Equities and the Economy:

• Concerns on tax reform plans.
• Profit taking.

On concerns over the Senate’s tax plan, which delayed corporate tax cuts for a year, and with the strong performance of the equity markets in recent weeks, investors decided to take some profits on Friday. The Dow closed down 40 points at 23,422, the S&P 500 slipped a couple of points to 2,582 while the Nasdaq managed to add a point to 6,751. For the week, the Dow lost ½% and the S&P slipped 0.21% ending 8 consecutive weeks of gains. The Nasdaq gave up 0.2% with latter snapping 6 weeks of weekly gains. Despite the losses, all three indexes remain near record levels.

Here’s a data point for you. S&P 500 P/E ratio is at 18.1, the highest since 2004.

Regarding tax reform, the prospect of it has been a major driver in the rise of equities over the past month or so. Investors are paying close attention. If it fails to pass we’ll probably see a pullback in the market.

This morning the European markets are on the defensive which is rippling to the U.S. markets and the Dow is down 82 points.

Oil

• Prices close lower on Friday.
• Strong week.

After a strong week oil prices closed lower on Friday. WTI settled down 43¢ at $56.74 and Brent fell 41¢ to $63.52. That being said, it was a big week for prices. WTI gained 2.3% and Brent rose 2% logging their 5th consecutive weekly gain. Prices were buoyed last week after Saudi Arabia detained 201 individuals including princes, businessmen and government officials after a three year investigation alleging that an estimated $100 billion of state funds had been embezzled. That action helped push oil prices to more than 2 year highs.

Baker Hughes released its weekly rig count report after the close on Friday noting the number of rigs looking for oil rose by 9 last week to 738. This compares to 286 this same time last year.

Keep an eye on Lebanon. Tensions are increasing there between Saudi Arabia and Hezbollah with the latter backed by Iran.

This morning natty is quiet up 9¢. Chatter.

Courtesy of MDA Information Systems LLC

Natural Gas

• Prices creep higher.
• Second week posting gains.

The December Nymex natural gas contract closed marginally higher on Friday up 1.3¢ to $3.213/MMBtu. It was a big week for natty prices which posted a gain of 7.7% marking a its second consecutive weekly advance. It was all about the weather with the forecast last Monday morning coming in markedly colder for the east and it got progressively colder as the week went on.

This morning the 6-15 day forecast is definitely supportive of prices with below normal temperatures encompassing the eastern half of the nation for that time frame. In fact, for the next 2 weeks South Carolina to Maine will experience colder than normal temps. Even though the forecast remains bullish natty is down 5.6¢ in early trading. The cash market must be a little weaker this morning.

Elsewhere

You’ve heard of Black Friday and Cyber Monday. How about Singles’ Day? No? Well you need to learn about it. It’s a fairly recent phenomenon and annual event in China where singles celebrate the fact they’re single. 11/11 (November11th) was chosen because the number ‘1” resembles an individual that is alone. And it involves a lot of consumer spending. A heck of a lot!!! It’s become the world’s biggest shopping spree! In 24 hours retails sales are greater than Black Friday and Cyber Monday combined. Alibaba reported that in the first 3 minutes after midnight November 10th gross merchandise sales topped $1.5 billion! After 6 minutes sales topped $2.8 billion, beating the entire day sales in 2012. Over the next 6 days delivery men and robots (yes, robots!) will deliver 1.5 billion parcels!

Sales have been rising as China’s middle class grows coming with it more disposable income. However, retailers like Alibaba and JD.com Inc. are fretting because sales growth may be slowing, down to “only” 20%. Seriously?!