Diary of a Financier

Top Newsstuffs (November 17-23)

In Bookshelf on Sun 23 Nov 2014 at 05:19

I’ll be gone ’til December.  Top reads from the week that was…

Macro

Rail traffic weekly (Week 46, 2014) | Association of American Railroads (AAR)
Soft sequential growth after last week’s big deceleration keeps Q4 volumes under GDP’s ytd trend (+2%), although it’s still comping off a high yoy base that started the YE13 rally:
Weekly traffic: +0.3pp @ +1.4% yoy
Growth rate: -0.1pp @ +4.3Rail traffic weekly 2014.11.20% ytd
Carload groups: 4 of 10 posted gains for the week yoy
    Minerals: +9.6%
    Metals: +5.5
    Petroleum: +4.7, multiyear boom continues succumbing to $CL_F price collapse
    Coal: -1.6
    Chemicals: -2.0
    Motor vehicles/parts: -2.1
    Forestry: -3.6
    Grain: -3.9
#Bearish #Latent indicator $XLE $USO $XLB $KOL $XME $XLI

Inflation: Consumer Price Index (October 2014) | Bureau of Labor Statistics (BLS)
Inflation beats expectations again, but stays below Fed’s 2.0% target:
Headline CPI: unch @ +1.7% yoy, unch mom (beats -0.1e)
    Energy: -1.6% yoy, -1.9% mom; drag continues
    Food: +3.1% yoy, +0.1% mom
Core CPI (ex food & energy): +0.1pp @ +1.8 yoy, +0.2% mom (beats +0.1e)
#Neutral

Fundamentals

Valuation metrics: S&P 500, Russell 2000, and select sectors (2014.11.13) | Philosophical Economics
Broad index valuation multiples have surpassed historical averages, but relative valuations remain cheap.  In aggregate, these are a bullish signal, considering the context of ZIRP/TINA & the financial crisis’ skewing of historical average earnings:SPX valuation metrics 2014.11.10RUT valuation metrics 2014.11.10
Valuation multiples: bearish/overvalued (includes ttm PE, fw PE, PB, PS, P/EBITDA, EV/EBITDA)
Relative valuations: bullish/undervalued (includes inverse of all multiples less 10y Treasury yield e.g. earnings yield – bond yield)
[Previously: SPX’s substantial return after fair value & CAPE and valuations in context]
#Bullish #There Is No Alternative $SPY $IWM $TNX

Sentiment

Investor sentiment survey (2014.11.19) | American Association of Individual Investors (AAII)
Sentiment moderates, but remains at exuberant extremes after surprisingly countercyclical confidence in the face of the September/October’s double-dip internal correction, which has me worried that retail investors are getting too complacent:
Bull/Bear ratio: -94bps wow @ 2.06 (above 1.28 historical average & 1.8 extreme high)
Bullish: -8.8pp @ 49.1% (over 39.0 avg & 45 extreme high)
Bearish: +4.5 @ 23.8% (under 30.5 avg & 25 extreme low)
Neutral: +4.3 @ 27.1% (under 30.5 avg)
Measures respondents’ expectation for equity performance over next 6 months (through 5/2015).
[Previously: Recent volatility increases retail’s willingness to buy, Retail allocations are average & Strategist sentiment remains a bullish signal]
#Bearish #Contrarian

Global fund manager allocation survey (November 2014) | Bank of America Merrill Lynch (BAML)
Procyclical changes in positioning, as risk exposure remains slightly light and Japanese bullishness spikes.
Net portfolio positioning of global PMs (overweight/underweight relative to 60/30/10 benchmark):
Equity: +12pp @ +46% OW (below +55% extreme)
Cash: -14 @ +13% OW (above 4.5 extreme)
Europe: +4 @ +8% OW; but is the region most likely to UW in 2015
Japan: +13 @ +45% OW; most bullish since 2005
Commentary:
“Deflation is the biggest risk in 2015… with Eurozone deflation the greatest tail risk.”
[Previously: Margin debt back near record extremes]
#Neutral

Interests

New York City to offer free WiFi starting in late-2015 | Re/code
NYC Mayor Bill DeBlasio is fulfilling his promise to bring free, municipal broadband to all citizens and tourists with “LinkNYC” WiFi, which will cost taxpayers nothing due to $500mm cumulative revenue forecast (2015-28) from advertising.
Kiosks known as “Links” will replace antiquated pay-phones and provide the following features:
1. Wireless internet router
2. Free phone calls to anywhere in US
3. Touchscreen tablet for tourists & public services
4. Advertising
$XLK

Scientists create flash storage within a single molecule | Gizmodo
Whereas we currently store computer/software data by etching onto hardware disks, scientists were able to apply a chemistry-based proof-of-concept:
“An international team of researchers has managed to turn a single molecule into a flash storage device. The whole device is actually three molecules. Two of those hold electrons that act as storage, and they live inside of the third, a nanometer-wide metal oxide molecular cage… the researchers used tungsten as the cage and selenium trioxide molecules holding extra electrons for the storage…
“They were able to store data in the device for 336 hours but didn’t test any longer durations…
“Setting the device and writing data took tenths of seconds and milliseconds. To compete with existing flash storage devices, this molecular monster would need to get much faster. Researchers say they can theoretically bring those speeds down to picoseconds or less.”
#Cloud #Biotechnology #Hard drive

–Romeo

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  1. […] capita (Q3): +3.1% (-0.4pp); 9.3% below LT regression trend [Previously: Advanced estimate & CPI inflation @ 1.8% core] […]

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