Diary of a Financier

Top Newsstuffs (April 24-30)

In Bookshelf on Sun 30 Apr 2017 at 05:59

Top reads from across the past week…

Macro (BULLISH)

Consumer confidence survey (April 2017)
by Conference Board

Sentiment decelerated, although it remains in rarefied air…
Consumer confidence index: -4.6 mom @ 120.3 (miss 122.5e); down from the highest level since 12/2000; 90th percentile of historical data
[Previously: Retail sales remain bullishIncome/consumption remain bullish signals & A new generation of Depression Babies?]
#Bullish! $XLY

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

Despite missing expectations, data remain at high velocity far above trend GDP; good to see capex regain 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: unch @ +4.6% yoy, -0.2% mom (miss +0.4e)
– Core capex (capital goods, ex-defense & aircraft)
    Orders: +0.3pp @ +3.0% yoy, +0.2% mom
– Core inventory (ex-transportation)
    Inventories: +0.4pp @ +1.3% ytd, +0.3% mom
#Bullish #Stagnation $XLI

Gross Domestic Product (First estimate, 2017q1)
by Bureau of Economic Analysis (BEA)

This continues a few years’ worth of underwhelming Q1’s, which have all missed pretty light expectations; consumption was really disappointing, although the yoy comps will get tougher henceforth; good to see a big spike in investment…
Real GDP (Q3): -1.4pp sequentially @ +0.7% qoq saar (miss +1.1e)
    Inflation: Core +2.3%; Headline +2.3%
    Consumption (PCE): -3.2pp @ +0.3%
    Investment: -5.1pp @ 4.3%; Residential +13.7%; Nonresidential +22.1%
    Government spending: -1.9pp @ -1.7%; Federal -1.9%; State & local -1.6%
    Exports: +10.3pp @ +5.8%
    Imports: -4.9pp @ +4.1%
    Inventories: -0.93pp detraction from GDP growth rate
Real GDP per capita (Q1): -1.1pp @ -0.1% yoy; 10.1% 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

Sentiment (BULLISH)

Retail investor sentiment survey (2017.04.27)
by The American Association of Individual Investors (AAII)

Sentiment has a massive spike from extreme lows back up to historical norms, after hitting a post-Election low last week, which had triggered a bullish signal that’s historically resulted in outperformance (SPX +6.3% average over next 6-months with 85% win percentage)…
Bull/Bear ratio: +54bps wow @ 1.20 (below 1.30 historical average, but between 1.00 – 1.80 extremes)
Bullish: +12.3pp @ 38.0% (below both 39 avg, but between 30 – 45 extremes)
Bearish: -7.0pp @ 31.7% (above 30 avg, but between 25 – 40 extremes)
Neutral: -5.3pp @ 30.2% (below 31 avg)
Measures respondents’ expectation for equity performance over next 6 months (through 10/2017).
[Previously: Retail allocations remain neutral & Quantifying the “wall of worry”]
#Neutral #Contrarian

Global fund manager allocation survey (April 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 remain near 2 and 7-year highs, respectively, and inflation expectations are at a 13-year high; $DXY is considered the most overvalued since 2006 (historically a high fidelity signal)…
– Equity: -8pp @ +40% OW (neutral signal, between +15 & +50 extremes); down from a 24-month high
– Bonds: +3pp @ -62% UW (bullish signal, below -60 extreme); up from a 3-year low
– Cash: +0.1pp @ +4.9% OW (neutral signal, below +5.0 extreme high)
– Commodities: -5pp @ -4% UW (neutral signal, between -20 & +12 extremes); still near a near 4-year high
– Regions…
    US: -21pp @ -20% UW (bullish signal, below -10 extreme); lowest since 1/2008
    Europe: +21pp @ +48% OW (bearish signal, above +35 extreme); a 15-month high
    Japan: +2pp @ +22% OW (neutral signal)
    Emerging Markets: +26pp @ +44% OW (bearish signal, above +40 extreme); a 5-year high & the 2nd highest reading alltime
 Sectors…
    Bearish: $XLF $EZU
    Bullish: $EUR $EWU $GBP
Surveys a sample of 200+ PMs with $700B+ in AUM, asking for portfolio positioning (overweight/underweight) relative to 60/30/10 benchmark.
#Bullish ($SPY $AGG) #Contrarian

Credit (NEUTRAL)

Technicals (NEUTRAL)

Fundamentals (BULLISH)

Valuations (NEUTRAL)

–Romeo

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