Category Archive: 5.) Alhambra Investments

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

2022-04-21

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2022-04-21

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.

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Yield Curve Inversion Was/Is Absolutely All About Collateral

2022-04-18

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2022-04-18

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.

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China More and More Beyond ‘Inflation’

2022-04-17

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2022-04-17

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%.

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

2022-04-16

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2022-04-16

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.

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

2022-04-14

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2022-04-14

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.

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Produzentenfenster Globale Rezessionsuhr

2022-04-13

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2022-04-13

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.

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Concocting Inventory

2022-04-11

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2022-04-11

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.

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Worry Walls Don’t Explain Repeated Falls

2022-04-09

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2022-04-09

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.

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Goldilocks And The Three Central Banks

2022-04-07

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2022-04-07

This isn’t going to be like the tale of Goldilocks, at least not how it’s usually told. There are three central banks, sure, call them bears if you wish, each pursuing a different set of fuzzy policies. One is clearly hot, the other quite cold, the final almost certainly won’t be “just right.” Rather, this one in the middle simply finds itself…in the middle of the other two.Running red-hot to the point of near-horror, that’s “our” Federal...

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Weekly Market Pulse: What Now?

2022-04-05

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2022-04-05

The yield curve inverted last week. Well, the part everyone watches, the 10 year/2 year Treasury yield spread, inverted, closing the week a solid 7 basis points in the negative. The difference between the 10 year and 2 year Treasury yields is not the yield curve though. The 10/2 spread is one point on the Treasury yield curve which is positively sloped from 1 month to 3 years, negatively sloped from 3 years to 10 years and positively sloped again...

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The Short, Sweet Income Case For Ugly Inversion(s), Too

2022-04-04

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2022-04-04

A nod to just how backward and upside down the world is now. The economic data everyone is made to pay attention to, payrolls, that one is, in my view, irrelevant. As is the consumer price estimates from earlier this week, the PCE Deflator. That’s another one which receives vast amounts of interest even though it is already old news.

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Weekly Market Pulse: The Cure For High Prices

2022-03-31

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2022-03-31

There’s an old Wall Street maxim that the cure for high commodity prices is high commodity prices. As prices rise two things will generally limit the scope of the increase. Demand will wane as consumers just use less or find substitutes. Supply will also increase as the companies that extract these raw materials open new mines, grow more crops or drill new wells.

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We Can Only Hope For Another (bond) Massacre

2022-03-30

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2022-03-30

To begin with, the economy today is absolutely nothing like it had been almost thirty years ago. That fact in and of itself should end the discussion right here. However, comparisons will be made and it does no harm to review them.I’m talking about 1994, or, more specifically, the eleven months between late February 1994 and early February 1995.

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It Wouldn’t Be TIC Without So Much Other

2022-03-23

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2022-03-23

With the Fed (sadly) taking center stage last week, and market rejections of its rate hikes at the forefront, lost in the drama was January 2022 TIC. Understandable, given all its misunderstood numbers are two months behind at their release. There were some interesting developments regardless, and a couple of longer run parts that deserve some attention.

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Inversion Is The Real March Madness, Just Don’t Take It Literally

2022-03-22

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2022-03-22

With such low levels of self-awareness, it isn’t surprising that the FOMC’s members continue to pour gasoline on the already-blazing curve fire. March Madness is supposed to be on the courts of college basketball, instead it is playing out more vividly across all financial markets.

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The Fed Inadvertently Adds To Our Ironclad Collateral Case Which Does Seem To Have Already Included A ‘Collateral Day’ (or days)

2022-03-21

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2022-03-21

The Federal Reserve didn’t just raise the range for its federal funds target by 25 bps, upper and lower bounds, it also added the same to its twin policy tools which the “central bank” says are crucial to maintaining order in money markets thereby keeping federal funds inside the band where it is supposed to be. The FOMC voted to increase IOER from 15 bps to 40 bps, and the RRP from 5 bps to 30 bps.

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Baby Boomer Retirement at Risk

2022-03-20

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2022-03-20

The seven deadliest words in the English language—We’ve never done it this way before. And that certainly applies to Baby Boomers whose prospects for retirement are different than any preceding generation.

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Media Attention All Over FOMC, Market Attention Totally Elsewhere

2022-03-19

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2022-03-19

The Federal Reserve did something today, or actually announced today that it will do something as of tomorrow. And since we’re all conditioned to believe this is the biggest thing ever, I’ll have to add my own $0.02 (in eurodollars, of course, can’t be bank reserves) frustratingly contributing to the very ritual I’m committed to seeing end.We shouldn’t care much about the Fed.

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There Is An Absolutely Solid Collateral Case For What’s Driving Curve Inversion(s) [Part 2]

2022-03-18

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2022-03-18

Securities lending as standard practice is incredibly complicated, and for many the process can be counterintuitive. With numerous different players contributing various pieces across a wide array of financial possibilities, not to mention the whole expanse of global geography, collateral for collateral swaps have gone largely unnoticed by even mainstream Economics and central banking.

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There Is An Absolutely Solid Collateral Case For What’s Driving Curve Inversion(s) [Part 1]

2022-03-17

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2022-03-17

With the 7s10s already inverted, and the 5s today mere bps away, making a macro case for the distortion isn’t too difficult. Despite China’s “upside” economic data today, even the Chinese are talking more about their downside worries (shooting/hoping for “stability”) than strength. In the US or Europe, no matter the CPIs in either place there are cyclical (not just inventory) warning signs all over the place.

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