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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

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

6 days ago

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

7 days ago

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

11 days ago

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

12 days ago

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

15 days ago

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

18 days ago

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?

20 days ago

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

23 days ago

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

26 days ago

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

29 days ago

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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Is There Enough?

October 8, 2020

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

October 6, 2020

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

October 2, 2020

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)

October 1, 2020

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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