Thursday , January 21 2021
Home / Jeffrey P. Snider
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

No Sharp Turns From China’s Potential

1 day ago

Most people can be forgiven for suffering the misimpression. Some of it is intentional, as reflation – and those selling it – absolutely require a healthy Chinese contribution to reach their strong global rebound. As we’ve documented over the last decade, it almost doesn’t matter what numbers China’s economy actually puts forward, that system is always “strong.”The only time it wasn’t was understandable. In the first quarter of last year, the world was told about COVID and the “successful” shutting down of much of the Chinese economy to get this pandemic under control. Doing so necessarily produced a huge contraction during Q1, but then, contrary to the narrative, a rather sluggish rebound from it over the final nine months of 2020.In last year’s final quarter, according to estimates

Read More »

If the Fed’s Not In Consumer Prices, Then How About Producer Prices?

5 days ago

It’s not just that there isn’t much inflation evident in consumer prices. Rather, it’s a pretty big deal given the deluge of so much “money printing” this year, begun three-quarters of a year before, that consumer prices are increasing at some of the slowest rates in the data. Trillions in bank reserves, sure, but actual money can only be missing.
OK, fine. What about commodities? If the Fed’s monetary fires haven’t fed through to corporate pricing power for the stuff going out the door, then perhaps it just hasn’t gotten that far yet. Given the huge move in especially industrial metals (and others) led by Dr. Copper, though companies aren’t raising prices on the goods (and services) they’re sending out maybe that’s just because they haven’t yet passed along the rapidly rising prices

Read More »

Consumers, Producers, and the Unsettled End of 2020

5 days ago

The months of November and December aren’t always easily comparable year to year when it comes to American shopping habits. For a retailer, these are the big ones. The Christmas shopping season and the amount of spending which takes place during it makes or breaks the typical year (though last year, there was that whole thing in March and April which has had a say in each’s final annual condition). The calendar being what it is – we’ve never been forced to use the French Revolutionary datebook, thankfully, not yet – there are quirks. Pertaining to US retail sales, the Census Bureau, the government’s agency given the task of keeping track, it really comes down to the number of weekends each way. That final one in November one year could be the first one for December the following

Read More »

Rising Probability For A Second Payroll Minus (and its implications)

6 days ago

Revolving consumer credit declined again in November 2020, according to data released by the Federal Reserve last week. Though the monthly seasonally-adjusted change was small, it still represents significant uncertainty and material mistrust of the underlying economic condition among a broad section of consumers. Those who are paying down their credit card balances, while avoiding taking on higher revolving debts, they are the very consumers Fed policymakers are counting on to lead any recovery rather than subvert it.In terms of non-revolving credit, the federal government continues to do what it does and will always do regardless of the circumstances. Private banks and non-bank financial entities have added back some credit they’d expunged earlier in 2020. Even so, the rate is minimal

Read More »

Episode 41; Part 2: Professor Copper’s Got Other Courses To Teach

7 days ago

41.2 Copper Prices Signal Inflation (or something else?)
[Emil’s Summary] Mary Toft had delivered a litter of rabbits – that was the news that reached the court of King George I in 1726. Obstetrician John Howard arrived at Toft’s bedside in September where he was presented with several animal parts, ostensibly from the supernatural womb. In October, she delivered nine dead baby rabbits, prompting Howard to write a letter to England’s greatest doctors and scientists, as well as the King’s secretary. Nathaniel St. André, the King’s Swiss surgeon-anatomist, was sent to investigate. Toft greeted his arrival in November by delivering her 15th dead rabbit in his presence. St. André bought the story and “took some of the rabbit specimens back to London to show the King.”Despite a chorus of

Read More »

Suasion, Sure, But Is It Really Moral?

