Equities and the Economy:

• Dow closes at record high.
• Markets shrugging off geopolitical events.

Although the major U.S. indexes ended mixed yesterday the Dow’s gain of 45 points to 22,203 was enough to log its third consecutive record high. The S&P 500 fell 3 points to end at 2,496 and the Nasdaq finished down 31 points at 6,429. Chatter. Let’s move on to the fundamental data. Yesterday the Labor Department reported its weekly jobless claims data noting first time claims fell by 14,000 but the data has been whacky the last couple of weeks due to Hurricane Harvey. The week before claims were up by 61,000 which was the largest weekly increase in years. We need to let this data settle down. Leveling this out, claims are still at multi-decade lows. That same department released its consumer price index which rose 0.4% in August and 1.9% y-o-y. Core consumer prices (not including food and energy) rose 0.2% for the month and 1.7% on an annualized basis. Note that inflation remains below the Fed’s 2% target. No need to raise interest rates in the near future.

This morning the big news is geopolitical. First, North Korea launched yet another missile, and once again it flew over Japan landing in the Pacific. North Korea has fired dozens of missiles under Kim Jong and on September 3rd conducted a nuclear bomb test of material size. Second, this morning a homemade bomb exploded on a packed London subway train during rush hour leaving 22 people injured. Fortunately, reports are that none are seriously hurt. So how are the global markets taking these two events? As has been the case for years now, completely in stride. The only market really feeling it is London’s FTSE which is down 1.2% which is not surprising. Here in the U.S. investors are unphased with the Dow down 2 points. At this rate we’re eight North Korean missiles away from Dow 25,000.

Oil

• Oil prices rally for 4th day.
• Close at 6 week high.

Oil prices continue their rally closing higher for a 4th consecutive day. WTI closed up 59¢ at $49.89 and at a 6 week high. Bent settled 31¢ higher at $55.47. Fundamental data is driving the market. On Wednesday the IEA (not our EIA) said global supply dropped by 720,000 bpd last month and OPEC forecasted 2018 demand to be strong in the U.S. and EU. Also, Saudi Arabia seems to be gathering more and more support to extend the 1.8 million barrel production cut beyond March 31, 2018. The OPEC meeting to decide this is in November.

This morning its quiet with WTI down 9¢. Complete chatter. And also ignoring geopolitical events.

Courtesy of MDA Information Systems LLC

Natural Gas

• EIA storage report marginally bearish.
• Prices rise.

The EIA released its regular weekly storage report stating 91 Bcf was injected into storage last week. This was a bit bearish for traders were looking for an injection of 85 Bcf. One would expect prices to drop, or at least close unchanged. And that’s exactly what happened for all the months, except the prompt month, October, which closed up 1.2¢ at $3.070. Every other month closed virtually unchanged. The October contract has risen 22¢, 7.5%, just this week as the weather forecast has turned warmer and the knowledge we’ll go into this winter with less gas, 5%, than last year.

You bears out there that are saying “Oh, we’re in the shoulder months now and prices will fall.” Don’t bet on it. At least a fall of material size. Remember, autumn also brings nuclear power plant maintenance. 20 units with a net capacity of 20.854 MW’s are expected to be shut down for refueling in the second half of the year.

This morning natty is down 4.1¢ at $3.029. Look familiar? $3.00.

Elsewhere

Have you heard of Cassini-Huygens? More commonly referred to as Cassini, it is a spacecraft launched on October 15,1997 to study the planet Saturn, its rings and its moons. This was a huge project! Teams from 17 countries joined together to design, build, fly and collect data. Cassini took 7 years to travel from Earth to the planet and has been successfully exploring and sending data back to scientists for 13 years! Due to its dwindling fuel supply the space craft conducted the Grand Finale phase of its mission, where it performed a number of risky passes through the gap between Saturn and its inner rings. The purpose of this phase was to maximize Cassini’s scientific outcome before the spacecraft is intentionally destroyed by letting it dive into Saturn’s atmosphere. The death dive to Saturn is happening today. Actually as I write this. PBS’ NOVA had a fascinating special on it two days ago. Highly recommend you watch it.

Here are Cassini’s top 10 accomplishments.

• The probe attached to Cassini, the Huygens probe, made the first landing on a moon in the outer solar system (Titan).

• The spacecraft discovered active, icy plumes on the moon Enceladus providing evidence that there is water beneath the atmosphere with volcanic activity beneath the water. This is believed to be how life began on earth.

• Saturn’s rings revealed as active and dynamic – a laboratory on how planets form.

• The moon Titan was revealed to be an Earth-like world with rain, rivers, lakes and seas.

• Radio-wave patterns were shown to not be tied to Saturn’s interior rotation as previously thought.

• Large vertical structures in the rings imaged for the first time.

• Titan’s atmosphere was found to be teaming with a variety of molecules – the most chemically complex in the solar system.

• The mystery of the dual bright-dark surface of lapetus was solved (Google it).

• Cassini gave scientist the first complete view of the north polar hexagon, which changes colors from winter to summer, and the discovery of giant hurricanes at both of Saturn’s poles.

On a logistical note, I am travelling on business Monday through Wednesday so the next Morning Energy Blog will be Thursday.