Good morning. Natural gas gets the lead position today. The cold weather over the past week or so has been a crank on a spring turning it tighter and tighter and tighter. Yesterday the spring sprung in full force. The December natural gas contract exploded 32.1¢, 6.9%, higher yesterday closing at $4.341. Yesterday’s move was the biggest one day move since last winter. Now I always talk about the price action of the prompt, or front month, Nymex contract but it is the calendar strips that I’m really watching for the strips are what really impact electricity prices and natural gas budgets. Yesterday the calendar 2015 strip flew higher climbing a huge 14.7¢ to $3.971. Traders weren’t nearly as excited about what the calendar 2016 time frame for that strip was up only 4.4¢.

We may not be seeing a Polar Vortex but there is no doubt the jet stream is and remains in an “amplified” pattern, i.e. a ridge in the western U.S. and trough east of the Rockies allowing cold arctic air to fall into the U.S. like a child on a slide. Since we’re on the topic of weather, which will be the topic ALL winter, the eastern 1/3rd of the U.S. continues to look cold in the 11-15 day time frame. Now this is a tad warmer than yesterday’s forecast for the Midwest but it’s still going to be 5-8 degrees below normal. For that time period it looks like the ski resorts out west will have “spring skiing” conditions. With the warmer forecast coupled with a correction due after such a huge up day yesterday natty is retreating 10.9¢ this morning.

The S&P 500 barely eked out a new record high yesterday closing up 2 points to 2,041. The Dow added 13 to 17,648 but the more volatile Nasdaq fell 18 to 4,671. Big M&A activity worth $100 billion drove the bellwether index up offsetting the bad news out of Japan that the country is officially in a recession with its second consecutive quarter of negative GDP growth. Two S&P components, Baker Hughes and Allergan, rose on announcements they will be acquired which pushed the index higher. Looking at the forest through the trees, this is the 6th consecutive day the stock market was basically directionless.

Overnight Asian stocks closed mixed but the major European bourses are all trading nicely higher this morning. The latter are getting a boost from the closely watched ZEW Survey released today showing the index for economic activity in Germany, Europe’s largest economy, rose to 11.5 in November which compares to a dismal reading of negative 3.6 in October and coming in much better than expectations. A separate report showed inflation in the UK came in at 1.3% for October up from 1.2% from September better than economists predicted and getting closer to the ECB’s 2%. My how times have changed. I remember when inflation was bad for stocks.

Courtesy of MDA Information Systems LLC

Oil was stable yesterday with WTI falling 18¢ to $75.64 and Brent lost a dime to $79.31. With the OPEC meeting in Vienna 9 days away the political rhetoric continues to escalate. Late Monday Venezuelan President Nicolas Maduro said that a gathering of both OPEC and non-OPEC was being planned. The discussions would be the lead-up to the OPEC meeting on Thanksgiving Day. This comes as Venezuela’s Foreign Minister Rafael Ramirez is currently on a tour of oil producing nations including Russia and the Gulf States. Oil prices have fallen about 30% since the summer and are trading near 4 year lows on a combination of stagnant demand, booming U.S. oil production and a strong U.S. dollar. Here are some important facts related to the price of oil compliments of RBS, Citi, the Financial Times and Thomson Reuters.

$160 – The price/barrel that Venezuela needs to balance its budget this year.
$130 – The price/barrel that Iran needs to balance its budget next year.
$115 – the price/barrel that Iraq needs to balance its budget next year.
$110 – The price/barrel Russia needs to balance its budget this year.
$100 – The price/barrel needed by new operations in the Canadian Tar Sands for commercial viability.
$90 – The price/barrel Saudi Arabia needs to balance its budget this year.
$80 – The price/barrel needed by Angola, Brazil, Norway and the UK for deep-water production to be truly viable.
$60 – This is the break-even median price for U.S. shale oil development.
$50 – The price/barrel for Kuwait to balance its budget this year.
$40 – The break-even price for the lowest cost shale oil producers.

Now you see why the Venezuelans are traversing the globe.

Here’s something to chew on. In 2002, Jeffrey Loria paid $158.5 million for the Florida Marlins. Yesterday Mr. Loria paid more than twice that to keep Giancarlo Stanton. The Associated Press reported the outfield slugger agreed to a deal worth $325 million over 13 years. It’s the biggest windfall ever bestowed upon an American athlete. Breaking this down, Stanton get more than $150,000 per game! As Yogi Berra said, “Congratulations. I knew the record would stand until it was broken.” Have a good day.