Equities and the Economy:

U.S. stocks closed mixed on Friday with the Dow closing down 37 at 18,576 and the S&P 500 falling 2 points to 2,184. Both of these indexes posted new record highs on Thursday. The Nasdaq hit a new high on Friday finishing 5 points up at 5,233. That’s all pretty good considering we’re at record highs and traders or investors didn’t take more profits and reducing risk ahead of the weekend. Turning to the fundamental data, the Labor Department reported its producer Price Index fell 0.4% in July compared to economists’ forecast of an increase of 0.1%. For the year prices were down 0.2% with core PPI, which excludes the volatile food and energy prices, up 0.7%. Although this is not Janet Yellen’s favorite inflation data point, it will give them reason not to raise interest rates.

Additional evidence of a lack of inflation was the Commerce Department’s Retail Sales report, which is a very closely monitored report by many players. The report showed that while auto sales were stronger in July by 0.3%, all other categories had weaker sales with the July index ending flat to June’s. Wall Street was estimating a 0.4% increase from June. The report also noted business inventories rose 0.2% with Wall Street looking for 0.1%. On the news the dollar fell.

It looks like it could be a good day. All the major indexes are higher this morning with the Dow up 73 points.

Oil

Oil prices popped Friday with WTI closing up an even buck at $44.49 and Brent rising 93¢ settling at $46.97. Short covering continues in oil after the Saudi oil minister made comments that the kingdom is open to discussing freezing production levels to stabilize the market. Now this was the exact same talk in the market before the April Doha meeting and no action was taken. Let’s see if it’s déjà vu. Oil is up 94¢ this morning with Russia stating today they are amendable to freezing output in cooperation with OPEC. Whether production levels are frozen or not, OPEC and Russia are getting their desired affect with prices rising. Prices rising or not, it appears more and more U.S oil producers are making the economics of current prices work for the oil rig count rose by another 15 rigs last week and the natural gas rig count rose by 2. This is the 7th consecutive week the rig count has risen.

Courtesy of MDA Information Systems LLC

Natural Gas

Natural gas prices rose a little on Friday closing up 3.5¢ at $2.586 and stabilizing after a nearly 40¢ drop in a little more than 2 weeks and hitting a 2 month low of just above $2.500. Although there’s been record demand for natural gas in the electric generation sector, storage levels are still at record levels. Most important to me though is that U.S. dry production has rebounded a Bcf/d with the increase coming from West Virginia and Ohio. I will be focusing on this. If this is just the backlog of drilled but uncompleted wells being brought on line, which is defacto storage, then the supply increase is temporary. However, if this is something bigger, i.e. production really is fundamentally growing, it is bearish in the longer term. This morning natty is getting a bounce of 3.84¢ on the cash market today which is strong due to the extremely hot weather in the MidAtlantic an northeast.

Elsewhere

Continuing with the Olympics theme:

The medal count is: U.S. 69, China 45 and Great Britain 38.

Congratulations to Jamaica’s Usain Bolt. He won gold in the 100 meter dash in an amazing run for the third consecutive time. That’s something no one has ever done.

Three cheers for cyclist Kristin Armstrong! She won gold in the women’s cycling time trial for the 3rd consecutive time. And she did it on the day before her 43rd birthday! She was the oldest woman in the field by seven years!

Michelle Carter logged a remarkable first. The “Shot Diva” unleashed a Herculean final throw in the woman’s shot put on Friday to take home the first-ever gold medal by an American woman in the event.

The U.S. women’s 400 meter swim medley relay made history Saturday night. They won gold and recorded the 1,000 gold medal in American Summer Olympics history.

Here’s a trivia question for you. What university or college has produced the most Olympians? The answer: USC. They have 44 athletes in the 2016 Olympics. Over the years 423 Trojans have been in the Olympics and they’ve won 135 gold medals. If USC was a country it would rank 12th in the world! The next four schools are, in descending order: Cal Berkley, Stanford, Florida and UCLA. Anybody other than me see a common thread???

A gold medal is said to be priceless. But before someone stands on the podium with it hanging around his or her neck, that medal was bought by the IOC at a price that was a function of its contents. Here’s something I bet many of you didn’t know. That gold medal that Michael Phelps was wearing around his neck the other night is only 1.2% gold. 98.8% is sterling silver. Of the 500 grams a gold medal weighs, 494 grams are silver. At current prices the contents of the gold medal around Michael Phelps’ neck costs about $587. If it were pure gold it would cost about $22,000. Being that the IOC will give out about 2,200 gold medals this year, it would set them back about $50 million if the medals were solid gold.

On a logistical note, this will be the only Blog for this week. I will be travelling on business the entire week.