Equities and the Economy:

Not sure if it was the fact Donald Trump won the election or simply that the election and accompanying uncertainty was behind us but whatever it was investors liked it, but boy, was it a huge whip-saw!. Now remember at around midnight on Tuesday Dow futures were down a whopping 800 points. When the market opened the next morning at 8:30 AM CST the Dow was flat to Monday’s close, and stocks climbed throughout the day and when the final bell rang the Dow posted a nice, big 218 point, 1.2%, gain. That is an incredible swing of over 1,000 points! The stock market yesterday behaved like a teenager! (I have two of them. Girls.) It makes a lot of demands but doesn’t really know what it wants. The S&P 500 surged 21 points, 1.1%, closing at 2,150 and the Nasdaq advanced 38 points, 1.11% ending at 5,231. Now here is the forest rather than the trees. The Dow closed just 0.25% below its all-time high! And I’ll just jump to today because if this morning’s gains hold, the Dow is up 122 points, we’re going to close at new record highs!

There were no economic reports of significance released yesterday, and this may sound oxymoronic, but I’m not sure they would have mattered anyway.

Fundamentally the economy conditions to grind better and with the election out of the way that’s what investors are focusing on.

Oil

Oil prices closed marginally higher yesterday with WTI up 29¢ at $45.27 and Brent posting a 32¢ gain ending at $46.38. Like equities, oil recovered from a low set in the middle of the night at of around $43. The gain came from the slightly bullish API report Tuesday evening showing aggregate inventories of crude oil, gasoline and products fell last week more than traders expected. But really the price movement was just chatter. Unlike the equities market, this market was much more focused on the fundamentals and the fundamentals pertain to whether or not and if so by how much and how it will be calculated, OPEC and Russia will freeze or limit crude oil production. And lest we forget, both are currently producing at record levels. By the way, the contango in the WTI price curve continues to widen suggesting current supplies are abundant and crude is bidding for storage. This morning WTI is down 23¢.

Courtesy of MDA Information Systems LLC

Natural Gas

After plummeting for the past few weeks from a high of $3.36 on October 13th to a low of $2.54 intraday yesterday, natural gas prices did manage to eke out a gain yesterday closing up 5.7¢. Let’s call in short covering. Profit taking. The weather continues to be the driver of this market, and it has, is and is forecasted to be warm. This past Monday forecasters were showing normal temperatures in the 11-15 day term but slowly over the week they’ve backed off that forecast and today in the 6-15 day forecast almost the entire country is showing above normal temperatures. With storage facilities across the nation basically full, operationally limiting their ability to take incremental amounts of gas, cash prices are going to be low. The cash price for gas on the weekend, which usually trades lower than weekday gas because weekend demand is lower, is going to be ugly.

Today is Thursday and that means EIA storage report day. The market is expecting an injection of 53 Bcf. Natty is down 8.2¢ this morning. Weather, weather, weather.

Elsewhere

The election is over and we have a new president who will take office in January. I started thinking about past presidents and those on U.S. dollar bills (No I’m not implying that Donald Trump will be on a U.S. bill!) When the conversation gets boring at a social function you can always find a way to shift the conversation to which president is on which U.S. bill. Everyone knows who’s on the smaller denominations but as the bills gain in value, so does the number of people who cannot remember the name of the president on the bill, except for the $2 bill. Nobody remembers that because nobody’s seen a $2 bill in forever! Here they are: $1 bill, George Washington; $2 bill, Thomas Jefferson; $5 bill, Abraham Lincoln; $20 bill, Andrew Jackson; $50 bill, Ulysses S. Grant; $100 bill, Benjamin Franklin; $500 bill, William McKinley; $1,000 bill, Grover Cleveland; $10,000 bill, Salmon P. Chase (who was not even a President! And not a variety of fish either! He was the 25th Secretary of the Treasury under Lincoln); and $100,000 bill, Woodrow Wilson. Here’s the really ironic part about all this. American presidents weren’t originally supposed to be on the nation’s currency as that was seen as a practice of monarchies.