Equities and the Economy:

• U.S. equities close marginally higher yesterday.
• Nasdaq touches record high.

U.S. stocks edged higher yesterday with the Dow adding 24 points closing at 19,122, the S&P 500 finished 3 points up at 2,205 and the Nasdaq popped 11 ending at 5,380 touching its record high intraday or 5,404. The driver of yesterday’s price action was very positive economic data. Q3 GDP was revised materially higher with the second reading of the economic data point showing the economy grew at 3.2% in the quarter, up from the previous number of 2.8%, and at its fastest pace in over two years. Other data was also bullish. The Conference Board reported that its index of consumer confidence soared from 101 in October to 107 in November. The index is now at prerecession levels! The housing market, which has been the backbone of the recovery from the Great Recession, continues to be strong. S&P/Case-Shiller’s 20 city index of home prices rose 5.1% on an annualized basis in October. Housing prices rose 5.5% to a new high for the index of 184.8, exceeding the previous record of 184.6 set back in July 2006. This is good news for those of us that own homes, but for all those millennials who are looking to be first time purchasers, not so much. There has been and continues to be inadequate supply at the entry level end of the market. Bottom line, yesterday’s economic data was very good.

This morning the bulls are firmly in control with the Dow up 61 points hitting a record intraday led by the energy sector on materially higher oil prices.

Oil

• OPEC on the verge of an agreement.
• WTI price up 7% this morning.

Oil prices are skyrocketing this morning on reports that OPEC, at its 171st (ordinary) meeting, has agreed to cut output for the first time since 2008. Oil prices have been very volatile of late often moving up or down over a dollar on a daily basis driven by headlines regarding OPEC’s progress on agreeing to production cuts. Yesterday WTI closed down a big $1.85 at $45.23 and this morning its up a whopping $3.23 at $48.46. The word is that Saudi Arabia is prepared to accept a “big hit” on production if ach-rival Iran freezes production at pre-sanction levels, which is about 4 million bpd. The 14 member group accounts for a third of the world’s production.

I’m sure U.S. oil producers are jumping for joy this morning! Let the cheating begin!

Courtesy of MDA Information Systems LLC

Natural Gas

• Natural gas prices little changed yesterday from Monday.

After going apogee on Monday the bulls rested yesterday with natty prices ending little changed. The January contract, which is now the prompt month, end down half a cent at $3.315. The forecast for the 6-10 day time frame and especially the 11-15 day time frame has brought in the bulls. Not doubt the weather will be the driver of prices this winter but we do have a record amount of gas in storage with additional “implied” storage in the Marcellus from wells not full-flowing due to high back pressure because of a lack of take-away pipeline capacity so we’ll have to see how “hungry” the bulls are. The calendar 2017 and 2018 strips are above $3.00 which definitely works for many natural gas plays in the U.S. and will bring in the drillers. This morning natty is up 2.3¢.

Elsewhere

California has been a leader in pushing renewable resources (wind and particularly solar) and in fighting climate change and has taken the fight to a new level. Cows. The nation’s leading agricultural state is now targeting greenhouse gases produced by dairy cows and other livestock. Despite strong opposition from farmers, Governor Jerry Brown signed legislation in September that for the first time regulates heat-trapping gases from livestock and landfills. The state considers cattle and farm animals to be a major source of methane, a greenhouse gas many times more potent than carbon dioxide. Methane is released when livestock belch, pass gas and make poop. The state references a United Nations report stating livestock are responsible for 14.5% of human-induced greenhouse gas emissions, with beef and dairy production accounting for the bulk of it. California has set a goal of reducing methane emissions 40% below 2013 levels by 2030. I wonder how they’re going to implement this? I can see it now. You’ll drive down the road seeing a bunch of cows with suction tubes on their butts.