Equities and the Economy:

• Quiet day on Wall Street yesterday.
• “Fear index” drops to lowest level in 24 years.

It was a quiet day for U.S. stocks yesterday with the major indexes ending essentially unchanged. The Dow closed up 4 at 21,011, the S&P 500 closed flat to Monday at 2,399 and the Nasdaq ended up 2 points at 6,103. Off major note to me was that the CBOE Volatility Index, VIX, aka “fear index.” closed at its lowest level since December 27, 1993. This can be interpreted two ways. First, the economy is doing quite well and investors have a lot of confidence in it, or 2) investors are becoming too complacent. Remember, in every market, stock or commodities, things get overdone, and then the boat corrects itself. (Can you say “Dot com?”). On a broader perspective the market has been consolidating with the S&P moving less than 20 points in either direction for 9 consecutive days.

That fruit company, Apple, continues to amaze! Upon hitting an all-time high yesterday at $135.70/share, it became the first company ever to eclipse a market capitalization over $800 billion! Apple’s stock is up an incredible 24% in Q1. How in the heck do you take the a behemoth like Apple and get that kind of growth?!

There was no economic reports or consequence released yesterday.

This morning the “irons” continue. Dow up 28.

Oil

• Prices close marginally higher.
• Saudi oil minister confident cuts will be extended.

WTI and Brent prices closed marginally higher yesterday. WTI closed up 21¢ at $46.43 and Brent added 24¢ settling at $49.34. Not really much solace for the producer. Oil prices “found a bid” when Saudi Arabia’s oil minister stated yesterday that he was confident the production cut agreement will be extended for Q3 and Q4. OPEC meets May 25th to vote.

First it was Goldman Sachs. Now it’s Morgan Stanley. MS joined Goldman in saying their base case for prices for 2018 is for prices for that year to be what they are at the end of 2017. They added, however, “…risks to that outlook are becoming skewed to the downside.”

This morning prices are chopping around with WTI down 25¢.

Courtesy of MDA Information Systems LLC

Natural Gas

• Prices retreat yesterday.
• Still pivoting around $2.30

Natural gas prices yesterday gave up almost exactly their gains from Friday closing down 9.4¢ at $3.172. That being said, prices have now spent a month waffling around $3.200. The cash market is going to be the key over the next few weeks as A/C load picks up but nuclear power plants come back on line after refueling, and there was a huge amount of MW’s off-line this spring for refueling. Weather forecast show temperatures to be gradually warming over the next couple of weeks which will bring the humidity to the south and great weather to the Midwest and East. This morning natty is up 2.9¢ on the dry gas production report this morning showing U.S. production fell yesterday.

Elsewhere

Bitcoin. Remember that name? It was all the talk a few years ago but I thought it was dead. Well I was wrong. It’s back, and with a vengeance! Last week the digital current and the world’s second largest digital currency, ethereum, both hit record highs. Bitcoin eclipsed the $1,400 level for the first time and ethereum climbed above $80. Both record highs. Bitcoin is up 30% y-t-d, and that’s after doubling in 2016. So what’s going on? Well both currencies have surged since the beginning of the year as traders remain optimistic the SEC could soon approve the first bitcoin exchanged-traded fund recently saying that it would reconsider an earlier rejection. However, market strategists say this is part of routine due diligence and not to read too much into it.

In April, Japan cleared the way for large institutional money managers and banks to get involved in the space. Russian authorities said last month they would recognize bitcoin and its peers as soon as next year. Also, the Indian government is leaning towards legalizing digital currencies. All these announcements are making the public at large more accepting of the virtual currencies.

Have at it. I’m not going near it.