Little economic or business news sent the major averages into the final hour mixed to begin the week. That said the 3-ring circus that has become the lamestream media trying to hold on to its credibility with increasingly bizarre and contradictory behavior is second only to the growing chaos of the post Trump election win as the status quo becomes increasingly alarmed over loss of control and ever more desperate in its attempts to retain it.
Market valuations have reached painfully high levels as the 3 standard of deviation post Trump rally has pushed the current 12-month trailing price-to-earnings ratio of the S&P 500 to 25.95x, while the forward 12-month price-to-earnings is over 17x, according to FactSet research. The Case/Schiller P/E ratio hit 27.9 on Friday. Tobin’s-Q has also reached painfully high levels. To put all that into perspective stocks have reached valuations similar to that seen in 1929, the years just before the Dot-Com bust and of course 2007 just before the most recent financial crisis.
Total consumer debt has also been on a tear of late as well with the 3rd quarter up 63 billion on strength in auto and student loans to a grand total of 12.35 trillion dollars. In comparison, non-household debt peaked at about 2.7 trillion in late 2008 as the financial crisis was getting underway, currently it is north of 3.5 trillion. As one would expect with crushing debt levels defaults are on the rise particularly with the lower credit scores, aka sub-prime.