Diary of a Financier

Top Newsstuffs (March 27 – April 2)

In Bookshelf on Sun 2 Apr 2017 at 05:27

Top reads from across the past week…

Macro (BULLISH)

Personal income & outlays (February 2017)
by The Bureau of Labor Statistics (BLS)

Spending and income remained healthy; slight upward revisions to prior month data weren’t much of a factor…
Disposable personal income (Real DPI): +0.2pp @ +2.3% yoy, +0.2% mom
Personal consumption expenditures (Real PCE): -0.4 @ +2.6% yoy, -0.1% mom
Personal savings rate: +0.1pp @ +5.6%
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 extremely bullish]
#Bullish $XLY #Wages

Consumer confidence survey (March 2017)
by Conference Board

Sentiment surprise with a huge, unexpected acceleration to rarefied air…
Consumer confidence index: +9.5 mom @ 125.6 (beat 114.0e); highest since 12/2000; 91st percentile of historical data
[Previously: Retail sales remain bullish & A new generation of Depression Babies?]
#Bullish! $XLY

Gross Domestic Product (Third estimate, 2016q4)
by Bureau of Economic Analysis (BEA)

After last quarter’s significant acceleration, Q4 underwhelmed expectations, although a nice bump from this upward revision helps; net exports weighed significantly (as expected); growth was again aided by a meaningful tailwind from the re-stocking of Inventories (as expected after a stretch of drawdowns)…
Real GDP (Q3): +0.2pp @ +2.1% qoq saar (beat +2.0e)Real GDP 2016q4i
    Inflation: Core +1.8%; Headline +2.1%
    Consumption (PCE): +0.5pp @ +3.5%
    Investment: +0.2pp @ 9.4%; Residential +9.6%; Nonresidential +0.9%
    Government spending: -0.2pp @ +0.2%; Federal -1.2%; State & local +1.0%
    Exports: -0.5pp @ -4.5%
    Imports: +0.5pp @ +9.0%
    Inventories: +1.01pp contribution to GDP growth rate
Real GDP per capita (Q4): -1.7pp @ +1.0% yoy; 10.0% below LT regression trend
Real GDP (2016FY): +1.6% yoy
Real GDP (2015FY): +2.6% yoy
Real GDP (2014FY): +2.4% yoy
Real GDP (2013FY): +1.7% yoy
#Neutral

Credit (BULLISH)

Household debt service & financial obligations (2016q4)
by The Federal Reserve (Fed)

Households remain as deleveraged as they’ve been at any point in history (or at least since the record started in 1980s); although student debt is a real problem for the Millennial generation, consumers in aggregate have a lot of dry powder…
Debt Service Ratio (DSR): -1bp yoy @ 9.98%, -2bps qoq; still near the alltime low (9.86% in 2012q4)
Financial Obligations Ratio (FOR): -2bp yoy @ 15.40%, -1bp qoq; still near alltime low (14.92 in 2012q4)
All ratios are relative to disposable personal income (DPI); the Financial Obligations Ratio (FOR) is a broader measure that includes non-debt liabilities like rent, leases, insurance & taxes.
#Bullish!

Sentiment (NEUTRAL)

Fundamentals (BULLISH)

Valuations (NEUTRAL)

Technicals (NEUTRAL)

–Romeo

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