Category Archive: 5.) Alhambra Investments

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Do Record Debt And Loan Balances Matter? Not Even Slightly

2017-03-12

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2017-03-12

Z1 Total Debt Securities, 1980 - 2016
We live in a non-linear world that is almost always described in linear terms. Though Einstein supposedly said compound interest is the most powerful force in the universe, it rarely is appreciated for what the statement really means. And so the idea of record highs or even just positive numbers have been equated with positive outcomes, even though record highs and positive growth rates can be at times still associated with some of the worst. It...

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[ Jeffrey Snider ] Understanding the Global US Dollar Shortage

2017-03-12

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Erik Townsend welcomes Jeffrey Snider to MacroVoices. Erik and Jeff discuss: — Understanding the Eurodollar Money Market — Swap Spreads and Interbank . MacroVoices Presents: Jeffrey Snider – Understanding the Global US Dollar Shortage. Thanks for watching!!! Erik Townsend welcomes Jeffrey Snider to MacroVoices. Erik and Jeff discuss: — Understanding the Eurodollar Money Market — …

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Payrolls Still Slowing Into A Third Year

2017-03-11

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2017-03-11

Payrolls Est Survey, Jan 2010 - 2017
Today’s bland payroll report did little to suggest much of anything. All the various details were left pretty much where they were last month, and all the prior trends still standing. The headline Establishment Survey figure of 235k managed to bring the 6-month average up to 194k, almost exactly where it was in December but quite a bit less than November. In other words, despite what is mainly written as continued “strength” is still pointing down...

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Time, The Biggest Risk

2017-03-11

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2017-03-11

Oil WTI, May 2016 - February 2017
If there is still no current or present indication of rising economic fortunes, and there isn’t, then the “reflation” idea turns instead to what might be different this time as compared to the others. In 2013 and 2014, it was QE3 and particularly the intended effects (open ended and faster paced, a bigger commitment by the Fed to purportedly do whatever it took) upon expectations that supposedly set it apart from the failures of QE’s 1 and 2. This...

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No Paradox, Economy to Debt to Assets

2017-03-11

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2017-03-11

Household Net Worth, April 1951 - 2016
It is surely one of the primary reasons why many if not most people have so much trouble accepting the trouble the economy is in. With record high stock prices leading to record levels of household net worth, it seems utterly inconsistent to claim those facts against a US economic depression.

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Same Country, Different Worlds

2017-03-10

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2017-03-10

China CPI PPI, February 2007 - 2017
To my mind, “reflation” has always proceeded under false pretenses. This goes for more than just the latest version, as we witnessed the same incongruity in each of the prior three. The trend is grounded in mere hope more than rational analysis, largely because I think human nature demands it. We are conditioned to believe especially in the 21st century that the worst kinds of things are either unrealistic or apply to some far off location nowhere...

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US Trade Skews

2017-03-09

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2017-03-09

US Trade Export, NSA 1989-2016
US trade statistics dramatically improved in January 2017, though questions remain as to interpreting by how much. On the export side, US exports of goods rose 8.7% year-over-year (NSA). While that was the highest growth rate since 2012, there is part symmetry to account for some of it.

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China And Reserves, A Straightforward Process Unnecessarily Made Into A Riddle

2017-03-08

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2017-03-08

China Official Foreign Exchange 2015-2017
The fact that China reported a small increase in official “reserves” for February 2017 is one of the least surprising results in all of finance. The gamma of those reserves is as predictable as the ticking clock of CNY, in no small part because what is behind the changes in those balances are the gears that lie behind face of the forex timepiece.

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Do Record Eurodollar Balances Matter? Not Even Slightly

2017-03-07

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2017-03-07

Nonbanks TIC Other Outbound, Nov 1978 - 2016
The BIS in its quarterly review published yesterday included a reference to the eurodollar market (thanks to M. Daya for pointing it out). The central bank to central banks, as the outfit is often called, is one of the few official institutions that have taken a more objective position with regard to the global money system. Of the very few who can identify eurodollars, or have even heard of them, the BIS while not fully on board is at least open...

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Manufacturing Back To 2014

2017-03-07

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2017-03-07

Factory Orders for All Manufacturing Industies, SA 1992-2016
The ISM Manufacturing PMI registered 57.7 in February 2017, the highest value since August 2014 (revised). It was just slightly less than that peak in the 2014 “reflation” cycle. Given these comparisons, economic narratives have been spun further than even the past few years where “strong” was anything but.

