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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 MORE Sense; Episode 92: Frontline’s ‘Power of The Fed’ Would’ve Been Powerful Criticism Had It Not Blindly Swallowed ‘Easy Money’

3 days ago

92.0: What FRONTLINE got SO wrong about the Fed LIVE!———Ep 92.0 Summary———FRONTLINE critiques the Fed for showering #BigBanks, #BigBusiness and #WallStreet with easy money, which reached neither the real #economy nor the vast majority of Americans. Yes to the latter, but no-no-no-no to the former. We did a 95-minute review of this episode and explain why the Fed is not central to money.
———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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Diverging Inflation Numbers, For How Much Longer?

3 days ago

Germany’s flash July 2021 inflation estimate came in hot yesterday, boosted mostly by comparisons to July 2020’s VAT-free situation. That country’s CPI is a robust sounding 3.8% year-over-year this month, though only 3.1% in its flash HICP terms. Despite Deutschland’s oversized contribution and influence, Eurostat reports today how for Europe as a whole there was a whole lot of little inflation in July. Base effects and surging commodities, and yet the headline (which includes energy and food) ticked up only to 2.2% year-over-year from 2.0% in June. This is nothing whatsoever like what US consumer price indices are suggesting even though, up until very recently, those on both sides of the Atlantic had been highly correlated for more years than fit on my chart.
Unsurprisingly given this,

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Inflation Estimates (PCE) *Totally* Overshadowed By Benchmark Income Revisions, And The (Deflationary) Implications of Them

3 days ago

Of course inflation numbers, the PCE Deflators for June 2021, but first in the same report as those the BEA also released its various data on income and spending. In the former category, income, we’ll find a big reason why this deviation for consumer prices most likely ends up as temporary. And before we can get to that, big benchmark revisions. Like any other statistics-keeping agency, the BEA issues high frequency data (monthly PCE like this along with more comprehensive quarterly figures such as GDP) based on manageable survey sizes. The higher the frequency, the smaller the samples, the less accurate in a statistical sense.Not satisfied with this setup (good on them), these agencies endeavor to supplement high frequency data taking their time with larger, more complete sampling saved

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Eurodollar University’s Making Sense; Episode 91: Almost Perfect Example of Collateral Scramble

3 days ago

91: Repo Market Collateral Rumble Moving the Needle———Ep 91.0 Summary———Early-morning action in the repo market shows a musical chairs-like collateral scramble; it has the Fed’s attention. But the Fed is blasé about it (i.e. ‘too much cash’). Yet these collateral scrambles resemble what we saw in March 2020.
———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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Business Or Inflation Cycle?

4 days ago

Was the GDP report good or bad? Six percent sure sounds terrific, given it wasn’t all that long ago two and a half or three was perceived a home run. As with any of these things, the ultimate judgement depends on more than single numbers because everything is relative. The fact is the BEA calculated a headline quarterly change which was substantially less than anticipated. The continuously compounded annual growth rate from Q1 to Q2 2021 was just 6.3% compared to 6.1% Q4 to Q1. Acceleration had been the main expectation.For example, the Atlanta Fed’s GDPNow estimate actually nailed it – if only because it was downgraded just yesterday by a full percent; from 7.4% to 6.4%. Earlier in the quarter, going back to early May (May again?) this rarely useful statistical monstrosity was pegging a

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Leading Out From Japan

5 days ago

Admittedly, there isn’t much economic data released in the back half of every month. So, we’re sort of stretching our gaze into the second (maybe third) tier. But in this case, it’s just by way of reinforcing much what we already know and further what’s been suspected. Over in Japan, the government’s Cabinet Office gathers surveys, cross tabulates results and market prices, and then produces a set of economic indicators from leading to coincident to lagging. As I already said, lower tier. Still, there’s been value in it as a corroborating proposal for things going on elsewhere (see: Euro$ #4). What’s potentially noteworthy is the Leading Economic Indicator (LEI) for May 2021, the result released just today; it declined for the first time since last May, down more than a point, too. We

