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A Time Recession

Eurostat confirmed earlier today that Europe has so far avoided recession. At least, it hasn’t experienced what Economists call a cyclical peak. During the third quarter of 2019, Real GDP expanded by a thoroughly unimpressive +0.235% (Q/Q). This was a slight acceleration from a revised +0.185% the quarter before. The real question, though, is whether the business cycle approach means anything in this day and age. I don’t think it does, and that’s a big part of why there’s so much confusion...

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More Signals Of The Downturn, Globally Synchronized

For US importers, October is their month. And it makes perfect sense how it would be. With the Christmas season about to kick into full swing each and every November, the time for retailers to stock up in hearty anticipation is in the weeks beforehand. The goods, a good many future Christmas presents, find themselves in transit from all over the world during the month of October. For the Census Bureau’s trade data, that means this is the month that shines above all the rest. The greatest...

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All Signs Of More Slack

The evidence continues to pile up for increasing slack in the US economy. While that doesn’t necessarily mean there is a recession looming, it sure doesn’t help in that regard. Besides, more slack after ten years of it is the real story. The Federal Reserve’s favorite inflation measure in October 2019 stood at 1.31%, matching February for the lowest in several years. Despite constantly referencing a tight labor market and its fabulous unemployment rate, broad pricing pressures remain scant....

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Fails Swarms Are Just One Part

There it was sticking out like a sore thumb right in the middle of what should have been the glory year. Everything seemed to be going just right for once, success so close you could almost feel it. Well, “they” could. The year was 2014 and the unemployment rate in the US was tumbling, the result of the “best jobs market in decades.” Real GDP in that year’s two middle quarters was pretty near 5% in both. What wasn’t to like? As GDP-measured output was spiking, so, too, had repo fails. There...

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Consistent Trade War Inconsistency Hides The Consistent Trend

You can see the pattern, a weathervane of sorts in its own right. Not for how the economy is actually going, mind you, more along the lines of how it is being perceived from the high-level perspective. The green light for “trade wars” in the first place was what Janet Yellen and Jay Powell had said about the economy. Because it was strong and accelerating, they said, the Trump administration gambled that such robust growth would insulate the US system from any fallout. Flush with confidence...

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The Risen (euro)Dollar

Back in April, while she was quietly jockeying to make sure her name was placed at the top of the list to succeed Mario Draghi at the ECB, Christine Lagarde detoured into the topic of central bank independence. At a joint press conference held with the Governor of the Reserve Bank of South Africa, Lesetja Kganyago, as the Managing Director of the IMF Lagarde was asked specifically about President Trump’s habit of tweeting disdain in the direction of the Federal Reserve’s Chairman, Jay...

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The ISM Isn’t An Isolated Case

They absolutely loved the China PMI numbers, after having taken no note of Japan’s IP, dismissed Markit’s slightly higher revisions, and then totally hated the ISM’s Manufacturing PMI. That last one was supposed to join the others in moving substantially upward, contributing to widespread hopes all recession fears have been extinguished even this late into 2019. Instead, the Institute of Supply Management index continues to suffer. This one hurts, too, because it was this outfit who really...

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Weekend’s PMI Joy Was Spoiled Before It Ever Got Started

The weekend began with pure joy over PMI’s before it ended in deep disappointment early Monday…over a PMI. It started in China. That country’s National Bureau of Statistics (NBS) released its November 2019 numbers for manufacturing and non-manufacturing sentiment. According to the government’s calculations, the gauge for manufacturing ticked back above 50 last month for the first time since April. At 50.2, that was up from 49.3 in October. Assuming that this better-than-expected rebound is...

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Further The Zombie Bubble

The Bureau of Economic Analysis (BEA) has revised its preliminary estimate of GDP. That can only mean one thing: time to look at corporate profits again. Included along with the recalculated headline output estimate is the BEA’s first run of profit figures. If you are Jay Powell, you aren’t going to like what you find. First, real GDP in the third quarter was practically unchanged. Revised from around 1.90% (continuously compounded annual rate of change) to a touch above 2.10%, either of...

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Nothing Good From A Chinese Industrial Recession

October 2017 continues to show up as the most crucial month across a wide range of global economic data. In the mainstream telling, it should have been a very good thing, a hugely positive inflection. That was the time of true inflation hysteria around the globe, though it was always presented as a rationally-determined base case rather than the unsupported madness it really was. That was the month the real recovery was supposed to have started. Instead, we can now plainly observe how it was...

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