The U.S. Energy Information Administration (EIA) released its weekly petroleum status report Wednesday morning. U.S. commercial crude inventories decreased by 5.2 million barrels last week, maintaining a total U.S. commercial crude inventory of 522.5 million barrels. The commercial crude inventory has moved down into the upper half of the average range for this time of year.Tuesday evening, the American Petroleum Institute (API) reported that crude inventories fell by 5.8 million barrels in the week ending May 5. API also reported gasoline supplies increased by 3.8 million barrels and distillate inventories decreased by 1.2 million barrels. For the same period, an S&P Global Platts survey of analysts had consensus estimates for a decrease of 1.8 million barrels in crude inventories, a decrease of 700,000 barrels in gasoline inventories and a drop of 800,000 barrels in distillate stockpiles.Total gasoline inventories decreased by 200,000 barrels last week, according to the EIA, and are now above the upper limit of the five-year average range. Total motor gasoline supplied (the agency’s measure of consumption) averaged over 9.2 million barrels a day for the past four weeks, down by 2.4% compared with the same period a year ago.

Platts oil futures editor, Geoffrey Craig, said:
One factor weighing on trader positioning is U.S. crude production, which continues to climb and offset the impact of OPEC-supply cuts.Even with crude futures trading around $46/b [per barrel], significantly below the $51/b-$55/b levels of January and February, some producers are already insulated from an ongoing downturn due to hedges placed earlier this year.The amount of crude processed by refiners hit a record high the week that ended April 21, and refinery utilization has stayed far above typical levels for this time of year.Analysts forecast a 0.1 percentage point drop in refinery runs for the latest reporting week to 93.2% of operable capacity. If confirmed, that would far exceed the rate from a year prior which stood at 89.1% of capacity.Crack spreads in April encouraged refiners to run at greater capacity, which pulled crude barrels from storage but also generated a quantity of products that the market must now absorbBefore the EIA report, benchmark West Texas Intermediate (WTI) crude for June delivery traded up about 1.6% at around $46.61 a barrel, and it rose to $46.94 shortly after the report’s release. WTI crude settled at $45.88 on Tuesday. The 52-week range on June futures is $43.76 to $57.95.Distillate inventories fell by 1.6 million barrels last week and remain in the upper half of the average range for this time of year. Distillate product supplied averaged 4.1 million barrels a day over the past four weeks, down by 0.7% compared with the same period last year. Distillate production averaged about 5 million barrels a day last week, down 100,000 barrels compared with the prior week’s production.


































For the past week, crude imports averaged over 7.6 million barrels a day, down by about 644,000 barrels a day compared with the previous week. Refineries were running at 91.5% of capacity, with daily input averaging 16.8 million barrels a day, about 418,000 barrels a day less than the previous week’s average.According to AAA, the current national average pump price per gallon of regular gasoline is $2.337, down three cents from $2.367 a week ago and down more than five cents per gallon compared with the month-ago price. Last year at this time, a gallon of regular gasoline cost $2.199 on average in the United States.Here is a look at how share prices for two blue-chip stocks and two exchange traded funds reacted to this latest report.Exxon Mobil Corp. (NYSE: XOM) traded up about 1%, at $82.32 in a 52-week range of $80.30 to $95.55. Over the past 12 months, Exxon stock has traded down about 7% and is down about 20.2% since August 2014, as of Tuesday’s close.Chevron Corp. (NYSE: CVX) traded up about 1.4%, at $106.54 in a 52-week range of $97.53 to $119.00. As of last night’s close, Chevron shares have added about 3.2% over the past 12 months and trade down about 21.3% since August 2014.The United States Oil ETF (NYSEMKT: USO) traded up about 2.4%, at $9.80 in a 52-week range of $9.23 to $12.45.The VanEck Vectors Oil Services ETF (NYSEMKT: OIH) traded up about 2.1%, at $27.91 in a 52-week range of $26.10 to $36.35.

One week ago, a malware attack known as WannaCry was launched and reportedly affected hundreds of thousands of computers worldwide. The malware encrypted files on an infected machine and then posted a ransom demand for $300. Upon payment of the ransom, the files would be decrypted and all would be well. The deadline for payment was seven days, and those seven days end Friday, May 19.Just before noon on Friday, some 311 payments totaling $94,437 have been made to the anonymous attackers. Not close to early estimates that costs could be in the tens of millions.

All along, advice from cybersecurity experts has been not to pay. For one thing, in most ransomware attacks, payment does not translate into recovered files.For another, a French security expert has published a free tool called Wannakey that, under certain circumstances, can retrieve the encryption. The Wannakey tool is available on Github, but it works only on computers that are running Windows XP and that have not been rebooted since the ransom message was displayed.

Overall, however, it appears that the damage from WannaCry will be limited. Cyber researcher Gary Warner noted in Dark Reading, the CryptoLocker ransomware collected $209 million in ransom fees in the first quarter of 2016. Warner also puts the latest attackin context:Sure, a handful of companies that didn’t patch their Windows systems got hit hard, but organizations that were broadly impacted were, in many cases, using outdated, unsupported computers that were not patched. … Remember that most of the ransomware that is actually being paid out is still being delivered by phishing email. Make sure that your employees know what to do when they see a suspicious email.

