Diary of a Financier

Top Newsstuffs (July 4-17)

In Bookshelf on Sun 17 Jul 2016 at 05:55

Top reads from the last two weeks…


Retail sales (June 2016)
by US Government Census

Another awesome report crushes headline expectations, but that’s tempered by downward revisions to prior months; still continues the growth leadership from US consumers; headline data is shedding more & more of energy’s dead-weight on comps…Retail sales (%change yoy & $gross, 2016.06)
Core (ex-autos): +0.5pp @ +3.2% yoy, +0.7% mom (beat +0.4e); prior months revised lower
    Gas: -0.2pp @ -9.6% yoy, +1.2% mom
Headline: +0.2pp @ +2.7% yoy, +0.6% mom (beat +0.1e); prior months revised lower
Retail sales account for ~31% of US GDP (~45% of the Consumption component).
[Previously: PCE sends bullish signal & Consumption boom or depression babies?]
#Bullish $XLY

Inflation: Consumer Price Index (June 2016)
by Bureau of Labor Statistics (BLS)

Core inflation accelerates a bit more, now running a little hot relative to the Fed’s 2% target; headline’s recovery resumes as energy’s drag wanes…Core inflation- PCE, CPI, Median CPI, trimmed mean CPI 2016.06
Core CPI (ex food & energy): +0.1pp @ +2.3% ttm, +0.2% mom (meet +0.2e)
Headline CPI: unch @ +1.0% ttm, +0.2% mom (miss +0.3e)
    Energy: +0.6pp @ -9.5% ttm, +1.3% mom
    Healthcare: +3.8% ttm, +0.2% mom
    Shelter: +3.5% ttm, +0.3% mom
[Previously: Yellen’s “Optimal Control Policy” could have Fed target 2.5% inflation]

Rail traffic monthly (June 2016)
by Association of American Railroads (AAR)

The decline in railroad volume still manifests the collapse in manufacturing activity, led lower by energy & materials amidst the commodity supercycle’s bust…
Monthly traffic: +0.5pp @ -6.3% yoyRailtraffic- total & groups (wow & ytd, 2016.06)
Growth rate: +0.2pp @ -7.4% ytd
Carload groups: 6 of 20 posted gains for the month yoy
In particular, the secular decline of coal volumes (~40% of carloads makes it the largest category) is negatively skewing the data.
#Irrelevant? $IYT $XLB $XLE $DBC


Loans & leases in bank credit, all commercial banks (2016.06.29)
by St. Louis Federal Reserve (FRED)

Lending growth remained at a healthy velocity…
Weekly loan growth: +0.2pp @ +7.6% yoy (beat 7.3% historical average)Loans & leases in bank credit, all commercial banks (weekly, %yoy, 2016.06.29)
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, signalling whether or not the private sector is suffering from post-traumatic stress — a hangover from the crisis (i.e. “Depression Babies”).
[Previously: Consumer indebtedness returns to bullish signal & Loan officer survey remains a bearish signal]
#Bullish #Releveraging #Credit cycle $XLF $KBE $KRE


Quant study: New alltime highs in stocks are the “mother of all buy signals”
by Nautilus Research

SPX total return after achieving a new multiyear high (17 historical occurrences)…
1/ 3-months: +4.44% avg; 94% win rateSPX new multiyear alltime highs
2/ 6-mos: +8.54%; 100% win rate
3/ 12-mos: +15.56%; 100% win rate
#Bullish! #technicals $SPX $SPY


Retail investor sentiment survey (2016.07.14)
by American Association of Individual Investors (AAII)

Sentiment continues its recovery from Brexit’s extreme lows, but remains a neutral signal…
Bull/Bear ratio: +46bp wow @ 1.62 (above 1.30 historical average, between 1.00 – 1.80 extremes)
Bullish: +5.8 @ 36.9% (below 39 avg, between 30 – 45 extremes); continues recovery fm 11-year low
Bearish: -2.2pp@ 24.4% (below 30 avg, between 25 – 40 extremes)
Neutral: -3.6pp @ 38.7% (above 31 avg)
Measures respondents’ expectation for equity performance over next 6 months (through 12/2016).
[Previously: Retail allocations remain neutral, Institutional allocations send bullish signal & Strategist sentiment still a buy signal]
#Neutral #Contrarian


Housing tailwind: Homeowners blacklisted by crisis-era foreclosures & short sales are eligible to borrow again
by Calculated Risk
Generally, debtors who defaulted on mortgages have to wait 7-years before they’re eligible to borrow again…
” A large number of the foreclosures were in 2009 and 2010, so those people will be eligible to borrow [in 2016/17].
#bullish $ITB $XHB $MBB $AGZ #MBS




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