
bring imported copper into the country. Since the import change facilitates
demand for copper in
that should eventually be a positive for world copper prices.
CRUDE COMPLEX
OVERNIGHT
CHG to
AM
CRUDE -27,
HEAT -57, UNGA -8 — To summarize
the posture of the energy complex, we can only suggest that the market wants to
see the "actual" increase in supply before it decides to deflate prices.
Apparently prompt delivery supplies were tight enough to fuel the May crude
contract back to $31, which is almost a pre-war or war type price level.
NATURAL GAS
We are
not sure if the market is so sensitive that it responded to reports of an early
hurricane threat in the
but we would not be surprised considering the tight supply mentality. More than
likely a cold front provided the incentive to natural gas, which might have
picked up some spec long interest because of the gains in the regular energy
complex.