Equities and the Economy:  

More of the same, which is nothing. On Friday the Dow closed down 8 at 18,161, the S&P 500 lost 7 to 2,126 and the more volatile Nasdaq ended 36 points lower at 5,190. As has been the trend lately, stocks traded lower intraday with the Dow down as much as 75 points before rallying back. The big intraday dip came fast and hard happening on the announcement by the FBI that it was restarting the probe into Hillary Clinton’s emails. For the week the Dow eked out a 0.1% gain but the other two major indexes fell with the S&P and Nasdaq, down 0.7% and 1.3%, respectively. It’s been a quiet summer for stocks. The S&P has only moved 1.4% over the past three months.

The big report on Friday was from the Commerce Department which stated the U.S. economy grew at 2.9% in Q3. This was not only better than the 2.5% economists were forecasting but the fastest economic growth in two years. Definitely a good report. Other data Friday came from the University of Michigan which reported its Index of Consumer Sentiment fell from 91.2 in September to 87.2 in October which was well below forecasts of something closer to 89. The University’s economist explained the decline as angst related to the upcoming election.

This morning the Dow is literally flat to Friday’s close. Go get a cup of coffee. You’re not missing anything. I said this almost a month ago and will say it again. Barring something anomalous we’re not going to much movement until at least after the election.

By the way, the FOMC meets tomorrow and Wednesday. It’s not expected they will raise interest rates at this meeting.

Oil

Oil prices got clobbered on Friday with WTI closing down $1.02 at $48.70 and Brent off 76¢ settling at $49.71. The market continues to question the efficacy of OPEC and Russia agreeing on a production cut. This was reinforced over the weekend when the parties met in a technical conference. On Saturday Brazil’s Oil and Gas Secretary said the talks had yielded little progress. Despite that comment after the meeting ended OPEC and non-OPEC countries said in a joint statement that their weekend meeting was a “positive development” towards reaching a global output limit deal on November 30th. And then you have the report from Russia saying they expect crude oil production to hit a record high 548 million tonnes in 2017, up from an estimated 544 million tonnes this year. Additionally, Libya announced production continues to grind higher with output reaching 650,000 bpd last month. With the lack of any sign of progress at the meeting over the weekend WTI is down a material $1.24 this morning.

Courtesy of MDA Information Systems LLC

Natural Gas

Natural gas prices bounced a tad on Friday with natty closing up 3.7¢ at $3.105 and appearing to stabilize after plunging nearly 75¢ over the past couple of weeks. The bull’s albatross has been the abnormally warm weather and forecast. Record warmth will continue to give a summer feel into the first days of November this week with hundreds of daily record highs and warm lows likely to be set. Numerous daily record highs were broken yesterday. The weather should be spectacular for trick-or-treating tonight! Looking beyond this week, temperatures will be above normal for the next couple of weeks in the Midwest but the Appalachians eastward look to have normal temps.

With little changed fundamentally natty is feeling a tad of pressure with the December contract down 4.0¢.

Elsewhere

With the election a week from tomorrow, this week’s Elsewhere themes will be on the subject. Have you ever wondered why Republican states are red and Democratic states are blue? The coloring of states dates back to the election of 1976. Why then? Because prior to that time most of TV viewing was done in black and white. Color TV was still penetrating the market in the early 1970’s. It wasn’t until 1972 when color TV set sales surpassed black and white TV sales. It was in 1976 when ABC showed a map of the U.S. with the states different colors for each party to show how things were progressing. The states the Democrats won were blue. The states the Republicans won were yellow. Yes! Yellow. What’s interesting is that in the early days when a color convention had not taken hold, Democratic states were red and Republicans states were blue. The Democrats were designated as red because red was associated with left-wing politics. Right-wing movements were often seen as blue and associated with Republican ideas. It wasn’t until the presidential election of 2000 when on an episode of the Today show on October 30, 2000 Republican states were red and Democratic states blue. It was journalist Tim Russert’s of The Washington Post comment during his televised coverage who coined the term “red states” and “blue states” and thereafter the standard color scheme took hold.