Good morning. I sure hope it is for you because yesterday was another really, really lousy day for our 401K’s. The Dow lost 238 points, 1.4%, to 16,805, the S&P 500 dropped 26, 1.32%, to 1,946 and the Nasdaq ended down 71 points, 1.59%, to 4,422. All material losses. For well over a year I’ve mentioned the bull market we’ve been in since ’09 has lasted well past historical norms and a correction was coming. The only question was when (if I had known that I wouldn’t be writing to you right now!) Well it’s finally here, at least for the Russell 2000 which is one of the broadest indexes and closely watched for macro trends. Yesterday the index posted a 10% loss from its high in July which means it officially entered into a “correction.” The decline in equities isn’t just emotional but is supported by fundamentals, mostly from across the pond. Europe’s economy is steadily worsening evidenced by data released yesterday. Markit’s PMI index for the eurozone fell to 50.3 in September from 50.7 in August which, although is still above the important 50 figure representing expansion, has been steadily decreasing and is at its lowest level in the past year. Not enough evidence? How about Germany, the largest economy of the eurozone, and its manufacturing PMI falling to a 15 month low. Now one might point to the fact unemployment has fallen in countries such as Greece, Spain and Portugal but going from 25% to 22% is nothing to write home to mom about. These are depressionary levels. The ECB’s policy committee meets today and this may be the most important meeting of the year for Mr. Draghi & Company. The “battle” shall be whether further expansionary policies are needed which are vehemently opposed by Germany as well as possibly the Finnish, Austrians and Dutch and vehemently supported by France, Spain, Greece, Portugal and Italy. The French are so adamantly opposed to the current austerity measures put upon it by the “Troika” that in France’s 2015 budget released yesterday they said they have no intention of complying with the requirements set by the European Fiscal Compact of 2012 and that France “rejects austerity.”

Domestically there was some important economic data released. ADP’s report showed the U.S. added 213,000 new jobs in the private sector up from August’s 202,000 and greater than Wall Street’s estimate of 205,000 so this was supportive of equities. Being that tomorrow the Labor Department releases its all-important jobs report for September the market always looks to ADP’s report for guidance. Offsetting this news though was The Commerce Department’s report showing construction spending fell 0.8% in August from July. Also, the Institute for Supply Management reported its purchasing managers’ index fell 2.4 points to 56.6 for September. Boss of these reports were worse than estimates.

So after the recent multi-day carnage where are we this morning? Nowhere, that’s where with Dow futures down 3 points. I mean, after yesterday’s big sell off we can’t even get a dead cat bounce?! Hmmm.

Oil closed lower again with WTI falling 43¢ to $90.73 and Brent down 51¢ to $94.16. WTI is now trading at a 22 month low and Brent is at a 25 month low. Multiple factors are weighing on crude prices including ample supply, flat to declining global demand and the strength of the U.S. dollar. Taking these one at a time, OPEC this week released production data from its countries and 8 of the 12 showed increases in production from August to September and the other 4 were flat to very marginally lower. With respect to global demand, re-read the first paragraph and then add in that China’s economy (#2 in the world) is showing less growth and you have your answer. Finally, the U.S. dollar is the strongest it’s been in 6 years vs. the Yen and 2 years vs. the euro making all commodities priced in U.S. dollars more expensive (as well as our exports).

This morning? WTI continues to get hammered being down $1.05. You oil producers can thank the Saudi’s. Yesterday Mr. Ibrahim as-Muhanna, the Saudi Arabian Deputy Energy Minister, said “We will respond to our customer’s needs [and] that is why we are able to market about 7 million bpd all over the world, and we could easily market more if our customers or we need to do so.” It was the phrase “or we need to do so” that sent the bulls fleeing. Why? Because you can interpret that phrase as the Saudis have no intention of giving up market share further evidenced by the cut in their posted price earlier this week for crude to their clients for next month’s deliveries. How’s it feeling Mr. Putin?!

After hitting a 3 month high on Tuesday natural gas backed off yesterday falling 9.8¢ to $4.023. The $4.17 – $4.18 area once again was strong resistance and when traders couldn’t take it through that level short term selling came in. Today is EIA storage report day with an expectation of a 108 Bcf injection. Not an immaterial sum. This is more than last year’s 99 Bcf injection and far greater than the five year average of 85 Bcf. So why is natty near 3 month highs? Because the bears are a tad scared right now with forecasters predicting a colder than normal winter for the upper Midwest emphasized by the early cold shot in the forecast below. This morning natty is down 4.6¢ Have a good day.