Good morning. Maybe we shouldn’t have taken a holiday. On Monday equities fell, the Dow down 44, and then again yesterday stocks took a knackering with the Dow falling 118 points to 16,907, the S&P 500 off 14 to 1,964 and the Nasdaq just got bludgeoned losing 60 points, 1.35% (that’s a lot for a single day!), to 4,391. Yesterday was the Nasdaq’s worst day in two months. Not helping the market yesterday were reports from Raymond James & Associates saying equities were vulnerable to losses and Citicorp citing investor concerns for a “severe pullback.” The VIX, aka “fear index,” which had been at 7 year lows jumped 5.7% yesterday which was on top of the 9,8% the day before. What’s going on folks is that a lot of investors are wondering if the wonderful ride we’ve had the last few years (S&P up 30% last year!) is coming to an end and taking some “chips off the table” might be good idea. The S&P has not had a drop of 10% in more than two years and is trading at 18 times reported earnings, the highest since 2011 when it was in the middle of a 19% slide (that hurt!).

As I mentioned yesterday, earnings season begins this week and Alcoa did so yesterday after the bell with earnings topping estimates and their stock rising 1.3% in after-hours trading. The reason I mention Alcoa is they are always the first company to report. Let’s hope this is an omen.

This morning is beginning sedately with Dow futures up 21. The major Asian bourses all closed lower but this is unsurprising being the ripple effect from U.S. equities. European equities have been trading mixed. This afternoon the minutes of the last Fed meeting will be release and investors will parse, slice, dice and dissect it in every sort of manner looking for nuances in what the Fed’s next course of action shall be, specifically when they might be raising interest rates.

After getting pummeled on Monday natural gas fell 2.1¢ yesterday closing at $4.204. It traded as low as $4.129, down 9.6¢, but found buyers down there. The matador has been at work as of late with natty falling 75¢, 15%, in less than a month to a 6 month low. The bulls are getting “no love” from the weather (see below) with extremely mild conditions over the eastern U.S. for the next 2 weeks. Add that to increased production levels and the yoke was simply too heavy, even with the large storage deficit. Interestingly, what’s causing the mild weather in the eastern half of the country so far this summer is exactly what caused last winter to be the coldest in 34 years. And that is a buckled jet stream with its ridge over the Northwest and Gulf of Alaska and then dipping into the eastern U.S. allowing cool artic air to slide into that region. This also results in the Pacific Northwest having above normal temperatures but the weather there is feckless upon futures. This morning the market is up $0.002 which is total chatter.

Oil was again weaker yesterday with Brent getting whacked a material $1.61. WTI fell 13¢ to $103.40 which considering how hard equities fell was a good day for the bulls. The market is becoming convinced that ISIS in Iraq will not do harm to the oil facilities there. It’s apparent they realize they’ll need what revenues they can get from Iraqi oil either from the oil itself or from transit fees charged for the pipelines that cross the territory it holds. You can say what you want about ISIS but they have proven to be well organized and adept at using modern communications technology. WTI is again eroding this morning trading down 60¢. I wouldn’t be surprised if WTI gets a dead cat bounce soon. It’s been sold off for days and the short side of the boat is listing.

Speaking of Iraq, get familiar with the city known as Karbala. That is really the “red line” for the Shi’ia, not Bagdad. Why? Because Kabala is central to Shi’ia theology, It is where the shrine to Imam Hussein is which according to Shi’ia history and theology was the first official Muslim Imam. As one Shi’ia spokesperson said recently in an interview with the western press “We have a score to settle between us, but it will not be settled in Baghdad or Samarra but in Karbala.”

Have a good day.

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