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Jeffrey P. Snider

Jeffrey Snider

As Head of Global Investment Research for Alhambra Investment Partners, Jeff spearheads the investment research efforts while providing close contact to Alhambra’s client base. His company is a global investment adviser, hence potential Swiss clients should not hesitate to contact AIP

Articles by Jeffrey Snider

Eurodollar University’s Making Sense; Episode 100, Part 1: For Our Hundredth, What Else Would It Be? INFLATION

2 days ago

100.1 Why Inflation is OVERHYPED: US Producer Prices
———Ep 100.1 Summary———Producer prices in the US are elevated, but decelerating. They’re elevated because of demand surges, supply shocks and logistics snarls – all TRANSITORY factors. Producer prices ARE NOT elevated because of permanent, pervasive central bank or government inflationary action.
———See It———
Twitter: https://twitter.com/JeffSnider_AIPTwitter: https://twitter.com/EmilKalinowskiAlhambra YouTube: https://bit.ly/2Xp3royEmil YouTube: https://bit.ly/310yisLArt: https://davidparkins.com/
———Hear It———

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Since There Is No Tantrum, Can We Taper The Dots Instead?

2 days ago

So much easier to just change the target, to move the goalposts. Having failed for weeks to provoke any “tantrum” to the Federal Reserve’s oncoming taper, even before today’s FOMC meeting all attention was instead simply shuffled off tapering QE and onto rate hikes. Bring the dots back! Anything to keep up the idea the Fed is a central bank in control of money stuff.A single dot maybe two get moved and we’re told to consider this terrific optimism and terrible hawkishness (if you are holding safe and liquid). It doesn’t matter, apparently, that we just went through this barely two years ago and it didn’t work out so well for either the dots or the hawks who plot them.
Early in 2018, March to be specific, Jay Powell’s early tenure was marked by increasing hawkishness from then onward.

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Hey Jay, Maybe Check The Swaps Before Committing to Taper

3 days ago

It was said to be something hugely significant, truly momentous – but only until it started to misbehave all over again. This was the summer of 2013, SHIBOR Summer in China and the misunderstood, mislabeled “taper tantrum” in the US$. Consistent with the latter’s more optimistic take on the world, the 30-year swap spread turned positive for the first time since the worst of the 2008 crash.Ever since it first appeared late in 2008, a negative then persistently negative swap spread confounded and confused the world’s “experts”, especially those associated with the Federal Reserve. Not just that it shouldn’t happen, many before the worst of the Global Financial Crisis had come to believe it couldn’t happen. Why?

To see the swap rate trade below its equivalent UST was akin to holy

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Previewing The Taper Theater

3 days ago

Eurodollar, not Evergrande. That wasn’t just the point of yesterday’s recall, it is the whole point of beyond fourteen years of going only the wrong way. The deflationary way. Defaults in China are nowadays a commonplace part of that trend, one which began early in 2014 with Shanghai Chaori Solar.What was significant about Chaori was this: “It was the moment when the eurodollar finally caught up to China.” You can literally see it. The problem is despite the deficiency being just this obvious, the orthodox of Economics prevents any correct interpretation. The public remains confused about cause and effect. Why does the dollar go up in value (and CNY down)? No Economist seems to know and so long as the stock market is up, very few elsewhere seem to care (which, by the way, is the whole

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Talking To Bill About Evergrande

4 days ago

The US Treasury auctioned off $45 billion in 3-month (13w) bills this morning. Despite the Federal Reserve paying 5 bps for SOMA UST collateralized, for “some” reason the primary market’s players wanted this issue far more. The auction’s high was just 3.5 bps, its median 2.5. These are down from 4 bps and 3.5 bps, respectively, last Monday.
With the world on edge over China’s Evergrande, it has more than a few people talking about prospects for dreaded contagion. The generic honorific “Lehman” has been liberally tossed about, too, since we live in a clickbait world. While Evergrande’s real trouble is almost certain to make things uncomfortable and disorderly in RMB markets and for the PBOC (and other regulatory headaches), as I wrote earlier, I don’t believe this is something new nor

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China’s Managed Decline Ain’t Ever To Be Grand(e), It’s (euro)Dollars

