Equities and the Economy:

• Stocks snap 9 day win streak.
• Investors see little reason to buy.

U.S. stocks closed marginally lower yesterday. Although the Dow traded at a new intraday high at 22,420 it couldn’t hold the gains and closed down 53 points at 22,359. The S&P 500 slipped 8 points finishing at 2,501 and the Nasdaq fell 33 points ending at 6,423. Yesterday was a day that can be summarized as one where, after 9 closes higher, investors had no reason to buy. Perhaps investors were digesting the Fed’s decision on Wednesday to leave interest rates unchanged but reduce its ginormous balance sheet created over the last 9 years through its QE effort. As I mentioned yesterday, the Fed said 1) to expect one more interest rate increase before the year’s end, and 2) it will reduce its balance sheet by $10 billion a month. That may seem like a big chunk, but an analogy will put it in perspective for you. $10 billion a month to the Fed is like you raking the leaves in your yard, one leaf at a time! So yes the Fed is reducing its balance sheet, but ever so slowly. With inflation below 2% they don’t want to upset the our growing economy, which is growing at a “plow horse” pace.

Turning to the fundamental news, weekly first time jobless claims fell more than expected. Economists were expecting more claims due to Harvey and Irma. Claims remain at decades low levels. The Conference Board published it index of leading economic indicators which rose 0.4% in August to 128.8 and slightly better than forecasts of a 0.2% increase. The Board’s head economist cautioned though that the period of data collection did not include the full effects of the hurricanes, but he added that the underlying trends suggest the current solid pace of growth should continue in the near term.

This morning more bivouacking. The Dow is down 33 points.

This weekend Germany holds its federal election. Polls show Angela Merkel will retain her office.

Oil

• Prices close mixed.
• OPEC/non-OPEC meeting today.

After hitting a nearly 5 month high on Wednesday WTI closed marginally lower yesterday falling 14¢ to $50.55. The day before, Wednesday, the October WTI Nymex expired at a 4 month high for a front month contract. Oil prices have rallied 7% this month. Fundamentally, it appears that, although it’s taken longer than OPEC (i.e., Saudi Arabia) expected, production cuts are bringing global supplies more in balance. Got to hand it to Saudi Arabia. The kingdom has done a good job of keeping its members in tow with production cut compliance at about 90%, which I never would have predicted a year ago. History has shown very little compliance with production cuts. That being said, U.S. production continues to grow which will be a “ball and chain” on price rallies.

Traders are keeping an eye on the OPEC and non-OPEC countries meeting today in Vienna to discuss the effect of the production cut agreement and progress toward a global supply/demand balance. The narrative is expected to be one of managing expectations. Oil prices are moving in the right direction and OPEC doesn’t want to derail it. No announcement of an extension of the production cut agreement will come at this meeting. That’ll be in November when the big, formal meeting occurs.

This morning WTI is down 4¢. Total chatter.

Courtesy of MDA Information Systems LLC

Natural Gas

• Storage report bearish.
• Price gets whacked.

The EIA released its weekly storage report stating 97 Bcf was injected into U.S. storage fields last week. This was markedly over forecasts of 89 Bcf and prices reacted accordingly with the October contract, which was already at the higher end of a multi-month trading range, getting bludgeoned falling a material 14.8¢ to $2.946/MMBtu. As it’s been for months now, all the action is in the calendar 2018 and forward months. While the calendar 2018 strip fell 6.4¢, calendar 2019 and calendar strips beyond strips moved marginally losing only about 1.6¢.

Current storage levels are 4% below last year at this time and 2% above the 5 year average.

U.S. natural gas production hit a record high on Wednesday of 74.6 Bcf/d. LNG exports are also hitting record highs at 2.9 Bcf/d.

This morning it’s quiet with natty up 0.8¢. Complete chatter.

Elsewhere

So what’s the “Best Job in America?” Per Glassdoor, the job search engine and review site, its “data scientist.” The job boasts a median salary of $110,000 and a job satisfaction score of 4.4 out of 5. To find the best jobs in the U.S. the company weighed three factors equally: earnings potential (median annual base salary), job satisfaction rating, and number of job openings. For a job title to be considered, it had to receive at least 100 salary reports and 100 job satisfaction ratings over the past year. The big demand for data scientists is driven by companies quest to understand consumer behavior. Following data scientist was devops engineer ($110,000 per year), which combines development, testing and operations, data engineers ($106,000 a year), tax managers ($110,000 a year) and analytics managers ($112,00 per year).

The number one skill most in demand for data scientists is knowledge of the programming language Python (sought after 72% in job postings), followed by R (64%), SQL (51%), Hadoop (39%) and the more well-known Java (33%). The employers who hire these types of people are Google, Aetna and Microsoft.