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Eurodollar University’s Making Sense; Episode 90: Value and Valuing Inflation

5 days ago

90.0: What is that thing’s Value today?———Ep 90.0 Summary———Professor Sam Williamson, economic historian, explains how the value of commodities, projects and income/wealth should be properly measured across time (AND IT IS NOT WITH A CPI INDEX!). Otherwise, like a recent NY Times article, your worth may be off by a factor of 20!!!!
———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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Tapering The Truth

5 days ago

Ceremony and ritual are not just important concepts for priming and keeping faith, they are absolute essentials. There’s a reason why cult leaders make themselves appear – at every instance – indispensable while at the same time keeping their masses busy with nonsense. Can’t ever permit thinking too much lest the house of cards crash downward at the first slight breeze of independent thought.So it is with these Rites of FOMC. From back before Greenspan the “Maestro”, we have been methodically conditioned to believe, to only believe, the entire financial and economic world is wound up in whatever deliberate acts this specific set of policymakers concocts. There is no market, there is no economy, there is NO LIFE without Dear Leader.And this age of un-growth will never end until this

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Bills Down, RRP Up

6 days ago

The Federal Reserve has done us a solid favor by opening wide its RRP window. Quite by accident, obviously, these policymakers hardly useful monetary stewards, we now have another indication, and a more direct one (though still indirect overall), relating on the surface two seemingly very different factors. The correlation found there between T-bills and that has increased the visibility of the shadows behind both.And one which continues to prove itself. Here’s where we left off (kind of) a couple weeks ago.

Interestingly, for the collateral view, secondary market bill prices have normalized to the higher RRP payment scheme beginning right on July 1. In other words, still the same correlation as before only so far in Q3 there has been less collateral pressure (via overbid bill prices)

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The Radically Not Inflationary ‘Shock’ Of Chinese Cracking Down

6 days ago

We’ve spent months in US Treasury bill yields for a (very good) reason. There’s brewing trouble out there, and it’s not just caught the attention of overeager indirects bidding in UST bill auctions. The premium for those instruments is a nod toward growing collateral scarcity, a deflationary potential that is almost certainly a big part, probably the key part, behind diving bond yields.This scarcity of collateral has even caught the partial attention of the top policymaker at the Fed (not that Jay Powell knows what more to make of it, or how serious it can get).For the brief notice at that central bank, the “not a lot of T-bills” is for its worldview a product of Janet Yellen acquiescing to Congressional stalemate (she obviously has no other choice). In other words, Treasury is refunding

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Golden Collateral Checking

7 days ago

Searching for clues or even small collateral indications, you can’t leave out the gold market. We’ve been on the lookout for scarcity primarily via the T-bill market, and that’s a good place to start, yet looking back to last March the relationship between bills and bullion was uniquely strong. It’s therefore a persuasive pattern if or when it turns up again. To recap the main push of last year’s acute dollar shortage:

Over the past several dreadful weeks of liquidations the pattern has largely repeated. During the early morning hours, before regular trading opens, yesterday’s repo transactions are unwound. Under normal and even less-than-ideal conditions these are just rolled over.Not any more. Collateral calls mean in some cases using gold as a last resort (which gets dumped

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Behind The Inflation Curtain (Europe)

7 days ago

When the ECB’s leadership presented their first QE to the assembled media on March 5, 2015, there was a lot of the usual corporate-speak. It sure wasn’t fedspeak, the purposefully obfuscating wordsmithing of the kind made infamous by Alan Greenspan. No, on this occasion, to the contrary, Mario Draghi, the ECB’s President, wanted to be perfectly clear in what he was saying.Sort of:

The substantial additional easing of our monetary policy stance supports and reinforces the emergence of more favourable developments for the euro area economy. In an environment of improving business and consumer sentiment, the transmission of our measures to the real economy will strengthen, contributing to a further improvement in the outlook for economic growth and a reduction in economic slack. Thereby,

