Equities and the Economy:

• Lackluster trading on May Day.
• Nasdaq posts yet another record high.

With many markets around the globe closed for International Workers Day, aka May Day, trading was muted here in the U.S, at least for the Dow and S&P 500. The former dipped in and out of positive territory all day finishing on a down note losing 27 points to 20,913. The latter did the same but closed up 4 points at 2,388. The Nasdaq however continued its bullish, record setting ways closing up 44 points, 0.7%, at 6,092, a new high. Apple, Amazon and Netflix all closed at all-time highs yesterday boosting the tech heavy index.

Coming into work yesterday investors were relieved an agreement was made to fund the government, albeit only until May 5th. As I’ve mentioned numerous times, its earnings season and P/E ratios going into the season were lofty and companies needed to prove their worth to keep their ratios that high, and they aren’t disappointing. Earnings are coming in at 12%, better than expected!

Turning to the economic news, the big report yesterday was the Commerce Department’s Personal Consumption Expenditure Price Index which fell 0.2% for March. The reason this data point is important is because it is the Fed’s preferred measure of inflation. Although on an annualized basis the index is up 1.8%, yesterday’s data was surely disappointing making it hard for the FOMC, which meets today and tomorrow, to raise interest rates at this meeting. Other data released was also of an ill nature. The Institute for Supply Management reported its index of manufacturing activity fell from 57.2 in March to 54.8 in April disappointing Wall Street which was looking for something closer to 56.5. That being said, we’re still above 50 indicating expansion.

Overnight the equities markets in Asia opened after the long weekend and performed well. The MSCI Asia Pacific Index is at its highest level since June 2015. Unfortunately, we’re not seeing the love here with the major indexes basically flat to yesterday’s close.

Oil

• Oil prices settle at lowest level in 5 weeks.
• Traders remain skeptical of effects of production cuts.

The theme of the last couple of months continued yesterday with oil prices closing lower. WTI fell 49¢ to $48.84 and Brent lost 53¢ settling at $51.52. Both are 5 week lows. The theme of the last couple of months remains, i.e., skepticism the OPEC and “friends” production cuts, even if extended beyond June 30th, will be enough to bring supply and demand more into balance. U.S. production is growing as well as other countries not in the OPEC agreement such as Libya which reported yesterday production has risen to 760,000 bpd for the first time since 2014.

So one might say, “OPEC just needs to cut more.” Well it ain’t that easy. Most OPEC countries have large budget deficits and can’t afford the loss of revenue from additional production cuts.

The bulls are happy this morning. At least oil prices aren’t lower. They’re flat to yesterday’s close.

Courtesy of MDA Information Systems LLC

Natural Gas

• Prices ease back from one month high.
• Production remains the focus.

After pushing to a near one-month high intraday yesterday sellers came in taking profits pushing prices to close 6.1¢ lower on the day at $3.215. The weather forecast is showing virtually no heating or cooling load for the next couple of weeks, however the focus remains on production which is down 2.5% y-o-y. Traders are reluctant to sell the market right now with cash prices around current Nymex levels and this is with no load conditions. Additionally there’s a big customer out there needing gas all summer: storage. Current levels are 15% below last year meaning every price dip will be bought, at least through the summer.

The bulls are taking back yesterday’s losses with natty up 5.0¢ as I write.

Elsewhere

It was going to be so special! Last Sunday at the Boston Red Sox game just before 10 PM during a commercial break the camera turned and focused on a couple. Up on the Jumbotron a man got down on his knee and asked his date to marry him. In the next moment in front of the whole stadium, it was clear. She said “No.” While the Red Sox did their best to preserve the poor sap’s dignity when it was obvious his girlfriend said “No” by breaking away, the fans were not so forgiving chanting “She said no!” Just imagine. You’ve planned this big moment, poured your heart into a public proposal, got told no, and turn into a deer looking into headlights, all while the entire stadium is chanting “She said no!” over and over again! That’s rough amigos!

Thankfully, and incredibly, no video of the debacle has surfaced. If you know of anyone considering proposing at a public sporting event tell them to reference the decision tree below before doing so.