Futures Point To A Flat Open
October
31, 2003
INTEREST RATES
OVERNIGHT CHANGE to  4:15 AM :BONDS +1 A large portion of Washington and the
Press have attempted to make the 7.2% GDP number out to a be a negative,
because that growth reading was accomplished without an improving job market.
The Treasury market continues to have some life on the long side, as the
minutes of the previous FOMC meeting seemed to provide a burst of short
covering yesterday afternoon. With the last FOMC meeting expressing concern
over the ongoing threat of deflation, many shorts decided to take profits and
move to the sidelines.
STOCK INDICES
OVERNIGHT CHANGE to 4:15 AM:S&P-150 DOW -17 NIKKEI -135 FTSE -17Â It is really
quite amazing that the stock market couldn’t mount an aggressive rally and
hold those gains. However, we would not give up the bull track despite the
apparent lack of satisfaction in prices, as the trend is toward growth and
eventually prices will manifest that reality. It would almost seem like Wall
Street has somehow come under the spell of the liberal Press, as the talking
heads managed to find numerous ways to discount the 7.2% gain in the GDP.
FOREIGN
EXCHANGE
EURO:
The trade is making the Euro zone consumer confidence readings out to be
positive this morning but again it seems like the Press and the trade is
bending over backwards to accentuate the feeble growth rate in the Euro zone.
For instance, the headlines trumpet that the Euro zone business confidence
rose for the third month and is at the highest level in 2 years but yet when
one looks at the breakdown of the numbers, the rate of improvement is
virtually nothing and many readings remain in negative ground. While we are
bullish to the Euro versus the Dollar, the spin off the numbers is a little
surprising. We are of a mind to buy the December Euro on a slide to 115.70.
YEN:
The Nikkei was weak overnight and that seems to add to the weakness on the Yen
charts. Slumping Japanese construction orders were overset by an up tick in
housing starts and therefore the economic setup would not seem to prevent a
minor slide in the Yen today. Position traders should use a break to 91.00 to
get long for an eventual continuation of the up trend.
SWISS:
Given the residual follow through in the Dollar, we suspect that the Swiss is
set to slide to consolidation support of 74.79 and then we would become an
interested buyer.
POUND:
While the UK economy continues to post favorable numbers, they do seem to pale
in comparison to the US numbers and the Pound is technically overbought.
Therefore a correction to 168.29 would not be surprising in the short term. We
still think that the Pound will remain in a long-term up trend pattern.
CANADIAN DOLLAR: The Canadian is in a profit-taking slide that might not
culminate until the break equals that of the late September correction.
Therefore we project a slide down to 75.11.
METALS
GOLD:
There was a story overnight that gold producers might be stepping back into
light hedging activity. The story originated out of Sydney and suggested that
Barrick reported no “dehedging” while Newmont Mining Corp lifted hedges on a
mere 53,000 ounces, Placer Dome lifted hedges to the tune of 430,000 oz and
Anglogold supposedly lifted hedges on 500,000 ounces. In conclusion, the pace
of hedge lifting has slowed to a crawl and that would seem to suggest that
more normal hedging might be expected in the future, especially if prices
entice more aggressive risk control.
SILVER:
The market fell back from a critical upside breakout zone and now would appear
to be set to slide to $511 support. We keep thinking that silver is going to
separate itself from tracking with gold and begin to track more like copper
but that hasn’t happened yet. In fact, if silver were poised to benefit from
growth in the economy we would have expected silver to rise off the GDP
reading released yesterday.
PLATINUM: In the past a massive reversal pattern on the charts has meant
nothing in platinum. However, the chart action is quite negative and we have
to wonder if the market won’t encounter some stop loss selling. In order to
get a minor downside thrust going, the Jan contract might have slide below
$748. We still don’t see a fundamental shift to suggest a top. In the past
platinum has corrected $30 without ending the trend. Â
The
overnight action is moderately higher and into new high ground. Chinese copper
prices were sharply higher and the COPPER: Shanghai exchange raised margins to
attempt to slow aggressive speculation. Shanghai copper stocks were up a
massive 25,355 tons and that combined with a track close to our targeting
price of 94.50 could put the market in a precariously overbought condition.
CRUDE COMPLEX
OVERNIGHT CHG to    4:15 AM  :CRUDE +27 ,HEAT+63 ,UNGAS+68 While the market
suggests that a rise in crude oil inventories is thought to be behind the
recent weakness but we think that the market is doubtful that OPEC has the
ability to enforce the upcoming November 1st production cut promise. In other
words, rising Iraqi oil exports are thought to be outdistancing the cutbacks
from OPEC.
NATURAL GAS
To see
the market fade aggressively in the face of an “as expected” inventory number,
highlights the markets disappointment over the narrowing of the annual storage
deficit. The market was also disappointed by the fact that the overall storage
level continues to rise and is expected to rise for at least another two more
weeks.