Equities and the Economy:

• Stocks slip on healthcare vote delay.
• Google gets hit with record fine.

U.S. stocks closed lower yesterday with the Dow falling 99 points, 0.5%, to 21,311, the S&P 500 sliding 20, 0.8%, to 2,419 and the Nasdaq getting whacked closing down a big 101 points, 1.6%, at 6,147. Here were the drivers. First, it appears the Senate Republicans didn’t have the votes to pass their healthcare bill so Majority Leader Mitch McConnell has delayed the vote. The point here is that the delay adds to uncertainty and I’ve said many times, “uncertainty breeds contempt” in markets. This means investors go conservative selling riskier assets, like equities, and buying safer assets like Treasuries. Second, Janet Yellen’s comment yesterday that asset prices, (she’s talking stocks here) are “somewhat rich” certainly encourage any buying, and third. the tech sector got hammered triggered by the EU issuing Google a record $2.7 billion fine for violating antitrust rules. Google’s Alphabet lost more than 2% yesterday. OK, now the “glass is half full” perspective. The S&P is still up 8.0% y-t-d and with Friday being exactly halfway through the year that translates to 16% for 2017! I seriously doubt we’re going to get that performance, so expect the second half of 2017 to yield lower gains than the first half.

The Conference Board reported consumer confidence rose to 118.9 in June from May’s 117.6 which was marginally better than economists were forecasting. The take-away here is that consumer confidence is near 16 year highs.

Standard & Poor’s reported its S&P/CoreLogic Case-Shiller 20 city home price index yesterday with the index rising 5.7% on an annualized basis in April. S&P Dow Jones’ economist put it succinctly, “Since demand is exceeding supply and financing is available, there is nothing right now to keep prices form going up.”

This morning we’re not seeing much movement with the Dow up 17 points.

Oil

• Prices gain for 4th day.
• API report bearish.

Oil prices rose for a 4th consecutive session with WTI closing up 86¢ at $44.24 and Brent climbing 82¢ to $46.55. I think we’re still in a “technical correction,” i.e. short covering rally, after 5 weeks of price declines.

Last evening the API released its weekly crude and products report which was mildly bearish. Analysts were forecasting crude inventories to fall 2.6 million barrels. Instead they rose by 851,000 barrels. If that wasn’t bearish enough gasoline stocks rose 1.4 million barrels, counter to expectations of a decline of 900,000 barrels. Distillates came in at forecast. The EIA releases its crude and products report today.

The bulls have this challenge. Not only is U.S. production increasing, but so are Libya’s and Nigeria’s, both of whom are exempt from the production cut agreement. Take Libya. Just a year ago the country was producing only 250,000 bpd. Currently its producing 950,000 bpd, and it’s ultimate goal is to get back to producing 1.6 million bpd which it did prior to the 2011 uprising.

This morning WTI is under marginal pressure down 15¢.

Courtesy of MDA Information Systems LLC

Natural Gas

• Prices end little changed.
• Weather forecast remains warm.

Prices ended little changed yesterday with the July Nymex contract closing up an even penny at $3.037. That being said, the front month price has rallied 22¢, 8%, from last week’s low. The price drop was caused by the weather forecast (a cool one) and the rally is caused by the same, which beginning on Monday showed above normal temperatures across most of the U.S., which has now expanded to the 6-15 day time frame. With the weather remaining warm natty is continuing to find support up 3.1¢ this morning. Note, the July Nymex contract expires today.

Elsewhere

Five decades ago yesterday a machine heralded in a transformation in banking. I’m talking about the first ATM machine. The brainchild of Scottish inventor Shepherd-Barron, the first Automated Teller Machine opened on June 27, 1967 at a branch of Barclay’s bank in Enfield, north London. It was the first of six dispensers commissioned by the bank. English actor Reg Varney was the first person to withdraw cash from the new machine. Currently there are an estimated three million cash machines across the globe with some 70,000 cash machines in the UK alone which dispensed 175 billion pounds in 2016. The world’s most northerly machine is at Longyearbyen, Svalbard, Norway and the most southerly located at the McMurdo station at the south pole. To commemorate the anniversary Barclay’s transformed the ATM at its Enfield branch into gold, added a commemorative plaque and placed a red carpet in front of it for its uses.

As said in trading terms, “I’d be a seller of ATM’s.” Can you say Venmo?