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Jeffrey P. Snider

Jeffrey Snider

Jeffrey P. Snider is the head of Global Investment Research of Alhambra Investment Partners (AIP). Jeffrey was 12 years at Atlantic Capital Management where he anticipated the financial crisis with critical research. His company is a global investment adviser, hence potential Swiss clients should not hesitate to contact AIP

Articles by Jeffrey Snider

Demand Down, Supply Down, Ugly Up

July 3, 2022

Well, that was a mess. The Richmond Fed’s Manufacturing Survey was at first released before being taken back. Initially reported as a plunge in the headline number, it was quickly scrapped once the statisticians remembered they had just discontinued their average workweek component – but had kept a zero in its place when tallying the overall PMI.
With it, the PMI was originally calculated to have gone from bad in May (-9) to horrible in June (-19). Refiguring the whole thing for what today are now fewer inputs, the good folks in Richmond confidently say the corrected number is “merely” -11.
Talk about exceeding radically lowered expectations.
It wasn’t the case, however, where it counts the most going forward.

As always, new orders. Unaffected by the litany of

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Getting Whipped Will Really Hurt

July 2, 2022

The Federal Reserve’s various branches don’t just do manufacturing surveys anymore. This is a modern economy, after all, meaning industry isn’t the same top dog as what it used to be. While still important, and still able to tear down even the global-iest synchronized of growth-y, services are the big macro enchilada.
Reflecting this fact, there are now regional Fed services surveys producing services indices to go along with the manufacturing sentiment stuff. I’ll start with the one from Dallas for all of Texas because this one was released today with the latest estimates for June 2022.
In a word: worse.

The Dallas Fed Texas Services General Business Index plummeted, yes, plummeted, to -12.4 this month from last month’s not-good-at-all +1.5. More concerning

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Wait A Sec, That’s Not Really An *RMB* Liquidity Pool…

July 1, 2022

Ben Bernanke once admitted how the job of the post-truth “central banker” is to try to convince the market to do your work for you. What he didn’t say was that this was the only prayer officials had for any success. Because if the market ever decided that talk wasn’t enough, only real money in hand would do, everyone’d be screwed.
Yes, 2008. Also everything after.
The Chinese have followed closely this style having realized what took Bernanke too long. That is, the real goal isn’t so much to move the markets or the system like a puppet master directly, that’s just not possible, rather to feed an over-complaint media what’s necessary to try to fool the public into some sort of indirect pressures.
You know what they say about rocks and hard places. For China, the

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Eurodollar Futures Interpretation Is Everywhere

July 1, 2022

Consumer confidence in Germany never really picked up all that much last year. Conflating CPIs with economic condition, this divergence proved too big of a mystery. When the German GfK, for example, perked up only a tiny bit around September and October 2021, the color of consumer prices clouded judgement and interpretation of what had always been a damning situation.
From GfK back then:
The growing consumer optimism signals that consumers here consider the German economy on course for recovery, although the momentum is somewhat more moderate than expected a few months ago.

A stable labor market also contributes significantly to the high level of economic expectations.
The words just don’t match the data; when the quote above was written and released, the

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It’s Inventory PLUS Demand

June 30, 2022

It’s not just the flood of never-ending inventory. That’s a huge and growing problem, sure, as the chickens of last year’s short-termism overordering finally come home to their retailer roost. Being stuck with too many goods isn’t necessarily fatal to the global and domestic manufacturing sectors.
The scale of the burden is one key worry, though equally so is demand. When the orders were placed during last year, companies appear to have fully bought into (literally) the permanent plateau of fiscal prosperity brought about by repeated war-scale government interventions. They never questioned the current nor future state of the American consumer, laser-focused instead on supply problems exclusively.
I wrote all the way back last September, just as Euro$ #5 was

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Nasty Number Five, Not Hawk Hiking CBs

June 27, 2022

It’s not recession fears, those are in the past. For much if not most (vast majority) of mainstream pundits and newsmedia alike, unlike regular folks this is all news to them (the irony, huh?) Economists and central bankers everywhere had said last year was a boom, a true inflationary inferno raging worldwide.
For once, CPIs (or European HICPs) seemed to have confirmed the narrative. Unlike 2018 when inflation indices kept policymakers and their forecasts out in the cold, 2021 sure appeared to be different.
Yet, it wasn’t. Apart from specific price behavior (supply shock, neither money printing nor an overheating economy), the underlying not-recovery pattern has repeated. Markets worldwide picked up on these key distinctions which, as usual, were never reported

