Stocks are at their highest levels of the year (SPY, SPX, DJI, IXIC, JPM, CAD, USO, WTI, OIL, VDE)

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Stocks rallied on Wednesday to close near their highest levels of the year.

First, the scoreboard:

• Dow: 17,908.3, +187, (+1.1%)
• S&P 500: 2,082.4, +20.7, (+1%)
• Nasdaq: 4,947.4, +75.5, (+1.6%)
• WTI crude oil: $41.50, -1.6%

US economy

It was not a great day for American economic data.

The March retail-sales report out on Wednesday morning showed that sales fell 0.3% compared to last month, an unexpected drop as economists had forecast a 0.1% increase in sales against February.

Much of this drop was attributable to a 2.1% decline in auto sales, though across the board this was a disappointing report with clothing stores, restaurants, and non-store retailers seeing declines in March. Building materials, however, were a bright spot and sales of these goods increased 1.4% in March.

Following the report, Chris Rupkey at MUFG said, “Going into today we already knew that car & light truck sales fell 5.2% to a 16.5 million annual rate in March from 17.4 million in February. Today’s report is old news and not the harbinger of hard times or recession ahead. Who keeps asking about a recession anyway?”

Speaking of recessions — or not-recessions — the Atlanta Fed’s latest GDPNow tracker shows that first-quarter growth is expected to now come in at 0.3%. So, not a recession, but not great.

Atlanta Fed

The Atlanta Fed’s measure, closely tracked for its accuracy in forecasting the first estimate of GDP growth, declined to as low as 0.1% last week after having earlier forecast economic growth of more than 2% to start 2016.

Also in the economy on Wednesday, we got inflation data from the producer price index, which fell 0.1% in March against expectations for a 0.2% increase. The latest reading of consumer prices — a more widely followed reading on inflation — will cross the wires on Thursday morning.

The Federal Reserve also released its latest Beige Book on Wednesday afternoon, a collection of anecdotes from business leaders across the country on the health of the US economy. The big takeaway is that wage growth is solid.

Oil

After rallying on Tuesday, crude-oil prices declined a bit on Wednesday.

The Tuesday rally was triggered by reports that Saudi Arabia and Russia agreed to freeze production, with this news coming ahead of a meeting on Sunday between OPEC and non-OPEC oil giants in Doha.

On Wednesday, however, Russian energy minister Alexander Novak confirmed that talks took place but said a decision would not be announced beforehand. So, we’ll see: Oil rumors are perhaps the purest form of rumor left in the global business press.

But a funny thing happened in oil markets on Wednesday, as Brent crude oil, the international benchmark, slipped into a modest backwardation. Which, in English, means that futures contracts for oil were less expensive than the future expected price of oil.

This is basically a normal market — or normal for folks who are long on oil prices — but is a big reversal from what we’ve seen for most of the last year or so, which is a market in contango.

We get into contango a bit here, but it’s simply the opposite of backwardation. Investors are willing to pay more for a futures contract than what the actual expected price of a good will be at that point in time.

Reuters’ John Kemp noted that Brent quickly moved from contango into backwardation over the last two weeks and wrote that given we’re still in an oil market that is oversupplied — which means you’d expect prices to remain low — contango should persist. Except, it hasn’t.

“The question,” Kemp writes, “is what is causing this sudden tightness in the nearby Brent spread? Is it the arrival of the North Sea maintenance programme? A short squeeze? A shift in the (expected) supply-demand balance? Or some combination of all these factors and others?”

For what it’s worth, Credit Suisse wrote in a note to clients on Wednesday that indicate global oil production ex-Saudi Arabia has finally started to slow down. Maybe there’s your relief.

Coal

The world’s largest privately owned coal producer, Peabody Energy, has filed for bankruptcy protection.

The filing comes after a decline in coal prices left it saddled with debt in the wake of an expansion into Australia. This filing marks the largest energy-related bankruptcy since the oil bust that began in the middle of 2014.

Peabody CEO Glenn Kellow said on Wednesday, “This was a difficult decision, but it is the right path forward for Peabody.”

Of course, as Bob Bryan notes, this filing is merely the manifestation of a long-term decline in the use of coal, which has gone from providing around 50% of the US’s electricity 15 years ago to less than a third today. And as it gets hit by the twin disruptions of regulations and cheap natural-gas prices, coal is, in a word, doomed.

Facebook

Facebook is a source of fascination and hatred for not only those in digital media, but anybody with an internet connection.

This week the company held an event in San Francisco that was for developers, but also the media and public. The big news out of this was Facebook CEO Mark Zuckerberg laying out his 10-year vision for the company.

It looks like this:

Facebook

Which sort of looks like Facebook wants to be everything to and for you. Which is true. So the point is that Facebook is still called a social network, but it’s now really a platform.

A platform to buy stuff, sell stuff, keep in touch with family, friends, coworkers, and so on. And in the media it’s a platform to get your stuff distributed and, increasingly, get paid for that distribution!

Of course, though, things are complicated.

Writing more clearly and detailed than me on the topic in the last day have been Ben Thompson at Stratechery and Nitasha Tiku at BuzzFeed. You should read them.

But what media types are grappling with now is how to distribute content, how to get paid for that content, and how the relationship between publishing platforms like your website, Facebook, Snapchat, and others plays out. What Facebook made clear on Tuesday by introducing things like chatbots is that it expects users will interact with content inside Facebook’s apps and outside its most hallowed product: the News Feed. And the company will continue to refine that experience.

Things like Facebook Instant Articles, in which a publisher posts something directly to Facebook, thus keeping users on the website rather than redirecting them elsewhere, are the first iteration of this, but it’s clear the integration will get deeper. As Tiku noted, Zuckerberg said on Tuesday that he can now make a call to 1-800-FLOWERS from inside Facebook Messenger without literally calling 1-800-FLOWERS: Messenger will do it for you.

So then you can imagine sharing, reading, commenting on content of all kinds inside Messenger, VR headsets, the News Feed, and so on.

As Thompson notes, though, this makes sense for a company that has become a phone book of sorts, a utility that is jam-packed with information about people, information we want to share and acquire for a very long time.

But the question is how to make money with this service, and how to compensate users that provide the information — which is increasingly becoming companies like Business Insider instead of individuals.

As Thompson writes, “The truth is that Facebook chose its path way back in 2004, and cemented it in 2006: it was the place you publicly shared your identity with the world, and you had best take care exactly what that identity was.” And increasingly this is something companies more than individuals are grappling with, though it is still the individuals — and their information — that power the Facebook engine.

This all might be more confusing than concrete, but I find it interesting.

Additionally

Walmart expands online-grocery pickup to eight more cities. I know readers of this space know I love Amazon, but don’t sleep on Walmart.

Dish’s skinny bundle Sling TV has a new skinny bundle.

US regulators want to ban Elizabeth Holmes from Theranos.

Verizon CEO Lowell McAdam calls Bernie Sanders’ rhetoric “contemptible.”

Bernie Sanders welcomes this contempt.

Kobe Bryant’s last game is tonight and The Golden State Warriors are one win away from 73 wins, which would be a new NBA single-season record.