Equities and the Economy

The stock market was closed yesterday so let’s recap what happened Friday. Bottom line, it was outstanding! U.S. stocks snapped a five day losing streak logging their largest daily gains of the month led by financial and energy shares. The Dow closed up a big 314 points, an even 2%, at 15,974, the S&P 500 rose 36 points, 1.96%, to 1,865 and the Nasdaq climbed 71, 1.67%, to 4,338. We’ll most definitely take the good data but unfortunately the gains weren’t enough to avert a second straight weekly loss for the main indexes. For the week the Dow was down 1.4%, the S&P slid 0.8% and the Nasdaq was off 0.6%. But we’ll take every up day we get.

Also driving equities higher was a big jump in oil prices (more below) on continuing discussions by OPEC and Russia regarding limiting production.

On Friday stock prices got a boost from a report on retail sales which showed sales rose 0.2% in January beating expectations of a 0.1% increase. Just as importantly, December sales were revised up from minus 0.1% to plus 0.2%. The data suggests that even with all the volatility in the market consumer confidence is on the rise, and as Martha Stewart says “That is a good thing.”

Let’s move on to this morning because a lot is happening. First of all, and this is important, while our markets were closed yesterday Europe’s markets were flying higher with the major bourses rallying over 2% logging their strongest gains in three weeks. Once again it was about QE with ECB President Mario Draghi’s suggestion further stimulus is coming next month when the central bank has it’s meeting. The Asian markets put wind in the equity sail all closing materially higher with China’s Shanghai leading the way closing up 3.29%. With all the good news U.S. equity futures are up big this morning with Dow futures up 187 points. Youza! Stock prices are also getting some love from the announcement that some of the OPEC nations and Russia have agreed to limit production to January’s levels.

Oil

As mentioned above, oil prices skyrocketed on Friday on speculation that OPEC might finally agree to cut production. This brought in short covering as well as the bulls pushing WTI up a big $3.23. 12.3%, closing at $29.44 while Brent rose $3.30, 11%, settling at $33.96. Indeed, some OPEC countries, Saudi Arabia, Qatar, Venezuela and Russia agreed to limit, but not to a cut production, to January’s levels, which, by the way, is at record levels for Saudi Arabia and Russia. This was all to the chagrin of the ever hawkish Venezuela who wanted a production cut, but who themselves never cut production. Oh, and there’s a caveat. Iran and Iraq must also halt production increases, and that ain’t gonna happen. Even with the war there, Iraq’s production has soared to record levels as it furiously pumps oil to generate revenue to fight a war against Islamic State and Iran is ramping up output now that sanctions have been lifted. That being said, this is a significant deviation for the Saudi’s who previously opened the spigot producing all they could.

Baker Hughes’ rig count report on Friday showed a second consecutive large drop in the number of oil rigs at work here in the U.S., falling by 28 and that is down 18% y-t-d. There are now only 439 oil rigs at work in the U.S., down from 536 as of December 31st and down from over 1,600 two years ago! One year ago this week there were 1,056 drilling rigs at work. Rigs are stacking up along highways in west Texas and North Dakota!

This morning traders are digesting the offset of the big gains Friday against the fact that an agreement was reached to limit production, not cut it, and WTI is up 16¢.

Courtesy of MDA Information Systems LLC

Natural Gas

Although there was action going on all around it, natural gas was oblivious to it closing down 2.8¢ at $1.966 in a sedate session. This despite the intensely cold weather the northeast had over the weekend. New York hit a low of minus 1 over the weekend which was the coldest day in 100 years! It was so cold that the Central Park Ice festival was cancelled. Think about that. An ice festival cancelled because it was too cold!

The northeast is getting a nice warm up beginning today with temperatures over the next 10 days to be normal to as much as 12 degrees above normal. Following that period temps will remain marginally above normal then returning to normal. Remember now, statistically we’re past the coldest time of year so normal temperatures will continue to climb meaning HDD’s will be decreasing. This morning the bears are piling on with natty down 6.9¢ and below $1.90! Looks like winter is over folks!

Elsewhere

Phones have come a long way since Innocenzo Manzetti played around with the idea of a “speaking telegraph” in 1844. Development of the landline telephone came in leaps and bounds but it is the mobile phone that truly captured a global audience. The first mobile phones introduced in 1946 by Bell System for use in only in cars on their Mobile Telephone Service in St. Louis, Missouri. The first mobile phones weighed 2 lbs. and were nicknamed “the brick” and cost $3,995. In 1983 the 1G network was launched but phones were still too big for comfort and suffered from short battery life. 2G came in 1991 and phones were better and the first smartphones were introduced. But it was only after 2001, when 3G technology was launched, that the mobile phone market really took off. Networks were faster and phones smarter and more affordable. The entry-level Nokia 1100, launched in 2003, was snapped up a whopping 1 million times a week to eventually become the world’s most popular cell phone with over 200 million units sold. By 2011, Apple had sold more than 100 million iPhone smartphones.

Android, Inc. was founded in October 2003 by Andy Rubin, Rich Miner, Nick Sears and Chris White. Google bought it in 2005 and the Linux-based Android operating system was unveiled in 2007. The first Android phone was the HTC Dream which came to the market in October 2008 as the T-Mobile G1 in the USA at a cost of $179 and required a two year service agreement. By 2012, Android enjoyed 1.5 million activations each day! There are almost a billion Android apps available. About 25 billion apps have been downloaded for the Android app site, Google Play.

By 2013, mobile phones have replaced watches and cameras as the primary time tellers and for taking photographs and videos. Many users have more than one phone or mobile device, resulting in more than 6 billion mobile subscriptions worldwide, almost half of these being smartphone subscriptions. Android is found on 75% of those smartphones in use.