Diary of a Financier

Top Newsstuffs (June 15-21)

In Bookshelf on Sun 21 Jun 2015 at 06:41

Top reads from the week that was…

Macro

Housing permits, starts & completions (May 2015) | US Government Census
Strong trend growth maintained; misses expectations due to big prior month upward revision; remains a lonely sign of pent-up demand after a weak end to Q1 amidst tough weather:Housing starts 2015.05
Monthly housing starts:  -4.1pp @ +5.1% yoy, -11.1% mom @ 1.036M saar (misses 1.090M exp); prior month revised higher
Growth rate:  +0.5pp @ +6.0% ytd
#Bullish #Green shoots

Inflation: Consumer Price Index (May 2015) | Bureau of Labor Statistics (BLS)
While headline still battles deflation, core slips further from the Fed’s 2.0% target; energy price collapse is still weighing on headline:
Headline CPI: +0.2pp @ unch ttm, +0.4 mom (misses +0.5e)Core inflation- PCE, CPI, Median CPI, trimmed mean CPI 2015.05
    Energy: -16.3% ttm, +4.3% mom; sequential drag wanes, but yoy comps won’t improve until September
Core CPI (ex food & energy): -0.1pp @ +1.7% ttm, +0.1% mom (misses +0.2e)
#Neutral #Disinflation

Sentiment

Retail investor sentiment survey (2015.06.17) | American Association of Individual Investors (AAII)
Sentiment remains a big buy signal; neutral cohort reverting slowly, but still outsized & an indication of healthy uncertainty:
Bull/Bear ratio: +13bp wow @ 0.74 (below both 1.28 historical average & 1.80 extreme high)
Bullish: +5.4pp @ 25.4% (under both 38.9 avg & 45 extreme high)
Bearish: +1.7pp @ 34.3% (above both 30.4 avg & 25 extreme low)
Neutral: -7.1pp @ 40.3% (over 30.7 avg)
Measures respondents’ expectation for equity performance over next 6 months (through 11/2015).
[Previously: Retail allocations bullish]
#Bullish! #Contrarian

Global fund manager allocation survey (June 2015) | Bank of America Merrill Lynch (BAML)
Risk allocations moderate again after March’s extremes, with safe assets slowly clawing-back from extreme underweights; the record flight of capital out of US into International markets is also starting to revert:
Equity: -9.0pp @ +38.0% OW (under +50% extreme, above +15% buy signal); still OW highest beta/cyclical sectors too
Bonds: +2.0pp @ -58.0 UW (above -60 extreme low)BAML fund manager allocation survey- equity/fixed income/cash 2015.06
Cash: +0.4pp @ +4.9 OW (above +4.5 extreme high)
Commodities: +3.0pp @ -11.0 UW
Regions:
    US: +9.0pp @ -10.0 UW
    Europe: -3.0pp @ +46.0 OW; just off alltime high
    Japan: -2.0pp @ +40.0 OW
    Emerging Markets: -12.0pp @ -18.0 UW; meets 2-year low
Surveys a sample of 200+ PMs with $700B+ in AUM, asking for portfolio positioning (overweight/underweight) relative to 60/30/10 benchmark.
#Contrarian
#Bearish: $XLY $XLF $EWJ $FEZ
#Neutral: $SPY
#Bullish: $EEM $XLE $XLP $XLB $AGG

–Romeo

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