Equities and the Economy:

• Another strong performance for global equities.
• All three major indexes finish at record highs.

With investors optimistic about global economic growth and current strong earnings, stock markets around the world posted a good performance including those in the U.S with the three major indexes closing at record highs.  The Dow logged a big 161 point gain, 0.69%, closing at 23,591, the S&P 500 rose 17 points, 0.65%, ending at 2,599 and the Nasdaq also ended at a new record popping 71 points, 1.1%, to 6,862.  Great way to go into Thanksgiving!  The three primary indexes are up between 16% and 28% this year.  We’ve got Goldilocks conditions with the global economy growing, low inflation and cheap money which make for a great equity market.  Yesterday it was one of the generals leading the battle with Apple gaining 1.9%.  It still amazes me that behemoth can move that much in a day.  There’s a lot of “mass” there and it takes a lot of buying or selling to move the needle.  Kind of like turning an oil supertanker.

One thing I’m keeping an eye on is the yield spread between the short term bonds, the 5 year, and the long bond, the 30 year.  Currently it’s around 65 basis points.  That the tightest since the summer of 2007.  Why is this so important?  Because just about every recession we’ve had is precede when the yield curve has gone backwardated, i.e. short term yields are greater than long term bond yields.  Banks lend long term and finance that by borrowing short term.  If short term yields go above long term yields they quit lending cutting off the money supply to corporate America.

This morning world shares are looking to set yet another record with the Dow up 34 points.

Bitcoin hit a new record high yesterday of $8,362.30.  The cryptocurrency is up more than 750% from the end of last year.

Oil

• Prices settle higher.
• OPEC meets next Thursday.

Oil prices closed marginally higher yesterday on really no new news.  WTI rose 41¢ to $56.83 and Brent settled up 35¢ at $62.57.  OPEC meets next Thursday to vote on extending the production cuts until the end of next year.  With Saudi Arabia’s backing its widely expected the cuts will be extended.  Remember Saudi Aramco goes out for its IPO, the largest IPO ever, in Q4 of next year and they are going to do whatever is necessary to keep oil prices up until at least that time.  The market fully expects the extension and its priced into the market.

WTI is up a big 95¢ this morning on the bullish weekly API report released last evening taking prices to their highest level since July 2015.  Crude inventories plunged by 6.5 million barrels last week, more than 5 times estimates.  Although gasoline inventories rose more than expected by 900,000 barrels the bullish crude data is overwhelming the bearish gasoline data.

Per AAA, 45.5 million people will driving this Thanksgiving, and they’ll be paying more for gasoline.  In fact, prices are the higher than the two previous years.  Heading into this weekend gasoline is averaging $2.57 per gallon.  That’s up 41¢/gal from the same time last year.  That being said, prices are still the 3^rd lowest since 2008.

AAA says 50.9 million people will be traveling 50 or more miles this year which is an increase of 1.6 million compared to 2016 and the most since 2005.  1.5 million more driving this year compared to 2016.

Courtesy of MDA Information Systems LLC

Natural Gas

• Prices close lower.
• Warming trend continues.

After posting 5 month highs, prices have been on the defensive and that continued yesterday with December gas closing down 3.0¢ at $3.017.  The price of December gas has now fallen nearly 25¢, 7.8%, near a 3 week low.  Since the forecast of the cold weather blast a couple of weeks ago, the theme has been of weather forecasts trending toward normal bringing out the bears.  Add to that near record U.S. dry production and that doesn’t make for a bullish scenario.  That being said, it seems like there’s a huge magnet at the $3.00 level pulling prices down to it and lifting prices when we’re below it.

Today total U.S. demand is expected to hit 89.0 Bcf/d which is the highest since last winter supported by an increase in heating demand with temperatures dropping about 5 degrees in the Midwest and Northeast.  Canadian imports jumped to satisfy the demand and are at their highest level since last winter.

Today the EIA is releasing its weekly storage report which is a day early due to the holiday.  Traders are looking for a 55 Bcf withdrawal which is greater than both last year at this time when we had a 2 Bcf injection and the 5 year average of a 26 Bcf withdrawal.

The weather forecast this morning is showing some materially warmer than normal temperatures for the 11-15 day term in the midcontinent and it’s putting pressure on prices with December down 4.5¢.

Elsewhere

On the fourth Thursday of November families across the U.S. gather to feast on turkey, watch the Macy’s Thanksgiving Day parade and watch football.  Here are some fun facts about Thanksgiving.

• The first Thanksgiving was held in the autumn of 1621 and included 50 Pilgrims and 90 Wampanoog Indians, and lasted 3 days!
• Thanksgiving only became a national holiday over 200 years after that first Thanksgiving when Sarah Josepha Hale convinced President Lincoln in 1863 to make it a national holiday.  Additional trivia:  Ms. Hale wrote the classic song “Mary Had a Little Lamb.”
• Historians are pretty sure that no turkey was served at the first Thanksgiving.  On the menu?  Deer, or venison, ducks, geese, fish, oysters and maybe even lobster.
• The first Thanksgiving was eaten with spoons and knives.  No forks.  They were invented until 10 year later.
• In 1953, Swanson had so much extra turkey (260 tons) that a salesman told them they should package it onto aluminum trays with other sides like sweet potatoes, and voila, the first TV dinner was born!
• Thanksgiving was almost a fast — not a feast!  The early settlers gave thanks by praying and abstaining from food, which is what they planned on doing to celebrate their first harvest, that is, until the Wampanoag Indians joined them and turned their fast into a three-day feast!
• Yesterday President Trump continued the relatively new tradition of pardoning the turkey.  President Truman did the first turkey pardon in 1947.
• The Macy’s Thanksgiving Day Parade began in 1924 with 400 employees marching from Convent Ave to 145th street in New York City.  No large balloons were at this parade.  It featured only live animals from Central Park Zoo.
• How did the tradition of watching football on Thanksgiving start? The NFL started the Thanksgiving Classic games in 1920 and since then the Detroit Lions and the Dallas Cowboys have hosted games on Turkey Day. In 2006, a third game was added with different teams hosting.

Remember, the most valuable commodity on earth is not gold, platinum, rare earths, or even Bitcoin.  It is time.  Spend it with the ones you love.  Happy Thanksgiving!