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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

Rechecking On Bill And His Newfound Followers

8 days ago

The benchmark 10-year US Treasury has obtained some bids. Not long ago the certain harbinger of bond rout doom, the long end maybe has joined the rest of the world in its global pause if somewhat later than it had begun elsewhere (including, importantly, its own TIPS real yield backyard). Even nearer-in inflation expectations have rounded off at their current top. Perhaps no more than a short-term rest before each rising again, then again with the rest of the world’s markets acting similarly it’s fair to ask which end is actually leading?

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More importantly, if it’s the wrong end, why would that end be leading? Especially right now. As I wrote a few days ago, there doesn’t appear to be a single thing going wrong. Quite to the contrary, what’s good (in the

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Real Dollar ‘Privilege’ On Display (again)

9 days ago

Twenty-fifteen was an important yet completely misunderstood year. The Fed was going to have to become hawkish, according to its models, yet oil prices crashed and the dollar continued to rise. Both of those things were described as “transitory” by Janet Yellen, and that they were helpful or positive (rising dollar means cleanest dirty shirt!), but domestically American policymakers’ clear lack of conviction and courage about that rate hike regime showed otherwise.
It wouldn’t be until December 2015 that Yellen finally got on with it – and then promptly paused for an entire year (until December 2016) while explaining nothing about anything before or after.
The US economy did not fall into recession, which is one key source of confusion. For most of the public,

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Spending Here, Production There, and What Autos Have To Do With It

March 16, 2021

While the global inflation picture remains fixed at firmly normal (as in, disinflationary), US retail sales by contrast have been highly abnormal. You’d think given that, the consumer price part of the economic equation would, well, equate eventually price-wise. Consumers are spending, prices should be heading upward at a noticeable rate.
To begin with, consumer spending – as pictured by the Census Bureau – was obviously boosted during January by the previous infusion of Uncle Sam’s beneficence (he’s your “uncle” and he has the cash).
By how much, though? According to preliminary estimates released last month, for the month of January it must have been a lot. The latest update for February, which includes revisions to January, maybe it had been even more.
But

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Looking Past Gigantic Base Effects To China’s (Really) Struggling Economy

March 15, 2021

The Chinese were first to go down because they had been first to shut down, therefore one year further on they’ll be the first to skew all their economic results when being compared to it. These obvious base effects will, without further scrutiny, make analysis slightly more difficult. What we want to know is how the current data fits with the overall idea of recovery: is it on track, perhaps going better than thought, or falling short.
Another set of huge positives has the potential to be misleading (like the initial burst of estimates immediately following the trough had been).
China’s National Bureau of Statistics (NBS) reported late last night on the country’s Big Three economic accounts for the joint January-February period (the two months are combined

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JOLTS Revisions: Much Better Reopening, But Why Didn’t It Last?

March 12, 2021

According to newly revised BLS benchmarks, the labor market might have been a little bit worse than previously thought during the worst of last year’s contraction. Coming out of it, the initial rebound, at least, seems to have been substantially better – either due to government checks or, more likely, American businesses in the initial reopening phase eager to get back up and running on a paying basis again.
The JOLTS labor series annual revisions took about 300,000 off the estimated level of Job Openings (JO), one way to figure demand for labor, in each March and April 2020. Instead of a bottom just less than a 5 million pace, the government now thinks it was more like 4.63 million.

JOLTS – Job Openings, SA 2017-2021 – Click to enlarge
In terms of Hires

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What Gold Says About UST Auctions

March 11, 2021

The “too many” Treasury argument which ignited early in 2018 never made a whole lot of sense. It first showed up, believe it or not, in 2016. The idea in both cases was fiscal debt; Uncle Sam’s deficit monster displayed a voracious appetite never in danger of slowing down even though – Economists and central bankers claimed – it would’ve been wise to heed looming inflationary pressures to cut back first. Combined, fiscal and monetary policy was, they said, eventually going to let loose on consumer prices.
Hogwash. Here’s what I wrote the first time back in March 2016:
The story has problems on both ends; to start with, why are dealers supposedly buying up UST inventory that they will only get stuck with? That has never been a money dealing function, as if there

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Deja Vu: Treasury Shorts Meet Treasury Shortages

