Weekly Chart Flow (8.20.17)

Us retail sales ex autos, gas came in at 0.5% M/M, beating expectations of 0.4%. Headline y/y numbers bounced, but have been range bound.

Amazon’s prime day provided a positive tailwind, as non-store growth re-accelerated, accounting for 41% of the aggregate gain.

Building materials and garden equipment was also strong, coming in at 8.3% y/y.

However, food services and drinking places remain weak at 3.4% y/y, down from 10% in Jan 2015.

Housing starts came in at 1.155, missing expectations of 1.225. 

Industrial production beat estimates, with half of the % gain from shale drilling.

And auto incentives have declined materially with the pace of car sales. 

On the corporate front, buybacks relative to market caps have slowed across indices.

As US buybacks continue to slow. 

Reducing overall liquidity, as corporates have been the primary bidder.

We are beginning to see some weakness in small caps.

With breadth deteriorating across the NYSE.

H/t @stockboardasset

Which we can also see on the NYSE summation index from @andyscycles.

Some view it as equity rotation, as earnings growth overseas outpaces the US. Some see a bubble.

That may be turning based on the Hindenburg Omen. 

As well as BMI’s study. 

Europe still looks cheap on a relative basis.

But EPS revisions may continue to be a headwind.

Largely due to the strength of the Euro, which may reverse in the short term. Mario?

This will likely weigh on crude.

But a near term bounce to shake shorts may be in order first.

Which is also in line with @freixasmarti’s rendering.

Though longer term it seems the bulls may have trouble on the demand side.

That will continue to persist into 2018. [5Y swap mkt indicating large reduction in credit impulse]

H/t @Jp_OB

This would seemingly hamper global growth, as China has been the primary driver of credit creation.

The forward curve does not seem to be pricing this in at 30 BPS of flattening. 

However, the probabilities may favor the curve already inverting.

So is it time to get long bonds?