Equities and the economy

(Sorry for the lateness. It’s been a crazy morning!) After a couple of strong days the U.S. equities market took the day off closing near Wednesday’s settles. The Dow rose 18 to 17,926, the S&P 500 closed flat to Wednesday at 2,083 and the Nasdaq dropped 2 points to 4,946. Although U.S. stocks were little changed, globally equities rose to their highest level since late December. That’s all good news folks for although U.S. equities didn’t rise, they didn’t fall either, and although the Dow’s gain was small, the blue chip index did post a new 2016 high.

Let’s turn to the fundamental news, which was mixed. The Labor Department released its weekly jobless claims reporting that initial claims fell 13,000 last week to 253,000. This is a stunningly and surprisingly low number. Economists were expecting a number closer to 270,000. The 253,000 matched the low set all the way back to Decembers 1973. The Labor Department also reported on March Consumer Prices and they rose 0.1% which was below forecasts of 0.2%. Stripping out the volatile food and energy components, prices also rose 0.1%. I’m sure Janet Yellen will be disappointed in this inflation data for it means that inflation is still materially below their 2% annual target. So while one part of the Fed’s mandate is in pretty good shape, the labor market, the other mandate, inflation, is still not at target. This data will reinforce the Fed’s current tact of cautiousness in raising interest rates for they want to see “the whites of inflation’s eyes” before raising rates.

It’s been a good week for equities globally and it looks like we’re seeing some folks take some chips off the table for the weekend. Stocks in Asia closed marginally lower. Stocks in Europe are trading the same and the Dow is down 10. Even if the Dow closes at the current level it will be a good week.

Oil

Oil prices closed marginally lower yesterday with WTI closing down 26¢ at $41.50 and Brent lost 34¢ settling at $43.84. After positing fresh multi-month highs earlier this week prices have pulled back a couple of dollars. The U.S. dollar, in which most commodities are priced, added marginally to its big gain chalked up earlier in the week; it’s biggest one day gain in 6 weeks. The rising dollar has put pressure on commodity prices, including oil. After hearing Janet Yellen’s comments a couple of weeks ago traders came in pounding the dollar and it got over sold and we’re seeing a correction. The boat has recovered from its severe list and we’ve stabilized.

It looks like it’s a “Buy the rumor. Sell the fact.” this morning regarding Sunday’s meeting of oil producers in Doha, Qatar for WTI is down $1.22 this morning. Prices are under pressure on the IEA’s, not our EIA, statement stating it is skeptical Sunday’s meeting would do anything it tighten the supply/demand balance. However, in their monthly report they expect to see the global oil glut decreasing sharply in the second half of 2016 to just 200,000 barrels from the current 1.5 million barrels. This is based upon their assumption that U.S. shale production continues to decline while global demand increases.

Courtesy of MDA Information Systems LLC

Natural Gas

Despite a marginally bullish EIA weekly storage report natural gas prices fell 6.6¢ closing at $1.970. The EIA reported a withdrawal of 3 Bcf from U.S. storage fields last week with the market expecting an injection of 1 Bcf. Storage levels are currently 956 Bcf, 63%, greater than last year and 849 BCF, 52%, greater than the 5 year average. Natty prices had rallied last week on the cold blast that hit the Midwest and northeast but that’s all gone and nothing but above normal temperatures are expected for those regions over the next

Natty is down 5.3¢ as I write.

Elsewhere

Today is April 15th and all of you know the dubious distinction this day bears. Income tax forms due. But this year you’re getting a reprieve. You can submit them on Monday April 18th this year. Why? Thank our 16th president. President Lincoln signed the Emancipation Act and Emancipation Day is celebrated on April 16th. Emancipation Day is a legal holiday in Washington D.C. with federal employees, including the IRS, off the job. Since this year’s holiday is on a Saturday, it is observed the Friday before, today. Thus, the tax deadline moves to Monday. You have the whole weekend to work on those fun taxes!