Category Archive: 5.) Alhambra Investments

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Auto Pressure Ramps Up

2017-05-10

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2017-05-10

Motor Vehicle Sales And Production, January 2011 - May 2017
The Los Angeles Times today asked the question only the mainstream would ask. “Wages are growing and surveys show consumer confidence is high. So why are motor vehicle sales taking a hit?” Indeed, the results reported earlier by the auto sector were the kind of sobering figures that might make any optimist wonder.

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Bi-Weekly Economic Review

2017-05-09

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2017-05-09

The economic reports since the last economic update were generally less than expected and disappointing. The weak growth of the last few years had been supported by autos and housing while energy has been a wildcard. When oil prices fell, starting in mid-2014 and bottoming in early 2016, economic growth suffered as the shale industry retrenched.

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China: Blatant Similarities

2017-05-07

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2017-05-07

China NBS Manufacturing PMI, April 2007 - April 2017
Declines in several of the world’s PMI’s in April have furthered doubts about the global “reflation.” But while many disappointed, some sharply, it isn’t just this one month that has sown them. In China, for example, both the manufacturing and non-manufacturing sentiment indices declined to 6-month lows.

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This Is Not Expansion

2017-05-06

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2017-05-06

Real GDP Trends 2011-2017
Back in October, the Bureau of Economic Analysis released GDP figures that suggested what those behind “reflation” had hoped. After a near miss to start 2016, the economy had shaken off the effects of “transitory” weakness, mainly manufacturing and oil, poised to perform in a manner consistent with monetary policy rhetoric.

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Clickbait: Bernanke Terrifies Stock Investors, Again

2017-05-03

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2017-05-03

Unstable GDP Revised, April 2011 - April 2017
If you are a stock investor, you should be terrified. The most disconcerting words have been uttered by the one person capable of changing the whole dynamic. After spending so many years trying to recreate the magic of the “maestro”, Ben Bernanke in retirement is still at it.

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Defining Labor Economics

2017-05-02

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2017-05-02

Job Openings and Labor Turnover Survey, Dec 2000 - 2016
Economics is a pretty simple framework of understanding, at least in the small “e” sense. The big problem with Economics, capital “E”, is that the study is dedicated to other things beyond the economy. In the 21st century, it has become almost exclusive to those extraneous errands. It has morphed into a discipline dedicated to statistical regression of what relates to what, and the mathematical equations assigned to give those relationships some...

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‘Dollar’ ‘Improvement’

2017-04-29

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2017-04-29

US TIC Official Buying Of US Treasury Bonds And Notes, February 2013 - February 2017
According to the headline TIC statistics, foreign central banks have in the past six months sold the fewest UST’s since the 6-month period ended November 2015. That may indicate an easing of “dollar” pressure in the private markets due to “reflation” sentiment.

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PBoC: Mechanical Tightening PBoC is China Central Bank

2017-04-28

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2017-04-28

PBOC Balance Sheet, March 2011 - March 2017
The mainstream narrative as it relates to Chinese money is “tightening.” Having survived the economic downturn last year, we are to believe that the PBOC is once again on bubble duty. They raised their reverse repo rates, considered to be their policy benchmarks, three times up to mid-March.

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To The Asian ‘Dollar’, And Then What?

2017-04-27

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2017-04-27

TIC - US Banking Data Claims On Foreigners, February 1979 - February 2017
The Bretton Woods system was intentionally set up to funnel monetary convertibility through official channels. The primary characteristic of any true gold standard is that any person who wishes can change paper claims into hard money. It was as much true in any one country as between those bound by the same legal framework (property).

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Bi-Weekly Economic Review

2017-04-25

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2017-04-25

bi-weekly
It wasn’t a very good two weeks for economic data with the majority of reports disappointing. Most notable I think is that the so called “soft data” is starting to reflect reality rather than some fantasy land where President Trump enacts his entire agenda in the first 100 days of being in office. Politics is about the art of the possible and that is proving a short list for now.

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Money In America

2017-04-24

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2017-04-24

Economic Baselines in the Eurodollar Era, January 1993 - 2016
In 1830, France was once more swept up in revolution, only this time at the end of it was installed one king to replace another. Louis-Phillipe became, in fact, France’s last king as a result of that July Revolution. The country was trying to make sense of its imperial past with the growing democratic sentiments of the 19th century.

