Diary of a Financier

Top Newsstuffs (October 26 – November 1)

In Bookshelf on Sun 1 Nov 2015 at 05:18

Top reads from the week that was…

Macro

Manufacturers’ durable & capital goods (September 2015) | US Department of Commerce
Ugly report with data missing consensus expectations across-the-board, compounded by downward revisions to prior month data; ytd growth slides deeper into the red; there’s a chance that growth resumes once we lap comps’ high base in next month’s report (due to last year’s pent-up demand recovery):
Core durable goods (ex-transportation)Core durable goods & capex (% change yoy, 2015.09)
    Orders: -0.5pp @ -2.6% ytd, -0.4 mom (misses +0.2e)
    Shipments: -0.4pp @ -0.7% ytd, -0.1 mom
Core capex (nondefense, ex-aircraft capital goods)
    Orders: -0.7pp@ -4.2% ytd, -0.3% mom
    Shipments: -0.6pp @ +0.2% ytd, +0.5% mom
Core inventory (ex-transportation)
    Inventories: -0.6pp @ +0.2% ytd, -0.1% mom
#Bearish #Deceleration

Gross Domestic Product: Advanced estimate (2015q3) | Bureau of Economic Analysis (BEA)
Growth decelerated & missed expectations, but a big inventory drawdown sets-up Q4 for a big production boom.
Consumption is notable as it is finally starting to net-out the energy crash’s drag (albeit still difficult to resolve w weak Retail Sales & Durable Goods data):
Real GDP (Q3): +1.5% qoq saar (misses +1.7e)
    Inflation: Core +1.5%; Headline +1.2%
    Consumption (PCE): +3.2%
    Investment: -5.6%; Residential +6.1%; Structures -4.0%
    Government spending: +1.7%; Federal +0.2; State & local +2.6%
    Exports: +1.9%
    Imports: +1.8%
    Inventories: -1.44pp detraction fm GDP growth rate
Real GDP per capita (Q3): +3.2%; 9.8% below LT regression trend
Real GDP (Q2): unrevised @ +3.9% qoq saar
Real GDP (FY14): unch@ +2.4% yoy
Real GDP (FY13): unch @ +1.5% yoy
Real GDP (FY12): unch @ +2.2% yoy
#Neutral

Consumer confidence survey (October 2015) | Conference Board
Big miss & decline, led by the present situation subindex’s drop from an 8-year high, although the ST outlook remains neutral:Consumer confidence vs GDP 2015.10
Consumer confidence index: -5.0 mom @ 97.6 (misses 103.0e)
Data was collected before 10/15, amidst the market’s recovery from its Q3 correction.
[Previously: Retail sales are neutral & A new generation of Depression Babies?]
#Neutral $XLY

Sentiment

Retail investor sentiment survey (2015.10.28) | American Association of Individual Investors (AAII)
Another spike takes sentiment into the upper-bounds of exuberance:
Bull/Bear ratio: +51bp wow @ 1.96 (above 1.30 historical average)
Bullish: +5.6pp @ 40.4% (above 39 avg); ending record 33-week stretch below avg
Bearish: -3.4pp @ 20.6% (below 25 extreme low & 30 avg)
Neutral: -2.2pp @ 39.0% (above 31 avg)
Measures respondents’ expectation for equity performance over next 6 months (through 4/2016).
[Previously: Retail allocations neutral, Institutional allocations neutral & Strategist sentiment extremely bearish]
#Bearish #Contrarian

–Romeo

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