Equities and the Economy:

Booooring. Directionless. That’s what this market is. Although U.S. stocks closed lower yesterday it was really just another choppy day. The Dow finished 30 points off at 18,170, the S&P 500 fell 6 to 2,133 and the Nasdaq ended down 34 at 5,216. It really does seems as if investors are waiting to get through at least the election before making any major decisions. Earnings season is progressing on a positive note. With about half of the S&P 500 having reported earnings for Q3 are expected to grow 2.6%, up from the 0.5% decline anticipated at the beginning of October. If the season ends like this it would be the first quarter of profit growth since Q2 2015.

The market really does believe the Fed will raise interest rates this year (probably in December). Evidence: the yield on the 10 year T-bill hit 1.87%, the highest level in 5 months. Speaking of sovereign debt, get this one. Poland this week raised euro 250 million in the international market by selling 2 year zero coupon bonds in a private placement. Guess what the yield was? -0.6%. Yes negative! Poland is considered an emerging market. The fact that the country can raise money at a negative interest rate is amazing. Remember, interest rates are the markets quantification of risk. I have to wonder if the market accurately priced the risk in this transaction.

Regarding fundamental data, the Labor Department released its weekly intimal jobless claims for last week which fell by 3,000 to 258,000 and right at expectations. This marks the 86th consecutive week claims have been below 300,00 which is the number normally associated with a strong jobs market. This is the longest stretch since 1970 claims have been below 300,000, and at that time the labor market was much smaller. Labor market healthy at about 5% unemployment. Core inflation around 2%. The Fed has met its goals. Now you can understand why so many Fed officials want to raise interest rates and begin curtailing the incredibly accommodating monetary policy we’ve been in for 7 years.

This morning is more of the same we’ve seen for weeks. The Dow is up 38, the S&P is up 5 and the Nasdaq is up 10.

Oil

Yesterday oil prices recouped some of their Wednesday losses with WTI closing up 54¢ at $49.72 and Brent climbing 49¢ at $50.17. This was oil’s first gain in 4 sessions. Oil’s price gain came on statements from Saudi Arabia and Russian they are willing to cut 4% from their peak production. Obviously the market is skeptical as evidenced by the meager price move. We may get a better idea on the progress of a cut in a few days because OPEC has a “technical” conference today and a meeting with non-OPEC members tomorrow in Vienna. The official meeting is November 30th. As I’ve said previously, there may be an oral and even written agreement, but I don’t believe the quotas will be observed. We’re talking Russia here. We’re talking Putin. We’re talking KGB!

This morning WTI is giving up yesterday’s gains trading down 25¢. Chatter as we trade loosely around $50.

Courtesy of MDA Information Systems LLC

Natural Gas

The EIA released its weekly storage report yesterday stating 73 Bcf was injected last week which was close to the expectation of 75 Bcf. Natty prices did manage to rally slightly yesterday and the November contract, which expired yesterday, closed up 3.3¢ at $2.764. The December contract climbed 3.2¢ at $3.068. Of note to me, the Calendar 2017 strip popped 5.8¢. With the way prices have gotten destroyed over the last couple of weeks yesterday’s action was most definitely profit taking.

Returning to storage, currently there is 3,909 Bcf in storage. We are now 52 Bcf above where we were last year at this time and 182 Bcf above the five year average. Last year’s record amount of gas in storage, 4,006 Bcf, is in sight. In fact, with the current weather forecast we’ll beat it ending somewhere between 4,020 Bcf and 4,030 Bcf. Traders figured this out a couple weeks ago and this, along with the weather forecast, is why natty sold off so hard.

This morning traders are off their desks in the kitchen eating kolaches and drinking coffee with natty flat to yesterday’s close.

Elsewhere

This is eerie, and thought provoking. A team of scientists have revealed new research that seem to indicate intelligent aliens beyond planet Earth exist and are trying to communicate with us. A paper titled “Discovery of peculiar periodic modulations in a small fraction of solar type stars” doesn’t necessarily sound like a stunning discovery to most people but the paper may turn out to be the first step in the quest to establish the presence of intelligent life beyond our solar system.

An analysis of 2.5 million stars that researchers have been watching has revealed 234 stars giving off “strange modulations” that suggest their origins are likely caused by alien species rather than natural causes. “We find that the detected signals have exactly the shape of an [extraterrestrial intelligence] signal predicted in the previous publication and are therefore in agreement with this hypothesis” two researchers wrote in the new paper. Here may be the rug though. The mathematical tool the researchers used to reach their conclusion hasn’t been really studied in depth yet. It analyzes super quick light pulses of less than a trillionth of a second. “Phone home.”