Equities and the Economy:

• Caution prevails.
• Today is “Super Thursday.”

U.S. stocks ended little changed yesterday as investors remain cautious ahead of three big news events. All of which happen today. Today has even got a moniker, “Super Thursday.” The most important event for those of us in the U.S. is the oral testimony of ex-FBI Director James Comey at 10 AM EDT before the Senate Intelligence Committee. Washington DC is going to be virtually shut down at that time with all eyes on their TV’s. The other two events are the general election in the UK and the conclusion of the ECB’s meeting.

Well we now have one less unknown. The ECB concluded their meeting announcing they will make no changes to their monetary stimulus program keeping interest rates at a record low. However, in a signal to investors the central bank is shifting policy they dropped previous language saying they could lower interest rates further. The economy in the 19 country eurozone is doing quite well with GDP at a two year high. Further proof of that is today final GDP for Q1 2017 for the EZ was reported coming in at 1.9% growth y-o-y. The rationale for the bank to not remove stimulus is that inflation remains below their 2% target. Here’s the bottom line. Like our Fed, the ECB is taking a cautious approach to removing monetary stimulus. This is great for stocks, not just in the U.S. but globally! Global equities are just 0.4% off all-time highs.

Getting to the numbers, the Dow gained 27 to 21,174, the S&P 500 rose 4 finishing at 2,433 and the Nasdaq ended up 22 to close at 6,297. For the year the S&P is up 8.7%.

The only economic report of significance yesterday was from Gallup noting it’s Job Creation Index rose to 37 for May, tying the record high from March. 46% of employees queried said their companies were hiring while only 9% said their companies were letting workers go.

This morning all eyes on Wall Street are turned toward D.C. and away from Wall Street with the Dow virtually unchanged.

Oil

• DOE report shows surprise build in inventories.
• Prices get crushed.

The DOE released its weekly crude and products report yesterday, and it mauled the bulls. Setting the stage, API’s report on Tuesday showed a bigger than expected drop in crude oil inventories but this was offset by a larger than expected build in gasoline stocks. Well the bulls got no such offset in the DOE report. Every inventory category (crude, gasoline and distillates [diesel and jet fuel]) showed a build. Confounding forecasters, who predicted a decline in stocks, crude inventories rose 3.3 million barrels. Gasoline inventories increased by 3.3 million barrels, way over expectations of a 200,000 barrel rise as imports increased and exports decreased. Distillate stocks rose by 4.4 million barrels, also way over the expectation of a rise of only 250,000 barrels. The most important number is total inventories, which rose by 15.5 million barrels. The significance? This is the largest weekly build since 2008! Don’t forget the DOE’s report carries more weight than the API report for reporting is mandatory to the DOE. It’s voluntary to the API.

After the report came out crude prices got hammered at the session’s end WTI closed down a huge $2.47, 5.1%, at $45.72. That’s the lowest close since May 4th. Brent also got hammered settling $2.06 lower, 4.1%, at $48.06. Gasoline futures got whacked falling 4% to $1.4921/gallon. The DOE added that gasoline demand is down 0.7% for the past 4 weeks from a year ago.

Triage is being applied this morning with WTI prices unchanged from yesterday’s settles.

Courtesy of MDA Information Systems LLC

Natural Gas

• Prices consolidating.
• Storage report today.

After falling to a two month low early this week at $2.935 prices have bounced back consolidating around the $3.00 level. Yesterday July natural gas closed down 2.2¢ at $3.020. Weather forecasts are showing a gradual warming in the east over the next couple weeks which will keep a bid in the market. U.S. dry production has stabilized around 71.4 Bcf/d, although northeast production is pushing record highs. Producers there are begging for more pipeline capacity.

Today the EIA releases its weekly storage report. Traders are looking for an injection of 100 Bcf. If we get that number, or higher, it would be the first triple digit injection of the season.

It’s all quiet on the natty front this morning with prices down a meaningless 1/2¢.

Elsewhere

Many people like to cruise, even bragging about the number of cruises they’ve been on. Well these people really like to cruise. So much so they permanently live on a cruise ship. The ship is named MS The World with its 165 luxury apartments and it sails around the world. There’s a wide variety of facilities. For food and general supplies there’s a gourmet deli and grocery store. Leisure and fitness is also covered with a fitness center, billiard room, golf green, tennis court, jogging track and swimming pool. For entertainment, there’s a cocktail lounge, movie theater and library. Organized activities are offered including dance, language, cooking, art, computing and others. All this is yours for $600,000. That’s the cost of a 1,350 sq. ft. studio. A two bedroom apartment is all yours for $2.95 million. If you really want some room you can purchase a “cruise mansion,” which is 3,000 sq. ft. That’ll cost you $15.5 million. I’ll take two.