Diary of a Financier

Top Newsstuffs (March 28 – April 3)

In Bookshelf on Sun 3 Apr 2016 at 05:23

Top reads from the week that was…

Macro

Consumer confidence survey (March 2016) | Conference Board
Sentiment resumes a decent trend after last month’s procyclical plunge…Consumer confidence vs GDP 2016.03
Consumer confidence index: +4.0 mom @ 96.2 (beats 94.0e); 52nd percentile of historical data
[Previously: Retail sales bullish, Wage growth remains neutral & A new generation of Depression Babies?]
#Neutral $XLY

Personal income & outlays (February 2016) | Bureau of Labor Statistics (BLS)
While the headline report was disappointing (despite prior month revised significantly lower), inflation-adjusted data is decent, yet still handicapped by continued acceleration in the savings rate…
Disposable personal income (Real DPI): +0.2pp @ +2.8% yoy, +0.3% mom
Personal consumption expenditures (Real PCE): +0.1pp @ +2.7% yoy, +0.2% mom
Personal savings rate: +0.1pp @ +5.4%
[Previously: Retail sales bullish, Wage growth remains neutral & A new generation of Depression Babies?]
#Neutral $XLY

Purchasing Managers Index (March 2016) | Markit Economics
Global growth ticks-up from the brink of stagnation with decent internals providing a tailwind; not only did leading indicators Taiwan & Korea rally, but China itself perked-up…
Global PMI (Composite): +0.5 @ 51.3 (misses 53.9 LT average); off a 40-month low
Global PMI (Services): +0.7 @ 51.4
Global PMI (Manufacturing): +0.5 @ 50.5US ISM PMI Composite 2016.03
US ISM (Composite): +1.5 @ 54.2
– US ISM (Services): +1.1 @ 54.5 (beats +54.2e); great report, although sentiment survey says inventories are too high (i.e. headwind); corresponds to +2.2% real GDP (annualized)
    New orders: +1.2 @ 56.7
    Production: +2.0 @ 59.8
    Exports: +5.0 @ 58.5
    Employment: +0.6 @ 50.3; off lowest level since 2/2014
US ISM (Manufacturing): +2.3 @ 51.8 (beats 50.5e); the tailwind embedded in the internals last month is manifest in what could be the bottom in manufacturing’s contraction; corresponds to +2.7% real GDP (annualized)
    New orders: +6.8 @ 58.3
    Production: +2.5 @ 55.3
    Inventories: +2.0 @ 47.0
    Employment: -0.4 @ 48.1
    Prices: +13.0 @ 51.5
Eurozone (Composite): -0.6 @ 53.0 (_ _e); corresponds to +0.3% real GDP (annualized)
Eurozone (Services): -0.3 @ 53.3 (_ _e)
Eurozone (Manufacturing): +0.4 @ 51.6 (beat 51.4e); core nations hover around stagnation with the periphery leading growth
UK: +0.2 @ 51.0; off a 34-month low
Japan: -1.0 @ 49.1; a 3-year low
China: official +1.2 @ 50.2 (beats 49.3e); unofficial +1.7 @ 49.7
India: +1.3 @ 52.4
South Korea: +0.8 @ 49.5
Taiwan: +1.7 @ 51.1
Brazil: +1.5 @ 46.0
#Neutral

Credit

NYSE margin debt & balances (February 2016) | Doug Short (dshort.com)
While measures remain at elevated levels, massive deleveraging continues at a healthy pace, as expected amidst Fed tightening…NYSE margin debt vs SPX (real gross & net, 2016.02)
Nominal margin debt: -2.7% mom, -6.3% yoy @ $436B
Real margin debt: -2.7% mom; -14.3% 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”): +10.3% mom, +18.0% yoy @ -$148B debit; another record sequential move in its recovery from record lows, but remains double prior records from 2000, 2007 & 2011
[See also: Margin debt & SPX growth rates in lockstep, Margin debt/NYSE ratio constant since 2007 & Margin debt/SPX ratio constant since 2007]
#Neutral #Leverage #Lagging indicator

Technicals

Commitment of Traders (COT): S&P 500 net speculative positioning (2016.03.29) | 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) 2016.03.29
Net speculative positioning: +25.3k wow @ -122.1k contracts short (above -150k extreme)
Measures difference between non-commercial longs & shorts in SPX futures (# contracts) as of Tuesday’s trade date.
#Neutral $ES_F $SP_F

Sentiment

Retail investor sentiment survey (2016.03.31) | American Association of Individual Investors (AAII)
Although still a neutral signal, sentiment retraces back down near extreme lows; neutral cohort spikes again, remaining a sign a healthy uncertainty…
Bull/Bear ratio: -38bp wow @ 1.05 (below 1.30 historical average, but between 1.00 & 1.80 extremes)Retail investor sentiment survey- bulls/bears/neutrals 2016.03.30
Bullish: -6.6pp @ 27.2% (below 30 – 45 extremes & 39 avg)
Bearish: +2.1pp @ 25.8% (below 30 avg, but above 25 extreme low)
Neutral: +4.6pp @ 47.1% (above 31 avg); another 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 #Wall of worry

Interests

Millennials & Low income consumers are surging, offsetting Baby Boomers’ drag | The Wall Street Journal (WSJ)
The Echo Boom’s consumption is spiking so much that it’s offsetting the decline in Boomers’…
1/ Spending (total): +2.35% yoy in 12/2015
2/ Spending (contribution to growth rate, by age)…

    i/ <35 year olds: +1.9ppConsumption- contribution to spending growth rate, by age & income (monthly, 2015)
    ii/ >55 year olds: -0.5pp
3/ Spending (contribution to growth rate, by income percentile)…
    i/ <20%: +1.25pp
    ii/ >80%: -0.43pp
4/ Millennials’ spending growth rate & share…
    i/ Lowest age bracket: +16% yoy (6.9% share of total)
    ii/ Lowest income quintile: +10% yoy (13.8% share of total)
[Previously: The largest cohort in US history has reached prime spending age & A new generation of Depression Babies?]
#Bullish! #demographics #GenY

–Romeo

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