Equities and the Economy:

• Dow and S&P shed a little
• Nasdaq again closes at a record high.

The Nasdaq is draining 3’s like an el fuego NBA guard. Yesterday it again set another record high. This time closing 18 points higher at 6,121. It’s the 30th closing record high of the year. The other two indexes closed slightly lower. The Dow slipped below 21,000 falling 37 points to 20,976 and the S&P 500 lost 2 points ending at 2,397. I see no reason for this bull market to end, even at the current lofty P/E ratios.

The labor market continues to strengthen. The Labor Department reported yesterday that job openings rose 1.1% in March. They also stated the “quits rate” rose 2.6%. This is a very good data point on employee’s confidence. The “quits rate” goes up when employees either are offered a better job or believe they won’t have trouble finding another one. The “quits rate” has doubled since September 2009.

The other significant report was the National Federation of Independent Businesses report that its index of small business optimism fell 0.2 to 104.5 in April. Although the index has fallen for 3 consecutive months, it remains near record highs. Quality of labor is the issue. A stunning 87% of those companies hiring or trying to hire reported few or no qualified applicants for their open positions. That’s a huge percentage!

This morning U.S equites are slightly lower with the Dow off 42 points.

By the way, with the strength in equities and investors being in a “risk on” mode gold, a safe haven, is getting whacked. Yesterday it closed at an 8 week low at $1,216.10/oz.

Oil

• Oil prices retreat marginally.
• EIA raises forecast of U.S. crude production for the year.

Crude prices slipped yesterday hovering at their pre-OPEC agreement levels. WTI fell 55¢ closing at $45.88 and Brent lost 61¢ settling at $48.73. Not helping the bulls, yesterday in its latest Short-Term Energy Outlook the EIA raised its U.S. crude production forecast for 2017 by 1% to 9.31 million bpd. The agency raised its 2018 forecast 0.6% to 9.96 million bpd.

Today producers are “seeing some love” with WTI up 69¢ on the heels of last night’s API crude and products report. The institute stated crude inventories fell by 6 million barrels last week, much greater than the 1.8 million barrel forecast. Additionally, Saudi Arabia stated late yesterday it was cutting its sales to Asian customers by 7 million barrels next month. Bulls, don’t get too excited about this. This happens in the summer when the oil is consumed locally in the Middle East for electric generation, i.e. A/C. You may not know this but the Middle East is the fast growing oil demand region in the world. And the reason is explicitly electric generation for air conditioning.

Courtesy of MDA Information Systems LLC

Natural Gas

• Weather forecast warmer.
• Production lower.

A combination of a warmer weather forecast and less production pushed natural gas prices higher yesterday with the June Nymex contract closing up 5.5¢ at $3.227. As you regular readers know, my focus of late has been on U.S. dry natural gas production and yesterday morning it fell below 70.0 Bcf/d, which I haven’t seen happen in weeks. Daily production figures are always revised so I’ll be paying close attention to see if yesterday production is revised higher. That being said, I’ve seen no growth in U.S. production in many months.

The bulls remain in control today with natty up 4.7¢. Today’s weather forecast is hotter than yesterday’s.

Elsewhere

Not sure you’ve heard of Lonzo Ball. You college basketball fans know who he is. He was the UCLA Bruins point guard this year, and the freshman (yes, freshman) is projected to go #2 or #3 in the NBA draft. Well he hasn’t even been drafted, and he’s got a shoe deal. The top three major sneaker companies, Nike, Adidas and Under Armor, did not offer him an endorsement making it the first time a top draft prospect has been shut out of the Big 3 shoe corporations. So Lonzo’s dad, LaVar, created a new brand, Big Baller Brand, and hopes to release a debut sneaker for Lonzo’s rookie season. The shoe, the ZO2, was unveiled last week and has a price tag of, drum roll please, of $495! If you’re a size 14 or 15 the price goes up to $695! There’s also a limited-edition ZO2 WET that comes personally autographed by Lonzo in a clear acrylic case with white LED lights retailing for a measly $995!

For perspective, LeBron James’ LeBron XIV shoe retails for $175. Kevin Durant’s latest KD9 comes in at $150. James Harden, who will either be this year’s MVP or the runner-up, Harden Vol. 1 Series shoe is $140. Seph Curry’s, this year’s other MVP candidate, kick debuted at $149.99 but has been cut to $99.99.

Good luck Lonzo.