Diary of a Financier

Top Newsstuffs (July 25-31)

In Bookshelf on Sun 31 Jul 2016 at 06:28

Top reads from this week…

Macro

Consumer confidence survey (July 2016)
by Conference Board

Sentiment remains strong with good internals, beating expectations largely due to downward revisions in prior month’s data…Consumer confidence vs GDP 2016.07
Consumer confidence index: -0.1 mom @ 97.3 (beats 96.0e); off a ytd high; 55th percentile of historical data
[Previously: Retail sales bullish & A new generation of Depression Babies?]
#Bullish $XLY

Manufacturers’ durable & capital goods (June 2016)
by US Department of Commerce

Another weak report misses consensus expectations by a mile, continuing secular decline in manufacturing; on the bright side, the drawdown in inventories accelerates, showing strong internals that could provide a future tailwind…
Core durable goods (ex-transportation)Core durable goods & capex (% change yoy, 2016.06)
    Orders: -0.6pp @ -1.1% ytd, -0.5% mom (miss +0.3e)
    Shipments: -0.3pp @ -1.8% ytd, -0.2% mom
Core capex (capital goods, ex-defense & aircraft)
    Orders: -0.3pp @ -3.8% ytd, +0.2% mom (meet +0.2e)
    Shipments: -0.3pp @ -4.5% ytd, -0.4% mom
Core inventory (ex-transportation)
    Inventories: -0.4pp @ -4.1% ytd, +0.2% mom
#Bearish #Contraction $XLI

Gross Domestic Product: Advanced estimate (2016q2)
by Bureau of Economic Analysis (BEA)

Huge miss is even more disappointing considering downward revision to prior quarters too (although prior years were revised higher); Consumption had a strong recovery from a 2-year low; massive Inventory drawdowns (for 5th straight quarter) provide decent tailwinds for Q3, but that’s offset by the collapse in Investment…
Real GDP (Q2): +1.2% qoq saar (miss +2.6e)Real GDP components 2016q2.i
    Inflation: Core +2.0%; Headline +2.2%
    Consumption (PCE): +4.2%; off a 2-year low
    Investment: -9.7%; Residential -6.1%; Nonresidential -7.9%, attributable to energy
    Government spending: -0.9%; Federal -0.2%; State & local -1.3%
    Exports: +1.4%
    Imports: -0.4%
    Inventories: -1.16pp detraction fm GDP growth rate
Real GDP per capita (Q2): +0.46% yoy, +0.53% qoq; -10.3% below LT regression trend
Real GDP (2016q1): -0.3pp @ +0.8% qoq saar
Real GDP (2015FY): +0.2pp @ +2.6% yoy
Real GDP (2014FY): unch @ +2.4% yoy
Real GDP (2013FY): +0.2pp @ +1.7% yoy
#Bearish

Credit

NYSE margin debt & balances (June 2016)
by Doug Short (dshort’s Advisor Perspectives)

All measure indicate continued deleveraging, as expected amidst Fed tightening; importantly decoupling from an organic market rally…NYSE margin debt vs SPX (gross & net, 2016.06)
Nominal margin debt: -0.8% mom, -11.4% yoy @ $447B; -11.8% 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”): +9.1% mom, +40.5% yoy @ -$133B 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]
#Bullish #Leverage #Lagging indicator

Sentiment

Retail investor sentiment survey (2016.07.28)
by American Association of Individual Investors (AAII)

Sentiment dips to the lower end of its extremes, but remains a neutral signal…Retail investor sentiment survey- bulls & bears 2016.07.28
Bull/Bear ratio: -23bp wow @ 1.10 (below 1.30 historical average, between 1.00 – 1.80 extremes)
Bullish: -4.1pp @ 31.3% (below 39 avg & between 30 – 45 extremes)
Bearish: +1.7pp @ 28.4% (below 30 avg & between 25 – 40 extremes)
Neutral: +2.4pp @ 40.3% (above 31 avg)
Measures respondents’ expectation for equity performance over next 6 months (through 1/2017).
[Previously: Retail allocations remain neutral & Institutional allocations send bullish signal]
#Neutral #Contrarian #TINA

–Romeo

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