Equities and the Economy:

• Equities globally consolidate yesterday.
• FOMC and BoJ meetings this week.

Consolidation was the order of the day not just parochially but catholically with the U.S., Asian and European markets generally closing little changed.  Focusing on the U.S., the Dow slid 22 points to 20,881, the S&P 500 gained a point to 2,373 and the Nasdaq added 14 to 5,876.  Investors appear be content with the positions they have going into the FOMC meeting which is today and tomorrow with everyone expecting a ¼% interest rate increase to be announced tomorrow.  What will be of high interest is the Fed’s post-meeting communique where investors will try to parse how aggressive the Fed will be in raising interest rates this year.  Bear in mind, the Fed is always behind the economic curve.  Because the Fed is always reactionary, not leading, historically there’s been economic bubbles and recessions.  In some cases the Fed has actually caused a recession.  In addition, the Bank of Japan’s Monetary Policy Board, our FOMC, meets tomorrow and Thursday giving investors plenty of reasons for pause.

There were no economic reports of significance released yesterday.  This morning European equities are under pressure and the momentum traders are selling U.S. stocks accordingly with the Dow down 35 points.

Oil

• Oil prices pause
• EIA forecasts April shale production to be highest in a year.

Oil prices ended little changed yesterday with WTI closing down 9¢ at $48.40 and Brent off 2¢ to $51.35.  We’re only half way through March and WTI and Brent have posted losses of 10.7% and 8.2%, respectively, for the month.  Yesterday the EIA  released its monthly Drilling Productivity Report forecasting that U.S. shale oil production will increase in April by 109,000 bpd from March to 4.962 million bpd.  This is the highest production level since March 2016.  Drilling down into the data, production in the Permian Basin (west Texas/southeast New Mexico) is expected to rise 79,000 bpd to 2.29 million bpd.  If realized it will be a new production record for the Permian, which is pretty darn amazing considering that the basin has been producing oil for 90 years!  Production in the Eagle Ford shale play (Texas) is expected to rise 28,000 bpd to 1.14 million bpd.  Think about this.  A decade ago shale production in the U.S. was virtually zero!

This morning the bears are out in force.  WTI is down 99¢.

Courtesy of MDA Information Systems, LLC

Natural Gas

• Natural gas posts small gain.
• Cash market strong.

A strong cash market driven by the cold shot currently hitting the eastern U.S. has been the driver of prices lately and yesterday was no exception.  The April contract closed up 3.5¢ at $3.043 supported by a daily cash market that settled over $3.00.  This is the first time the cash market has been over $3.00 in over a month.  Yesterday’s daily high of $3.089 was a three week high.  The short term weather forecast is little changed with winter storm Stella unleashing her wrath on the Midwest and east coast.  The storm is expected to bring 10 to 20 inches of snow from Philadelphia to Boston.  Chicago’s O’Hare is completely closed today.  7,000 flights have been cancelled over the last two days.  The medium term forecast, 6-15 days, has turned marginally cooler for the eastern region.  Thought you’d like to know that Phoenix is forecast to have a high of 93 today (ouch!)

Elsewhere

Happy Pi Day!  3.14.  The date resembles the ratio of a circle’s circumference to its diameter.  Greek mathematician Archimedes of Syracuse (no, not you Orange!) who lived in 3 B.C. and is considered the greatest mathematician of the ancient world, is credited with doing the first calculation of Pi.  Pi has been calculated to over one trillion digits beyond its decimal point.  As an irrational and transcendental number, it will continue indefinitely without repetition or pattern.  A “P” was chosen to describe the calculation as an association to “perimeter.”