Equities and the Economy:

• Investors pile back into stocks after the French elections.
• Nasdaq posts another record high.

Relieved that centrist Emmanuel Macron garnered the most votes in round one of the French elections investors poured back into stocks sending both European and U.S. stocks soaring. France’s CAC 40 skyrocketed up 4.14% ending at a 2 year high and Germany’s DAX climbed 3.4%. As we all know we live in a world where events in countries in one part of the globe effect countries in another part of globe and the investor euphoria crossed the Atlantic pushing U.S. stocks materially higher. The Dow closed up a hefty 216 points, 1.1%, at 20,764, the S&P 500 surged 25 points, also 1.1%, finishing at 2,374 and the Nasdaq rose 73 points, 1.2%, to a record close of 5,984. Yesterday’s performance pushed the S&P to being up 6.0% for the year. The VIX, aka “fear index, which moves in contravention to equities, fell 25%, its large one day percentage drop since August 9, 2011. Safe haven assets took it on the chin with gold getting whacked falling $11.60, 0.9%.

The party continues today. World stocks continue to rally with the MSCI’s world stock index, an index comprised of shares from 46 countries, hitting a new all-time high. Locally, we’re rocking with the Dow up 339 points! Laissez les bons temps rouler!

Oil

• Oil prices fall for 6th consecutive session.
• Prices at lowest level in a month.

WTI and Brent prices fell for the 6th straight session with the former falling 39¢ to $49.23 and the latter down 36¢ closing at $51.60. Prices have now fallen 7.5% and are at their lowest level in a month erasing more than 75% of the past month’s rally. Concerns of rising rig counts and U.S. production are feeding the bears. As I mentioned yesterday, U.S. production last week hit a 20 month high 9.25 million bpd. Traders have serious doubts whether the OPEC production cuts will impact global supplies. The doubts are so pronounced that even typically bullish factors such as a weaker dollar and geopolitical tensions are not boosting prices.

Today after the bell the API will release its crude and products report which has the potential to move the market. This morning oil is treading water up 8¢.

Courtesy of MDA Information Systems LLC

Natural Gas

• Natural gas prices ease on mild weather.
• May Nymex options expire today.

On the heels of the mild spring weather and easing cash market the May Nymex contract closed down 3.5¢ yesterday at $3.066. Here’s some insight from an old, seasoned trader. I believe the spec traders went long cash gas into April with forecasts of above normal temperatures for the month along with an huge amount of nuclear plant refueling to occur. This drove the monthly index up to $3.175 spurring some baseloading of coal for the month. After April 1st in the “day cash” market these long cash positions were looking for market and there just wasn’t enough “day cash” market demand to suck up all the supply and the length had to hit declining bids to keep the gas flowing. I’ve seen this, and the opposite, happen so many times in my career I can’t count. Such is the gamble in playing the cash market, and I’ve been on both sides: winning and losing.

Today the May Nymex options contract expires (always a day before the futures contract expires) and there’s a lot of open interest at the $3.00 level and that level could shape up to be the battleground today. The gravity of the $3.00 level is exerting itself this morning with natty down 2.0¢.

Elsewhere

Last Friday something happened in Britain that hasn’t happened since the 1800’s, which was the height of the Industrial Revolution. It was the first full day since that time that Britain did not burn coal to generate electricity. A combination of low seasonal and daily load (that Friday was Good Friday, a holiday), and an increase in renewable and natural gas fired generation created the event.

The trend away from coal as a source of electricity in Britain is structural with officials saying more coal-free days are likely. Since 2012, 2/3rds of Britain’s coal-fired power generating capacity has been shuttered. The last deep coal mine closed in December 2015, although open cast mining still exists.

Switzerland, Belgium and Norway no longer use coal as a fuel source for electric generation.