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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

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

1 day ago

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

2 days ago

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

16 days ago

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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Is There Enough?

18 days ago

It’s just not fast enough. And with the labor market spitting out numbers across a broad economic cross-section that look increasingly tired suggesting an economy running out of momentum, there’s the added urgency of time. Late summer figures still aren’t close to where they need to be even though when you view them in isolation they can look tremendous.
Start with PMI’s, a bunch of them from last week and early this week. Many are the highest in many months, years for quite a few. But matching up with early 2019 or late 2018, not even coming up as high as 2017, that’s actually trouble. And it would be that way even if following a normal downturn.
After the one from Q2, it’s downright curious this absence of an unambiguously sharp upturn.

IHS Markit US

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Who’s Negative? The Marginal American Worker

20 days ago

The BLS’s payroll report draws most of the mainstream attention, with the exception of the unemployment rate (especially these days). The government designates the former as the Current Employment Statistics (CES) series, and it intends to measure factors like payrolls (obviously), wages, and earnings from the perspective of the employers, or establishments. The Establishment Survey.
Its cousin is called the Household Survey, or CPS, the Current Population Survey, which comes at everything from the other side. Here the government asks a large panel of households about how many might be eligible to work, who in them is looking for work or has already found it, and for how many hours that might have been.
The CPS informs the BLS about the size of the labor force and

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Why Aren’t Bond Yields Flyin’ Upward? Bidin’ Bond Time Trumps Jay

24 days ago

It’s always something. There’s forever some mystery factor standing in the way. On the topic of inflation, for years it was one “transitory” issue after another. The media, on behalf of the central bankers it holds up as a technocratic ideal, would report these at face value. The more obvious explanation, the argument with all the evidence, just couldn’t be true otherwise it’d collapse the technocracy right down to the ground.
And so it was also in the bond market. Inflation and their yields very much related, the lack of the former wasn’t ever used to explain the curious absence of the BOND ROUT!!! No, the US Treasury market has been beset by its own set of “transitory” factors, too.
As ridiculous as some of the inflation excuses had been, Verizon’s unlimited

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What’s Zambia Got To With It (everything)

25 days ago

As one of Africa’s largest copper producers, it seemed like a no-brainer. Financial firms across the Western world, pension funds from the US or banks in Europe, they lined up for a bit of additional yield. This was 2012, still global recovery on the horizon – at least that’s what “they” all kept saying. Zambia did what everyone does, the country floated its first Eurobond ($750 million).
At that point, copper was only down modestly from its 2011 peak.
By 2014, however, very different story. The Zambian government still needed the dollars, as everyone did and does, and so more Eurobonds.
This other one, $1 billion total, was structured by Deutsche Bank as well as Barclays and then further aided by the IMF because of the situation. No need to worry, though, just

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If Dollar Is Fixed By Jay’s Flood, Why So Many TIC-ked At Corporates in July?

September 21, 2020

When the eurodollar system worked, or at least appeared to, not only did the overflow of real effective (if virtual and confusing) currency “weaken” the US dollar’s exchange value, its enormous excess showed up as more and more foreign holdings of US$ assets. Mostly US Treasuries, especially in official hands, but not entirely those. That much is perfectly clear; you can actually see the difference on every chart despite all the QE’s and trillions in bank reserves following after August 2007.
Therefore, a net negative monthly change in US TIC – the gross buying and selling of US$ assets by foreigners of all kinds – has been unusual.
Negative means more selling than buying, and not coincidentally these months tend to show up and cluster when the US dollar exchange

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Reopening Inertia, Asian Dollar Style (Still Waiting On The Crash)

September 20, 2020

Why are there still outstanding dollar swap balances? It is the middle of September, for cryin’ out loud, and the Federal Reserve reports $52.3 billion remains on its books as of yesterday. Six months after Jay Powell conducted what he called a “flood”, with every financial media outlet reporting as fact this stream of digital dollars into every corner of the world, how can there be anything greater than zero in overseas liquidity swaps?
Six months is an eternity.
While you think about that, let me ask another question. Would it surprise you to find out that the primary central bank counterparty on the receiving end of these instruments just so happens to be the Bank of Japan?
If you’ve been following JPY, no, this doesn’t surprise you one bit.

