Equities and the Economy:

• Multiple major U.S. indexes hit yet another record high.
• Corporate earnings the driver.

Better than expected corporate earnings from Morgan Stanley brought out the buyers yesterday who pushed numerous U.S. indices to new record highs including the Dow, S&P 500 and Nasdaq. The Dow climbed 66 points to 21,641, the S&P added 13 to 2,474 and the Nasdaq rose 41poitns to 6,385. Even the small-cap stocks rallied with the Russell 1000 and Russell 2000 posting new record highs. It was a good day for your 401K. As I mentioned, corporate earnings are the driver. We’re right in the middle of “earnings season” for Q2 performance and quite frankly, so far earnings have been great. It’s a little too early to declare a “victory” because a lot of companies still need to report, but it’s looking very good. It’s like we’re in a Goldilocks environment: sluggish consumer prices and inflation and weak data are preventing the Fed from raising interest rates too quickly which is supporting equity and bond prices. Additionally, the labor market is solid which all give comfort to the bulls.

On the fundamental front, the Commerce Department yesterday reported that housing starts rose by an unexpected and very sharp 8.3% in June to an annualized rate of 1.22 million units. Single family homes starts rose 7.9%. Building permits also rose 7.4%. This was a very “strong” report.

This morning the bulls remain in control with the Dow up 21 points.

Oil

• Oil prices close at 6 week high.
• EIA weekly inventory report bullish.

The EIA released its weekly crude and products report yesterday noting crude oil inventories fell 4.7 million bbls last week, much greater than forecasts. Additionally, gasoline inventories declined by 2.1 million bbls, also greater than expectations. And distillates made it a perfect trifecta for the bulls falling by 2.1 million bbls, also more than forecasts. The report brought in buyers who pushed August WTI oil up 72¢ to $47.12 and Brent up 86¢ to $49.70, both 6 week high prices. Over the past 15 weeks, U.S. oil inventories have fallen 13 times and in most cases more than forecast.

This coming Monday both OPEC and non-OPEC oil producers will meet in St. Petersburg, Russia and will discuss compliance. Traders are not expecting much from the meeting other than the parties to reiterate their commitment to rebalancing the global market. Saudi Arabia continues to state they’ll do what’s necessary to bring the market into balance. They recently announced they’ll cut production by an additional 1 million bpd to offset rising production from Nigeria and Libya.

The August WTI Nymex contract expires today. It’s starting the day up 30¢.

Courtesy of MDA Information Systems LLC

Natural Gas

• Prices little changed.
• U.S. power burn hits y-t-d high.

Natural gas prices ended little changed yesterday closing down 2.2¢ at $3.066. Above normal temperatures in the Midwest and East are elevating the natural gas burn for electric generation. Total U.S. power burn hit a y-t-d high of 41.1 Bcf which is the highest since last August.

Today the EIA releases its weekly storage report. Traders are looking for an anemic 31 Bcf injection for last week. Last year for this week we saw a 38 Bcf injection and the 5 year average is 59 Bcf.

This morning it’s sedate before the storage report with natty up 0.9¢.

Elsewhere

We’ve heard of fans paying hundreds of dollars to get to a baseball game, but a player?! That’s what happened to 4 players from the Seattle Mariners’ Triple-A team recently. For some unknown reason something went afoul with their airline reservations for their flight from Phoenix to Albuquerque. The players couldn’t afford to miss the game, so they Uber’ed to the stadium. All for the tidy sum of $683.52! How they found an Uber driver to make the trip is itself pretty amazing. However, unlike the players, the driver is pretty happy. Factoring in the ride back to Phoenix he made about $49 per hour!