Equities and the Economy:

• Dow closes lower for 8th straight day.
• Yesterday could have been a lot worse.

Yesterday the Dow fell 46 points, 0.2%, to 20,551 marking its 8th consecutive day of losses not seen since way back in August 2011. But it could have been much, much worse for at one point in the day the blue chip index was down a whopping 184 points. The S&P 500 and Nasdaq fared a lot better. The former slipped a meaningless 2 points to 2,342 and like the Dow dodged a material loss being down 22 points intraday. The Nasdaq, which has been performing outstanding of late, bucked the negativism going on around it and posted a nice gain of 12 points, 0.2% finishing at 5,840. A little perspective is due here. The Dow is still up 12.4% since the election, the S&P is up 9.7% and the Nasdaq up 12.2%. Although not fun, pullbacks happen and are healthy in preventing “bubbles.”

Yesterday’s move down was the hangover in President Trump not getting enough votes to get his AHCA bill through the House of Representatives with the much bigger implication being investors asking themselves if he is going to have the same difficulty with tax reform and fiscal spending. The stock market had been priced for all three major events to occur and not getting the first one has led investors take some chips off the table and go into more safe haven assets such as U.S. Treasuries.

Turning to the economic news yesterday, The Dallas Fed’s Manufacturing Production Survey came in a good better than had been expected rising to 19 in March from February’s 17. A big part of that is the oil and gas industry which is once again getting “its legs.” Also yesterday the National Association of Business Economists reported its survey of business economists expect the U.S. economy to grow at 2.3% in 2017 and 2.5% in 2018. However, a caveat was added which was that the majority of the panelists expected corporate tax reform and tax cuts to be enacted this year with 70% believing the market is overpricing the impact of expected policy developments. There’s that red flag again.

If we end where we are starting today it will be 9 days of losses for the Dow is down 11.

Oil

• Oil prices continue to slip on fears of supply continuing to rise.
• Prices finding a bid this morning on turmoil in Libya.

Oil prices continued to slip yesterday with WTI closing down 24¢ at $47.73 and Brent off a nickel to $50.75. What’s unnerving for the bulls is that prices have fallen even with the U.S. dollar down 3% this year and 4% since peaking in December. Continuing fears are that U.S. production will grow (the U.S. oil rig count is double what it was last May) despite OPEC cuts. Speaking of such, representatives from 5 OPEC countries met this past weekend and there is momentum to extend the cuts beyond the deadline of June 30th. I’m sure U.S. producers are smiling.

This morning WTI is up 44¢ on news overnight that a Libyan militia has shut down over a third of Libya’s production in a dispute over wages. Expectations are for this rift to be resolved fairly quickly.

This news is a tad bit old but last week President Trump approved the Keystone XL Pipeline which will span 1,179 miles and running from the U.S. Canadian border to Gulf Coast ports. TransCanada, the owner, still has some material hurdles to jump for it needs approval from Nebraska whose landowners have opposed the pipeline.

Courtesy of MDA Information Systems LLC

Natural Gas

• Prices chattering around the $3.00 level.
• No increase in U.S. production.

After climbing to a 6 week high yesterday to $3.133, Natural gas prices closed marginally lower with the April contract ending down 2.4¢ at $3.052. That being said, over the past 1.5 months prices have rallied nearly 60¢, or 23%, driven by the very cold first two weeks of March. Talk about anomalies, the first two weeks of March in the U.S. were colder than the first two weeks of February. Weather forecasts today are little changed from yesterday with just about everyone in the country looking to have above normal temperatures save the New England states where it’s still pretty cold. This morning natty is doing nothing being up a penny. Heads up: the April Nymex contract expires tomorrow.

The oil rig count is growing but much less so for the natural gas rig count. This has resulted in U.S. production having fallen 3% y-o-y and leveling off there. Canadian imports have filled the shortfall.

Here’s an update on LNG exports. Per the EIA, the U.S. has exported about 235 BCF of LNG over the past 12 months, all from Cheniere Energy’s plant in Louisiana. The terminal has exported LNG to 18 different countries with Mexico the largest recipient at 41.5 Bcf. Big difference from last year when exports were zero!

Elsewhere

We’re a long way from football season (unfortunately) but you’re going to like a change the NFL is implementing for next season: fewer commercial breaks!!! Whoo-Hoo!!! Per Commissioner Roger Goodell, beginning next year the NFL will implement changes aimed at improving game flow and reducing the number of “unnecessary disruptions to the game” including the “double ups,” one of fan’s biggest annoyances. The “double up” is when the network goes to a commercial after the extra-point kick and then again after the ensuing kickoff (Oh, how I hate that!). Instead of going to commercial after the extra-point attempt the play clock will start. Goodell said research showed fans are bothered by the number of commercial pauses, but not so much the length of the commercial. The format will change to four commercial breaks per quarter each 2:20 minutes long as opposed to the current 5 or 6 at 1:50 each. Other broadcast changes include an occasional double box with commercials on one side and the field on the other or a sponsored break with just one brand or company instead of several commercials for different products.