Category Archive: 5.) Alhambra Investments

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US IP On The Other Side of Harvey and Irma

2018-02-19

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2018-02-19

US Industrial Production, Jan 1995 - 2018
Industrial Production in the US was revised to a lower level for December 2017, and then was slightly lower still in the first estimates for January 2018. Year-over-year, IP was up 3.7%. However, more than two-thirds of the gain was registered in September, October, and November (and nearly all the rest in just the single month of April 2017).

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China: Inflation? Not Even Reflation

2018-02-16

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2018-02-16

China Price Stability, Jan 1997 - 2018
The conventional interpretation of “reflation” in the second half of 2016 was that it was simply the opening act, the first step in the long-awaiting global recovery. That is what reflation technically means as distinct from recovery; something falls off, and to get back on track first there has to be acceleration to make up that lost difference.

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Bi-Weekly Economic Review

2018-02-14

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2018-02-14

Personal income for December was better than expected at up 0.4% on the month and 4.11% year over year. Wages and salaries were up 0.5%. Unfortunately, that rate of rise is not even up to the lower end of the range we’ve seen in past expansions when 5% income growth was a precursor to recession. Still, it is, sadly, about average for this expansion.

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China: CNY, Not Imports

2018-02-11

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2018-02-11

China Imports, Jan 2011 - 2018
In February 2013, the Chinese Golden Week fell late in the calendar. The year before, 2012, New Year was January 23rd, meaning that the entire Spring festival holiday was taken with the month of January. The following year, China’s New Year was placed on February 10, with the Golden Week taking up the entire middle month of February.

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COT Blue: Interest In Open Interest

2018-02-10

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2018-02-10

US Treasury Bond Futures, Jan 1993 - 2018
For me, the defining characteristic of the late nineties wasn’t the dot-coms. Most people were exposed to the NASDAQ because, frankly, at the time there was no getting away from it. It had seeped into everything, transforming from a financial niche bleeding eventually into the entire worldwide culture. We all remember the grocery clerks who became day traders.

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Global Asset Allocation Update:

2018-02-09

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2018-02-09

Moderate Allocation
There is no change to the risk budget this month. For the moderate risk investor the allocation to bonds is 50%, risk assets 45% and cash 5%. Despite the selloff of the last week I don’t believe any portfolio action is warranted. While the overbought condition has largely been corrected now, the S&P 500 is far from the opposite condition, oversold. At the lows this morning, the S&P 500 was officially in correction territory, down 10% from the...

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US Imports: A Little Inflation For Yellen, A Little More Bastiat

2018-02-08

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2018-02-08

US Trade Balance, Jan 2014 - 2018
US imports rocketed higher once again in December, according to just-released estimates from the Census Bureau. Since August 2017, the US economy has been adding foreign goods at an impressive pace. Year-over-year (SA), imports are up just 10.4% (only 9% unadjusted) but 9.3% was in just those last four months. For most of 2017, imports were flat and even lower.

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How Global And Synchronized Is A Boom Without China?

2018-02-04

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2018-02-04

China Manufacturing PMI, Jan 2007 - 2018
According to China’s official PMI’s, those looking for a boom to begin worldwide in 2018 after it failed to materialize in 2017 are still to be disappointed. If there is going to be globally synchronized growth, it will have to happen without China’s participation in it. Of course, things could change next month or the month after, but this idea has been around for a year and a half already.

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The Historical Warnings of Money

2018-02-02

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2018-02-02

Bank of England
It’s interesting, to me anyway, that an image of the Roman goddess Juno remains to this day on the logo of the Bank of England. There are many stories about her role as it relates to money, but what cannot be denied is that the very word itself came to us from her temple. The Latin moneta was derived from the word monere, a verb meaning to warn. Moneta was Juno’s surname.

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Globally Synchronized What?

2018-01-31

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2018-01-31

Inflation Europe, Jan 2007 - Oct 2017
In one of those rare turns, the term “globally synchronized growth” actually means what the words do. It is economic growth that for the first time in ten years has all the major economies of the world participating in it. It’s the kind of big idea that seems like a big thing we all should pay attention to. In The New York Times this weekend, we learn.