4 days ago

Some wanted to call it China’s Bear Stearns, and over time it may end up being seen that way. And that would be the right way to see it. What Bear’s March 2008 demise had represented was the watershed event for the eurodollar system, the final straw which finally broke the camel’s back. In the same way, CNY’s was broken by this other. First, though, Ben Bernanke had made the terrible mistake of thinking his “bailout” of the old Wall Street name would end the crisis. Instead, it began the new monetary era.
What followed from that inflection point wasn’t just the worst planet-spanning financial crisis since the Great Depression. Having little to do with US subprime mortgages, the global reserve monetary system which had supported cooperation and legitimate prosperity throughout much of

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Eurodollar University’s Making Sense; Episode 99, Part 3: When Everyone Understands Why The Dollar Goes Up, We Celebrate Our Show’s Demise

7 days ago

99.3 US Dollar Gains Value – Bad News for the World 
———Ep 99.3 Summary———In 1971, US Treasury Secretary John Connally told a group of European finance ministers that the US dollar “is our currency, but your problem.” Half a century later, the problem has grown bigger encompassing the whole world. A world that is short of dollars.
———See It———
Twitter: https://twitter.com/JeffSnider_AIPTwitter: https://twitter.com/EmilKalinowskiAlhambra YouTube: https://bit.ly/2Xp3royEmil YouTube: https://bit.ly/310yisLArt: https://davidparkins.com/
———Hear It———

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PracTICal Remainders and Reminders

7 days ago

As usual, a couple of additional odds and ends leftover from TIC that are worth a few brief mentions. And then a reminder of the caveats which come along with them (and all the interpretations).
1. First up, China. According to the latest TIC data, mainland China added a few billion to its UST holdings during July 2020, while those belonging to someone (China) posting through Belgium declined by a few billion more. Netting the two, a small decline otherwise more consistent with a weaker CNY (rising dollar) and yet that was the month when the Chinese currency really traded in its suspiciously narrow range. There isn’t a one-to-one with what’s in TIC; meaning that CNY can and does move independently of what might be indicated in China’s holdings of Treasuries, at the same time the latter

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Dollar Warning Update From The Islands Which Started It

7 days ago

The first seeds of the eventual eurodollar bloom, in domestic US terms, were sown all way back in sixteen – as in the year 1916. Believe it or not, the Federal Reserve Act, then only a few years old, had been modified so that banking syndicates (those able to raise the princely sum of $1 million capital) could form what were called agreement corporations.What was the agreement? Like the arrangement in London many years later which would make the eurodollar into all it could be (and then some), US agreement corporations would be relatively free of regulation provided that their exclusive focus and customer base didn’t include any domestic Americans or American businesses. These were given an upgrade, kind of, in 1919 after only three such corporations were incorporated in the first three

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Eurodollar University’s Making Sense; Episode 99, Part 2: Their Get Out of Deflation Free Card

8 days ago

99.2 LABOR SHORTAGE! A Fed ‘Get out of Jail Free’ card
———Ep 99.2 Summary———Labor shortages are normal, at the microscale, from time to time, in this or that industry. Yet since 2008, establishment economists use “labor shortage” as an excuse to: A) support a misleadingly low unemployment rate and, B) explain away the participation problem.
———See It———
Twitter: https://twitter.com/JeffSnider_AIPTwitter: https://twitter.com/EmilKalinowskiAlhambra YouTube: https://bit.ly/2Xp3royEmil YouTube: https://bit.ly/310yisLArt: https://davidparkins.com/
———Hear It———

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August Retail Sales Surprise To The Upside, Because They Were Down?

8 days ago

According to the movie The Princess Bride, the worst classic blunder anyone can make is to get involved in a land war in Asia. No kidding. The second is something about Sicilians and death. There is also, I’ve come to learn, an unspoken third which cautions against chasing down and then trying to break down seasonal adjustments in economic data.Some things are best left just as they are published.
The Census Bureau today released its estimates for retail sales. Most pay attention only to the seasonally-adjusted version which was surprisingly positive for August 2021 (if after an unusually large downward revision to July). It was widely expected sales would continue to fade, another monthly move downward nonetheless as the last Uncle Sam helicopter likewise fades on the calendar.Instead,

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Eurodollar University’s Making Sense; Episode 99, Part 1: What’s Really Killing The Economy’s Potential?

