Equities and the Economy:

• S&P and Nasdaq close at record highs.
• Global equities hitting record highs.

It was a good day for your stock portfolio yesterday with all three major indexes performing well with the S&P 500 and Nasdaq both posting record highs. The former rose 11 points to finish at 2,402 and the latter gained 28 points ending at 6,150. While not logging a record high the Dow performed well rising 85 points closing at 20,982. Equities globally are also performing well with England’s FTSE reaching a new high yesterday. Analysts are rationalizing higher prices on China’s announcement that it will infuse $100 billion in fresh financing to support its “Belt and Road Initiative” infrastructure program. If you’re not familiar with this project you need to be. The project is to create a modern Silk Road spanning 65 countries. It’s going to materially change global trading patterns.

Getting back to the States, there were two economic reports of interest. First, the New York-area manufacturing report which was quite disappointing coming in at -1. This was the first time this index has slipped into negative territory since the presidential election. This is a parochial report so let’s take it with a grain of salt and hope it’s a one off. The other report was much more positive, and catholic, which was the National Association of Home Builders housing index which rose to 70 from 68 and higher than the most optimistic forecasts on Wall Street. I’ve said this countless times. The housing market continues to be one of the strongest segments of the economy.

This morning European stocks are high with the FTSE posting an intraday high and pulling U.S. equities higher. The Dow is up 37.

Oil

• Oil prices end at 2 week highs.
• OPEC and Russia want production cuts through Q1 2018.

Oil prices surged again yesterday with WTI gaining $1.01 settling at $48.55 and Brent rising 98¢ closing at $51.82. Both are 2 week highs. The impetus of this latest move was the announcement over the weekend that powerhouses OPEC and Russia want the current 1.8 million bpd production cut to remain in place until March 31, 2018. This is 3 months longer than traders were expecting. If OPEC, i.e. Saudi Arabia, wants to balance the market they need to extend the agreement because even though the cuts have been in place since January 1, 2017, global inventories have not fallen, primarily because U.S. production continues to grow. Yesterday the EIA forecasted that oil production from the seven major shale plays will increase by 122,000 bpd to 5.401 million bpd in June from May. Additionally, an IEA (not our EIA) report stated OPEC output rose by 65,000 bpd in April. The increase came from primarily Libya which is exempt from the agreement.

This morning WTI is up 26¢.

Courtesy of MDA Information Systems LLC

Natural Gas

• Prices ease on higher production.
• Spec positions at record high.

Yesterday prices eased with natural gas falling 7.5¢ settling at $3.349. Since hitting a 3 month high last week just below $3.45 we’ve pulled back about a dime as of yesterday’s close. Prices fell on data that U.S. production over the weekend was 1 Bcf/d higher than last week’s lows. Additionally, the weather forecast backed off the heat in the east in the 6-15 day time frame meaning less gas for A/C load. I noted another important data point yesterday. The CME (which is organization that owns the Nymex exchange) reported that money managers were the longest they’ve been of natural gas futures in 3 ½ years and the net long position was at an 11 year high. Take it from an ex-natural gas trader, even if you’re bullish you never want to buy into a market with length at record highs. The boat is listing too heavily. Some of this length needs to be flushed out. And it looks like that is happening for today natty is down another 7.4¢.

Elsewhere

Facebook. It’s ubiquitous. But I bet you don’t know just how ubiquitous it really is. Consider this. There are 1.754 billion monthly active Facebook users. The world’s population is 7.502 billion. Doing simple math that means 1 in every 4 people on the planet is on Facebook! Here’s some additional interesting Facebook data.

• There are 1.126 billion mobile Facebook users.

• 648 million minutes are spent on Facebook by users each month.

• 48% of all Facebook users log in on an average day.

• Users spend an average of 18 minutes per visit.

• There are 78.2 million total Facebook pages.

• 48% of 18-34 year olds check Facebook when they wake up.

• 28% of 18-34 year olds check Facebook before they get out of bed.

• On average 205 photos are uploaded daily.

• There are 81 million fake Facebook profiles.

• Facebook is in 70 different languages.

• 75% of Facebook users are outside of the U.S.

Source: Statistic Brain Research Institute. Research date May 9, 2017.