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08Dec2016 Market Close: Wall Street Closes Higher, But Not Without Pause For Indicators That Spell CAUTION In Capital Letters

Written by Gary

Major U.S. stock indexes climbed again today and set fresh record highs as a month-long rally following the presidential election of Donald Trump rolled on. Market indicator, Shiller "cyclically adjusted price-to-earnings ratio" (CAPE), hits extreme levels last seen before plunges in 1929, 2000 and 2008.

Todays S&P 500 Chart

The Market in Perspective

Here are the headlines moving the markets.

Wall Street continues rally to new record

NEW YORK (Reuters) - Major U.S. stock indexes climbed again on Thursday and set fresh record highs as a month-long rally following the presidential election of Donald Trump rolled on.

U.S. jobless claims drop from five-month high

WASHINGTON (Reuters) - The number of Americans filing for unemployment benefits fell from a five-month high last week, pointing to labor strength that underscores the economy's sustained momentum.

Exclusive: Bangladesh panel finds insiders negligent in central bank heist

DHAKA (Reuters) - A Bangladesh government-appointed panel investigating the cyber-heist of $81 million from its central bank in February found five officials at the bank were guilty of negligence and carelessness, the head of the panel told Reuters on Thursday.

DuPont CEO Breen says Trump win unlikely to impact Dow deal

BOSTON (Reuters) - Dupont Chief Executive Ed Breen said on Thursday the incoming administration of U.S. President-elect Donald Trump is not likely to have an impact on his company's planned merger with rival Dow Chemical.

Lower for longer, ECB scales back asset buys

FRANKFURT (Reuters) - The European Central Bank trimmed back its asset buys in a surprise move on Thursday but promised protracted stimulus to aid a still fragile recovery, and dismissed any talk of tapering the program away.

U.S. SEC enforcement chief Ceresney to depart at year-end

WASHINGTON (Reuters) - Andrew Ceresney, U.S. Securities and Exchange Commission's policeman of Wall Street, will be departing the agency at the end of December, joining other top officials who are leaving before Donald Trump is sworn in as president in January.

Only five non-OPEC producers so far attending talks to widen output cut

LONDON/DUBAI (Reuters) - Only five of 14 non-OPEC oil producers have agreed so far to meet the group on Saturday for talks aimed at widening a deal to reduce output, casting doubt on whether OPEC will secure the full cuts it is seeking, two OPEC sources said.

Daimler to become 2016's biggest luxury car maker - CEO

FRANKFURT (Reuters) - German carmaker Daimler is to become this year's biggest and most profitable luxury car maker, its chief executive said on Thursday.

U.S. household net worth rose to $90.2 trillion in the third-quarter: Fed

WASHINGTON (Reuters) - The net worth of U.S. households increased in the third quarter as U.S. stock prices and real estate values continued to flourish, a report by the Federal Reserve showed on Thursday.

Presenting SocGen's "Most Frightening Credit Chart"

"I sometimes feel like 'The Grim Reaper', scouring the research savannah in a ghoulish quest to harvest bad news with a forceful sweep of my scythe. Imagine then my perverse delight when our credit team produced what is one of the scariest charts I have seen for a very long time. Markets shrugged off the Brexit vote in a couple of days. They shrugged off Donald Trump's election in a single day. They shrugged off the Italian Referendum result in a couple of hours. Heck, in this mood they would shrug off an alien invasion of planet Earth. But global political risk is now at such elevated levels that investors must surely be on another planet."

- Albert Edwards

Has the reflationary blow to bond markets from "Trumpflation" and the euphoria in global equities tempered Soc Gen's Albert Edwards' decades long "Ice Age" bearishness? Not a chance, as he explains in his latest note "Presenting our credit team's most frightening chart". In contrast, Edwards admits to the "perverse delight" at his discovery of the aforementioned chart which reassures him that global risk is at such elevated levels that "investors must surely be on another planet."

While our take has generally been that it's central bankers that are on another planet - the rest of us merely forced to play on it - we know what he means.

The chart below was created by Edwards' colleague in EM credit, Guy Stear, who the former describes as "unlike this author he is a normal, well-adjusted person not prone to uncontrolled outbursts of bearish hyperbole. And people actually like him!" It shows the comparison between Global Economic Policy Uncertainty (EPU) and Global Credit Spreads.

The EPU is the work of three American academics, Messrs ...

From 65 Days To 9 Hours - The Incredible Shrinking Life Of Market Crashes

The opportunity to buy the crash-event dip has diminished dramatically in the last year.

As JPMorgan's Marko Kolanovic notes, the market's response to recent major catalysts has become progressively shorter (as measured by time to recovery)

It appears the machines (and the humans) are learning... this is easy! At what point do the central bankers decide this kind of one-sided coin tossing is not 'safe'.

Tweaks but No Tapering From ECB

Markets have no excuse for a 'taper tantrum.' ECB purchases should continue for a long time yet.

Infrastructure Investors Are Out of Tune With Markets

An international consortium of major infrastructure investors is paying a punchy price for the U.K.'s gas-distribution network.

Rust-Belt Debt Hangs Around Beijing's Neck

Good times won't last in China's worst-off, old-economy provinces dominated by steel and coal.

The Tell: Trump won't be a 'dangerous' president, says Goldman's CEO

Fears about a Donald Trump presidency are mostly misplaced, according to Goldman Sachs Group CEO Lloyd Blankfein in an interview published in the German newspaper Handelsblatt.

The Ratings Game: Will denim steal Lululemon's thunder?

Some analysts say Lululemon could suffer from the end of the athleisure trend, but others think the third-quarter success will continue.

The Tell: Trump has unleashed the stock market's 'animal spirits'

Steve Barrow, currency and fixed-income analyst at Standard Bank, said in a Nov. 30th research note "whatever fears might exist in some quarters about Trump's win, some sort of animal spirits might have been spurred."

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To contact me with questions, comments or constructive criticism is always encouraged and appreciated:

gary@econintersect.com

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