March 10, 2021

Investors like to short bonds, even Treasuries, as much as they might stocks and their ilk. It should be no surprise that profit-maximizing speculators will seek the best risk-adjusted returns wherever and whenever they might perceive them. If one, or a whole bunch, has to first “borrow” a security the one doesn’t own in order to sell something at a high price betting the price to go down, you can likewise bet there’s someone out there in the financial landscape more than willing to let you borrow that security – for a fee.
Leverage all around.
When it comes to the intersection of bonds and securities lending, money dealers may not have quite the inventory themselves but they certainly have access to any kind of instrument you could want to borrow from those who

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There’s Two Sides To Synchronize

March 3, 2021

The offside of “synchronized” is pretty obvious when you consider all possibilities. In economic terms, synchronized growth would mean if the bulk of the economy starts moving forward, we’d expect the rest to follow with only a slight lag. That’s the upside of harmonized systems, the period everyone hopes and cheers for.
What happens, however, when it’s the leaders rather than laggards who begin to shift toward the other way?
It’s a question the global economy has confronted four times over the past thirteen years. Each time, at least during the introductory inflection phase, rather than being clear it becomes a muddied mess of disbelief. The word “decoupling” enters the discussion as if “synchronized” applies only in the one direction.
On September 4, 2018,

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Three Things About Today’s UST Sell-off, Beginning With Fedwire

February 28, 2021

Three relatively quick observations surrounding today’s UST selloff.
1. The intensity. Reflation is the underlying short run basis, but there is ample reason to suspect quite a bit more than that alone given the unexpected interruption in Fedwire yesterday.
At 12:43pm EST, most of FRBNY’s electronic services experienced an as-yet unexplained problem which interrupted service, including that of Fedwire. To this point, the New York branch has only confirmed the disruption – lasting several hours – took place, which has been blamed on an unspecified “operational error.”
Reports indicate that settlement deadlines were extended into the evening, which can, and has in the past, led to short-term disturbances in interbank venues and conditions. Crypto exchanges, in

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Nine Percent of GDP Fiscal, Ha! Try Forty

February 25, 2021

Fear of the ultra-inflationary aspects of fiscal overdrive. This is the current message, but according to what basis? Bigger is better, therefore if the last one didn’t work then the much larger next one absolutely will. So long as you forget there was a last one and when that prior version had been announced it was also given the same benefit of the doubt.
Most people don’t like looking to Japan mainly because it is too depressing; unless one is an Economist who just doesn’t want admit such theoretical failures of the scale that would up-end the entire discipline. Whatever the underlying reason, each prefers instead to come up with rationalizations for why when every Western country does the exact same things the Japanese have already tried the results will

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For The Dollar, Not How Much But How Long Therefore How Familiar

February 24, 2021

Brazil’s stock market was rocked yesterday by politics. The country’s “populist” President, Jair Bolsonaro, said he was going to name an army general who had served with Bolsomito (a nickname given to him by supporters) during that country’s prior military dictatorship as CEO of state-owned oil giant Petróleo Brasileiro SA. Gen. Joaquim Silva e Luna is being installed, allegedly, to facilitate more direct control of the company by the federal government.
With the economy still gripped by the latest recession, and oil prices rising worldwide as supplies continue to be squeezed, Brazilians have been caught in the vise between fuel prices and unemployment – pure misery for a nation still reeling from Euro$ #3’s (2014-16) crushing impacts.
A depression for years

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What Might Be In *Another* Market-based Yield Curve Twist?

February 23, 2021

With the UST yield curve currently undergoing its own market-based twist, it’s worth investigating a couple potential reasons for it. On the one hand, the long end, clear cut reflation: markets are not, as is commonly told right now, pricing 1979 Great Inflation #2, rather how the next few years may not be as bad (deflationary) as once thought a few months ago.
On the other hand, over at the short end, yields are dropping toward zero again. This steepening isn’t quite the “good” version.
Supply issues are coming to T-bills, as we know, but anything else?

