Diary of a Financier

Top Newsstuffs (July 24-30)

In Bookshelf on Sun 30 Jul 2017 at 05:22

Top reads from across the past week…

Macro (BULLISH)

Consumer confidence survey (July 2017)
by Conference Board

Sentiment surges back to 16-year highs…
Consumer confidence index: +3.8 mom @ 121.1 (beat 116.5e); 91st percentile of historical data
[Previously: Retail sales remain bullish & Income/consumption remain bullish]
#Bullish! $XLY

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

Despite core orders missing expectations, headline spiked and the overall trend accelerated to an even higher velocity; after last year’s inventory drawdowns, this month finally showed healthy signs of re-stocking…
– Core durable goods, new orders (ex-transportation): +1.3pp @ +6.8% yoy, +0.2% mom (miss +0.4e)
– Core capex, new orders (capital goods, ex-defense & aircraft): +0.6pp @ +5.6% yoy, -0.1% mom
– Core inventory (ex-transportation): +0.7pp @ +4.0% ytd, +0.7% mom
#Bullish! $XLI

Gross Domestic Product (Advanced estimate, 2017q2)
by Bureau of Economic Analysis (BEA)

Good report meets expectations right near trend growth; consumptions and net exports outperformed higher-frequency data, likely aided by weak dollar at quarter-end, although yoy comps get harder though Q4; prior quarter was revised down slightly, but the bigger news is nice upward revisions to prior years…
Real GDP (Q2): +1.2pp sequentially @ +2.6% qoq saar (meet +2.6e); prior quarter revised down (-0.2pp @ +1.2%)
    Inflation: Core +1.8%; Headline +1.6%
    Consumption (PCE): +0.9pp @ +2.8%
    Investment: +3.2pp @ +2.0%; Residential -6.8%; Nonresidential +5.2%
    Government spending: -1.3pp @ -0.7%; Federal +2.3%; State & local -0.2%
    Exports: -3.2pp @ +4.1%
    Imports: -2.2pp @ +2.1%
    Inventories: -0.02pp detraction from GDP growth rate
Real GDP per capita (Q2): +1.14pp @ 1.95% yoy; 9.6% below LT regression trend
Real GDP (2016FY): -0.1pp @ 1.5% yoy
Real GDP (2015FY): +0.3pp @ 2.9% yoy
Real GDP (2014FY): +0.2pp @ 2.6% yoy
Real GDP (2013FY): unch @ +1.7% yoy
#Bullish

Credit (NEUTRAL)

 

Fundamentals (BULLISH)

 

Valuations (NEUTRAL)

 

Sentiment (BULLISH)

Retail investor sentiment survey (2017.07.27)
by The American Association of Individual Investors (AAII)

Although bears drop to extreme levels, a huge natural cohort maintains the wall-of-worry…
Bull/Bear ratio: +4bps wow @ 1.42 (above 1.30 historical average, between 1.00 – 1.80 extremes)
Bullish: -1.0pp @ 34.5% (below 39 avg, between 30 – 45 extremes)
Bearish: -1.5pp @ 24.3% (below both 30 avg and 25 – 40 extremes); back near post-Election lows
Neutral: +2.5pp @ 41.2% (above 31 avg and 40 extreme); near post-Election highs
Measures respondents’ expectation for equity performance over next 6 months (through 1/2018).
[Previously: Retail allocations remain neutral, Strategists’ consensus remains a neutral signal & Quantifying the “wall of worry”]
#Neutral #Contrarian

Global fund manager allocation survey (July 2017)
by Bank of America Merrill Lynch (BAML)

Global risk allocations remain in neutral territory, but US equities are flashing an even stronger bullish signal, while bonds remain on the threshold of a bull signal; the USD bear signal has waned…
– Equity: -2pp @ +38% OW (neutral signal, between +15 & +50 extremes)
– Bonds: +3pp @ -55% UW (neutral signal, above -60 extreme); near a 3-year low
– Cash: -0.1pp @ +4.9% OW (neutral signal, below +5.0 extreme high)
– Commodities: +9pp @ -6% UW (neutral signal, between -20 & +12 extremes)
Regions…
    US: -5pp @ -20% UW (bullish signal, below -10 extreme); lowest since 1/2008
    Europe: -4pp @ +54% OW (bearish signal, above +35 extreme); near 3½-year highs
    Emerging Markets: -4pp @ +38% OW (neutral signal, below +40 extreme); near a 5-year & alltime highs
 Sectors…
    Bearish signal: $XLF $EZU
    Bullish signal: $EWU
Surveys a sample of 200+ PMs with $700B+ in AUM, asking for portfolio positioning (overweight/underweight) relative to 60/30/10 benchmark.
#Bullish ($SPY) #Contrarian

Technicals (NEUTRAL)

 

 

–Romeo

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