Good morning. By now we know the correlation. More QE, higher equities. This time, as mentioned in yesterday’s Morning Energy Report, the impetus came from across the pond on ECB President Mario Draghi’s comments stating he’d use all available tools to stimulate growth in the EU. Folks that’s a euphemism for QE. And if there’s been one theme since the Great Recession it’s that QE fosters higher equity prices. Mr. Draghi’s comments led to a big rally in European stocks yesterday which fueled higher stock prices here in the U.S. The S&P 500 rose 10 points to close at a record high of 1,998 after trading for the first time over 2,000 intraday. Add his comments to Fed Chair Janet Yellen’s of patience and you have a tone that easy money will continue to flow, for now. The Dow climbed 76 points to 17,077 and the Nasdaq added 16 to 4,554. This party has lasted more than 5 years and will end someday but let’s ride this pony as far as we can.

On a more fundamental basis there were some economic reports of significance released yesterday. The Chicago Fed’s National Activity Index rose quite sharply to 0.39, well above last month’s upwardly revised 0.21 and above the consensus of 0.20. The Chicago Fed index is an index I like because it is so broad reflecting performance of the general economy vs. simply a region. A second report was not so good and that was Markit’s PMI Flash Index coming in at 58.5 for July, down from the previous month’s 61.0 and well below expectations of 61.5. We also had new home sales for July which came in at 412,000 which was below June’s 422,000 but the 422,000 was a revision higher from an initially reported 406,000. Thus, on balance, the news yesterday was of moderate, bumping along, tepid economic growth. The sort of news that will keep the Fed on hold in its present economic policies.

Asian stocks this morning all closed lower but the West doesn’t seem to care for European equities are all trading “green” and the Dow is up 44. This morning the government released its July Durable Goods report showing orders surged a huge 22.6% which was much better than the 7% expected. June’s number was increased to 2.7% from the original 1.7% so the revision was positive. A big word of caution here. Always, always take the Durable Goods report with a grain of salt. This is the most erratic report of any month. An airplane sale or cancellation can skew the data violently.

Oil was mixed yesterday with WTI slipping 30¢ to $93.35 while Brent rose almost the same amount, 36¢, closing at $102.65. Crude is now moving out of Libya while at the same time it is being moved out of Kurdistan seeking buyers. Libyan crude oil production has ramped up swiftly and the Kurds continue to sell oil from their newly “gained” oil fields in Iraq’s northeast taking almost any price for such. All this is pushing the term structures (the “curve,” i.e., the relationship of the front months to the deferreds) bearishly indicating the market is bidding more aggressively for storage. This morning WTI is up 68¢.

Natural gas had a big rally yesterday closing up 9.7 at $3.937 driven by a strong cash market driven by a hot Midwest and the hottest temperatures of the year in Texas. Triple digit temperatures were posted from south Texas all the way to Kansas City and St. Louis. Looking that the forecast below, the 6-15 day time frame was warmed up from yesterday showing more heat moving into the eastern U.S. during the period. This is supporting natty with the September contract, which expires tomorrow, up 2.1¢ this morning. I mentioned yesterday we’re getting into the “meat” of the hurricane season and today is the first day of any discussion of “something” in the Gulf. There’s a group of “disorganized showers and thunderstorms” in the northern Gulf south of Louisiana. It only has a 10% chance of development but again, ‘tis the season.

As you all readily know, I’m a big fan of horizontal drilling and hydrofracturing, aka, fracking. You have enjoyed natural gas bills half of what they were 6 years ago because of this technology and it has unequivocally enhanced the U.S.’ energy independence and natural security. You probably have not heard his name but Mr. Harold Hamm helped bring this technology to the fore. Mr. Hamm is Chairman of Continental Resources. And going through a divorce. A divorce that may end up being one of the most expensive in American history. Interestingly, Mr. Hamm is arguing that much of his company’s good fortune in recent years was derived from “luck” and happenstance and because it was luck and not investment prowess that brought him his fortune his wife should not receive half of his net worth but should receive only that share of his/her fortune directly attributable to investment prowess and insight. Wow! I could have had a V-8! Now the argument is completely ridiculous but think about it. What does this tell his shareholders? That Continental’s success was just dumb luck?! That Continental was just throwing darts at balloons in exploring for oil and gas hoping to find something?! Unfortunately Mr. Hamm, you can’t have it both ways! Have a good day.