Diary of a Financier

Top Newsstuffs (August 10-16)

In Bookshelf on Sun 16 Aug 2015 at 06:41

Top reads from the week that was…

Macro

Retail sales (July 2015) | US Government Census
Sales recover from last month’s dip into contraction, but prior months’ upward revisions redouble the bounce; below-trend growth remains disappointing, especially given the tailwind of “consumer stimulus” from lower energy prices:Retail sales (% change yoy, 2015.07)
Headline: +1.0pp @ +2.4% yoy, +0.6% mom (meets +0.5e); prior month revised up (+0.3pp @ unch mom)
Core (ex-autos): +1.2pp @ +1.3% yoy, +0.4% mom (meets +0.4e); prior month revised up (+0.5pp @ +0.4% mom)
#Neutral

Credit

US household debt & credit report (2015q2) | Federal Reserve Bank of New York (NY Fed)
Credit expansion remains below trend GDP growth, with mortgages dragging on the data, however delinquencies fall further below LT averages:
Total consumer indebtedness: +0.1pp @ +1.8% yoy, unch qoq @ $11.85T; 6.5% below alltime record ($12.68T in 2008q3)
Mortgages: -5.8% yoy, -6.3% qoq @ $8.12THousehold debt & credit- composition & delinquency status 2015q2
    Originations: +62.9% yoy, +26.3% qoq @ $466B; yoy surge due to easy comp off of last year’s low base (a 14-year low)
Non-housing debt: +7.3% yoy, +2.0% qoq @ $3.24T
    Auto loans: +11.0% yoy, +2.9% qoq @ $1.01T; record high
    Credit cards: +4.48% yoy, +2.9% qoq @ $0.70T
    Student loans: +6.3% yoy, unch qoq @ $1.19T; record high
Delinquencies:
Total:
-58bps yoy, -9bps qoq @ 5.64% (vs 7.2% LT average)
90+ days:
-51bps yoy, -26bps qoq @ 3.97%
[Previously: Loan growth still bullish]
#Neutral #Private sector

Sentiment

Retail investor sentiment survey (2015.08.12) | American Association of Individual Investors (AAII)
Sentiment remains a buy signal in extreme lows; neutral cohort finally relents after spending all of 2015 ytd at extreme levels — once an indication of healthy uncertainty:AAII retail investor sentiment survey- bullish/bearish/netural 2015.08.12
Bull/Bear ratio: +8bp wow @ 0.85 (below both 1.30 historical average & 1.80 extreme high)
Bullish: +6.1pp @ 30.5% (under both 39.0 avg & 45 extreme high); near postcrisis low
Bearish: +4.5pp @ 36.1% (above both 30.0 avg & 25 extreme low)
Neutral: -10.6pp @ 33.4% (above 31.0 avg)
Measures respondents’ expectation for equity performance over next 6 months (through 1/2016).
[Previously: Retail allocations neutral, Fund manager allocations neutral & Strategist allocations are bullish signal]
#Bullish #Contrarian

Technicals

Study: US Dollar vs. Fed Funds Rate hikes (1970 – 2015) | Credit Suisse
Historically, investors overshoot $USD fair value leading up to the first rate hike in the Fed’s tightening cycle, setting-up the Dollar for a surprisingly big retracement after the rise:USD vs Fed Funds (initial hikes, 1970-2015)
– $DXY performance: -5% average (subsequent 3 mos)
Today seems like no exception with “70% of [Credit Suisse] clients expecting the dollar to continue appreciating over the next 12 months.”
Analyses the historical performance of USD before & after the first interest rate raise in a Fed tightening cycle during the Great Moderation.
#Counterintuitive

–Romeo

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