9 days ago

99.1 What’s Killing Labor Force Participation in the USA? 
———Ep 99.1 Summary———‘Maybe the economy isn’t in as good a condition as you economists / academics / technocrats think it is,’ says the labor force participation rate. ‘The economy is in fantastic shape,’ says the unemployment rate. Which one is correct?
———See It———
Twitter: https://twitter.com/JeffSnider_AIPTwitter: https://twitter.com/EmilKalinowskiAlhambra YouTube: https://bit.ly/2Xp3royEmil YouTube: https://bit.ly/310yisLArt: https://davidparkins.com/
———Hear It———

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First Transitory In Producers, Then More For Consumers, Now A Negative For Import Prices

9 days ago

The American people were first introduced to the Treasury helicopter in 2008, not 2021. The Bush Administration’s “radical” approach to keeping the Great “Recession” from becoming a contraction, obviously, failed spectacularly even though the initial returns had been positive – literally positive in how Q2 ’08 GDP suddenly turned higher as if this was by skilled design. Economists, including those at the Fed (meaning everyone at the Fed), practically called it a day thereafter. By mid-2008, they weren’t yet popping champagne corks but the bubbly had already been put on ice. What a gigantic mistake; fooled by the transitory into ignoring all the increasingly desperate warning signs.
Eurodollar University’s Making Sense; Episode 95, Part 1: How Tbills Tell You A Lot About Inflation’s

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China’s Actual Base Affects Inflation As Well As Prosperity

9 days ago

Those pesky base effects. For most of the world’s economic data, these have contributed much to creating the misimpression the global economy is doing well, if not on fire. By comparing data now (or a month ago) to the same a year earlier, boy can it look splendid. In the stock business, they’re called easy comps.The Chinese, however, have just upended the whole love affair. And more than any other place on Earth, much more than the American economy once overflowing with digital product of Treasury’s helicopter, it is China’s grand ability which means economic life or death for much of the rest of the planet. Inflation, recovery, a return to normal (at the very least pre-2020 normal), all of it depends upon Xi Jinping’s support and approval.His National Bureau of Statistics (NBS)

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Bills Flipping The Debt Ceiling

10 days ago

The dollar stopped falling on January 6, beginning a reversal which has lasted more than eight months. This forewarning was joined two days later when TIPS breakevens crossed, inverting the 5-year when compared to the 10-year. About a week after that, T-bills.In other words, as I had written up last week, there actually were quite a few contrary indications in January 2021 just like there had been during September 2017. These may have been less loud than four years ago, yet proving to have been just as serious as when Reflation #3 and globally synchronized growth began to be forced into Euro$ #4 and its globally synchronized downturn by what these all represent.Deflation potential rather than the presumed, promised, even near-guaranteed inflation.And it’s that last one, bills, which

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CPI Comes ‘Home’ To The Other Side of Inverted TIPS

10 days ago

January 2021 was, it may have seemed, only the start of something big. Huge. Colossal. Coronavirus vaccines had been discovered, publicized, and rolled out, meaning for the first time a real shot at ending the pandemic. The world could quickly get back to normal, the economy recovering its footing, and between January and that bright future Uncle Sam was going to flood not just the US but much of the rest of the world (starting with US imports) with Treasury’s cash.Everything appeared to be going just right, if not in danger of being “too much.” This latter was the phrenzy, a second bout of inflation hysteria which extrapolated (in a straight line) what would never be anything more than a minor bond sell-off into the biggest thing since the Great Inflation; if not Weimar Germany.Yet,

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Getting Giddy About Taper

11 days ago

As another central bank, the Federal Reserve, seriously contemplates tapering its latest QE, its policymaking members would do well to consider the several others who either did or thought they should. One of them, obviously, the same Fed but back in 2013. Another was the Bank of Japan early in 2018.It was March that year and “monetary” officials gathering around Governor Haruhiko Kuroda’s confab were, as I wrote at the time, practically “giddy.” QQE may have taken five years to show itself in the form of growth and inflation, but in their collected views this seemed a plausible outcome for the first time; maybe even likely (it was in the econometric models).Mind you, growth and inflation hadn’t actually happened yet at the point; on the contrary, these Economists (they are all

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Honestly Not Easy

11 days ago

Central banking’s real monetary power comes from a different kind of printing. We’re all taught and told from the very beginning that it’s derived from enjoying the money printer, the ability to stack currency at will. No. In actual fact, monetary policies are all money-less leaving “monetary” authorities to employ instead the press which prints words.Deciding which words, and more importantly what they mean, now that’s not at all what they teach you in school. The closest to this truth is the fuzzy concept of “moral suasion”, but even when that’s brought up and out it remains closer to a lie of omission (while the idea is introduced, it is only said to be a small part of what central bankers do rather than their entirety).Officials talk and we’re supposed to just take the words at the

