Diary of a Financier

Top Newsstuffs (March 21-27)

In Bookshelf on Sun 27 Mar 2016 at 05:08

Top reads from the week that was…

Macro

Manufacturers’ durable & capital goods (February 2016) | US Department of Commerce
Another weak report misses expectations, compounded by across-the-board downward revisions to prior month data; ytd data recover a bit due to easy yoy comp; however, continued inventory draw-downs show decent internals…
Core durable goods (ex-transportation)Core durable goods & capex (% change yoy, 2016.01)
    Orders: +2.5pp @ unch ytd, -1.0% mom (misses -0.3e)
    Shipments: +1.7pp @ -1.1% ytd, -0.7% mom
Core capex (capital goods, ex-defense & aircraft)
    Orders: +3.5pp @ -0.9% ytd, -1.8% mom
    Shipments: +2.7pp @ -1.6% ytd, -1.1% mom
Core inventory (ex-transportation)
    Inventories: -0.6pp @ -3.1% ytd, -0.3% mom
#Neutral #Contraction

Gross Domestic Product: Third estimate (2015q4) | Bureau of Economic Analysis (BEA)
Upward revision to growth beats expectations by a lot (again), with decent consumption potentially starting the consumer’s long-awaited comeback…
Real GDP (Q4): +0.4pp @ +1.4% qoq saar (beats +1.0e)Real GDP components 2015q4.iii
    Inflation: Core +1.0%; Headline +0.4%
    Consumption (PCE): +0.4pp @ +2.4%
    Investment: -0.3pp @ -1.0%; Residential +10.1%; Nonresidential -2.1%; Intellectual property -0.2%
    Government spending: -0.8pp @ -0.1%; Federal +2.2%; State & local -1.4%
    Exports: +0.7pp @ -2.0%
    Imports: -0.1pp @ -0.7%
    Inventories: -22bps detraction fm GDP growth rate
Real GDP per capita (Q4): +1.2% yoy, +0.54% qoq; -10.0% below LT regression trend
Real GDP (FY15): unch @ +2.4% yoy
Real GDP (FY14): unch @ +2.4% yoy
Real GDP (FY13): unch @ +1.5% yoy
#Neutral

Credit

Loans & leases in bank credit, all commercial banks (2016.03.09) | St. Louis Federal Reserve (FRED)
Lending growth accelerates a bit more, maintaining its healthy trend; allays concerns that credit cycle may be turning lower…Loans & leases in bank credit, all commercial banks (weekly, %yoy) 2016.02.10
Weekly loan growth: +0.1pp @ +8.2% yoy (beat 7.3% historical average)
This is a key indicator, as I’d expect continued expansion due to household & corporate balance sheets being most deleveraged as any point since the 1970s, but the private sector may be suffering from post-traumatic strike — a hangover from the crisis (i.e. “Depression Babies”).
[Previously: Consumer indebtedness remains neutral & Loan officer survey sends bearish signal]
#Bullish #Releveraging $XLF $KBE $KRE

Technicals

Commitment of Traders (COT): S&P 500 net speculative positioning (2016.03.25) | Commodity Futures Trading Commission (CFTC)
Along with the market’s continued recovery, extreme short positioning is finally pared, reducing the magnitude of short-covering’s upside risk…SPX futures- net speculative positions (non-commercial longs less shorts) 2016.03.04
Net speculative positioning: +59.5k wow @ -146.4k contracts short (above -150k extreme)
Measures difference between non-commercial longs & shorts in SPX futures (# contracts).
#Neutral $ES_F $SP_F

Sentiment

Retail investor sentiment survey (2016.03.24) | American Association of Individual Investors (AAII)
Sentiment remains a neutral signal, recovering from last week’s bout of pessimism…
Bull/Bear ratio: +43bp wow @ 1.43 (above 1.30 historical average, but between 1.00 & 1.80 extremes)Retail investor sentiment survey- bulls & bears 2016.03.10
Bullish: +3.8pp @ 33.8% (below 39 avg, but between 30 & 45 extremes)
Bearish: -3.1pp @ 23.7% (below 30 avg, but above 25 extreme low)
Neutral: -0.7pp @ 42.5% (above 31 avg); ytd high
Measures respondents’ expectation for equity performance over next 6 months (through 9/2016).
[Previously: Retail allocations remain neutral, Institutional allocations send bullish signal & Strategist sentiment still a buy signal]
#Neutral #Contrarian

–Romeo

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