Pro forma CES Private Payrolls, 2020-2021 – Click to enlarge
There’s been demand for these instruments which predates Janet Yellen resurfacing at the Treasury Department to unleash TGA drains and debt

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Eurodollar University’s Making Sense; Episode 46; Part 3: Bill’s Reading On Reflation, And Other Charted Potpourri

February 21, 2021

46.3 On the Economic Road to NothingGoodVilleRecent, low consumer price inflation readings combined with falling US Treasury Bill yields are cautionary sign posts that say this reflationary path may not be the road to recovery but a deflationary cul-de-sac.
[Emil’s Summary] Having studied monetary policy for several years it was only natural that your podcaster spent considerable time contemplating the essential elements of fiction. Some experts say there are five components to it; others put the tally at six, even eight! But at the core it has always been the three elements: plot, setting and character.  
Plot was perfected, in the Western tradition at least, in the late 16th century by Shakespeare with the 5-act dramatic structure. Setting, given short-shrift

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Two Seemingly Opposite Ends Of The Inflation Debate Come Together

February 19, 2021

It’s worth taking a look at a couple of extremes, and the putting each into wider context of inflation/deflation. As you no doubt surmise, only one is receiving much mainstream attention. The other continues to be overshadowed by…anything else.
To begin with, the US Bureau of Labor Statistics reported today that US import prices were up on annual basis for the first time in some time. Rising in January 2021 by 0.9% year-over-year, this was actually the fastest increase in almost three and a half years; another one of these “highest in years” comparisons.
Not only that, just looking at the index especially clear acceleration the past two months (December and January), it does seem to be indicative of all that price overheating everyone’s been talking about.
Given

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Uncle Sam Was Back Having Consumers’ Backs

February 17, 2021

American consumers were back in action in January 2021. The “unemployment cliff” along with the slowdown and contraction in the labor market during the last quarter of 2020 had left retail sales falling backward with employment. Seasonally-adjusted, total retail spending had declined for three straight months to end last year.
The latest updated estimates from the Census Bureau, released today, show that December’s drawback, in particular, was much larger than previously figured – small wonder given just how many unemployed Americans ended up falling off that “cliff.” Revised downward by an unusually large -$3.4 billion, it really had been the weakest holiday season since 2009’s.
Uncle Sam, however, came riding to the rescue at the end of last year.
Fixing (at

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The Endangered Inflationary Species: Gazelles

February 11, 2021

Nevada is, by all accounts and accountants, in rough shape. Very rough shape. An economy overly dependent upon a single industry, tourism, in this case, is a disaster waiting to happen should anything happen to that industry. Pandemic restrictions, for instance.
Nevadans cannot afford the government spending they “have” without a gaming industry attracting visitors at full throttle. Desperate, the state’s governor Steve Sisolak announced last week that officials would explore setting up highly innovative, and what will be very controversial, “innovation zones” within their borders to specifically attract other types of businesses; the pandemic panic seems likely to stick around for a while.
The controversy stems not from the general idea of incentivizing

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Permanent Jobs And Permanent Job Losses

February 9, 2021

Even the feds haven’t been able to keep up. Without the government having taken over student loans in the wake of 2008-09’s Great “Recession”, there’d have been almost no additional consumer credit extended during the decade since. It’s one more facet to the recovery-less recovery; like Japan, a dominant even overbearing government influence that doesn’t stimulate anything but its own proportionally larger footprint.
Given all that, the “need” for maintaining its footprint during the current recession is that much more paramount. With an employment crisis far worse than twelve years ago, any channel for raw aid, even student loans and stipends for those unfortunate college graduates staring into this even deeper labor market abyss, is an absolute necessity.

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Even The People ‘Printing’ The ‘Money’ Aren’t Seeing It

February 7, 2021

Everyone in Europe has long forgotten about what was going on there before COVID. First, an economy that had been stuck two years within a deflationary downturn central bankers like Italy’s new recycled top guy Mario Draghi clumsily mistook for an inflationary takeoff. Both the inflation puzzle and ultimately a pre-pandemic recession have taken a back seat to everything corona.
Whereas Draghi spent those years howling for inflationary conditions that were nowhere in sight – and plenty which unambiguously dictated its opposite – this supposedly virus-driven recession has provided official cover.

Inflation Europe, 2007-2020 – Click to enlarge
As a result, official numbers and commentary surrounding them have become more honest.
With no one else to blame back

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Consumers, Producers, and the Unsettled End of 2020

January 17, 2021

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?

January 16, 2021

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)

January 15, 2021

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?)

January 10, 2021

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

January 9, 2021

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

January 6, 2021

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.
Ben

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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.
Nearly.
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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