Equities and the Economy:

• Dow and S&P close at record high.
• Dow closes above 24,000 for first time.

It was a stellar day for stocks yesterday. The Dow skyrocketed gaining a whopping 332 points, 1.39%, closing above 24,000 for the first time at 24,272 and logging its largest single day gain since March. It was just a month ago, October 18th, when the Dow closed above 23,000 making it 30 trading days between 1,000 point milestones, the third fastest on record. The S&P 500 rose 22 points, 0.82%, at 2,648, also a record high. The Nasdaq also had a good day adding 50 points, 0.73%, but not at a record high. It’s still recovering from Wednesday when it had its biggest one-day drop in 3 months. The Dow and S&P have registered 8 months of gains and the Nasdaq 5. Not to be left behind, the Russell 2000 also closed at a record high, its 3rd consecutive record high close. Trading volume for the day was the largest since June 23rd which reinforces the conviction of yesterday’s move up.

Some are rationalizing yesterday’s great price action as a consequence of Senator John McCain’s decision to support the Senate’s tax–cut plan. Indeed, that was a positive, but the fundamentals and corporate earnings are the big drivers. Yesterday consumer confidence data came out showing confidence at levels not seen since the dot-com boom.

The morning the Dow is down 9 points. Chatter, and not surprising to me after we’ve had such a big move up and it’s Friday with some profit taking coming in.

This morning the CFTC approved the CME Group’s and CBOE Global Market Inc.’s requests to list Bitcoin futures. They are the first traditional U.S. exchanges to launch trading in bitcoin-related financial contracts with trading to begin this month.

Oil

• OPEC and friends extend production cuts.
• Plan to review market in 6 months.

Yesterday OPEC formally met and approved extending the current production cuts until the end of 2018, with a caveat. Leading up to the meeting word was that Russia was concerned about the length of the extension wanting a shorter time frame. A compromise was reached and “formally” the production cuts were extended through 2018, but will be reviewed in 6 months. Russian producers have been reportedly looking for an “exit strategy” and you can expect this will likely be a running theme through next year. OPEC members Libya and Nigeria, who were exempt from the original agreement, are now included in the new pact pledging to cap their production at their 2017 levels. The production cut agreement was fully baked into oil prices with WTI closing up 10¢ at $57.40 and Brent settling 46¢ higher at $63.57.

Data released yesterday by the EIA showed the U.S. oil production juggernaut has no intention of slowing down. U.S. production climbed to 9.7 million bpd for the week ended November 24th. That’s the highest weekly level since 1983.

This morning WTI is popping up 94¢.

Courtesy of MDA Information Systems LLC

Natural Gas

• EIA storage report bearish.
• Weather models price supportive.

Yesterday the EIA released its weekly storage report stating 33 Bcf was withdrawn from U.S. storage fields last week. This was materially less than forecasts for a 42 Bcf withdrawal. Prices were already on the defensive going into the report and the bearish number brought in more selling. January natural gas ended down a big 15.4¢ at $3.025. Current storage levels are 7.7% lower than this time last year and 3% below the 5 year average.

We’ve been getting some volatility the last 6 weeks or so, and it continues this morning with natty up 6.9¢. Weather forecasts continue to show some cold weather for the 6-10 day time frame for the eastern half of the country and turning very cold in the 11-15 day period. Brrrrr! It almost looks like a (drum roll please) a Polar Vortex.

ERCOT, the Texas electricity grid operator, posted a new record. In late November with a 155 MW wind farm in West Texas beginning operation, Texas’ wind power capacity passed the 20,000 MW level, surpassing Texas’ coal plant capacity of 19,000 MW’s. One MW is enough to power 200 homes on a hot day. Wind now accounts for 15% of Texas’ power mix. Bear in mind, capacity is not kilowatt hours. The wind doesn’t blow, you don’t get electricity.

Elsewhere

Next to the screaming hot stock market this year, blockchain and cryptocurrencies has been one of the hottest topics this year. Most of the discussion has focused around the appreciation in value of the same. Recently Bitcoin’s value hit over $11,000. Based upon that number if you had one bitcoin at the beginning of 2017 you would have realized an appreciation of 1,100%! Ethereum is up more than 5,000! Llitecoin is up more than 2,000%! Cryptocurrencies have never been hotter than they are right now. Coinbase, the leading U.S. platform for buying and selling bitcoin, reported 11.7 million users in October. Putting this in perspective, Charles Schwab reported 10.6 million active brokerage accounts in October! As of last Sunday Coinbase’s user base is now 13.3 million, an increase of almost 14% in about a month and in increase of 148% in a year! Coinbase added 300,000 in the last week alone. Now Schwab has trillions of dollars under management compared to Bitcoin’s $160 billion capitalization but the growth is stunning considering that Schwab is the second largest broker-dealer by assets next to Fidelity.

Many analysts have said Bitcoin is a “bubble” and Jamie Diamond, CEO of JPMorgan, recently called Bitcoin a “fraud,” but the reality is that Bitcoin is gaining traction amongst the general public. Evidence of this is that the CME, the world’s largest futures exchange, is planning to launch bitcoin futures in the second week of December implying hedge funds are embracing cryptocurrencies. In the past week, Google search for “Bitcoin” exceeded searches for “Trump” for the first time.

Owning or trading cryptocurrencies is not for the faint of heart! After hitting an all-time high of $11,395 on Wednesday Bitcoin lost more than 20% of its value yesterday! Yikes!