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Before The Bell: Commodities Break Records; No Bailout For Ambac


Gold, Oil, Copper hit highs as Ambac plunges.

Morning Perspective: Record Breaking Commodities

According to Bloomberg, commodities are surging as the dollar continues to slide. Crude oil rose to a record $105.96 a barrel in New York and gold reached record highs touching $992 an ounce in London. Copper extended its best start to a year in two decades as stockpiles monitored by the London Metal Exchange shrank for an eighth consecutive day. The dollar fell against 13 of the world's 16 most actively traded currencies and the euro climbed to a new high of $1.5347 vs. the dollar, the highest since the currency debuted in 1999. Read Todd's view on commodities in yesterday's Random Thoughts.

From the Bull Pen: Bulls see upside in the Energy ETF (XLE) and Gold Fields (GFI); sell-stops below $75 and $14.50.

From the Bear Cave: Bears are wary of shorting a bull market and conscious of a rally by the dollar. Instead, bears expect these high prices to pressure the margins of companies like refiner Tesoro (TSO) and restaurant Cheesecake Factory (CAKE); buy-stops above $38 and $22 respectively.

No Bailout For Ambac

Ambac (ABK) rocked the financial markets yesterday after revealing its decision to issue $1.5 bln in equity. Shares of ABK plunged as much as 25% because investors had been waiting since last week for news of a bailout by the investment banks. Analysts remain skeptical that the plan will work as credit-default swaps on the company rose 38 basis points to 513. Further the company scared Wall Street after saying it could still operate with AA ratings. Credit Suisse (CS), Citigroup (C), Bank of America (BAC), and UBS (UBS) will handle the stock sale. For context read Bennet Sedacca's Credit Default Swaps Signal Brokerage Trouble.

From the Bull Pen: Bulls looking for financial exposure can look to MasterCard (MA). Professor Jeff Macke said he'd be a buyer of a sustained dip. Sell-stops can be set below $180.

From the Bear Cave: Bears can short the underwriters for this deal. Buy-stops above $40 for BAC and above $50 for CS.

For more ideas, see Minyanville's Spotlight Stocks.

Quick Check Around the World

Asian trading closed in the green with the Hang Seng +0.99%, Nikkei +1.88%, Taiwan +2.06% and Shanghai +1.59%.

A quick check of European bourses finds the CAC -0.22%, DAX -0.33%, FTSE -0.24%, ATX-0.03%, Swiss Mkt. +0.13% and Stockholm -0.08%

A Look At Commodities

Commodities are mixed. Crude oil is up +0.33 to 104.85. Gold is lower -4.40 to 984.00. Silver is lower -0.03 to 20.655, and copper is higher +1.05 to 400.00.

The dollar index is lower -0.248 to 73.231.

As of 8:45 AM EST, S&P futures are down -12 points to 1323, and Nasdaq futures are lower by 11 points to 1748.

On the Radar

Initial Jobless Claims: 351 k vs. 373 k prior.
Continuing Claims: 2831 k vs. 2807 k prior.

10:00 Pending Home Sales (m/m): -0.8% cons
1:30 ICSC Chain Store Sales (y/y): 0.5% prior

Click here for Minyanville's full trading radar.

Good luck, Minyans! Have a great day!
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No positions in stocks mentioned.

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