7 days ago

One of the concepts educators sort of snuck into the curriculum was something they called “moral suasion.” This term has meanings outside of Economics, but within the discipline it refers to one key element to the monetary policies of central banks. Basically, persuading markets or economic groups to act in the way officials want using rhetoric or threats without having to resort to overt and explicit means. If central bankers have walked softly all these years, the so-called big stick they told you they carried with them was what Ben Bernanke had openly talked about the government’s “printing press” all the way back in November 2002. People took him literally when he was really doing this as a way to more forcefully back up the rhetorical method of moral suasion. If you fight the Fed,

Read More »

Labor Shortage Under #1 Becomes Labor Bottleneck Under #2

8 days ago

It doesn’t quite rise to the level of the LABOR SHORTAGE!!!! fiasco, not yet, but it’s moving up toward that territory. This, of course, had been during Inflation Hysteria #1 when at its absolute peak the unemployment rate was being used to justify expectations for not just a little more in consumer prices but a lot more. In 2018, in particular, there were widespread anecdotes, hardly a day would pass without some mainstream media story about how companies were struggling to cope finding enough workers. The idea then was as simple as it was pleasing to Jay Powell and those like him who’d spent years waiting on just this sort of confirmation for monetary policy in QE form. Had it been happening that way, this would’ve meant officials hadn’t screwed up as badly as it appeared (certainly

Read More »

The Fundamentals of the Bond ‘Bubble’

8 days ago

They were never very specific to begin with, even in Ben Bernanke’s infamous November 2010 Post op-ed covering the start of QE2. Officials like to keep it purposefully vague as a kind of dry powder, a margin for error. If bureaucrats become too specific, the public would reasonably hold them to their own standard being laid out. The point behind Alan Greenspan’s infamous fedspeak was, most of all, wiggle room. QE is going to help boost the economy. How, you naturally ask? Don’t say. Keep it ambiguous. At most point to the “financial system” and claim “accommodation” will make things “loose” and “easier.” None of those terms, you’ll notice, really answer your question.How, exactly, do these things work?More than a decade of this in the Western world, there’s only more of it on the

Read More »

Being Specific About Dollar Specifics

9 days ago

Last week, IHS Markit reported that sentiment in Mexico’s factory sector had slipped again during December 2020. The organization’s manufacturing PMI had declined for the second straight month, having peaked recently back in October. Even then, the index hadn’t yet come close to crossing the magic 50 dividing line. The best it had managed during this global rebound was a mere 43.6.This sentiment data correlates closely enough to the Mexican government’s statistics. According to that country’s INEGI, the agency responsible for tabulating and publishing data for Mexico’s economic accounts, Industrial Production has yet to push back even with February. For the month of November 2020 (the latest figures release today), total output in the sector remains 3.4% below where it had been nine

Read More »

Episode 41; Part 1: At Times, Interest Rates *Do* Go Up

9 days ago

41.1 Has the US Treasury Bond Rout Begun? (No.)
[Emil’s Summary] Mary Toft had delivered a litter of rabbits – that was the news that reached the court of King George I in 1726. Obstetrician John Howard arrived at Toft’s bedside in September where he was presented with several animal parts, ostensibly from the supernatural womb. In October, she delivered nine dead baby rabbits, prompting Howard to write a letter to England’s greatest doctors and scientists, as well as the King’s secretary. Nathaniel St. André, the King’s Swiss surgeon-anatomist, was sent to investigate. Toft greeted his arrival in November by delivering her 15th dead rabbit in his presence. St. André bought the story and “took some of the rabbit specimens back to London to show the King.”Despite a chorus of doubt from

Read More »

Closing The Books on 2020 Didn’t Close The Books

12 days ago

ADP let the cat of the bag on Wednesday when the payroll processing provider announced it believed the level of private employment had declined in December 2020. Since it wasn’t likely to have been wildly inaccurate, it set the stage for a renewed negative number in the main government payroll report released today.According to those BLS’s Current Employment Statistics (CES), the Establishment Survey did indeed fall. During the month of December, the agency believes that somewhere around 140k payrolls had been lost, about 95k of which were in the private sector.
With renewed COVID restrictions (overreactions) being set in place, the majority of any job losses was predictably concentrated in the leisure and hospitality industry. Closing and constraining the activity at more bars,

Read More »

Did You Ever Think It Would Reach 42?

