Futures Point To A Flat Opening
INTEREST RATES
OVERNIGHT
CHANGE to
AM
BONDS -1 — The bond market appears to have
lost whatever positive momentum it had accumulated early in the week. It would
seem that the ebb and flow of the war is a direct influence on prices, with the
regularly scheduled economic information only a sideshow. The bond market might
have been cheered by the idea that the tax cut plan was going down to defeat, as
that means no stimulus will be applied and that the deficit might not be
exaggerated.
STOCK INDICES
OVERNIGHT
CHANGE to
4:15 AM
S&P
-120, DOW +1,
NIKKEI +113, FTSE +38 — The
stock market is fearful of the coming siege of
but at the same time many longs are filtering into the market in hopes that a
quick end to the war will materialize. Certainly the coalition saw events shift
in its direction Tuesday, by the "uprising" in
However, we also suspect that antiwar protests will reach a zenith in the coming
36 hours, as the coalition softens up
and civilian deaths are played to the hilt in countries where the war is
strongly opposed.
FOREIGN EXCHANGE
DOLLAR: The Dollar continues to hold up at a higher consolidation
than was seen for most of February. While the Russians suggest that only the UN
can verify weapons of mass destruction and
is getting hot under the collar to be part of the reconstruction process in
it is clear that the US Dollar could see victory in the coming 72 hours and
could certainly find evidence of weapons of mass destruction. As mentioned in
the stock comment this morning, the Dollar is very lucky that war coverage is
masking the overtly weak stream of US economic numbers, or the Dollar might not
have been able to hold its gains from last week. We have to think that the
market is partially expecting a
victory and from that they are thinking that US economic numbers will improve
from their current state. Near term support in the June Dollar comes in at
101.20 but there may be no small bets in the Dollar in the coming three
sessions. Utilize strategy over opinion, buy a June Dollar and buy an April
Dollar 101 put for 45 ticks. The April options only have 9 days left, so buy
close to the money.
EURO: German
Ifo readings overnight were softer than
expected and by the close Friday those soft numbers will matter, as it will
become clear that the Euro gambit against the
wasn’t the best track. The power block in the Euro zone could be reduced to
bickering over being involved in the reconstruction of
and we are sure that the coalition forces will manage the lion’s share because
possession is 9/10ths of the law! Therefore we have to think that the Euro will
attempt to rally but the extent of that rally might be 106.50!
YEN: We see the yen as a high beta stock. If
the war ends quickly, the Japanese economy will benefit, if the war drags on,
the Yen might continue to see flight to quality buying. However, due to the
recent rally off the low, we hate to buy the Yen above 82.98.
SWISS: If there ever were a 24-hour period
in which flight to quality interest in the Swiss should be high, it would seem
to be the coming 24 hours. However if the Swiss can’t regain 72.96, we suspect
that a major top has unfolded.
POUND: Unless there are horrific losses by
the
military or widespread anti war violence, we suspect that the Pound will be able
to respect support of 155.66 and possibly prepare for a return to 158.00.
CANADIAN: The coming two days could be an
extremely critical time frame for the Canadian as the flight to quality
influence will either be massive or non existent. A failure below 67.26 would
now be very damaging to the bull trend. However, the trend is up and the
Canadian economy comes into this decision point with a strong standing. Those
that are long should probably seek long put coverage.
METALS
OVERNIGHT CHANGE to
4:15 AM
GLD
+1.40,
SLV -0.3, PLAT +4.00;
Gold Fix $329.60, -$3.40; LME Copper
Warehouse stks 819,525 ton, -1,950
tns;
Comex Gold stocks 2.36 ml, +26,603 oz;
COMEX Silver stks 108.1 ml oz,
-460,644 oz; OVERNIGHT: Buying interest in
and
lifted gold slightly overnight.
GOLD: In our opinion the gold market hasn’t
completely reversed the downtrend pattern in effect since early February and
certainly hasn’t altered the aggressive liquidation tilt seen since the first of
March. We suspect that the sand storm in
stalled the timing of the assault of
and therefore the anxiety and flight to quality buying of gold on that event
hasn’t been totally interjected into prices. However, we suspect that the coming
rally will run out of steam quickly and only after minimal price gains.
SILVER: With the slight pause in fresh war
developments and the tax cut proposal being cut down to almost nothing, we can
understand the negative drag on silver prices from the macro economic situation.
Unlike gold, silver is already much closer to long term fair value levels on the
charts and may not have as much war liquidation to wade through. Therefore we
are interested in picking up a long silver play around the $4.35 level in the
May contract.
PLATINUM: A partial double low in April
platinum around $632 looks like thin support. However like silver, platinum
needs a positive economic view in order to justify its already lofty historical
price level. Until the siege of
is underway and the end of the war in sight, we suspect that platinum has a
liquidation tilt. We suspect that Apr platinum has initial support on the charts
down at 630 and then at 620.
COPPER: Chinese copper prices were higher
overnight, which gives the
session a little lift into the opening. However, with the attack of
directly ahead and the stock market not expected to handle that situation well,
we are fearful that copper might sag toward near term support of 76.00. However,
as has been the case, copper will be one of the first commodities to pick up
quickly on any theme that the war will come to an end soon.
CRUDE COMPLEX
OVERNIGHT
CHG to 4:15 AM: CRUDE +62,
HEAT +201, UNGA
+144 — While the weekly inventory readings today might show another increase in
crude stocks we doubt that the increase in supply will have a big impact on
prices. With traders concerned about a deterioration of political conditions
inside
it is fair to think that Nigerian supply might be off the market for a sustained
period of time.
NATURAL GAS
The
regular energy complex continues to provide some support to natural gas but we
suspect that support from crude oil will now begin to wane. While weather turned
back toward more normal levels we continue to think that heating demand is
waning and that the market will soon get beyond the draw season.