Diary of a Financier

Top Newsstuffs (February 13-19)

In Bookshelf on Sun 19 Feb 2017 at 05:57

Top reads from across the past week…

Macro

Retail sales (January 2017)
by US Government Census

Another great report that not only crushed expectations, but did it despite massive upward revisions to prior month data; yoy growth accelerated further above trend GDP; we’re in the midst of easy yoy comps due to energy’s low base, which is offsetting the weakness in brick & mortar retailers…Retail sales- Core & Headline (% yoy, 2017.01)
Core (ex-autos): +1.9pp @ +5.3% yoy, +0.8% mom (beat +0.3e); prior months revised significantly higher
Headline: +1.5pp @ +5.6% yoy, +0.4% mom (beat +0.1e); prior months revised significantly higher
Retail sales account for ~31% of US GDP (~45% of the Consumption component).
[Previously: Consumer confidence remains extremely bullish signal & Income & consumption remain bullish signals]
#Bullish! $XLY $XRT #tailwind

Housing permits, starts & completions (January 2017)
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 2017.01
Monthly housing starts:  +4.8pp @ +10.5% yoy, -2.6% mom @ 1.246M saar (beat 1.232e); prior months revised significantly higher
Growth rate:  n/a 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]
#Bullish $XHB $ITB

Inflation: Consumer Price Index (January 2017)
by Bureau of Labor Statistics (BLS)

Report accelerates far above expectations; energy’s lapping its low base for yoy comps, so expect headline inflation to run hot in 2017h1; although inflation is now above the Fed’s 2% target, Yellen has said she’d tolerate higher run-rates…
Core CPI (ex food & energy): +0.1pp @ +2.3% ttm, +0.3% mom (beat +0.2e)Core inflation- PCE/CPI/Median CPI/Trimmed mean CPI 2017.01
Headline CPI: +0.4pp @ +2.5% ttm, +0.6% mom (beat +0.3e)
    Energy: +5.4pp @ +10.8% ttm, +4.0% mom
[Previously: Yellen’s “Optimal Control Policy” could have Fed target 2.5% inflation]
#Neutral $TIP

Credit

US household debt & credit report (2016q4)
by The Federal Reserve Bank of New York (NY Fed)

While Q4’s credit expansion (+1.8% qoq) was the biggest sequential gain since 2013q4, impairments remain relatively low; both foreclosures & bankruptcies hit record lows…Household debt & credit- delinquency status 2016q4
Delinquencies: unch qoq @ 4.8% (vs 7.2% LT average); lowest since 2007q2
    90+ days: unch qoq @ 3.3%; deterioration in student loans (11.2%)
#Bullish #Releveraging

Sentiment

Retail investor sentiment survey (2017.02.16)
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 2017.02.16
Bullish: -2.7pp @ 33.1% (below 39 avg, between 30 – 45 extremes); -13.1pp ytd
Bearish: +4.7pp @ 32.4% (above 30 avg, between 25 – 40 extremes)
Neutral: -2.0pp @ 34.5% (above 31 avg)
Measures respondents’ expectation for equity performance over next 6 months (through 7/2017).
[Previously: Retail allocations remain neutral, Institutional allocations remain neutral & Quantifying the “wall of worry”]
#Bullish #Contrarian

–Romeo

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