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Eurodollar University’s Making Sense; Episode 98, Part 3: Lightning Round

14 days ago

98.3 Lightning Round: AUD CNY Au/Ag RRP ECB NG1 BoE and QE!
———Ep 98.3 Summary———Lightning round review of the: Australian dollar, Chinese yuan, gold-silver ratio, Federal Reserve’s reverse repo program, European Central Bank’s symmetric inflation target and natural gas. Also, the House of Lords questions the Bank of England’s use of QE.
———See It———
Twitter: https://twitter.com/JeffSnider_AIPTwitter: https://twitter.com/EmilKalinowskiAlhambra YouTube: https://bit.ly/2Xp3royEmil YouTube: https://bit.ly/310yisLArt: https://davidparkins.com/
———Hear It———

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Too Much (about) Taper, Not (yet) Too Many Treasuries

14 days ago

Almost universally, the comeback is always QE. Whenever trying to discuss the bond market’s unmovable pessimism in 2021, especially now about six months after reflation ended, people just don’t want to hear about such low (and lower) growth and inflation expectations in nominal yields. No, that’s not deflationary potential, they’d say, it was and is the Fed buying bonds which has kept a lid on rates.If not for Jay Powell and his penchant for “monetizing” his buddy Yellen’s offerings, then, you know what with CPI’s and all, that’s when rates really, really skyrocket to where they “should” be. This unmovable deflation and low rate business brings out emotions at the expense of rational analysis; people want inflation and a broken down Treasury market if only to get the rest of the world to

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The Non-Charitable economics of (Not) Inflation

14 days ago

Are giant French freightliners really so generous? Big companies can be known for their philanthropy, of course, but such efforts aren’t usually folded into their own business activities. Generally speaking, the beneficiaries of corporate charity tend to be strangers. If determined giving is actually being applied within the narrower confines of the corporation, that’s not altruïsm but economics (small “e”). Interesting, therefore, that CMA CGM yesterday announced what might otherwise appear as sympathetic benevolence. A conglomeration of two older French businesses, Compagnie Maritime d’Affrètement and Compagnie Générale Maritime, the firm’s reach is mammoth. We aren’t talking about some niche company trying to stand out or make its name during trying times. Operating/owning 566

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Eurodollar University’s Making Sense; Episode 98, Part 2: Wisdom of Crowds

15 days ago

98.2 NBC News Poll Shows Economic Wisdom of the Crowds
———Ep 98.2 Summary———A long-standing NBC News Survey shows John & Jane Q. Public perceive the economy’s condition BETTER than economists who anchor to the unemployment rate. Since 2005, US citizens have sensed each global dollar squeeze. They may be noticing another one, right now.
———See It———
Twitter: https://twitter.com/JeffSnider_AIPTwitter: https://twitter.com/EmilKalinowskiAlhambra YouTube: https://bit.ly/2Xp3royEmil YouTube: https://bit.ly/310yisLArt: https://davidparkins.com/
———Hear It———

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What *Was* It That Changed Around May?

15 days ago

The inflation hysteria striking the US just hasn’t caught on elsewhere. China is a perfect example of resisting the strain. According to new figures from the Chinese government, consumer price inflation had retreated again during August 2021. The year-over-year change for their CPI was just 0.8%. This was the lowest since March, the fourth straight month of decelerating price changes.China’s consumer price top was reached, like a whole bunch of other data, back in May. At 0.8%, it was once more among the lowest inflation rates in modern China history. A part of this disinflation is due to base effects, though in the opposite way of those adding to consumer indices around the rest of the world. Chinese consumers had suffered rampant disease wrecking pig livestock herds through 2019 before

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Eurodollar University’s Making Sense; Episode 98, Part 1: LABOR SHORTAGE!!!!

