Equities and the Economy:

• Political wrangling in Washington doesn’t impact stocks.
• Nasdaq closes higher for 4th consecutive day.

President Trump’s surprise, some would say “stunning”, firing of FBI Director Comey Tuesday certainly wasn’t positive for U.S. stocks, but it sure didn’t cause investors to panic. The Dow fell 33 points finishing at 20.943, the S&P 500 ended up a point at 2,398 and the Nasdaq set yet another record high, its 4th consecutive, gaining 9 points closing at 6,129. The reason I say the Director’s firing is not good for stocks is that the event will divert attention from and delay what investors really want, and what is at least somewhat built into current stock prices: tax reform. One of the stand-out points of the recent price action is the incredibly low volatility. As I mentioned recently, the VIX is at a multi-decade lows. For the year the S&P is up 7.2%.

There was a dearth of economic data yesterday with the only report being the Labor Department’s data on import and export prices. Import prices rose 0.5% in April marking the 5th consecutive monthly increase with import prices up for the last 12 months 4.1%. A big “however” here though. Prices were driven higher on higher oil costs, and we all know what’s happened in the last week or so with oil prices. Export prices rose 0.2%. Bottom line, import and export price rises when the global economy is growing.

Ole Man River continues its meandering ways this morning. Dow is down 23.

Oil

• DOE releases bullish crude and inventory report.
• Oil prices post largest one day gain since December.

The DOE surprised everyone one yesterday. In their regular weekly crude and products report they stated that domestic crude inventories fell by 5.2 million barrels for the week ending May 5th. This was way larger the forecasts of 1.8 million barrels. It was also the largest weekly drop in inventories so far this year. Now it’s not unusual for a “big” number in one category to be offset by a “big” number in another category, such as gasoline inventories, making the report neutral. But such was not the case yesterday. The DOE also reported that gasoline inventories fell 150,000 barrels which was neutral but when taken with the crude data, the report was bullish. The oil market was already “short” from the drop in prices over the last few weeks and with this report it was like a beach ball held under water and released. Prices popped big. WTI rose $1.45 closing at $47.33 and Brent rose $1.49 settling over $50 at $50.22.

Just one little word of caution to the bulls. Analysts point out the weather in the Gulf of Mexico was rough at times during the week limiting imports. Let’s see if this data point is a “one off” or if something more structural in nature is happening.

This morning the bears continue to cover with WTI up 46¢.

Courtesy of MDA Information Systems LLC

Natural Gas

• Prices slowly grinding higher.
• EIA storage report out today.

As the weather forecast continues to warm translating into more CDD’s, natural gas prices continue to creep higher. The rise has not been jerky and in dimes, but a slow grind up in pennies. Yesterday for the third consecutive day the weather models came in warmer overnight. The June contract closed up 6.5¢ at $3.292. Whereas we were trading around $3.20 most of last week prices we are now trading around the $3.30 mark. This morning natty is up 3.2¢. Resistance is $3.35.

Today the EIA releases its regular weekly storage report. The market is looking for an injection of 55 Bcf. Last year at this time we had a 58 Bcf injection and the 5 year average is above that at 73 Bcf.

Elsewhere

Everyone knows that climbing Mt. Everest is one of the greatest challenges a human can tackle. And that challenge doesn’t come cheap. Foreign climbers, which are about 99% of all climbers, have to pay about $10,400 for a permit to scale the 29,030 ft. mountain. Then there is Ryan Davy, 43, who tried to beat the system.. He was trying to gain the glory of scaling the world’s highest mountain on the cheap. He stealthy climbed alone making it to camp two at 21,000 ft. and set up camp in an isolated place to avoid being seen. However, a government liaison officer saw him at the camp and approached him, but he ran away. The official followed him and found him hiding in a cave.

Mr. Davy is now in very, very serious trouble. His passport has been confiscated and sent to Katmandu, He will be fined $20,800, double the permit fee, and could be banned from Nepal for 5 years or face a 10 year ban on climbing in the country. Davy told officials that he didn’t even have enough money to buy a flight from Everest to Katmandu to collect his passport. His friends have started a “GoFundMe” account to raise the money he needs. Until that monies raised the South African is looking at jail time. Very hard and expensive lesson learned.