Equities and the Economy:

Well it appears investors liked the results of the first presidential debate, and oh, maybe a number of stronger than expected economic reports just may have helped as well. Yesterday the Dow popped 133 points, 0.73%, finishing at 18,228, the S&P 500 rose 14, 0.64%, to 2,160 and the Nasdaq added a nice 48, 0.92%, closing at 5,306. Getting to those economic reports, Standard & Poor’s reported that its S&P CaseLogic Case-Shiller 20 city home price index rose 5% in July from the same period a year ago. Analysts were expecting a 5.1%. On a monthly basis, home prices were up 0.6% from June. As I’ve mentioned SO many times previously, there just isn’t a lot of inventory which is creating a seller’s market to the chagrin of all the millennials wanting to move out of their apartments. This report is further evidence the housing market, which has been the best performing sector of the economy since the recession, continues to be “solid.” The Conference Board reported yesterday its index of consumer confidence rose from 101.8 in August to 104.1 in September. This was a very positive surprise and is a nine year high for the index and the highest since the recession ended. Consumer confidence is important for when the consumer is more confident about their economic future they spend and consumer spending is 70% of the GDP. Finally, the financial information firm IHS Markit reported its “flash” index of service sector economic activity for from 51.0 to 51.9 in September. Wall Street was expecting no change. While a single point increase may seem inconsequential to you, it shows the rate of growth is expanding.

What’s really interesting is watching the action of the Mexican peso vs. the U.S. dollar in the currency market. It looks like it has become the barometer of this presidential election. The theory is that a Trump victory will at the very least result in less trade between the countries, if not the building of a more extensive barrier on the southern border. The peso had been under attack as Donald Trump’s poll numbers have risen in the last month or so. Well yesterday after the debate the peso rose almost 2%. This may not seem like much but in the world of currency trading when a 10% move in an entire year is a huge move, a 2% move in a day is ginormous! As least as far as the currency traders are concerned, Hillary Clinton won the debate.

The Asian markets closed mixed overnight and the European markets are trading deeply in the green up at least 1% being pulled up on higher oil prices and trying to break a 3 day losing streaks. The Dow is up 22 points being pulled up on the European price action and some follow through from yesterday’s positive economic reports.

Oil

Oil prices finished down on the day and wiping out gains from the previous as headlines surrounding the OPEC meeting in Algiers drive the market. Whereas Sunday there was talk of production limits between Saudi Arabia and Iran, yesterday the bull’s hopes were dashed when both came out basically saying there was not going to be an agreement. WTI finished down $1.26 on the day at $44.67 and Brent lost $1.39 settling at $45.97. These prices may seem low, but remember, the U.S. rig count has increased, albeit marginally, the last 12 of 13 weeks. The Algiers meeting ended today so traders will have to take their cues from more traditional sources, such as the API’s crude and products inventory report which came out last evening. The market was looking for an increase of 3.0 million barrels. The actual: a 750,000 withdrawal. Additionally, gasoline inventories fell a whopping 3.7 million barrels vs. and expectation of them being unchanged. Shwing! In come the bulls and WTI is up 60¢ this morning.

Courtesy of MDA Information Systems LLC

Natural Gas

Natural gas was quite quiet yesterday trading in a 4¢ range closing down an immaterial 0.1¢ at $2.996. There’s a lot of maintenance going on right now, as usual in September and October, causing all sorts of production problems, albeit them temporary. Last week natty hit a new 2016 high of $3.098 but has since fallen nearly 5%. Today the October 2016 Nymex contract will have its last day of existence setting the price of many unhedged natural gas and electricity supplies for October as well as one “leg”, or side, of many, many financial swaps. As I write the October contract is under some pressure down 6.4¢. Regarding the weather, normal temperatures will prevail on the center of the country before the above normal temps return in the 6-15 day time frame bringing some fantastic weather to the Midwest, MidAtlantic and Northeast.

Elsewhere

Talk about loving your pet! An Australian women may have just set the bar. Emma Marsh coughed up $377 to save her pet: a goldfish. The tiny 0.4 ounce goldfish, Courage, mistook a stone for a hearty meal and sucked it in so hard it could not spit it out. Courage was rushed to the vet where Emma was faced with a hard choice: let natural selection take its course or pay up for an expensive aquatic operation complete with anesthetic. She chose the operation paying 4,166% the value of a new goldfish to save Courage (a new gold fish cost $9). I’m sure Emma is hoping Courage has a memory so as not to exhibit so much courage in attempting to eat such a grandiose meal?