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Eurodollar University’s Making Sense; Episode 89, Part 3: Bitcoin’s El Salvador Conundrum Easily Untangled By Realizing the Real Dollar Situation

10 days ago

89.3 The Real Reason El Salvador went Crypto———Ep 89.3 Summary———El Salvador announced its crypto intentions seemingly out of the blue. But a closer look reveals the nation had run dangerously short of (euro)dollars in early 2021. It went to the IMF for a bailout. Now it heads to the crypto world for one. Just like people did in the 14th-century. Wait, what?!
———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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Maybe Interesting, Perhaps Somewhat Useful Other TIC Nuggets

10 days ago

I’m just going to post some brief comments on other parts of the TIC data. The major takeaway from the May 2021 update is what I wrote earlier, how what these figures show is both entirely consistent with what will be to most people a surprisingly long history as well as completely misconstrued in mainstream conversations (what few may take place). We’ll begin with official institutions. They were again on the selling side of UST’s, after having been solidly reflationary buying (also backward to convention; central banks adding UST’s during reflation when everyone is supposed to be getting out of USTs) back in March. Not huge selling, and a single month doesn’t by itself lead to any solid conclusions.However, as discussed at length earlier, this is hardly a singular indication or

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Yet Another Key Warning Sign, Piece Of Strong Evidence: TIC & The Long Misunderstood History of Selling Treasuries

10 days ago

Like so many other monetary things, the name itself is misleading though it’s not immediately clear why. The Asian Financial Crisis (or Asian flu, as many called it back in the day) began in Thailand, became a financial crisis, and spread throughout, well, Asia. How else would anyone label it?This name, however, radiates an impression that this was a lot of fuss and bother for overseas concerns and only overseas. Not so. The disruption may have begun seemingly innocuously in far-flung locales divorced and disconnected from everything but their own idiosyncratic problems, the real truth of the episode was that what started in mid-1997 before its ultimate climax in later 1998 had actually been a regional dollar shortage.In many respects, a dress rehearsal for what began in August 2007;

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Eurodollar University’s Making Sense; Episode 89, Part 2: Let’s Crack China’s RRR Code

11 days ago

89.2 China Warns World of (Next?) Dollar Disorder———Ep 89.2 Summary———The People’s Bank of China lowers its bank Required Reserve Ratio to get money into a slowing economy. A lowered RRR means that there aren’t enough (euro)dollars flowing into China. Why? Because there aren’t enough (euro)dollars in the world. A lower RRR is a warning for the whole world.
———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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Do Rising ‘Global’ Growth Concerns Include An Already *Slowing* US Economy?

11 days ago

Global factors, meaning that the wave of significantly higher deflationary potential (therefore, diminishing inflationary chances which were never good to begin with) in global bond yields the past five months have seemingly focused on troubles brewing outside the US. Overseas turmoil, it was called back in 2015, leaving by default a picture of relative American strength and harmony.The rest of the world’s economic system hasn’t really come back much, and there’s much to suggest we’ve already seen it’s best days anyway. The American piece in it, on the contrary, it has been characterized as a singularly impressive bright spot; especially the goods economy which by all ongoing symptoms remains in a frenzied state.Does that accurately summarize the American end of things, though? We know

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The Contraction Is Over, Which Means The Hard Part Only Begins

12 days ago

Conventional wisdom has said for a long time that a recession is two consecutive quarters of declining output. Where this idea came from, who knows. It’s a shorthand that was put together over time derived from the folks at the NBER. This latter group has claimed the responsibility for being the “official” arbiter of every recession, having become the go-to outfit for determining business cycles.What the NBER actually says about recession is that it is a serious downturn lasting more than a few months. And since GDP is one important datapoint for analyzing downturns, voila, two straight quarters of falling GDP seems a close enough distillation of the concept.According to the group’s Business Cycle Dating Committee this week, last year’s recession lasted not even two quarters but, by

