Equities and the Economy:

• Mixed and muted session with below average volume.
• All eyes on the House.

It was a quiet day on Wall Street yesterday with the major indexes closing basically flat to Wednesday on below average volume. The Dow lost 5 points to 20,657, the S&P 500 fell 2 to 2,346 and the Nasdaq closed 4 points lower at 5,818. Chatter. All eyes and ears are focused on Pennsylvania Avenue and whether President Trump has the votes in the House to pass the American Health Care Act. Speaker Paul Ryan was working non-stop yesterday negotiating to muster enough votes but didn’t have them and delayed the vote to today. Reports today are that President Trump has thrown down the gauntlet. He said there’s going to be a vote today and if it doesn’t pass he’s moving on to other agenda items and Republicans are going to have to live with Obamacare. This whole thing has less to do with health care and more with the ability of Republicans to get things done. There’s a huge difference between being an obstructionist and having to govern.

Regarding fundamental economic data, yesterday the Labor Department released its regular weekly initial jobless claims report noting that claims rose 15,000 on the week to 258,000. Nothing of note there. The important statistic is that claims are down by 9% compared to this time last year. The Commerce Department reported new home sales rose 6.1% in February to an annualized rate of 592,000. This was far above Wall Street’s forecast of 565,000. Here’s a stunning data point. New home sales are up 12.8% over the past 12 months. Impressive!

This morning the Dow is up 40 points. Expect a repeat of yesterday until the vote is taken.

Oil

• Prices continue to leak.
• OPEC compliance committee meeting this weekend.

The bears have been in firm control the last couple of weeks and yesterday was no exception. WTI fell 34¢ to $47.70. Brent lost less, 8¢, closing at $50.56. Oil prices have dropped nearly 10% over the last 2 weeks and are trading near 4 month lows on growing concerns whether the OPEC “and friends” production cuts are really having any effect. Speaking of production cuts, the monitoring committee put together by OPEC members at their meeting last November will meet this weekend to review compliance. Recall, the cut agreement was to keep production 1.8 million bpd below demand for 5 consecutive months to reduce oil inventories back to the 5 year average. This sums to an effective reduction of over 200 million barrels in excess inventories. However, the evidence shows that rising U.S. output is offsetting the cuts to a degree. This morning WTI is moribund up 19¢.

Courtesy of MDA Information Systems LLC

Natural Gas

• EIA storage report bearish.
• Prices hang in there.

Despite a bearish storage report natural gas prices logged a gain yesterday. The EIA reported 150 Bcf was withdrawn from storage last week which is a huge number. Putting this in perspective, last year we saw an injection of 13 Bcf for this week and the 5 year average is a withdrawal of a measly 21 Bcf. The market was looking for a withdrawal of 158 Bcf so the actual number was bearish. Immediately after the number prices dropped but buyers emerged and at day’s end the April contract closed up 4.0¢ at $3.051. Impressive.

Spring is here! At least for everyone except the New England states. Beginning this weekend winter is over and temperatures will be at or above normal for most of the entire eastern half of the country for the next 2 weeks. That means natural gas load is plummeting, but it’s not translating into lower prices. Natty is basically flat to yesterday’s close this morning up 0.4¢. With exports of both LNG and natural gas to Mexico increasing and U.S. production down 3% from this time last year it makes for a “supportive” case.

Elsewhere

In my first paragraph I used the phrase “thrown down the gauntlet.” I’m sure you understand the metaphor, but do you know where the term originated? Today the phrase “throw down the gauntlet” means to challenge or confront someone, but in its earliest use it wasn’t meant as a metaphor, but was a physical action intended to issue a formal challenge to a duel. The word itself comes from the French word “gantelet,” and referred to the heavy, armored gloves worn by medieval knights. In an age when chivalry and personal honor were paramount, throwing a gauntlet at the feet of an enemy or opponent was considered a grave insult that could only be answered with personal combat, and the offended party was expected to “take up the gauntlet” to acknowledge and accept the challenge. Over time, as heavy steel armor became less common, gauntlets referred to any heavy glove with an extended cuff to protect the wrists, and the practice of using gloves to initiate duels continued until dueling was outlawed in Europe and the United States in the late 18th century.