Diary of a Financier

Top Newsstuffs (May 11-17)

In Bookshelf on Sun 17 May 2015 at 06:03

Top reads from the week that was…

Macro

Rail traffic weekly (Week 18, 2015) | Association of American Railroads (AAR)
2015’s weakness culminates with a dip into contraction; this feels even worse since we should be seeing a snap-back as evidence of pent-up demand; this report reaffirms my thesis that we won’t see that Q2 recovery in 2015:
Weekly traffic: -2.5pp @ -2.3% yoyRailtraffic 2015 week 17
Growth rate: -0.1pp @ -0.1% ytd
Carload groups: 4 of 10 posted gains for the week yoy
    Motor vehicles/parts: +8.9%
    Petroleum: +6.1
    Chemicals: +0.6
    Farm: -2.6
    Forestry: -3.9
    Minerals: -5.1
    Grain: -11.2
    Metals: -12.1
    Coal: -16.1; heavily skewing 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 (~40% of carloads makes it the largest category), traffic doesn’t seem able to stand on its own without the tailwind of energy boom.
#Bearish $IYT

Retail sales (April 2015) | US Government Census
Growth continues to decelerate & misses expectations due to prior month’s upward revisions; overall disappointing results, confirming a lack of pent-up demand from a weak Q1 and leaving the onus on May’s data to show evidence of “consumer stimulus” from lower energy prices:Retail sales (% change yoy, 2015.04)
Headline: -0.4pp @ +0.9% yoy, unch mom (miss +0.2e); miss due to big upward revision to prior month (+0.8pp @ +1.7% mom)
Core (ex-autos): -0.3pp @ unch yoy, +0.1% mom (miss +0.5e); prior month revised up (+0.2pp @ +0.4% mom)
#Bearish

Credit

US household debt & credit report (2015q1) | Federal Reserve Bank of New York (NY Fed)
Deceleration in credit expansion drops below trend GDP growth; delinquencies fall further below LT averages:
Total consumer indebtedness: +1.7% yoy, +0.2% qoq @ $11.85T; 6.5% below alltime record ($12.68T in 2008q3)
Mortgages: +2.9% yoy, unch qoq @ $8.17THousehold debt & credit- composition & delinquency status 2015q1
    Originations: +11.1% yoy, +3.9% qoq @ $369B; aided by a decline in rates that should revert in the Q2 report, although Q2’s yoy comp is off an easy base
Non-housing debt: +7.1% yoy, +0.7% qoq @ $3.17T
    Auto loans: +10.2% yoy, +2.1% qoq @ $0.97T; record high
    Credit cards: +3.0% yoy, -2.9% qoq @ $0.68T
    Student loans: +7.2% yoy, +2.6% qoq @ $1.19T; record high
Delinquencies:
Total:
-88bps yoy, -27bps qoq @ 5.73% (vs 7.2% LT average)
90+ days: -54bps yoy, -6bps qoq @ 4.23%; serious credit card delinquencies spike (+107bps @ 8.38%) but remain below LT average; student loans finally repair (-26bps @ 11.06%)
[Previously: Margin debt at exuberant extremes again & Loan growth healthy]
#Neutral #Releveraging #Private sector

Sentiment

Investor sentiment survey (2015.05.13) | American Association of Individual Investors (AAII)
Sentiment remains in neutral territory, hardly budging again; neutral cohort keeps swelling in a sign of healthy uncertainty:
Bull/Bear ratio: unch wow @ 1.01 (below both 1.28 historical average & 1.80 extreme high)
Bullish: -0.3pp @ 26.7% (under both 38.9 avg & 45 extreme high)
Bearish: -0.5pp @ 26.4% (under 30.4 avg, but above 25 extreme low)
Neutral: +0.8pp @ 46.9% (over 30.7 avg)
Measures respondents’ 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! #Contrarian

–Romeo

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