Diary of a Financier

Top Newsstuffs (September 12-18)

In Bookshelf on Sun 18 Sep 2016 at 06:21

Top reads from across this week…

Macro

Retail sales (August 2016)
by US Government Census

Pretty bad report, with data missing expectations & growth decelerating, somewhat improved by upward revisions to prior months; regardless, yoy growth decelerates closer to trend, as the growth leadership from US consumers will continue to wane as headline data continues to shed energy’s yoy comp tailwind…Retail sales (%change yoy & $gross, 2016.07)
Core (ex-autos): -0.2pp @ +2.0% yoy, -0.1% mom (beat -0.3e)
Core-core (ex-gas & autos): -0.3pp @ +3.1% yoy, -0.3% mom
Headline: -0.4pp @ +1.9% yoy, -0.3% mom (miss unch exp); prior months revised slightly higher
Retail sales account for ~31% of US GDP (~45% of the Consumption component).
[Previously: Income & consumption remain bullish signals & Consumption boom or depression babies?]
#Neutral $XLY

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

Core inflation re-accelerates back above the Fed’s 2% target, as energy’s drag is ending; this would be a nightmare report (with inflation hot but the economy weakening), but Yellen has said she’d tolerate higher inflation…Core inflation- PCE, CPI, Median CPI, trimmed mean CPI 2016.07
Core CPI (ex food & energy): +0.1pp @ +2.3% ttm, +0.3% mom (beat +0.2e)
Headline CPI: +0.3pp @ +1.1% ttm, +0.2% mom (beat +0.1e)
    Energy: +1.7pp @ -9.2% ttm, unch mom
    Healthcare: +1.0pp @ +5.1% ttm, +0.9% mom
    Used cars: -0.3pp @ -4.0% ttm, -0.6% mom
[Previously: Yellen’s “Optimal Control Policy” could have Fed target 2.5% inflation]
#Bearish

Sentiment

Retail investor sentiment survey (2016.09.15)
by The American Association of Individual Investors (AAII)

Sentiment crashes into another bullish signal, redoubled by the persistently outsized Neutral cohort; there’s no better manifestation of investors’ postcrisis PTSD…
Bull/Bear ratio: -26bp wow @ 0.78 (below both 1.30 historical average & 1.00 – 1.80 extremes)
Bullish: -1.8pp @ 27.9% (below 39 avg & 30 – 45 extremes); back down to lowest level since Brexit
Bearish: +7.4pp @ 35.9% (above 30 avg & between 25 – 40 extremes)
Neutral: -5.6pp @ 36.1% (above 31 avg)
Measures respondents’ expectation for equity performance over next 6 months (through 2/2017).
[Previously: Net speculative futures positionings send bearish signals]
#Bullish! #Contrarian

Global fund manager allocation survey (September 2016)
by Bank of America Merrill Lynch (BAML)

Risk allocations remain in extreme lows, maintaining a sector/region-specific risk-on buy signal akin to 2011/12’s…
Equity: -8pp @ +1% OW (below +15 & +50 extremes)baml-fund-manager-allocation-survey-equity-fixed-income-cash-sectors-2016-08; a 4-year low relative to cash (ratio), akin to 2002/3 and 2011/12 before those breakout rallies
Bonds: -2pp @ -45% UW (between -60 & -20 extremes)
Cash: +0.1pp @ +5.5% OW (beyond +5.0 extreme high); back near a 15-year high
Commodities: -4pp @ -8% UW (between -20 & +12 extremes); down fm a 3.5-year high
Regions…
    US: -18pp @ -7% UW; down fm a 20-month high
    Europe: +4pp @ +5% OW; continues recovery fm July’s a 3-year low
    Japan: -7pp @ -8% UW; a 4-year low
    Emerging Markets: +11pp @ +24% OW; a 3.5-year high
Sectors…
    Bearish: #Cash $VNQ $XLY $XLK
    Bullish: $GBP $ACWI $EWU
Surveys a sample of 200+ PMs with $700B+ in AUM, asking for portfolio positioning (overweight/underweight) relative to 60/30/10 benchmark.
#Bullish! #Contrarian

–Romeo

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