Equities and the Economy:

• Dow and S&P 500 end four day win streak.
• Consolidation/pullback due.

U.S. stocks closed lower yesterday with the Dow off 54 points, 0.28%, to 19,098, the S&P 500 closing down 12, 0.53%, at 2,201 and the Nasdaq falling 20 points, 0.56%, to 5,369. Folks, this is overdue. We’ve had 3 weeks with the market pretty much going straight and up logging a big gain of 6.24% for the short period November 4th to November 25 period. That’s a big move in a very short period. Additionally, we’re at the end of the month and we can be seeing some month-end position squaring and profit taking. Actually, yesterday’s move down was, as Monty Python’s black night would say, merely a flesh wound. So where do we go from here? This is still a “buy the dip” market so play it accordingly.

There were no economic reports of significance released yesterday so let’s move on to today which actually is quite quiet with Dow futures up 7 points. Total chatter.

Oil

• All eyes are on the OPEC meeting tomorrow.

Tomorrow is the much talked about meeting of OPEC in Vienna with the cartel trying to put in writing the oil production cuts that it orally stated at its Algiers meeting months ago. At that time it wanted to limit production to between 32.5 and 33 million bpd. It’s got a difficult task of getting its 14 members plus Russia to agree on a production ceiling or cut. This is the most difficult meeting in decades for the group because they’re starting from scratch. An adjustment to countries’ quotas hasn’t happened in years and the last OEPC output cut was announced in December 2008. Saudi Arabia had been trying to get the group to cut production by 2% for weeks but backed away from that position a few days ago saying that freezing production at current levels may be enough to tighten the market based upon their forecast of increased global demand in 2017. Prices have been driven by headlines and gyrating widely since the Algiers meeting. Example, yesterday WTI closed up $1.02 at $47.08. This morning, WTI is down a big $1.59. Today’s down move is on the announcement that the Russian oil minister, Mr. Novak, has no intention of flying to Vienna for the “official” meeting tomorrow saying that Russia will respond only when it is clear that OPEC has reached a consensus.

Here’s my prediction. There will be a deal. Not sure what the deal will be, but there will be some sort of agreement. And then the cheating will begin.

Courtesy of MDA Information Systems LLC

Natural Gas

• The December Nymex natural gas contract expired up 14.7¢ at $2.232.
• Front month natty prices have risen 80¢, 32%, to a near two year high.

Natural gas prices have been going apogee of late on the heels of weather forecasts that have been turning colder. Yesterday the December Nymex contract, which expired setting numerous natural gas and electricity supply costs for December as well as swaps, expired up a whopping 14.7¢ at $3.232. This is the highest monthly settle since the December 2014 Nymex contract expired in November 2014 at $4.282. Front month natty prices have rallied more than 80¢ to a two year high above $3.350 in less than a month. Over the next two weeks the weather temperature forecast is turning from above normal in the Midwest and northeast to normal which will support prices. That being said, storage levels are at record highs which, barring a major cold event, will limit upside price movement.

Elsewhere

Like here it’s getting to be winter in Japan which means it’s time to freeze up some water and make a skating rink. But a word of advice, don’t do it like this company did in Japan. Amusement park Space World thought it would be really cool for visitors to skate on a rink with 5,000 dead fish embedded in the ice. About 250 different kinds of fish could be seen under the 250 meter long ice circuit. The fish were placed in the water to make them look like they were swimming in a school below the ice. The idea was to give the feel that people were skating on the ocean. The rink opened November 12th to the owners anticipation and excitement with the “decorative” fish frozen under the surface. Unfortunately for Space World, their concept didn’t go over so well with the public and after a barrage of criticism the rink was closed. Although park officials said the fish were already dead at the time of purchase and were considered unfit to be sold in markets, the public soundly rejected the concept. The company is now melting the rink, which could take about a week, and will hold a memorial service for the fish overseen by a Shinto priest. Moral of the story, don’t put dead animals, even fish, in public display.