Equities and the Economy:

• Fed leaves interest rates unchanged.
• Equities march higher.

Stock prices continued their seemingly inexorable march higher yesterday. While the gains weren’t huge they were enough to set record highs for the three major indexes. The Dow rose 98 points, 0.5%, to close at 21,711, the S&P 500 eked out a meager single point gain to 2,478 and the Nasdaq added 11 points ending at 6,423. The theme lately has been corporate earnings, and it was again yesterday. Get this. Boeing yesterday reported and with “close to a perfect” earnings report and was alone responsible for 117 points on the Dow. The stock closed up 8% at a record high. Here’s another one for you. Facebook crushed quarterly profit and revenue estimates and gained 1.4% yesterday. I can hear you say “What’s the big deal? 1.4%.” Well the company, which has a massive market cap of over $500 billion, has seen its stock price rise a staggering 44% this year. That’s like increasing the speed of an aircraft carrier 44% in a year! By the way, the company said they now have over 2 billion (that’s a “b”) users, up 17% from a year ago. Let’s put this in perspective. The earth’s population is 7.5 billion people. That means 1 out of every 3.5 people living on this planet have a Facebook account. That’s defies comprehension!

The FOMC concluded its 2 day meeting yesterday and as expected they didn’t increase interest rates. What they did say is that as soon as this autumn they will allow the bonds it’s bought and are maturing to “roll off.” That means they won’t reinvest the money by buying new bonds. This is a form of monetary tightening and will most likely effect interest rates “down the curve,” i.e. yields on 10 year and longer bonds will increase. This should push mortgage interest rates higher being their terms are usually 15 and 30 years.

The Dow is up 68 points this morning. Laissez les bon temps roulez.

By the way, a surge in Amazon.com’s shares this morning has propelled its CEO Jeff Bezos past Bill Gates as the richest person in the world.

Oil

• Oil prices close at highest level in 2 months.
• EIA report confirmed API’s bullish report.

Oil prices added to their recent gains with WTI closing up 86¢ at $48.75 and Brent settling 77¢ higher at $50.97. In just the last 3 days prices have risen 7.5% and are at 8 week highs. Yesterday the EIA released its weekly crude and products report which confirmed Tuesday’s API report. In aggregate, inventories fell 10.1 million barrels last week. This compares to a 5 year average 700,000 barrel increase in inventories.

Adding to the bullish tone, U.S. shale producers Whiting Petroleum, Hess Corp and Anadarko Petroleum yesterday announced they will cut spending this year due to lower crude prices.

Oil prices are hanging in their this morning. WTI is up 15¢.

By the way, OPEC announced compliance amongst countries in the production cut agreement was 98% in June. I must say, that’s very impressive.

Courtesy of MDA Information Systems LLC

Natural Gas

• Prices little changed.
• EIA storage report today.

In a quiet day of trading the August Nymex contract closed down an even 2¢ at $2.924. Chatter. The EIA just released its weekly storage report. Traders were looking for a 25 Bcf injection. The actual: only 17 Bcf. Prices are up 5.3¢ this morning on the bullish report. By the way, today the August contract rolls off the board/expires. $3.00 continues to act like a black hole.

Elsewhere

Note to star, professional athletes: take off your jewelry before doing water sports. At least Atlanta Falcon’s Julio Jones should have. According to a report by Atlanta Live, recently the All-Pro wide receiver was wake boarding at Lake Lanier in Gainesville, GA, hit and jumped a wake jarring the diamond earring from his ear. Not that big a deal, except the earring was worth $100,000! Jones hired Bobby Griffin, a local diver who knows the lake very well, to find it. But it was to no avail. The diver said the jewelry is about 65 feet down and in a crevasse, nook or cranny, adding “It’s impossible – absolutely impossible” to find it.

Jones took it all in stride saying “It’s materialistic stuff. You can always get that kind of stuff back.” I guess you can say that when you sign a 5 year, $71 million contract which includes a $12 million signing bonus and $47 million in guaranteed money. And oh, the lake has all of a sudden become a very popular destination for divers.