Equities and the Economy:

• Nasdaq closes at record high.
• Dow and S&P meandering.

The tech heavy Nasdaq closed up 20 points, 0.4%, yesterday at 5,552 marking the 6th consecutive day of gains with the last four at record highs representing the longest stretch of record closes for the index since 1999. Impressive. Enthusiasm for the other two indexes, the Dow and S&P 500, have been much more tepid the last few weeks. Yesterday the Dow, which traded up as much as 70 points yesterday, closed down 32 points at 19,856. The S&P closed literally unchanged to Monday’s close at 2,269. Let’s keep in mind that the S&P has popped 9% since the November 4th election so some bivouacking is not to be unexpected. Fundamental analysis has replaced post-election exuberance.

On the economic docket yesterday was the National Federation of Independent Business report stating its optimism index jumped 7.4 points to 105.8, the strongest reading since 2004! Previously only 12% of small business owners were optimistic about the future. Now 50% are! Optimism in the economy is always a good thing for that means businesses invest and hire.

This morning it remains choppy with the Dow up 63 points.

Oil

• Oil prices close at lowest level in 5 weeks.
• Multiple factors pushing prices lower.

Oil prices remain on the defensive. WTI lost $1.14, 2.2%, yesterday closing at $50.82 and Brent fell $1.30, 2.4%, settling at $53.64. These are the lowest closes in 5 weeks. Multiple factors are at play here. 1) Traders are skeptical the OPEC/non-OPEC agreement will materially affect global production. For example, Libya, while exempt from the agreement, continues to increase production. Just today the country announced it struck a deal with local militias which will reopen previously closed infrastructure facilities. 2) increased U.S. production. Even prior to the oil price rise the U.S. rig count was rising. These higher prices will bring more rigs on line. The EIA yesterday stated it expects U.S. oil production to rise 110,000 bpd in 2017 relative to 2016. 3) the strength of the U.S. dollar. It’s close to 14 year highs. 4) In the shorter term seasonality. January tends to be a month when prices decline.

This morning WTI is getting a bit of a bounce being up 65¢. After falling for 5 weeks some short covering is to be expected.

Courtesy of MDA Information Systems LLC

Natural Gas

• Prices pop materially on colder longer term weather forecast.
• February closes up 17.5¢ at $3.276.

While the forecasts for the next two weeks are very, very warm relative to normal, yesterday two private forecasting services released their forecasts for week three showing normal temperatures returning to the eastern half of the country. Additionally, prices have fallen 90¢, 22%, over the last 7 days and the boat was listing to the short side. Yesterday’s forecast was the catalyst for shorts to cover and length to enter. The colder forecasts are a ways out and tend to change so expect volatility.

The forecast this morning for the next 2 weeks is little changed which is offset by the threat of colder temperatures at the end of the month and that ying-yang is resulting in no price movement with natty up a penny this morning.

Elsewhere

When I say “ATM” what comes to your mind? Of course the machine that spits out greenbacks. But the ATM is getting a new application. Spitting out piping-hot pizzas! Back in September, Xavier University debuted America’s first Pizza ATM, a genius invention supplied by the French company Pauline. The machine created a frenzy! Over 3,000 media outlets covered the machine and the ATM dished out 750 pizzas in its first week. That’s a rate of a pizza every 13 minutes!

Since the autumn the company said that colleges and businesses in 20 states have expressed interest in the machine and that this month the Pizza ATM’s will begin rolling out across the U.S. and Canada. The 24-hour pizza ATM works by storing pizza dough, fermented for two days, par-baked, topped with eight different toppings, in a refrigerated section. Orders are placed by touchscreen and when the order is complete the machine moves the pizza to a convection oven, cooks it, and then places it in a cardboard box, and all under three minutes! The company claims the ATM makes a higher quality pizza because the fresh dough used is allowed to rise for two days before kneading. It is then partially cooked, topped by hand and then placed in the ATM. I have a few questions. Can I check my pizza balance? Can I make pizza transfers? What about pizza deposits?