Futures Indicate Stronger Open
INTEREST RATES
OVERNIGHT
CHANGE to
4:15 AM
BONDS
+2 — The bonds are poised to charge to yet another new high zone. However,
there could be a temporary correction this morning on the release of the
numbers, before the market returns to a factoring of the war. With energy prices
soaring and the UK Parliament passing a measure to threaten Saddam, it would
seem that the war track is progressing.
STOCK INDICES
OVERNIGHT
CHANGE to
4:15 AM
S&P
-70, DOW -10,
NIKKEI +2.57, FTSE
+1 — Coming into the
session this morning, European equities were weaker, mostly because of soaring
energy prices and warnings of an impending war. We also have to think that
European stock prices were also being pressured by an extremely weak
consumer confidence report. In fact,
consumer confidence reached the lowest level in 4 ½ years and that mirrors the
weak confidence numbers recently released in the
FOREIGN EXCHANGE
DOLLAR: The dollar has largely avoided the selling crush this week
but that could change as the trade might want to factor the chance of a weekend
start to the war. However, it would appear
numbers today could be partially supportive for the Dollar, if the trade even
takes them into consideration. It would seem that the Dollar will lack the
support it had yesterday, when the Japanese seemed to float the idea of
intervention. It would also seem like the war protestors are planning large
scale events this weekend and that could mean that the Dollar comes under heavy
pressure today and Friday. With a near term failure of chart support already
underway in the overnight action, we suspect that the February low of 98.87 is
to be tested soon. In fact, we have to think that the Dollar will at least
temporarily violate the February lows.
EURO: The Euro zone showed a significant
increase in their money supply and that could provide some long interest to the
euro. With the
once again talking about joining the ERM, the Euro might see an added lift on
the current wave higher. The chart shows an upside breakout underway in the
overnight action, with next resistance seen coming in at 108.47. It would be
very surprising to see the March Euro slide back below 107.82 in the coming
sessions.
YEN: A sharp rise in auto production in
January (up 16%) is certainly an impressive feat considering the economic action
in many areas. Therefore, the Yen gets flight to quality buying and the economic
information doesn’t look to get in the way. Therefore, a new high for the move
is expected. However, there is evidence that the BOJ has been selling Yen and
that could restrain upcoming gains.
SWISS: If the Swiss is all about flight to
quality, that issue should be playing loudly in the coming two sessions. Even if
the Swiss has to give back the gains Monday (if war doesn’t start) we suspect
that the path of least resistance is up for today and Friday.
POUND: Surprisingly the Pound seems to have
shaken off the correlation with the Dollar and that could be because of the talk
about joining the ERM. We can’t be interested in buying the Pound considering
the fundamentals and psychology, but we would expect the currency to rally until
it finds resistance up around 158.88.
CANADIAN: Another new high for the move is
expected, as the flight to quality wave re-ignites. With US economic numbers
today expected to temporarily sooth fears of economic disaster south of its
border, the Canadian should not be encumbered.
Therefore, the 67.40 level is the next upside target.
METALS
OVERNIGHT CHANGE to
4:15 AM
GLD
+1.10,
SLV -0.5, PLAT +3.60,
CP -15;
Gold Fix $354.00, +$1.45; LME Copper
Warehouse stks 822,675 ton, -500
tns;
Comex Gold stocks 2.263 ml, Unchanged;
COMEX Silver stks 108.1 ml oz, +28,255
oz; OVERNIGHT: Another session where early gains were posted but then pared lat
GOLD: The gold continued to consolidate
despite what appeared to be a very aggressive war rally in the energy markets on
Wednesday. This morning the energy sector is rising again and that has pushed
gold up slightly in the European action. The UK Prime Minister managed to
overcome political opposition to provide another formal warning to
and that would seem to reconfirm the
commitment.
SILVER: The silver market appeared to make a
slight upside breakout (on a very short term basis) overnight but once again the
market will need strong leadership from gold to make significant gains. The
economic report slate today could be slightly supportive for silver as durable
goods and the housing figures are expected to show a slight gain. We doubt that
the numbers will be able to turn the stock market up, which is what silver needs
to rally without a move in gold.
PLATINUM: The pattern on the charts is up
and considering the recent action in platinum it should outperform gold and
silver in the event that the market begins to factor a weekend start to the war.
We are not sure if buyers in platinum are buying the metals into obvious war
timing because they view it as the best flight to quality metal, or off some
misguided idea that platinum is used in some military application but we have
seen dialogue supporting that type of thinking in the past. Platinum is still
the best fundamental story in the metals market.
COPPER: The Asian news headlines trumpet
domestic copper supply shortages in
and
and that is the source of the recent price strength. In
they reported a decline of copper exports in excess of 20% because of shortages
and that is the heart of the bull case. We can’t argue against the tightness
being generated by the orchestrated production cutbacks, even if the macro
economic outlook suggests that demand in some quadrants is weakening.
CRUDE COMPLEX
OVERNIGHT
CHG to 4:15 AM: CRUDE +63,
HEAT +21, UNGA
+128 — With heating oil already reaching an all time high previously and the
crude oil managing to climb to yet another new contract high, the energy market
is rushing headlong toward factoring a shooting war. Apparently the markets take
the comments from Saddam, as a sign that an end game is coming.
NATURAL GAS
Massively
wide ranges highlight the uncertainty and the potential for even more extreme
volatility ahead. We continue to think that the net spec long in natural gas is
above 100,000 contracts, which doesn’t cause a top,
it only serves to increase the chance that corrections will be violent.