Diary of a Financier

Top Newsstuffs (March 20-26)

In Bookshelf on Sun 26 Mar 2017 at 06:37

Top reads from across the past week…

Macro

Manufacturers’ durable & capital goods (February 2017)
by US Department of Commerce

Data accelerated again, now above trend GDP; good to see capex get its footing after struggling for years with the mining/energy bust; after a much-needed drawdown in inventories, there should be a slight tailwind in coming months…
– Core durable goods (ex-transportation)
    Orders: +2.2pp @ +4.6% yoy, +0.4% mom (miss +0.5e)
– Core capex (capital goods, ex-defense & aircraft)
    Orders: +2.2pp @ +2.7% yoy, -0.1% mom
– Core inventory (ex-transportation)
    Inventories: +1.7pp @ +0.9% ytd, +0.3% mom
#Bullish #Stagnation $XLI

Sentiment

Retail investor sentiment survey (2017.03.23)
by The American Association of Individual Investors (AAII)

Sentiment continues to normalize, reverting back up to historical averages…
Bull/Bear ratio: +10bps wow @ 1.016 (below 1.30 historical average, but between 1.00 – 1.80 extremes)
Bullish: +4.1pp @ 35.3% (below 39 avg, but between 30 – 45 extremes)
Bearish: -8.2pp @ 30.5% (above 30 avg, but between 25 – 40 extremes)
Neutral: +4.1pp @ 34.2% (above 31 avg)
Measures respondents’ expectation for equity performance over next 6 months (through 9/2017).
[Previously: Retail allocations remain neutral & Quantifying the “wall of worry”]
#Neutral #Contrarian

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

Risk allocations barely remain in neutral territory, with equities near extreme highs as bonds have entered extreme lows; confidence in the economy and corporate profits hit 2 and 7-year highs, respectively; $DXY is considered the most overvalued since 2006 (historically a high fidelity signal)…
– Equity: +9pp @ +48% OW (neutral signal, between +15 & +50 extremes); a 24-month high
– Bonds: -6pp @ -65% UW (bullish signal, below -60 & -20 extremes); a 3-year low
– Cash: -0.1pp @ +4.8% OW (neutral signal, below +5.0 extreme high)
– Commodities: -2pp @ +1% OW (neutral signal, between -20 & +12 extremes); down from a near 4-year high
– Regions…
    US: -12pp @ +1% OW (neutral signal)
    Europe: +4pp @ +27% OW (neutral signal); an 11-month high
    Japan: +2pp @ +22% OW (neutral signal)
    Emerging Markets: +13pp @ +18% OW (neutral signal)
 Sectors…
    Bearish: $XLF $USD
    Bullish: $EUR $GBP $EWU $AGG/$BWX
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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