Equities and the Economy:

• All three major indexes close at record highs.
• Apple drives the indexes.

On the back of Apple, the world’s most valuable publically traded company, all three major U.S. indexes closed at record highs. The company posted a better than expected sales forecast for this holiday shopping season and reported that consumers were gobbling up its latest iPhone. On the news investors gobbled up the company’s stock which gained 2.6% on the day driving the Dow up 23 points to 23,539, the S&P 500 up 8 points to 2,588 and the Nasdaq up a hefty 50 points to 6,764. For the week, the Dow rose 0.5%, the S&P 0.3% and the Nasdaq 0.9%. The week marked the 8th consecutive weekly gain for both the Dow and S&P, the longest such streak for both since November 2012. The Nasdaq closed out its 6th positive week in a row matching a streak that ended in early March.

The primary fundamental news on Friday was the Labor Department’s Employment Situation Report for October. Payrolls increased by 261,000 last month which was less than the 325,000 economists were forecasting. The unemployment rate dipped from 4.2% to 4.1%. On a very positive note, both August’s and September’s payroll tally were revised higher. As I’ve said many times, I pay close attention to revisions for in good times data is revised for the better and in bad times vice versa. One troubling data point was that wages grew at their slowest annual pace in more than 1 1/2 years. This is a sign that inflation will continue to undershoot the Fed’s 2% target. That being said, traders are pricing in a 98% probability of the rate increase next month. The Fed wants to get a little bit ahead of the inflation curve.

This morning is quiet. The Dow is up 12 and the S&P is down 1. Chatter.

Oil

• Prices continue higher.
• Sweeping purge in Saudi Arabia.

Oil prices continued their march higher on Friday with WTI closing up a big $1.09 at $55.64 and Brent settling $1.45 higher at $62.07 with both continuing to post multi-year highs. WTI’s closing price was the highest since July 2, 2015. It ended the week up 3.2%, its 4th straight weekly climb. Brent also ended at more than a 2 year high and was up 3.2% on the week.

Big news came out of Saudi Arabia over the weekend. Saudi Crown Prince Mohammad bin Salman made a sweeping purge of numerous business people and ministers in the country, including billionaire Alwaleed bin Talal, one of the country’s most prominent businessmen. Under the auspices of anti-corruption, the Saudi King tightened his grip on power. The fallout of this is yet to be known, but there’s a school of thought that the Crown Prince is removing those who are standing in the way of his ambitious reform agenda which includes economic and financial reforms.

This morning prices continue to grind higher with WTI up 21¢. Texas Tea is getting a boost from Friday’s Baker Hughes rig count report that showed the number of rigs drilling for oil fell by 8. This is the 4th weekly decline in 5.

Courtesy of MDA Information Systems LLC

Natural Gas

• Weather has been shifting colder.
• Price up 14% in a little over a week.

The December Nymex contract closed up 4.9¢ on Friday at $2.984. Prices have rallied 37¢, 14%, from the November contract expiration on October 27th. The weather has slowly, but consistently, been shifting colder from the anomalously warm temperatures we had last week which drove prices very low.

The weather forecast this morning is looking very cold for the near term, 1-5 day period, with much below temperatures forecast for the upper Midwest. That polar pig I was watching last week shifted a little moving from western Canada to the Canadian plains which is bringing in the very cold weather all the way down to Oklahoma.

On Friday Baker Hughes reported the natural gas rig count fell by 3. The combination of the cold weather forecast and rig count report is giving natty a healthy boost this morning. The December contract is up 8.5¢.

Elsewhere

Interesting American events occurring on this day.

• In 1860 Abraham Lincoln was elected our 16th president, and the first Republican.

• Birthday of American conductor John Philip Souza (1854-1932). He was born in Washington, D.C. and is best known for his rousing marches including The Stars and Stripes Forever, Semper Fidelis, and El Capitan.

• The CSS Shenandoah, the last Confederate combat unit in the Civil War, surrendered after circumnavigating the globe on a cruise on which it sank or captured 37 vessels.

• Cuba and the U.S. formally agree to begin an airlift for Cubans who want to go to the U.S. By 1971, 250,000 Cubans made use of the program.

• Birthday of James Naismith (1861-1939). He was born in Almonte, Ontario, Canada and is the inventor of the game of basketball.