Diary of a Financier

Top Newsstuffs (September 28 – October 4)

In Bookshelf on Sun 4 Oct 2015 at 06:00

Top reads from the week that was…

Macro

Purchasing Managers Index (September 2015) | Markit Economics
While still in expansion, global growth slips below trend, missing expectations across the board, with emerging Asia’s still in contraction, but buoyed by decelerating growth in the US & Europe:
Global PMI (Composite): -1.1 @ 52.8 (under 53.9 LT average)
Global PMI (Services): -1.3 @ 53.3
Global PMI (Manufacturing): -0.1 @ 50.6; lowest since 7/2013 as employment slips into contraction
US ISM (Composite): -1.9 @ 56.1
– US ISM (Services): -2.1 @ 56.9 (miss 57.7e); this month corresponds to +3.5% annualized GDP
US ISM (Manufacturing): -0.9 @ 50.2 (miss 50.5e); weak report indicates stagnation, as commentary cites uncertainty; this month corresponds to +2.2% annualized GDP (+2.9% ytd trend):
    New orders: -1.6 @ 50.1US ISM PMI Composite (2015.09)
    Production: -1.8 @ 51.8
    Deliveries: -0.5 @ 50.2
    Inventories: unch @ 48.5
    Backlog: -5.0 @ 41.5
    Employment: -0.7 @ 50.5
Eurozone (Composite): -0.7 @ 53.6 (miss 53.9e); corresponds to +0.4% GDP in Q3
Eurozone (Services): -0.7 @ 53.7 (miss 54.0e)
Eurozone (Manufacturing): -0.3 @ 52.0 (meet 52.0e)
    Germany: -1.0 @ 52.3
    Netherlands: -0.9 @ 53.0
    Italy: -1.1 @ 52.7
    France: +2.3 @ 50.6; big reversal out of contraction
    Spain: -0.5 @ 51.7
    Greece: +4.2 @ 43.3
Japan: -0.7 @ 51.0
China: official +0.1 @ 49.8; unofficial -0.1 @ 47.2 (beat 47.0e)
India: -1.1 @ 51.2
South Korea: +1.3 @ 49.2
Taiwan: +0.8 @ 46.9; bounces from 35-month low
UK: -0.1 @ 51.5
Australia: +1.3 @ 51.7; rally continues after multi-year contraction
Brazil: +1.2 @ 47.0; “domestic issues suggest the country’s economy won’t be turning a corner in the near future”
#Neutral

Consumer confidence survey (September 2015) | Conference Board
Surprising spike & big beat, led by consumers’ present situation subindex at an 8-year high, although the ST outlook is neutral:Consumer confidence vs GDP 2015.09
Consumer confidence index: +1.7 mom @ 103.0 (beat 97.5e)
Data was collected before 9/17, amidst market correction.
[Previously: Retail sales are neutral & A new generation of Depression Babies?]
#Bullish $XLY

Sentiment

Retail investor sentiment survey (2015.10.01) | American Association of Individual Investors (AAII)
Sentiment swings to a screaming buy signal, crashing to extreme lows amidst this market turmoil:AAII retail investor sentiment survey- bulls/bears 2015.10.01
Bull/Bear ratio: -42bp wow @ 0.70 (below 0.8 extreme low & 1.30 historical average)
Bullish: -4.0 @ 28.1% (under 30 extreme low & 39 avg); remains near postcrisis low
Bearish: +11.2pp @ 39.9% (meets 40 extreme high & above 30 avg)
Neutral: -7.2pp @ 32.0% (above 31 avg)
Measures respondents’ expectation for equity performance over next 6 months (through 3/2016).
[Previously: Institutional allocations neutral]
#Bullish! #Contrarian

Asset allocation survey (September 2015) | American Association of Individual Investors (AAII)
Equity allocations largely unchanged, maintaining neutral signal:
– Stocks: -1.4pp @ 63.6% (above 60% average; below 70% extreme high); lowest since 8/2013
Bonds: +0.2pp @ 16.5% (above 16% avg & 10% extreme low); a 6-month high
Cash: +1.3pp @ 20.0% (below 24% avg; above 15% extreme low); below avg for 46th-consecutive month
#Neutral #Contrarian $SPY $AGG

Strategist sentiment survey: Sell side consensus indicator (September 2015) | Bank of America Merrill Lynch (BAML)
Big buy signal as analysts/strategists sentiment dips back into extremely bearish territory (recommending underweight equity allocations):Sell side consensus indicator 2015.09
Equity allocation: -0.9pp @ 53.1% (below 59.6 average & 53.2 extreme low)
“People hate stocks… today’s sentiment levels are still near where they were at the market lows of March 2009… expected 12-month return for SPX is 18%.”
Indicator measures the average recommended equity allocation of Wall Street strategists.
#Bullish #Contrarian

Interests

The US economy is telling two stories & the good far outweighs the bad | BMO
Charts the divergence between US exports & consumption (PCE), PCE vs Exports (%change yoy, 2006-15)which are both largely attributable to the strong dollar & weak energy prices (respectively).
While real exports are -3.4% yoy, they’re only a 12.7% share of the economy — far exceeded by consumption’s impact @ +3.2% yoy as a 68.5% share.*
[Previously: The economic net impact of energy’s price crash & Do we have to worry about a new generation of conservative Depression Babies?]
$XLY $XLE $USO #GDP

–Romeo

*Editorial note:
I put these data in apples-to-apples form (i.e. real %change yoy, as of 8/2015)

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