US: +1 (877) 51 POWER 
Europe: +44 (0) 207 198 1634 Good morning. Yesterday stocks added small gains to the small gains they had on Friday. But a gain is a gain is a gain and much better than the alternative. The Dow closed up 21 at 16,512, The S&P 500 added 7 ending at 1,885 and the Nasdaq rose 35 to 4,126. On a bright spot, the Russell lessened its divergence with the rest of the market gaining a hefty 1.1% (although the divergence remains very material). Another cautionary note. Yesterday’s volume was the second lowest volume of the year on the NYSE. Large volume confirms moves. Price action on light volume must be taken with a grain of salt.
With a dearth of economic data investors watched the headlines and the $48.5 billion (yes, with a “b”!) bid by AT&T for DirecTV and a joint venture between Johnson Controls and a Chinese company that will form the world’s largest maker of automotive interiors kept things positive. Investors like M&A activity because it illustrates that companies have the financial ammunition and appetite to grow through acquisitions. All that being said, the market really just “drifted” yesterday BUT the S&P is still near it’s all time high, up 2% for the year. The Dow and Nasdaq are still in the red for the year so far. Treasuries actually backed off from their recent highs with the yield on the 10 year increasing from 2.52% to 2.54%. I’ll take a quiet, positive day any day.
We’ve got déjà vu with this morning bearing close resemblance to Monday’s premarket session with not much happening and Dow futures down 7. Chatter. Global trade is confusing with the Asian markets all closing higher but the European markets all trading lower today.
Natural gas prices picked up some yesterday on the heels of yesterday’s warmer weather forecast with the June contract settling up 5.7¢ at $4.47. Last Thursday’s storage report has spooked the bears a little with less gas injected than many expected hence the lack of motivation to sell it down. Natural gas prices in the mid-Atlantic states are in the dumper with plenty of gas coming out of the Marcellus and Utica formations. The problem is, and think of this like the oil pipeline transportation constraints that were Cushing, OK, you can’t get the gas out of the region. For decades natural gas was brought to those regions from the Gulf Coast so pipeline flows were from south to north. Now the regions are producing prolific quantities of shale gas (and oil) in amounts greater than regional demand thus requiring exportation to other regions. The rub is the pipeline infrastructure is not set up to do this and it’ll take a couple of years for modifications to occur. I never thought I’d see the day when the MidAtlantic region, which for decades was a “premium market” for natural gas producers, would be the supply region for the southeast displacing Gulf Coast gas but that is exactly what’s going to happen. So what we’re going to see for a while is that Henry Hub, LA, which is the delivery point for the Nymex contract, will be a “premium market,” along with the California border.
This morning natty is up 2.5¢ hovering just below the $4.50 level which was a big number when prices were rising.
Oil went in opposite directions with WTI up 59¢ closing at $102.61 while Brent fell 38¢ to $109.37. Putting a bid into the former is traders’ belief that inventories will decline as summer driving season ramps up. Putting an offer into the latter is President Putin’s announcement yesterday stating he has ordered his troops to move back from the Ukrainian border and return to their home bases. So why didn’t Brent fall more? I think Mr. Anders Fogh Rasmussen, NATO”s Secretary General, put it succinctly “Unfortunately, I have to say that we haven’t seen any evidence at all that the Russians have started withdrawing troops from the Ukrainian border…[This is] I think the third Putin statement on withdrawal of Russian troops, bit so far we haven’t seen any withdrawals at all.” ‘Nough said. I mean, come on. We’re talking KGB here. This morning WTI is down 20¢ with the June contract expiring today.
Cal Ripken’s 2,632 consecutive starts. DiMaggio’s 56 straight games with a hit. Pretty impressive records, eh? Well they pale in comparison to what’s happened in the stock market currently. That’s because the S&P has gone 468 days since experiencing a correction of 10% or more, the 4th longest streak on record. And how about this. The S&P hasn’t closed below its 200 day moving average in over 18 months. So does that spark fear? Well those who’ve gone to the sidelines have missed an incredible run! Waiting for the correction has become an absurdist activity, the financial equivalent of “Waiting for Godot!” Have a good day.
