National Futures and Financial Weekly

Financial Commentary

Copyright 1997 by Consensus, Inc.
November 7, 1997 * * 1737 McGee, Kansas City, Mo. 64108 U.S.A. * * Full Edition

Recent Issues   Subscriber Index    October 31    October 24    October 17    October 10    October 03
  • THE ALLENDALE ADVISORY REPORT
    Prepared by Allendale, Inc.
    Commodity Wrap-Up For October 31, 1997
    Wow! You should see what's ahead for the ag industry and markets: We are very excited about the next 14 months and see many opportunities for those who prepare. We are completing our 1998 outlooks and strategies. You should see the difference between the normal weather and El Nino weather scenario. This should be a year where balanced, diversified marketing plans pay off. Crop insurance, revenue assurance, and forward pricing!

  • THE SPECULATOR
    Prepared by Berkeley Futures, Ltd.
    Financial Typhoon
    The financial typhoon that has been blowing around Southeast Asia hit Hong Kong a fortnight ago with such force that the reverberations were felt all over the world.
    Until last month. Hong Kong had remained relatively unscathed by the waves of selling pressure that hit other markets in the region. But eventually the target of Hong Kong's currency peg with the U.S. Dollar proved irresistible to speculators.

  • COMMODITY FUTURES FORECAST WEEKLY REPORT
    Prepared by Commodity Futures Forecast
    Grains Rally Into Harvest
    After another short-side harvest assumption, January soybeans rocketed through our stop to hover back in the $7.20 area. The dip in supplies indicated by the USDA report coupled with continuing export prospects pressured beans and meal higher despite marketing the cash crop. As we move through November, the seasonal expectation remains bearish.

  • THE WAY THEY WERE GONE FOREVER!
    Prepared by Commodity Information Systems
    Turmoil in this week's financial markets was a result of Asian nations using currency markets to enhance their competitive edge in world trade. China devalued the yaun four years ago in an effort to keep exports high. Japan allowed the yen to devalue three years ago in an effort to bring their struggling economy out of recession by stimulating exports.

  • ECONOMIC PERSPECTIVE
    Prepared by Merrill Lynch & Co.
    Global Securities Research & Economics Group
    Greenspan's Point Comes Home
    The stock market plunge, correlated, if not precipitated, in part by rather severe falls in a number of emerging markets, has brought home to investors a point that Greenspan often makes, but which seems at times to fall on deaf ears. The markets involve risk!

  • FRIEDBERG'S COMMODITY AND CURRENCY COMMENTS
    Prepared by Friedberg Mercantile Group
    The Re-Pricing Of Risk
    “The global speculative orgy is slowly coming apart, literally fraying at the edges.” We wrote these exact words a little over six months ago (“Fraying at the edges,” Friedberg's Commodity & Currency Comments, April 20, 1997); tragically, they are patently more evident today than they were then, when only Thailand and South Korea were experiencing gut-wrenching bear markets.

  • CASH UP $4 IN TWO WEEKS–FUTURES DOWN $1
    Prepared by Hales Cattle Letter
    Storm Drives Fed Prices Higher
    An early winter storm that hit Colorado, Kansas, and Nebraska late last week, forced cash prices sharply higher this week as packers scrambled for the storm reduced supplies. Without taking away from the financial loss and the serious problems suffered by the cattle feeders and feedlots in the storm area, the event is not the most bullish event of the 20th century. It hasn't started the next major bull market.

  • THE OPTION ADVISOR
    Prepared by Investment Research Institute, Inc.
    To coin a phrase from a popular “oldies” song: “Is that all there is?”
    One day of sheer panic followed by a scary morning, and the storm has now passed? The normally alarmist headlines of the New York Post instead screams “hang in there!” the day after “Black Monday 1997,” and they were right? The ever- complacent “little guy” once again dodges a bullet and buys the dip (or at least “hangs in there”)? Much to the chagrin of the still vast coterie of “perma-bears,” the answer to all of the above questions might well be “yes.” And it would be another lesson from that great contrarian Humphrey Neill, who told us 40+ years ago in The Art of Contrary Thinking that “the public is right during the trends but wrong at both ends.”

  • COMMITMENT OF TRADERS ANALYSIS-CURRENCY CONTRACTS
    Prepared by Jack McIntyre
    Strategy #1
    Sell the Dec. 117 call options on the Dec. T-bond contract. Take in 1-03/64's, which makes break-even 115-30+. There are 10 days until expiration.
    Strategy #2
    Buy spread product versus Treasuries (e.g., mortgages and high-grade corporates). These spreads widen as a result of last week's equity-market shake out and offer better relative value.

