Diary of a Financier

Top Newsstuffs (May 29 – June 4)

In Bookshelf on Sun 4 Jun 2017 at 05:52

Top reads from across the past week…

Macro (BULLISH)

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

Spending and income remained relatively healthy, but both have decelerated below potential GDP, with PCE only buoyed by drawdowns in the savings rate; upward revisions to prior month data slightly hampered sequential numbers; yoy comps get increasingly more difficult for PCE and easier for DPI through year end…
Disposable personal income (Real DPI): -0.1pp @ +1.9% yoy, +0.2% mom
Personal consumption expenditures (Real PCE): -0.5pp @ +2.6% yoy, +0.2% mom
Personal savings rate: unch @ +5.3%
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]
#Neutral $XLY #Wages

Consumer confidence survey (May 2017)
by Conference Board

Sentiment continued to decelerate after hitting 17-year highs in March, although it still remains in rarefied air…
Consumer confidence index: -1.5 mom @ 117.9 (miss 120.3e); 88th percentile of historical data
[Previously: Retail sales remain extremely bullish]
#Bullish $XLY

Trade balance (April 2017)
by US Department of Commerce

Report misses expectations, with a mounting deficit acting as dead-weight on Q2 GDP; in broader context, gross trade volumes are still trending higher, and the deficit is cyclically repairing thanks to declining petroleum imports & slower trade with China (although the latter is starting to reverse); data have lapped their easy yoy comps now, providing another headwind going forward…
Net exports: -23% yoy, -5% mom @ -$47.6B deficit (miss -$46.1B exp)
    Exports: +5% yoy, -0.25% mom
    Imports: +8% yoy, +0.78% mom
The net balance of trade accounts for ~3 – 5% of US GDP (seasonally adjusted).
#Neutral #EX #IM #NX #Globalization

Purchasing Managers Index (May 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): +0.1  53.7 (below 53.9 LT avg); remains near a 22-month high
Global PMI (Services): +0.2 @ 53.8 (below 54.3 LT avg); remains near a 17-month high
Global PMI (Manufacturing): -0.1 @ 52.6 (above 51.4 LT avg); near a 6-year high
US ISM (Composite): -0.5 @ 56.7 (above 54.6 post-recession avg)
– US ISM (Services): -0.6 @ 56.9 (miss 57.0e); good velocity maintained, and internals remains pretty robust; corresponds to +3.1% real GDP (annualized)
    Backlog: +3.5 @ 57.0
    Employment: +6.4 @ 57.8
US ISM (Manufacturing): +0.1 @ 54.9 (beat 54.6e); velocity remains strong, with good internals keeping the tailwind in tact; inflation is still running too hot despite decelerating; corresponds to +3.7% real GDP (annualized)
    New orders: +2.0 @ 59.5
    Backlog: -2.0 @ 55.0
    Prices: -8.0 @ 60.5
Eurozone (Composite): unch @ 56.8 (meet 56.8e); corresponds to +0.7% real GDP (annualized)
Eurozone (Services): -0.1 @ 56.3 (beat 56.2e)
Eurozone (Manufacturing): +0.3 @ 57.0 (meet 57.0e); another 6-year high
UK: -0.6 @ 56.7; down from a 3-year high
Japan: +0.4 @ 53.1; near a 3-year high
China: official unch @ 51.2 (beat 51.0e); unofficial -0.7 @ 49.6
Canada: -0.8 @ 55.1; down from a 6-year high
India: -0.9 @ 51.6
South Korea: -0.2 @ 49.2
Taiwan: -1.2 @ 53.1
ASEAN: -0.6 @ 50.5
Brazil: +1.1 @ 52.0
; a 51-month high
#Bullish $ACWI

Sentiment (BULLISH)

Retail investor sentiment survey (2017.06.01)
by The American Association of Individual Investors (AAII)

Sentiment retraces last week’s crash, returning right back to the neutral signal from which it came…
Bull/Bear ratio: +25bps wow @ 1.10 (below 1.30 historical average, but between 1.00 – 1.80 extremes)
Bullish: -5.9pp @ 26.9% (below both 39 avg & 30 – 45 extremes)
Bearish: +1.5pp @ 31.5% (above 30 avg, but between 25 – 40 extremes)
Neutral: +4.4pp @ 41.5% (above 31 avg); another post-Election high
Measures respondents’ expectation for equity performance over next 6 months (through 11/2017).
[Previously: Institutional allocations remain a bullish signal for US assets & Quantifying the “wall of worry”]
#Neutral #Contrarian

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

Allocations remain neutral signals, moderating from last month’s brink of extremes (i.e. bearish signal)…
– Stocks: +2.1pp @ 67.4% (between 60% average & 70% extreme high)
Bonds: -2.5pp @ 15.5% (below 16% avg); down from highest since 7/2016
Cash: +0.4pp @ 17.2% (between 24% avg & 15% extreme low)
#Neutral #Contrarian $SPY $AGG

Credit (NEUTRAL)

Valuations (NEUTRAL)

Fundamentals (BULLISH)

Technicals (NEUTRAL)

–Romeo

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