Thursday, March 15, 2007

Friday Curtain Raiser

June Yen futures have dashed back up by more than 50 points to .8655 and that is enough to put pressure on U.S. stock futures and even the Nikkei 225. Not that a 155 point dip in the Nikkei is all that much mind you, but it plays well into my theme of just how important it is to keep at eye on the YEN with respect to gauging what will happen to money flow. A strong yen is equity negative as it forces institutions and hedge funds to liquidate equity bets made by the good graces of shorting Yen and putting those proceeds to work in assets of higher yielding currencies. How long with this last? Even the famed Mr. Yen a week ago didn't know, but said the phenomenon could take quite some time to unwind.

Front and center tomorrow morning at 8:30 is the consumer price index. A .3% rise is expected in the overall figure, and .2% factoring out food and energy. Do you really believe that CPI data as being real world inflation data? I don't, but it makes for nice fodder at the trading desks where billions will be won or lost following its release. At 10, industrial production data will be released. The consensus is expecting a .3 uptick in production and a plant use rate at 81.3%.

Tomorrow is quadruple witching, the expiration of stock index futures, stock index options, stock options and single stock futures expire.

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