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Joseph Y. Calhoun

Joseph Y. Calhoun

Joe has worked in the financial services industry since 1992 in various capacities, including Operations Manager, Compliance Manager, Registered Representative and Portfolio Manager. From 1997 to 2006, when he founded Alhambra Investment Management, Mr. Calhoun was a Director of Investments at Oppenheimer & Co. Mr. Calhoun holds the Series 63 (Uniform Securities Agent State Law) and 65 (Uniform Investment Advisor Law) securities licenses. He has previously taken and passed the Series 7 (General Securities Representative) and Series 9/10 (General Securities Sales Supervisor) securities exams. His company is a global investment adviser, hence potential Swiss clients should not hesitate to contact AIP

Articles by Joseph Y. Calhoun

Weekly Market Pulse: Things That Need To Happen

19 hours ago

Perspective: per·​spec·​tive |  pər-ˈspek-tiv
b: the capacity to view things in their true relations or relative importance
Perspective is something that comes with age I think. Certainly, as I’ve gotten older, my perspective on things has changed considerably. As we age, we tend to see things from a longer-term view.
Things that seemed so important at the time, years ago, turned out to be nothing more than bumps along the road of life. That is as true in my personal life as it is in my professional one but you don’t need to hear about the former so let’s focus on the latter.
I don’t view the economy through any preconceived lens. My natural state is not negative or positive but open-minded. I can’t predict how the billions of people who make up

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Market Pulse: Mid-Year Update

12 days ago

Note: This update is longer than usual but I felt a comprehensive review was necessary.
The Federal Reserve panicked last week and spooked investors into the worst week for stocks since the onset of COVID in March 2020. The S&P 500 is now firmly in bear market territory but that is a fraction of the pain in stocks and other risky assets. Stocks are now down 10 of the last 11 weeks but the pain was concentrated in the last two weeks. 5 of the last 8 trading days have seen 90% of the stocks in the S&P 500 down on the day and there are only 11 stocks in the index up over the last month. Unprecedented is an overused word but not in this case. Last week was also the second week in a row that saw all the major asset classes down on the week.
And energy stocks led the

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Weekly Market Pulse: Is The Bear Market Over?

May 31, 2022

Stocks had a rip snorter of a rally last week and a lot of people are pondering the question in the title over this long weekend. The S&P 500 was down 20.9% from intraday high (4818.62, January 4th) to intraday low (3810.32, May 20th). From that intraday low the market has risen 9.1% in just six trading days. That still leaves the market 13.7% from the intraday high and most investors still down double digits on the year (-11.5% for the standard 60/40 portfolio). For Alhambra investors, the typical moderate risk account is down 4 to 5% or less than half the 60/40. That fact is something to be proud of I suppose but frankly, I hate being down at all. But drawdowns are part of being an investor and the best you can hope for is to minimize them when they happen.

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Weekly Market Pulse: TANSTAAFL

May 16, 2022

TANSTAAFL is an acronym for “There ain’t no such thing as a free lunch”. It has been around a long time – Rudyard Kipling used it in an essay in 1891 – but it was popularized by Robert Heinlein’s 1966 book, “The Moon is a Harsh Mistress”. In economics it most often refers to tradeoffs or opportunity costs; resources are scarce and if you choose to use them in one way they aren’t available for an alternate use. The other way the phrase is often used is to describe a situation where it appears you are getting something for free but the cost is actually embedded in some other item. There’s always a catch and you should always look a gift horse in the mouth.
I’ve seen a lot of seemingly free lunches in the investment world during my 40 year investing career.

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Weekly Market Pulse: Welcome Back To The Old Normal

May 3, 2022

Stagflation. It’s a word that strikes fear in the hearts of investors, one that evokes memories – for some of us – of bell bottoms, disco, and Jimmy Carter’s American malaise. The combination of weak growth and high inflation is the worst of all worlds, one that required a transformational leader and a cigar-chomping central banker to defeat the last time it came around. Or at least that’s how it’s remembered. Whether the cigar-chomping central banker was really important is relevant only because Jerome Powell is being asked if he can do what Paul Volcker did 4 decades ago, namely induce a recession to kill the inflation part of that equation. The stagflation scenario got a little more traction last week with the release of a negative Q1 GDP print on Thursday and

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Weekly Market Pulse: What Now?

