Diary of a Financier

Top Newsstuffs (January 25-31)

In Bookshelf on Sun 31 Jan 2016 at 06:26

Top reads from the week that was…

Macro

Manufacturers’ durable & capital goods (December 2015) | US Department of Commerce
Nothing redeeming about this horrible report, with the trend wading deeper into contraction & missing expectations across-the-board, even despite downward revisions to prior month data and easy yoy comps; affirmation of the broad manufacturing slowdown we’re seeing (product of the strong Dollar), in stark contrast to services expansion…
Core durable goods (ex-transportation)Core durable goods & capex (% change yoy, 2015.12)
    Orders: -0.6pp @ -3.2% ytd, -1.2% mom (miss -0.1e)
    Shipments: -0.2pp @ -1.1% ytd, unch mom
Core capex (capital goods, ex-defense & aircraft)
    Orders: -0.3pp @ -3.9% ytd, -4.3% mom (miss -0.2e)
    Shipments: -0.4 @ -0.3% ytd, -0.2% mom
Core inventory (ex-transportation)
    Inventories: -0.3pp @ -1.5% ytd, +0.1% mom
#Bearish #Contraction $USD $DXY $UUP

Consumer confidence survey (January 2016) | Conference Board
Another spike exceeding expectations, even despite massive upward revisions to prior month data; bullish signal is even stronger within context of the SPX correction underway…Consumer confidence vs GDP 2016.01
Consumer confidence index: +1.6 mom @ 98.1 (beats 96.5e); 57th percentile of historical data; prior month revised up (+5.7 @ 96.3)
[Previously: Retail sales are neutral, Wage growth remains neutral & A new generation of Depression Babies?]
#Bullish! #Countercyclical $XLY

Gross Domestic Product: Advanced estimate (2015q4) | Bureau of Economic Analysis (BEA)
Growth decelerates & misses expectations, even despite downward revision to prior Q; consumption remains the anchor, somewhat netting-out the energy crash’s drag (albeit still difficult to resolve w weak Retail Sales & Durable Goods data)…
Real GDP (Q3): +0.7% qoq saar (misses +0.9e)Real GDP components 2015q3iii
    Inflation: Core +1.1%; Headline +0.8%
    Consumption (PCE): +2.2%
    Investment: -2.5%; Residential +8.1%; Nonresidential -1.8%; Intellectual property +1.6%
    Government spending: +0.7%; Federal +2.7%; State & local -0.6%
    Exports: -2.5%
    Imports: +1.1%
    Inventories: -45bps detraction fm GDP growth rate
Real GDP per capita (Q4): +2.2%; 9.8% below LT regression trend
Real GDP (Q3): revised -0.1pp @ +2.0% qoq saar
Real GDP (FY15): unch yoy @ +2.4% yoy
Real GDP (FY14): unch @ +2.4% yoy
Real GDP (FY13): unch @ +1.5% yoy
#Neutral

Credit

NYSE margin debt & balances (December 2015) | Doug Short (dshort.com)
While measures remain at elevated levels, massive sequential normalization continues deleveraging at a healthy pace, as expected amidst Fed tightening…NYSE margin debt vs SPX (real gross & net, 2015.12)
Nominal margin debt: -2.4% mom, +1.1% yoy @ $461B
Real margin debt: -2.4% mom; -9.0% fm record high (4/2015), but still above prior highs from 3/2000 & 7/2007′s before those bear markets
Net margin balances (“buying power”): +4.8% mom, -10.2% yoy @ -$182B debit; biggest sequential move to date in its recovery from record lows, but still doubles prior records from 2000, 2007 & 2011
[See also: Margin debt/NYSE ratio constant since 2007 & Margin debt/SPX ratio constant since 2007]
#Neutral #Leverage #Latent indicator

Sentiment

Retail investor sentiment survey (2016.01.28) | American Association of Individual Investors (AAII)
The extreme buy signal persists as sentiment is mired in a procyclical collapse amidst global market turmoil, despite its continued recovery from 1/13’s lowest level since 2005 & 1993…
Bull/Bear ratio: +31bp wow @ 0.75 (below 1.00 extreme & 1.30 historical average)AAII retail investor sentiment survey- bulls & bears 2015.01.28
Bullish: +8.3pp @ 29.8% (below 30 extreme & 39 avg); continues recovery fm lowest level since 2005
Bearish: -8.7pp @ 40.0% (above 30 avg); down fm highest level since 4/2013
Neutral: +0.4pp @ 30.2% (below 31 avg)
Measures respondents’ expectation for equity performance over next 6 months (through 6/2016).
[Previously: Retail allocations neutral, Institutional allocations neutral, Net short speculators positions a buy signal & Strategist sentiment still a buy signal]
#Bullish! #Contrarian

Interests

The complete guide to the Millennial Generation | Goldman Sachs (GS)
“The largest generation in US history is about to move into its prime spending years… poised to reshape the economy”…US demographic cohorts- by generation
Millennials: 92M population cohort
Gen X: 61M
Baby Boomers: 77M
#GenY #Echo boom

–Romeo

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