Diary of a Financier

Top Newsstuffs (August 14-20)

In Bookshelf on Sun 20 Aug 2017 at 05:46

Top reads from across the past week…

Macro (BULLISH)

Retail sales (July 2017)
by US Government Census

After the recent deceleration, this was a healthy beat in the face of significant upward revisions to prior months, returning data above trend; aided by Amazon’s Prime Day (ecommerce +11.5% yoy); expect the deceleration to resume as easy yoy comps taper into YE…
Core (ex-autos): +0.9pp @ +3.8% yoy, +0.5% mom (miss +0.4e); prior month revised significantly higher
Headline: +0.8pp @ +4.2% yoy, +0.6% mom (beat +0.3e); prior month revised significantly higher
Retail sales account for ~31% of US GDP (~45% of the Consumption component).
[Previously: Consumer confidence remains extremely bullish signal & Income/consumption decelerate to neutral signals]
#Bullish $XLY $XRT #tailwind

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

This resumes a string of ugly reports after last month’s recovery; multifamily’s headwind (-35% yoy) will continue to drag on data as its cyclical boom has ended (as expected)…
Monthly housing starts:  -7.7pp @ -5.6% yoy, -4.8% mom @ 1.155M saar (miss 1.225e); prior months revised slightly higher
Growth rate: -1.5pp @ +2.4% ytd
Residential investment accounts for 3-5% of US GDP, part of housing’s 15-18% total contribution to growth.
[Previously: The future is still so bright; See also: BAML says housing starts will accelerate & return to historical average in 2016/17 & Homebuilder confidence remains near 11-year highs]
#Neutral $XHB $ITB

 

Credit (NEUTRAL)

US household debt & credit report (2017q2)
by The Federal Reserve Bank of New York (NY Fed)

Despite balances reaching another record high, impairments remain relatively low; both foreclosures & bankruptcies hit record lows…
Total Debt: +0.6pp @ +4.5% yoy, +0.9% qoq @ $12.84T
Delinquencies: unch qoq @ 4.8% (vs 7.2% LT average); lowest since 2007q2
    90+ days: -0.2pp qoq @ 3.2%; student loans remain elevated (11.2%)
#Bullish #Releveraging

 

Fundamentals (BULLISH)

 

Valuations (NEUTRAL)

 

Sentiment (BULLISH)

Retail investor sentiment survey (2017.08.17)
by The American Association of Individual Investors (AAII)

Sentiment remains stable, right at the bottom-end of its neutral range…
Bull/Bear ratio: unch wow @ 1.04 (below 1.30 historical average, between 1.00 – 1.80 extremes)
Bullish: +0.5pp @ 34.2% (below 39 avg, between 30 – 45 extremes)
Bearish: +0.5pp @ 32.8% (above 30 avg, between 25 – 40 extremes)
Neutral: -1.0pp @ 33.0% (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)

NYSE margin debt & balances (July 2017)
by Doug Short (dshort’s Advisor Perspectives)

Margin debt levels retrace again, remaining in reasonable proportion to market performance; yoy comps are still misrepresentative due to a low base…
Nominal margin debt: -0.2% mom, +20.5% yoy @ $539.1B; still near a record high
Net credit (“buying power”): -0.9% mom, +79.6% yoy @ -$238.6B debit
[See also: Margin debt & SPX growth rates in lockstep, Margin debt/NYSE ratio constant since 2007 & Margin debt/SPX ratio constant since 2007]
#Neutral #Leverage #Lagging indicator

 

–Romeo

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