Good morning. At this time yesterday morning things were looking pretty bleak with all the Asian, European and U.S. markets all down materially. It was even worse during the regular session with the S&P 500 down as much as 1.3%, 218 points!, lower on the day. But bargain hunters came in on the pulverized energy stocks as well as the fruit buyers, aka Apple, which was up 1.5% on the day, mitigating most of the damage resulting in a less bad day (Dow down 52 at 17,801), a breakeven day (S&P closing flat to Monday) and a descent day (Nasdaq ending up 26 at 4,766). Investors still remember October when we gave almost everything that had been gained for the year and are hypersensitive to potential downdrafts and have their trigger finger poised over the “sell” button. We’ve made a nice recovery since then with the S&P up 10.6% from the October 15th low and up 11.4% for the year and they don’t want to give it back, especially with their bonus on the line!

The big talk in the market lately, besides what’s going on in the oil market, is what the Fed will do regarding interest rates on the heels of a very bullish jobs report last Friday. An article in the Wall Street Journal this week by John Hilsenrath said Fed officials meeting next week will likely affirm a plan to start raising short term interest rates in 2015 and are debating dropping the key phrase investors have been focusing on for months, and that is “a considerable time.” Remember Janet Yellen’s first press conference when she answered a question on when short term interest rates might be raised? Her answer sent the markets in a tail spin. The Fed not only has a mandate to manage the economy to realize “full” employment and control inflation but must very, very carefully manage its communications with the public. The Wall Street article has more credence than a normal speculative article for it is widely accepted that Mr. Hilsenrath is generally the conduit through which the Fed communicates with the public outside of its published meeting minutes. It’s through him that the Fed often “leaks” its intent.

Regarding economic reports, the most significant report released yesterday was by the National Federation of Independent Business stated yesterday this its small business sentiment index hit a 7 year high in November as expectations for business conditions in 6 months surged and expectations for sales volume gained.

Of note internationally, Greece’s Athex Composite, the equivalent of our S&P, fell an incredible 13% yesterday marking its worst one day decline ever! Folks that’s the equivalent of the Dow losing 2,305 points! Now that is some serious hurt! Yesterday’s fall is really incredible considering that is was just a few years ago all the talk was of Greece defaulting on its debt and that is not even in the conversation today. The impetus for the move was the Greek government’s totally unexpected announcement that it would hold presidential elections two months earlier than expected. Opinion polls are pointing to a win by the far-left opposition Syriza party and the market believes a win by them could put Greek’s eurozone bailout package in jeopardy.

This morning Asian stocks closed mixed but European stocks are all trading nicely higher which I hope is simply not a dead cat bounce from the pummeling they took yesterday with UK’s FTSE falling 2.1% leaving the index at its lowest close since early November.

Here in the States the Dow is getting whacked down 112. It certainly appears investors are more anxious to sell than buy as we near the year’s end.

Oil managed a rebound yesterday with WTI tacking on 77¢ closing at $63.82 and Brent added 65¢ settling at $66.84. Well it most certainly was a dead cat bounce with WTI down $1.74 as I write and it was OPEC who dropped that cat. They came out overnight stating they are lowering the demand for their crude oil for 2015 by 300,000 bpd to 28.9 million a day. This is the lowest level in 12 years and about 1.15 million bpd less than the group’s 12 members pumped last month and the 30 million bpd target reaffirmed at its meeting in Vienna on November 27th. OPEC squarely points to the growth in Canadian and U.S. shale oil production and a downward revision of global demand.

Not helping the oil bulls (if there are any still out there!) was yesterday’s API report which showed a stunningly large increase in both crude and product inventories for last week.

Courtesy of MDA Information Systems LLC

In spite of a warm weather forecast natural gas managed a small gain yesterday closing up 5.7¢ higher at $3.652. I think the bears have spent most of their bullets, for now. We’ve still got a lot of winter left and storage levels are still below both last year and the 5 year average. That being said, every day that goes by with warm weather forecasted will mean less gas withdrawn from storage and feed the bears. Spring could get real interesting. A new paradigm I need to research is how the falling price of oil, specifically less drilling, will impact natural gas production and therefore natural gas and electricity prices. Natural gas production will continue to remain strong in Q1 and Q2 for there is a lot of completed wells yet to be connected to a pipeline system and you have regulations in North Dakota mandating a decrease in flaring natty bringing “new” gas to market. However, if oil prices stay low for 6 months we’ll definitely see less natural gas production on Q3 and Q4. Obviously, there are a lot of moving parts at work here I need to follow so stay tuned.

On a logistical note, this will be the last report until Monday. I’m taking a couple of very necessary days of vacation. Have a great day.