Equities and the Economy:

• Dow posts 11th straight record.
• S&P 500 has 5th weekly gain.

U.S. equities have been screaming the last 3 ½ months and the party continued Friday. The major indexes traded in the red for almost the entire day but staged, literally, a last minute rally ahead of the closing bell extending the Dow’s winning streak to 11 days. The blue chip index closed up 11 points at 20,822. This is the first time since 1992 the index has posted 11 days of consecutive gains and the longest streak of consecutive record closing highs since 1987. The S&P 500 added 4 to 2,367, also a record high, and the Nasdaq finished up 10 points at 5,845. For the week the Dow rose 1%, the S&P 0.7% and the Nasdaq 0.1%. Last week marked the 5th straight weekly advance for the S&P and the Nasdaq and the 3rd straight for the Dow.

Regarding fundamental data, the Commerce Department reported new home sales rose 3.7% in January vs. December and up 5.5% from a year ago. Housing remains strong. On a mildly disappointing note, the University of Michigan reported its index of consumer sentiment fell form 98.5 in January to 96.3 in February. Although a decline, consumer sentiment is still “healthy.”

This morning global equities are on the defensive with all the major Asian bourses closing down and the European markets currently trading negative but the Dow is bucking the trend up 20 points.

Oil

• Oil prices continue to be range bound between $50 and $55.25.
• Speculative traders trading it from the long side.

Oil prices remain in the mid-$50’s basis WTI. On Friday it closed down 46¢ at $53.99 and Brent finished off 59¢ at $55.99. Since early December it’s really just been trench warfare with WTI trading between $50 and $55.15. The speculative traders are bullish. Per the latest CFTC data, traders have built a net long position of nearly 48,000 contracts which is an all-time high. Now in full disclosure in dollar terms the exposure, which is $30 billion, is at its highest level since August 2014. Today’s cheaper oil prices translate into a lower net dollar exposure. That being said, the boat is listing pretty heavily to the long side. Traders seem to be focusing on declining OPEC production and not the fact that U.S. production continues to climb and is currently at a one year high of 9 million bpd.

The U.S. rig count keeps climbing. Last week 5 more oil rigs were added to the U.S. oil rig count totaling 602. This is the highest level since October 2015. The Permian Basin in Texas continues to lead the nation with 306 rigs working there. The natural gas rig count declined by a couple of rigs.

This morning it’s more of the same with WTI up 23¢.

Courtesy of MDA Information Systems LLC

Natural Gas

• The March Nymex contract expires for the month at $2.627.
• Record setting warmth the story of February.

The March Nymex contract has gotten hammered all month due to the record setting warm weather this February and on Friday it expired for the month at $2.627, up a penny from Thursday. Based on gas weighed population degree days this February is going to be the warmest on record, by a long shot. This morning the bears maintain their dominance with April beginning its tenure as the front month contract down 9.9¢ at $2.688. We’re getting close to price levels where coal will be displaced for natty. This Wednesday Chicago and New York are going to be 25 degrees above normal!

Elsewhere

I’m sure many of you watched the Oscars last night. A record of sorts was set. The Best Picture of the Year Award was awarded to the wrong movie! Warren Beatty and Faye Dunaway announced that La La Land won the coveted award. The La La Land crew even took the stage and began to give speeches only to be truncated by a panicking production crew telling them they hadn’t won! Moonlight was the real winner. Don’t blame Beatty or Dunaway for they were handed the wrong envelope. They were handed an envelope for the immediately previous award which was Best Actress which Emma Stone won for her performance in La La Land. Beatty opened the incorrect envelope and looked over the card three times not sure what to do. Well the clock was ticking and Dunaway looked over at the card, saw La La Land, and blurted it out. So how could such a monumental snafu occur??? Well, I bet you didn’t know this but for each award two envelopes are made with each one held by a person at opposite ends of the stage. The person who did not give the Best Actress envelope to that presenter still had it in his or hers possession and accidently gave it to Beatty when he walked onto the stage. PricewaterhouseCoopers admitted it was their mistake and vehemently apologized. This, folks, is why I love live TV!