Equities and the Economy

As I suspected, with it being Veteran’s Day yesterday and the bond market and banks closed, U.S. equities really didn’t do much. Trading was directionless and when the final bell rang the Dow was off 56 at 17,702, the S&P 500 closed down 7 at 2,075 and the Nasdaq fell 16 ending at 5,067. Pretty much chatter. Actually, yesterday marked the 2nd consecutive day of directionless trading. Everyone is waiting around for the next major event. Energy stocks were the big losers yesterday on falling oil prices. Being it was Veteran’s Day no government reports were released and there was no private economic reports of significance either. So let’s just move on to today.

Although the Asian markets closed mixed, European markets are under pressure all trading moderately negative between 0.83% and 1.43% with the latter dragging U.S. stocks this morning with Dow futures down 97. This morning the Labor Department released its weekly unemployment claims data showing applications for unemployment benefits holding steady at lows not seen since the early 1970’s. They have now held below the 300,000 level for 36 consecutive weeks, the long stretch in years. Claims below this level are indicative of a healthy jobs market. The word in the market this morning is that in addition to lower European stocks, lower oil prices this morning are weighing on U.S. equities.

Today there will be a virtual tsunami of Fed spokespeople out speaking including Mr. Bullard, Dr. Yellen, Mr. Lacker, Mr. Evans, Mr. Dudley and Mr. Fischer. Whew! This is going to give investors plenty to digest.

Oil

Oil prices got whacked yesterday with Brent falling 3.5%, $1.63, closing at $45.81. WTI didn’t fare much better losing $1.28, 2.9%, settling at $42.93. The overarching theme remains the same. Lots of supply, especially with the report yesterday that Iraq is exporting to the U.S. the most crude in more than 3 years, and shaky demand, with continuing concerns about Chinese growth, or lack thereof. Although WTI is down $1.03 this morning, you bears better be careful. Position reports show producers have increased short positions in Brent futures to record highs of almost 1.3 million which is evidence they are increasingly hedging their production, possibly on expectations of falling prices.

Courtesy of MDA Information Systems LLC

Natural Gas

The El Nino and accompanying warm weather continue to weigh on natty prices with the December contract closing down 5.7¢ at $2.263. Actually though, for the last 2 weeks we’ve been waffling around the $2.30 level. As I’ve previously stated, you bears better be careful. Everyone has their short position already on with a record number of shorts out there and we could easily see a price bounce. The forecast remains the same with warmth in the east, and cold in the west. The Colorado ski resorts are loving it! It’s been snowing out there and the season is getting off to a great start! Natty is dead this morning being up a meaningless 1.4¢.

Elsewhere

Here’s something for you to think about. “Don’t let the facts distort the truth!” Something a politician would say.  Have a nice day.