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Eurodollar University’s Making Sense; Episode 89, Part 1: T-bill Scarcity So Obvious Jay Powell Tells Congress About It

12 days ago

89.1 Jay Powell Sees Safe-Asset Demand Surge; Why?———Ep 89.1 Summary———Jay Powell has confirmed a surging Fed program (RRP) is partly the result of safe-asset demand. But he plays it off as a monetary technicality, mere arcana. Nope! Safe-asset scarcity is step one along a well-trod path towards a malfunctioning economy. Here’s what happens next.
———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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From China: Dollar, Deflation, And The RRRest

12 days ago

It’s not necessarily a discrepancy so much as maybe looking at the same thing from a different point of view. China’s State Administration of Foreign Exchange (SAFE) reports on, among other things, the widest definition of foreign assets being under its whole national umbrella. Yet, the agency publishes balances denominated not in CNY, either US$’s or SDR’s (hey, they can dream!) instead. The country’s central bank, the People’s Bank of China (PROC), owns, holds, and manages (a comprehensive term of art) a big chunk of those reserves. In fact, contrary to what seems popular perception, these foreign assets (largely US$ denominated) form the basis of the Chinese domestic monetary system (RMB). Because of this fact, China really, really needs dollars (see: below).SAFE indicated that during

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Sorry, One More On Bills: Today A Really Good Example of All The Things We’ve Been Focused On Lately

13 days ago

I had intended to lay off the T-bills today, just to write about something else, anything else, but, as often occurs, circumstances intervened. We’ve been subjecting you to seemingly unrelenting focus on Treasury bills’ various follies this year. The reason is quite simple, and trading early in the morning today a very good example both of “what” and “why.”FRBNY last week called it a “scramble for collateral.” Its telltale signs show up in the bill market (though not strictly bills) very early in the morning, though the Liberty Street Blog writing about it borrowing heavily from an OFR (Treasury’s Office of Financial Research) report which required confidential repo information gleaned from DTCC and others just to come up with that expression. There’s no need for confidential transaction

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Lower Yields And (fewer) Bills

14 days ago

Back on February 23, Federal Reserve Chairman Jay Powell stopped by (in a virtual, Zoom sense) the Senate Banking Committee to testify as required by law. In the Q&A portion, he was asked the following by Montana’s Senator Steve Daines:

SENATOR DAINES. I just was looking at the T bill chart and noticing since the 1st of February, the one month rates have dropped in half from 0.06 to today 0.03, two months went from 0.07, to 0.02. We’re starting to get into that realm here of possibly negative rates, which we saw of course briefly a year ago, March. Just want to get your thoughts on that. Is there any issues here of shortage collateral? What’s driving this as you’re watching some of these short-term rates approaching zero?

If your jaw has hit the floor, yes, a US Senator actually

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Inching Closer To Another Warning, This One From Japan

14 days ago

Central bankers nearly everywhere have succumbed to recovery fever. This has been a common occurrence among their cohort ever since the earliest days of the crisis; the first one. Many of them, or their predecessors, since this standard of fantasyland has gone on for so long, had caught the malady as early as 2007 and 2008 when the world was only falling apart.The disease is just that potent; delirium the chief symptom, especially among the virus’ central banker variant.One need only review the ECB’s absurd performance beginning just weeks before Lehman in order to understand just how this sickness totally wrecks (already limited) official faculties. On July 3, 2008 (July 2008!), Europe’s central bank raised its benchmark interest rate. With other monetary authorities around the world

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Eurodollar University’s Making Sense; Episode 88, Part 3: Looking Forward

17 days ago

88.3 PMIs: The Economy’s Forward Looking Indicators
———Ep 88.3 Summary———A review of US, Chinese and global purchasing manager indices for manufacturing and services shows just a few too many “not great” readings. Not necessarily bad but within the context of HUGE ‘money printing’ and GIGA deficit blowouts shouldn’t the economy be rip-roaring?
———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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Dead Data Inflation

