Category Archive: 5) Global Macro

Our “Prosperity” Is Now Dependent on Predatory Globalization

Nowadays, trade and "prosperity" are dependent on currencies that are created out of thin air via borrowing or printing. So here's the story explaining why "free" trade and globalization create so much wonderful prosperity for all of us: I find a nation with cheap labor and no environmental laws anxious to give me cheap land and tax credits, so I move my factory from my high-cost, highly regulated nation to the low-cost nation, and keep all the...

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Capital Controls Next? Lira Rebounds After Turkey Bank Regulator Limits FX Swap Operations

In the first tentative step toward the final option available for Erdogan to halt the Lira's accelerating collapse - which crashed as low as 7.2362 earlier after the Wellington FX open following the the Turkish president's latest belligerent comments - namely capital controls, the Turkish Banking Regulation and Supervision Agency imposed a limit on the amount of foreign currency and lira swap and swap-like transactions, which are not to exceed 50%...

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Emerging Markets: Preview of the Week Ahead

EM FX came under greater pressure last week as the situation in Turkey deteriorated. With no weekend developments as of this writing, we expect Turkish assets to remain under pressure this week. Five worst EM currencies YTD are TRY (-41%), ARS (-36%), RUB (-15%), BRL (-14.5%), and ZAR (-12%). All five have serious baggage that warrants continued underperformance.

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Jim Rogers – Making China Great Again! (Video)

We are delighted to announce a very special guest for our next episode of the Goldnomics Podcast, due for release later this week. We recently had the opportunity to speak with the legendary investor and adventure capitalist Jim Rogers. Jim is an American businessman, investor, traveler, financial commentator and author. He is the Chairman of Rogers Holdings and Beeland Interests, Inc. He was the co-founder of the Quantum Fund and creator of the...

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What Chinese Trade Shows Us About SHIBOR

Why is SHIBOR falling from an economic perspective? Simple again. China’s growth both on its own and as a reflection of actual global growth has stalled. And in a dynamic, non-linear world stalled equals trouble. Going all the way back to early 2017, there’s been no acceleration (and more than a little deceleration). The reflation economy got started in 2016 but it never went anywhere. For most of last year, optimists were sure that it was just the...

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The Fantasy of “Balanced Returns” Funding Retirement

The fantasy that a "balanced portfolio" yielding "balanced returns" will fund a stable retirement for decades to come is widely accepted as a sure thing: inflation will stay near-zero essentially forever, assets such as stocks and bonds will continue yielding hefty income and capital gains, and all the individual or fund needs to do is maintain a "balanced portfolio" of various asset classes that yield "balanced returns," i.e. some safe "value"...

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Global Asset Allocation Update – (VIDEO)

Economic thoughts and analysis from Alhambra Investments CEO Joe Calhoun.

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We’ll Pay All Those Future Obligations by Impoverishing Everyone (How to Destroy Our Currency In One Easy Lesson)

The only way to pay all these future obligations is by creating new money. I've been focusing on inflation, which is more properly understood as the loss of purchasing power of a currency, which when taken to extremes destroys the currency and the wealth/income of everyone forced to use that currency.

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Emerging Markets: Preview of the Week Ahead

EM FX has come under pressure again due to ongoing trade tensions and rising US rates but saw some modest relief Friday after the PBOC announcement on FX forwards. This helped EM FX stabilize, but we do not think the negative fundamental backdrop has changed. Best performers last week were MXN, PHP, and PEN while the worst were TRY, ZAR, and KRW.

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The 21st Century Misery Index: Labor’s Share of the Economy and Real-World Inflation

In the late 1970s and early 1980s, an era of stagflation, the Misery Index was the unemployment rate plus inflation, both of which were running hot. Now those numbers are at 50-year lows: both the unemployment rate and inflation are about as low as they can go, reaching levels not seen since the mid-1960s.

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Global Asset Allocation Update

The risk budget is unchanged again this month. For the moderate risk investor, the allocation between bonds and risk assets is evenly split. The only change to the portfolio is the one I wrote about last week, an exchange of TIP for SHY.

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Russia Sells 80 percent Of Its US Treasuries

Russia Sells 80% Of Its US Treasuries. Description: In just over 2 months Russia has sold-off over 85% of its holdings of U.S. Treasuries, should the U.S. be concerned? – Russia has liquidated 85% of its US Treasury holdings in just two months. – Russia dumps over $90 billion of Treasuries in April and May as holdings collapse from near $100 billion to just $9 billion.

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Here’s What We’ve Lost in the Past Decade

The confidence and hubris of those directing the rest of us to race off the cliff while they watch from a safe distance is off the charts. The past decade of "recovery" and "growth" has actually been a decade of catastrophic losses for our society and nation. Here's a short list of what we've lost: 1. Functioning markets. Free markets discover price and assess risk.

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Emerging Markets: Week Ahead Preview

EM FX enjoyed a respite from the ongoing selling pressures, with most currencies up on the week vs. the dollar.  Best performers were CLP, MXN, and ZAR while the worst were TRY, CNY, and COP.  BOJ, Fed, and BOE meetings this week may pose some risks to EM FX.

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Here’s How Systems (and Nations) Fail

These embedded processes strip away autonomy, equating compliance with effectiveness even as the processes become increasingly counter-productive and wasteful. Would any sane person choose America's broken healthcare system over a cheaper, more effective alternative?

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When Long-Brewing Instability Finally Reaches Crisis

The doom-and-gloomers among us who have been predicting the unraveling of an inherently unstable financial system appear to have been disproved by the reflation of yet another credit-asset bubble. But inherently unstable / imbalanced systems can stumble onward for years or even decades, making fools of all who warn of an eventual reset.

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Global Asset Allocation Update

Note: This will be a short update. We are shifting the timing of some of our reports. The monthly Global Asset Allocation update will now be published in the first week of the month, aiming for the first of each month. I’ll put out a full report next week. The Bi-Weekly Economic Review is shifting to a monthly update, published on the 15th of each month.

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The Top of GDP

In 1999, real GDP growth in the United States was 4.69% (Q4 over Q4). In 1998, it was 4.9989%. These were annual not quarterly rates, meaning that for two years straight GDP expanded by better than 4.5%. Individual quarters within those years obviously varied, but at the end of the day the economy was clearly booming.

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Mid-Year Global Update

Economic thoughts and analysis from Alhambra Investments CEO Joe Calhoun.

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The Imperial Naivete of the American Public

The nation's premier corporate profit engines / social media giants are the ideal platforms for undermining the U.S. via the sowing of disintegration. Whether it's stated or not, one source of the inchoate outrage triggered by Russian-sourced purchases of adverts on Facebook in 2016 (i.e. "meddling in our election") is the sense that the U.S. is sacrosanct due to our innate moral goodness and our Imperial Project.

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