Diary of a Financier

Top Newsstuffs (February 6-12)

In Bookshelf on Sun 12 Feb 2017 at 05:11

Top reads from across the past week…

Macro

Trade balance (December 2016)
by US Department of Commerce

Report beats expectations, but the deficit will continue to weigh on GDP; in broader context, gross trade volumes continue to accelerate and the deficit is cyclically repairing thanks to slower trade with China & declining petroleum imports…
Net exports: -6.7% yoy, +3.2% mom @ -$44.3B deficit (beat -$44.9B exp)Trade deficit 2016.12
    Exports: +4.2% yoy, +2.7% mom @ $190.7B; +15% above the precrisis peak
    Imports: +4.6% yoy, +1.5% mom @ $235.0B
The net balance of trade accounts for ~ 3-5% of US GDP (seasonally adjusted).
#Neutral #EX #IM #NX #Globalization

Rail traffic monthly (January 2017)
by The Association of American Railroads (AAR)

Another expansionary month continues the upward trend after years of uninterrupted declines — although it’s still attributable to easy yoy comps; while petroleum shipments are still collapsing (-19.5% yoy), coal has at least steadied (+11.9%)…
Monthly traffic: -6.4pp @ +0.5% yoy
Growth rate: n/a @ +0.5% ytd
Carload groups: 9 of 20 posted gains for the month yoy
In particular, the secular decline of coal volumes (~40% of carloads makes it the largest category) has been negatively skewing the data.
#Bullish $IYT $XLB $XLE $DBC

Credit

Loans & leases in bank credit, all commercial banks (2017.01.25)
by St. Louis Federal Reserve (FRED)

Lending growth continued to decelerate post-Election, now at multiyear lows…
Weekly loan growth: -3bps wow @ +5.5% yoy (below 7.3% historical average); lowest level since 6/2014Loans & leases in bank credit, all commercial banks (weekly, %yoy, 2017.01.25)
This is a key indicator.  Although the Fed’s rising rates & Trump’s deregulation increase NIMs, I’d expect continued credit expansion due to household & corporate balance sheets being more deleveraged than at any point since the 1970s.
[Previously: Consumer indebtedness remains a bullish signal, Banks’ future credit supply & demand fundamentals expected to remain neutral & Households remain extremely deleveraged]
#Neutral #Releveraging? #Credit cycle $XLF $KBE $KRE

Sentiment

Retail investor sentiment survey (2017.02.09)
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

–Romeo

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