Hightower Financials (short version)
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TODAY'S OUTLOOKS
BONDS: Prices might rally but the upside should be short lived and restricted
STOCKS: Short term overbought market corrects in face of a slack report slate
METALS: The metals look to be temporarily out of favor today
COPPER: A corrective setback ahead not a complete end to the Feb/Mar rally
CURRENCIES: Not enough growth news & lingering Greek concerns favor $ and Yen
OVERNIGHT CHANGES
BONDS: +100
S&P: -460
FTSE: N/A
DOW -31
DOLLAR +306
SWISS: -45
CANADIAN: -27
YEN: +65
EURO: -68
GOLD: -6.40
SILVER: -21.70
PLATINUM: -15.30
London Gold Fix $1120.00 -14.00 LME Copper stks 538,875 tons -2,700 tons
GOLD stks 9.975 ml oz -200 oz SILVER stks 110.3 ml oz -616,582 oz
BONDS AND STOCKS MARKET OVERVIEW
BONDS: Weakness in equities and some supportive dialogue from the Chinese overnight regarding their ownership of US Treasuries has given the Treasury market a minor lift in the overnight trade. Apparently Chinese officials have suggested that their ownership of US debt was market driven and not a politically driven decision and that provided the bonds and notes with a bit of a lift ahead of impending supply later today. With the markets fresh off a better than expected US Non farm payroll reading last Friday and the Greece situation seemingly still mostly under control, that leaves a slightly negative fundamental tilt in the market.
STOCKS: The equity market has apparently fallen back in a corrective mode in what appears to be partially a technical balancing move but it might also be the result of mixed opinions on the pace of the recovery. The market was helped yesterday by favorable tech sector news and without a fresh supportive headline issue today, the market looks to start the US session slightly off balance. While the Greece situation remains mostly under control, the trade did see concerns from Greece that they would not be able to pay such high rates for upcoming debt and that leaves the debt crisis as a key market force.
CURRENCY MARKET OVERVIEW
DOLLAR: The Dollar has merely managed to climb back above the mid point of the last months trading range in the overnight action. Apparently the Dollar is getting some lift from Chinese comments that suggested their interest in US Treasuries is a function of their trading in the currency markets. In fact, the Chinese suggested that their interest in US Treasuries is economically driven and not politically driven and that in turn provided support to the Dollar.
EURO: Despite what would appear to be a calming of anxieties toward Greece, the Euro has remained under pressure. Apparently the Greece Prime Minister thinks that hedge funds artificially contrived the massive deficit in Greece and since he is now taking that show to Washington, there will probably be a huge stage for shifting the blame away from politicians. In fact, with Euro zone officials also trumpeting anti speculation claims this morning, it is possible that traders will drive the Euro down sharply, as a signal to officials that ignoring excess spending patterns will insure that more pain is ahead in currency exchange rates.
YEN: The Yen appears to be set to regain some ground off a lack of alternatives. With the market also seeing the prospect of a re-valuation in the Chinese currency and with the US economic report slate mostly empty this week, it is possible that the Yen is getting some returning buying interest off the idea of a very long slow global recovery ahead. It also appears as if interest in risk from last week has been reversed and that could allow the Yen a quick return to the 112.00 level.
SWISS: A major rejection of strength in the Swiss over the last 24 hours suggests that the Swiss lacks the fundamental prowess to get out from under the drag of the Euro. In fact, seeing the Swiss fall even in the face of speculation that the SNB might allow a rally in the currency, highlights the vulnerability of the Swiss. Like the Euro, seeing EU officials ignore their spending addiction looks to put the Swiss on a near term track to fall back to 92.50 and possibly down to even lower support of 92.25.
POUND: The March Pound is back under noted pressure in the face of residual concern that UK debt levels are simply too high. Apparently negative ratings dialogue also served to undermine the Pound overnight as that dredges up the debt concerns again. With renewed or ongoing concerns toward the Euro zone debt situation and a lack of freshly bullish macro economic news from the US, it is not surprising that the market has rekindled its interest in attaching weakly positioned currencies.
CANADIAN DOLLAR: The Canadian is vulnerable to a tempering of macro economic views and perhaps to a short term overbought technical condition. After seven straight days of gains in the Canadian Dollar, the bulls need a patently up beat global economic view just to support the Canadian and that isn't in place in the early going today. Near term downside targeting in the Canadian is seen at 96.71 and possibly down at 96.50.
METALS MARKETS OVERVIEW
GOLD: Unfortunately for the bull camp, the gold market was partially undermined by Chinese Treasury market comments overnight and also because of ongoing hints from Chinese officials that gold might not be as important to the Chinese as was hoped by some in the gold trade. However, the market is accepting of ideas that China will eventually increase its gold holdings and that probably provides some form of eventual underpin for gold prices. On the other hand, the gold market is facing a weaker equity market, a higher US Dollar and mostly slack macro economic views today and that appears to have given the bear camp an early edge.
SILVER: While silver bulls will point to silver's recent capacity to out perform gold, the outside market action is certainly giving the bear camp in silver a lot of fodder. Clearly silver has been showing positive classic fundamentals from demand for silver coins to talk about improving industrial use, but that tilt is being countervailed by concerns on the pace of the global recovery. In fact, silver exchange stocks did manage another daily decline overnight and that joins a recent short lived pattern of declines in exchange stocks.
PLATINUM: After a massive range up move and failure, the platinum market would seem to be presented with fundamental and technical pressures. While the April platinum contract might be able to hold close-in support around $1,568, up trend channel support isn't seen until $1,530. In the end, platinum appears to be the best of class in the metals markets, but the macro economic outlook just doesn't appear to be solid enough to lift platinum prices consistently.
COPPER: Like the rest of the metals markets today, copper would appear to be vulnerable to a technical corrective setback. In fact, the copper market also looks to be vulnerable to a measure of fundamental selling interest, as the equity markets are weaker, the Dollar is higher and the overall global recovery view is largely missing this morning. However, there was another decline in daily LME copper stocks overnight and that is becoming a somewhat supportive pattern.
***NOTICE: Above is a condensed version of The Hightower Report's daily reserch.
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