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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

Consumers, Producers, and the Unsettled End of 2020

11 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

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

12 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.

U.S. CPI Services Core Fed, Jan 1985 – -2020 – Click to enlarge

U.S. CPI Services Core percentile, Jan 2009 – 2020 – Click to enlarge
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,

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

13 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.

US Consumer Credit SA, Jan 2006 – 2020 – Click to enlarge
Private banks and non-bank financial entities

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They’ve Gone Too Far (or have they?)

18 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

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There’s Always A First Time

19 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,

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Seizing The Dirt Shirt Title

22 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

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Consumers, Too; (Un)Confident To Re-engage

December 19, 2020

There is a lot of evidence which shows some basis for expectations-based monetary policy. Much of what becomes a recession or worse is due to the psychological impacts upon businesses (who invest and hire) as well as workers being consumers (who earn and then spend). Once the snowball of macro contraction begins rolling downhill, rational prudence dictates some degree of caution on all parts (pro-cyclicality).
Bathed in the unearned glow of the Great “Moderation”, central banking’s greatest thinkers untroubled by no longer thinking about finance or money began to presume they had figured out a way to manipulate “confidence” to such a degree that it would allow them some substantial degree of control over the entire business cycle.
Down as well as up.

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What Did Hamper Growth ‘In A Few Months’

December 18, 2020

Over here, on the other side of that ocean, the US economy can only dream of the low levels Chinese industry has been putting up this late into 2020. At least those in the East are back positive year-over-year. Here in America, manufacturing and industry can’t even manage anything like a plus sign.
Summer slowdown extends in Industrial Production.
According to the Federal Reserve, the outfit which has kept tabs on this economic sector for more than a century, the economic rebound from 2020’s big collapse bent the wrong way around July and hasn’t yet been able to curve its way back in the good direction.

US Industrial Production, SA 2011-2020 – Click to enlarge
Over the four months since, through November, IP has come back by just a little over 2%.
While a 6.7%

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This Global Growth Stuff, China Still Wants A Word

December 15, 2020

Before there could be “globally synchronized growth”, it had been plain old “global growth.” The former from 2017 appended the term “synchronized” to its latter 2014 forerunner in order to jazz it up. And it needed the additional rhetorical flourish due to the simple fact that in 2015 for all the stated promise of “global growth” it ended up meaning next to nothing in reality.
Oddly the same for 2017’s update heading into 2018 and 2019.
If currency wars are the beggar-thy-neighbor approach to igniting one’s own economy at other’s expense, either “global growth” or “globally synchronized growth” had turned the concept on its ear. “Devaluation” would leave everyone pointing the finger at you for taking from everyone else in order to pick yourself up. Dreams of

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Inflation Hysteria #2 (Slack-edotes)

December 13, 2020

Macroeconomic slack is such an easy, intuitive concept that only Economists and central bankers (same thing) could possibly mess it up. But mess it up they have. Spending years talking about a labor shortage, and getting the financial media to report this as fact, those at the Federal Reserve, in particular, pointed to this as proof QE and ZIRP had fulfilled the monetary policy mandates – both of them.
A labor shortage would’ve meant full or maximum employment, the absolute best any economy can imagine. Given the huge economic hole the first Global Financial Crisis had created (How was it global, again? Why did this get so bad in 2008 of all years?), the inflationary pressures presumed from a sizable labor shortage would have been a welcome development.
The end

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Inflation Hysteria #2 (WTI)

December 11, 2020

Sticking with our recent theme, a big part of what Inflation Hysteria #1 (2017-18) also had going for it was loosened restrictions for US oil producers. Seriously. Legacy of the 1970’s experience depending too much on OPEC, subject to embargoes, American oil companies had been prohibited for decades from exporting oil. Not that it would have mattered before 2014, the country never producing near enough to have ever done so.
Export limitations removed, shale boom well underway, export crude they did – and right into the mix of TCJA and globally synchronized growth.