16 days ago

98.1 America’s Labor Shortage (doesn’t exist?) 
———Ep 98.1 Summary———A lousy labor market report for August is being blamed on a “labor shortage”. Also, ‘lazy Americans’ and ‘the delta’. But the real problem is that businesses will not pay a market-clearing wage to hire the workers they need. Why not? Because the economy is lousy.
———See It———
Twitter: https://twitter.com/JeffSnider_AIPTwitter: https://twitter.com/EmilKalinowskiAlhambra YouTube: https://bit.ly/2Xp3royEmil YouTube: https://bit.ly/310yisLArt: https://davidparkins.com/
———Hear It———

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The Eurodollar’s Nose

16 days ago

What an intriguingly odd month September 2017 turned out to be. To start with, Reflation #3 only seemed to be gaining strength. The full throat behind Inflation Hysteria #1 was still ahead, as was its related personage the BOND ROUT!!!! And yet, early in that late summer month a sudden eruption; actually several. On September 5, T-bills. A day later a big one, CNY. Gold. Repo fails. And on and on.
While Reflation #3 would continue forward, and after October 2017 it seemed like the situation in these others (all of them, of course, deeply connected to eurodollar “stuff”), was calming down, by the end of that year a return of the more ominous tones and bass notes. All the while the bond market, from UST’s to JGB’s to Germany’s bunds were signaling the other – the reflation. There had

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Turning The LABOR SHORTAGE Up to 11

16 days ago

In Massachusetts, the Federal Reserve’s First District, restaurateurs have struggled mightily to find workers. As part of the central bank’s Beige Book, one contact of the Boston leadership said the industry was “facing the worst labor shortage he has seen in 35 years of experience.” In response to such a major threat, these firms become truly creative to try to entice employee prospects. According to the text of the Fed’s document, it’s not just restaurants, either, as this deficit has been seen in high tech areas, too:

Tight labor markets are seen for at least some positions in each of retail, manufacturing, and software/IT services, and a severe labor shortage is said to restrain hiring and expansion in Massachusetts’ restaurant industry.

That’s really the message here; lazy

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Unsentimental About Fast-Fading Sentiment

17 days ago

By the summer of 2018, there were already any number of economic warning signs over globally synchronized growth fading fast. Many if not most of them market-based, of course, but not all. In the realm of sentiment, for example, the Germans in particular had put their finger on the pulse of the global economy and found it suspiciously feeble, economic pressure dropping far faster than you’d have thought at the time (given constant upbeat assessments no matter data).

I wrote about Germany’s closely-watched ZEW in July 2018, back when everyone was still convinced about the “surefire” inflationary upside every country’s central bankers were projecting. No. The global economy was quite steadily rolling itself over:

In the latest value for July 201[8], reported today, the index has

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What’s Real Behind Commodities

17 days ago

Inflation is sustained monetary debasement – money printing, if you prefer – that wrecks consumer prices. It is the other of the evil monetary diseases, the one which is far more visible therefore visceral to the consumers pounded by spiraling costs of bare living. Yet, it is the lesser evil by comparison to deflation which insidiously destroys the labor market from the inside out.You see inflation around you; anyone can only tell deflation by hopefully noticing and appreciating what must instead be absent (a poignant reminder for US Labor Day).People with the means don’t sit idly by for either affliction. As to the former, inflation, as noted here investments and activity will flow from the financial to the real. Commodities do particularly well and in that sense they can tell us

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Just In Time For Labor Day: It’s Not Payrolls Missing The Mark By Such A Wide Margin

21 days ago

It was a highly curious change in the shape of the labor force. Beginning October 2015 and lasting until March 2016, for six months Americans came flooding back into the labor market. Or, so they said. When the BLS’s various surveyors working on the Current Population Survey (known as the Household Survey) came calling for answers each month, all of a sudden, a whole lot more previously out of the workforce declared themselves back in.They didn’t all find jobs; hardly any of them would. That didn’t matter, however, since for the bean counting purposes of the government’s stat-managers they merely needed to report they’d looked for a job to be included within the official labor force. It was an astonishing leap, though more astounding its timing. Just over 2 million were added again in

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China, Australia, and The European Way Into Reverse Repo

23 days ago

We are going to start here with Europe before heading to Australia and then getting to China – and then currency. Why the ECB? It is going through the same pangs of dissatisfaction as its cousin the Federal Reserve had last summer. Like the Fed in 2020, Europe’s central bank in 2021 has climbed to the end of its grand strategy review and following its own come to the same conclusion as that other.Symmetric inflation target requiring more nuanced forward guidance.

If you aren’t distracted by the shiny wrapping, you realize what Powell’s saying is that after failing to hit the inflation target for over a decade he’s now going to let inflation run over the target none of them could hit because for more than a decade no one could hit their own target.

A few weeks ago, Philip Lane – the

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