Good morning. The Dow and S&P 500 set another both intraday and closing high yesterday with the former adding 33 points to 17,913 and the latter 8 points to 2,074. I’m about to give you staggering statistic. This year the Dow has closed at a record high 48 times and the S&P 33 times! If you’ve been in bonds all year you’ve missed the party. Although the Nasdaq did not set records (we’ve yet to surpass levels seen in the Dot com era) this index also continues to climb closing 19 points higher yesterday at 4,774. It is up 14% YTD. The good news to me is that the moves higher these last couple of months are not based upon any QE (in fact the opposite has happened with the Fed ending its asset purchase program in October) but on good, solid fundamental data. For example, yesterday ADP released its National Employment Report (a prelude to tomorrow’s Labor Department Situation Report) showing U.S. private employers added 208,000 new jobs in November. Now this was a bit less than economists were forecasting at 220,000 but the main point here it’s the 6th consecutive report over 200,000 new jobs. “Steady as she goes, mate.” Of note, October’s job gains were revised upward by 3,000 jobs and you regular readers know how much credence I place in revisions. Forgive the redundancy, but in good times revisions are for the better and vice versa. Additionally, the ISM yesterday reported its non-manufacturing index of the U.S. economy rose from 57.1 in October to 59.3 in November. This was over analysts’ expectation of 57.5 and it is now nearing its apogee of 59.6 which was in August and was an 8 year peak. Lastly, the Labor Department reported yesterday that U.S. worker productivity rose 2.3% in Q3 coming in at expectations and a very good number. The Department also revised its estimate of labor costs from an increase of 0.2% to a 1.0% decrease. The ying-yang of this is it gives the Fed pause concerning deflationary pressures but it also gives them the green light to keep interest rates low for “an extended period of time.”

Although the Asian markets closed higher, the European markets, which were all “green” when I came in, are trading marginally red which is pushing Dow futures down 36 points. But as I always say, “Let’s see where it closes.” Investors eyes will be across the pond today for the ECB’s monetary policy committee led by its President Mario Draghi will be meeting. On one side you have Mr. Draghi, the Italians and Greeks and on the other side the Germans with the former pushing for a more aggressive monetary policy and the latter austerity. Basically, Germany is the lone “hawk,” but they hold the purse strings!

Finally, Russian President Vladimir Putin gave his annual state of the union speech yesterday accusing Russia’s enemies of seeking to carve it up and destroy it. The Kremlin leader trumpeted his annexation of Ukraine’s Crimea peninsula praising the Russian people for their strength saying economic sanctions must drive Russians to develop their own economy. As he gave his hour long plus speech, which was repeatedly interrupted by applause, the ruble continued its fall.

Oil stabilized yesterday although WTI and Brent went in opposite directions with the former gaining 50¢ settling at $67.38 and the latter falling 62¢ to $69.92. Brent’s close was its lowest close since May 2010. Note that spread is now in to $2.54. Almost 3 years ago to the date it was over $25. WTI found a minor bid yesterday on the release of the DOE’s weekly crude and product report which showed a drop of crude inventories at Cushing, OK when a build was expected. This was offset somewhat by a bigger than expected build in gasoline inventories. Saudi Arabia came out this morning stating they expect oil prices to level out around $60. Some U.S. analysts though believe the number to be closer to $50. By the way, the U.S. dollar hit another 7 year high vs. the yen. The euro hit a 2 year low.

This morning the bears are putting pressure on Texas Tea with it being down 56¢ which is much higher than the $1.00 lower earlier today.

Natural gas prices are realllllly feeling the weight of the weather forecast (see map). No one’s talking about it but if we’re not experiencing the effects of an El Nino, which was discussed last spring but the conversation has all but ceased, I don’t know what else you could call it. There are 3 classic effects of an El Nino. Wet west coast winter, mild temperatures in the winter in the Midwest and a less than average number of hurricanes (due to wind shear). Have you been seen the news about the rain in California? Yesterday I talked to my friend who lives in SoCal and they are rejoicing.

Courtesy of MDA Information Services LLC

Looking at today’s forecast, the east and especially the Midwest will see abundant warmth in the 11-15 day time frame as a strong ridge remains in place over North America with a trough over the Pacific. This morning natty is down 7¢ in response to the red and orange all over the map.

Today the EIA releases its weekly natural gas storage report with the market is expecting a withdrawl of 28 Bcf. This compares to last year’s whopping 141 Bcf withdrawl and the 5 year average of 50 Bcf.

Get ready for this! If you lived in Oklahoma City you could buy regular gasoline for $1.99! That was not a typo! This is the first time gasoline has been below $2.00 since July 30, 2010. Now the national average remains materially higher at $2.74 but even that is a whopping 51¢ than just a year ago. Prices at the pump have fallen almost a dollar since this year’s high on April 16th. And it’s fully expected we haven’t seen the price floor. Now THIS is a QE! Have a good day.