Diary of a Financier

Top Newsstuffs (May 15-21)

In Bookshelf on Sun 21 May 2017 at 06:21

Top reads from across the past week…

Macro (BULLISH)

Housing permits, starts & completions (April 2017)
by US Government Census

Weak report missed expectations, although the trend remains strong as we’re exiting the stretch of difficult yoy comps; weakness was mostly attributable to a collapse in multifamily, continuing the category’s choppy trend now that its boom has ended (as expected)…
Monthly housing starts:  -8.5pp @ +0.7% yoy, -2.6% mom @ 1.172M saar (miss 1.256e); prior month revised lower
Growth rate: -2.8pp @ +5.3% 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

Credit (NEUTRAL)

US household debt & credit report (2017q1)
by The Federal Reserve Bank of New York (NY Fed)

Despite balances reaching their first postcrisis record high, impairments remain relatively low; both foreclosures & bankruptcies hit record lows…
Total Debt: +3.9pp yoy @ $12.73T, +1.2% qoq; new alltime high surpassing 2008’s precrisis peak
Delinquencies: unch qoq @ 4.8% (vs 7.2% LT average); lowest since 2007q2
    90+ days: +0.1pp qoq @ 3.4%; student loans remain elevated (11.0%)
#Bullish #Releveraging

Sentiment (BULLISH)

Retail investor sentiment survey (2017.05.18)
by The American Association of Individual Investors (AAII)

Sentiment plummets, triggering a bullish signal amidst allegations around the Trump administration; coincidentally, these readings are exactly where they were going into Election 2016…
Bull/Bear ratio: -33bps wow @ 0.85 (below both 1.30 historical average & 1.00 – 1.80 extremes)
Bullish: -8.9pp @ 29.3% (below both 39 avg & 30 – 45 extremes)
Bearish: +4.0pp @ 34.3% (above 30 avg, but between 25 – 40 extremes)
Neutral: +4.8pp @ 41.9% (above 31 avg); another post-Election high
Measures respondents’ expectation for equity performance over next 6 months (through 11/2017).
[Previously: Retail allocations remain neutral & Quantifying the “wall of worry”]
#Bullish! #Contrarian

Global fund manager allocation survey (May 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: +5pp @ +45% OW (neutral signal, between +15 & +50 extremes); back up near a 24-month high
– Bonds: +5pp @ -57% UW (neutral signal, above -60 extreme); up from a 3-year low
– Cash: unch @ +4.9% OW (neutral signal, below +5.0 extreme high)
– Commodities: +1pp @ -3% UW (neutral signal, between -20 & +12 extremes); still near a near 4-year high
– Regions…
    US: +3pp @ -17% UW (bullish signal, below -10 extreme); up from a 9-year low
    Europe: +11pp @ +59% OW (bearish signal, above +35 extreme); a 26-month high
    Japan: -6pp @ +16% OW (neutral signal)
    Emerging Markets: -3pp @ +41% OW (bearish signal, above +40 extreme); down from a 5-year high, which had been the 2nd highest reading alltime
 Sectors…
    Bearish: $XLF $EZU
    Bullish: $EUR $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

Valuations (NEUTRAL)

Fundamentals (BULLISH)

Technicals (NEUTRAL)

–Romeo

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