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The Everything Data’s (Z1) Verdict: Not Inflation, Only More Of The Same

June 26, 2022

The only thing that changed was the CPI. What distinguishes 2021-22 from the prior post-crisis period 2007-20 is merely the performance of whatever consumer price index. This latter has been called inflation, yet the data conclusively support the market verdict pricing how it never was.
What data? The “everything” data, the most comprehensive financial and monetary compendium yet available: The Financial Accounts of the United States, or Z1. While this doesn’t quite cover the entirety of shadow money out there, it’s as close as we might currently hope to get.
Some will say that QE6 represented a change, or that government interference particularly Uncle Sam’s “helicopters” were absolutely unprecedented.
Whereas maybe QEs 1 through 5 hadn’t been enough “money

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Everything Hitting The Global (eurodollar) Wall

June 23, 2022

Over the weekend, Bitcoin tumbled again. Reaching an ultra-ugly low of $17,641 (before retracing back above $20k), even the self-styled premier digital “store of value” has thrown in the towel. As I wrote last week, winter isn’t coming it is here.
One crucial reason why, the Japan’s Ministry of Finance reported last week how imports into that country during the tumultuous month of April surged by a frankly ridiculous 48.9% year-over-year. It was the biggest annual gain since 1980, very much like US CPI rates the highest in four decades.
With numbers like those, most mainstream outlets can’t help but characterize them as “strong domestic demand.” It’s an understandable if still egregious error.

Winter Is Here for crypt.

Sad. Predictable.
Prices were

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Angry April TIC Zeroed In On China’s CNY and Japan’s JPY

June 21, 2022

If the March gasoline/oil spike hit a weak global economy really hard and caused what more and more looks like a recessionary shock, a(n un)healthy part of it was the acceleration of Euro$ #5 concurrently rippling through the global reserve system. This much was apparent right from the start, with financial markets gone haywire three months ago (mid-March seasonal bottleneck), and then more of the same into April right to now.
The updated TIC data for the month of April is everything we already expected, including the usual after-the-fact corroboration of the situation displayed to us in real-time by market performance. The stand-outs were definitely Japan and China, both JPY and CNY together careening towards the eurodollar, global recession risk abyss.

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Sorry Chairman Powell, Even FRBNY Now Has To Forecast Serious and Seriously Rising Recession Risk

June 20, 2022

At his last press conference, Federal Reserve Chairman Jay Powell made a bunch of unsubstantiated claims, none of which were called out or even questioned by the assembled reporters. These rituals are designed to project authority not conduct inquiry, and this one was perhaps the best representation of that intent.
Powell’s job is to put the current predicament in the best possible light, starting by downplaying the current predicament. From there, to try to get the public to believe the Fed has the tools, the willingness, and the resolve to deal with it – first convincing people policymakers have correctly identified the problem.
From the political perspective behind all this, everyone’s been told that’s inflation.
But how does the Fed replace Russian oil on

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Curve Inversion 101: US CPI Politics Up Front, China PPI Down(ing) The Back

June 16, 2022

While the world fixated on the US CPI, it was other “inflation” data from across the Pacific that is telling the real economic story. Having conflated the former with a red-hot economy, the fact American consumer prices aren’t tied to the actual economic situation has been lost in the shuffle of the FOMC’s hawkishness, with markets obliged to price wrong-way Jay.
The short end of the yield curve (USTs and elsewhere) is plotting like FOMC dots, whenever oil and crude factors raising the ceiling maybe short-term duration of the Fed’s rate hikes.
Since these are pure theater, the curve’s far end is looking elsewhere for what the economy is really about.




