Diary of a Financier

Top Newsstuffs (January 16-22)

In Bookshelf on Sun 22 Jan 2017 at 05:18

Top reads from across the past week…

Macro

Housing permits, starts & completions (December 2016)
by US Government Census

A good end to the year, beating expectations thanks to a big recovery by multifamily (after last month’s collapse); this continues a choppy trend, as multifamily volatility suggests its boom has ended (as expected)…Housing starts 2016.12
Monthly housing starts:  +12.6pp @ +5.7% yoy, +11.3% mom @ 1.226M saar (beat 1.200e); prior months revised down
Growth rate:  +0.1pp @ +4.9% ytd
[Previously: The future is still so bright; See also: BAML says housing starts will accelerate & return to historical average in 2016/17 & Homebuilder confidence spikes to 11-year high]
#Neutral $XHB $ITB

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

Report meets expectations; although inflation remains in the ballpark of the Fed’s 2% target, energy’s starting to lap its low base for yoy comps, so expect headline inflation to run hot in 2017h1; remember that Yellen has said she’d tolerate higher inflation…
Core CPI (ex food & energy): +0.1pp @ +2.2% ttm, +0.2% mom (meet +0.2e)
Headline CPI: +0.4pp @ +2.1% ttm, +0.3% mom (meet +0.3e)core-inflation-pce-cpi-median-cpi-trimmed-mean-cpi-2016-12
    Energy: +4.3pp @ +5.4% ttm, +1.5% mom
[Previously: Yellen’s “Optimal Control Policy” could have Fed target 2.5% inflation]
#Bullish $TIP

Sentiment

Retail investor sentiment survey (2017.01.19)
by The American Association of Individual Investors (AAII)

Sentiment procyclically moderated, with a big plunge from high up in extremes back down into neutral territory…
Bull/Bear ratio: -48bps wow @ 1.13 (below 1.30 historical average & between 1.00 – 1.80 extremes)
Bullish: -6.6pp @ 37.0% (below 39 avg & between 30 – 45 extremes)
Bearish: +5.7pp @ 32.7% (above 30 avg & between 25 – 40 extremes)
Neutral: +0.9pp @ 30.3% (below 31 avg)
Measures respondents’ expectation for equity performance over next 6 months (through 7/2017).
[Previously: Retail allocations remain neutral]
#Neutral #Contrarian

Global fund manager allocation survey (January 2017)
by Bank of America Merrill Lynch (BAML)

Risk allocations remain in neutral territory, signalling an end to the 18-month bullish signal that had been a risk tailwind; $DXY is considered the most overvalued since 2006 (historically a high fidelity signal)…
Equity: +8pp @ +39% OW (neutral signal, between +15 & +50 extremes)BAML fund manager allocation survey- Equity, Fixed income, Cash, Sectors 2017.01; a 13-month high
Bonds: -5pp @ -63% UW (bullish signal, below -60 & -20 extremes)
Cash: +0.3pp @ +5.1% OW (bullish signal, above +5.0 extreme high); returns to extremes after last month’s first decent into normalcy in 18-months
Commodities: -2pp @ +3% OW (neutral signal, between -20 & +12 extremes); down from a 4-year high
Regions…
    US: -1pp @ +14% OW (neutral signal)
    Europe: +18pp @ +17% OW (neutral signal)
    Japan: unch @ +21% OW (neutral signal)
    Emerging Markets: -7pp @ -6% UW (neutral signal)
Sectors…
    Bearish: $XLF $USD $IYR $XLY
    Bullish: $EUR $GBP $XLP $AGG $EEM
Surveys a sample of 200+ PMs with $700B+ in AUM, asking for portfolio positioning (overweight/underweight) relative to 60/30/10 benchmark.
#Neutral #Contrarian

–Romeo

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