Category Archive: 5.) Alhambra Investments

Some ‘Core’ ‘Inflation’ Difference(s)

The FOMC meets next week, with everyone everywhere expecting a 50 bps rate hike to be announced on Wednesday. Yesterday’s “unexpected” and “shocking” negative GDP is unlikely to deter anyone on the committee.

Read More »

Synchronized Manufacturing, Hopefully Not Mao

This is one of those cases when Inigo Montoya, the lovable if fictional rapscallion from the movie The Princess Bride, would pop into the scene to devastatingly deliver his now famous rebuke. Last week, China’s one-man Dear Leader said that the country was going to start up its own version of Build Back Better.

Read More »

What Really ‘Raises’ The Rising ‘Dollar’

It’s one of those things which everyone just accepts because everyone says it must be true. If the US$ is rising, what else other than the Federal Reserve. In particular, the Fed has to be raising rates in relation to other central banks; interest rate differentials.

Read More »

Weekly Market Pulse: Welcome Back To The Old Normal

Stagflation. It’s a word that strikes fear in the hearts of investors, one that evokes memories – for some of us – of bell bottoms, disco, and Jimmy Carter’s American malaise. The combination of weak growth and high inflation is the worst of all worlds, one that required a transformational leader and a cigar-chomping central banker to defeat the last time it came around.

Read More »

Is It Recession?

According to today’s advance estimate for first quarter 2022 US real GDP, the third highest (inflation-adjusted) inventory build on record subtracted nearly a point off the quarter-over-quarter annual rate. Yes, you read that right; deducted from growth, as in lowered it. This might seem counterintuitive since by GDP accounting inventory adds to output.

Read More »

Historic Inventory Continued In March, But Is It All Price Illusion, Too?

The Census Bureau today released its advanced estimates for March trade. These include, among other accounts like imports and exports, preliminary results reported by retailers and wholesalers. That means, for our purposes, inventories. Oh my, was there ever more inventory. It was, apparently, widely expected that following an avalanche of goods building up over the previous five months the situation might calm down a touch.

Read More »

Euro$ #5 in Goods

Last Friday, S&P Global (the merged successor to IHS Markit) reported that its PMI for German manufacturing fell to 54.1. It hadn’t been that low for more than a year and a half. Worse than that, the index for New Orders dropped below 50 for the first time since the middle of 2020. The excuses are plentiful, as there’s COVID, supply problems, Russia, a drop in demand. Wait, what was that last one?

Read More »

CNY’s Drop Wasn’t ‘Devaluation’ in ’15 nor ’18, and It Isn’t ‘Devaluation’ Now

For one thing, that whole Bretton Woods 3 thing is really off to an interesting start. And by interesting, I mean predictably backward. According to its loud and leading proponent, China’s yuan was supposed to be ascending while the dollar sank, its first step toward what many still claim will end up in some biblical-like abyss.

Read More »

The (less) Dollars Behind Xi’s Shanghai of Shanghai

What everyone is saying, because it’s convenient, is that China’s zero-COVID policies are going to harm the economy. No. Economic harm of the past is the reason for the zero-COVID policies. As I showed yesterday, the cracking down didn’t just show up around 2020, begun right out in the open years beforehand, born from the scattering ashes of globally synchronized growth.

Read More »

Not Good Goods

The goods economy in the United States is – maybe was – the lone economic bright spot. That in and of itself should’ve provoked more caution, instead there was the red-hot recovery to sell under the cover of supply shock pricing changes. The sheer spending on goods, and how they arrived, each unabashedly artificial from the get-go.

Read More »

Shanghai’s Current Plight Began in 2017

The first chapters to China’s new story now playing out in Shanghai were written down in October 2017. Planning for them had begun years earlier, their author Xi Jinping requiring more research before committing them to paper. Communist authorities there had grown increasingly concerned about the lack of growth potential for its political system by then utterly dependent for a quarter-century on the economy growing.

Read More »

China, Japan, And The Relative Pre-March Euro$ Calm In February

The month of February 2022, the calm before the latest storm. Russians went into Ukraine toward the month’s end, collateral shortage became scarcity, maybe a run right at February’s final day, and then serious escalations all throughout March – right down to pure US Treasury yield curve inversion.Given that setup, it was unsurprising to find Treasury’s February TIC data mostly unremarkable.

Read More »

I Told You It *Wasn’t* Money Printing; How The Fed Helped Cause, But Can’t Solve, Our Current ‘Inflation’

Trust the Fed. Ha! It’s one thing for money dealers to look upon Jay Powell’s stash of bank reserves with remarkable disdain, more immediately damning when effects of the same liquidity premiums in the real economy create serious frictions leaving the entire world exposed to the consequences. When all is said and done, the Federal Reserve has created its own doom-loop from which it won’t likely escape.

Read More »

Yield Curve Inversion Was/Is Absolutely All About Collateral

If there was a compelling collateral case for bending the Treasury yield curve toward inversion beginning last October, what follows is the update for the twist itself. As collateral scarcity became shortage then a pretty substantial run, that was the very moment yield curve flattening became inverted.Just like October, you can actually see it all unfold.

Read More »

China More and More Beyond ‘Inflation’

If only the rest of the world could have such problems. Chinese consumer prices were flat from February 2022 to March, even though gasoline and energy costs predictably skyrocketed. According to China’s NBS, gas was up 7.2% month-over-month while diesel costs on average gained 7.8%.

Read More »

China’s Imports Outright Declined In March, And COVID Was The Reason Why But Not Really

The guy said this was going to be the future. Not just of China, for or really from the rest of the world. Way back in October 2017, at the 19th Communist Party Congress newly-made Emperor Xi Jinping blurted out his grand redesign for Socialism with Chinese Characteristics.

Read More »

You Know What They Say About The Light At The End Of The Tunnel

In any year when gasoline prices rise 18%, that’s not going to be good for anyone except maybe oil companies who extract its key ingredient from out of the ground (or don’t, as the case can be). Yet, annual rates of increase that size do happen.

Read More »

Produzentenfenster Globale Rezessionsuhr

German optimism was predictably, inevitably sent crashing in March and April 2022. According to that country’s ZEW survey, an uptick in general optimism from November 2021 to February 2022 collided with the reality of Russian armored vehicles trying to snake their way down to Kiev. Whereas sentiment had rebounded from an October low of 22.3, blamed on whichever of the coronas, by February the index had moved upward to 54.3.

Read More »

Concocting Inventory

The Census Bureau provided some updated inventory estimates about wholesalers, including its annual benchmark revisions. As to the latter, not a whole lot was changed, a small downward revision right around the peak (early 2021) of the supply shock which is consistent with the GDP estimates for when inventory levels were shrinking fast.

Read More »

Worry Walls Don’t Explain Repeated Falls

Someone once said that the stock market is always climbing a wall of worry. Maybe that had been true in some long-ago day, but whether or not it might nowadays is beside the point. The nugget of truth which makes the prosaism memorable is the wall rather than the climber. There’s always something going on somewhere to get worked up over.

Read More »