Diary of a Financier

Top Newsstuffs (October 23-29)

In Bookshelf on Sun 29 Oct 2017 at 05:20

Top reads from across the past week…

Macro (BULLISH)

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

Growth reaches even higher velocities, as orders beat expectations behind another big acceleration; inventory growth is a bit hot, but it’s off of a low base; still expect decelerations down from these above-trend velocities, considering the tapering of easy yoy comps into year-end…
– Core durable goods, new orders (ex-transportation): +1.4pp @ +7.5% yoy, +0.7% mom (beat +0.5e)
– Core capex, new orders (capital goods, ex-defense & aircraft): +4.2pp @ +7.8% yoy, +1.3% mom
– Core inventory (ex-transportation): +0.6pp @ +5.1% ytd, +0.6% mom
Durable goods account for ~8% of US GDP.
#Bullish! $XLI

Gross Domestic Product (Advanced estimate, 2017q3)
by Bureau of Economic Analysis (BEA)

Another good report beats expectations at the high-end of trend growth; again, consumption and net exports outperformed higher-frequency data, likely aided by the weak dollar at quarter-end, although yoy comps get harder though Q4…
Real GDP (Q2): -0.1pp sequentially @ +3.0% qoq saar (beat +2.5e)
    Inflation: Core +1.7%; Headline +1.7%
    Consumption (PCE): -0.9pp @ +4.4%
    Investment: +2.1pp @ +6.0%; Residential -6.0%; Nonresidential +3.9%
    Government spending: +0.1pp @ -0.1%; Federal +1.1%; State & local -0.9%
    Exports: -1.2pp @ +2.3%
    Imports: -0.7pp @ -0.8%
    Inventories: +0.73pp contribution to GDP growth rate
Real GDP per capita (Q3): +0.12pp @ 2.34% yoy; 9.3% below LT regression trend
Real GDP (2016FY): +1.5% yoy
Real GDP (2015FY): +2.9% yoy
Real GDP (2014FY): +2.6% yoy
Real GDP (2013FY): +1.7% yoy
#Bullish

 

Credit (BEARISH)

 

Fundamentals (BULLISH)

 

Valuations (NEUTRAL)

 

Sentiment (BULLISH)

Retail investor sentiment survey (2017.10.26)
by The American Association of Individual Investors (AAII)

Sentiment wanes a bit, remaining right in the middle of neutral territory in aggregate; more importantly, the neutral cohort continues to recede — a sign of both broader-based participation and the wall-of-worry’s dismantling…
Bull/Bear ratio: -16bps wow @ 1.20x (below 1.30 historical average, within 1.00 – 1.80 extremes)
Bullish: +1.7pp @ 39.6% (above 39 avg, within 30 – 45 extremes)
Bearish: +5.1pp @ 33.0% (above 30 avg, within 25 – 40 extremes)
Neutral: -6.8pp @ 27.3% (below 31 avg and 40 extreme)
Measures respondents’ expectation for equity performance over next 6 months (through 4/2018).
[Previously: Retail allocations remain neutral, Institutional allocations maintain bullish signal for US risk, Strategist sentiment remains neutral & Quantifying the “wall of worry”]
#Neutral #Contrarian

 

Technicals (NEUTRAL)

 

 

–Romeo

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