Recap 5-17-12

Main Items:

· Philly Fed declined to -5.8 in May vs 10 exp and 8.5 prev

· US Initial Jobless Claims increased to 370k vs 365k exp and 367k prev

· Merkel said she would consider stimulus programs for Greece – NYT

· 10y Tips auction had a clearing real yield of -40bps. Lock in a 4% loss of purchasing power here!


  • Japan GDP rose 4.1% SAAR in 1Q vs 3.5% exp and -0.7% prev
  • Australian Weekly Wages increased 4.4% YoY in through Feb vs 4.1% exp and 4.3% prev

Upcoming Data:

  • Fri: Canada CPI
  • Mon: Chicago Fed
  • Tues: UK CPI EU Consumer Confidence, Richmond Fed Mfg Idx, Japan Trade Balance


Interesting Tidbit: Total Net Inflows into Equity Mutual Funds in the US hasn’t been positive on a 3m basis since last May. That’s longer than the 2007/2008 period. Bond inflow – Equity inflow differential has averaged 30bn a month for a year.

This probably isn’t a surprise for regular readers. The demographically driven contraction in PE will probably mean that dividend & share buybacks will become increasingly important source of equity returns. Many large companies with substantial moats and earning power appear to be trading at very cheap levels. Apple is trading < 10x Fwd earnings net of cash. Activist investing may increase as some participants agitate for better returns. Steve Mandel reportedly touched on this at the Ira Sohn conference yesterday.