Fed Balance

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China’s Hole Puzzle

September 15, 2020

One day short of one year ago, on September 16, 2019, China’s National Bureau of Statistics (NBS) reported its updated monthly estimates for the Big 3 accounts. Industrial Production (IP) is a closely-watched indicator as it is relatively decent proxy for the entire goods economy around the world. Retail Sales in the post-Euro$ #2 context give us a sense of the Chinese economy’s persistent struggle to try to “rebalance” without the pre-2008 boost China had obtained through actual global growth contributing to its export orientation.
The third of the Big 3 is Fixed Asset Investment (FAI), the real secret behind the country’s rapid modernization. FAI is how the Chinese view their own future, whether that’s as a rebalanced consumer-led economy leaping off into a

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Inflation Karma

September 15, 2020

There is no oil in the CPI’s consumer basket, yet oil prices largely determine the rate by which overall consumer prices are increasing (or not). WTI sets the baseline which then becomes the price of motor fuel (gasoline) becoming the energy segment. As energy goes, so do headline CPI measurements.

CPI Changes on Energy, 1995-2020 – Click to enlarge
And that’s a huge problem…if you are Jay Powell. We’ve been making a big deal out of him making a huge deal out of this “new” inflation strategy (that isn’t even close to new). With “transitory” retired from the official vocabulary, the word “average” – as in inflation target – was meant to slide right in unnoticed to take its place.
Except, neither the CPI nor the PCE Deflator are going to cooperate with WTI

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Re-recession Not Required

September 12, 2020

If we are going to see negative nominal Treasury rates, what would guide yields toward such a plunge? It seems like a recession is the ticket, the only way would have to be a major economic downturn. Since we’ve already experienced one in 2020, a big one no less, and are already on our way back up to recovery (some say), then have we seen the lows in rates?
Not for nothing, every couple years when we do those (record low yields) that’s what “they” always say and yet they only ever go lower the next time. But what do we mean by “the next time?”
Before getting into it, the central bank simply doesn’t factor.

Japan Economy, 2013-2020 – Click to enlarge
Monetary authorities possess no monetary abilities therefore they follow along with what bond markets are

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Bottleneck In Japanese

September 9, 2020

Japan’s yen is backward, at least so far as its trading direction may be concerned. This is all the more confusing especially over the past few months when this rising yen has actually been aiding the dollar crash narrative while in reality moving the opposite way from how the dollar system would be behaving if it was really happening.
A dollar crash, or even just a true reflationary dollar drop, would be JPY negative (like 2017). Ever since the last one, during Euro$ #4, the trend for Japan’s currency is toward the worrisome side, all the illiquidity and shortage stuff what leads the dollar to rise against everyone else.

US / Japan, 2018-2020 – Click to enlarge
The simple truth is that rising yen is bad. You need look no further than the history of the past

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Eurodollar University’s Making Sense; Episode 24, Part 2: Peering Behind The (Unemployment Rate) Curtain

September 6, 2020





Jeff Snider, Head of Global Investment Research for Alhambra Investments with Emil Kalinowski, incredibly irresponsible. Artwork by

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Powell Would Ask For His Money Back, If The Fed Did Money

September 5, 2020

Since the unnecessary destruction brought about by GFC2 in March 2020, there have been two detectable, short run trendline upward moves in nominal Treasury yields. Both were predictably classified across the entire financial media as the guaranteed first steps toward the “inevitable” BOND ROUT!!!! Each has been characterized as the handywork of master monetary tactician Jay Powell.
There is some truth underlying, only stripped of all that hyperbole. These backups in yields over the last few months do coincide with major Federal Reserve initiatives (if you can call them that).
The first one was the “flood”, a couple weeks punctuated by Chairman Powell’s wild appearance on 60 Minutes.
Тhe 10-year yield “surged” upward, reaching at one point above 90 bps.
The next

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Writing Rebound in Italian

September 4, 2020

As the calendar turned to September, the US Centers for Disease Control and Prevention (CDC) issued new guidelines expanding and extending existing moratoriums previously put in place to stop evictions during the pandemic. Families affected by COVID either through the disease or as a result of job loss due to the coronavirus have been protected from landowner actions including eviction as a final means to reclaim rental properties from non-conforming tenants.
There are, of course, severe challenges to this authority already being planned especially given how broad the guidelines are. Basically, if your income is less than $99k (or $198k as joint filers) you merely have to “demonstrate” somehow that you’ve attempted to receive some kind of government assistance

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Second Wave Global Trade

July 10, 2020

Unlike some sentiment indicators, the ISM Non-manufacturing, in particular, actual trade in goods continued to contract in May 2020. Both exports and imports fell further, though the rate of descent has improved. In fact, that’s all the other, more subdued PMI’s like Markit’s have been suggesting. Getting closer to a bottom.
Unlike any of the sentiment numbers, however, these trade figures better demonstrate just how far from a rebound let alone recovery the world might be. The hole is enormous, a very long road ahead.
The problem with a long road ahead is that it’s been a very long one already.
Unadjusted, US exports to the rest of the world tallied $90.7 billion during May – the lowest for that particular month since May of 2009. Even though the global

