Equities and the Economy:

• February jobs report “Goldilocks”.
• U.S. post minor losses for the week.

Although U.S. stocks closed higher on Friday with the Dow gaining 45 points to 30,903, the S&P 500 up 8 to 2,373 and the Nasdaq adding 23, 0.4%, to finish at 5,862, the major indexes posted minor losses for the week. For the period the Dow lost 0.5 snapping a 4 week winning streak. The S&P lost 0.4% and the Nasdaq slipped 0.2%, both breaking a run of 6 weeks of consecutive gains. Friday’s gains were on the heels of a “Goldilocks” Labor Department jobs report. The headline number of 235,000 job gains for February, which verified ADP’s report on Wednesday, and the employment rate dropping a tick to 4.7% coupled with a very reasonable increase in wages gives the Fed justification to raise interest rates but not having to do it in an aggressive manner. Hence, the “Goldilocks” descriptor. However, the big story in Friday’s report was that people are coming back into the work force. In February, the employment-to-population ratio rose to 60%, the highest since February 2009. I need to mention one caveat to the labor report. Construction jobs exploded in February due to the record warm weather we had. As most of you know, March’s weather is coming in much colder and “nastier” which means next month’s report will show a drop in construction workers returning this data point to the “mean.”

The FOMC meets tomorrow and Wednesday with everyone expecting they’ll announce an interest rate increase. Investors appear to be taking a wait and see attitude with trading being muted this morning with the Dow up 3 points.

Oil

• Oil prices fall for a 5th consecutive session.
• WTI posts a loss of 9% for the week.

It was a very tough week for the oil bulls. On Friday WTI lost another 79¢ ending at $48.49 and Brent fell 82¢ closing at $51.37 capping a week where oil prices lost 9.1% ending at its lowest price since late November. Last week was the big CERA conference in Houston which is attended by all the major global players and bearish news reports kept coming out all week, especially from the Saudis. For example, in two separate statements they mentioned they were not going to let their market share be simply taken away by other non-OPEC parties and the extension of the production cut agreement, which ends June 30th, was not a sure thing. Additional price pressure came domestically where our EIA reported that crude inventories are at an all-time high even with exports rising.

If that wasn’t enough, and although it was after the close, Baker Hughes reported on Friday the oil rig count continues to rise with 8 rigs added for the week. The natural gas rig count rose by 5. The total rig count is now 768, the highest since November 2015.

Flash back to the 1970’s when gasoline prices were 79¢/gallon. That was the price at Texaco and Chevron on the south side of Houston yesterday when a good ole price war erupted. It lasted only for a short time and folks lined up around the block to capitalize on the bargain. What’s funny to me is that Chevron owns Texaco.

This morning oil is sedate down 14¢.

Courtesy of MDA Information Systems, LLC

Natural Gas

• Winter returns to the east.
• Natural gas prices up 22% in past 3 weeks.

Natural gas prices continued to rise on Friday with the April contract closing up 3.4¢ at $3.008 with winter returning to the eastern U.S. For the next 5 days well below normal temperatures will encompass the entire eastern half of the nation. Reports over the weekend are that Pennsylvania and the northeast may get a record amount of snow for a March over the next few days with a “perfect storm” event occurring. The cold snap has brought with it record setting demand for natural gas for this time of year. The 7 days beginning March 9th are expected to have the highest U.S. demand for the corresponding days going back to 2005 averaging 14 Bcf/d above the next closes record. Natty prices have now rallied more than 55¢, 22%, over the past 3 weeks. Natty continues to creep higher being up 4.5¢ this morning.

Elsewhere

Barack Obama for president, of France??? Not really, but that’s not stopping organizers of Obama17, a guerrilla campaign trying to entice the former U.S. president to head to Paris. The group has launched a website and put up 500 posters around Paris with the goal of getting 1 million people to sign a petition urging Obama to run. French voters go to the polls April 23rd in the first round of voting for a new president. Many of the French are fed up with the politicians there and are venting their frustration through schemes like this one. So what are the chances of Obama running? Zero. For one thing, he’s not French which the French Constitution requires the president to be. Obama has not responded.