Diary of a Financier

Top Newsstuffs (June 27 – July 3)

In Bookshelf on Sun 3 Jul 2016 at 06:41

Top reads from the week that was…

Macro

Consumer confidence survey (June 2016) | Conference Board
Sentiment delivers a big upside surprise, even despite the noise from Brexit…Consumer confidence vs GDP 2016.06
Consumer confidence index: +3.1 mom @ 98.0 (beats 93.5e); a ytd high; 57th percentile of historical data
[Previously: Retail sales bullish & A new generation of Depression Babies?]
#Bullish $XLY

Personal income & outlays (May 2016) | Bureau of Labor Statistics (BLS)
Both income & spending continue to gain traction, with welcome moderation in savings; the headline report was mixed relative to expectations, although prior month data was revised slightly higher…
Disposable personal income (Real DPI): -0.2pp @ +3.1% yoy, +0.1% momPersonal savings rate (1960-2016)
Personal consumption expenditures (Real PCE): -0.3pp @ +2.7% yoy, +0.3% mom
Personal savings rate: -0.1pp @ +5.3%
[Previously: Retail sales are bullish & A new generation of Depression Babies?]
#Bullish $XLY #Wages

Purchasing Managers Index (June 2016) | Markit Economics
Global growth remains resilient, with some repair across Emerging Markets & Asia, although data were collected before Brexit; US results were very impressive…Global PMI composite 2016.06
Global PMI (Composite): unch @ 51.1 (miss 53.9 LT avg)
Global PMI (Services): -0.1 @ 51.3 (miss 54.3 LT avg)
Global PMI (Manufacturing): +0.4 @ 50.4
US ISM (Composite): +0.9 @ 55.1; a ytd highUS ISM PMI Composite 2016.06
– US ISM (Services): +3.6 @ 56.5 (beat +53.3e); impressive recovery from last month’s one-off; corresponds to +3.0% real GDP (annualized)
    New orders: +5.7 @ 59.9
    Production: +4.4 @ 59.5
US ISM (Manufacturing): +1.9 @ 53.2 (beat 51.5e); confirms the bottom in manufacturing’s contraction; inflation a growing concern; corresponds to +3.2% real GDP (annualized)
    New orders: +1.3 @ 57.0
    Production: +2.1 @ 54.7
    Exports: -7.5 @ 49.0
    Prices: -3.0 @ 60.5
    Inventories: +3.5 @ 48.5
Eurozone (Composite): unch @ 53.1 (beat 52.8e); corresponds to +0.3% real GDP (annualized)
Eurozone (Services): -0.5 @ 52.8 (beat 52.4e)
Eurozone (Manufacturing): +1.3 @ 52.8 (beat 52.6e); France remains the biggest drag @ 48.3
UK: +1.7 @ 52.4; data collected before Brexit referendum
Japan: +0.4 @ 48.1; up from a 3-year low
Canada: -0.3 @ 51.8
China: official -0.1 @ 50.0 (meet 50.0e); unofficial -0.6 @ 48.6
India: +1.0 @ 51.7
South Korea: +0.4 @ 50.4
Taiwan: +2.0 @ 50.5
Brazil: +1.6 @ 43.2; up from a 7-year low
#Bullish (US)

Gross Domestic Product: Third estimate (2016q1) | Bureau of Economic Analysis (BEA)
Upward revision beats expectations, continuing the multiyear habit of seasonally weak Q1s; consumption surprisingly declines to a 2-year low; internals (like inventory drawdowns) are decent tailwinds for Q2…
Real GDP (Q1): +0.3pp @ +1.1% qoq saar (beat +1.0e)Real GDP components 2016q1.iii
    Inflation: Core +1.5%; Headline +0.4%
    Consumption (PCE): -0.4pp @ +1.5% (miss +2.0e), a 2-year low
    Investment: +0.8pp @ -1.8%; Residential +15.6%; Nonresidential -4.5%, attributable to energy crash
    Government spending: +0.1pp @ +1.3%; Federal -1.6%; State & local +3.2
    Exports: +2.3pp @ +0.3%
    Imports: -0.3pp @ -0.5%
    Inventories: -0.23pp detraction fm GDP growth rate
Real GDP per capita (Q1): +1.13% yoy, -0.30% qoq; -10.3% 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

Sentiment

Retail investor sentiment survey (2016.06.30) | American Association of Individual Investors (AAII)
Although sentiment recovered this week, it remains deep within an extremely bullish signal after the Brexit referendum; the neutral cohort remains excessive relative to its historical average…
Bull/Bear ratio: +24bp wow @ 0.87 (below 1.30 historical average & 1.00 – 1.80 extremes)Retail investor sentiment survey- bulls & bears 2016.06.30
Bullish: +6.9pp @ 28.9% (below 39 avg & 30 – 45 extremes), continues recovery fm 11-year low
Bearish: -1.8pp@ 33.4% (between 30 avg & 25 – 40 extremes)
Neutral: -5.1pp @ 37.7% (above 31 avg)
Measures respondents’ expectation for equity performance over next 6 months (through 12/2016).
[Previously: Institutional allocations send bullish signal & Strategist sentiment still a buy signal]
#Bullish! #Contrarian

Asset allocation survey (June 2016) | American Association of Individual Investors (AAII)
Allocations maintain neutral signals, although data was collected mostly before Brexit…
– Stocks: +1.2pp @ 64.1% (between 60% average & 70% extreme high)
Bonds: -1.4pp @ 17.4% (above 16% avg & 10% extreme low); down from a 3-year high
Cash: -0.8pp @ 18.5% (between 24% avg & 15% extreme low)
#Neutral #Contrarian $SPY $AGG

–Romeo

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