All of us at Trading Advantage would like to wish all of you a very Happy (and safe) New Year! We had a wonderful time meeting all of our new clients, while continuing to educate everyone whether they thought they were beginners or old souls. We certainly believe that 2018 will be even better.
Staying with yesterday’s theme of economic data, today we will look at the Chicago PMI and more.
The Chicago PMI is a diffusion index, which means that anything above 50.0 is gaining strength, while anything below 50.0 is losing strength. From Econoday we read: Chicago’s PMI sample ends an enormously strong year at a 6-1/2 year high, rising 3.7 points in December to 67.6. Production is at a 34-year high while new orders are at a less spectacular but still very striking 3-1/2 year high. One area not improving, however, is employment which is losing ground as members of the sample are having difficulty finding candidates. Lack of employment growth is of special note and has been cited by the Federal Reserve’s Beige Book as a risk to continued business expansion. Signs of overheating are evident in this report which includes respondents from Chicago’s manufacturing and non-manufacturing sectors.
For the storage data week of Dec 22nd, the government said that natural gas supply declined by -112 billion cubic feet. This was the 6th weekly drawdown of supply, while demand is certainly increasing with the current arctic blast that is strangling the country. The price of “Nat Gas” certainly went up Thursday, but didn’t explode. Will that happen Friday, or next week, with the sub-zero temps?
Oil supply data were similar, with a wrinkle. Overall oil supply declined by -4.6 Mln barrels, but expectations were a drop of ~ 6.0 Mln barrels. Oil prices do not normally rise or fall with the temperature, unless the weather is really beyond normal temperatures…and heating oil supplies are falling.
Although it’s as cold as ice out there this week, the weekly change of “distillates” (heating oil) supplies were nearly 50% higher than expected. When this is reported, it should be heeded.