UBER RIDERS GIVE UP CARS

​RETAILERS VS AMAZON

GASOLINE PRICES MOVING UP

​ENERGY

The U.S. Energy Information Administration (EIA) released its weekly petroleum status report Wednesday morning. U.S. commercial crude inventories decreased by 5.2 million barrels last week, maintaining a total U.S. commercial crude inventory of 522.5 million barrels. The commercial crude inventory has moved down into the upper half of the average range for this time of year.Tuesday evening, the American Petroleum Institute (API) reported that crude inventories fell by 5.8 million barrels in the week ending May 5. API also reported gasoline supplies increased by 3.8 million barrels and distillate inventories decreased by 1.2 million barrels. For the same period, an S&P Global Platts survey of analysts had consensus estimates for a decrease of 1.8 million barrels in crude inventories, a decrease of 700,000 barrels in gasoline inventories and a drop of 800,000 barrels in distillate stockpiles.Total gasoline inventories decreased by 200,000 barrels last week, according to the EIA, and are now above the upper limit of the five-year average range. Total motor gasoline supplied (the agency’s measure of consumption) averaged over 9.2 million barrels a day for the past four weeks, down by 2.4% compared with the same period a year ago.

Platts oil futures editor, Geoffrey Craig, said:
One factor weighing on trader positioning is U.S. crude production, which continues to climb and offset the impact of OPEC-supply cuts.Even with crude futures trading around $46/b [per barrel], significantly below the $51/b-$55/b levels of January and February, some producers are already insulated from an ongoing downturn due to hedges placed earlier this year.The amount of crude processed by refiners hit a record high the week that ended April 21, and refinery utilization has stayed far above typical levels for this time of year.Analysts forecast a 0.1 percentage point drop in refinery runs for the latest reporting week to 93.2% of operable capacity. If confirmed, that would far exceed the rate from a year prior which stood at 89.1% of capacity.

Crack spreads in April encouraged refiners to run at greater capacity, which pulled crude barrels from storage but also generated a quantity of products that the market must now absorb.Before the EIA report, benchmark West Texas Intermediate (WTI) crude for June delivery traded up about 1.6% at around $46.61 a barrel, and it rose to $46.94 shortly after the report’s release. WTI crude settled at $45.88 on Tuesday. The 52-week range on June futures is $43.76 to $57.95.Distillate inventories fell by 1.6 million barrels last week and remain in the upper half of the average range for this time of year. Distillate product supplied averaged 4.1 million barrels a day over the past four weeks, down by 0.7% compared with the same period last year. Distillate production averaged about 5 million barrels a day last week, down 100,000 barrels compared with the prior week’s production.For the past week, crude imports averaged over 7.6 million barrels a day, down by about 644,000 barrels a day compared with the previous week. Refineries were running at 91.5% of capacity, with daily input averaging 16.8 million barrels a day, about 418,000 barrels a day less than the previous week’s average.

According to AAA, the current national average pump price per gallon of regular gasoline is $2.337, down three cents from $2.367 a week ago and down more than five cents per gallon compared with the month-ago price. Last year at this time, a gallon of regular gasoline cost $2.199 on average in the United States.Here is a look at how share prices for two blue-chip stocks and two exchange traded funds reacted to this latest report.Exxon Mobil Corp. (NYSE: XOM) traded up about 1%, at $82.32 in a 52-week range of $80.30 to $95.55. Over the past 12 months, Exxon stock has traded down about 7% and is down about 20.2% since August 2014, as of Tuesday’s close.

Chevron Corp. (NYSE: CVX) traded up about 1.4%, at $106.54 in a 52-week range of $97.53 to $119.00. As of last night’s close, Chevron shares have added about 3.2% over the past 12 months and trade down about 21.3% since August 2014.The United States Oil ETF (NYSEMKT: USO) traded up about 2.4%, at $9.80 in a 52-week range of $9.23 to $12.45.

The VanEck Vectors Oil Services ETF (NYSEMKT: OIH) traded up about 2.1%, at $27.91 in a 52-week range of $26.10 to $36.35.

​CRUDE INVENTORIES DECLINE

Fruit and vegetable farmers will take bold steps to tackle labor shortages that are expected to worsen under Trump's aggressive immigration policies. Farmers fear they will not be able to hire enough workers to harvest their crops.  Look for more farmers to expand production in Latin America. Costco and other big grocers are looking for growers in areas such as Mexico and Chile. Automation is sure to ramp up as cheap labor becomes more scarce and robot prices fall. Robots cost less than humans for some crops, such as lettuce.

