Good morning. Yesterday the Dow closed down 22 points at 16,846, the S&P 500 lost 2 to 1,957 and the Nasdaq fell 1 to 4,379. And you should be happy. Why? Because 20 minutes after the open the Dow was down 122 points! Taking “the glass is half full” approach, yesterday was only the 3rd loss in 10 trading days for the S&P which closed at its record high just a week ago on June 20th. The government reported yesterday that weekly unemployment claims declined marginally and came in at expectations while consumer spending in May rose 0.2% which was below expectations of 0.4%. The latter data gives Dr. Yellen cover for keeping interest rates low. A bit of good news came in that consumer incomes were up 0.4% in May and combining that with the low consumer spending means that the consumer added to his or her savings. What a novel idea!

Overnight the Asian markets closed mixed but the Nikkei got hammered losing 1.39% which equates to a very material 234 points on the Dow. Yikes! Fortunately European stocks aren’t following Asia’s lead with the major indexes trading marginally higher. Here in the States the Dow futures is starting out down 20 points. Based upon the markets recent price action it seems like traders can’t push it down nor can they push it up. Summer doldrums? Consolidation? Call it what you want but the market is looking, pausing. What’s good for stocks is that alternative investments aren’t providing yield. Bonds aren’t attractive, other than as a safe haven, as evidenced by the 30 year mortgage rate which for the first time this year was lower than a year ago. I don’t have any evidence of this but it sure seems to me tons of money is flowing to private equity firms as investors look for yield.

Natural gas gets 2nd position today for the July contract fell 15.3¢ yesterday closing at an even $4.400. Yesterday’s settle was the most important of the month for it was the July contract’s expiration setting the monthly natural gas price for those of you unhedged on the Nymex + basis product and the electricity rate for those on an unhedged heat rate. Of note, this was July’s lowest daily settle since it became the prompt month on May 29th. The price drop was driven by the EIA’s weekly natural gas storage report which came in at a 110 Bcf injection. This was greater than the market’s expectation of 105 Bcf. As I’ve mentioned numerous times this month, I truly believe traders have been playing natty from the long side for the last few months. Also, there were “short squeezes” on the May and June contract expirations and traders were going long into the July settle. Take if from an ex-trader, you never get 3 repetitions in trading natural gas. By then the world has caught on and you’re nothing but a mullet. Yesterday’s storage injection was the 7th in a row of triple digit injections and the 2nd largest injection into storage for this week with only 2003 being greater. There’s only been once in modern history we’ve had more than 7 weeks of triple digit injections and that was 8 weeks in a row. We could tie that record because my research indicates a 101 Bcf injection for next week’s report. It’s still early so it’ll be close. This morning the August contract becomes the prompt month and is down 3.6¢ with no volume trading. The back months haven’t even traded. My experience has always been the Friday after the prompt month close to be an anemic day for trading.

Oil continue to erode yesterday with WTI losing 66¢ to $105.84 and Brent falling 79¢ to $113.21. WTI’s trading range is now $105 to $107.70 and since we just broke the $105 support it needs some time to consolidate before its next move. The bulls have a recovering global economy, reduced production from Iraq and a weaker U.S. dollar while the bears have increasing supplies here in the U.S. although unequivocally the bulls have been winning this war. This morning WTI up 15¢. Chatter.

Today is the 100th anniversary of the “shot heard round the world.” This was the day Serbian Gavrilo Princip assassinated Austrian Archduke Franz Ferdinand in Sarajevo and considered to be cause of World War I. You may know that but I bet you don’t know this. There were actually seven assassins along the parade route of the archduke and his wife, Sophie. An assassin, not Mr. Princip, threw a bomb which exploded behind the archduke’s vehicle injuring numerous people. Ferdinand stopped the parade, checked on the victims of the bomb attack and then the parade continued on. After giving a speech at the city hall Ferdinand and Sophie got back into their vehicle to continue their trek along the parade route. Ferdinand stated that he wanted to go to the hospital and check on the bombing victims. However, no one informed the driver of the archduke’s car of this request. The vehicle pulled up to an intersection and instead of going straight toward the hospital, turned right along the planned parade route. The general in the car yelled “Stop. You’re going the wrong way!” The driver of course immediately stopped. Right in front of and four feet from Gavrilo Princip. Have a good weekend

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