April 5, 2022

The yield curve inverted last week. Well, the part everyone watches, the 10 year/2 year Treasury yield spread, inverted, closing the week a solid 7 basis points in the negative. The difference between the 10 year and 2 year Treasury yields is not the yield curve though. The 10/2 spread is one point on the Treasury yield curve which is positively sloped from 1 month to 3 years, negatively sloped from 3 years to 10 years and positively sloped again from 10 out to 30 years:
So, yes, parts of the yield curve are inverted but the short end of the curve remains fairly steep. That is an unusual situation with no recent comparable periods (back to the 1978 inversion). Typically, 10/2 inversions occur when the entire curve is flat with maturities shorter than 2 years

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Weekly Market Pulse: The Cure For High Prices

March 31, 2022

There’s an old Wall Street maxim that the cure for high commodity prices is high commodity prices. As prices rise two things will generally limit the scope of the increase. Demand will wane as consumers just use less or find substitutes. Supply will also increase as the companies that extract these raw materials open new mines, grow more crops or drill new wells. The combination of those two will act to bring prices back down until the process reverses. As prices fall, demand rises and supply is constrained until prices start to rise again. We’ve seen this cycle many times throughout history so we know the sequence of events. What we don’t know is the time within which these things will occur.
How high do prices have to go before we get demand destruction? How

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Weekly Market Pulse: Is This A Bear Market?

March 16, 2022

I don’t know the answer to the question posed in the title. No one does because the future is not predictable. I don’t know what will happen in Ukraine. I don’t know how much what has already happened there – and what might – matters to the US and global economy. I don’t know if the Fed is making a mistake by (likely) hiking interest rates by an entire 1/4 of 1% this week. I can only see things as they are today and think about similar times in the past and know that it is different this time because it is always different this time. I can look back at history to the Crimean War in the mid-1850s when Russia faced off against the West in part of Ukraine and marvel at how little things have actually changed over the last 170 years.
I can read “The Charge of the

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Weekly Market Pulse: Oil Shock

March 8, 2022

Crude oil prices rose over 25% last week and as I sit down to write this evening the overnight futures are up another 8% to around $125. Almost every other commodity on the planet rose in prices last week too, as did the dollar. Those two factors – rising dollar and rising commodity prices – mean the likelihood of recession in the coming year has risen significantly in just the last week. Rising oil prices, in particular, have been a regular feature of past recessions and while the US may be better suited to handle this shock than Europe and some other countries, that doesn’t mean it won’t have an impact. We own commodities – including gold – in our portfolios for exactly these types of situations and that has been helpful to our returns this year.
But at some

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Weekly Market Pulse: Are We There Yet?

January 31, 2022

I’ll just get this out of the way right at the beginning. The question in the title of this post refers to the end of the ongoing stock market correction and the answer is likely no. There are no sure things in this business so it isn’t an unequivocal no, but based on history, the odds favor more weakness. I know a lot of people liked that rally into the close on Friday and it was a nice way to end a wild week but it also shows that traders/investors are all too willing, able and anxious to buy the dip. It is probably true, as I heard someone say last week, that with the Fed meeting over, the market will focus more on fundamentals now but that may just introduce a whole new set of problems.
We’re in the midst of earnings season and Q4 2021 is so far tracking as

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Weekly Market Pulse: Fear Makes A Comeback

January 24, 2022

Fear tends to manifest itself much more quickly than greed, so volatile markets tend to be on the downside. In up markets, volatility tends to gradually decline.
Philip Roth
Be fearful when others are greedy and be greedy when others are fearful.
Warren Buffett
The new year hasn’t gotten off to a great start for growth stocks or any of the other speculative assets that have drawn so much attention over the last couple of years. Bitcoin is down 25% since the beginning of 2022 and almost 50% from its high in November. Anyone who bought at the lows after the onset of COVID is still pretty darn happy, up over 400%. Even if you bought at the beginning of 2021, you’re still up nearly 20% which is pretty good until you take into account the volatility.
If you bought

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Weekly Market Pulse: A Very Contrarian View