  • U.S. ECONOMIC AND INTEREST-RATE OUTLOOK
    Prepared by Merrill Lynch & Co. International Fixed Income Research
    The stock market rout lifted Treasuries, although the bill curve flattened rather than steepened, as would be expected in a typical flight to quality. Yields on three-month bills were up slightly due to a $21 billion cash management bill plus ongoing selling by central banks.

  • MYERS ON FUTURES
    Prepared by Steven R. Myers
    Long-Term S&P Bear Market
    A long-term S&P bear market is what I believe the charts are now telling us! This long- term bull market has topped out in a rather common fashion. The bear market will also be a rather normal bear market. The bulls get hurt time after time in a bear market just like the bears have been hurt for the last few years. Most bull markets will finally top after all the bears have given up. Many of the bears and fence sitters have finally turned bullish.

  • NIKKO MARKET COMMENTS
    Prepared by The Nikko Securities Co. International, Inc.
    Hong Kong Gong Show Hits The Road
    The turbulence in Hong Kong spread across the world's financial markets over the past week in a big way. Now clouds of dust are still being raised in the world's equity markets as investors scramble for a viable strategy; economists are altering their prognostications of the future.

  • NIKKO MARKET COMMENTS
    Prepared by The Nikko Securities Co. International, Inc.
    Economic News
    Jobless claims rose to a 315,000 pace in the week ended November 1, an increase of 16,000 from the revised 299,000 rate recorded last week.

  • INTEREST RATE WATCH
    Prepared by R.J. O'Brien & Associates, Inc.
    Federal Reserve
    There is a strong likelihood of wage pressures ahead, and inflation may rise, unless there is a marked slowing in demand for goods and services. Alan Greenspan (10/8/97)
    Inflation has stayed low and is even falling, despite an ever tighter labor market. We are not using the Labor Department's Employment Cost Index as a signal of future inflation. The link between wages and inflation is unclear. It's not clear that wages cause inflation or whether inflation leads to accelerating wages. Alan Greenspan (this week)

  • THE SOVEREIGN ADVISOR
    Prepared by Sovereign Management Investment Counsel
    Summary
    –Currency crisis in South East Asia has created anxiety in Western markets–A plus for U.S. bonds.
    –Overall our indicators are still positive, but our momentum indicators are slipping.
    –We have increased our exposure slightly to bonds and decreased it slightly for stocks.

  • STOCKMARKET CYCLES
    Prepared by Peter Eliades
    The Cycles
    It has been an amazing three weeks since our last newsletter. In our last letter, we presented a chart showing the actual daily Dow closes along with the average of other October years within the seventh year of each decade this century. That chart is updated here. On October 21, the Dow closed above 8060 and was about as far away from the chart pattern we showed as one could imagine.

  • STRATEGY FOCUS
    Prepared by Merrill Lynch & Co.
    Global Securities Research & Economics Group
    Commodities Highly Impacted By Recent Events In Asian And Other Global Stock Markets
    The turmoil in Asia combined with volatile global equity markets was clearly the dominant influence not only in financial markets but also in commodities as well. Some have tried to make a bullish case for commodities as related to this but in our view the situation has mostly bearish implications.

  • THE COPPER JOURNAL
    Prepared by J.E. Gross & Associates, Inc.
    On The Defensive
    Rising production, Asian weakness, growing inventories, negative sentiment and nervous equity markets all collaborated to push copper lower.
    Indeed, even the few scraps of good news found in falling Asian and European inventories a few weeks ago were washed away, as stocks on the Continent reversed course to reach a new high, while domestic warehouse stocks continue marching onward and upward.

  • WEEKLY OUTLOOK
    Prepared at University of Illinois
    Grain Markets Survive A Demand Scare
    The case for continued strength in the price of corn, wheat, and soybeans is built on the cornerstone of growing world demand. The current strong El Nino weather pattern, which is blamed for some current world crop problems and is expected to cause more disruption in the months ahead, plays an important supporting role in the case for higher prices. The recent problems in some Asian currency and financial markets raised concerns about the rate of demand growth in southeast Asia. Signs of stability in those markets as central banks intervened to support currency values brings a sigh of relief to U.S. commodity markets.

  • THE YAMAMOTO FORECAST
    Prepared byIrwin T. Yamamoto
    Could It Happen Again?
    52% in Stocks; 25% in Rydex Ursa Fund; 23% in Cash.
    Indicators:Fundamental - Negative; Technical - Negative; Monetary - Neutral; Sentiment - Negative.
    What The Experts Won't Tell You
    October 1997 was the 10th anniversary of the 1987 stock market crash. Could it happen again? This question has been asked by the media. Generally speaking, the answer has been the same. It's not impossible, but not probable. Well, consider the source.

    Copyright 1997, by Consensus Inc.  All American and Pan American rights Reserved. editor@consensus-inc.com

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