The WTI curve still in contango up until mid- to late 2017, the sudden rush of black gold from the US to foreign shores absolutely helped rebalance the domestic market setting up the WTI curve for its

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Inflation Hysteria #2 (Nominal UST)

December 9, 2020

What had given Inflation Hysteria #1 its real punch had been the benchmark 10-year Treasury note. Throughout 2017, despite the unemployment rate in the US, globally synchronized growth being declared around the world (and being declared as some momentously significant development), and whatever other tiny factors acceding to the narrative, longer-term Treasury rates just weren’t buying it. Instead, the eurodollar monetary system continued to cling to these safest, most liquid instruments through nearly the whole year.
The 5-year UST yield started to perk up in September 2017, but it was the 10s – and when – which really drove Reflation #3’s final insanity to truly hysterical proportions.
Once the Tax Cuts & Jobs Act of 2017 made it through Congress and

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Polar Opposite Sides of Consumer Credit End Up in the Same Place: Jobs

December 8, 2020

If anything is going to be charged off, it might be student loans. All the rage nowadays, the government, approximately half of it, is busily working out how it “should” be done and by just how much. A matter of economic stimulus, loan cancellation proponents are correct that students have burdened themselves with unprofitable college “education” investments. Without any jobs, let alone enough good jobs, an entire generation of Americans has been hamstrung, absolutely holding back legitimate economic growth.
In this area, at least, too much debt has been a very clear sign of unproductive finance. Not banking, however; government.

CPS Household Survey, 2003-2020 – Click to enlarge

CPS Household Survey, 1995-2020 – Click to enlarge

Consumer Credit, Levels

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Don’t Really Need ‘Em, Few More Nails Anyway

December 6, 2020

The ISM’s Non-manufacturing PMI continued to decelerate from its high registered all the way back in July 2020. In that month, the headline index reached 58.1, the best since early 2019, and for many signaling that everything was coming up “V.” Since, however, it’s been a slow downward trend that, when realizing early 2019 wasn’t exactly robust, only reconfigures the very nature of this rebound.
When comparing comebacks from outsized economic contractions, the best level in 2020 was entirely too equal to the best from 2010-11 – which, as we unlike Economists know, didn’t equate to recovery then, either.

Pro forma CES Private Payrolls, 2020-2021 – Click to enlarge
Sure, the economy is still moving positively but barely. Given now this summer slowdown has

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There Have Actually Been Some Jobs Saved, Only In Place of Recovery

December 4, 2020

The ISM reported a small decline in its manufacturing PMI today. The index had moved up to 59.3 for the month of October 2020 in what had been its highest since September 2018. For November, the setback was nearly two points, bringing the headline down to an estimate of 57.5.
At that level, it really wasn’t any different from where it had been at its multi-year high the month before. Neither are indicative of any sort of “V” shaped recovery, or any shaped recovery.
Rebound, yes, but that’s very different.
That point may have been best described by the key subcomponent most responsible for the index’s top-level decline.

IHS Markit US Manufacturing, 2012-2020 – Click to enlarge
The manufacturing employment estimate fell back below 50 yet again. In fact, it had

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Just Who Is, And Who Is Not, Selling T-Bills

November 29, 2020

Are foreigners selling Treasury bills? If they are, this would seem to merit consideration for the reflation argument. After all, the paramount monetary deficiency exposed by March’s GFC2 (and the Fed’s blatant role in making it worse) was the dangerous degree of shortage over the best collateral. Best collateral means OTR, and for standard practice this had always meant Treasury bills (as well as, noted yesterday, bonds and notes just auctioned off).
According to the TIC data updated through September 2020, yes, foreigners (both private and official) have been “selling” bills.
During the month of September alone, the total was -$30.3 billion (net), split somewhat equally between FOI’s (foreign official institutions) and overseas private financials.
Not only

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Treasury Auctions Are Anything But Sorry Because They’ve Never Been Sorry About Solly

November 28, 2020

Twenty years ago, in November 2000, the Treasury Department changed one aspect of the way the government would sell its own debt. Auctions of these and other kinds of securities had been ongoing for decades, back to the twenties, and they had been transformed many times along the way. In the middle of the 1970’s Great Inflation, for example, Treasury gradually phased out all other means for issuing securities, by 1977 relying exclusively on auctions as the sole process for the public to acquire notes and bonds.
That’s not really how it works, though. There’s a lot that goes on in between, stuff that gets misunderstood and misconstrued because for half a century Economics as a discipline hasn’t paid any real attention to what really goes on in the monetary system.

