Equities and the Economy:

• Slight gains set record highs once again.
• No alternative to equities.

U.S. stocks booked small gains yesterday but enough to yet again post new record highs. The Dow closed up a meager 6 points at 23,563, the S&P 500 gained 4 points to 2,594 and the Nasdaq Composite rose 21 points to finish at 6,789. It was the 27th time this year all three indexes simultaneously set record highs. For the Dow it was the 59th closing high, the 53rd for the S&P and the 64th for the Nasdaq. Youza! Since Donald Trump was elected president a year ago the Dow has gained 29%, the S&P 22% and the Nasdaq 31%.

Even though P/E ratios are extended making stocks historically expensive, but with interest rates so low, central banks around the world still monetarily accommodative and the prospect of tax reform, there’s really just no alternative to stocks. Take it from an energy trader of 25 years, never buck the trend. “The trend is your friend” And the trend is up!

Yesterday President Trump and China’s President Jinping met in Beijing. Of course there was the photo op. What struck me while looking at the picture of the two shaking hands was that in that small space 40% of the global economy was represented!

Yesterday Bitcoin set a new record high at $7,800. A year ago it was $324. You do the math.

This morning stocks are pulling back with the Dow down 95 points. Traders are taking some profit ahead of the release of the Senate’s version of the tax plan, which is rumored to not be as “generous” as the House’s.

Oil

• Prices end lower on EIA report.
• Refiners running hard.

Oil prices retreated yesterday, albeit marginally. WTI closed down 39¢ at $56.81 and Brent fell 20¢ at $63.49. Yesterday’s EIA inventory report was neutral. While crude stocks unexpectedly rose by 2.2 million barrels last week with forecasts of a 2.7 million barrel decline, gasoline and distillate stockpiles fell by a combined 6.7 million barrels contrary to an forecasts of only a 4.1 million barrel decline. What did catch traders’ eyes, and was bearish, is the agency stated U.S. oil production rose by 67,000 bpd to a new record high of 9.62 million barrels. The “crack spread” must be working for refiners. They’re refining 500,000 bpd more than last year at this time.

OPEC will meet at the end of the month and most assuredly will extend the production cuts until the end of next year. This is priced in. The question now is whether or not traders will take profits over the next couple of weeks.

This morning WTI is virtually unchanged up a nickel.

Natural Gas

• Prices hit 6 month high.
• Weather trending colder.

Natural gas prices continue to march higher. Yesterday the December contract settled 2.3¢ higher at $3.178, a 6 month high. No doubt what the driver is: cold weather. There’s deep blue all across the map for the entire Midwest and east for the next 5 days. Temps will be 8 to 15 degrees below normal. I can hear the gas being sucked out of storage! Speaking of storage, it’s EIA storage report day. Traders are looking for a small injection of 15 Bcf. This compares to last year at this time of a 54 Bcf injection and the 5 year average of a 45 Bcf injection.

This morning the 11-15 day forecast shows the cold penetrating deeper into the southeast which is bringing in buying. Natty is up 3.1¢

Elsewhere

I’m sure you know Thomas Jefferson was our third president, but here’s 5 interesting facts you may not know.

• He was called “the man of the people.” Why? Because he greeted people at the White House in a robe and slippers.

• Being elected president is a pretty darn prestigious title. There are only 45 of them over 228 years! Something to be awfully proud of! Apparently not Jefferson. His gravestone says nothing about being president. It does mention 1) author if the Declaration of Independence, 2) author of the Statute of Virginia for religious freedom, and 3) Father of the University of Virginia.

• He was an awful money manager. Jefferson spent lavishly and lived perpetually beyond his means. Most of his adult life he was in debt, even to his death.

• Jefferson was a vegetarian.

• Jefferson introduced french fries to mainstream America by serving it in the Monticello in 1802.