Futures Point To A Flat Opening
INTEREST RATES
OVERNIGHT
CHANGE to
AM
BONDS
+15 — While economic uncertainty remains high enough to have a number of
economists expressing doubt on the timing of the recovery, talk about deficit
spending today might countervail the bullish tilt in the Treasury market. With a
number of economists suggesting that a protracted war might cause the world
economy to fall back into a recession and others suggesting that the war is
already causing consumer spending to contract sharply a quick end to the war is
a must. While we understand that the impact of the war is damaging the recovery
bid, we also think that ruling out a quick end to the war is still premature.
STOCK INDICES
OVERNIGHT
CHANGE to
4:15 AM
S&P
-250, DOW -36,
NIKKEI -196, FTSE -38 — We sense
that anxiety isn’t running as high today as it was Monday. Therefore, stock
market losses might be less significant today. We have to think that the action
Monday was particularly negative because the market was rushing to factor in the
fact that the war didn’t end quickly.
FOREIGN EXCHANGE
DOLLAR: We suspect that accidents to coalition forces will be less
likely for the coming 24 hours and that could serve to take some of the pressure
off the Dollar. However, until the war is totally dispatched we seriously doubt
that the Dollar will mount anything more than a technical bounce. With US
economic numbers resuming their flow today and a number of economists fretting
that the war might extend far into the future, the Dollar is expected to remain
weak. Furthermore, with the attack on
expected in the coming 48 hours, we have to think that the Dollar is set to
return to the bottom of the February consolidation around 100.00. In the mean
time things that could suddenly turn the Dollar sharply higher would be news
that Saddam has died, or that more Iraqi commanders have surrendered. At this
point it would seem unlikely that mass surrenders will take place. If the Dollar
were to rise above 102.00 one might assume that some major shift in conditions
has taken place.
EURO: Considering that the euro has managed
to climb into the overhead resistance off the February consolidation it might be
possible to see it climb to 108.00 in the build up to the battle for
With German inflation numbers this morning under control there would seem to be
little to discourage the buyers from pushing the Euro higher for the coming 24
hours. In other words, the Euro is expected to get flight to quality buying for
at least the next 24 hours. However, a decline back below 105.53 in the June
contract would signal a change in conditions.
YEN: Japanese economic readings this morning
hardly support the influx of flight to quality buying but in the near term
getting away from US investments and from investments impacted by the war takes
precedence over the pace of the Japanese economy. In fact, Japanese supermarket
store sales fell for the 8th straight month and department store sales fell for
the 11th straight month. Some economists are already predicting a recession for
the
and
in an extended war. Near term resistance in the Yen is 84.04. We don’t like the
risk and reward of being long the Yen from current levels.
SWISS: It’s all about flight to quality but
we don’t get the sense that the long interest in the Swiss will be nearly as
strong as it was Monday. However, as we lead up to the battle for
we suspect that the Swiss will see a return of aggressive buying. Near term
upside targeting in the Swiss is seen at 73.20.
POUND: More gains are in order with near
term targeting seen up at 157.12. Right now it is unclear what is driving the
Pound, as it managed to rise in the face of military losses, while the Dollar
slid in the face of military losses. We suspect that the Pound will see little
in the way of major war developments today but Wednesday and Thursday will be a
whole different ballgame.
CANADIAN: We are a little disappointed that
the momentum in the Canadian hasn’t put the currency closer to the contract
high. We do suspect that more gains are ahead and that 67.00 has become solid
support. Once the assault on
starts the Canadian should reach 68.00.
METALS
OVERNIGHT CHANGE to
4:15 AM
GLD
+3.90, SLV +3.7,
PLAT +8.00;
Gold Fix $333.00, +$2.85; LME Copper
Warehouse stks 821,475 ton, -3,150
tns;
Comex Gold stocks 2.334 ml, Unchanged;
COMEX Silver stks 108.5 ml oz,
-600,450 oz; OVERNIGHT: Apparently significant losses in the Dollar sparked
Asian buying.
GOLD: The gold market appears to have added
to the gains posted Monday in the overnight action. While we doubt that the
coalition forces will see the same magnitude of bad luck they encountered over
the weekend, the unpopular view of the war is expected to keep the Dollar down
and gold up. We do think that a rising number of coalition casualties will
correlate positively with gold pricing.
SILVER: Thus far, the silver market hasn’t
shown much response to the gold recovery and that is because the outlook for the
economy and therefore physical demand is deteriorating. Significant overhead
resistance is detected around the $4.50 consolidation. Considering that the war
looks to run longer and cost more than expected, many economists are now
suggesting that the recovery will now take much longer to unfold and could still
be derailed altogether.
PLATINUM: In the overnight action, April
platinum slid below critical chart support formed by the February lows and looks
to fall below even numbered $640 support sometime today. Like silver, platinum
is behaving like an industrial commodity fearful of deflationary conditions. At
this point we would not be surprised to see a slide down to $632 basis the April
contract.
COPPER: With European stocks weaker and
concerns growing that a long war could stall, or prevent economic
recovery, the copper market enters the session
vulnerable. Chinese copper futures were basically unchanged, which suggests that
copper won’t be overly weak. Reports that
Chile
saw its copper exports rise 10.9% for the latest month, is a minor negative when
combined with the sluggish economic outlook.
CRUDE COMPLEX
OVERNIGHT
CHG to
AM
CRUDE +73,
HEAT +138, UNGA +121 — The
energy complex managed to bounce Monday and then followed through with upside
action in the evening trade Monday might. With OPEC suggesting that their
production tally had declined by 500,000 barrels per day due to Nigerian and
Iraqi losses, prices were justified in forging upside gains.
NATURAL GAS
Slightly
cooler temps follow the much above normal temps Sunday and Monday, so the net
effect of the weather is mixed or slightly bearish. However, the outlook for the
coming 6 to 10 days is for cool in the East and mild in the
and that is a neutral to bearish forecast.