January 19, 2022

What is the consensus about the economy today? Will 2022 growth be better or worse than 2021? Actually, that probably isn’t the right question because the economy slowed significantly in the second half of 2021. The real question is whether growth will improve from that reduced pace. The Atlanta Fed GDPNow tracker now has Q4 growth all the way down to 5% from the 6.8% rate expected just a week ago (a result of a less than expected retail sales report). That’s still a pretty good rate of growth if it holds up but my guess is that the final number will be somewhat less than that as the omicron wave took some juice out of the reacceleration from the end of Delta. I think a decent estimate of second half 2021 GDP growth would be 3.5 to 4%%. Interestingly, consensus

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Weekly Market Pulse: Has Inflation Peaked?

December 13, 2021

The headlines last Friday were ominous:
Inflation Hits Highest Level in Nearly 40 Years
Inflation is Painfully High…
Groceries and Christmas Presents Are Going To Cost More
Inflation is Soaring..
America’s Inflation Burst
This morning on Face The Nation, Mohamed El-Erian, former Harvard endowment manager, former bond king apprentice, economist and the man who seems to have a permanent presence on CNBC, had this to say:
The characterization of inflation as transitory — it’s probably the worst inflation call in the history of the Federal Reserve. It results in a high probability of a policy mistake. So the Fed must quickly, starting this week, regain regain control of the inflation narrative and regain its own credibility.
It would be hard, in my opinion, for the

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Weekly Market Pulse: Discounting The Future

December 7, 2021

The economic news recently has been better than expected and in most cases just pretty darn good. That isn’t true on a global basis as Europe continues to experience a pretty sluggish recovery from COVID. And China is busy shooting itself in the foot as Xi pursues the re-Maoing of Chinese society, damn the economic costs. But here in the US, the rebound from the Q3 slowdown is in full bloom. Just last week we had pending home sales, ADP employment, both ISM reports, jobless claims, Challenger job cuts, the unemployment rate and factory orders all better than the pundits’ expectations. I didn’t list the official employment report (establishment survey) because the headline was less than expected but there were some obvious seasonal adjustment issues with that

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Weekly Market Pulse: Growth Scare?

November 1, 2021

A couple of weeks ago the 10 year Treasury note yield rose 16 basis points in the course of 5 trading days. That move was driven by near term inflation fears as I discussed last week. Long term inflation expectations were and are well behaved. I wrote nearly 2000 words last week about that change in inflation expectations and I’m so glad you took the time to read it. And now you can forget it because over the next four days all but 2 basis points of the move in the nominal 10 year was reversed. And 10 year TIPS yields were actually up 2 bps last week so inflation expectations fell back to where they were. So, do we now have a growth scare instead? Maybe. Or maybe we’re just guilty of a little myopia.
The idea of a growth scare was reinforced by the release last

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Weekly Market Pulse: Inflation Scare!

October 25, 2021

The S&P 500 and Dow Jones Industrial stock averages made new all time highs last week as bonds sold off, the 10 year Treasury note yield briefly breaking above 1.7% before a pretty good sized rally Friday brought the yield back to 1.65%. And thus we’re right back where we were at the end of March when the 10 year yield hit its high for the year. Or are we? Well, yes, the 10 year is back where it was but that doesn’t mean everything else is and, as you’ve probably guessed, they aren’t. In the early part of this year, the 10 year yield was rising as anticipation built for a surge in post vaccination economic growth. The 10 year yield rose about 85 basis points from the beginning of the year to the peak in late March.
10 year TIPS yields, meanwhile, were also rising,

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Weekly Market Pulse: Perception vs Reality

October 18, 2021

It was the best of times, it was the worst of times…
Charles Dickens, A Tale of Two Cities
Some see the cup as half empty. Some see the cup as half full. I see the cup as too large.
George Carlin

The quote from Dickens above is one that just about everyone knows even if they don’t know where it comes from or haven’t read the book. But, as the ellipsis at the end indicates, there is quite a bit more to the line than the part everyone remembers.
It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had

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Weekly Market Pulse: Inflation Scare?