13 days ago

Did anyone back when this whole thing started think that by the first week of the new year, 2021, jobless claims would still be significantly higher than every previous record worst level? We aren’t just revisiting the numbers, it’s completely rewriting the circumstances. The “V” hopes were dashed so long ago, and so thoroughly, the letter itself has completely dropped off the face of the Earth. It has been replaced instead by “stimulus”; more of the same which had led us to this same place anyway. The tremendous economic fallout from the recession has now become the baseline. That’s the real takeaway, a downgrade and downshift more meaningful than every electronic payment sent out by the US Treasury Department. Drain the TGA, and to what end? It’s Thursday, and that means,

Read More »

There’s Always A First Time

14 days ago

Is it a race against time? Or is it trying to set aside today so as to focus entirely on a specific kind of tomorrow? It’s easy to do the latter especially when today is what it is; you can’t change what’s already gone on. You can, however, think that today won’t impede or even impact a much better tomorrow yet to be determined, especially when the heavy hand of government is anticipated to intervene after sunset. On the one side, more fiscal “stimulus” is purported just over today’s horizon landing squarely at the forefront of our future. The government will spend gobs, trillions, no doubt, to fix whatever’s broken, however much it may be broken. And it is in the scale of such “stimulus” all worries are supposed to melt away.That hasn’t happened yet, anywhere, but there’s always a first

Read More »

They’ve Gone Too Far (or have they?)

14 days ago

Between November 1998 and February 1999, Japan’s government bond (JGB) market was utterly decimated. You want to find an historical example of a real bond rout (no caps nor exclamations necessary), take a look at what happened during those three exhilarating (if you were a government official) months. The JGB 10-year yield had dropped to a low of just 77.2 bps during the depths of 1998’s Asian Financial Crisis (or “flu”, so noted for its regional contagious dollar shortages). Having backed up modestly from that low in early October ’98 to around 90 bps by mid-November (sounds familiar), a few days after November 16, 1998, the massacre was in full effect. It wouldn’t end until February 5, 1999, where by then the JGB 10s had skyrocketed (in yield) to a seemingly inflationary fire of 243

Read More »

Seizing The Dirt Shirt Title

15 days ago

In mid-December 2019, before the world had heard of COVID, China’s Central Economic Work Conference had released a rather startling statement for the world to consume. In the West, everything was said to be on the up. Central banks had responded, forcefully, many claimed, more than enough to deal with that year’s “unexpected” globally synchronized downturn.This view had been punctuated by Fed Vice Chairman Richard Clarida, among many others, who in early January 2020 said that, “’significant global headwinds and global disinflationary pressures … may be beginning to abate.” As usual, the Chinese and Chairman Xi, who presided over that Central Economic Work Conference, disagreed.In this December 2019 Chinese statement, it made mention of “contingency plans” to try gain control over

Read More »

Inflation, Reflation, Or Something Else?

16 days ago

Is there a difference between inflation or reflation, and whatever this is? Not mere semantics, it may be everything for what the future ultimately looks like. Yet, the only one ever talked about is the first, as if a foregone conclusion. Why?We’re conditioned to believe in only one or the other, recession still contracting or otherwise total recovery, on top of never questioning whatever it is the Federal Reserve may be doing:

We’ve been left with the impression that the economic situation is always binary; the economy is in recession or recovery/growth. No other choices. Believing this, everything becomes a simple matter – including the most important part. In other words, all you have to do during contraction is wait for it to end. If there are only the two options, once an

Read More »

The Doctor Is In?

