Diary of a Financier

Top Newsstuffs (January 30 – February 5)

In Bookshelf on Sun 5 Feb 2017 at 06:10

GO PATS!

Macro

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

While spending maintained its healthy velocity, income growth continued to decelerate — eroding the savings rate a bit; mixed revisions to prior months’ data amounted to a net increase; important to watch coming months’ reports for dips below trend…real-dpi-vs-pce-2016-12
Disposable personal income (Real DPI): -0.2pp @ +2.1% yoy, +0.1% mom
Personal consumption expenditures (Real PCE): unch @ +2.8% yoy, +0.3% mom
Personal savings rate: -0.1pp @ +5.4%
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

Consumer confidence survey (January 2017)
by Conference Board

Sentiment remains very strong, declining a bit for its highest level since 2003…Consumer confidence vs GDP 2017.01
Consumer confidence index: -1.9 mom @ 111.8 (miss 112.8e); down from a 13-year high; 83rd percentile of historical data
[Previously: Retail sales remain bullish & A new generation of Depression Babies?]
#Bullish! $XLY

Purchasing Managers Index (January 2017)
by Markit Economics

Global growth continues to accelerate, with tailwinds ahead considering the recovery in emerging Asia and the inventory repair in US…
Global PMI (Composite): +0.3 @ 53.9 (meet 53.9 LT avg); a 22-month highGlobal PMI composite 2017.01
Global PMI (Services): +0.4 @ 53.9 (below 54.3 LT avg); a 17-month high
Global PMI (Manufacturing): +0.6 @ 52.7 (above 51.3 LT avg); a 35-month high
US ISM (Composite): +0.4 @ 55.8 (above 54.6 post-recession avg); a 14-month high
– US ISM (Services): -0.1 @ 56.5 (miss 57.2e); unexpectedly maintains high velocity, although inflation is creeping & inventories are too high; corresponds to +2.9% real GDP (annualized)
    New orders: -2.1 @ 58.6
    Production: -0.6 @ 60.3
    Inventories: -4.0 @ 48.0
    Inventory sentiment: +0.5 @ 62.0 (“too high”)
    Prices: +2.9 @ 59.0
US ISM (Manufacturing): +1.5 @ 56.0 (beat 55.0e); another big acceleration, again without Inventories’ tailwind being manifest (still contracting), which suggests there’s still more room to run; inflation is running even hotter, but respondents seems to suggest that prices are encouraging present consumption; corresponds to +4.0% real GDP (annualized)
    New orders: +0.1 @ 60.4
    Production: +2.02 @ 61.4
    Inventories: +1.5 @ 48.5
    Prices: +3.5 @ 69.0
    Employment: +3.3 @ 56.1
Eurozone (Composite): unch @ 54.4 (beat 54.3e); corresponds to +0.4% real GDP (annualized)
Eurozone (Services): unch @ 53.7 (beat 53.6e)
Eurozone (Manufacturing): +0.3 @ 55.2 (beat 55.1e); strength everywhere but Greece
UK: -0.2 @ 55.9; “input cost inflation surged to a survey record high… driven up by the weak sterling [$GBP] exchange rate and higher costs for commodities” #Brexit
Japan: +0.3 @ 52.7; a 21-month high
China: official -0.1 @ 51.3 (beat 51.2e); unofficial -0.9 @ 51.0 (miss 51.8e)
Canada: +1.7 @ 53.5
India: +0.8 @ 50.4; recovery back into expansion as impact from demonetization crackdown wanes
South Korea: -0.4 @ 49.0
Taiwan: -0.6 @ 55.6; down from a 28-month high
ASEAN: +0.6 @ 50.0
Brazil: -1.2 @ 44.0
#Bullish

Credit

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

Still no alarms from debt levels to end 2016, which will be remembered as the year when the market not only deleveraged, but also decoupled from its underlying leverage — a sign of a healthy, organic rally…NYSE margin debt vs SPX (gross & net, 2016.12)
Nominal margin debt: -2.2% mom, +6.1% yoy @ $489.5B; -3.5% fm record high (4/2015)
Net margin balances (“buying power”): +9.5% mom, +1.4% yoy @ -$179.2B debit
[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 (2017.02.02)
by The American Association of Individual Investors (AAII)

Sentiment remains at extremes, maintaining a bullish signal after last week’s plunge…
Bull/Bear ratio: +2bps wow @ 0.96 (below 1.30 historical average & 1.00 – 1.80 extremes)Retail sentiment- bulls & bears 2017.02.02
Bullish: +1.2pp @ 32.8% (below 39 avg, between 30 – 45 extremes)
Bearish: +0.7pp @ 34.2% (above 30 avg, between 25 – 40 extremes)
Neutral: -1.9pp @ 33.0% (above 31 avg)
Measures respondents’ expectation for equity performance over next 6 months (through 7/2017).
[Previously: Institutional allocations remain neutral & Quantifying the “wall of worry”]
#Bullish #Contrarian

Asset allocation survey (January 2017)
by The American Association of Individual Investors (AAII)

Allocations remain neutral signals; respondents are still mixed on the Trump administration, with those who were bullish on his policies being offset by those who were uncertain (suggesting that the Trump rally isn’t ahead of itself)…
– Stocks: -0.3pp @ 66.0% (between 60% average & 70% extreme high)
Bonds: +0.6pp @ 16.4% (between 16% avg & 10% extreme low); up from a 17-month low
Cash: -0.2pp @ 17.7% (between 24% avg & 15% extreme low)
#Neutral #Contrarian $SPY $AGG

–Romeo

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