Diary of a Financier

Top Newsstuffs (April 13-19)

In Bookshelf on Sun 19 Apr 2015 at 05:22

Top reads from the week that was…

Macro

Rail traffic weekly (Week 14, 2015) | Association of American Railroads (AAR)
2015’s weakness feels like it culminates with growth grinding to a halt this week, now flat ytd — even worse since we should be seeing a faster snap-back as evidence of pent-up demand:
Weekly traffic: +1.2pp @ -0.3% yoyRailtraffic 2015 week 13
Growth rate: -0.1pp @ unch ytd
Carload groups: 6 of 10 posted gains for the week yoy
    Grain: +13.9
    Petroleum: +5.5
    Chemicals: +2.0
    Farm: +0.7
    Forestry: +0.3
    Metals: -3.2
    Motor vehicles/parts: -3.6
    Minerals: -3.9
    Coal: -8.2; a heavy drag on data
2014 & 2015 both share the hindrance of record snowfalls (2014 being nationwide & 2015 limited to the Northeast), and 2015 added the dislocation of California port closures — all of which have now been resolved.
Given the secular decline of coal volumes (the largest category), traffic doesn’t seem able to stand on its own without the tailwind of energy boom
#Bearish $IYT

Housing permits, starts & completions (March 2015) | US Government Census
After a surge in January followed by a reversion in February, March data disappoints, but growth remains solid ytd; I’d expect a stronger snapback due to pent-up demand fromHousing starts 2015.03 record snowfall in the northeast, LA port closures, and alleged “consumer stimulus” from lower energy prices:
Monthly housing starts:  +0.8pp @ -2.5% yoy, +2.0% mom @ 950k saar (miss 1.040m exp); prior month revised higher
Growth rate:  -4.5pp @ +3.9% ytd
#Bullish

Retail sales (March 2015) | US Government Census
Growth continues to decelerate & misses expectations due to prior month revision; overall disappointing since March should have shown a strong snapback due to pent-up demand from record snowfall in the northeast, LA port closures, and alleged “consumer stimulus” from lower energy prices:Retail sales (% change yoy, 2015.03)
Headline: -0.4pp @ +1.3% yoy, +0.9% mom (miss +1.0e); miss due to upward revision to prior month (+0.1pp @ -0.5% mom)
Core (ex-autos): -0.5pp @ +0.3% yoy, +0.4% mom (miss +0.7e); prior month revised up (+0.1pp @ unch mom)
#Bearish

Inflation: Consumer Price Index (March 2015) | Bureau of Labor Statistics (BLS)
While headline dips into deflation, core stays stable, nestling closer to the Fed’s 2.0% target; energy price collapse is still weighing on headline, which teeters on brink of deflation:
Headline CPI: -0.1pp @ -0.1% ttm, +0.2 mom (misses +0.3e)Core inflation- PCE, CPI, Median CPI, trimmed mean CPI 2015.02
    Energy: -18.3% ttm, +1.1% mom; comp & sequential drag stabilize
Core CPI (ex food & energy): +0.1pp @ +1.8% ttm, +0.2% mom (meets +0.2e)
#Neutral #Disinflation

Credit

Loans & leases in bank credit, all commercial banks (2015.04.15) | St. Louis Federal Reserve (FRED)
Lending growth remains at healthy trend, slightly above historical average:Loans & leases in bank credit, all commercial banks 2015.04.15
Weekly loan growth: +8.1% yoy
Expect continued expansion due to household & corporate balance sheets being most deleveraged since 1970s.
#Bullish #Releveraging $XLF $KBE $KRE

Sentiment

Investor sentiment survey (2015.04.15) | American Association of Individual Investors (AAII)
Sentiment ascends into neutral territory; neutral cohort remains outsized in a sign of healthy uncertainty:
Bull/Bear ratio: +22bps wow @ 1.41 (above 1.28 historical average, but below 1.80 extreme high)
Bullish: +3.4pp @ 32.1% (under both 38.9 avg & 45 extreme high)
Bearish: -1.4 @ 22.8% (under both 30.4 avg & 25 extreme low)
Neutral: -2.0 @ 45.1% (over 30.7 avg)
Measures respondents’ expectation for equity performance over next 6 months (through 10/2015).
[Previously: Retail allocations are neutral & Strategist sentiment remains a bullish signal]
#Neutral #Contrarian

Global fund manager allocation survey (April 2015) | Bank of America Merrill Lynch (BAML)
Allocations moderate slightly from last month’s extremes, paring the record flight of capital out of US into International markets:
Equity: -4.0pp @ +54.0% OW (over +50% extreme); has remained OW uninterrupted for longest period in history; still OW highest beta sectors too with $XLF exuberance & $XLE despondency
Bonds: unch @ -54.0 UW (over -60 extreme)BAML fund manager allocation survey- equity/fixed income/cash 2015.04
Cash: unch @ +4.6 OW (over +4.5 extreme)
Commodities: unch @ -20.0 UW
Regions:
    US: +7.0 @ -19.0 UW
    Europe: -14.0 @ +46.0 OW; reverts from alltime high
    Japan: -2.0 @ +38.0 OW
    Emerging Markets: +7.0 @ -18.0 UW
Surveys a sample of 200+ PMs with $700B+ in AUM, asking for portfolio positioning (overweight/underweight) relative to 60/30/10 benchmark.
#Contrarian
#Bearish: $ACWI  $XLF $XPH $EFA $EWJ $DXY
#Bullish: $AGG $IWV $XLE $XLB $EEM $DBC

Interests

Hundreds of Russian banks are about to collapse | Macro Advisory Consulting
“Hundreds of Russian banks have no choice but to close down, merge or be acquired by larger rivals as a result of mismanagement… [when] bad loans climb from 9.5% to about 15% of total assets.”
Russia has 820+ lenders, which is far too many, and regulators might revoke licenses and force consolidation until that number reaches 200-300.
$RSX #Bankruptcy

–Romeo

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  1. […] (+): Fund manager sentiment & allocations are at neutral levels. Retail investor allocations & sentiment are also average, with a swelling neutral cohort […]

  2. […] performance over next 6 months (through 10/2015). [Previously: Retail allocations stay neutral, Fund manager allocations bullish for US equities & Strategist sentiment remains a bullish signal] #Bullish […]

  3. […] performance over next 6 months (through 10/2015). [Previously: Retail allocations stay neutral, Fund manager allocations bullish for US equities & Strategist sentiment remains a bullish signal] #Bullish […]

  4. […] expectation for equity performance over next 6 months (through 11/2015). [Previously: Fund manager allocations bullish for US equities & Strategist sentiment remains a bullish signal] #Bullish! […]

  5. […] loans finally repair (-26bps @ 11.06%) [Previously: Margin debt at exuberant extremes again & Loan growth healthy] #Neutral #Releveraging #Private […]

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