Diary of a Financier

Top Newsstuffs (September 4-10)

In Bookshelf on Sun 10 Sep 2017 at 05:09

Top reads from across the past week…

Macro (BULLISH)

Trade balance (July 2017)
by US Department of Commerce

The deficit beats expectations, but is still recovering from postcrisis lows despite a really weak USD; difficult comps remain for yoy data until October; overall, gross trade volumes are healthy, with tailwinds from a cyclically weak USD, secularly declining petroleum imports, and slower trade with China…
Net exports: -5.8% yoy, -0.46% mom @ -$43.7B deficit (beat -$44.6e)
    Exports: +5% yoy, -0.31% mom
    Imports: +5% yoy, -0.17% mom
The net balance of trade accounts for ~3 – 5% of US GDP (seasonally adjusted).
[Previously: GDP returns to bullish trend]
#Neutral $DXY $UUP #EX #IM #NX #Globalization

Purchasing Managers Index (August 2017)
by Markit Economics

Global growth bumps back up to multiyear highs, anchored by Europe’s ossified growth, steady US velocity, and emerging Asia recovery…
Global PMI (Composite): +0.3  53.9 (meets 53.9 LT avg); highest since 4/2015
Global PMI (Services): +0.4 @ 54.1 (below 54.3 LT avg); a new 2-year high
Global PMI (Manufacturing): +0.4 @ 53.1 (above 51.4 LT avg); a 75-month high
US ISM (Composite): +1.4 @ 55.3
(above 54.6 post-recession avg)
– US ISM (Services): +1.4 @ 55.3 (miss 55.4e); underwhelms expectations despite the nice bump; internals are decent for coming months and the headwind from spiking inventories is waning, but hot inflation is a creeping problem; corresponds to +2.5% real GDP (annualized)
    New orders: +2.0 @ 57.1
    Inventories: -3.0 @ 53.5 (sentiment -6.5 @ 61.0 “too high”)
    Backlog: +1.5 @ 53.5
    Prices: +2.2 @ 57.9
US ISM (Manufacturing): +2.5 @ 58.8 (beat 56.6e); huge acceleration, with internals turning into a tailwind; inflation remains at troubling levels (heating-up due to plunging USD?); corresponds to +4.9% real GDP (annualized)
    New orders: -0.1 @ 60.3
    Backlog: +2.5 @ 57.5
    Prices: unch @ 62.0
    Customer inventories: -8.0 @ 41.0
    Employment: +4.7 @ 59.9
Eurozone (Composite): unch @ 55.7 (miss 55.8e); corresponds to +0.6% real GDP (annualized)
Eurozone (Services): -0.7 @ 54.7 (miss 54.9e)
Eurozone (Manufacturing): +0.8 @ 57.4 (meet 57.4e); retraces back up to a 6-year high
China: official +0.3 @ 51.7 (beat 51.3e); unofficial +0.5 @ 51.6
Japan: +0.1 @ 52.1; optimism remains near alltime highs due to 2020 Tokyo Olympics
UK: +1.6 @ 56.9
Canada: +1.8 @ 55.5
India: +3.3 @ 51.2; up from lowest level since 2/2009; uncertainty in the wake of demonetization and the new goods & services tax (GST) waned
South Korea: +0.9 @ 49.9
Taiwan: +0.7 @ 54.3
ASEAN: +1.1 @ 50.4
Brazil: +0.9 @ 50.9

#Bullish $ACWI $EFA $EEM $DXY $UUP

Rail traffic monthly (August 2017)
by The Association of American Railroads (AAR)

Another decent month maintains a solid velocity recovering from a multi-year decline, although it’s still attributable to easy yoy comps that will be a tailwind until 2/2018…
Monthly traffic: +0.1pp @ +2.5%yoy
Growth rate: +0.9pp @ +4.0% ytd
Carload groups: 7 of 20 posted gains for the month yoy; led by Coal’s recovery (+14% ytd) from a low yoy comp base, albeit tempered by Energy’s continued collapse (-14% ytd)
In particular, the secular decline of coal volumes (~40% of carloads makes it the largest category) has been negatively skewing the data.
#Bullish $IYT $XLB $XLE $DBC

 

Credit (NEUTRAL)

 

Fundamentals (BULLISH)

 

Valuations (NEUTRAL)

 

Sentiment (BULLISH)

Retail investor sentiment survey (2017.09.07)
by The American Association of Individual Investors (AAII)

Sentiment recovers a bit but still remains at extremes indicative of a contrarian bull signal…
Bull/Bear ratio: +21bps wow @ 0.84 (below both 1.30 historical average and 1.00 – 1.80 extremes)
Bullish: +4.3pp @ 29.3% (below both 39 avg and 30 – 45 extremes)
Bearish: -4.9pp @ 35.0% (above 30 avg, between 25 – 40 extremes)
Neutral: +0.6pp @ 35.7% (above 31 avg, below 40 extreme)
Measures respondents’ expectation for equity performance over next 6 months (through 2/2018).
[Previously: Retail allocations remain neutral, Institutional allocations remain a bullish signal, Strategists’ consensus remains a neutral signal & Quantifying the “wall of worry”]
#Bullish! #Contrarian

 

Technicals (NEUTRAL)

 

–Romeo

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