Futures Point To A Flat Opening
INTEREST RATES
OVERNIGHT
CHANGE to
AM
BONDS +9 — The bond market has simply been
revived by views that the economy will remain sour after the war concludes. In
fact, the headlines yesterday suggested that investors were looking beyond the
war and seeing many difficulties and that is exactly why bonds have mounted a
recovery. With Treasury prices returning to the previously designated sell zone,
we see no reason to back away.
STOCK INDICES
OVERNIGHT
CHANGE to
4:15 AM
S&P -430, DOW
-15, NIKKEI -73,
FTSE -38 — The action in the stock market is very disappointing but
when one considers the uncertain status of the "end of the war" its not
surprising that prices are sloppy. We would suspect that the market will be made
aware of the "Saddam status" in the action today, or certainly in the action
Thursday and that might serve to clear up the current confusion. With some
traders and investors suggesting that beyond the war, the
economy will still be confronted with difficult times, one gets the impression
that there will be very little sustained euphoria off the actual end of the war.
FOREIGN EXCHANGE
DOLLAR: The Dollar is almost in the same disjointed position as the
equity market, as the trade is uncertain what to make of current events. While
the end of the war should not be seen as negative thing for the Dollar, the fact
that there isn’t a widespread euphoria waiting to surface, has caused many
Dollar longs to exit. In fact, with a number of UN members meeting in
it would seem that those opposing the war, are now preparing to mount a
diplomatic charge against the
The Russians are attempting to steal a portion of Iraqi reserves claiming that a
deal signed with Saddam over a year ago gives them rights to one of the largest
oil reserves in
The French are also ranting because they had favorable oil deals with
and now will have to pay true market prices. In conclusion, as long as the
majority of the world sees the Russian and French anti war position, as a stance
against violence, the Dollar is going to suffer. However, once it becomes clear
that the
won’t budge on the reconstruction process, maybe the Dollar will get a lift. We
also have to think that the dollar might mount a temporary rally to 101.47 on
the end of the war, or the end of Saddam but will then run out of gas quickly.
EURO: While the Euro is higher overnight it
had to absorb another weaker than expected German manufacturing reading. We
suspect that French statements about becoming involved in
will become a critical pivot point for the Euro in the coming sessions and we
doubt that the Euro will be able to rise above 107.95.
YEN: Japanese economic numbers continued to
show weakness but did show some signs of life and that is a slight change from
the past. Furthermore, we continue to see the SARS issue fading from the
headlines as control is asserted in affected regions and that should take some
of the resistance off the Yen. Near term resistance is documented at 83.85.
SWISS: We see almost no flight to quality
potential in the coming 36 hours. In fact, while euphoria off the end of the war
might be less than originally expected, we would not want to be long the Swiss
when the war officially ends.
POUND: We suspect that the Pound will get
some credit for the position of Blair in the upcoming UN showdown. The
favors UN involvement, while the
opposes given the UN control and that should improve the status of the Pound.
However, for the Pound to turn off the selling pattern, it must avoid a slide
below 154.48.
CANADIAN: We really like the chart pattern
in the Canadian but we understand the high risk of being long at such lofty
chart levels. We also have some fear of being short into the potential official
end to the war. In any regard, traders should be long but should carry a put for
the next 2 sessions.
METALS
OVERNIGHT CHANGE to
4:15 AM
GLD +1.90, SLV
+0.7, PLAT +7.80,
CP -20;
Gold Fix $324.10, +$1.80; LME Copper
Warehouse stks 801,725 ton, -1,600 tns;
Comex Gold stocks 2.379 ml, -525 oz; COMEX
Silver stks 107.0 ml oz, -304,132 oz; OVERNIGHT: Minor gains off a
weak Dollar and increased Japanese purchasing power.
GOLD: Unless something breaks today in the
war, delaying the outcome further into the future might result in deflationary
conditions creeping back to the forefront and that in turn could undermine the
gold market. While a large amount of economic uncertainty is present due to the
delay in ending the war, the fact that the stock market slid yesterday could
have dampened some of the positive action documented in both gold and silver on
Tuesday but apparently had no effect. However, with gold prices showing positive
early morning action, it would appear that the bull camp remains in charge of
gold for another session.
SILVER: The action in the silver market is
very impressive, with either recovery hopes or out right short covering
providing the bullish tilt in prices. The fact that COMEX silver stocks have
declined considerably, should also be supportive of silver prices. In fact, the
extension above the last month’s consolidation pattern is quite impressive given
the macro economic environment.
PLATINUM: An apparent gap higher move
overnight might suggest that the downtrend of the last month has in fact been
reversed. A rise back to the late March high of $634 might be seen but the July
contract will probably find some significant resistance around the $622.2 level.
Prior to the last 24 hours we suspected that platinum needed a stronger stock
market in order to turn off the selling pattern but now it would appear the
market is back to trading its own fundamentals.
COPPER: While we saw favorable price action
in China overnight, that didn’t serve to support US copper prices yesterday.
Considering the weakness in international equity markets overnight and the
ongoing and unclear status of the SARS issue, we can understand another down day
in
copper prices. Near term support should hold around 71.90 and then again down at
71.55.
CRUDE COMPLEX
OVERNIGHT
CHG to
AM
CRUDE +40, HEAT
+145, UNGA +56 — With the trade buffeted by
the ebb and flow of war news and by OPEC dialogue, it is clear that energy
prices are attempting to make a key decision. We have to think that the bounce
off this weeks lows, confirms a near term low but we are not convinced that
prices will be able to mount a consistent run higher, in the face of oversupply
anecdotes.
NATURAL GAS
With the
NWS forecast calling for cool and wet conditions and the regular energy complex
showing support off the theme that OPEC is preparing to remove some supply, we
expect prices to consolidate just below the recent highs. The charts do depict a
pattern of lower highs but with partially unimpressive momentum we suspect that
the upcoming action will be nondescript.