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Gratuitously Impatient (For a) Rebound

July 7, 2020

Jay Powell’s 2018 case for his economic “boom”, the one which was presumably behind his hawkish aggression, rested largely upon the unemployment rate alone. A curiously thin roster for a period of purported economic acceleration, one of the few sets joining that particular headline statistic in its optimism resides in the lower tiers of all statistics. The sentiment contained within the ISM’s PMI’s were at least in the same area as the unemployment rate, and therefore they were upgraded and then relentlessly highlighted as if comprehensively irrefutable.
With the unemployment rate, you could at least see why there was such an error.

ISM Purchasing Managers Indexes, 2008-2020 – Click to enlarge
The participation problem left the denominator improperly

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Reality Beckons: Even Bigger Payroll Gains, Much Less Fuss Over Them

July 5, 2020

What a difference a month makes. The euphoria clearly fading even as the positive numbers grow bigger still. The era of gigantic pluses is only reaching its prime, which might seem a touch pessimistic given the context. In terms of employment and the labor market, reaction to the Current Employment Situation (CES) report seems to indicate widespread recognition of this situation.
And that means how there are actually two labor markets at the moment. Occupying the same geographic space but separated otherwise by every factor that’s meaningful. What’s driving the headline figures is only the first group, those workers who were let go if only because their place of employment was forced to close down for non-economic reasons.As the restrictions relax, this group

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What The PMIs Aren’t Really Saying, In China As Elsewhere

July 1, 2020

China’s PMI’s continue to impress despite the fact they continue to be wholly unimpressive. As with most economic numbers in today’s stock-focused obsessiveness, everything is judged solely by how much it “surprises.” Surprises who? Doesn’t matter; some faceless group of analysts and Economists whose short-term modeling has somehow become the very standard of performance.
According to one such group, China’s official manufacturing index, the one calculated and maintained by the government (via its National Bureau of Statistics), solidly “beat” expectations. The headline was thought to have declined from May’s 50.6 to somewhere around 50.2. Instead, the NBS reports it accelerated during June 2020 to 50.9 for a big upside surprise.
While the manufacturing PMI was

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Looking Ahead Through Japan

June 29, 2020

After the Diamond Princess cruise ship docked in Tokyo with tales seemingly spun from some sci-fi disaster movie, all eyes turned to Japan. Cruisers had boarded the vacation vessel in Yokohama on January 20 already knowing that there was something bad going on in China’s Wuhan. The big ship would head out anyway for a fourteen-day tour of Vietnam, Taiwan, and, yes, China.
Three days in, news reached the Diamond that the Communists had closed down the affected region. Worse, on February 2, the company operating the tour disclosed to the captain that one passenger who had disembarked in Hong Kong tested positive for this novel coronavirus.
The crew and passengers were told they had to immediately turn around and head back toward Tokyo.
What followed was a nightmare.

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Wait A Minute, What’s This Inversion?

June 28, 2020

Back in the middle of 2018, this kind of thing was at least straight forward and intuitive. If there was any confusion, it wasn’t related to the mechanics, rather most people just couldn’t handle the possibility this was real. Jay Powell said inflation, rate hikes, and accelerating growth. Absolutely hawkish across-the-board.
And yet, all the way back in the middle of June 2018 the eurodollar curve started to say, hold on a minute. That’s the part which caused so much apprehension since we are all taught, and the vast majority still, somehow, believe, central bankers are infallible.
A key money market, one of the most sophisticated and deep in world history, blatantly disagreeing with the scenario no one is supposed to challenge (don’t fight the Fed!)
It didn’t

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Not COVID-19, Watch For The Second Wave of GFC2

June 27, 2020

I guess in some ways it’s a race against the clock. What the optimists are really saying is the equivalent of the old eighties neo-Keynesian notion of filling in the troughs. That’s what government spending and monetary “stimulus” intend to accomplish, to limit the downside in a bid to buy time.
Time for what? The economy to heal on its own. Fill up the bathtub, so to speak, with artificial stimulus water (aggregate demand) until such time as the basin stops leaking and it’s that much of a shorter way to go for the water level to rise back to normal without the need for further assistance.
What happens in the trough is what can make the worst kinds of troughs; second and third order effects where instead the negative forces are amplified and the recession

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The Smallness of the Most Gigantic

