Equities and the Economy:

• U.S stocks retreat.
• Dow closes lower for 3rd consecutive day.

U.S. equities closed lower yesterday. The Dow shed 24 points closing lower for the third straight session at 20,919, the S&P 500 pulled back from its record close falling 5 points ending at 2,394 and the Nasdaq also retreated for its record losing 13 points to 6,116. Looking at it from the “glass is half full” perspective, it could have been much worse for intraday the Dow was down 145 points. What’s going on folks is that currently with both U.S. stocks and global equities trading near record highs there needs to be a fresh catalyst to take stocks higher. So with stocks pausing and losing momentum some folks are coming in and booking profits.

The Labor Department released its regular weekly initial unemployment claims yesterday noting claims fell 2,000 last week to 236,000 and well below consensus. Claims are at their lowest level since way back in November 1988, and that was with a much smaller labor pool. The labor market remains strong. In other news the same governmental department reported that producer prices rose 0.5% in April on higher energy and food prices. On an annual basis prices rose 2.5%, the largest gain in 5 years. Core PPI, which excludes the more volatile energy and food categories, rose an even more stout 0.7% on the month and 2.1% y-o-y. Further data for reasons to expect an interest rate increase at the Fed’s June meeting.

I sure hope you don’t own SNAP, Snapchat’s parent. Upon reporting a $2.2 billion loss for Q1 2017 the stock got absolutely hammered yesterday losing a portfolio crushing 21% on the day.

The Asian markets closed mixed overnight, the European markets are currently trading marginally higher and here in the U.S. things are starting out mixed with the Dow down 34 but the Nasdaq flat.

Oil

• Oil prices post 2nd day of gains.
• OPEC forecasts U.S. shale production to rise 600,000 bpd in 2017.

After rising more than 3% on Wednesday on the bullish DOE crude and products report oil prices posted a second day of gains with WTI logging a 50¢ rise to $47.83 and Brent settling up 55¢ at $50.77. Yesterday was follow through from the surprising DOE report showing crude inventories fell 5.2 million barrels last week far exceeding expectations and the biggest weekly drawdown since December. Plus the market was oversold from the relentless selling the previous 4 weeks.

As OPEC cuts, U.S. production increases. The cartel reported yesterday they believe U.S. shale production will increase by 600,000 bpd in 2017. I think they’re about 150,000 bpd shy.

No material new fundamental news occurred while you were sleeping and this morning prices are consolidating just below yesterday’s 8 day high down 28¢.

Courtesy of MDA Information Systems LLC

Natural Gas

• EIA releases bullish weekly storage report.
• Prices are at highest level since January

The EIA issued it regular and closely watched weekly storage report, and it was downright bullish. Traders were looking for a 55 Bcf injection. They got a 45 Bcf injection. This got the bulls stampeding pushing the June Nymex contract up 8.4¢ to close at $3.376. Prices are now at their highest level since January, and that’s a winter month! I believe the surprisingly low injection was caused by an underestimation of load in the Midcontinent region where temperatures averaged 2 degrees lower last week than the prior week. Speaking of temperatures, starting early next week they will be rising quickly in the Midwest and East which will kill the heating load.

Higher natural gas prices are resulting in coal continuing to capture more of the electric generation market. Yesterday the EIA reported U.S. coal production is 13% above a year ago. Another barometer, coal carloads, are 8% higher than a year ago and more than 6% above year ago y-t-d levels.

Elsewhere

What do Gloria Gaynor’s disco anthem “I Will Survive,” George Carlin’s seven dirty words routine and coverage of Wilt Chamberlain’s 100 point game have in common? They are all among the 25 sound recordings that have been selected for preservation by the Library of Congress in its National Recording Registry. Each year the library chooses recordings that are “culturally, historically ore aesthetically significant” and are at least 10 years. The selections include a wide range of music from blues, jazz and rock to country and classical as well as recordings of radio shows, sports and comedy. This year’s selections bring the registry’s total to 450.

Some of the earliest recordings include a 1911 recording of “Let Me Call You Sweetheart” by the Columbia Quartette and Clarence Williams’ Blue Five’s 1923 recording of “Wild Cat Blues” which is among the earliest jazz recordings to have a widespread influence on musicians. By the way, many of the words in Carlin’s 1972 “Seven Words You Can Never Say On Television” still can’t be aired. Imagine the impact they had in 1972!