Equities and the Economy:

• Major indexes closed little changed.
• Dow posts 5th consecutive losing session.

After falling more than 1% on Tuesday, the first time that’s happened in 109 days, U.S. equities closed little changed from the day prior. However, the Dow did post its 5th consecutive loss closing down 7 points at 20,661. We haven’t seen that since January. The S&P 500 and Nasdaq eked out gains with the former ending up 4 points to 2,348 and the latter, and best performing index, up 28 points, 0.5%, ending at 5,822. As I said yesterday, Tuesday’s sell-off is nothing out of the ordinary. Markets don’t go straight up, or down.

The only economic report of significance yesterday was Existing Home Sales which was marginally disappointing. Emphasis on “marginally.” Sales in February were down 3.7% from January which was above economists’ expectations of 2.0%. The positive news in the report was that sales are up 5.4% y-o-y and prices are up a whopping 7.7% y-o-y to just over $228,000. The housing market remains strong with a lack of inventory and with interest rates going up with “fence sitters” now moving. Example, my best friend in southern California sold his home last month in 2 weeks getting two full price offers.

It’s a very big day for President Trump. Today the House of Representatives is scheduled, as of now, to vote on health care legislation. This is Trump’s first big test and passage is far from a forgone conclusion. This just isn’t about modifying Obama Care. The major significance is that the bill needs to pass for Trump to proceed with his fiscal and tax reforms. And the market has priced in (lofty P/E ratios) that these two reforms are going to happen. Without them investors are going to have a tough time justifying current valuations. Interestingly, even if it does pass the house, leaders of the Senate have said there’s no chance it will pass in the Senate in its current form which means it will go to conference committee where participants will try to put together a deal amicable to both branches of Congress.

Unsurprising to me, with the vote pending stocks are pretty flat with the Dow down 27 points.

Oil

• Prices close marginally lower.
• EIA report shows crude build but gasoline stocks fall.

The EIA yesterday in its regular weekly crude and products inventory reported noted that crude oil inventories rose markedly and above expectations by 5.0 million barrels but this was offset by a larger than expected decline in gasoline stocks of 2.8 million barrels. Let’s call it a “wash.” That being said, inventories are at a record high of 533 million barrels. Add that to the fact that the U.S. is once again producing over 9 million bpd, a one year high, and you can see why current oil prices are at 4 month lows. Yesterday WTI slipped 20¢ closing at $48.04 and Brent fell 32¢ to $50.64. If that isn’t bad enough for the bulls, Libyan oil production continues to increase pushing back above 700,000 bpd. Remember, they’re exempt from the OPEC cut program. Saudi Arabia is between a rock and a hard place. OPEC, mostly the Saudis, have cut production and prices are back down to where they were before they announced the cut agreement. All they’re doing is turning their market share over to the U.S.

This morning it’s quiet with WTI down 23¢.

Courtesy of MDA Information Systems LLC

Natural Gas

• Cash market retreats yesterday.
• EIA weekly storage report today.

The cold weather that was with us the last 3 weeks is just about gone with only the New England region still cold. Heating demand is diminishing which pushed the cash market lower yesterday and futures followed. The April contract closed down 8.2¢ yesterday at $3.011. Finally Spring will be coming to the Midwest beginning tomorrow with Cincinnati posting highs in the high 60’s for at least 9 days. Lows will be in the low to mid 50’s. Nice. And no natural gas load! Don’t you bears forget though that there’s going to be 48% more nuclear MW’s down for refueling this spring compared to 2016.

Today the EIA releases its weekly storage report. Traders are looking for a 159 Bcf withdraw. That’s huge folks! Last year we saw a 13 Bcf injection (yes, injection) and the 5 year average is a measly 21 Bcf withdraw. Natty is up 1.3¢ this morning. Chatter.

Elsewhere

I see Oklahoma City 15 year old Girl Scout Katie Francis’ career path. She’s going into sales.. How can I make such a prediction for one so young? Because she sold 101,105 boxes of cookies! She based her success on the fact she sang so-called “cookie tunes” outside grocery stores. Katie’s accomplishment was so impressive Jimmy Fallen had her on his show and bought the final record smashing box. Fallen bought the $4 box of Somoas paying with a $5 bill. He made her keep the change. Things even got better. Fallen gave Katie a check for $15,000 from Reddi Wip for The Girls Scouts of America.