… Goldman and UBS have upped their estimates on total writedowns for the financial sector. Carry Trades and the USD look weak again.

Overnight News Bullets

• GE IFO - Business Climate (MAR) out at 104.8 vs. 103.5 expected vs. 104.1 prior.
• GE IFO - Current Assessment (MAR) out at 111.5 vs. 109.5 expected vs. 110.3 prior.
• GE IFO - Expectations (MAR) out at 98.4 vs. 97.8 expected vs. 98.2 prior.
• EC E-Z Current Account (JAN) out at -10.6B vs. -10.3B prior.
• EC Industrial Orders MoM/YoY out at 2.0%/7.3% vs. 0.2%/3.3% expected vs. -3.6%/2.1% prior.
• US Mortgage Applications (MAR) out at 48.1% vs. -2.9% prior.
• US Durable Goods Orders (FEB) out at -1.7% vs. 0.7% expected vs. -5.3% prior.
• US Durable Goods Orders Ex. Transp. (FEB) out at -2.6% vs. -0.3% expected vs. -1.6% prior.
• US New Home Sales (FEB) out at 590K vs. 578K expected vs. 588K prior.
• US New Home Sales MoM (FEB) out at -1.8% vs. -1.7% expected vs. -2.8% prior.
• US DOE U.S. Crude Oil Inventories (MAR) out at 88K vs. 1800K expected vs. 133K prior.
• NZ Trade Balance (FEB) out at 258.0K vs. 140.0K expected vs. -320.0K prior.
• NZ Current Account Balance (4Q) out at -3.410B vs. -3.500B expected vs. -5.174K prior.
• NZ Account Deficit-GDP Ratio (4Q) out at -7.9% vs. -8.0% expected vs. -8.3% prior.
• JN Foreign Buying Japan Bonds (MAR) out at JPY-2346.7B vs. JPY853.0B prior.

Markets

• FX: The USD is weakening again. EURUSD soon about to take out the prior high at 1.5904.
• Fixed Income: Treasuries and JGB’s being picked up, but Bunds still weakening. All in uptrends, though.
• Equities: All regions weak, but down less than a percent.
• Commodities: All higher on USD weakness and lower than expected Crude Oil inventories.

O/N Data Heat map:

Calendar

Today’s Highlights:

This and Next Week’s Highlights:

What’s going on?

• New estimates for total writedowns among the financials yesterday. Both Goldman and UBS upping their estimates. This makes us change our call for short-term consolidation.
• In stead, it looks like we will have a round of ‘more of the same’ or consolidation in FX and stock markets. The USD and Carry Trades look quite weak and we think the JPY and CHF should continue to outperform, even if FX markets are just consolidating.
• Buy Bunds, they have some catching up to do vs. Treasuries and JGB’s. Use a stop below 116 and target 118.
• Precious metals might see some more buying interest after the sell-off last week. Especially if the USD continues lower.

FX

Counting on continued JPY strength

FX Trading Strategies

Equities

Financials Remain the Laggard In Class! - We Sell Commerzbank

• We expect the European markets to drop -0.5% in the opening. The banks will be in the focus again… The leading US banks lost ground yesterday evening after the closing in Europe because of further speculations of write downs in the first quarter. We stress that in the last weeks and still believe that the worst is not over yet. For the upcoming earnings season we recommend to stay short in banks. If you prefer single company than short UBS and for a spread trade make in relative against Deutsche Postbank. Another interesting story comes out of India, were steel producer reported a drop in earnings on the increasing raw material cost. We expect that this could happen in 2008 as well to European steal producer, after there forward buying contracts for iron ore runs out. It is too early to make the call to short them now, but keep an eye on the biggest producer Arcelormittal, ThyssenKrupp and Salzgitter.
• Trading Strategy: (Sell Commerzbank (CBKG:xetr): The German Commerzbank has rallied lately solely on an upgrade from Credit Suisse, we believe this move is overdone and the technical indicators are still in place for a renewed slide downwards. We recommend selling between 18.80-19.00. Keep a stop at 19.60 and target 16.80 initially.

Equity Trading Strategies

Futures

Gold: Technically Bullish, we Buy on dips.

• Buy Gold (gcm8) @ $943-948 Stop below $934, target $970.00.

Equity Index Levels

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