Good morning. Equities drifted on either side of unchanged all day yesterday but the S&P 500 did manage to eke out its third record close in three days by the barest of margins, 1/10th of one point. Being I round the equity indexes to the unit figure the result was that yesterday’s close was the same as Tuesday’s, 2000. The Dow rose 15 points to 17,122 and the Nasdaq fell a meaningless 1 point to 5,570. Trading volume reflected the lack of movement (oh how are the high frequency traders to make money!) being about 66% the recent average. The major indexes are riding a 3 week streak of gains and the slope of the curve of the rise of these indexes is very steep since the beginning of August so a pause is not to be unexpected. In military terms, call it bivouacking while supply lines are reestablished.

Photo by DonkeyHotey / Licensed under CC BY 2.0

This morning Dow futures are down 60 being dragged lower by Asian and European stocks. The former closed lower and the latter are trading materially in the red, especially Germany’s DAX which is down 1.33%. Equities in Europe are reacting to statements by Ukraine’s president saying Russian troops are directly participating in the conflict in the eastern region of the country. The DAX is getting hit the most because it has the most trade with Russia.

Oil did absolutely nothing yesterday with WTI up 2 cents to $93.88 and Brent up a little more, 22¢, to $102.72. Quite frequently lately I’ve mentioned that oil prices have been pressured by ample supply and stagnant global demand. Case in point. China actually became a net exporter of oil products in July with oil product exports rising 13.8% year-on-year while total oil imports tumbled 42.8%. The change reflects the ongoing slowdown in China’s economy but let’s keep in mind its “slowdown” would be the envy of most nations with industrial production rising “only” 9.0% year-on-year in July compared to 9.2% in June.

This morning WTI is up 19¢. Yawn.

The September Nymex natural gas contract expired yesterday climbing 4.6¢ to $3.957. This is about 23¢ higher than the low set earlier this month and in late July. Natty has been rallying ever since the weather forecasts changed from below normal/normal to above normal for the Midwest and east. Not much rocket science needed there. The EIA releases its much anticipated natural gas storage report today with the market expecting an injection of 79 Bcf. Last year for this week we saw an injection of 65 Bcf and the 5 year average is 58 Bcf.

October becomes the prompt month today and is up 3.0¢ and we’re once again over $4.00, at $4.033, for the second time this month. Increased use of natural gas in the electric generation sector to satisfy A/C demand has taken volumes away from storage. The weather forecast for the 6-10 day time frame got warmer from yesterday for the eastern half of the country which will definitely result in higher CDD’s and more natty being converted from methane to electrons. I’m sure it’s this forecast which is pushing prices higher this morning.

We’re now about 6 years past the depths of the Great Recession. During that time when Wall Street seemed to be melting down but most of America was oblivious to what was happening and going about their daily routines like shopping at Wal-Mart, our Fed Chairman and Treasury Secretary were working feverishly to manage the situation. But really, how bad was it? Well maybe worse than any of us ever thought. In a document filed August 22nd with the U.S. Court of Federal Claims, then Federal Reserve Chairman Ben Bernanke stated “September and October of 2008 was the worst financial crisis in global history, including the Great Depression.” Of the 13 “most important financial institutions in the United States, 12 were at risk of failure within a period of a week or two.” Timothy Geithner, former Treasury Secretary, said the economy was “in free fall” between September 6 and September 22 of 2008. All I can say is wow! Ignorance is bliss. Have a good day.