Diary of a Financier

Top Newsstuffs (April 3-9)

In Bookshelf on Sun 9 Apr 2017 at 05:50

Top reads from across the past week…

Macro (BULLISH)

Trade balance (February 2017)
by US Department of Commerce

Report beats expectations, neutralizing the deficit’s impact on Q1 GDP; in broader context, gross trade volumes continue to increase and the deficit is cyclically repairing thanks to slower trade with China & declining petroleum imports…
Net exports: +4.5% yoy, +9.5% mom @ -$43.6B deficit (beat -$44.5B exp)
    Exports: +7% yoy, +21bps mom @ $192.9B
    Imports: +4% yoy, -1.8% mom @ $236.4B
The net balance of trade accounts for ~3 – 5% of US GDP (seasonally adjusted).
#Neutral #EX #IM #NX #Globalization

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

Another expansionary month continues the acceleration after years of uninterrupted declines — although it’s still attributable to easy yoy comps; while petroleum shipments are still declining (-5.8% yoy), coal’s comeback is gaining steam (+26.8%)…
Monthly traffic: +1.3pp @ +5.5% yoy
Growth rate: +1.2pp @ +3.5% ytd
Carload groups: 13 of 20 posted gains for the month yoy; led by coal (+15.5% ytd), which rallied off a low yoy base
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

Purchasing Managers Index (March 2017)
by Markit Economics

Global growth remains strong, with tailwinds ahead considering the recovery in emerging Asia and the inventory repair in US…
Global PMI (Composite): +0.4 @ 53.8 (miss 53.9 LT avg); back near a 22-month high
Global PMI (Services): +0.5 @ 53.6 (below 54.3 LT avg); back near a 17-month high
Global PMI (Manufacturing): unch @ 53.0 (above 51.3 LT avg); remains at a 70-month high
US ISM (Composite): +1.8 @ 57.6 (above 54.6 post-recession avg); a 16-month high
– US ISM (Services): -2.4 @ 55.2 (miss 57.0e); although growth remains healthy, this was a pretty big miss, and inventories remain a huge headwind; corresponds to +2.4% real GDP (annualized)
    New orders: -2.3 @ 58.9
    Production: -4.7 @ 58.9
    Inventories: -3.5 @ 48.5
    Inventory sentiment: +0.5 @ 65.0 (“too high”)
US ISM (Manufacturing): -0.5 @ 57.2 (beat 57.1e); velocity remains strong, with great internals still suggesting there’s more room to run; inflation is running way too hot, but respondents seems to suggest that prices are encouraging present consumption; corresponds to +4.4% real GDP (annualized)
    New orders: -0.6 @ 64.5
    Backlog: +0.5 @ 57.5
    Inventories: -2.5 @ 49.0
    Prices: +2.5 @ 70.5
Eurozone (Composite): +0.4 @ 56.4 (miss 56.7e)
Eurozone (Services): +0.5 @ 56.0 (miss 56.5e)
Eurozone (Manufacturing): +0.8 @ 56.2 (meet 56.2e); a 72-month high
UK: -0.3 @ 54.2; “[inflation measures] are still rising at near survey record rates [but] the recent easing… suggests that the impact of the weak [$GBP] input cost inflation surged to a survey record high… driven up by the weak sterling [$GBP] is starting to subside” #Brexit
Japan: -0.9 @ 52.4; down from a 35-month high
China: official +0.2 @ 51.8 (beat 51.6e); unofficial -0.5 @ 51.2
Canada: +0.8 @ 55.5; a 30-month high
India: +1.8 @ 52.5
South Korea: -0.8 @ 48.4; employment falls fastest since 2008 amidst the PM’s impeachment turmoil
Taiwan: -1.1 @ 54.5
ASEAN: +0.6 @ 50.9; all countries rose (ex-Malaysia)
Brazil: +2.7 @ 49.6
#Bullish $ACWI

Sentiment (BULLISH)

Retail investor sentiment survey (2017.04.06)
by The American Association of Individual Investors (AAII)

Sentiment remains at extremes, historically a sign of outperformance (SPX +6.3% average over next 6-months)…
Bull/Bear ratio: -10bps wow @ 0.71 (below both 1.30 historical average & between 1.00 – 1.80 extremes)
Bullish: -1.9pp @ 28.3% (below both 39 avg & 30 – 45 extremes)
Bearish: +2.2pp @ 39.6% (above 30 avg, but between 25 – 40 extremes)
Neutral: -0.3pp @ 32.1% (above 31 avg)
Measures respondents’ expectation for equity performance over next 6 months (through 9/2017).
[Previously: Retail allocations remain neutral, Institutional allocations are barely neutral & Quantifying the “wall of worry”]
#Bullish! #Contrarian

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

Allocations remain neutral signals, albeit nearing extremes of a bearish signal…
– Stocks: +2.1pp @ 67.6% (between 60% average & 70% extreme high); highest since 5/2015
Bonds: -0.3pp @ 17.0% (between 16% avg & 10% extreme low)
Cash: -1.7pp @ 15.5% (between 24% avg & 15% extreme low)
#Neutral #Contrarian $SPY $AGG

Credit (BULLISH)

Fundamentals (BULLISH)

Valuations (NEUTRAL)

Technicals (NEUTRAL)

–Romeo

Advertisements

Comment

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s