Equities and the Economy:

There were two material events yesterday and both were by central banks. The first, which I discussed in yesterday’s Morning Blog, was the Bank of Japan’s move to continue its 80 trillion yen bond buying program (QE) focusing on the back end of the yield curve (10 year note) as opposed to short term interest rates (overnight rate). The second was the conclusion of the FOMC meeting where they left interest rates unchanged. Talk hawk, walk dove. That is the Fed’s mantra. They explained their “no action” yesterday by the fact they lowered their projection for GDP growth both this year and next. While the BOJ’s move was met with a yawn by the market, the Fed’s move, while expected, was welcomed buoying investors’ risk sentiment. The Dow rose a nice 164 points, 0.9%, to 18,294, the S&P 500 added 23 ending at 2,163 and the Nasdaq popped 54, 1.03%, to finish at 5,295.

Returning to the Fed, being they “passed” on raising interest rates at this meeting, it really only leaves the December meeting for the opportunity to raise rates for they will most definitely pass on taking action at the November meeting given its close proximity to the election. In reflection, the last rate hike was last December with the Fed indicating there would be 3 or 4 rate increases in 2016. So much for that. In the Fed’s defense, they have always said they are “data dependent” and the data has not convinced them to raise rates, particularly the data showing a lack of inflation. Also remember, this is most definitely a “dovish” Fed and they are going to error that way.

There were no significant economic reports released yesterday. This morning investors’ “risk on” sentiment continues with the Dow up big 133 points.

Oil

Oil prices jumped yesterday with WTI closing up a hefty $1.29 at $45.34 and Brent rising 95¢ settling at $46.83. On the heels of a bullish API Tuesday evening the DOE yesterday released its weekly crude and products report which was also bullish. The agency stated crude stocks fell 6.2 million barrels which was materially greater than market forecasts of a drop of 3.0 million barrels. Additionally, gasoline stocks fell by 3.2 million barrels with expectations of a 900,000 barrel drop. U.S. crude inventories are at their lowest level since February but remain 10% above last year at this time. The U.S. dollar weakened after the Fed non-decision which is mildly supporting all commodities priced in the greenback, which of course includes oil.

This morning oil prices are looking to extend their rally into a third consecutive session with WTI up 84¢ after yesterday’s bullish DOE report

Courtesy of MDA Information Systems LLC

Natural Gas

Although natural gas closed only a penny higher yesterday at $3.057, but it remains over 3 bucks. The Nymex front month has now rallied a big 45¢ to a 16 month high of $3.098 as strong end of summer demand and exports support the market along with flat y-o-y production. The cash market has been the driver of this rally and remains very, very strong. Yesterday it traded $3.14. That’ll pull the futures market up every time!

Today is Thursday and we all know that means its EIA storage report day. Traders are looking for a 49 Bcf injection which would continue the theme of the summer of below average injections. Last year at this time we saw a 96 Bcf and the 5 year average is 83 Bcf.

Natty is pretty quiet right now being up 1.2¢.

Elsewhere

You might want to think twice the next time you think of throwing that pet goldfish down the toilet or in a nearby river. That little goldfish is actually an invasive species and can wreak havoc for the native fish and surrounding ecosystem. Researchers from the Center for Fishing and Fisheries at Murdoch University in Australia have been trying to control goldfish for 12 years in a river in the southwest of the country. Goldfish are omnivores in the wild and can have destructive feeding habits. They deteriorate the quality of water by stirring up sediment on the bottom of river beds, dig up vegetation and consume anything edible that comes before them, including native fish eggs. Most startling is the fact that goldfish in the wild grow to massive sizes and can travel long distances. One goldfish found by researchers weighed 4.1 pounds while another was tracked travelling 142 miles in a year. Sounds like I need to bait a hook!