Good morning. After Monday’s head fake getting us excited with the gains equities resumed their downward trend from last Friday with the Dow closing 179 points, 1.09%, lower at 16,330, the S&P lost 24, 1.23%, to 1,943 and the Nasdaq closed ended down 72, 1.50%, at 4,757. Now the good news is that as a result of last week’s Monday through Thursday’s rally we’re still above the lows on 9/14, 9/4 and that super ugly low on August 25th. It was commodities, specifically a rout in mining stocks, that pulled stocks down yesterday. The culprit was Credit Suisse who downgraded the sector and severely cut its commodity price forecasts on the back of growing concerns over a slowdown in demand in, guess where, China. The selling took the Bloomberg Commodity Index, a key commodity index, to its lowest level since late August. The index has lost 16% year to date. Adding to worries, the Asian Development Bank in a report yesterday cut its regional forecasts for this year and 2016 forecasting the region’s GDP will grow 5.8% in 2015 and 6.0% in 2016, down in both cases from 6.3% previously forecast.

As I mentioned yesterday and Monday, VW’s stock has been hammered losing about 30% Monday and Tuesday, and the CEO’s of the U.S. manufacturers are cussing out VW for they are feeling the impact of VW’s deceit. Yesterday Ford lost 2.8% and GM fell 1.9%, both more than the major indexes.

China’s economy is under the microscope of late and Caixin Media and Markit Economics reported overnight that their “preliminary” Purchasing Manager’s Report for September fell to a truly disconcerting 47.0 down from 47.3 last month. As in all PMI’s anything below 50 signals economic weakness. This is lowest level this particular index has fallen since the spring of 2009! This is pouring gasoline on the fear of a slowing Chinese economy fire.

The Asian markets got clobbered overnight but this was all catchup to U.S. and European equities. More importantly, European stocks are bouncing from yesterday’s knackering with the major indexes up between 0.75% and 1.71% buoyed by another PMI report. The report’s index was down in September from August but is still at its highest level in more than 4 years. Investors of U.S. equites are not as enthusiastic this morning for the Dow is down 26 points. And you should be really glad for it opened up at midnight eastern time down 265 points. This is only my opinion folks but I believe we’re in a bear market for now and we’ve yet to see the low.

Oil

Oil prices hung in there yesterday with WTI losing 85¢ closing at $45.83. Brent actually rose 16¢ to $49.08. This is of course after getting hammered on Monday. Prices were lower but recovered some of their losses near the close following a report that Colonial Pipeline shut down its petroleum products pipeline. But this is a short term matter. A more important matter to traders is the long term prospects of U.S. oil production declining due to the massive drop in rig count. Last night the API reported after the bell that crude inventories fell 3.7 million barrels last week which was a huge drop but offsetting that was a rise of product inventories (mostly gasoline and diesel) of 2.2 million barrels. The aggregate was a drop of 1.5 million barrels which was pretty much in line with expectations. Now I’ve mentioned countless times that the API data must be taken with a grain of salt for reporting is voluntary. The DOE’s report, which is released today, carries much more weight for reporting is mandatory. This morning WTI is quiet up 11¢. I don’t see much downside for oil prices.

Courtesy of MDA Information Systems LLC

Natural Gas

Natural gas prices were moribund yesterday with the October Nymex contract closing 0.4¢ higher at $2.577. The calendar 2016 strip was unchanged from Monday’s close. Total chatter. Prices have stabilized after having dropped nearly 20¢ over the past couple of weeks and are at their lowest levels since late April. Forecasts of very mild weather throughout the eastern third of the nation for October has brought the bears out. Keep in mind that the lower prices go, the more coal fired generation will be displaced by natural gas fired generation which increases demand. And there’s a lot of coal fired generation out there folks. Today is the autumnal equinox, the astronomical start of autumn, aka fall, which is when the sun is directly above the equator. On this day both the day and night are roughly 12 hours long all over the world. It may be technically the beginning of autumn but it we’re experiencing an Indian Summer for temperatures across just about the entire U.S. for the next 2 weeks will be above normal. You folks in the upper Midwest and Northeast are going to have some spectacular weather! This morning natty is sedate up 1.2¢.

Elsewhere

I’m very sad to report that an American cultural icon passed away last night. Yogi Berra died at the age of 90. Yogi Berra was a phenomenal baseball player and manager but his legacy is that of his Yogi-isms in which he mixed up his words but they still made a sound point. In a tribute to the late, great Yogi Berra here is some of his wit and wisdom.

On getting enough rest: “I usually take a two hour nap from one to four.”

On “fan” mail: “Never answer an anonymous letter.”

On education: “I’m not going to buy my kids an encyclopedia. Let them walk to school like I did” and “You can observe a lot by watching.”

On the future: “The future ain’t what it used to be.”

On travel: “If you don’t know where you are going, you might wind up someplace else” and “Why buy good luggage? You only use it when you travel” and “The towels were so thick I could barely close my suitcase” and “When you come to a fork in the road, take it.”

On social life: “Nobody goes there anymore. It’s too crowded” and “It get late early out here.”

On youth sports: “I think Little League is wonderful. It keeps the kids out of the house.”

On the human anatomy: “I don’t know (if they were men or women fans running naked across the field). They had bags over their heads.”

On weather: It ain’t the heat. It’s the humility.”

On finances: “A nickel ain’t worth a dime anymore.”

On baseball: “In baseball, you don’t know nothing” and “We make too many wrong mistakes” and “If the people down’s want to come out to the ballpark, nobody’s going to stop them” and “Baseball is 90 percent mental. The other half is physical” and “He hits from both sides of the plate. He’s amphibious”

On being a philosopher: “”I didn’t really say everything I said.”

On death: “You should always go to other people’s funerals, otherwise, they won’t come to yours.”

Have a great day.