Equities and the Economy:

• Choppy day yesterday.
• Yellen and Draghi speaking today.

Stocks posted minor losses on another low volume day. The Dow finished down 29 points at 21,783, the S&P 500 lost 5 to close at 2,439 and the Nasdaq declined 7 to 6,271. Really not much more to talk about there so let’s move onto the fundamentals, which were mixed. On the positive side, the Kansas City Fed released its manufacturing index noting its continued rise. It climbed in August to 16 from July’s 10 with the chart of the index steadily moving from the bottom-left to upper right since Q4 2015. This report was offset by the existing home sales report for July stating 5.44 million annualized units were sold which was the most pessimistic forecast and less than June’s 5.52 million units. Sales of single family homes and condominiums were both lower. By the way, mortgage rates in July fell to their lowest level of the year.

This morning the world’s focus will be on Janet Yellen’s and Mario Draghi’s speeches at the symposium of central bankers at Jackson Hole, WY with investors looking for insight into the two banks’ monetary policy. I don’t expect much from either one. I don’t expect Yellen to say the Fed is looking to raise interest rates this year but I do expect her to say the Fed will reduce its massive balance sheet that was created by its various QE programs. They will do this by not reinvesting the money they receive when the bonds they own mature. This is a monetary tightening move.

Investors are very optimistic this morning. The Dow is up 105 points.

Oil

• Crude prices get hit.
• Product prices rise.

Hurricane Harvey is being felt in the oil market forcing several refineries (Flint Hills Resources and Citgo’s plant, others coming) in its projected path to shut down operations. This is bearish crude prices and bullish product prices. Makes sense. Refineries closing means less demand for crude while the supply of their output, refined products, deceases. WTI closed down 98¢ at $47.43 and dragged down Brent with it falling 53¢ to $52.04. That’s the input side of the refinery. On the output side, products’ prices have increased sharply with gasoline prices closing up big 4.52¢/gallon. Interestingly, the Brent/WTI spread is the widest it’s been since Q3 2015. This will encourage the U.S. to export to Europe and Asia.

For you trivia buffs, the Gulf of Mexico is the home to about 17% of all U.S. crude production.

Oil is quiet this morning being up 8¢.

Courtesy of MDA Information Systems LLC

Natural Gas

• Harvey puts a minor bid into the market.
• EIA storage report marginally bullish.

The EIA released its weekly storage report noting 43 Bcf of gas was injected into storage, and once again coming in below forecasts. This the 7th consecutive week the amount of gas injected into storage was less than the 5 year average. This brought in a minor buying and the September contract closed up 2.1¢ at $2.949. Harvey is shutting in some gas which is bullish but it is also killing A/C load dumping copious amounts of rain on southeast Texas for about 4 days, is quite bearish. So Harvey is having a ying/yang effect. This morning traders are viewing Harvey is ultimately bearish with natty down a material 6.2¢

Elsewhere

Being I’m about to get slammed with a category 3 hurricane, the biggest storm to hit Texas in 12 years, I thought it would be appropriate to give you some interesting hurricane facts.

• The word hurricane comes from the Taino Native American word, hurucane, meaning evil spirit of the wind.

• The man who first gave names to hurricanes was an Australian weather forecaster named C. Wragge in the early 1900s.

• The first time anyone flew into a hurricane happened in 1943 in the middle of World War II.

• Hurricanes are the only weather disasters that have been given their own names. (The Weather Channel started naming winter storms in 2014 but the National Weather Service does not recognize the names)

• Every second, a large hurricane releases the energy of 10 atomic bombs.

• Hurricanes can also produce tornadoes.

• Most people who die in hurricanes are killed by the storm surge of sea water that comes inland.

• In the Pacific Ocean, Hurricanes are generally known as typhoons. In the Indian Ocean they are called tropical cyclones.

• Australians call hurricanes, willy-willies.

• The planet Jupiter has a hurricane which has been going on for over 300 years. It can be seen as a red spot on the planet. This hurricane on Jupiter is bigger than the Earth itself.