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Bi-Weekly Economic Review: Markets At Extremes

2018-01-30

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2018-01-30

Production ended the year on a strong note but early readings from January are not as positive. The December industrial production report headline was strong at a 0.9% gain but a lot of that strength was in the mining (oil drilling) and utility sectors. Mining has actually led the way the last year as rig count has risen with drilling activity. I’d love to see our economy less dependent on the price of oil but that is what we’ve become over the...

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December Durable Goods

2018-01-29

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2018-01-29

US Durable Goods Order, Jan 1993 - 2018
Durable and capital goods orders and shipments all increased in December by growth rates consistent with those registered in the months leading up to the big storms Harvey and Irma. We continue to find evidence that accelerated growth in October and November was nothing more than the anticipated after-effects cleaning up after those hurricanes.

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The Dismal Boom

2018-01-25

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2018-01-25

Friedman's Plucking Model of Trend-Cycle
There is a fundamental assumption behind any purchasing manager index, or PMI. These are often but not always normalized to the number 50. That’s done simply for comparison purposes and the ease of understanding in the general public. That level at least in the literature and in theory is supposed to easily and clearly define the difference between growth and contraction.

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Central Bank Transparency, Or Doing Deliberate Dollar Deals With The Devil

2018-01-25

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2018-01-25

Hong Kong HKD, Jul 2012 - Jan 2018
The advent of open and transparent central banks is a relatively new one. For most of their history, these quasi-government institutions operated in secret and they liked it that way. As late as October 1993, for example, Alan Greenspan was testifying before Congress intentionally trying to cloud the issue as to whether verbatim transcripts of FOMC meetings actually existed.

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What About 2.62 percent?

2018-01-22

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2018-01-22

US Treasury Curve, Nov 2000 - 2006
There’s nothing especially special about 2.62%. It’s a level pretty much like any other, given significance by only one phrase: the highest since 2014. It sounds impressive, which is the point. But that only lasts until you remember the same thing was said not all that long ago.

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The Blatant Dishonesty of the ‘Boom’

2018-01-20

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2018-01-20

China Fixed Asset Investment, June 2013 - Dec 2017
Why do humans tend to behave in herds? It’s a fundamental question that only recently have researchers been able to better understand. On the one hand, it doesn’t take an advanced degree in some neurological science to see the basis behind it; survival for our ancestors often meant getting along with the crowd. There are times when that very trait applies still.

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U.S. Unemployment: The Dissonance Book

2018-01-20

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2018-01-20

US Federal Reserve, Jan 2010 - 2018
I’ve found the word “dissonance” has become more common in regular usage beyond just my own. Whether that’s a function of my limited observational capacities or something more meaningful than personal bias isn’t at all clear. Still, the word does seem to fit in economic terms more and more as we carry on uncorrected by meaningful context.

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Good or Bad, But Surely Not Transitory

2018-01-19

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2018-01-19

US Consumer Price Index, Dec 1997 - 2017
When Federal Reserve officials first started last year to mention wireless network data plans as a possible explanation for a fifth year of “transitory” factors holding back consumer price inflation, it seemed a bit transparent. One of the reasons for immediately doubting their sincerity was the history of that particular piece of the CPI (or PCE Deflator).

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Is Un-Humming A Word? It Might Need To Become One

2018-01-19

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2018-01-19

U.S. Industrial Production, Jan 1968 - 2018
Industrial Production in the US was up 3.6% year-over-year in December 2017. That’s the best for American industry since November 2014 when annual IP growth was 3.7%. That’s ultimately the problem, though, given all that has happened this year. In other words, despite a clear boost the past few months from storm effects, as well as huge contributions from the mining (crude oil) sector, American production at its best can only manage to reflect...

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Retail Sales, Consumer Sentiment, And The Aftermath Of Hurricanes

2018-01-17

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2018-01-17

US Retail Sales in Feb 2016
Consumer confidence has been sky-high for some time now, with the major indices tracking various definitions of it at or just near highs not seen since the dot-com era. Economists place a lot of emphasis on confidence in all its forms, including that of consumers, and there is good reason for them to do so; or there was in the past.

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