Equities and the Economy:

• Solid July jobs report.
• Dow posts 8th consecutive record close.

On the heels of a very solid Labor Department jobs report on Friday the Dow propelled to a new record close of 22,093 closing up 67 points. While the S&P 500 and Nasdaq didn’t end at records, they both did close positive with the former adding 5 points finishing at 2,477 and the latter climbing 11 points to 6,352. The employment report showed the U.S. created 209,000 new jobs in July easily beating Wall Street forecasts for 175,000 jobs. Additionally, June’s jobs report was revised upward by 9,000 jobs. Why do I mention June’s revision? Because in good times revisions are for the better. In not-so-good times revisions are for the worse. The unemployment rate fell to 4.3% from 4.4%. a 16 year low. Other than the aforementioned headline statistics, the most important data was average weekly earnings which rose 0.3%, $3.10, which was a solid gain. The importance here is that the Fed has been closely monitoring wage growth, which has been stubbornly low for this time in an economic recovery, in determining monetary policy, i.e., when to raise interest rates.

For the week the Dow rose 1.2%, the S&P 0.2% while the Nasdaq fell 0.4%. The S&P s less than ½% point away from a new record. The Nasdaq is 2% below its record high.

Based upon this morning’s action the Dow is trying to close for an 9th consecutive session being up 8 points.

Oil

• Oil settles higher on the day but posts small weekly loss.
• Weekly oil rig count flat.

While closing higher for the day with WTI adding 55¢ to $49.58 and Brent closing up 41¢ at $52.42, WTI lost 0.3% for the week weighed down by Thursday’s loss.

Baker Hughes in its weekly rig count report noted the oil rig count slipped by 1 to 765 last week. The number of rigs drilling for natural gas fell by 3 to 189. Traders are viewing the data as supportive for prices with the thinking being that U.S. production growth, which has been a juggernaut, will slow down and flatten out. This belief has pushed prices up from the low to high $40’s.

That being said, OPEC and Russia are concerned about global production because of 1) Nigeria’s and Libya’s dramatic increase in production and 2) other members noncompliance with the production cut agreement. Remember, Nigeria and Libya are not included in the agreement but obviously their output affects global prices. Regarding compliance, OPEC and Russian officials are meeting in Abu Dhabi today and tomorrow to figure out how to improve compliance.

This morning oil is a little on the defensive down 29¢.

Courtesy of MDA Information Systems LLC

Natural Gas

• Prices slip on Friday.
• Prices down 12% over the past 3 weeks.

With no threat of above normal temperatures hitting the Midwest or East natural gas prices have been on the decline all week with the September contract closing down 2.6¢ on Friday to $2.774. For the week natty prices fell 5.7%. Natty has now fallen more than 35¢, 12%, over the past 3 weeks and traded last week at a 5 month low. A note of caution to you bears out there. Per the CFTC, the number of short positions has doubled since May and is the most since last November. Interpretation: the boat is currently listing a little too much to the short side. That means is going to be tough for prices to go lower.

This morning natty is up 2.1¢ on this morning’s weather forecast which is showing normal temperatures returning to the upper Midwest and northeast. Last week’s forecast was for these regions to be below normal.

Elsewhere

Late last Thursday the U.S. Senate confirmed two nominees, Neil Chatterjee and Robert Powelson, to the FERC. The importance here is that now the FERC has a quorum, which it hasn’t had since the Trump Administration took over. There are an estimated $14 billion in private capital energy infrastructure projects, including new natural gas pipeline projects and LNG terminals, that have been held up by the lack of a quorum. These now can be voted on.

FERC’s responsibilities are wide ranging, including regulation of wholesale transmission and sales of power and natural gas and oil pipeline rates. It also must sign off on major mergers and acquisitions by power companies, the siting and abandonment of interstate natural gas pipelines and storage facilities, and hydropower licenses.