Diary of a Financier

Top Newsstuffs (May 31 – June 5)

In Bookshelf on Sun 5 Jun 2016 at 06:51

Top reads from the week that was…

Macro

Consumer confidence survey (May 2016) | Conference Board
Sentiment delivers a downside surprise, sliding lower again, moderated by a nice upward revision to prior month data…Consumer confidence vs GDP 2016.05
Consumer confidence index: -2.1 mom @ 92.6 (misses 96.3e); 46th percentile of historical data
[Previously: Retail sales bullish & A new generation of Depression Babies?]
#Neutral $XLY

Personal income & outlays (April 2016) | Bureau of Labor Statistics (BLS)
While the headline report was mixed relative to expectations, income growth is gaining traction, and it’s finally translating into spending thanks to a healthy decline in savings…
Disposable personal income (Real DPI): +0.2pp @ +3.3% yoy, +0.2% mom
Personal consumption expenditures (Real PCE): +0.4pp @ +3.0% yoy, +0.6% mom
Personal savings rate: -0.5pp @ +5.4%
[Previously: Retail sales neutral & A new generation of Depression Babies?]
#Bullish $XLY #Wages

Purchasing Managers Index (May 2016) | Markit Economics
Global growth ticks higher again, but Emerging Markets & Asia are really struggling, despite US & EU strength…Global PMI composite 2016.05
Global PMI (Composite): -0.5 @ 51.1 (misses 53.9 LT avg); continues recovery fm a 40-month low
Global PMI (Services): -0.5 @ 51.4 (misses 54.3 LT avg)
Global PMI (Manufacturing): -0.1 @ 50.0US ISM PMI Composite 2016.04
US ISM (Composite): +0.9 @ 55.1; a ytd high
– US ISM (Services): -2.8 @ 52.9 (miss +55.5e); a real weak report with equally poor internals; corresponds to +1.6% real GDP (annualized)
    New orders: -5.7 @ 54.2
    Production: -3.7 @ 55.1
    Exports: -7.5 @ 49.0
    Inflation: +2.2 @ 55.6
    Inventories: unch @ 54.0
US ISM (Manufacturing): +0.5 @ 51.3 (beat 50.6e); solidifies the bottom in manufacturing’s contraction; inflation a growing concern; corresponds to +2.6% real GDP (annualized)
    New orders: -0.1 @ 55.7
    Deliveries: +5.0 @ 54.1
    Inventories: -0.5 @ 45.0
    Prices: +4.5 @ 63.5
Eurozone (Composite): +0.1 @ 53.1 (beat 52.9e); corresponds to +0.3% real GDP (annualized)
Eurozone (Services): +0.2 @ 53.3 (beat 53.1e)
Eurozone (Manufacturing): -0.2 @ 51.5 (meet 51.5e); France remains a big drag
UK: +0.7 @ 50.1; off a 3-year low
Japan: -0.5 @ 47.7; continues cascade to another 3-year low
Canada: -0.1 @ 52.1
China: official unch @ 50.1 (beat 50.0e); unofficial -0.2 @ 49.2
India: +0.2 @ 50.7
South Korea: +0.1 @ 50.1
Taiwan: -1.2 @ 48.5
Brazil: -1.0 @ 41.6; another 7-year low
#Neutral

Credit

NYSE margin debt & balances (April 2016) | Doug Short (dshort.com)
Debt measures continue to stagnate on a sequential basis, not only allowing yoy comps to repair, but also decoupling from an organic market rally; deleveraging is still en force, as expected amidst Fed tightening…NYSE margin debt vs SPX (real gross & net, 2016.04)
Nominal margin debt: +2.2% mom, -10.2% yoy @ $456B
Real margin debt: +2.1% mom; -11.9% 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”): -0.5% mom, +32.9% yoy @ -$153B debit; maintains trend recovery from record lows, but remains far above 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

Sentiment

Retail investor sentiment survey (2016.06.02) | American Association of Individual Investors (AAII)
Sentiment has a huge bounce, recovering from deep within extreme territory to a neutral…
Bull/Bear ratio: +43bp wow @ 1.04 (between 1.30 historical average & 1.00 – 1.80 extremes)
Bullish: +12.4pp @ 30.2% (between 39 avg & 30 – 45 extremes)Retail investor sentiment survey- bulls, bears & neutrals 2016.06.02, up from a 11-year low
Bearish: -0.3pp @ 29.1% (between 30 avg & 25 extreme low)
Neutral: -12.1pp @ 40.8% (above 31 avg), down from a 26-year high
Measures respondents’ expectation for equity performance over next 6 months (through 11/2016).
[Previously: Institutional allocations are neutral & Strategist sentiment still a buy signal]
#Neutral #Contrarian #Wall of worry

Asset allocation survey (May 2016) | American Association of Individual Investors (AAII)
Allocations maintain neutral signals…
– Stocks: -1.9pp @ 62.9% (between 60% average & 70% extreme high)
Bonds: +0.2pp @ 17.8% (above 16% avg & 10% extreme low); highest since 5/2013
Cash: +1.7pp @ 19.3% (between 24% avg & 15% extreme low)
#Neutral #Contrarian $SPY $AGG

–Romeo

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