Futures Market - General Highlight #1
Key commodity market fundamental event identified prior to spring rally.
(COMMENT # 17)
UPDATED 19980110
COMMENT 1998-17
In the markets, we always attempt to prepare for the unexpected.
What will be the unexpected surprise of the Asian debacle?
Consider this - what happens if the Asian countries cannot finance the incremental growth that currency devaluation would normally be expected to drive their way?
Wouldn't this demand befall American companies?
Is it possible that the Asian flu could improve the health of the American economy?
The slowdown in Asian demand is apparently causing liquidation of inventory as short term interest rates increase.
Our commodity markets have been the recipient of this inventory selloff as short term demand has dropped.
Doesn't this near term drop suggest stronger spring markets, however, especially if demand is shifted, incrementally, to our shores?
The key is to watch commercial purchases over the next month or so as near term inventory liquidation drives spot prices lower.
Heavy long positions by commercial interests will suggest that this scenario, combined with Asian restocking of inventory, are combining to replenish demand.
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