Equities and the Economy:

• U.S. bourses close higher.
• Market remains choppy and range bound.

Chop. Chop. Chop. That describes the equities markets of late, and I’m talking globally, not just U.S. Getting yesterday’s numbers out of the way, the Dow posted a nice gain of 99 points, 0.50%, ending at 19,954, the S&P 500 added 6 to 2,275 and the Nasdaq closed 12 higher at 5,564. Volatility has leeched out of both the U.S. and European equity markets since mid-December. Since that time the Dow has traded in a 275 point range and the S&P a 50 point range. The somnolence is not limited to the U.S. for the European STOXX 50 (similar to our Dow) has traded in a 25 point range since mid-December. Miniscule by historical standards. This will eventually change with the catalyst coming from some unknown event, but for now its tepid.

There were no significant economic reports yesterday so let’s move on to today. This morning the bulls are being tested for the Dow is down 173 points. Let’s see how it closes.

Oil

• Oil prices pop yesterday.
• Refineries process a record amount of crude oil last week.

Oil prices rose yesterday on the EIA’s weekly crude and products report showing U.S. refineries processed a record amount of crude oil last week. The most since 1989. While this level of refining activity is not expected to continue indefinitely, the rate of refining does imply that crude inventories may be drawn down. Yesterday WTI rose $1.43 settling at $52.25 and Brent rose $1.46 closing at $55.10. Interestingly, the data indicated that the U.S. supplied 70% of all fuel used by Mexican consumers in December. Also helping oil is the U.S. dollar which has dropped to a 5 week low vs. a basket of major currencies. This morning the bulls are still in control with WTI up 70¢.

Courtesy of MDA Information Systems LLC

Natural Gas

• Natural gas falls 5.4¢ closing at $3.224.
• EIA weekly storage report today.

After popping 17.5¢ on Tuesday natural gas prices retreated a little yesterday with the February Nymex contract closing down 5.4¢ at $3.224. The calendar strips were little changed. Today’s weather forecast is little changed from yesterday’s. The western half of the country is a little cooler and the eastern half of the country is a little less warm. That being said, the next two weeks are going to be very warm in the Midwest and east with temperature anomalies in the Midwest being more than 20 degrees above normal! However, some forecasters are showing a return to normal temperatures at the end of January which has brought out the bulls this morning with natty up a material 13.5¢.

The EIA releases its always closely watched weekly storage report today with the market looking for a withdrawal of 135 Bcf. This compares to last year’s 152 Bcf withdrawal and the 5 year average of 168 Bcf.

Elsewhere

I wonder how Tadashi Yanai is feeling? I would be shocked if you knew who I am talking about but he happens to be the wealthiest man in Japan. Yanai is the CEO of Fast Retailing which owns numerous clothing brands including Uniqlo, J Brand, Theory among others. He aggressively expanded Uniqlo in the U.S. in his quest to take on H&M and other fast-fashion chains. The reason I wonder how he’s feeling is because last Friday, on that one, single day, he personally lost $1.4 billion! The reason? Warm weather. Yep, blame it on the weather. The company last Friday released same store sales noting sales declined 5% year on year in December because warm weather in the latter part of the month dampened sales of core winter items. The report resulted in the share price of company falling 7% that day and Yanai’s wealth comes from his stock holdings in Fast Retailing. On that day he fell six slots on Bloomberg’s Billionaire Index to number 44 in the world with an estimated worth of $17.7 billion. I guarantee Mr. Yanai is aware of his loss, but I’m not going to shed any tears for him.