Diary of a Financier

Top Newsstuffs (August 7-13)

In Bookshelf on Sun 13 Aug 2017 at 05:25

Top reads from across the past week…

Macro (BULLISH)

Inflation: Consumer Price Index (July 2017)
by Bureau of Labor Statistics (BLS)

Inflation misses expectations across the board again, remaining below the Fed’s 2% target; energy’s easy yoy comps are waning into YE; essentials like shelter (+3.2% yoy) and medical (+3.7% yoy) are starting to run hot, offset by used cars (-4.1%)…
Core CPI (ex food & energy): unch @ +1.7% ttm, +0.1% mom (miss +0.2e); a 19-month low
Headline CPI: unch @ +1.7% ttm, +0.1 mom (miss +0.2e)
Yellen has said she’d even tolerate higher run-rates, so don’t expect too hawkish of a tightening cycle from the Fed.
[Previously: Yellen’s “Optimal Control Policy” could have Fed target 2.5% inflation]
#Neutral #Dovish $TIP

 

Credit (NEUTRAL)

Loans & leases in bank credit, all commercial banks (2017.07.26)
by St. Louis Federal Reserve (FRED)

Lending growth remains ugly, having decelerated ytd to new multi-year lows; econometrics suggest that this could be a lagged effect of 2015/16’s industrial production slowdown, which difficult comp doesn’t get lapped until 2017YE…
Weekly loan growth: +40bps mom @ +3.70% yoy (below 7.3% historical average)
This is a key indicator; although the Fed’s rising rates & Trump’s deregulation increase NIMs, I’d expect continued credit expansion due to household & corporate balance sheets being more deleveraged than at any point since the 1970s.
[Previously: Households remain extremely deleveraged]
#Bearish #Releveraging!? #Credit cycle $XLF $KBE $KRE

 

Fundamentals (BULLISH)

 

Valuations (NEUTRAL)

 

Sentiment (BULLISH)

Retail investor sentiment survey (2017.08.10)
by The American Association of Individual Investors (AAII)

After some big swings, sentiment settles-down right at the bottom-end of its neutral range; the survey’s timing likely captured the nose of North Korea geopolitical/nuclear tensions, but next week’s data should be more representative…
Bull/Bear ratio: -8bps wow @ 1.04 (below 1.30 historical average, between 1.00 – 1.80 extremes)
Bullish: -2.4pp @ 33.7% (below 39 avg, between 30 – 45 extremes)
Bearish: +0.2pp @ 32.3% (above 30 avg, between 25 – 40 extremes)
Neutral: +2.2pp @ 34.0% (above 31 avg, below 40 extreme)
Measures respondents’ expectation for equity performance over next 6 months (through 1/2018).
[Previously: Retail allocations remain neutral, Institutional allocations remain a bullish signal, Strategists’ consensus remains a neutral signal & Quantifying the “wall of worry”]
#Neutral #Contrarian

 

Technicals (NEUTRAL)

 

 

–Romeo

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