October 10, 2021

Bonds sold off again last week with the yield on the 10 year Treasury closing over 1.6% for the first time since early June. The yield is now down just 16 basis points from the high of 1.76% set on March 30. But this rise in rates is at least a little different than the fall that preceded it. When nominal rates fell from April through July, real rates fell right along with them. The nominal bond yield fell by 63 basis points and the 10 year TIPS yield fell by 57. That means that the drop was driven by a change in real growth expectations not a change in inflation expectations. But the rebound has not been as uniform, as the nominal rate has risen by 47 basis points while the real rate has only climbed by 27.
So, this rise has been driven more by rising inflation

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Weekly Market Pulse: Zooming Out

October 3, 2021

How often do you check your brokerage account? There is a famous economics paper from 1997, written by some of the giants in behavioral finance (Thaler, Kahnemann, Tversky & Schwartz), that tested what is known as myopic loss aversion. What they found was that investors who check their performance less frequently are more willing to take risk and experience higher returns. Investors who check their results frequently take less risk and perform worse. And that makes a lot of sense if you think about it. If you check the stock market every day, the odds of seeing a negative result are fairly high. There are more up days than down but the difference isn’t that great, say 53% up and 47% down.
If you back out to monthly you see positive returns 63% of the time,

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Weekly Market Pulse: Time For A Taper Tantrum?

September 20, 2021

The Fed meets this week and is widely expected to say that it is talking about maybe reducing bond purchases sometime later this year or maybe next year or at least, someday. Jerome Powell will hold a press conference at which he’ll tell us that markets have nothing to worry about because even if they taper QE, interest rates aren’t going up for a long, long time. That statement might have more credibility if the Fed had been right about just about anything over the last decade. But they haven’t and we are left to wonder how exactly Jerome Powell will be wrong this time. Will the economy slow so quickly that he can’t even credibly start tapering? Or will the economy re-accelerate to such a degree that he has no choice but to stomp on the brakes? I’m not sure but I

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Weekly Market Pulse: Time For A Taper Tantrum?

September 20, 2021

The Fed meets this week and is widely expected to say that it is talking about maybe reducing bond purchases sometime later this year or maybe next year or at least, someday. Jerome Powell will hold a press conference at which he’ll tell us that markets have nothing to worry about because even if they taper QE, interest rates aren’t going up for a long, long time. That statement might have more credibility if the Fed had been right about just about anything over the last decade. But they haven’t and we are left to wonder how exactly Jerome Powell will be wrong this time. Will the economy slow so quickly that he can’t even credibly start tapering? Or will the economy re-accelerate to such a degree that he has no choice but to stomp on the brakes? I’m not sure but I

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Weekly Market Pulse: Happy Anniversary!

August 16, 2021

Today is the 50th anniversary of the “Nixon shock”, the day President Richard Nixon closed the gold window and ended the post-WWII Bretton Woods currency agreement. That agreement, largely a product of John Maynard Keynes, pegged the dollar to gold and most other currencies to the dollar. It wasn’t a true gold standard as only other countries that were party to the agreement could demand gold in exchange for their dollars, but it was at least a standard of some kind. Nixon didn’t intend to end Bretton Woods altogether but rather anticipated a negotiation that would result in some devaluation of the buck. A very tall future Fed Chairman named Paul Volcker, at Treasury at the time, did indeed try to negotiate a devaluation but it was never implemented.

And since

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Weekly Market Pulse: What Is Today’s New Normal?

August 9, 2021

Remember “The New Normal”? Back in 2009, Bill Gross, the old bond king before Gundlach came along, penned a market commentary called “On the Course to a New Normal” which he said would be:
“a period of time in which economies grow very slowly as opposed to growing like weeds, the way children do; in which profits are relatively static; in which the government plays a significant role in terms of deficits and reregulation and control of the economy; in which the consumer stops shopping until he drops and begins, as they do in Japan (to be a little ghoulish), starts saving to the grave.”
If you remember reading Bill Gross commentaries over the years you know the piece was his typical mess of weird metaphors and obscure references that really amounted to nothing more

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Weekly Market Pulse: Buy The Dip, If You Can

July 26, 2021

[unable to retrieve full-text content]If you were waiting for a correction in stock prices to put some money to work, you got your chance last week. The Dow Jones Industrial Average was down nearly 1000 points at the low Monday and closed down 725, a loss of a little over 2%. The S&P 500 did a little better but closed down 1.5%.