June 19, 2020

These numbers do seem epic, don’t they? It’s hard to ignore when you have the greatest percentage increase in the history of a major economic account. Just writing that sentence it’s difficult to deny the power of those words. Which is precisely the point: we already know ahead of time how the biggest economic holes in history are going to produce the biggest positives coming out of them.
Whether that constitutes an actual recovery as opposed to the simplistic and more troubling rebound is the only question that ultimately matters. Here we are just as I said a week ago, a little further inside the window of the most fantastic figures ever.
Gigantic positive numbers like we’re going to see more and more don’t mean as much as you’ll be led to believe.
They only seem

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Fed Balance Sheet: Swap Me Update

June 17, 2020

Just a quick update to add a little more data and color to my last Friday’s swap line criticism so hopefully you can better see how there is intentional activity behind them. Since a few people have asked, I’ll break them out with a little more detail. While the volume of swaps outstanding at the Fed has, in total, remained relatively constant (suspiciously, if you ask me), the underlying tenor of them has not.
Meaning, there is purpose. It’s not like everyone panicked in March, signed up for longer swap trades, and are now letting them just roll off as everything has gone back to normal (as is alleged).

Fed Balance Sheet: Assets, 2007-2020 – Click to enlarge
Foreign central banks (remember, the overseas institution initiates the transaction likely on

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A Chinese Outbreak (of Li v. Xi, Round 2)

June 16, 2020

Here they are again, seemingly at odds over how to proceed. Reminiscent of prior battles over whether to revive the economy or just let it go where it will, it appears as if China is in for Xi vs. Li Round 2. Or is it all just clever politics?
Li Keqiang may be nominally the Chinese Premier but he’s a very distant second on every list of power players. Xi Jinping holds all the top spots, including a 2017-18 consolidation of power that left Xi rivaling only Mao in terms of dictatorial reach. It was traditionally the Premier’s job to look after economic and industrial affairs, stripped instead and place in the hands of more assured loyalists.
That is until recently; funny, the timing. As the Chinese economy has lurched into its first modern contraction, it’s as if

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This Thing Is Only Getting Started; Or, *All* The V’s Are Light On The Right

June 14, 2020

The Federal Reserve’s models really are the most optimistic of the bunch. With the policy meeting conducted today, no surprises as far as policies go, we now know what ferbus has to say about everything that’s happened this year. Skipping the usual March projections, what with the FOMC totally occupied at the time by a complete global monetary meltdown Jay Powell now says “we saw it coming”, the central bank staff released the calculations performed by its DSGE prodigy concurrent with today’s policy meeting.
According to these simulations, the US economy will contract by somewhere between 5.5% and 7.6% for all of 2020 and then rebound by hopefully 4.5% if not 6.0% in 2021. The median forecast, to make things simple, calls for -6.5% this year followed by +5.0% next

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Why The FOMC Just Embraced The Stock Bubble (and anything else remotely sounding inflationary)

June 13, 2020

The job, as Jay Powell currently sees it, means building up the S&P 500 as sky high as it can go. The FOMC used to pay lip service to valuations, but now everything is different. He’ll signal to all those fund managers by QE raising bank reserves, leading them on in what they all want to believe is “money printing” (that isn’t). This provides the financial services industry with the rationalization those working within it desperately want for them to do what they already want to anyway.
As Powell signals to portfolio managers managing the S&P on its upward trajectory, Economists believe stocks are then a signal to consumers and businesses.
Flying share prices, they think the public thinks, are the definitive indication for how the economy must be progressing.

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A Second Against Consumer Credit And Interest ‘Stimulus’

June 10, 2020

Credit card use entails a degree of risk appreciated at the most basic level. Americans had certainly become more comfortable with debt in all its forms over the many decades since the Great Depression, but the regular employment of revolving credit was perhaps the apex of this transformation. Does any commercial package on TV today not include one or more credit card offers? It certainly remains a staple of junk mail.
Leaning more and more on credit cards during the so-called good times only makes it more difficult during lean years. While regular folks are regularly chastised as to what from the outside appears to be fiscal imprudence, consumer behavior particularly around 2008 and after indicates the awareness of the risk.
According to the Federal Reserve’s

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Someone’s Giving Us The (Trade) Business

June 9, 2020

The NBER has made its formal declaration. Surprising no one, as usual this group of mainstream academic Economists wishes to tell us what we already know. At least this time their determination of recession is noticeably closer to the beginning of the actual event. The Great “Recession”, you might recall, wasn’t even classified as an “official” contraction until December 2008 – a full year after the NBER figured the thing had begun.
Rather than becoming much better at spotting changes in the business cycle, whatever we all end up calling this one there’s no debating that something big happened in March 2020.
If there remains any uncertainty, it pertains as to whether that was the actual start or if perhaps the thing had been underway before then. GFC2 is

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