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Bi-Weekly Economic Review

2017-03-05

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2017-03-05

Economic Reports Scorecard. The economic data released since my last update has been fairly positive but future growth and inflation expectations, as measured by our market indicators, have waned considerably. There is now a distinct divergence between the current data, stocks and bonds. Bond yields, both real and nominal, have fallen recently even as stocks continue their relentless march higher.

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Economic Dissonance, Too

2017-03-04

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2017-03-04

Germany Industrial Production, SA 1997-2016
Germany is notoriously fickle when it comes to money, speaking as much of discipline in economy or industry as central banking. If ever there is disagreement about monetary arrangements, surely the Germans are behind it. Since ECB policy only ever attains the one direction, so-called accommodation, there never seems to be harmony.

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True Cognitive Dissonance

2017-03-04

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2017-03-04

Inflation In Japan 2011-2016
There is gold in Asia, at least gold of the intellectual variety for anyone who wishes to see it. The Chinese offer us perhaps the purest view of monetary conditions globally, where RMB money markets are by design tied directly to “dollar” behavior. It is, in my view, enormously helpful to obsess over China’s monetary system so as to be able to infer a great deal about the global monetary system deep down beyond the “event horizon.”

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Real Disposable Income: Headwinds of the Negative

2017-03-03

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2017-03-03

PCE Chain-type Price Index 2008-2017
The PCE Deflator for January 2017 rose just 1.89% year-over-year. It was the 57th consecutive month less than the 2% mandate (given by the Fed itself when in early 2012 it made the 2% target for this metric its official definition of price stability).

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Some Notes On GDP Past And Present

2017-03-01

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2017-03-01

GDP PCE Deflator QQ YY, January 2009 - April 2016
The second estimate for GDP was so similar to the first as to be in all likelihood statistically insignificant. The preliminary estimate for real GDP was given as $16,804.8 billion. The updated figure is now $16,804.1 billion. In nominal terms there was more variation, where the preliminary estimate of $18,860.8 billion is now replaced by one for $18,855.5 billion.

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Durable Goods Groundhog

2017-02-28

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2017-02-28

Durable Goods New Orders, NSA 1993-2017
If the economy is repeating the after-effects of the latest “dollar” events, and it does seem more and more to be that case, then analysis starts with identifying a range for where it might be in the repetition. New orders for durable goods (ex transportation) rose 4.3% year-over-year in January 2017 (NSA, only 2.4% SA), the highest growth rate since September 2014 (though not meaningfully faster than the 3.9% rate in November 2016).

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It Was ‘Dollars’ All Along

2017-02-28

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2017-02-28

Giant Sucking Sound 1960 - 2015
Ross Perot famously declared the “giant sucking sound” in the 1992 Presidential campaign. The debate over NAFTA did not end with George H. W. Bush’s defeat, as it simmered in one form or another for much of the 1990’s. Curiously, however, it seemed almost perfectly absent during the 2000’s, the very decade in which Perot’s prophecy came true. Americans didn’t notice because there was a bubble afoot.

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Not Recession, Systemic Rupture – Again

2017-02-25

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2017-02-25

Pyramid - Total US Gold Stock, January 2017
For the very few in the mainstream of economics who venture further back in history than October 1929, they typically still don’t go much last April 1925. And when they do, it is only to further bash the gold standard for its presumed role in creating the conditions for 1929. The Brits under guidance of Winston Churchill made a grave mistake, one from which gold advocates could never recover given what followed.

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The Market Is Not The Economy, But Earnings Are (Closer)

2017-02-23

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2017-02-23

S&P 500 EPS April 1996 - April 2016
My colleague Joe Calhoun likes to remind me that markets and fundamentals only sound like they should be related, an observation that is a correct one on so many different levels. Stock prices, in general, and GDP growth may seem to warrant some kind of expected correlation, but it has proven quite tenuous at times especially in a 21st century sense.

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The Stinking Politics of It All

2017-02-22

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2017-02-22

Potential Real Gross Domestic Products 1999Q1 - 2017Q1
It is largely irrelevant, but still the political theater is fascinating. As is now standard operating procedure, whatever comes out of the Trump administration immediately is conferred as the standard for awful. This is not my own determination, mind you, but that of the mainstream, whatever that is these days. And so it is with the first set of budget figures that include very robust growth projections, a point of contention and an obvious one...

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