21 days ago

Gold’s not buying. Neither is the bond market. Inflation Hysteria #2 has so much less to it than #1 in 2017-18 ever did. But this one isn’t completely empty. There are some asset classes which have been absolutely on fire thus seemingly consistent with the “money printing” excesses of Fed and feds. Investors fearing for currency “debasement” and fiscal breakdown by piling into real and tangible assets in an obvious way.Just not gold. Other commodities, however, particularly copper.They call it Dr. Copper for a reason, and that reason is its situational proximity to real fundamental balances – or imbalances – in the real economy. As an industrial metal, there’s as much to its price in economy as what everyone is told to think about dollar currency. But in those instances where the two get

Read More »

The Summer Slowdown Collides With The Summers Acceleration Theory

22 days ago

You’d think Larry Summers would know better. Not that he stepped in it, again, but rather why he did this particular time. Making a big deal out of inflationary aggregate demand when he’s been practically the lone mainstream Economist to look at the post-2008 economy in an honest and serious fashion to then somehow failing to incorporate that view into our current place. What got Summers in hot water a few days ago was a rather careless throwaway surrounding his usual partisan politics. Essentially asking the question why the government would want to give $2,000 to all Americans. It’s a legitimate query but one unfortunately couched first in typical and typically unhelpful DC squabbling. 

When I see a coalition of Josh Hawley, Bernie Sanders and Donald Trump getting behind an idea, I

Read More »

Covering (In) COT Blue

23 days ago

It was late on a Tuesday night, in the middle of last week, Christmas week of all weeks, with most people already checked out. Having finally obtained Congressional support and approval, the $900 billion plus “stimulus” (read: stipend) was on its way to becoming reality after months of politically-motivated uncertainty. Not one to sit idly by while everyone else had their say, President Trump on that particular evening tweeted a shocking video where he declared the key (for the public) provision in it “a disgrace.”

I’m asking Congress to amend this bill and increase the ridiculously low $600 to $2000 or $4000 per couple.

Threatening veto, the entire bill – including the larger omnibus budget – was thrown into doubt leaving the Treasury days from perhaps shutting down. From a

Read More »

Episode 40; Part 3: Inflation on TV But Not In Real Life

23 days ago

PROGRAMMING NOTE: Episode 40 will be the final one for 2020. Episode 41 will pick back up in early January, ~10th.
———WHERE———
AlhambraTube: https://bit.ly/2Xp3royApple: https://apple.co/3czMcWN
Deezer: https://bit.ly/3ndoVPE
iHeart: https://ihr.fm/31jq7cI
TuneIn: http://tun.in/pjT2Z
Castro: https://bit.ly/30DMYza
Google: https://bit.ly/3e2Z48M
Spotify: https://spoti.fi/3arP8mY
Pandora: https://pdora.co/2GQL3Qg
Breaker: https://bit.ly/2CpHAFO
Castbox: https://bit.ly/3fJR5xQ
Podbean: https://bit.ly/2QpaDgh
Stitcher: https://bit.ly/2C1M1GB
Overcast: https://bit.ly/2YyDsLa
PlayerFM: https://bit.ly/3piLtjV
PocketCast: https://pca.st/encarkdt
SoundCloud: https://bit.ly/3l0yFfK
ListenNotes: https://bit.ly/38xY7pb
AmazonMusic: https://amzn.to/2UpEk2P

Read More »

Episode 40; Part 2: Dimon Says UST’s Have Cooties

28 days ago

PROGRAMMING NOTE: Episode 40 will be the final one for 2020. Episode 41 will pick back up in early January, ~10th.
———WHERE———
AlhambraTube: https://bit.ly/2Xp3royApple: https://apple.co/3czMcWN
Deezer: https://bit.ly/3ndoVPE
iHeart: https://ihr.fm/31jq7cI
TuneIn: http://tun.in/pjT2Z
Castro: https://bit.ly/30DMYza
Google: https://bit.ly/3e2Z48M
Spotify: https://spoti.fi/3arP8mY
Pandora: https://pdora.co/2GQL3Qg
Breaker: https://bit.ly/2CpHAFO
Castbox: https://bit.ly/3fJR5xQ
Podbean: https://bit.ly/2QpaDgh
Stitcher: https://bit.ly/2C1M1GB
Overcast: https://bit.ly/2YyDsLa
PlayerFM: https://bit.ly/3piLtjV
PocketCast: https://pca.st/encarkdt
SoundCloud: https://bit.ly/3l0yFfK
ListenNotes: https://bit.ly/38xY7pb
AmazonMusic: https://amzn.to/2UpEk2P

