Equities and the Economy

Good morning. It was a great day for our portfolios and 401K’s yesterday with the Dow soaring 156 points (0.86%) to 18,289 and the S&P 500 up 13 (0.59%) to 2,117. It was the 4th time this year the Dow set a record close and the 5th time for the S&P. But all the buzz yesterday was about the Nasdaq which ended up 44 (0.90%) at 5,008. This was the first time the Nasdaq closed over 5,000 since the dot-com bubble back in March, 2000! What’s the old saying? “You’ve come a long way baby!”

The Commerce Department reported yesterday that consumer spending dropped 0.2% in January falling for the second consecutive month. Economists expected the dip with falling gasoline prices during the month. Actually, after removing the decline in the always volatile energy component consumer spending rose a solid 0.3% and after-tax income, after adjusting for inflation, was up 0.9%. Also, income grew a solid 0.3% in January as wages and salaries increased a robust $42.4 billion. No doubt the recession is well behind us folks.

So what we have is a pretty darn good economy here in the U.S. with QE happening in China and Europe. That’s a good recipe for equities amigos!

This morning after setting records yesterday stocks are retreating with the Dow down 76 points and the Nasdaq is back below 5,000. Let’s call it a breather. A bivouacking. What I also like about this market is that I’m not seeing/feeling euphoria. Equities are climbing the proverbial “wall of worry” which is positive for stocks

Oil

WTI was volatile on the day but settled close to unchanged to Friday with WTI off 17¢ closing at $49.59. However, Brent got whacked losing $3.04 (4.9%) closing at $59.54. Moving Brent were independent reports yesterday that both Libya and Iraqi exports had surprisingly and materially increased. And guess what? The schizophrenia continues this morning. Brent is up $1.56. Apparently, there was an airstrike on a Libyan oil port overnight. I’m sure the surprises will keep on coming in the Iraq and Libya for no one is really in charge there with ISIS all over the place and tribal warfare prevalent as well as the “official” government fighting to gain any semblance of control. While Brent is bouncing WTI is doing nothing being up a chattering 20¢.

Courtesy of MDA Information Services LLC

Natural Gas

Although the 11-15 day forecast came in materially warmer yesterday natty fell only 3.6¢ settling at $2.698. Very, very cold weather is prevalent for the next 5 days over the entire eastern 2/3rds of the country which is keeping cash prices strong. Today’s 11-15 day forecast is even warmer than yesterday’s with above normal temperatures spreading to the eastern seaboard. You folks in the Midwest and east will finally get a long overdue reprieve from your recent experience of what living in Siberia is like. Get ready for the next headline! “Flooding Rampant As Rives Rise Due to Snow Melt.” This morning, and despite the warmer forecast, natty is moribund trading flat to yesterday. Warmer weather. No drop in price. Hmmm.

Elsewhere

Bet you didn’t know this but those cable TV boxes we all have can be energy suckers. About 85% of all U.S. households have at least one set-top box (STB). Some of these STBs are so inefficient they consume half of the electricity a typical refrigerator uses in a year and many households (like mine) have multiple boxes. The issue is these boxes are essentially never off. Even in sleep/standby mode most of them consume nearly the power they do when in active mode, which is 15-20 watts. Some models do have an energy saving mode such as “deep sleep” but this feature may not be enabled. No federal appliance standard currently exists for STBs but energy efficiency advocates, set-top manufactures, service providers and the federal government have voluntarily agreed to improve energy efficiency of the boxes generally based on the ENERGY STAR program’s product specifications. The voluntary agreement was made effective January 1, 2014 and states that 90% of all new STBs purchased by service providers for delivery to customers should meet the current ENERGY STAR specification, with a more stringent specification going into effect January 1, 2017.

On a logistical note, I will be travelling on business the next few days returning Friday which is when you’ll be able to get your next Morning Energy Report fix! Have a nice day.