Equities and the Economy:

• Equities rise sharply.
• Strong corporate earnings and progress on tax reform.

Well that wasn’t much of a dip. After falling 4 of the last 5 sessions, U.S. equities posted big gains yesterday. The Dow ended up a very nice 187 points, 0.8%, at 23,458. It was up as much as 221 points intraday. The S&P 500 climbed 21 points, 0.82%, to finish at 2,586. The Nasdaq Composite popped 87 points, a big 1.3%, to 6,793, a new record high. Stocks were driven higher by strong corporate earnings from Wal-Mart and Cisco. Wal-Mart’s stock price popped about 11% to a record high after reporting its strongest U.S. revenue growth since 2009 buoyed by soaring on-line sales (they’ve said they have Amazon in the crosshairs!). Cisco’s stock price hit its highest level since February 2001 with actual earnings beating expectations.

Additional buying came in after the U.S. House passed its version of the tax bill which lowers corporate taxes from 35% to 20%. The vote was largely along party lines. The focus now shifts to the Senate whose tax bill looks much different than the House’s. Senate Republicans can lose no more than two votes and at least two GOP senators have already spoken they won’t support the current version of the bill.

Regarding the fundamentals, private-sector housing starts in September increased 6.1% y-o-y, the fastest pace since February. The housing market has been and continues to remain on a solid growth path. This suggests that both consumer and small business sentiment remains very positive.

European stocks also had a good day yesterday but are much more muted today which is rippling across The Pond with the Dow down 49 and the Nasdaq up 2.

Oil

• Prices leak lower.
• Settle at two week low.

After hitting 2 ½ year highs last week oil prices closed at 2 week lows yesterday. WTI dipped 19¢ to $55.14 and Brent fell 51¢ to $61.36. Prices continued to feel the weight of the EIA’s report on Wednesday showing a rise in crude and distillate inventories and that U.S. production continues to rise as well as the IEA’s report that same day showing lower demand in 2018 compared to 2017 which was contrary to OPEC’s report a few days earlier.

At a meeting in Bonn, Germany yesterday Khalid al-Falih, the Saudi oil minister, stated that while progress has been made toward achieving OPEC’s goal of bringing global inventories down to their 5 year average, that goal will not be at reached by the end of March 2018 and that an extension of the production cut is required. He added that OPEC also does not want any price shocks, any price movements, that are unhealthy for demand. OPEC’s big meeting is November 30th in Vienna where extending the production cuts will be voted on.

This morning oil is popping with WTI up 73¢ on a ruling from the International Swaps and Derivatives Association that Venezuela as well as its state oil company has defaulted on their debts.

Courtesy of MDA Information Systems LLC

Natural Gas

• Prices close marginally lower.
• EIA report slightly bullish.

The EIA released its weekly storage report stating 18 Bcf was withdrawn from storage last week. This is the first withdrawal since March. Additionally, last year at this time as well as the 5 year average we saw injections into storage. The market was looking for a 15 Bcf withdrawal so overall the report was on the bullish side. Traders didn’t care for while buying came in right after the storage report was released pushing prices higher, selling dominated the afternoon and December gas closed down 2.7¢ at $3.053.

Forgive the redundancy, but the weather forecast continues to remain price supportive and natty is up 3.5¢ as I write.

Elsewhere

It’ll be another weekend of football with a lot of beer drank, including Budweiser. Here are 5 interesting facts about the beer and company.

• Nowadays Budweiser is about as American as McDonalds or Coca-Cola, but wasn’t always the case (pun most definitely intended!). Budweiser was created by Adophus Busch of Germany. He moved to the U.S. in 1857 and brought with him the latest techniques for brewing beer which he used when he opened the Anheuser-Busch brewery with his father-in-law Eberhard Anheuser in 1864. Based on the name I can conclude who contributed the most money!

• Budweiser was ahead of its time. At a time when most Americans were drinking dark ales, they produced a lighter lager. Additionally, they were the first brewery in the U.S. to pasteurize its beer which hugely improved its shelf life.

• The Budweiser name was inspired by a trip Adolphus made to the Budweis region of the Czech Republic.

• One can debate whether or not Budweiser is a great beer, but there’s no question the company is a marketing juggernaut. For example, the company spent $246.2 million on just Super Bowl commercials between 2002 and 2011. Those marketing dollars helped make Budweiser the best selling beer in the U.S. for much of the 19th and 20th centuries.

• Budweiser is vegan. No animal products are used to make the beer.