Read More »

Evidence Only For Hysteria

28 days ago

The people who believe they are the Federal Reserve’s biggest critics are actually Jay Powell’s most vocal supporters right now. Rather than being bothered by all the “Weimar” memes and printer-go-brrrrr jokes, US central bank officials welcome such free press (pun intended). Anything that contributes to the idea there will be inflation – a little or a ton – helps current monetary policy achieve its objective.And let’s be perfectly clear as to what that objective is: not inflation itself, no, the acceleration in consumer prices is presumed to be nothing more than a byproduct. A byproduct of what? People saying there’s going to be lots of inflation.It doesn’t matter if these claims come from the most vehement of detractors; in fact the more forceful the rhetoric the more Jay Powell

Read More »

Going Back Inside Lehman One More Time: An Important and Relevant Follow-up

29 days ago

Lehman Brothers was a cultural marker, the kind of thing that sticks for generations because of all the wrong reasons. Hardly anyone had heard of the investment bank throughout its unbelievably long history stretching back to the middle of the 1840’s (yes, eighteen forties). But being near the center of a multi-generational breakdown causing as yet-untold damage and misery extending far into the future (it’s still going as of 2020 near 2021) will erase even sixteen decades of otherwise silently effective effort.But what really happened at Lehman, to this day hardly anyone knows. Subprime mortgages? Derivatives? Something something bank reserves? Like Bear Stearns and AIG, the reason we keep coming back to Lehman is what it can tell us about how conventional wisdom hasn’t been all that

Read More »

Inflation Binary

December 21, 2020

Blame Milton Friedman for this one, too. The economist made many significant contributions to the advancement of economic understanding, but perhaps an equal number of extreme errors. For one thing, that whole bout with bank reserves and “high powered money” (what became QE) recommended in the late nineties to cure Japan of its obvious monetary illness. This followed from the conceit that monetary policy and central banking would always offer positive, meaningful contributions.The biggest blunder of them all, however, was Positive Economics. Begun long before Friedman, there had always been this idea that as a discipline Economics could fashion itself in a way more familiar to the hard sciences like physics. An economy can be precisely clocked, standardized, and then studied. This has

Read More »

Eurodollar University’s Making Sense; Episode 40; Part 1: The Inside Story of Lehman, Collateral, and Why Always Premature Celebrations

December 21, 2020

PROGRAMMING NOTE: Episode 40 will be the final one for 2020. Episode 41 will pick back up in early January, ~10th.
———WHERE———
AlhambraTube: https://bit.ly/2Xp3royApple: https://apple.co/3czMcWN
Deezer: https://bit.ly/3ndoVPE
iHeart: https://ihr.fm/31jq7cI
TuneIn: http://tun.in/pjT2Z
Castro: https://bit.ly/30DMYza
Google: https://bit.ly/3e2Z48M
Spotify: https://spoti.fi/3arP8mY
Pandora: https://pdora.co/2GQL3Qg
Breaker: https://bit.ly/2CpHAFO
Castbox: https://bit.ly/3fJR5xQ
Podbean: https://bit.ly/2QpaDgh
Stitcher: https://bit.ly/2C1M1GB
Overcast: https://bit.ly/2YyDsLa
PlayerFM: https://bit.ly/3piLtjV
PocketCast: https://pca.st/encarkdt
SoundCloud: https://bit.ly/3l0yFfK
ListenNotes: https://bit.ly/38xY7pb
AmazonMusic: https://amzn.to/2UpEk2P

Read More »