Inversion is simply these two competing sets: Fed playing inflation-fighter for the cameras pushing

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It’s Not Nothing, It’s Everything (including crypto)

June 15, 2022

Markets got aggressive long before the FOMC did. Everything, and I mean everything, has been trending the other way. Jay Powell says inflation risks are most pressing when markets have consistently priced the opposite for a whole lot longer.
It’ll be revised history when ultimately the mainstream attempts to write it over the months ahead, many will try to snatch some limited victory from the jaws of defeat. Should recession happen and bring an end to the “inflation”, just ask Target and Chinese producers, the Fed Cult will claim a few rate hikes were enough to scare off the Phillips Curve (which the cult alone imagines).
Even these Volcker-like whispers are an acknowledgement the Fed maybe, kind of could be wrong here.
Start with cryptocurrencies, those like

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Prices As Curative Punishment

June 14, 2022

It wasn’t exactly a secret, though the raw data doesn’t ever tell you why something might’ve changed in it. According to the Bureau of Economic Analysis, confirmed by industry sources, US new car sales absolutely tanked in May 2022. At a seasonally-adjusted annual rate of 12.7 million, it was a quarter fewer than sales put down in May 2021 and 13% below the not-great level from the month prior in April 2022.
Such puny results have typically been reserved for those heavily diseased months of whichever COVID variant or wave, except there was no new coronavirus-inspire disruption this time. Buyers appear to have disappeared, gone on strike for other reasons than the usual 2020 stuff.

The list of suspects for any strike was always thin. First up, gasoline prices.

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Update The Conflict of Interest Rate(s)

June 13, 2022

What changed? For over a month, the Treasury market had the Fed and its rate hiking figured out. Rising recession risks had been confirmed by almost every piece of incoming data, including, importantly, labor data. It is the jobs market where much of the official “inflation” jawboning is centered, all that Phillips Curve stuff.
So, whatever might seriously undermine Phillips would put the end to the rate hikes in sight. Short-term Treasuries therefore ignored everything that happened between late April and the end of May, the key 2-year note sideways to lower over those six weeks projecting forward that very end to Powell’s plan.
On May 30, however, the Europeans insinuated themselves via the Russian conflict. While America was solemnly observing the Memorial Day

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Simple Economics and Money Math

June 12, 2022

The BLS’s most recent labor market data is, well, troubling. Even the preferred if artificially-smooth Establishment Survey indicates that something has changed since around March. A slowdown at least, leaving more questions than answers (from President Phillips).
That as much because of the other employment figures, the Household Survey. April and May, in particular, not just a slowdown but a drop in overall employee count. As I pointed out last Friday, a 2-month negative is highly unusual except when the US already experiencing serious weakness, downturn, maybe more.

Given these, it might be time to revisit jobless claims and unemployment insurance. Quite unlike the unemployment rate, the number of American workers who are filing for initial verification of

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“Inflation” Not Inflation, Through The Eyes of Inventory

June 11, 2022

It isn’t just semantics, nor some trivial, egotistical use of quotation marks. There is an actual and vast difference between inflation and “inflation.” And in the final results, that difference isn’t strictly or even mainly about consumer prices.
Who cares, most people wonder. After all, what does it really matter why prices are going up so far? The pain this causes is pain regardless of any post hoc pedantry.
Insisting on proper terminology, however, is an attempt to get people to focus up on the future, not litigate the past. It may seem the latter, though the stakes are far higher moving forward than debating what has already happened.
What happened was never inflation. Sorry, it just wasn’t (and don’t need to take my word for it). But anyone is forgiven for

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A Volcker Pan Recession

June 10, 2022

The Volcker Myth is simple because there isn’t math for it just voodoo economics (to borrow George HW Bush’s phrase). In theory, the FOMC finally realized after more than a decade of currency devastation and its economic, financial, and social consequences, hey, inflation and money.
Once Paul Volcker took over in ’79, he acted on the belated realization, seeking to get the Great Inflation under control by restricting, well, something that seems like money.
All the Fed had by that point was bank reserves, so they gave it a go. Late in 1979, authorities restricted bank reserves with kind of an expectation, more like pure hope more costly reserves would constrict depository money.
And if they did, that would limit bank credit and then money flowing into the real

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May Payrolls (and more) Confirm Slowdown (and more)

June 7, 2022

May 2022’s payroll estimates weren’t quite the level of downshift President Phillips had warned about, though that’s increasingly likely just a matter of time. In fact, despite the headline Establishment Survey monthly change being slightly better than expected, it and even more so the other employment data all still show an unmistakable slowdown in the labor market.
What’s left open for argument and concern is now a matter of how much of a downside there might end up being. Politicians and other officials have confidently reassured the public this is a natural and welcome progression or transition from red-hot inflation-y to, in the President’s word, stability.
Markets (inverted curves) are stridently betting there’s more to it than that; and by more, they’ve

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No Pandemic. Not Rate Hikes. Doesn’t Matter Interest Rates. Just Globally Synchronized.