US start ups are making headway on next generation nuclear reactors. New designs are smaller, cheaper, and safer than the current crop of reactors and are getting funding and R&D assistance from the government. They will also benefit from lessening opposition from some environmental groups who concede that cutting carbon emission requires nuclear power in the mix.  An effort by Ore based NuScale Power will be a critical test for the industry. The company could become the first to build a small modular reactor in the US. The plan calls for NuScale's reactor to be built in a factory, not at the power plant. If that approach works, it could pave the way for more inexpensive, scalable reactors. The company is partnering with the Utah associated Municipal Power Systems and hopes to win regulatory approval by 2020 to get a reactor running before 2030 A rebirth of the nuclear industry promises a big infusion of new jobs

RANSOM WARE




OUR

 GOAL IS                                                  SMOOTH  

​     SAILING

​THE ECONOMY 

One cloud looming over the economy: Small firms growing cautious about their prospects now that it is clear that a tax reform is not imminent.  Smalls have bee buoyed by optimism fueled by the Trump administration's promise to enact a business friendly tax overhaul, a plan stymied for now by political gridlock. Trump's regulatory roolbacks are broadly popular but taxes remain the biggest worry for most small businesses. Major tax overhaul is unlikely to pass this year. Smalls are not pulling back yet. Hiring and spending plans are still optimistic. They are dialing back their sales expectations which could start of downsized outlays on new workers or equipment if confidence continues to soar

​FARM LABOR

According to a new Reuters/Ipsos poll, some riders who use Uber and Lyft have given up their cars. Others will do so in the near future. The trend is bad news for car companies.

Reuters reports:

Nearly a quarter of American adults sold or traded in a vehicle in the last 12 months, according to a Reuters/Ipsos opinion poll published on Thursday, with most getting another car. But 9 percent of that group turned to ride services like Lyft Inc and Uber Technologies Inc as their main way to get around.About the same percentages said they planned to dispose of cars and turn to ride services in the upcoming 12 months.The researchers who did the work speculated that Uber and Lyft drivers could make up for those car owners who drop out of the buying market, but that is simply a guess.

Car companies face two new developments that could injure their futures. One is autonomous cars. The other is the growth of Uber and Lyft and their smaller competitors. The U.S. car market produced about 17 million car and light truck sales last year. That number is expected to drop slightly in 2017.Several car companies have begun alliances with Uber and Lyft. General Motors Co. (NYSE: GM) has started to lease its electric Chevy Bolt to drivers for the two services under a program called Maven Gig. The weekly price of the lease is $229, which includes insurance, maintenance and charging.

On the other hand, some car companies have plans to compete with Uber and Lyft. Ford Motor Co. (NYSE: F) recently hired Uber’s VP of Global Vehicle Programs, Sherif Marakby. He will be in charge of Ford’s autonomous and electric car operations.The Reuters/Ipsos poll shows that it will be difficult to stop the trend of defections from car ownership to shared services. The question is whether the large car manufacturers can come up with ways to increase revenue to offset this.

               DANIEL CULLINANE CPA                                                              Phone:          732-516-1648

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MAY NEWSLETTER 3

One of the features online e-commerce retailers like Amazon.com Inc. (NASDAQ: AMZN) have relied on to drive sales over the years was elimination of state sales taxes. As states have wised up to how much revenue they are losing, this benefit is disappearing.

One area where brick-and-mortar stores had an advantage is delivery time. Generally speaking, when a customer walked in and bought something, that same customer walked out with that item. E-commerce sites at best offered free standard shipping, which typically took several days for items to reach customers. Faster shipment methods added to the price and cut both the savings associated with buying online and the instant gratification of leaving the store with the goods under your arm.

Then Amazon introduced its Amazon Prime subscription service, offering free two-day delivery of most items ordered from the site. For an annual fee of $79 (now $99), free delivery times from Amazon were cut in half and, more important, customers seemed willing to live with that length of delay.

Where sales taxes were once the battlefield where traditional retail slugged it out with online stores, delivery options have now moved to the front lines. Traditional stores, both the big chains and the small businesses, have a variety of delivery options that they could offer, but the one where they may have the biggest edge is the one that has seen the least adoption so far.According to a report in eMarketer, a survey of retailers by the Boston Retail Group consultancy indicates that among the delivery options available to retailers the one that most have chosen to implement is “buy in-store, ship to home.” A full 62% have implemented this option, with about half saying it is working well and half saying it needs to be improved. Another 22% expect to implement this option within three years.

Same-day delivery has been implemented by just over a third of retailers (34%) and only 8% say it is working well.
The two options that drive foot traffic to the traditional retail stores are, not surprisingly, the favorites. Half of retailers have implemented “buy online, pick up in store” options and another 27% have implemented “reserve online, pick up in store” options.Wal-Mart Stores Inc. (NYSE: WMT), for example now offers a “Pickup Discount” on certain items that customers can buy online and pick up in the store. Wal-Mart also now offers free two-day delivery on orders totaling more than $35 and no annual membership fee is needed.

That move probably led to Amazon’s decision to cut its minimum order requirement for non-Prime subscribers from $49 first to $35 and then earlier this month to $25.The message here is that delivery options are important to customers, and that means those options are worth fighting for. If the billions that Wal-Mart is investing in e-commerce haven’t yet threatened Amazon significantly, the e-commerce giant is paying attention to the world’s largest retailer and, occasionally, playing defense.