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New Patterns of Disturbance

2017-04-22

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2017-04-22

Industrial Production, 1991 - 2016
Having finally established that the economy of the “rising dollar” was appreciably worse than first estimated, we can turn our attention back toward figuring out what that means for the near future and beyond. According to the latest estimates for Industrial Production, growth has returned but in the same weird asymmetric sort of way that is actually common for the past decade. Year-over-year IP expanded by 1.5% in March 2017, the highest growth...

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Global Asset Allocation Update

2017-04-21

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2017-04-21

Moderate Allocation
There is no change to the risk budget this month. For the moderate risk investor, the allocation between risk assets and bonds is unchanged at 50/50. The performance of markets in the first quarter of the year was a bit schizophrenic. Stocks performed well which one might interpret as a reflection of improving economic growth prospects. Certainly President Trump and his proxies were quick to take credit but unfortunately for the new...

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Now You Tell Us

2017-04-20

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2017-04-20

US Industrial Production, Jan 2006 - 2017
As we move further into 2017, economic statistics will be subject to their annual benchmark revisions. High frequency data such as any accounts published on or about a single month is estimated using incomplete data. It’s just the nature of the process. Over time, more comprehensive survey results as well as upgrades to statistical processes make it necessary for these kinds of revisions.

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The Expanded Retail Sales Gap

2017-04-18

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2017-04-18

US Retail Sales Trade, Jan 1993 - 2017
Retail sales growth in February 2017 was going to be low by virtue of its comparison to February 2016 and the extra day in that month. The Census Bureau’s autoregressive models are supposed to normalize just these kinds of calendar irregularities so that we can make something close to apples to apples comparisons. The seasonally-adjusted estimate for February, however, was calculated to be less than the one for January 2017, therefore suggesting...

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Assessing China’s Economic Risks

2017-04-18

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2017-04-18

China Industrial Production 2009-2017
First quarter GDP in China rose 6.9%, better than expected and above the government’s target (6.5%) for 2017. It stands to reason, however, that if Communist officials thought they could get 6.9% to last for the whole year they would have made it their target, especially since 6.5% would be less than the GDP growth rate for 2016 (6.7%). In only that one way is China’s GDP statistic meaningful.

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What Was Chinese Trade in March?

2017-04-17

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2017-04-17

China Exports, Jan 2008 - 2017
As with all statistics, there are discrepancies that from time to time may obscure the meaning or validity of the particular estimate in question. For the vast majority of the time, any such uncertainties amount to very little. Overall, harmony among the major accounts reduces the signal noise from any one featuring a significant inconsistency.

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Earnings per Share: Is It Other Than Madness?

2017-04-16

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2017-04-16

S&P 500 Earnings Per Share 2014-2018
As earnings season begins for Q1 2017 reports, there isn’t much change in analysts’ estimates for S&P 500 companies for that quarter. The latest figures from S&P shows expected earnings (as reported) of $26.70 in Q1, as compared to $26.87 two weeks ago. That is down only $1 from October, which is actually pretty steady particularly when compared to Q4 2016 estimates that over the same time plummeted from $29.04 to $24.16. At $26.70, that would...

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Optimal Lunacy

2017-04-15

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2017-04-15

Federal Funds Rate 2010-2018
In June 2012, Janet Yellen, then the Vice Chairman of the Federal Reserve, addressed an audience in Boston with what for the time seemed like a radical departure. It was the latest in a string of them, for conditions throughout the “recovery” period never did quite seem to hit the recovery stride. Because of that, there was constant stream of trial balloons suggesting how the Federal Reserve might try to overcome this economic inertia. At that...

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The Global Burden

2017-04-12

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2017-04-12

Germany 2-year Bund Yield 2009-2017
Bundesrepublik Deutscheland Finanzagentur GmbH (German Finance Agency) was created on September 19, 2000, in order to manage the German government’s short run liquidity needs. GFA took over the task after three separate agencies (Federal Ministry of Finance, Federal Securities Administration, and Deutsche Bundesbank) had previously shared responsibility for it.

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