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A Lesson In PMIs: Relative vs. Absolute

November 23, 2020

The bid for “decoupling” has never been stronger, and, unfortunately, this time actually represents the weakest case yet for it. According to the mainstream interpretations of the most recent sentiment indicators, the US and European economies appear to be going in the complete opposite directions.
Beset by even more overreactive governments, spurred oppressively forward by an increase in COVID testing, in Europe the second wave of artificial restrictiveness has already arrived sending that system spiraling back into nearly certain re-recession. IHS Markit’s Eurozone PMI indices were appallingly bad in their “flash” assessments of so far in November 2020.
The manufacturing sector held up somewhat better, though dropping three points to 55.4 from 58.4 in October.

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Deflation Returns To Japan, Part 2

November 23, 2020

Japan Finance Minister Taro Aso, who is also Deputy Prime Minister, caused a global stir of sorts back in early June when he appeared to express something like Japanese racial superiority at least with respect to how that country was handling the COVID pandemic. For a country with a population of more than 126 million, the case counts and mortality rates suggest something in the nation’s favor.
Total reported coronavirus cases didn’t top 100,000 until the end of October. And the latest estimates attributing fatalities to the disease say there’s still less than 2,000 – total, since the beginning.
Aso talked about “mindo” being the answer for these miniscule results.
How it might translate into different languages, that’s part of the Minister’s problem. Having been

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Extending the Summer Slowdown

November 20, 2020

A big splurge in September, and then not much more in October. While it would be consistent for many to focus on the former, instead there is much about the latter which, for once, is feeding growing concerns. Retail sales, American consumer spending on goods, has been the one (outside of economically insignificant housing) bright spot since summer. If it succumbs to the slowdown every other economic account is displaying, that could only mean it really has been artificial all along.
The Census Bureau reports today that unadjusted retail sales had gained (upwardly revised) 7.65% year-over-year in September 2020, the highest rate in a very long time.

US Retail Sales, 2016-2020 – Click to enlarge
Last month, October, the rate cooled somewhat to 6.01% – but that

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Six Point Nine Times Two Equals What It Had In Twenty Fourteen

November 17, 2020

It was a shock, total disbelief given how everyone, and I mean everyone, had penciled China in as the world’s go-to growth engine. If the global economy was ever going to get off the ground again following GFC1 more than a half a decade before, the Chinese had to get back to their precrisis “normal.” In 2014, the clock was ticking but expectations were extremely high nonetheless.
In September 2014, however, massive setback. Though it had been building all year by then – CNY abruptly falling right from 2014’s start along with global bond yields, then oil prices following those by that July – when China’s National Bureau of Statistics (NBS) reported how Chinese Industrial Production had grown just 6.9% during the month of August, suddenly prospects for acceleration

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Where Is It, Chairman Powell?

November 15, 2020

Where is it, Chairman Powell? After spending months deliberately hyping a “flood” of digital money printing, and then unleashing average inflation targeting making Americans believe the central bank will be wickedly irresponsible when it comes to consumer prices, the evidence portrays a very different set of circumstance. Inflationary pressures were supposed to have been visible by now, seven months and counting, when instead it is disinflation which is most evident – and it is spreading.
The latest consumer price data in the form of the CPI further dispels some of the myths.

CPI less Food & Energy, 1983-2020 – Click to enlarge
It had been reopening – not QE – which had rescued the economy just in the nick of time from a possible outright deflationary trap.

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The Prices And Costs Of What Xi Believes He’s Got To Do

November 12, 2020

It does seem, at first, a huge contradiction. On the one hand, what we know so far of China’s 14th 5-year plan apparently will lean heavily on new technologies not-yet invented to rescue the country’s economy from the pit of de-globalization the eurodollar system had thrown it into years ago. If the global economy isn’t going to recover, and there’s absolutely no sign that it will, then the one seemingly logical (though far-fetched) way forward would be if the Chinese economy converted itself into an enormous self-sustaining island.

China Exports, 1995-2020 – Click to enlarge

China Exports, 1995-2020 – Click to enlarge

China Exports, 1995-2020 – Click to enlarge

China Exports, 1995-2020 – Click to enlarge

Geopolitical pressures related to COVID

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Good Payrolls Still Say Slowdown

November 8, 2020

The payroll report for the month of October 2020 was a very good one. This shouldn’t be surprising, perfect BLS publications appear with regularity even during the most challenging of circumstances. Headlines and underneath, everything looked fine last month.
It wasn’t perfect, however, and it’s the same things that leave it short of perfection which are entirely too familiar for this last decade of the occasional perfect payroll publication. Meaning, yes, highlighting the unemployment rate.
Usually, it’s the Establishment Survey which shines when the BLS puts out the good ones. That used to mean somewhere around +250k payrolls, an occasional +300k, which only seemed awesome by comparison to an economy normalized to far too little economic progress. “At least it

