Equities and the Economy:

• Dow posts largest one day gain in 4 months.
• Three major indexes post biggest percentage gains in a week.

After a couple weeks of declines and a lackluster Monday U.S. equities came out with a force yesterday logging significant gains. The Dow closed up a hefty 196 points, 0.9%, at 21,890 posting its best daily point and percentage close since April 25th. The S&P 500 rose 24 points, 1%, finishing at 2,453, its best day since August 14th. The Nasdaq rallied 84 points, 1.4%, ending at 6,297 logging its best single-session climb since June 28th. Bottom line, it was a good day for your portfolio. However (doesn’t there always seem to be a “however”?!), traded volume was below average even for August at 87% of August’s average volume, and August’s volume to date has been below the average traded volume in 2017. This shows not everyone is “buying in.” It shows lack of conviction. As I’ve stated previously, we want to see big up-days with at least average volume traded. That being said, an up-day on any volume is better than a down day. Analysts says the market got a boost when Norway’s nearly $1 trillion sovereign wealth fund, the world’s largest, stated it was raising its exposure to equities from 60% to 70%.

Turning to the economic news, the primary report was the Richmond Fed’s manufacturing index which came in better than expected at 14. The point here is that it confirmed the previously released Chicago Fed’s data. What the U.S. is in is a “plow horse” economy. It’s not a “race horse” economy and it’s not stagnant. It’s slow and steady. And as Martha Stewart would say, “That’s a good thing.”

This morning stocks are on the defensive with the Dow down 80. Volume is again light with investors waiting for the big meeting of some of the world’s biggest central bankers which begins tomorrow in Jackson Hole, WY looking for monetary policy direction.

Oil

• Oil prices hold after Monday’s beating.
• API report mixed.

After getting shellacked Monday oil prices found support yesterday with WTI closing up 27¢ at $47.64 and Brent settling up 21¢ at $51.87. Yesterday was the expiration of the WTI September Nymex contract. OPEC concluded its technical meeting yesterday putting off until November the decision on whether to extend the production cuts beyond March 31st.

So with little to move the market traders waited for the regular weekly API report which is always released after the close. The report was mixed. The bulls got excited because crude inventories fell 3.6 million barrels last week, much greater than forecasts of a 2.3 million barrel withdraw. The bears got excited with the report showing gasoline inventories rose 1.4 million barrels with forecasts of a decline of 600,000 barrels. So it was a push, and the market is reacting accordingly this morning with WTI down 7¢. Chatter.

Libya continues to be the focus of OPEC, as well as the entire world’s oil market. Remember its exempt from the production cut agreement, and that’s making it a thorn in OPEC’s paw. A year ago the country was producing 250,000 bpd. As of the end of June 2017 it was pumping more than 1 million bpd. That’s a material increase amigos!

Courtesy of MDA Information Systems LLC

Natural Gas

• Prices end little changed.
• $3.00 level resistance.

At this time yesterday morning the bulls were making a stand pushing natural gas prices higher, but once again, when buyers didn’t show up when the price got over $3.00 there was an about-face and at the day’s end the September contract settled down 2.3¢ at $2.939. The weather forecast for the next 10 days cannot be considered anything but bearish, but with storage levels forecasted to be marginally below the last two years going into this winter traders are reluctant to push prices too low. Take it from someone who ran a 3 Bcf storage field, you push prices down, I’ll buy it up and sell the deferred Nymex contract booking some money. The only thing that would make prices collapse this autumn would be a lack of storage capacity, and that is not going to happen this year.

Tropical Storm Harvey is forecast to dump heavy rains across Texas and the southeast over the next few days which will be a load killer and short term traders are pushing natty a little lower with natty down 3.4¢.

Elsewhere

“Wanted: Experienced nanny to live-in and care for four children. Salary $130,000 per year. Perks include international travel, meals from a Michelin star chef and use of the family’s fleet of cars” Yep. That was the ad that appeared August 9th on the website Childcare.co.uk. The ad was checked out and proved valid. Turns out a very wealthy family wants a nanny in London. They also own homes in Barbados, Cape Town and Atlanta. Now before you send in your application, you need to know something about the requirements. The person must have at least 15 years of nanny experience, no children of their own, and a degree in child psychology. And oh, did I mention the candidate should be trained in self-defense! Knowing that this last qualification might be tough to find, the parents said that if that is the only factor missing from the otherwise most qualified candidate, they would pay for martial arts training. The prospective supernanny will have to work 6 days a week from 7 AM to 8 PM, run errands and drop the children off at appointments, but can use the family’s fleet of cars to do that, including a Porsche, Range Rover and Maserati. 300 applications have been received, so far.