Equities and the Economy:

• Dow and S&P little changed.
• Nasdaq rallies after 3 losing sessions.

The Dow and S&P 500 ended little changed after the holiday with the former closing down a point at 21,478 and the latter ending up 4 at 2,433. The Nasdaq, after closing in the red for the previous 3 sessions and falling 5% over the past month, had a big day gaining 41 points, 0.7%, at 6,151. Trading volumes are down. Feels like the summer doldrums have set in. High flying Tesla got grounded yesterday falling 7.2%. It’s now down over 10% from its high.

The only report of significance yesterday was the release of the minutes of the FOMC’s June meeting, which on the whole, was a lot of nothing. The Fed did note concern over “asset values,” that stock prices folks.

Tomorrow we’ll see a major report, the Labor Department’s Employment Situation Report for June.

ADP just released its payroll report for June stating private employers added a modest 158,000 jobs last month. This is still enough to lower the unemployment rate. Most economists are chalking up the lower number to a dwindling supply of workers. This morning stocks are on the defensive with the Dow down 47 points.

Oil

• Prices get knackered.
• OPEC exports rise in June.

Oil’s 8 session rally came to a screeching halt yesterday with WTI losing $1.94, 4.1%, to close at $45.13. Brent fell $1.82, 3.7%, settling at $47.49. Yesterday’s price drop was the largest daily drop in a month. Two factors were at work. First, Russia stated that while they were amenable to the current production cut, they would not agree to further cuts. Second, and this may have been the major driver, OPEC released its June production report noting output for the month rose 450,000 bpd from May to 25.92 million bpd. This was the second consecutive month exports increased. Additionally, the cartel’s production is currently 1.9 million bpd higher than a year ago at this time. Not bullish data amigos.

It’s a new day, and a better one for the bulls. Last evening after the closing bell the API stated in its weekly crude and products report that crude inventories fell 5.8 million barrels last week, double the forecasts. Adding fuel to the bullish fire (pun definitely intended) gasoline inventories fell 5.7 million barrels, 5 times expectations and distillates stocks, while up 400,000 bbls, were up by only 20% of the forecast. A very bullish report. And on that news WTI has rebounded up 85¢ this morning.

Courtesy of MDA Information Systems LLC

Natural Gas

• U.S. production at highest level of the year.
• Prices get whacked.

As I mentioned yesterday, U.S. dry natural gas production hit its highest level of the year over the holiday weekend and on the news the sellers came out of the woodwork. The August Nymex contract got whacked closing down 11.1¢ at $2.840, a 4 month low. The calendar 2018 strip got hit 6.7¢ but the calendar 2019 and beyond fared better closing down only about 3¢.

Today’s forecast is not showing any heat waves in the eastern half of the country with seasonal weather expected for the next couple of weeks. That being said, the west is a real cooker with blazing hot temps. However, it’s the weather in the densely populated Midwest and Northeast that really impact natty prices.

It’s pretty quiet out there this morning with bottom pickers coming in with natty up 2.9¢. Remember, the lower natural gas prices go, the more it gets burned in electric generation displacing coal fired generation.

Elsewhere

Solar electric generation continues to grow. According to a newly published report by U.S. Solar Market Insight, the U.S. solar market grew by 2,044 MW’s in Q1 2017. This was the 6th consecutive quarter in which more than 2 GW’s of solar photovoltaic and more than one GW of utility-scale photovoltaic was installed. The non-residential solar market, which includes commercial, industrial and community installations, grew 29% y-o-y. Forecasts are that 12.6 GW’s will come online in 2017, which actually is down 10% from 2016.