OVERVIEW
Tightening credit markets claimed another victim overnight as BHP Billiton announced it was pulling out of a deal to buy Rio Tinto.  This could be the start of a trend that sees a shutdown in the merger and acquisitions market.  Industrial metal stocks were down on the news dragging down global equity markets and giving investors an excuse to take profits following a two day advance of close to 10%.  Yesterday’s housing report showed the U.S. economy was continuing to weaken.  The key item to notice about yesterday’s action was that global investors are prepared to bury the Dollar.  The government’s rescue of Citigroup just provided the economy with more cash.  This should lead to inflation down the road. 

No Comments

ENERGIES
Crude oil will find support and attract buyers if the Dollar weakens.  Demand is still down, but the market may start pricing in higher inflation over the long run.  Watch for buyers to step in on the current break especially if outside commodity markets begin to strengthen.

No Comments

After trading sideways-to-lower most of the week, the EUR USD finished the week with a strong gain on Friday. The market appeared to be trading in a holding pattern throughout the week, but finally erupted after the Obama administration announced its nominee for Treasury Secretary. This news triggered a rally in stocks which fueled a late session short-covering rally in the Euro. A rally through 1.3116 could trigger more short-covering next week. Fundamentally, the Euro remains weak because of the recession in the Euro Zone and because of expectations of more aggressive interest rate cuts. This market is getting support, however, because the Fed projected U.S. economic weakness into mid-2009 at its last FOMC meeting, according to the minutes released earlier in the week. 

No Comments