Equities and the Economy:

Although U.S equities closed lower on Friday, with the Dow closing down 131 points, 0.7%, at 18,261, the S&P 500 off 12, 0.6%, to 2,165 and the Nasdaq dropping 34, 0.6%, ending at 5,306, it was a pretty good week with the S&P gaining 1.2%. Remember the Nasdaq closed at record highs on Wednesday and Thursday. Basically Friday’s price action gave back Thursday’s gain which was 164 points with investors on that day cheering the dovish decisions by the BoJ and FOMC. If we need an excuse for Friday’s drop let’s blame the U.S. manufacturing purchasing managers’ report noting its index fell to 51.4 in September down from 52.0 in August and the lowest reading since June. However, as the Black Knight said in Monty Python, “It’s just a flesh wound.” The index is still above 50 indicating expansion. That was it for fundamental economic news so let’s move on to today.

Global markets are in retreat this morning with the Asian markets closing down materially, at least 1.25%, and the European markets currently trading even worse being down at least 1.12% which has brought the momentum traders and the Dow is down 100 points.

Tonight is the much anticipated debate between Hillary Clinton and Donald Trump (9 EDT). For 90% of the voters, nothing is going to make them change their mind on who they’re going to vote for. They’ve long ago made their decision. The next 6 weeks of this election season is the battle for those remaining 10% independent voters. Tonight is going to make for great entertainment! I feel for you who live in Ohio, Florida and Pennsylvania. For a month and a half you are going to be bombarded with negative, caustic ads and annoyed by a telephone that won’t stop ringing.

Oil

Oil prices got knackered on Friday with WTI falling $1.84, 4.0%, settling at $44.48 and Brent closing down $1.76, 3.7%, at $45.89. Oil prices fell after Bloomberg reported that Saudi Arabia didn’t see an output deal being reached at the OPEC meeting in Algeria, which begins today. When talking oil you never know what’s coming next and Saudi Arabia is talking a different tack today. Actually it was yesterday. That’s when Algerian’s oil minister, Noureddine Boutarfa, stated that Saudi Arabia has agreed to cut its production to January levels, IF Iran agrees to stop increasing production. Saudi Arabia is currently producing 10.7 million bpd. In January they were producing 10.2 million bpd so it would be a 5% cut in production. Iran is currently producing 3.6 million bpd which is materially more than the 2.8 million bpd it produced in 2015 amid economic sanctions. Iran has previously stated it would not freeze production until it reached pre-sanction production which was 4.0 million bpd. I remain skeptical of an agreement. Oh, except to hear the rhetoric but I don’t see it being translated into action. Remember, oil prices are 40% lower than they were in 2014 and OPEC and Russian treasury coffers are declining, except Iran’s.

This morning the renewed hope of the deal to limit production is popping prices with WTI up a big $1.36 this morning.

By the way, per Baker Hughes, the U.S. oil drilling rig count rose by 2 last week to 418 rigs. The rig count has now grown 12 of the last 13 weeks.

Courtesy of MDA Information Systems LLC

Natural Gas

Natural gas prices leaked 3.5¢ on Friday closing at $2.955. That being said, that’s a pretty strong number for natty. It’s the cash market that’s been and has been supporting this market trading as high as $3.14 last week. Natural gas demand in the power sector has been robust and add in exports in the form of LNG and to Mexico and you’ve got some hefty demand at Henry Hub, LA.

You folks in the upper Midwest are cooling down to normal temperatures this week but then will be returning to above normal temps in the 6-15 day time frame. The forecast is bringing in some buyers this morning with natty up 4.5¢ trading once again at 3 bucks.

Elsewhere

Here’s some things I’ll bet you didn’t know about traveling on an airplane.

Don’t get too nervous if you have a hard landing in bad weather. Pilots are instructed to do so to avoid winds affecting the plane or hydroplaning.

This is logical, but never drink water from an airplane lavatory. The tanks that hold the water are sanitized in intervals but parasites can gain a tolerance to the cleaners they use.

If a plane is hijacked while on the ground the pilot will leave the wing flaps up as a sign there is a problem.

Did you know you can tip your flight attendant? If might even get you a free drink!

At night about half of pilots sleep during the flight to your destination. Also, about 33% of the time a pilot will wake up to see if the co-pilot is sleeping as well.

You have a about 15 minutes of oxygen after the mask falls. That’s plenty of time for the pilot to get to a lower altitude. However, at normal flying altitude you only have about 15-20 seconds to secure the mask before you pass out.

The lights are dimmed when you land at night to allow your eyes to be adjusted to the darkness outside in the event of an evacuation.

The pilot and co-pilot are never given the same meal. Additionally, the pilots are not allowed to share their meal. This is to prevent both pilots from potentially getting food poisoning.

More often than not you’re sharing a flight with human remains or organs. Of course they’re in the cargo hold.

Planes are stuck by lightening all the time. They have special insulation the prevents the electricity from messing up the electronics.

When the door closes the pilot has an incredible amount of power including the power to arrest people, write fines, and take the will of a dying passenger.

The lavatories can be unlocked from the outside. There is a mechanism usually behind the no smoking badge, that allows the bolt to slide and unlock the door.

Planes have more difficulty flying on hot days because the air is thinner.