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Counting The Corroborated Stall, Not The Coming Lawfare Election Mess

November 6, 2020

While we wait for the electoral count to be sorted out by what we hope are competent and honest people (not holding our breath), there’s a greater muddle growing where it actually counts and where it’s never fully nor properly accounted. By a large and growing number of accounts, the US economy’s rebound seems to have stalled out back around June or July, an inflection unrelated to COVID case counts, too.
The rebound is still rebounding, of course, and this upturn from May’s bottom produced the most gigantic GDP ever witnessed in Q3. That aside, there curiously doesn’t seem to be much momentum spared for moving into Q4 and perhaps beyond.
Start with the labor market – simply because everything, meaning everyone, that matters is in it. The only question on our

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Meanwhile, Outside Today’s DC

November 5, 2020

With all eyes on Washington DC, today, everyone should instead be focused on Europe. As we’ve written for nearly three years now, for nearly three years Europe has been at the unfortunate forefront of Euro$ #4. We could argue about whether coming out of GFC2 back in March pushed everything into a Reflation #4 – possible – or if this is still just one three-yearlong squeeze of a global dollar shortage.
Either way, Europe gets at it first.
In 2018, what had been planned to be an auspicious year supposedly delivering the long-awaited worldwide recovery (globally synchronized growth!), that January it had instead started out with Europe already in big trouble – especially Germany, the Continent’s engine for growth.
Right away, contraction (with revised GDP estimates

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What’s Going On, And Why Late August?

October 29, 2020

This isn’t about COVID. It’s been building since the end of August, a shift in mood, perception, and reality that began turning things several months before even then. With markets fickle yet again, a lot today, what’s going on here?
What you’ll hear or have already heard is something about Europe and more lockdowns, fears about a second wave of the pandemic. No, that doesn’t fit the herdlike change in direction you can observe across many different markets (below). More so when as much as what.
“When” had been late August – the 26th, to be precise. And this was actually the second inflection, beginning on August 27, the first one tracing back all the way to June 5 when nobody, I mean nobody, was thinking about more COVID. In early June, the sky was the limit,

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Yep, There’s A New ‘V’ In Town And The Locals…Don’t Seem To Much Care For It

October 25, 2020

They should be drooling over the prospects of a clearing path toward normality. The pain and disaster of 2020’s economic hole receding into a more pleasant 2021 which would have been in position to conceivably pay it all back before any long run damage. Getting back to just even with February instead is becoming a distant probability, the kind of non-transitory shortfall with which we’ve grown far too accustomed.
Therefore, “they” now salivate (reported to be salivating) for more where no more should be necessary: government aid, government spending, and whatever it is the Fed pretends to do.
The “V” has changed – and markets are, believe it or not, changing with it. Not in a good way, though not yet necessarily in a bad way. Surefire recovery gave way months ago

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Consumer Confidence Indicator: Anesthesia

October 24, 2020

Europeans are growing more downbeat again. While ostensibly many are more worried about a new set of restrictions due to (even more overreactions about) COVID, that’s only part of the problem. The bigger factor, economically speaking, is that Europe’s economy has barely moved, or at most not moved near enough, off the bottom.
To interrupt now what has already proved to be a seriously impaired rebound should get people thinking more realistically about 2021. Once again, we’re witness to how the need for yet more “stimulus” is being proven – and what that might say about the effectiveness of what’s already been done. That much is universal globally from China to Europe to the US (which we’ll get to in a minute).
Beyond this synchronized shortfall there’s reason to

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It Just Isn’t Enough

October 10, 2020

The Department of Labor attached a technical note to its weekly report on unemployment claims. The state of California has announced that it is suspending the processing of initial claims filed by (former) workers in that state. Government officials have decided to pause their efforts for two weeks so as to try and sort out what “might” be widespread fraud.
The state is also using this time to get after a substantial backlog of previous initial claims yet to be processed. So, possibly fewer legitimate claims due to dishonesty, though maybe more claims if they’d all be processed at the time they’d been filed.
In other words, we have no how many claims are being honored in California versus how many “should” be completed therefore representing the underlying

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