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Weekly Market Pulse: As Clear As Mud

July 19, 2021

Is there anyone left out there who doesn’t know the rate of economic growth is slowing? The 10 year Treasury yield has fallen 45 basis points since peaking in mid-March. 10 year TIPS yields have fallen by the same amount and now reside below -1% again. Copper prices peaked a little later (early May), fell 16% at the recent low and are still down nearly 12% from the highs. Crude oil has recently joined in, falling 7% from its recent high. Energy stocks are in a full blown correction down 13% from the high set in June. Transportation stocks are also down more than 10%  and materials stocks are close to correction territory too. Small cap stocks (Russell 2000) have been treading water since early February and are down about 8% from their high.
So, yes, the markets –

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Weekly Market Pulse: Is It Time To Panic Yet?

July 12, 2021

Until last week you hadn’t heard much about the bond market rally. I told you we were probably near a rally way back in early April when the 10 year was yielding around 1.7%. And I told you in mid-April that the 10 year yield could fall all the way back to the 1.2 to 1.3% range. The bond rally since April has been of the stealth variety, the financial press and market strategists dismissing every tick down in rates as nothing. It was a lonely trade to put on and yes I think it was a trade, not the beginning of a bigger move. Heck, I expected a rally and still had a hard time benefitting from it. I did extend the duration of our bond portfolio in the spring but I didn’t go out and load up on the really long maturities that did the best as rates fell. Part of the

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Weekly Market Pulse: The Market Did What??!!

April 19, 2021

One of the most common complaints I hear about the markets is that they are “divorced from reality”, that they aren’t acting as the current economic data would seem to dictate. I’ve been in this business for 30 years and I think I first heard that in year one. Or maybe even before I decided to lose my mind and start managing other people’s money. Because, of course, it has always been this way. Economic data represents the past while markets look to the future. And that future is not necessarily the one you believe will unfold but one that millions of people form through their buy and sell decisions. You can no more predict what those millions of people are thinking than you can the winner of the next Super Bowl. Well, actually predicting the Super Bowl the last

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Weekly Market Pulse: Nothing To See Here. No, Really. Nothing.

April 12, 2021

The answer to the question, “What should I do to my portfolio today (this week, this month)? is almost always nothing. Humans, and especially portfolio managers, have a hard time believing that doing nothing is the right response….to anything…or nothing. We are programmed to believe that success comes from doing things, not not doing things. And so, often we look at markets on a day to day or week to week basis and think something of significance happened and we ought to respond to it. Most people, according to this recent article in Nature, “consistently consider changes that add components over those that subtract them — a tendency that has broad implications for everyday decision-making.”.
That is certainly obvious in most of the investor portfolios I’ve

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Weekly Market Pulse: Buy The Rumor, Sell The News

April 5, 2021

There’s an old saying on Wall Street that one should “buy the rumor, sell the news”, a pithy way to express the efficient market theorem. By the time an event arrives, whatever it may be, the market will have fully digested the news and incorporated it into current prices. And then the market will move on to anticipating the next event, large or small. What prompts this review of Wall Street folk wisdom is the most recent employment report.
The BLS reported Friday, with most markets closed, that the US added nearly 1,000,000 jobs in March, a number well above the supposed consensus of 675,000 jobs. 157,000 jobs were added to previous months via revision. It was what the market has been looking for, hoping for, the arrival – finally! – of the

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Weekly Market Pulse – Real Rates Finally Make A Move

February 22, 2021

Last week was only four days due to the President’s day holiday but it was eventful. The big news of the week was the  spike in interest rates, which according to the press reports I read, “came out of nowhere”. In other words, the writers couldn’t find an obvious cause for a 14 basis point rise in the 10 year Treasury note yield so they just chalked it up to mystery. Of course, anyone who’s been paying attention knows that rates have been rising for almost a year – and quite steadily since the beginning of August – so how this last 14 basis points qualifies as a surprise I’m not sure.
What was an actual surprise was mostly missed by the market commentators – the rise in real rates. The 10 year TIPS yield closed the week at -80 basis points which says very little

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