Outbreak Breakout

  • March 5, 2001
  • Marc Dupee

Pork contracts caught air, surging to contract highs on
the opening, as Europe went into lockdown mode in an effort to contain the highly
contagious foot-and-mouth disease outbreak plaguing Britain. Momentum-5
List leaders,
April lean hogs
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wasted little time setting new contract highs, hitting limit-up levels within
the first 10 minutes of trading. Late-session profit-taking brought the
contracts off their +2.000 and +3.000 peaks and contract highs to settle up
1.750 and 1.775, respectively.

The media was blanketed with reports over the weekend
about the worsening foot-and-mouth (also known as hoof-and-mouth) disease in the
United Kingdom and the outbreak of cases in Ireland and Belgium. Foot-and-mouth
virus is a highly contagious disease that affects hooved animals including pigs,
cows and sheep. The disease causes lesions and results in high morbidity rates
in herds. The treatment is to quarantine and slaughter the animals and to strive
to disinfect vehicle tires and human shoes (at border crossings, etc.) that
might carry the disease. The slaughter of herds infected with one of the world’s
most feared livestock diseases is expected to stimulate exports of US meats.

Japan temporarily banned imports of meat from European
countries as well as the world’s biggest producer of dressed pork products,
Denmark, as unconfirmed reports hit the CME pits that the Scandinavian country
was reporting its first case of the disease. 

Stock index futures closed higher and were underpinned by
strong performances in chip and networking stocks. The semiconductor index
closed up 5% with the best-gainer from the SOX and Nasdaq 100
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Linear Technologies
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the world’s largest maker of chips, also closed 3.6% higher and encouraged the

Nasdaq 100 futures
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S&P futures
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Dow futures
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 setup. 


T-bonds
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one-and-one-half points off Friday’s highs on glimmers of strength in the stock
market. T-bonds traded in lock-step opposition with the Naz 100, acting at times
as a short-term leading indicator, before closing up a tick at 104 26/32.

Energy contracts rallied on another widely publicized
event: forecasts that the largest storm in 60 years will hit the east coast as
the market scrambles for inventory.

April crude oil
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and heating oil
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shortened by the coming storm (the New York Mercantile Exchange closed at 1 PM
ET and opens late, at 10:45 tomorrow), crude held the opening gap, closing up .74
at 28.60. Heating oil came off its highest levels late in the session to close
at the gap-up open level, up .0158 at .7408.  

The Japanese yen
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gapped to a new low, but rallied off its new contract bottom after Prime Minister
Mori narrowly averted being ousted from a no-confidence vote, the second such
motion he has survived. Weakness in the Japanese political system means the
government will be less able to take measures to bring changes that could
improve their faltering economy. The yen is an Implosion-5 List
contract and closed .0012 lower at .8414.

Also from the Implosion-5 List
in the currencies, the
Canadian dollar
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