Futures Point To A Flat Open

INTEREST RATES

03/09 OVERNIGHT CHANGE to 04:09 AM:BONDS-6 US
numbers continue to support the bull case in bonds, as the Kansas City Fed
Manufacturing readings Monday were down. We also think that comments from a
former Fed member expressing concern for the livelihood of the US recovery also
added to the bullish mix Monday. Furthermore, the economic report slate of the
coming two sessions hardly offers up anything that would appear to be capable of
altering the current bullish opinion toward Treasury prices.

STOCK INDICES

03/09 OVRNIGHT CHG to 04:09 AM:S&P+200, DOW21,
NIKKEI +29, FTSE-18 The Press suggests that the market fell Monday in response
to the poor unemployment numbers released last Friday but we think that the
disappointment is the result of investors looking forward, instead of backward
and that could mean even more weakness ahead. In other words, there is now
enough macro economic uncertainty that many investors are not only backing away
from fresh buys, but are also now beginning to dump existing holdings. While we
still don’t expect to see an aggressive liquidation in prices, it is clear that
stock prices need to come down to compensate for the slower growth reality.

DOW

Critical support at 10,500 would seem to be in danger of failing, but another
solid support zone is then encountered down at 10,458. There does seem to be
some bargain hunting potential on the opening this morning but the Japanese
market focused on Bank shares and the London market was lower, so the bull camp
is not fully in charge of sentiment. As long as the March Dow holds above the
early February low of 10,431, the overall long term trend in the stock market
remains up, but the short term trend is pointing down.

S&P

The chart setup is negative and all that would appear to be lacking for the bear
camp is an anxiety element to drive prices down sharply. We do see the March S&P
holding above critical pivot point support of 1138, but we also expect prices to
continue drifting and probing lower. In fact, until the March manages to regain
the 1151.70 level, we peg the near term trend to be down.

FOREIGN EXCHANGE

US DOLLAR

The Dollar was poised to move lower overnight but
was saved by the weaker than expected January German Industrial output reading.
The German numbers seemed to generate enough dialogue on the slow pace of growth
in the Euro zone, that the prospect of a European rate cut might have been
increased slightly. Therefore, the Dollar gets a minor amount of support from
the overnight developments. However, it seems that the Dollar/Euro debate has
come down to which economic zone is the slowest, instead of which zone is
growing the fastest. In other words, all the horses in the race are
underperforming. We just don’t think that the Dollar can forge a major bottom
and rise consistently unless its economy is gaining traction and there is the
prospect of rising interest rates. Certainly seeing the ECB talk up lower rates
would provide the Dollar with a near term short covering lift, but we think that
rally would fail quickly. In the near term, we don’t expect the Dollar to come
out of a range bound by 87.27 and 88.50. Continue to hold a cheap April 89
Dollar Index put for a short term trade.

EURO

As mentioned in the Dollar section, German
Industrial output figures came in weak AT -0.1% and down 2% on last year and
that has generated some mild concern toward Euro zone growth. Prior to the
reading, the Euro was in an upside breakout, but has since fallen back into the
downtrend pattern. It is possible that the trade is making too much out of the
German readings but keep in mind that Euro zone numbers are on a 1 month lag to
the US and that US numbers seemed to get progressively slower in February! In
other words, more negative news is expected from the Euro zone in the coming
weeks. Expect a coming range of 124.15 to 122.50 basis March.

YEN

The Yen might have gotten too oversold around the
lows last Friday and therefore the recent bounce is to be expected. However,
with neither the US, nor the Euro zone is showing much in the way of economic
prowess, and therefore the Yen should be seeing some light long interest.
Japanese machinery orders declined in January but the Jasdaq Index managed its
9th straight rise overnight and that could pull in some money to the Yen. Right
now the world has set a low growth bar and the Japanese economy might be strong
enough to pull in capital! However, to shift the trend away from the downside, a
close back above 90.05 is needed.

^next^

SWISS

The Swiss attempted to rally overnight but lacked
follow through interest. Now it would appear that the Swiss is primed to slide
back below 78.00.

BRITISH POUND

The Pound was also undermined by economic stats
overnight, as UK Manufacturing output came out below expectations. However, the
distinction for the Pound, is that its output was still in positive ground, it
just failed to meet expectations. Therefore, the June Pound is probably a buy on
a correction back to 180.40 but that might take a couple of sessions to get down
to that level.

CANADIAN DOLLAR

Seeing a number of poor international economic
numbers, takes away some of the pressure on the Canadian but we still would
avoid fresh longs until the June Canadian falls back below 74.90, mostly because
longs might have to risk fresh positions to at least 74.10.

METALS

OVERNIGHT

GLD+0.10, SLV+0.50, PLAT-1.00 London A.M.
Gold Fix 401.20 +$6.80 LME COPPER STOCKS 260,175 -3,425 tons COMEX Gold stocks
3.52 ml +34,937 oz Comex Silver stocks 123.4 ml -491,347 oz

GOLD

The gold market did manage an upside breakout in the
overnight action but failed to hold the gains. It would seem that the market is
more concerned about a rising Euro than it is a falling Dollar and that could
become an important consideration. The London Bullion Market Association showed
their bullish bias toward the market by suggesting that the recent European
Central Bank gold sales agreement was neutral for prices, as the gold market was
thought to be capable of absorbing up 484 tons of central bank sales without an
adverse price reaction.

SILVER

The silver market once again appeared to show the
most interest overnight and that interest was reportedly coming from the funds.
Even with copper down sharply Monday (a market that has occasionally supported
silver interest) the silver market managed to post a very impressive overnight
thrust into new high ground. A number of market players are comparing current
prices to those posted in 1998 and that rally was supposedly driven by Warren
Buffett.

PLATINUM

Like silver, the platinum market continues to
exhibit bullish price action on the charts and also like silver, the upside
seems to be primarily the result of fund buying. Apparently another minimal
South African Mining output increase of 0.8% for the last three months, is seen
as an insignificant development for platinum. In other words, the market wants
to see higher Russian production evidence, or it will continue to bid up prices.

COPPER

The chart action in copper looks pretty negative
with the market carving out the biggest consolidation since the November
correction. Exchange stocks continue to decline in support of the bull case, but
it would seem that some buyers are balking at prices above $1.30. Chinese copper
market prices were down sharply overnight but that is probably simply follow
through to the US losses Monday.

CRUDE COMPLEX

The energy complex comes into the session this
morning below the level where the weekly COT report pegged the net spec long to
be 148,000 contracts. The market did manage to flare to another new high for the
move but was unable to hold those gains into the close Monday. Apparently, the
market is a little concerned that Iraqi oil production is rising, even if the
net output for February came in below expectations.

NATURAL GAS

A sale around the highs Monday might have been a
nice short entry play, especially if the regular energy complex is primed to
correct or consolidate in the coming sessions. We see near term support in the
April natural gas market coming in at $5.20 but for a fresh trade, we might need
to see a rally to $5.60 to get short or a break to $513 to get long. The main
supporting element in natural gas prices is the relative value of crude oil
prices and crude oil prices above $37 makes it hard to deflate natural gas
prices.