Equities and Economy

Good morning. On the heels of skyrocketing European equities U.S. stocks started the day green and climbed as high as 109 points higher than Monday’s close and all was looking good. Then reports of a bomb at a soccer stadium in Hanover, Germany hit the wire and the U.S. market did an about-face. The stadium was evacuated and no bomb found but the reversal in U.S. stocks highlighted how twitchy investors are and the major indexes closed very close to Monday’s settles. The Dow and Nasdaq managed to eke out minuscule gains of 7 and 1 points, respectively, while the S&P 500 closed down 3. All chatter, but the price action was not constructive.

Regarding fundamental economic news, U.S. industrial production came in a bit disappointing for October falling 0.2% for the 3rd consecutive month pulled down by mining, which includes the oil and gas sector. The stronger dollar is coming into play here which is hitting 7 month highs vs. the euro. Core inflation was reported (excludes the more volatile energy and food components) rising y-o-y 1.9% extending its multi-month climb. This is virtually at the Fed’s 2% goal which is one of the reasons the Fed is looking to raise interest rates.

Today the FOMC will release the minutes of its October meeting which may get more than the usual attention with Janet Yellen since the meeting stating an interest rate hike in December is very much on the table.

This morning is starting out mixed. The Asian markets closed mixed and the European markets are trading marginally lower but that is not a surprise considering they rose a big 2.6%-2.8% yesterday. U.S. futures are looking for direction opening up lower but now up 3. Chatter.

On a side note, gold prices are near 6 year lows and copper, a bellwether of global growth, is down 26% this year, which follows a 14% decline in 2014. Slowing demand from China is behind this base metals decline.

Oil

After rallying in Monday oil prices got whacked yesterday with WTI falling $1.07 to $40.67 and Brent closing down 99¢ at $43.57. Yesterday’s closing prices are once again testing 2 months lows. Ample global inventories and data showing the world is oversupplied by 700,000 to 1.5 million bpd is outweighing the risk of any Middle East supply disruption. It’s also not helping prices with the Iranian oil minister stating yesterday that Iran will not seek OPEC’s approval to boost exports once sanctions are removed. And then there is the UAE’s oil minister, Mr. Suhail Mohamed al-Mazrouei, telling an energy conference yesterday his country plans to raise production in the coming years.

Yesterday the API released its crude and products data noting crude inventories unexpectedly fell 482,000 barrels which is putting a mild bid into the market this morning with WTI up 50¢.

Courtesy of MDA Information Systems LLC

Natural Gas

Natural gas prices opened 10¢ lower yesterday morning with the overnight weather forecast shifting warmer for the east coast but the dip brought in some profit taking by buyers and at day’s end the market closed down 1.4¢ at $2.371. The inconsistent weather forecasts have led to a two day range of 18¢ but less than a 1¢ move from the close three days ago. This really doesn’t surprise me. After 20 years of trading I know that in the winter the weather forecast is everything and knee jerk reactions happen all the time. Speaking of the forecast, it looks like the east coast, east of the Appalachians, was warmed up from yesterday with above normal temperatures forecasted for the 11-15 day time frame. The entire western plains and Rockies will have temperatures below to much below normal, but no trader cares. There’s no load there. This morning we’re starting out very quietly with natty up 0.8¢

Elsewhere

You got to be a little old to understand today’s Elsewhere but the story is just too interesting not to be told. There once was boy named Benjamin Kubelsky. Nobody in his hometown saw much promise in him, even his father, Mayer. In fact, the Waukegan, Illinois haberdasher became so disenchanted with his son that he fired him when the lad fell asleep while minding the store and let a phony customer steal eleven pairs of pants. Benjamin didn’t have any more success in school. His teachers accused him of being more interested in theater than in learning, and they were pretty much on target for he was asked to leave the school in his second year of high school.

Now Benjamin had been taking violin lessons since he was six, and it was his true love. At the age of 16 he applied for first chair in the Waukegan Theater Orchestra. He sincerely believed he performed stupendously but all they offered him was a job as a door man. When he finally did make it to the orchestra pit, unfortunately, the theater closed. By this 17th birthday nearly every door was being slammed in his face. He then announced he was going to take his fiddle to vaudeville which made his father’s blood boil. He ordered Benjamin out of the house stating, “All actors were bums,” and actresses “were immoral.” Benjamin was not deterred. He formed a partnership with a piano player and toured for 4 years. Then the United States went to war and his life would forever be changed.

Kubelsky joined the navy and, unsurprisingly, landed in the entertainment department. His job was to play for the recruits at the Great Lakes Naval Station. He played quite well, but the performance didn’t do much for the troops. They were looking for something else. One day his commanding officer said to him, “For God’s sake, talk.” Obeying orders, Kubelsky put his violin under his arm and began to make fun of the navy. He was an instant success!

As much as he loved the violin, it stayed under his arm. Benjamin Kubelsky had discovered a powerful, hidden talent. He could make people laugh. He came to figure though that if he wanted to appeal to a wide audience he needed to change his name to something they could pronounce. That is how Benjamin Kubelsky became the famous Jack Benny who for many years kept America laughing.

Have a good day.