Equities and the Economy:

As you regular readers know last week was all about Deutsche Bank, Europe’s largest investment bank, and all of it was bad news which weighed on global equities. As I said last week, when bad news hits a major bank investors take note. Well the news turned positive on Friday with a report that the German banking giant was near a settlement with the Justice Department which brought in not only buyers of the bank’s stock but all equities. The bank’s U.S. listed shares rose a whopping 14% on Friday which pushed global equities higher including the U.S. major indexes. After being up as much as 226 points on the day the Dow closed up 165 points, 0.91%, ending at 18,308, the S&P 500 rose 17, 0.80%, to 2,168 and the Nasdaq added 43 points, 0.81%, at 5,312. For the 3rd quarter, which is the most important thing because we want to see the forest not the trees, the Dow rose 2.11% and the S&P was up 3.31% both posting a 4 quarter winning streak and, are you ready for this, the Nasdaq was up a whopping 9.69%, albeit after a 2 quarter slide. Those gains extrapolate to a very nice annual increase amigos.

Turning to the economic news, on Friday it was reported that Personal Incomes rose 0.2% in August, as expected, with spending flat with expectations of a 0.2% rise. Core Personal Consumption Expenditure (PCE) rose 0.2%, also as expected. The PCE data is very important for it is the Fed’s preferred inflation measure. The take-away from the data is that it looks like consumers are saving their increased income rather than spending it. In other data, the Chicago Purchasing Manager’s Index came in at 54.2 in August, same as July, and well above expectations. Remember, a number above 50 indicates expansion.

When I came in this morning Dow futures were marginally higher but are currently on the defensive being down 55 points. It’s early. The market is meandering this morning looking for direction.

Oil

Oil prices got some follow through from OPEC’s announcement on Wednesday of a tentative agreement to limit production with WTI closing up 41¢ at $48.24 which is a day after rising 78¢ which followed Wednesday’s gain of $2.38. See a trend there? Still, I remain very skeptical regardless of rhetoric and supposed agreement on paper that a production freeze will actually occur. Even if it does the U.S. shale producer is happy to fill any gap. And oh, did I mention the rig count increased again last week?! This time by 11. Per Baker Hughes, the recognized keeper of such information, 7 more oil rigs were put into action and 4 more gas rigs. On Friday OPEC reported its member states’ collective production rose to 33.6 million bpd form 33.53 the month previous with Iraq and Libya responsible for the increase. If that’s not enough, Russia reported its September production rose a stunning 4% to 11.11 bpd. This is a post-Soviet Union record. And a production freeze is proposed?! As Desi told Lucy, “You got some ‘splain’n to do!” OPEC.

This morning WTI is literally flat to Friday’s close.

Courtesy of MDA Information Systems LLC

Natural Gas

Natural gas prices slipped on Friday falling 5.3¢ settling at $2.906. The cash market was weaker going into the weekend on a combination of lower demand being we’re in the shoulder season and it being a weekend when demand is always lower. The short term weather forecast is definitely helping the bears with materially above normal temperatures forecasted for the next 5 days followed by slightly above normal temps in the 6-15 day time frame. No load there. That being said, due to the decommissioning of coal fired plants and coal to gas fuel switching, Bentek Energy, a research group, is forecasting power sector demand for natural gas to be up 4% from last October and a record for the month.

This morning natty is down marginally, 2.4¢. Chatter.

Elsewhere

If you have Aetna as your insurance carrier you just might have a cool new option. Last week they announced they will help pay for Apple smartwatches for customers as part of a move to integrate the gadgets into wellness management programs. In the coming open enrollment period Aetna will make Apple Watch buys an option for large employers and individual customers, becoming the first major health care company to subsidize “a significant portion” of the cost of the Apple Watch. Also, Aetna said it would let people pay off the balance owed using a monthly payroll deduction plan if desired. Practicing what they preach, Aetna said it will give each of its nearly 50,000 employees an Apple Watch if they participated in a company wellness program incorporating the internet-connected wrist gear. The company also said it is planning health initiatives that will include apps tailored for the iPhone, iPad and Apple Watch. Apple Wallet digital billfold will be incorporated into the apps which will let people pay their medical bills or prescription costs.