Diary of a Financier

Top Newsstuffs (January 11-17)

In Bookshelf on Sun 17 Jan 2016 at 05:41

Top reads from the week that was…

Macro

Retail sales (December 2015) | US Government Census
Decent report with yoy comps accelerating, only missing expectations due to prior months’ upward revisions; below-trend growth remains disappointing, especially given the tailwind of “consumer stimulus” from lower energy prices:Retail sales (%change yoy & $gross, 2015.11)
Headline: +0.8pp @ +2.2% yoy, -0.1% mom (misses unch exp); prior month revised up
    Autos: -2.3pp @ +6.3% yoy, +0.1% mom
Core (ex-autos): +0.5pp @ +1.2% yoy, -0.1% mom (misses +0.1e); prior month revised down (-0.1pp @ -0.1% mom)
    Gas: +5.4pp @ -14.6% yoy, -1.1% mom
#Neutral

Technicals

Commitment of Traders (COT): S&P 500 net speculative positioning (2016.01.15) | Commodity Futures Trading Commission (CFTC)
Extreme short positioning procyclically plummets to 8/2014 lows amidst market correction, entering short-covering range, albeit shy of 10/2014’s lows (-278.2k)…SPX futures net speculative positions (non-commercial longs less shorts 2016.01.12)
Net speculative positioning: -58.1k wow @ -162.3k contracts short
Measures difference between non-commercial longs & shorts in SPX futures (# contracts).
#Bullish $ES_F $SP_F

Sentiment

Retail investor sentiment survey (2016.01.13) | American Association of Individual Investors (AAII)
An extreme buy signal as sentiment continues procyclical collapse amidst global market turmoil, reducing optimism to lowest level since 2005 & 1993…
Bull/Bear ratio: -19bp wow @ 0.39 (below 1.00 extreme & 1.30 historical average)AAII retail investor sentiment survey- bulls/bears 2015.01.13
Bullish: -4.3pp @ 17.9% (below 30 extreme & 39 avg); lowest since 2005
Bearish: +7.3pp @ 45.5% (above 30 avg)
Neutral: -3.0pp @ 36.6% (above 31 avg)
Measures respondents’ expectation for equity performance over next 6 months (through 6/2016).
[Previously: Retail allocations neutral, Institutional allocations neutral & Strategist sentiment still a buy signal]
#Bullish! #Contrarian

Interests

Presentation: “Just Markets” multiasset class outlook (2016q1) | Jeffrey Gundlach (DoubleLine Funds)
1/ Global central bank policy divergence:Real GDP growth rate_US vs EU (2010-2015q3)
The Fed shouldn’t have tightened, considering that the ECB is easing while US GDP is only +60bps higher than the EU’s (2.2% vs 1.6% 2015q3 real GDP).
2/ Global demographics (China vs Japan):Demographics_China vs Japan (prime working age population)
China’s demographic tailwind (i.e. prime working age population) has ended, a la Japan in 1995, which led to the latter’s Lost Decade(s).
3/ Risk asset divergence ($SPX vs $HYG):SPX price vs HY credit spreads (1990-2015)
The decoupling between equities & HY credit is alarming and will recouple, with a higher risk of stocks revaluing than credit recovering — especially since Small & Mid-Caps are already in bear markets.
4/ US Dollar ($USD):DXY (2006-16)
DXY has hit a double top, and the near-term rally is over, as consensus has grown unanimously bullish.
[See also: Complete slide deck]
$IWR $IWM $GXC $FXI $EWJ $DXJ #SMid

–Romeo

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