17 days ago

Count retail sales (US) among the dead data. Like recent CPI’s and PPI’s, consumer spending on goods continues to be sky high – and yet markets (even stocks) don’t seem to care. For the month of June 2021, the Census Bureau believes total sales were up when compared to May, though not much as May’s estimate was revised lower. At $621 billion during last month, this was 0.55% more than the prior one but significantly lower than April (and less than January). While Americans keep splurging, the nagging sense of the splurge being tied mostly to the federal government’s influence wasn’t reduced by this monthly retail sales report.
And then there’s services – a completely separate data series and even more nagging issue.If the retails sales binge has indeed seen its best days, and those best

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Eurodollar University’s Making Sense; Episode 88, Part 2: Reversal of Fortunes, and Global Interest Rates from Japan to Germany and a Bunch In Between

18 days ago

88.2 Germany’s Economy Wobbles – Are We Next?
———Ep 88.2 Summary———The yields on German sovereign bonds began to tumble in May – now we know why. German Factory Orders and Industrial Production delivered lousy results that month. Germany is an export power so these negatives say a lot about the global customer – that’s us.
———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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Not The Chinese Numbers Anyone Was Hoping For

18 days ago

These are not the numbers to put anyone’s (rational) mind at ease. China’s data dump wasn’t terrible, but it didn’t need to be in order to amplify concerns about the state of the global economy. What the inflationary case required of the Chinese government instead was unambiguous, inarguable acceleration more consistent with the idea its economy is somehow performing up to that inflation potential.Again, these are in no way those figures.On the contrary, the economic accounts make it very clear China’s at or past its peak rate for whatever global recovery 2021 might offer. In other words, it really hasn’t been much and this doesn’t look in any way like it will change (at least not for the better). Starting at the top (line), according to that country’s National Bureau of Statistics (NBS)

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Powell Admits RRP and Collateral Scarcity, Still Unaware Of What It Means

19 days ago

I find it very uncomfortable to be in such agreement with monetary policy officials like Jay Powell. He and I both look at the inflation data, for example, and have come to the same conclusion that these consumer, producer, and commodity price deviations won’t last; though we arrive at our same view coming from very different use of analysis.Today, the Federal Reserve’s Chairman was asked in testimony before the House of Representatives about that darn reverse repo everyone is talking about. The specific question before Chairman Powell was queried by Congressman French Hill of Arkansas, taking the usual approach (the Investopedia answer) of how there seems to be “too much money” (because everyone says so) and that’s why the RRP transactions have so ballooned.Surprisingly, no, said Powell

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Eurodollar University’s Making Sense; Episode 88, Part 1: What Eurodollar Curve Quirks Say About Inflation and the Future

19 days ago

88.1 Uh Oh! The Eurodollar Has Inverted (Again)
———Ep 88.1 Summary———When the US Treasury yield curve inverts it is a warning that recession is on the horizon. What about when the Eurodollar Futures yield curve rolls over on its back? Not good news either. Would you believe that there’s a kink in the curve now? Would you believe it’s not great news?
———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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And Now Three Huge PPIs Which Still Don’t Matter One Bit In Bond Market

19 days ago

And just like that, snap of the fingers, it’s gone. Without a “bad” Treasury auction, there was no stopping the bond market today from retracing all of yesterday’s (modest) selloff and then some. This despite the huge CPI estimates released before the prior session’s trading, and now PPI figures that are equally if not more obscene. The BLS reports today that its main producer price index (PPI), the one for finished goods, was up 9.19% year-over-year in June 2021. That was a bit more than the 8.38% gain in May, but, and you don’t hear this much, still below the peak of 9.42% set back in April. The hot inflation continues, sure, but it’s no longer accelerating in its widest set.But the core rate continues to do just that. Excluding food and energy costs, the stripped-down version was

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