Good morning. Last week ended mixed for equities with the Dow rising 14 points to 17,280, a new record, the S&P 500 closing down 1 at 2,010 and the Nasdaq off 14 to 4,580. The major indexes over the week were supported by favorable outcomes of two “risk” events: the Fed reiterating its commitment to its view of the timing of increasing interest rates (“considerable time”) and the vote for Scotland to remain in the UK. Although U.S. stocks ended lackluster world stocks closed out their 5th week of gains. Alibaba had their IPO on Friday marking the world’s largest IPO raising $25 billion. Did you get any of the stock before it went public? My bet is no and too bad of us. All the IPO stock went to the underwriters which netted a windfall of more than $300 million with the stock closing at $93.89 on its first day of trading, up 38%! And the underwriters weren’t the only ones to make money. According to the SEC, Alibaba paid $121.8 million in commissions and selling shareholders are set to pay another $178.6 million. All not insignificant sums amigos.

This morning all the major indexes are retracing with the Dow down 42 points with Asian markets all closing lower and the European markets trading negative although the latter are just below unchanged. Hong Kong’s Hang Seng fell to 2 months lows today. Data over the last few months has shown China’s economy is slowing and its weighing not only on Asian stocks but equities globally. Over the weekend at a G-20 meeting China’s finance minister Lou Jiwei said the country is facing downward pressure.

The Brent/WTI spread got wider on Friday with The former gaining 69¢ closing at $98.39 and the latter falling 66¢ settling at $92.41. After rebounding early last week on comments by the Saudi’s they would be cutting production WTI has again sold off. The multi-month low of $90.43 is still a couple of dollars away but it sure looks like the market wants to test that support. Global supplies are ample, especially with U.S. production continuing to climb, and demand is flat at best. An example of the latter is some data compiled by Professor Short at NC State showing that since hitting an apex in June 2005 population adjusted miles driven by the average American is down 9.2% and at January 1994. More efficient gasoline engines are helping but let’s not forget about the advent of internet shopping which is definitely suppressing the need to go to the mall. This morning WTI is flat to Friday’s settle up a meaningless penny.

Natural gas continued its sell off from Thursday falling 7.3¢ to $3.837 and down about 20ٗ¢ from its high last week. There is no doubt the weather forecast is making the bulls yoke very heavy. Starting late last week the forecast shifted from colder than normal to warmer than normal for the eastern U.S. If the forecast below was for August natty would be popping but this forecast is for late September and early October meaning the upper Midwest and eastern U.S. are going to have some phenomenal weather! Looking at the forest through the trees though, at the beginning of July natty was trading $4.886 then fell to a low of $3.724 at the end of July and since then has been trading between that low and $4.101. This morning is quiet with natty is up 1.3¢.

And here I go again with the benefits of horizontal drilling and fracking. Per Mr. Robert Hefner III, the Chairman of GHK Companies and the author of The Grand Energy Transition: The Rise of Energy Gases, Sustainable Life and the Next Great Economic Expansion, in 2013 one large independent oil and gas company drilled over 100 horizontal wells on GHK’s leases. Now had those wells been drilled vertically they would have exposed 1,000 feet of shale but being horizontal nearly 100 miles of shale were exposed. Additionally, using horizontal drilling rigs, in 2014, 6 or 7 rigs will be able to drill more wells and produce as much oil and gas as 12 rigs were just one year earlier. Not only is productivity per well dramatically increased, the environmental impact is much less. As Martha Stewart would say, “This is a good thing.” Have a good day.