Good Good morning.  U.S. equities ended higher yesterday extending Friday’s rally as investors viewed Russia’s move to send humanitarian aid to Ukraine would ease tensions between the two countries.  They may be getting humanitarian aid but Ukraine is saying that contrary to Russian reports of de-escalation, Russia has amassed 45,000 troops on its border.  With Russia saying its military exercises along the Ukrainian border are over investors relaxed on the de-escalation.  But they better not get too relaxed because NATO puts the probability of a Russian invasion into eastern Ukraine as a “high probability.”  Investors don’t seem to be concerned for they pushed the Dow 16 points higher to 16,570, The S&P 500 up 5 to 1,937 and the Nasdaq up 30 to 4,401.  Although we ended up yesterday the price action was disappointing to me because we were up over 80 points early in the day (basis the Dow) and finished weak.

Overnight the Asian markets closed mixed pretty much on either side of unchanged.  However, the European markets are all trading materially in the red which is carrying over to the States with Dow futures down 36.  As I mentioned previously, investors were buoyed by Russia’s sending humanitarian relief to eastern Ukraine.  Reports are that 300 trucks left Moscow yesterday travelling to the western and northern borders of eastern Ukraine.  Ostensibly the trucks are carrying humanitarian aid, but there are very serious concerns now that these trucks instead carry men and war material.  As noted above, NATO’s leaders are convinced Russia still intends to invade eastern Ukraine and shall do so under the pretext of coming to the aid of Russian speaking Ukrainians, the very same pretext Russia used several years ago when it invaded Georgia and the Caucuses.  Moscow is saying that Kiev has agreed to accept the convoy of trucks buy Kievian officials say otherwise saying instead that it’s approval is contingent upon participation with the Russians of U.S. and EU personnel and all of which would come under control of the International Committee of the Red Cross.  It’s going to take a day or so for the Russian trucks to reach their destination so keep an eye on the news.  I guarantee you U.S. satellites are working overtime watching this convoy.  Keep in mind Russia just concluded military exercises last week and President Vladimir Putin, whose approval rating is near or at an all-time high of 80%, views Ukraine as critically important to Russia’s existence.  Military exercises.  300 trucks moving to the border.  If this isn’t preparation for an invasion I don’t know what is.  If it looks like a duck, quacks like a duck and walks like a duck, it’s a duck!

WTI and Brent went in opposite directions yesterday with WTI up 43¢ closing at $98.08 while Brent fell 12¢ settling at $104.68.  Brent prices are now at a 9 month low while WTI prices are just above last week’s 6 month low.  In June WTI prices spiked close to $117/bbl as ISIL’s offensive picked up and even though U.S. forces have started targeting ISIL positions, for a 3^rd day now, traders believe there’s only a limited risk to supplies.  Additionally, the perception is there is ample supply, particularly in West Africa and the North Sea, which is keeping a lid on prices.  The bulls are getting more bad news this morning with the EIA reporting that global oil demand growth dropped to its lowest since 2012 which is pushing WTI down 78¢ this morning.

Natural gas ended the day basically unchanged from Friday, up $0.003/MMBtu at $3.965.  Each day the weather forecast is coming in warmer in the 6-10 and 11-15 day period and that trend continues this morning with no below normal temperatures in the eastern half of the country in the 6-10 time frame and above normal temperatures showing up in the 11-15.  This will be the first time this summer that the eastern 1/3^rd of the country will have an multi-day period of above normal temperatures.  This will definitely increase demand for natural gas.  Natural gas prices are now just about parity with coal prices so we’ll have a tug-of-war at current prices.  All eyes will be on the cash market.

I’m only going to mention the following because of the non-news.  We are deep into the hurricane season and there has been zilch to discuss.  The peak of the season is September 10^th so we have a ways to go with the period between now and October 1^st the most active but there is no threats of anything developing over the next 5 days.  This morning natty is up $0.011.  Chatter

Have a good day.

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