TIC October: More Foreign Bills & More Private Corporates

December 19, 2020

Since we highlighted the action in T-bills yesterday and the day before, it’s worth at least mentioning what TIC had to say about the instruments. Foreigners had been reducing their holdings of them not out of growing distaste but rather the opposite. There’s not nearly as many of them, not enough for what’s demanded, the Treasury Department quite purposefully (and unhelpfully) supplying fewer of them.As we expected, according to TIC, foreign holdings of bills declined again in October by nearly the same net amount as during September.
Yet, you’ll notice, bill prices have only gone up (yields down). Collateral shortage, which we know from experience only beginning with Lehman Brothers, what really happened at Lehman Brothers, isn’t likely to mean anything good money-wise in the global

Read More »

Not Manipulation, Montagu’s Monkey

December 18, 2020

The Chinese have never subscribed to the modern wave of “transparency” which has swept over Western central banks. The People’s Bank of China, Big Mama, very much operates instead on the doctrine which preceded it. Basically, Montagu Norman’s way of doing things. Never explain, never excuse.This mantra has been applied to what it does outside of China as much as inside. Even when participating in the IMF’s data scheme for the first time in 2016, central bank authorities somehow left more off the template than they managed to fill in. Especially the important parts contained within Section IV. As I complained in March of that crucial year:

No swaps, options, swaptions or forwards, just $33.7 billion in almost perfectly balanced repo. It is possible that this is correct as the PBOC will

Read More »

Eurodollar University’s Making Sense; Episode 39; Part 3: Spiking The (inflation) Ball At Your Own 30

December 18, 2020

———WHERE———
AlhambraTube: https://bit.ly/2Xp3royApple: https://apple.co/3czMcWN
Deezer: https://bit.ly/3ndoVPE
iHeart: https://ihr.fm/31jq7cI
TuneIn: http://tun.in/pjT2Z
Castro: https://bit.ly/30DMYza
Google: https://bit.ly/3e2Z48M
Spotify: https://spoti.fi/3arP8mY
Pandora: https://pdora.co/2GQL3Qg
Breaker: https://bit.ly/2CpHAFO
Castbox: https://bit.ly/3fJR5xQ
Podbean: https://bit.ly/2QpaDgh
Stitcher: https://bit.ly/2C1M1GB
Overcast: https://bit.ly/2YyDsLa
PlayerFM: https://bit.ly/3piLtjV
PocketCast: https://pca.st/encarkdt
SoundCloud: https://bit.ly/3l0yFfK
ListenNotes: https://bit.ly/38xY7pb
AmazonMusic: https://amzn.to/2UpEk2P
PodcastAddict: https://bit.ly/2V39Xjr
———WHO———

Read More »

Possible Problem? Ask Bill

December 18, 2020

It has happened more frequently the past few days. The difference between the equivalent yield for the 6-month (26-week) Treasury bill and its cousin with a 1-year (52-week) maturity has turned negative. You have to watch for it intraday, catching it flipping occasionally back and forth by fractions. After hours more than regular trading.Inversion, in other words. That dirty term which has plagued the narrative for years on end. Conditioned to pay attention to only the 3-month/10-year calendar space, or maybe the spread between 2-years and 10, there’s actually been so much more relevant and useful information in other parts. Going back to late 2018 and early 2019, when things were still quite optimistic, Fed “pause” and all that jazz, it was these short bill spaces that more forcefully

Read More »

Messing Gold

December 17, 2020

They really got carried away, though in the context of that time there seemed any number of legitimate reasons for this. Gold investors were bidding up the precious metal like there was some kind of shortage, the price in dollars making a new record high (LBMA morning fix) on August 7. The way it was reported in the mainstream, this was more confirmation of Jay Powell’s flood of money printing making its way into every last corner of the financial world driving gold bugs nuts in the process (as intended).Nah.A few days before all that, the 10-year US Treasury yield had sunk back down near its crisis extremes. On August 4, the note finished trading to rate just 52 bps, less than the previous record low close set March 9. Since early August, gold and the long end of the yield curve (as

Read More »