Diary of a Financier

Top Newsstuffs (June 22-28)

In Bookshelf on Sun 28 Jun 2015 at 06:33

Top reads from the week that was…


Rail traffic weekly (Week 24, 2015) | Association of American Railroads (AAR)
Volumes remain in contraction; this feels even worse since we should be seeing a snap-back as evidence of pent-up demand; again affirms my thesis that we won’t see that Q2 recovery in 2015:
Weekly traffic: -0.5pp @ -2.4% yoy
Growth rate: -0.1pp @ -0.8% ytd
Carload groups: 4 of 10 posted gains for the week yoy
    Other: +15.7%Railtraffic 2015 week 24
    Grain: +3.4
    Motor vehicles/parts: +1.9
    Chemicals: +1.1
    Farm: -0.2
    Petroleum: -1.9
    Minerals: -4.5
    Forestry: -7.3
    Metals: -8.1
    Coal: -13.7; heavily skewing data, even off weak yoy comp base
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 energy boom’s counterbalance; I considered that the fuel price collapse might’ve reallocated some traffic to trucking, but volumes there are declining too.
#Bearish $IYT

Manufacturers’ durable & capital goods (May 2015) | US Department of Commerce
Data misses consensus with prior month’s downward revisions doubling-the-whammy; deceleration in ytd growth rates continue as we progress further into difficult yoy comps from last year’s pent-up demand recovery:
Core durable goods (ex-transportation)Core durable goods & capex (% change yoy, 2015.05)
    Orders: -0.6pp @ -1.3% ytd, +0.5% mom (misses +0.6e)
    Shipments: -0.7pp @ +0.7% ytd, +0.3% mom
Core capex (nondefense, ex-aircraft capital goods)
    Orders: -1.7pp @ -2.6% ytd, +0.4% mom
    Shipments: -0.5pp @ +1.3% ytd, +0.3% mom
    Inventories: -1.1pp @ +3.7% ytd, -0.2% mom @ $400.6B SA; SA & NSA finally relent from alltime highs
#Bearish #Deceleration

Gross Domestic Product: Third estimate (2015q1) | Bureau of Economic Analysis (BEA)
Despite slight upward revision, growth remains negative turns negative amidst record snowfalls in the Northeast, California port shutdowns & the dollar’s spike.
Energy crash was somewhat netted-out by consumption, but strong USD crushed net exports; investment in structures collapsed:
Real GDP (Q1): +0.5pp @ -0.2% qoq saar (meets -0.2e)
    Inflation: Core -0.1 @ +0.1%; Headline unch @ -1.6%
    Consumption (PCE): +0.3 @ +2.1%
    Government spending: +0.5 @ -0.6%; Federal +0.1 @ unch; State & local -1.0 @ -0.8%
    Investment: +1.7 @ +2.4%; Structures +2.0 @ -18.8%
    Exports: +1.7 @ -5.9%
    Imports: +1.5 @ +7.1%
    Inventories: +0.45pp contribution to GDP growth rate
Real GDP per capita (Q1): -1.4%; 9.9% below LT regression trend
Real GDP (FY14): unrevised @ +2.4% yoy
Real GDP (FY13): +2.2% yoy
Real GDP (FY12): +2.3% yoy
This would’ve been the perfect “bad is good” report, but the Fed seems committed to raising rates in September regardless.
[Previously: The economic deceleration is real this time]
#Bearish #Perfect? $XLE $DXY


Retail investor sentiment survey (2015.06.24) | American Association of Individual Investors (AAII)
Sentiment spikes into neutral territory; neutral cohort remains outsized & an indication of healthy uncertainty:
Bull/Bear ratio: +90bp wow @ 1.64 (above 1.28 historical average, but below 1.80 extreme high)
Bullish: +10.1pp @ 35.6% (under both 38.9 avg & 45 extreme high)
Bearish: -12.6pp @ 21.7% (under both 30.4 avg & 25 extreme low)
Neutral: +2.5pp @ 42.8% (over 30.7 avg)
Measures respondents’ expectation for equity performance over next 6 months (through 11/2015).
[Previously: Retail allocations bullish & Fund manager allocations neutral]
#Neutral #Contrarian




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