Diary of a Financier

Top Newsstuffs (June 4-10)

In Bookshelf on Sun 10 Jun 2018 at 05:09

Here are your top reads from across the past week…

Macro (BULLISH)

Trade balance (April 2018)
by US Department of Commerce

Finally, the deficit continues to mend, recovering from its worse postcrisis level (despite a really weak USD, historically narrow energy deficit, and having lapped difficult yoy comps in 2017Q4); overall, gross trade volumes had been accelerating (a sign of strong global growth), but it’s worth watching whether or not that changes after Trump’s tariffs/trade wars; secularly declining petroleum imports and slower trade with China have been multiyear tailwinds…
Net exports: -0.3% yoy, +2.1% mom @ -$46.2B deficit (beat -$49.0e); prior month revised higher
   Exports: +9.9% yoy, +2.8% mom; +28% since precrisis peak
   Imports: +8.0% yoy, -0.2% mom; +11% since precrisis peak
The net balance of trade accounts for ~3 – 5% of US GDP (seasonally adjusted).
#Neutral $DXY $UUP #EX #IM #NX #Globalization

Rail traffic monthly (May 2018)
by The Association of American Railroads (AAR)

After a weak start to the year, traffic has recovered and maintained velocity above trend; expect headwinds in coming months as we’ve now lapped easy yoy comps…
 Volume: -0.2pp @ +4.9% yoy
Carload groups: 15 of 20 posted gains yoy
   Energy: +17.7% yoy; continues recovery amidst increasingly easy yoy comps
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 (BULLISH)

 

Sentiment (NEUTRAL)

Retail investor sentiment survey (2018.06.07)
by The American Association of Individual Investors (AAII)

Sentiment remains in the middle of neutral territory, continuing a quiet, rangebound stretch after the whipsawing that began the year; we can still expect outperformance since the depths reached at the beginning of April, after which “[such] unusually low levels of optimism [and] unusually high levels of pessimism have historically been followed by above-average 6- and 12-month returns for the S&P 500″…
Bull/Bear ratio: +13bps wow @ 1.46x (above 1.30 historical average, but within 1.00 – 1.80 extremes)
    Bullish: +3.9pp @ 38.9% (below 39 avg, and within 30 – 45 extremes)
    Bearish: +0.4pp @ 26.7% (below 30 avg, but within 25 – 40 extremes); up from near ytd lows
    Neutral: -4.3pp @ 34.4% (above 31 avg, and within 40 extreme)
Measures respondents’ expectation for equity performance over next 6 months (through 12/2018).
[Previously: Institutional allocations fall back to a neutral signal; Strategist sentiment remains neutral; Quantifying the “wall of worry”; See also: Household equity allocations at postcrisis lows sends a bullish signal]
#Neutral #Contrarian

Asset allocation survey (May 2018)
by The American Association of Individual Investors (AAII)

Allocations procyclically cross back up to a bearish signal…
– Stocks: +2.5pp @ 70.0% (above both 60 average and 70 extreme high); back up near highest level since 7/2000
Bonds: -1.8pp @ 14.1% (below 16 avg); lowest since 9/2008
Cash: -0.7pp @ 15.9% (below 24 avg, but above 15 extreme low); up from lowest level since 12/1999
#Bearish #Contrarian $SPY $AGG

Technicals (NEUTRAL)

 

–Romeo

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