Equities and the Economy:

• U.S. stocks rise on positive economic reports.
• Q3 GDP revised higher.

On a couple of economic reports yesterday U.S. stocks posted gains with the Dow closing up 15 points to 21,880, the S&P 500 gained 10 points finishing at 2,457 and the Nasdaq popped a nice 64 points, 1.02%, ending at 6,366.  The Nasdaq was driven higher by Apple whose stock price hit a record high.  The Commerce Department reported yesterday that Q3 GDP grew at 3.0% which was a revision up from the initial estimate of 2.6% and greater than economists were forecasting at 2.7%.  On a very positive note, almost the entire upward revision was due to increased consumer spending which was revised up from 2.8% to 3.3%.

The other report, which was also positive news, was ADP’s private sector employment report stating employers added 237,000 new jobs in August which was much better than forecasts of 185,000.  Additionally, ADP revised its July figure up from 178,000 to 201,000.  Per their chief economist, “Job creation is strong across nearly all industries and company sizes.  Mounting labor shortages are set to get worse.”  This has got to lead to inflation, and I’m sure that’s what the Fed is thinking.

This morning the bulls are out pushing stocks higher.  The Dow is up a nice 73 points.

Oil

• Crude prices close at more than one month low.
• Gasoline hits 2.5 year high.

Harvey continues to make itself felt in the oil market.  With the continued closure of refineries traders pushed WTI down another 48¢ to $45.98, a price we haven’t’ seen since July 21^st.  The price of WTI has fallen more than $2.00 this past week.  Conversely, gasoline prices have been skyrocketing with prices hitting 2.5 year highs.  The DOE released its weekly crude and products inventory report yesterday stating crude inventories fell by 5.4 million barrels vs. expectations of only 1.4 million.  Crude inventories are now 14.5% lower than the highs seen this past March.  Gasoline inventories increased by 350,000 bbl and counter to forecasts of a decline of 1.3 million barrels.  All-in-all the report was net bullish, but traders didn’t care.  Right now all they’re focusing on is the effects of Harvey.

Brent really got whacked yesterday falling $1.14 closing at $50.86.  I think that WTI/Brent spread got too wide.  We just may have found the bottom in WTI prices for it’s up $1.39 this morning.

Courtesy of MDA Information Systems LLC

Natural Gas

• Price slips.
• EIA storage report today.

October spent its first day as the prompt, or front, month on the defensive falling 4.4¢ closing at $2.939.  That being said, we’ve now spent a month trading just below $3.00.  Interestingly, the market seems to have shrugged off the approximately 3 Bcf/d that was shut in by Harvey.

Today the EIA releases its weekly storage report.  Traders are looking for an injection of 30 Bcf.  If it materializes it will be another injection below last year and below the 5 year average.

This morning’s weather forecast is little changed from yesterday’s showing below normal temperatures into mid-September.  The weather forecast continues to be bearish, but with storage levels below last year traders are reluctant to sell.  This morning natty is down 1.7¢.

Elsewhere

Sailing about 2,000 miles west of South America the crew of the Essex encountered a huge 80 ton sperm whale about 85 feet long.  When they first saw it the whale just floated at the surface watching them, then all of a sudden it swam at the ship and rammed it.  At this point although the craft was damaged, it was still sea worthy and the whale appeared dazed.  The captain chose not to harpoon the whale because it was directly under the ship and he was worried it might thrash around causing more damage.  Once the whale got it senses, rather than swim away, it swam out about 500 meters, turned and headed right for the ship ramming it a second time.  According to a survivor, Frist-mate Owen Chase, it hit the ship at about 20-25 knots.  The second hit was too much for the ship and it sunk.

So what’s the significance here?  There was an individual was on another whaling ship only about 100 miles from where the Essex was destroyed.  That ship also had on board the son of Owen Chase.  The event turned out to be the inspiration for the classic novel Moby Dick, and you guessed it.  The person on the ship was Herman Melville.  While the original inspiration, other events in the book were inspired by the white whale, Mocha Dick.