Equities and the Economy:

Let’s get yesterday’s price action quickly out of the way because for all intents and purposes it’s meaningless. The Dow rose 73 points to close at 18,333, the S&P 500 added 8 to 2,140 and the Nasdaq rose 27 finishing at 5,193. As I’m sure you know, Donald Trump won the presidential election. His unexpected victory brings with it a lot of questions on his policies and how he will lead, but for the purposes of this Blog I only care about how the markets are reacting. Although Dow futures were down as much as 800 points around midnight CST, the Dow is currently, are you ready, up 130 points. Yes, it has recovered all 800 points, and more. And remember, just two days ago, Monday, the Dow rose 371 points. I said to myself last night, “If the Dow is down big tomorrow morning, buy it!” Looks like I wasn’t alone in that thinking. Of note, we’re still in the S&P 500 range of 2,100 to 2,200 we’ve been in since early July.

Turning to the prosaic economic news of the day, the Labor Department reported in its Job Openings and Labor Turnover Survey (JOLTS) that job openings posted by employers rose by 40,000 in September from August which was about at expectations. Job openings continue to grow with employers complaining that they can’t find the skill sets needed to fill positions. In the only other report of significance the National Federation of Independent Businesses reported their Optimism Index rose a bit in October from the month prior to 94.9 from 94.1. Also as expected. This is a closely watched index for small businesses are responsible for creating most of the new jobs in America.

Take all this volatility in stride. The sun will come up tomorrow. You will have to pay taxes. And Alabama will beat whoever they play.

Oil

Oil prices were little changed from Monday with WTI closing up 9¢ at $44.98 and Brent down 11¢ at $46.04. Complete chatter. Again, let’s move on to today. Like equities, in the middle of the night oil prices plunged hitting 3 month lows just above $43. Like equities it’s “risk on” this morning with the slick stuff getting a boost from last evening’s API report being up 90¢. Although the report showed U.S. crude stockpiles rising by 4.4 million barrels last week, gasoline inventories declined way more than expectations. The decline was 3.6 million barrels with the expectation of only a 0.5 million drop. Also, the boost in equities may be lending a tad of support.

Courtesy of MDA Information Systems LLC

Natural Gas

Natural gas prices got smashed yesterday with the prompt month closing down a material 18.3¢, 6.3%, at $2.633. The cash market is very, very weak right now on a combination of warm temperatures and full storage fields. There’s no demand by electric generators and no heating demand. No load period. N.S. natural gas storage fields are basically full, normal for this time of year, meaning that operationally they can’t take excess gas even if they wanted it. Operationally they just can’t take it. That means “homes” for excess gas are few and far between. This happens in the autumn when storage fields are full and we get a warm spell. A dubious position for a producer. This morning the 11-15 day forecast moved warmer overnight but prices are holding in there trading on either side of yesterday’s settle.

Elsewhere

If you have to drive in New Jersey I recommend you fill up your gas tank outside of the state. Last month Governor Chris Christie teamed up with a coalition of fellow Republicans and Democrats in the legislature and raised the gasoline tax, the first time in three decades. Guess how much? You’re too low. The tax was raised 37.5¢/gallon, a whopping 159%! This takes New Jersey from having the 2nd lowest gas tax to the 7th highest. Now in New Jersey’s defense it isn’t the only state that has or is considering raising gasoline taxes. Georgia, Idaho, Iowa, Kentucky, Michigan, Nebraska, North Carolina, South Dakota, Utah and Washington increased their gas tax in 2015. Louisiana, Tennessee, Alaska, Alabama and Minnesota are contemplating increasing it next year. Not to be left behind, California, Hawaii, Missouri, Mississippi, Oregon, South Carolina and Wisconsin are also discussing the issue and Idaho might raise the tax again next year.

Twenty-one states have not raised their gas tax in a decade or more. The thinking is that the time is right with gas prices relatively cheap, the economy gaining momentum and job growth improving. Taxes are being raised at the state level because roads and bridges are in such poor shape and the federal government isn’t addressing the issue. The federal government hasn’t raised its gas tax in 23 years so the states are taking it into their own hands. New Jersey is a prime example. Like so many other states it has major infrastructure problems. The Society of Civil Engineers graded the Garden State’s roads and bridges a “D+” this past summer.

On a side note, it’s still illegal to pump your own gas in New Jersey. Seriously?!