Equities and the Economy:

• Dow and S&P 500 suffer minor losses.
• Nasdaq closes at new record high.

The tech heavy Nasdaq gained 11 points yesterday and while it was only 0.2% it was enough to push the index to a new record closing high of 5,488. The Dow and S&P 500 suffered minor losses falling 43 points and 2 points, respectively. The Dow was down as much as 131 points intraday. The big loser was the financial sector but this was profit taking being that this sector has seen the largest gains on the prospect of higher interest rates and Trump reflation.

There were a couple important economic reports yesterday. The first, and more important, was ADP’s private sector employers report which stated 153,000 new jobs were created in this sector in December. This was below Wall Street’s estimate of something closer to 175,000. According to Moody’s Analytics’ Chief Economist, Mark Zandi, “Job growth remains strong but is slowing. Smaller companies are struggling to maintain payrolls while large companies are expanding at a healthy pace.” Remember, ADP’s employment report is a prelude to today’s big Labor Department employment situation report for December.

The other report was the Labor Department’s weekly first time unemployment claims report noting first time jobless claims fell 28,000 to 235,000. That’s near a 43 year low!

The Labor Department just released its December jobs report stating the U.S. added 156,000 new jobs in the last month of 2016. This number was below economists’ forecasts of 180,000 but the stand-out statistic was that workers’ wages rose at the fastest pace since the Great Recession which is a response to the tighter labor market. I guarantee you the Fed noted this data point.

Investors seem to be yawning at the jobs report for the market is doing nothing this morning with the Dow up a meaningless 8 points.

Oil

• WTI gains 50¢ closing at $53.78.
• Highest closing price in a week.

Oil prices closed slightly higher yesterday with WTI rising 50¢ to close at $53.76 and Brent added 43¢ settling at $56.89. It’s been a very volatile week but yesterday’s WTI close was its highest since December 29th. The DOE released its weekly crude and products report yesterday, and it was a whacky one. While the report showed crude inventories fell markedly more than expectations, 7.1 million barrels compared to a forecast of 2.0 million barrels, gasoline and distillate inventories surged higher. Gasoline supplies increased by 8.3 million barrels, seven times expectations of 1.3 million barrels, and distillate inventories rose by 10 million barrels, twenty times the forecast of an increase of 500,000 barrels. So why the craziness? Taxes. The report was for the last week of the year and that’s the time frame the government uses to establish the crude inventory amount for paying taxes. Concurrently, refinery runs were strong due to demand.

The EIA reported this morning that the average price paid for gasoline across the country in 2016 was $2.14, 29¢ per gallon less than 2015. That’s the lowest annual average since 2004! No wonder trucks and SUV’s are selling like hot cakes!

This morning things are quiet. WTI is down 3¢. Chatter.

Courtesy of MDA Information Systems LLC

Natural Gas

• Natural gas price closes little changed at $3.273.
• EIA weekly storage report bearish.

Despite a bearish EIA weekly natural gas storage report February natural gas ended little changed closing down less than a penny, 0.6¢, at $3.273. The EIA’s weekly storage report yesterday stated 49 Bcf was withdrawn from storage last week which was way below the estimate of 75 Bcf. Interestingly and surprisingly, the South Central region (Gulf Coast) actually injected 14 Bcf. So why did this region inject in late December, in the middle of winter? Storage arbitrage amigo, storage. Take it from someone who managed 6 Bcf of salt dome storage. The cash/futures spread widened to the point where a holder of storage capacity could buy physical gas and concurrently sell futures and lock in a profit. That’s arbitrage my friends.

This morning natty is sedate up 1.3¢.

Elsewhere

With the inauguration fast approaching I thought I thought you would like some more interesting facts on American history.

• Captain John Smith created the first U.S. tourism marketing campaign when he coined the term New England.

• The first law code in the U.S. was Dale’s Code of Laws Divine, Morall, and Martial enacted in 1611 in Jamestown.

• The last letter written by Thomas Jefferson was dated June 26, 1826 declining an invitation to participate in the 50th anniversary of the Declaration of Independence in Washington D.C. He was too sick to attend.

• Three presidents died on July 4th: Thomas Jefferson, John Adams (both in 1826) and James Monroe (1831).

• The first submarine attack ever occurred in New York Harbor in 1776. Inventor David Bushnell created the Turtle. The pilot was to attach a torpedo, a powder keg, to the hull of the HMS Eagle. He failed to do so because the Turtle became entangled with the Eagle’s rudder and surfaced before it could be planted. The timer on the keg kept ticking and the keg exploded in the middle of the harbor causing a spectacular explosion in the harbor.

• George Washington was not the first president of the United States. He was the first president under the U.S. Constitution. John Henderson was the first president under the Articles of Confederation.

• Founded by Admiral Pedro Menendez de Aviles in 1565, St. Augustine, Florida is the oldest city in the U.S.

• The official signing of the Declaration of Independence occurred on August 2, 1776. It was signed by 50 of the 56 men. Thomas McKean was the last to sign in January of 1777. Their names were withheld for several months to protect the men. Had the colonies failed in gaining independence the signers would have been guilty of treason.