Equities and the Economy:

• Stocks post modest gains.
• Economic data mixed.

U.S. equities logged modest gains yesterday with the Dow climbing 54 points to 21,808, the S&P 500 adding 8 to 2,466 and the Nasdaq tacked on 18 points to end at 6,393. There were quite a few economic reports released yesterday and in summary they gave a view of an economy that is grinding forward. The Fed released its Beige Book yesterday which is a summary and snapshot of the U.S. economy and is always released prior to the FOMC meeting which is next Tuesday and Wednesday. The Beige Book was, well, beige. Wage growth was limited, the labor market moderately tight, construction activity slightly stronger and manufacturing expanding modestly. In another report, the Institute for Supply Management reported its index for service sector activity grew from 53.9 in July to 55.3 in August and in line with economists’ forecasts. Folks, we’re in a “plow horse” economy. Not a thoroughbred race horse economy but one that is slowly, steadily grinding forward.

Speaking of the FOMC, Dr. Stanley Fisher, the Fed’s Deputy Governor and a voting member of the FOMC, announced his resignation yesterday for “personal reasons.” As matter of background, the FOMC is a committee that consists of 7 members of the Fed and which sets U.S. monetary policy The only reason I mention his resignation is that with his departure President Trump will have the ability to name 4 members to the FOMC. This is unprecedented. No president since the inception of the Fed back in the second decade of the 20th century has been able to appoint 4 members.

This morning it’s chatter with the Dow up 9 points.

Oil

• Crude prices close at 4 week high.
• Gasoline prices continue descent.

As more and more refinery capacity is, and will be, coming on line the crude oil/gasoline relationship is coming back in-line. WTI rose 50¢ yesterday closing at $49.16 which is its highest settlement price in 4 weeks. Brent rose 82¢ ending at $54.20, its highest settle since mid-April. Brent prices got a boost from an announcement from Russian officials that the current OPEC and “friends” production curtailment agreement will be extended well into 2018. It currently ends March 31, 2018. Gasoline prices continue to slip with the October Nymex contract 1.15¢ to $1.7595/gallon.

Yesterday the API released its weekly crude and products report and it was mixed. Crude oil stocks built less than forecasts but gasoline inventories fell less than expectations, so overall the report was neutral.

This morning WTI is trading a little lower down 33¢.

Courtesy of MDA Information Systems LLC

Natural Gas

• Prices rise marginally.
• EIA storage report today.

Yesterday the October Nymex contract gained 2.8¢ to settle at, guess where? Exactly $3.00! It’s been amazing how the market has continually been sucked back to that number. While we’ve seen some volatility, for 3.5 months natty has traded roughly around that number. If prices go lower, the electric generators suck it up and traders buy it to inject into storage (remember, inventories are 7% below last year). If prices get too high, the electric generators back off and burn coal putting additional gas on the market. The next big fundamental event will be the winter weather forecasts which come out next month.

Today the EIA releases its regular weekly storage report. Traders are looking for an injection of 62 Bcf.

The weather forecast continues to remain benign. Natty is down a penny this morning. Yawn.

Elsewhere

It’s back!!! NFL football! Whoop! Tonight marks the beginning of the 2017 NFL season with the Kansas City Chiefs visiting the New England Patriots. The Pats are favored by 5. The Patriots must have a weaker team this year because Tom Brady is always worth 7 points on the spread! Last week was also the beginning of the college football season. One of the college games was Western Michigan at USC. USC won the game 49-31. After USC scored a touchdown late in the 4th quarter USC Coach Clay Helton instructed 20 year old Jake Olson, whose job is to snap the ball, aka, “long snapper” to the “”place holder” for the kicker to kick, to go into the game. Jake went in, hiked a perfect snap and the kicker made the extra point. No big deal, eh. Happens all the time. Well this time it was a little different. You see, Jake Olson is blind. The Orange County, California junior was born with retinoblastoma, a cancer of the retina. His left eye was removed when he was a baby. By the time he was 12, he knew he would also lose his right eye. The day before the surgery to remove his right eye, Olson spent his final evening he would be able to see watching a USC practice.

Jake always has loved football and thought about how he could participate even with his handicap. He deduced that the long snapper is a consistent position in that you’re hiking the football the same distance every snap. He worked extremely hard and became the starting long snapper on his high school varsity team. His teammates would guide him onto the field and help him line up. And he earned their respect as a solid player. One teammate said, “We didn’t see him as a blind person. We saw him as a football player.”

Having learned his story, the USC football team adopted him as an honorary member allowing him to suit up, run though the stadium tunnel, walk the sidelines and give locker room pep talks. It all came together last Saturday for Jake Olson. “I just loved being out there. It was an awesome feeling, something that I will remember forever.”