Equities and the Economy:  

• All three U.S major indexes close at record highs.
• Global equities also setting record highs.

Equities around the world are on a tear! On the heels of a very strong ADP private-sector employment report investors came in buying, well, everything! Forecasts were for 185,000 private sector jobs to be added in May and ADP’s actual number was a whopping 253,000! Once the data was released the flood gates opened, as well as investors’ pocket books, with equities getting snatched up everywhere taking all 3 major U.S. indexes to new record highs. The Dow rose 136 points, 0.7%, to 21,144, the S&P 500 added 18, 0.8%, to 2,430 and the Nasdaq climbed 48 points, 0.8%, ending at 6,246.

Digging past the headline ADP number other data in the report was great as well. Jobs in the professional and business services sector grew at the strongest level since 2014. Additionally, the biggest job gains came from medium-sized businesses.

Research form the San Francisco Fed published last year indicated that between 50,000 and 110,000 jobs per month would likely be need to sustain labor market growth. ADP’s numbers have shown more than 200,000 private sector jobs were created in 6 of the last 7 months. Putting it another way, the current pace of job growth is nearly 3 times the rate necessary to absorb growth in the labor force.

Neil Dutta, an economist at Renaissance Macro, put it succinctly, “Where are these people coming from?!”

It’s not just U.S. equities that are doing well. Frances CAC 40, Germany’s DAX and the Euro Stoxx 50 are all at record highs. Japan’s Nikkei 225 is at its highest level since 2015.

ADP’s jobs data was the prelude to today’s Labor Department Employment Situation Report, which was just released. The Labor Department was much less bullish than ADP’s showing the economy added 138,000 non-farm jobs which was much less than forecasts of 185,000. Even with the bearish number the unemployment rate fell to 4.3%, a 16 year low. More on this report on Monday.

Investors are taking a wait-and-see attitude this morning with U.S. equities virtually unchanged from yesterday’s close.

Oil

• DOE weekly inventory report bullish.
• Prices end little changed.

Despite a bullish DOE weekly crude and products report prices ended little changed yesterday. The DOE reported that last week U.S. crude inventories fell a whopping 6.4 million barrels which was more than double forecasts of a 2.7 million barrel decline. Additionally, gasoline inventories decreased 2.9 million barrels, above expectations of a withdraw of 1.2 million barrels. One would have thought that would have brought out the bulls, but it didn’t. WTI closed up 4¢ at $48.36 and Brent fell 13¢ to $50.63. Traders continue to be concerned about U.S. supply growth which in the same report showed production grew 22,000 bpd to 9.342 million bpd.

This morning both Brent and WTI are trading lower with the latter down 80¢ and at a one month low. We’re close to the next technical support level which is $47.00.

Courtesy of MDA Information Systems LLC

Natural Gas

• EIA storage number bearish.
• Prices drop.

The EIA released its weekly storage report stating 85 Bcf of natural gas was injected into storage last week which was materially greater than traders were forecasting which was 72 Bcf. Prices reacted accordingly with the July Nymex contract falling 6.3¢ closing at $3.008. Prompt month prices have now fallen nearly 45¢, 13%, in less than a month and are at 2 month lows.

Returning to the storage report, current storage levels are 370 Bcf, 13%, below last year and 241 Bcf, 7%, above the 5 year average.

This morning’s forecast is showing some above normal temperatures to enter the upper Midwest and Northeast in the 11-15 day time frame which is bringing in some price support. Let me rephrase that, prices aren’t falling with natty unchanged from yesterday’s settle price. I expect that with a lot of summer still ahead of us natty will find strong support at the $3.00 level.

Elsewhere

Uber recently made a logical leap. They’re now into trucking. Not a bad idea considering that trucking is a $700 billion industry. Recently the $69 billion ride-hailing giant officially launched Uber Freight, its new network for helping truck drivers find loads easier and pay them faster. Uber Freight truck drivers are vetted by the company to be certified to drive the different kinds of trucking load loads, some which require refrigeration or special equipment. They’re starting small just operating in Texas between Houston, Dallas and Austin. It’s not just a ride sharing platform they’re after. In July Uber acquired Otto, a company that builds self-driving truck kits that equipment manufactures or freight networks could buy and install on their own. There’s that self-driving theme again!

A BIG congratulations to 12 year old Ananya Vinay of Fresno, California! After 12 hours of picking her way along a precarious lifeline of consonants and vowels she won the Scripps National Spelling Bee yesterday and the $40,000 cash first prize! She won it on the word “marocain.”