Good morning. After mass liquidation of length on Friday following the Fed’s decision on Thursday not to raise interest rates it was an about-face yesterday with risk once again in vogue yesterday. The Dow rose 126 points, 0.77%, closing at 16,510, the S&P 500 added 9, 0.46%, to 1,967 and the Nasdaq inched up 2 points, 0.04%, to 4,829. The Nasdaq had a ball and chain shackled to it all day with the Nasdaq biotech index down 4.4% on the day due to Hillary Clinton’s comment she would announce a plant to stop “price gouging” for specialty drugs. The Dow and S&P rose on comments by Atlanta Fed Reserved President Dennis Lockhart, a voting member, that last Thursday’s Fed decision not to raise rates was a close call and that he still expects lift off by the end of the year. It’s a strange world when hawkish comments from the Fed members spurs the buying of equities. What’s going on here is the market/investors are tired of the guessing game of when rates will be raised. This brings confusion to the market and confusion breeds contempt. I think most investors are thinking “Raise the darn rate and get it behind us so we can focus on other matters.”

Turning to fundamental data, the National Association of Realtors reported yesterday that August’s existing home sales fell 4.8% month-on-month from the 5.58 million annualized units in July to 5.31 million units. The number was marginally less than expectations however, compared to the same period a year ago sales are up 6.2% from 5.0 million units. The median price for an existing home rose 4.7% to $228,700 from the same period 12 months ago. Sales were down, especially in the south and west, not because buyers aren’t out there but due to the continuation of the theme that has persisted all summer which is tight inventory.

This morning we are, unfortunately, seeing a day more like Friday than yesterday with Dow futures getting bludgeoned being down 271 points. U.S. equities are following European equities with the three major bourses all getting hammered currently trading down between 2.24% and 3.16%. VW is most certainly not helping the DAX, Germany’s main index. After falling 18% on Monday it’s down another 20% today wiping out more than €14 billion of market capitalization. Acknowledging the emissions-cheating issue related to 11 million vehicles worldwide the company has set aside €6.5 billion to cover measures related to the issue. I really feel sorry for the VW employees who have been working hard for the company and been putting money away in their retirement plans only to see the value drop about 37% in just two days. I’d feel betrayed.

Oil

Oil prices caught a bid yesterday on the coattails of rising equities with WTI rising and even $2, 4.5%, closing at $46.68 and Brent adding $1.45. 2.9%, settling at $48.92. WTI also bid up on the Baker Hughes rig count report released late Friday showing the a drop in the number of rigs looking for oil. Traders are erring bullishly at current price levels because the last few DOE reports are showing U.S. production is starting to drop. A 60% annual drop in the rig count tends to do that. This morning WTI is feeling the pull of lower equities giving back 70% of yesterday’s gains being down $1.40. Today the API released its crude and products data after the bell which traders will look at for price direction.

Courtesy of MDA Information Systems LLC

Natural Gas

The October natural gas price slipped 3.2¢ yesterday closing at $2.573 and at the lowest level since the first week of June. Natty prices have fallen nearly 9% over the past five trading sessions and about 25¢ over the past week. It’s all about the weather and in this case the NOAA released its October forecast yesterday showing temperatures in the eastern third of the country to be above normal for the month. If the forecast comes to fruition you folks in the northeast are going to have a spectacular October. There’s no doubt this forecast is a result of the El Nino. That being said, all the weather forecasters I’ve spoken with state that we won’t get a true handle on the El Nino until the end of October. This morning natty is bouncing a tad being up 1.5¢.

Elsewhere

Did you know that Amazon.com was originally named Cadabra.com? However, Jeff Bezos, founder and CEO, changed the name to Amazon from Cadabra fairly early on for a very good reason. In the early internet days when Yahoo was the dominant search engine Yahoo listed its results alphabetically. By changing the name Amazon would always appear above its competition for specific keywords. Have a good day.