June 6, 2022

The fact that German retail sales crashed so much in April 2022 is significant for a couple reasons. First, it more than suggests something is wrong with Germany, and not just some run-of-the-mill hiccup. Second, because it was this April rather than last April or last summer, you can’t blame COVID this time. Something else is going on.

In America, the Fed Cult is out to take credit for this brewing downturn (Jay Powell seeking his place alongside Volcker, which more people need to realize just what absurd fantasy that would really mean). Since this being German consumers facing their fate, a third helpful facet of their persistent downturn-iness is how it can’t be the Fed.
Unlike America’s (fake) central bank, Europe’s (fake) central bank is still QE-ing. Rate

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Follow China’s True Line

June 5, 2022

It’s a broken a record, the macro stylus stuck unable to move on, just skipping and repeating the same spot on the vinyl. Since Xi Jinping’s lockdowns broke it, as it’s said, when Xi is satisfied there’s zero COVID he’ll release the restrictions and that will fix everything. The economy will go right back to good, like flipping a switch.
Where have we heard that before?
Everywhere, actually, but especially in China. Whether early last year, last August, and now again over the past few months, focus has been (intentionally) maintained on overly aggressive pandemic policies as the catchall for every bad number and vibe.

Just last week, the country’s National Bureau of Statistics (NBS) reported a substantial decline for Industrial Profits, typically a particularly

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ADP Front-Runs BLS and President Phillips

June 4, 2022

It’s gotten to the point that pretty much everyone is now aware of the risks. Public surveys, market behavior, on and on, hardly anyone outside politics thinks the economy is in a good place. Gasoline, sentiment, whatever, Euro$ #5 in total is much more than what’s shaping up inside the American boundary. Globally synchronized of which the US is proving to be a close part.
The destination, or depth, really, is what’s left to argue. As noted yesterday, even President Joe Biden has taken to talking down economic expectations.

He singled out the labor market, in particular, for the reasons I discussed – making him President Phillips from here on.
In consultation with the rate-hikers at the Fed, he’s been coached into the Phillips Curve – pretending that the

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Can’t Blame COVID For This One

June 3, 2022

Late in March 2021, then-German Chancellor Angela Merkel announced a reverse. Several weeks before that time, Merkel’s federal government had reached an agreement with the various states to begin opening the country back up, easing more modest restrictions to move daily life closer to normal. But with case counts sharply rising once more, the whole thing was going to get shutdown instead.
The government declared a holiday starting April 1 (no fooling) last year, lasting three days while totally banning any large public gatherings (except those by and for government officials, obviously) for nearly a week. Other restrictions were either applied or kept in place.
You know the drill.
As a consequence of these draconian measures, retail sales in Germany crashed. Of

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President Phillips Emerges To Reassure On Growing Slowdown

June 2, 2022

Just the other day, President Biden took to the pages of the Wall Street Journal to reassure Americans the government is doing something about the greatest economic challenge they face. Biden says this is inflation when that’s neither the actual affliction nor our greatest threat. On the contrary, recession probabilities have sharply risen as the real economy slows down given the emerging downside to last year’s supply shock.
One thing we might agree on, the President told the country to expect a slowdown primarily in the labor market from here on.

In consultation with the rate-hikers at the Fed, he’s been coached into the Phillips Curve – pretending that the Federal Reserve’s policies will cool down a supposedly red-hot labor market therefore no one need

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Peak Policy Error

June 1, 2022

Another economic discussion lost to the eventual coronavirus pandemic mania was the 2019 globally synchronized downturn. Not just downturn, outright recession in key parts from around the world, maybe including the US. We’ll simply never know for sure because just when it was happening COVID struck and then governments overrode everything including unfolding history.
What anyone can say for sure is that 2019 hit a rough patch where there was only supposed to have been smooth sailing. The Federal Reserve rather embarrassingly had pitched a sequence of rate hikes needed to further smooth out the sailing only to instead begin battening the hatches with rate cuts (and then, following some “unknown” flash in repo markets, not-QE5).
However much it went wrong, we all

