Diary of a Financier

Top Newsstuffs (December 19-25)

In Bookshelf on Sun 25 Dec 2016 at 09:15

Top reads from across this Merry Christmas week…

Macro

Personal income & outlays (November 2016)
by The Bureau of Labor Statistics (BLS)

Both income & spending maintain a health trend after last month’s big accelerations, although big downward revisions to prior month data take some wind out of the sails…Real DPI vs PCE (2016.11)
Disposable personal income (Real DPI): -0.2pp @ +2.3% yoy, -0.1% mom
Personal consumption expenditures (Real PCE): -0.1pp @ +2.8% yoy, +0.1% mom
Personal savings rate: -0.2pp @ +5.5%
Consumer spending accounts for ~70% of US GDP, as this report is a broader measure than the Retail Sales reported earlier this month.
[Previously: Retail sales remain bullish & A new generation of Depression Babies?]
#Bullish $XLY #Wages

Gross Domestic Product (Third estimate, 2016q3)
by Bureau of Economic Analysis (BEA)

The acceleration meaningfully beating expectations; growth was aided by a new tailwind from the re-stocking of Inventories after a string of drawdowns (as expected)…
Real GDP (Q3): +0.3pp @ +3.5% qoq saar (beat +3.3e)Real GDP 2016q3iii
    Inflation: Core +1.9%; Headline +1.4%
    Consumption (PCE): +0.2pp @ +3.0%
    Investment: +0.9pp @ +3.0%; Residential -4.1%; Nonresidential +1.4%
    Government spending: +0.6pp @ +0.8%; Federal +2.4%; State & local -0.2%
    Exports: -0.1pp @ +10.0%
    Imports: +0.1pp @ +2.2%
    Inventories: unch @ +0.49pp contribution to GDP growth rate
Real GDP per capita (Q3): +2.7% yoy; 10.0% below LT regression trend
Real GDP (2015FY): unch @ +2.6% yoy
Real GDP (2014FY): unch @ +2.4% yoy
Real GDP (2013FY): unch @ +1.7% yoy
#Bullish!

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

The ytd comps remain uninspiring, although this report continues a trend of sequential repair, beating expectations despite slight upward revisions to prior months; headline data got crushed as expected; capex continues to struggle due to mining/energy bust; on the bright side, the much-needed drawdown in inventories continues…
Core durable goods (ex-transportation)Core durable goods & capex- new orders (% change yoy) 2016.11
    Orders: +0.3pp @ -0.6% ytd, +0.5% mom (beat +0.2e)
    Shipments: +0.2pp @ -1.2% ytd, +0.4% mom
Core capex (capital goods, ex-defense & aircraft)
    Orders: +0.1pp @ -3.9% ytd, +0.9% mom (beat +0.4e)
    Shipments: +0.2pp @ -5.0% ytd, +0.2% mom
Core inventory (ex-transportation)
    Inventories: +0.3pp @ -1.2% ytd, +0.1% mom
#Bearish #Contraction $XLI

Fundamentals

S&P 500 valuation update: Sustained acceleration (2016.12.17)
by Fundamentalis

As the calendar turns toward 2016q4 & 2017q1, SPX enters a couple seasons of easy yoy comps due to China’s collapse & the energy crash (respectively); “This is the first time in over two years the [forward growth rate has both remained positive and accelerated] for any length of time”

EPS (ntm): +3c wow @ $128.54
PE ratio (ntm): unch wow @ 17.5x
PEG ratio (ntm): -30bps wow @ 3.89x
Earnings yield: unch wow @ 5.69%
EPS growth rate (ntm): +36bps wow @ 4.51%
#Bullish #Valuations $SPX $SPY

Sentiment

Retail investor sentiment survey (2016.12.22)
by The American Association of Individual Investors (AAII)

Sentiment remained a neutral signal, settling-in after the post-Election spike has passed…
Bull/Bear ratio: +15bps wow @ 1.53 (above 1.30 historical average, but between 1.00 – 1.80 extremes)
Bullish: -0.1pp @ 44.6% (over 39 avg, but between 30 – 45 extremes)Retail investor sentiment- bulls & bear 2016.12.22
Bearish: -3.1pp @ 29.2% (below 30 avg & between 25 – 40 extremes)
Neutral: +3.2pp @ 26.2% (below 31 avg); up from a 2-year low
Measures respondents’ expectation for equity performance over next 6 months (through 6/2017).
[Previously: Institutional allocations rally into neutral signal]
#Neutral #Contrarian

–Romeo

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