Equities and the Economy:

• Tiny gains on Friday, but enough to set records.
• Q1 2017 GDP revised higher.

The major indexes closed basically flat to Thursday but the very marginal gains by the S&P 500 and Nasdaq were enough for both indexes to post new record highs. The S&P gained 1 point to 2,015 and the Nasdaq rose 5 points to 6,210. Friday’s gains mark the 7th consecutive session of higher closes for both indexes. Friday also marked the 20th record of the year for the S&P surpassing the number of record closing highs in 2016. The Nasdaq has rung up a big 35 record closes this year. On Friday the Dow posted the tiniest of losses finishing down 3 points at 21,080, but just 0.2% from its all-time record high. Small word of caution here. Volume traded on Friday was the lowest in 2017. Conviction requires large volume.

Regarding fundamental news, on Friday the government revised Q1 2017 GDP up to 1.2% from the originally reported 0.7%. The original 0.7% data point was so low that no one even believed it. I don’t know the details but for some reason initially reported Q1 GDP is always low. Other quarters don’t seem to have this anomaly.

Investors are sipping their coffee this morning and exchanging stories about the weekend with the Dow down 26 this morning. Chatter.

Oil

• Prices close higher on Friday.
• WTI down 1.7% for the week.

Although oil prices closed higher on Friday with WTI finishing up 90¢ at $49.80 and Brent closing up 69¢ at $52.15, it was a rough week for producers with WTI prices down 1.7% on the week. Brent got hit worse falling 2.7% for the week. Thursday’s collapse when prices fell nearly 5% was a big hit. Prices had risen sharply, $5, in the 2 ½ weeks prior to the OPEC meeting on hopes that member states would further cut production quotas but the cartel agreed to only extend the existing quota levels. Quite frankly it was a classic case of “Buy the rumor. Sell the fact” for although OPEC mentioned additional cuts were discussed, they never gave any indication there was anything even close to an agreement on additional cuts.

Baker Hughes in its regular weekly rig count report on Friday stated the rig count again rose last week with the number of active oil rigs increasing by 2 and natural gas rigs climbing by 5. It was the 19th consecutive week the rig count increased, although last week’s increase was the smallest this year. The total rig count (oil & gas) is at a two year high.

The bears are in control this morning with WTI down 55¢.

Oil trivia: At the conclusion of OPEC’s meeting last Thursday Equatorial Guinea became the newest member of OPEC with its membership becoming effective at that time. The country is located on Africa’s western coast with a production of 13,000 bpd.

Courtesy of MDA Information Systems LLC

Natural Gas

• June Nymex contract expires at $3.236.
• Prices continue to pivot around $3.20.

The June Nymex contract had its last day of existence on Friday closing up 5.2¢ at $3.236 setting both unhedged natural gas and electricity heat rate prices for June for those on those products (many folks are on monthly hub index products and we won’t know those indexes for a few days yet). Front month prices have become extremely comfortable trading roughly around $3.20 for 8 weeks now.

Prices are getting hit hard this morning being down 13.2¢ on both a normal weather forecast for the eastern half of the country (no heat) for the next couple of weeks and reports showing U.S. dry production is marginally increasing hitting a 2017 high over the weekend.

Elsewhere

We all have car insurance. It’s mandatory. Here is some fact and fiction on car insurance.

1) Fact or fiction: Red cars cost more to insure. Fiction. Color has no bearing on the cost of your insurance. Your insurer probably doesn’t even know the color of your vehicle. What does affect the cost of your insurance is your driving record, as well as your car’s make, model, engine, body type and safety features. So that corvette you own is going to cost more to insurance than your daughter’s Nissan Sentra.

2) Fact or fiction: Your age affects your insurance cost. True. Insurance premiums decrease once you’re 55, assuming you have a good driving record. Maturity behind the wheel has proven to decrease the number of crashes. The highest paying age group is 16 to 20 followed by 21 to 24.

3) Fact or fiction: Your car’s age affects the premium. Maybe. A new car could cost less to insure because of advanced safety features, but a pre-owned vehicle with a lower MSRP could be less expensive to insurance because it costs less to repair. That said, if either of these cars are on the list that thieves love to steal, premiums for that vehicle will most likely be higher. Some of the most popular cars to steal are Honda Accords and Civics, pickup trucks from Ford and Chevrolet, and Toyota Camrys.

4) Fact or fiction: Men are better drivers than women and pay less for car insurance. Fiction. While women have been the butt of many a driving joke, statistics show women drivers are generally safer, less aggressive drivers than men. The trend, however, is that the premium gap is closing. There are more women drivers on the road than 20 or 30 years ago and these younger drivers are exhibiting behaviors conducive to accidents, like texting and driving.

5) Fact or fiction: The smaller the car, the less your premium. False. Compact vehicles are riskier because they can be made of lower-quality materials and likely to take on more extensive damage in a collision. Additionally, smaller cars can be more heavily damaged when impacted by a larger car.