Like A Rock Sinking Into Troubled Waters

Well, natural gas was up today.

All major stock indices were down from Asia, to Europe to New York. The NASDAQ seemed as if it were going to make it into the green zone as a result of positive developments in biotech issues but gravity proved to be too much for it. As of 3:30, the NASDAQ is also in negative territory.

Crude oil continues to be in the depths of a slump at prices not seen since the bad old days of 2009 and the Great Recession.

Brent North Sea briefly fell below $40 per barrel. West Texas Intermediate is half between $37 and $38. These are rock bottom prices that are sitting right on the edges of the “cost-to-produce-and-deliver” level.

Can the prices go lower? Sure. They can go to $32 or $33. It ought to be noted that some Canadian crudes are already trading at $24 per barrel, although those are of inferiority to the two world standards, Brent and WTI.

We won’t keep you in suspense. Natural gas rose about a quarter of a percent on the day. Whoopee. In April of 2011 nat gas was trading at $6.60. Today it will close just above $2.00.

Energy is weighing heavily on the equities, and it is not only the ripple effect we described yesterday that is damaging companies. (We said: “Start with machinery, industrial construction and extraction engineering and finish with transportation and vehicle manufacturing and you have the simple snapshot of how low prices unsettle the stock markets.”)

Some investors and traders are beginning to wonder if the slack demand in all petroleum products indicates a mini-recession within the recovery we have been hoping would be much more robust.

Equities in China closed in the red as November trade data again showed weakness. Exports fell by a worse-than-expected 6.8% year-on-year. That marks the fifth straight month of declines. Imports, meanwhile, were down 8.7% compared to last year. There was, nevertheless, a trade surplus of $54 billion.

Gold looks to finish higher, due mostly to dollar weakness, a factor that will be short lived. It is up about 0.30%.

The other precious metals were thrown back, though, with platinum again getting the worst of it as it receded over 1.00%.

On top of everything else, we are now just one week away from the opening of the Fed’s December meeting during which most analysts believe a rate liftoff will occur.

However, like so many other aspects of life, there are outliers who fervently believe that Janet Yellen et al will put off a hike one more time.

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Wishing you as always, good trading,