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04Jan2017 Market Close: Wall Street Closes Up, DOW Up 60 Points, Feds Very Hawkish, US Dollar Continues To Slide

Written by Gary

US markets close higher (SPY +0.6%) as Fed minutes shows central bank uncertain about the pace of interest-rate hikes. Gold holds ground at more than 3-week high after FOMC minutes and the Dollar retreats from 14-year high after FOMC minutes.

Todays S&P 500 Chart

The Market in Perspective

Here are the headlines moving the markets.

Fed policymakers agree Trump fiscal boost poses inflation risk

WASHINGTON (Reuters) - Almost all Federal Reserve policymakers thought the economy could grow more quickly because of fiscal stimulus under the Trump administration and many were eyeing faster interest rate increases, minutes from the central bank's December meeting showed.

Wall St. rises, Dow inches closer to 20,000

NEW YORK (Reuters) - U.S. shares ended higher on Wednesday after minutes from the Fed's December meeting showed policymakers were concerned that quicker economic growth under President-elect Donald Trump could require faster interest-rate increases to limit inflation.

U.S. December auto sales on pace for record high, led by GM

DETROIT (Reuters) - Sales of new cars and trucks in the United States likely set new records for December and the full year, automakers said on Wednesday, and investors bid up shares in the sector as strong consumer confidence and stable fuel prices bolstered the industry's outlook.

Exxon Mobil, Tillerson agree to cut all ties

(Reuters) - Exxon Mobil Corp and Rex Tillerson agreed to sever all ties to comply with conflict-of-interest requirements as the company's former chairman and chief executive awaits confirmation as U.S. secretary of state.

Trump to nominate Wall Street lawyer Clayton to lead SEC

(Reuters) - President-elect Donald Trump said on Wednesday he intends to nominate Walter "Jay" Clayton, an attorney who advises clients on major Wall Street deals, to lead the U.S. Securities and Exchange Commission.

Apple confirms $1 billion investment in SoftBank tech fund

(Reuters) - Apple Inc confirmed on Wednesday its plans to invest $1 billion in a tech fund being set up by Japan's SoftBank Group Corp .

Volkswagen CEO to stay away from Detroit auto show

BERLIN (Reuters) - Volkswagen chief executive Matthias Mueller will miss the Detroit auto show next week, the German carmaker said on Wednesday, amid uncertainty over its chances of settling a U.S. criminal investigation into its emissions scandal.

Deutsche Bank to pay $95 million to resolve U.S. tax case

NEW YORK (Reuters) - Deutsche Bank AG has agreed to pay $95 million to resolve a U.S. government lawsuit accusing the German bank of using shell companies to evade significant tax liabilities in 2000, according to court papers filed on Wednesday.

Boeing inches toward goal with $8.25 billion order from GE

(Reuters) - Boeing Co said on Wednesday it had received a firm order for 75 of its 737 MAX 8 aircraft, valued at $8.25 billion at list prices, from General Electric Co's commercial aircraft leasing and financing arm.

Fed Fails To Deliver Dow 20k But Bitcoin Hits Record High

"20,000 will be mine... oh yes, she will be mine..."

The post-Fed Minutes reactions were mixed initially

But perhaps the biggest news of the day was Bitcoin surged to record highs today... coming close to parity with gold...

NOTE - As stocks got hit in the last few seconds so Bitcoin also skidded

Another day, another cash open pump-and-dump in futures...

As "Most Shorted" stocks extended yesterday's afternoon rip...

Global Debt Hits 325% Of World GDP, Rises To Record $217 Trillion

While we eagerly await the next installment of the McKinsey study on global releveraging, we noticed that in the latest report from the Institute for International Finance released on Wednesday, total debt as of Q3 2016 once again rose sharply, increasing by $11 trillion in the first 9 months of the year, hitting a new all time high of $217 trillion. As a result, late in 2016, global debt levels are now roughly 325% of the world's gross domestic product.

In terms of composition, emerging market debt rose substantially, as government bond and syndicated loan issuance in 2016 grew to almost three times its 2015 level. And, as has traditionally been the case, China accounted for the lion's share of the new debt, providing $710 million of the total $855 billion in new issuance during the year, the IIF reported.

Joining other prominent warnings, the IIF warned that higher borrowing costs in the wake of the U.S. presidential election and other stresses, including "an environment of subdued growth and still-weak corporate profitability, a stronger (U.S. dollar), rising sovereign bond yields, higher hedging costs, and deterioration in corporate creditworthiness" presented challenges for borrowers.

Additionally, "a shift toward more protectionist policies could also weigh on global financial flows, adding to these vulnerabilities," the IIF warned.

"Moreover, given the importance of the City of London in debt issuance and derivatives (particularly for European and EM firms), ongoing uncertainties surrounding the timing and nature of the Brexit process could pose additional risks including a higher cost of borrowing and higher hedging costs."

For now, however, record debt despite rising interest rates, remain staunchly bullish and the equity market's only concern is j ...

Gold ETF Mechanics: An Infographic

Gold-backed Exchange Traded Funds (ETFs) have grown strongly in scale and popularity over the last decade and their combined gold holdings now surpass all but the largest central bank gold reserve holdings. However, its important to understand the mechanics of these gold-backed ETF investment vehicles and to appreciate what they can and can't provide to gold investors.

This infographic takes you on a tour of gold-backed ETFs and illustrates insights into how these products really work, including the following:

  • The contemporary gold holdings of the world's largest gold-backed ETF platforms
  • Why holders of gold ETFs are holders of units / shares, not gold holders
  • The characteristics and common objectives of gold-backed ETFs
  • How the world's largest gold ETFs support and perpetuate the opaque practices of the London Gold Market
  • The secretive vault network within which many large gold-backed ETFs allocate and store their gold in
  • How the amount of gold represented by an ETF unit erodes over time
  • The summary mechanics and infrastructure of many of these gold ETF vehicles

What Happens Next?

Remind us again - it's "Buy Low and Sell High?"

U.S. stocks have become too costly for mergers and acquisitions, according to Niels C. Jensen, chief investment officer at Absolute Return Partners LLP.

As Bloomberg reports, the U.K.-based investor cited the S&P 500 Index's ratio to earnings before interest, taxes, depreciation and amortization, or Ebitda, in a monthly letter published Tuesday...

"Interesting M&A deals are likely to be few and far between" with the price-to-Ebitda ratio at more than 11, he wrote. The indicator peaked at 11.35 as an Internet-driven bull market of the 1990s was ending... it's at 11.27 today!!

Slippery Logic to Russia's Oil-Cut Claim

Russia's pledge to cut output may have less impact on oil supply than the headlines suggest.

Envisioning a Fannie and Freddie Endgame

Fannie Mae and Freddie Mac can only be dealt with through a comprehensive solution that takes into account the interests of homeowners.

How Credit-Card Data Might Be Distorting Retail Stocks

Hedge funds and other big investors are relying on credit-card data to give them an edge, and that could be affecting trading in retailers.

How Trump-related uncertainty is bringing out the health-care stock bears

The latest analysis of changes in shorting activity shows growing number of bets that health care stocks will fall.

The Wall Street Journal: Hulu inks live-streaming deal for CBS content

Hulu struck a deal to license CBS Corp.'s broadcast network and cable channels for its forthcoming live-streaming service, adding to its lineup ahead of a highly anticipated launch in the coming months.

The investing insanity of trying to find the next Amazon

The company's stock has soared 38,155% in 20 years, but the ups and downs have been relentless, writes Michael Batnick.

Summary of Economic Releases this Week

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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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