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Inventory Flood Continues Just As Consumers Tap Out

May 31, 2022

If it continues to play out the same way, it would be all the worst scenarios lumped together all at the same time. A real unfortunate convergence, yet one that has been entirely predictable.
Consumers reaching their absolute spending limits. Warehouse and storage capacity nationwide dwindling to long-time lows, leaving firms no options to store inbound goods. And, of course, the stream of goods into inventory that shows no signs (yet) of letting up.
Taking the last one first, today the Census Bureau reported its advanced estimates for wholesale and retail inventories.

To start with, the figures for March were already excessive; in retail, the month-over-month change (seasonally-adjusted) had been the second highest on record, behind only December.

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‘Unconscionably Excessive’ Denial

May 30, 2022

What would “unconscionably excessive” even look, legally speaking? More to the issue, who gets to decide what constitutes “excessive?” The way the phrase has been inserted, it’s as if Congress today seeks to plant its members on some incorporeal higher plane than mere physical substance, too, diving deep into the moral consciousness of the nation and economy in order justify taking general action.
Just last week, the House of Representatives passed a bill which proposes to tackle “inflation”, specifically the ridiculous gasoline prices currently plaguing Americans. The vote ended up being 217-207, with four Democrats siding with all Republicans against the proposal.
Styled The Consumer Fuel Price Gouging Prevention Act, slightly more than half of half of the US

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Is It Being Demanded?

May 29, 2022

Shipping container rates have been dropping since early March – right around the time when we had just experienced our “collateral days” and then stood by to witness chaotic financial fireworks, inversions, the whole thing. The bane of the logistical supply-side snafu-ing, it has been container redistribution mucking the goods economy up.The recent and sharp decline in container rates, according to Freightos, is because China’s been closed down by Xi’s pursuit of his madman persona. With Shanghai locked up, freight just hasn’t been able to move.
In the meantime, with manufacturing still restricted, transpacific ocean rates continued to fall.
Asia – US West Coast rates fell 18% this week to $11,455/FEU and are 28% lower than at the start of the lockdown in late

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Hong Kong Stocks Pivot Euro$ #5

May 28, 2022

The stock market hasn’t been moneyed; well, US equities, anyway. What do I mean by “moneyed?” Common perceptions (myth) link the Federal Reserve’s so-called money printing (bank reserves) with share prices. Everyone still thinks there’s a direct monetary injection in this case by the central monetary agency which causes stocks to rise for no good reason.
While we don’t have to argue the Fed’s bank reserves here, the truth of the matter is stocks have been severed from any part of the actual and effective monetary system since 1929.
First, the collapse in share prices started the severing before government regulation finished the job generations ago.
This is why, for example, the Crash of ’87 is remembered exclusively in Wall Street legend rather than the first

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Crude Contradictions Therefore Uncertainty And Big Volatility

May 18, 2022

This one took some real, well, talent. It was late morning on April 11, the crude oil market was in some distress. The price was falling faster, already down sharply over just the preceding two weeks. Going from $115 per barrel to suddenly less than $95, there was some real fear there.
But what really caught my attention was the flattening WTI futures curve. Up in the liquid front, it was closing in on contango and had it achieved that reshaping it would have been, the point of my article, a key warning sign of more widescale deterioration.

No sooner had I hit publish, the whole thing reversed. Within basically a few hours of going live, the entire marketplace turned right around and hasn’t come back since. Not only have oil prices rebounded from that low,

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Peak Inflation (not what you think)

May 15, 2022

For once, I find myself in agreement with a mainstream article published over at Bloomberg. Notable Fed supporters without fail, this one maybe represents a change in tone. Perhaps the cheerleaders are feeling the heat and are seeking Jay Powell’s exit for him? Whatever the case, there’s truth to what’s written if only because interest rates haven’t been rising based on rising inflation/growth expectations.
Quite the contrary, actually. It’s all FOMC and the politics behind its rate hikes.

Rate hikes are demanded from up on high so that the government can appear to be doing something about “inflation.” If, however, the rate of consumer price change begins to decline, so might the political pressure, therefore the end of rate hikes and likewise should end the

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