Diary of a Financier

Top Newsstuffs (December 15-21)

In Bookshelf on Sun 21 Dec 2014 at 06:35

Top reads from the week that was…

Macro

Rail traffic weekly (Week 50, 2014) | Association of American Railroads (AAR)
Another acceleration continues unprecedented year-end rally, led by ytd laggards; although traffic seasonally wanes during YE holidays, yoy comps have a relatively high base from YE13 rally:Weekly railtraffic 2014 week 50
Weekly traffic: +1.4pp @ +8.4% yoy
Growth rate: +0.1pp @ +4.4% ytd
Carload groups: 10 of 10 posted gains for the week yoy
    Minerals: +28.8%
    Metals: +24.4
    Petroleum: +23.0, nice bounce after multiyear boom has been going-out with a whimper amidst oil price crash
    Grain: +17.1
    Coal: +7.8
    Chemicals: +6.7
    Farm/food: +5.8
    Motor vehicles/parts: +5.2
#Bullish! #Latent indicator $XLE $USO $XLB $KOL $XME $XLI

Inflation: Consumer Price Index (November 2014) | Bureau of Labor Statistics (BLS)
Inflation meets expectations, staying below Fed’s 2.0% target; important to focus on core measures, as energy price collapse is weighing on headline:
Headline CPI: -0.4pp @ +1.3% yoy, -0.3% mom (miss -0.1e)
    Energy: -4.8% yoy, -3.8% mom; drag worsens
    Food: +3.2% yoy, +0.2% mom
Core CPI (ex food & energy): -0.1pp @ +1.7 yoy, +0.1% mom (meet +0.1e)
#Neutral

Fundamentals

S&P 500: Energy sector depressing forward Revenue & Earnings estimates (2014e & 2015e) | Ed Yardeni (Dr. Ed’s Blog)
Analysts’ SPX consensus forecasts have undergone their habitual downward revisions in Q4, due largely to slashing of energy sector estimates:SPX forward Revenue & EPS 2014.12.11
FY14e:
    Rev: -0.5pp @ +3.4%
    EPS: -0.9pp @ +7.0%
FY15e:
    Rev: -1.2pp @ +3.0%
    EPS: -3.1pp @ +9.3%
#Bullish? #Lowering the bar $XLE

Sentiment

Investor sentiment survey (2014.12.17) | American Association of Individual Investors (AAII)
Sentiment finally cracks, dropping below exuberant extremes after months of alarming complacency and uncharacteristic countercyclicality that weathered multiple market events ytd (i.e. 2 internal corrections & energy bear market); ironically, this mini-capitulation coincided with SPX’s bounce off the bottom of a 5% drawdown, missing the opportunity to buy-the-dip:
Bull/Bear ratio: -58bps wow @ 1.44 (over 1.28 historical average, but under 1.8 extreme high)
Bullish: -6.3pp @ 38.7% (over 39.0 avg, but under 45 extreme high)
Bearish: +4.5pp @ 26.9% (under 30.5 avg, but over 25 extreme low)
Neutral: +1.7pp @ 34.4% (over 30.5 avg)
Measures respondents’ expectation for equity performance over next 6 months (through 5/2015).
[Previously: Retail asset allocations remain neutral, Fund managers report average risk exposures, Strategist sentiment remains a bullish signal & Recent volatility increases retail’s willingness to buy]
#Neutral #Contrarian

Interests

Video interview: Marc Andreessen on “Big Breakthrough Ideas and Courageous Entrepreneurs” | Stanford Graduate School of Business (GSB)
Andreessen articulates his thesis about the revolution underway in the news business (43:00).
Also discusses:
1. Tech is not in a bubble: we’re over the boom/bust of the “installation phase” & in the “deployment phase” [or as I’ve described it, the “technology revelation“]
2. Assessing entrepreneurs
3. Views on leadership
[See also: 10 popular business videos of 2014 & Bullish on the future of the news business]
#Startup #Venture Capital #VC

Email exchange: Snapchat CEO’s conversation thread with a Boardmember | Business Insider
Evan Spiegel (Snapchat CEO) shows shocking maturity in an email exchange with a Boardmember, discussing:
1. Financing/capital raises
2. Hiring/retaining talented employees
3. Facebook acquisition press leak
4. Tech 2.0 valuations
5. Monetization/revenue generation/long term plan
Emails were leaked as part of Sony hack.
#Leadership #Vision #Management #Startup

A comment on oil prices | Calculated Risk
The reason energy prices have crashed is fundamentals:Oil- supply & demand curves
The short term supply & demand curves for oil are very steep, so small changes in quantity of supply or demand cause large price moves… In the long run, supply and demand will adjust to price changes.”
$XLE $USO #Economics 101 #Economic Theory #Econometrics

Photos: 2014, the year in photographs | The Atlantic
“Residents of the besieged Palestinian camp of Yarmouk,Palastinian refugees in Syria (2014.01.31) queuing to receive food supplies, in Damascus, Syria, on January 31, 2014. At the time, a United Nations official called on warring sides in Syria to allow aid workers to resume distribution of food and medicine in a besieged Palestinian district of Damascus, devastated by Syria’s 3-year-old conflict.”

–Romeo

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  1. […] (-0.4pp); 9.3% below LT regression trend [Previously: Second GDP estimate & CPI inflation @ 1.7% core] […]

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