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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: Good News, Bad News

14 days ago

One thing I can tell you for certain about last week’s big rally on Thursday and Friday: there were a lot of people who desperately wanted a good excuse to buy stocks. And buy they did after a better-than-expected CPI report Thursday morning, pushing the S&P 500 up nearly 6% on the week with all of that coming on Thursday and Friday. The same could be said of bonds which also had a good week, with the aggregate index up 2.3%.
The stock market rally probably says more about the people doing the buying than it does about the reality of the inflation situation. The CPI report was indeed better than expected, especially the core reading of 0.3% which bested expectations of 0.5%. The headline rate was better too at 0.4% vs 0.6% expected, but it was also the fourth

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SPECIAL REPORT: Follow The Money Series – Dawn Of A New Era

October 25, 2022

With inflation recently hitting a high not seen since 1981, it is now apparent that the factors that drove the disinflation trend of the last four decades are coming to an end. Globalization and demographics, the two big factors that combined to hold down prices and wages for so long, are reversing, and so too is the downtrend in prices, wages, and interest rates.
While 1970s levels of inflation seem unlikely, several trends are converging to keep upward pressure on prices for years – maybe decades – to come. And that means the long downtrend in interest rates is at an end. This new, inflationary environment will change how we invest for years to come.
It is the dawn of a new era.
Our Special Report on Inflation, Volume 6 in Alhambra’s “Follow The Money” series,

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Weekly Market Pulse: Did Powell Just Blink?

October 24, 2022

Did Jerome Powell blink last Friday? It was just before the market open Friday and interest rates were jumping higher, as they had all week. The 10-year Treasury yield was up to 4.33%, another 11 basis points higher than the previous close and 32 basis points higher than the previous week’s close. Then, “the article” hit the front page of the WSJ:

Fed Set to Raise Rates by 0.75 Point and Debate Size of Future Hikes
By Nick Timiraos
The article led with this quote:
“We will have a very thoughtful discussion about the pace of tightening at our next meeting,” Fed governor Christopher Waller said in a speech earlier this month.
And just like that, the markets turned. Interest rates fell across the board – well, except for the very long end of the curve – and stock

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Weekly Market Pulse: Just A Little Volatility

October 17, 2022

Markets were rather volatile last week. That’s a wild understatement and what passes for sarcasm in the investment business. Stocks started the week waiting with bated (baited?) breath for the inflation reports of the week. It isn’t surprising that the market is focused firmly on the rear view mirror for clues about the future since Jerome Powell has made it plain that is his plan, goofy as it is. Stocks were down slightly Monday and Tuesday fearing the worst and hoping for the best I guess.
A hotter than expected PPI didn’t change things much on Wednesday because through hundreds of speeches about inflation over the summer no one at the Fed has mentioned PPI. Apparently inflation at the wholesale level is irrelevant.
But Thursday, well, now that’s a different

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Weekly Market Pulse: The Real Reason The Fed Should Pause

October 11, 2022

The Federal Reserve has been on a mission lately to make sure everyone knows they are serious about killing the inflation they created. Over the last two weeks, Federal Reserve officials delivered 37 speeches, all of the speakers competing to see who could be the most hawkish. Interest rates are going up they said, no matter how much it hurts, no matter how many people have to be put on the unemployment line, because that’s the only way to kill this inflation, to save the people from higher prices. They didn’t mention how shifting people from a job to the unemployment rolls would help those people afford the cheaper food, housing, transportation and iPhones the Fed is confident its policies will provide.
The big problem with the Fed’s plan to kill inflation by

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Weekly Market Pulse: Peak Pessimism?

October 3, 2022

Goodbye and good riddance to the third quarter of 2022. That was one of the wildest 3 months I’ve experienced in my 40 years of trading and investing. The quarter started off great with the S&P 500 rising 14% from July 1 to August 16 but ended with a 17% swan dive into the end of the quarter. And we closed on the low of the year. The 10-year Treasury yield rose from 2.97% to 4% just a few days before the end of the quarter. The 3-7 year Treasury index – our benchmark for bonds – was down 3.9% for the quarter, only slightly less bad than the S&P 500’s -4.9%.
YTD, the S&P 500 is now down 24% while bonds have their own double-digit losses. Our bond benchmark is down 10.5% for the year and that actually isn’t so bad. The Aggregate index – “the bond market” – is down

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Weekly Market Pulse: No News Is…

September 12, 2022

Nothing happened last week. Stocks and bonds and commodities continued to trade and move around in price but there was no news to which those movements could be attributed. The economic news was a trifle and what there was told us exactly nothing new about the economy. A report that wholesale inventories rose 0.6% cannot be turned into market moving news no matter how hard the newsletter sellers try. Jobless claims fell 8,000? Yawn. Exports rose $500 million? In a $24 trillion economy? Give me a break.
There was the kerfuffle of the S&P US Services PMI versus the ISM Services PMI. The former fell all the way to 43.7 (50 is the dividing line between expansion and contraction) while the latter, supposedly measuring the same thing, rose to 56.9.
Which one is right?

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Goldilocks Calling

September 2, 2022

Since the summer of 2020, my expectation for the US economy has been that once all the COVID distortions are gone, it would revert to its previous trend growth of around 2%. And that seems to be exactly what is going on with the economy right now.
There was a shift in consumption preference during COVID for goods over services with the goods consumption rising well above the pre-COVID trend:

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Now, some of that, as we know, is due to inflation so if we correct for that we still get a picture of goods consumption above the previous trend but working its way back down:

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Consumption of services, at first glance, looks as if it is back on trend:

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But again, if we correct for inflation we see a truer picture of services consumption still below the pre-COVID

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Weekly Market Pulse: The Dog That Didn’t Bark

August 29, 2022

Gregory (Scotland Yard detective): “Is there any other point to which you would wish to draw my attention?”
Sherlock Holmes: “To the curious incident of the dog in the night-time.”
Gregory: “The dog did nothing in the night-time.”
Sherlock Holmes: “That was the curious incident.”
From Silver Blaze by Arthur Conan Doyle, 1892

It is hard to determine sometimes what causes markets to move as they do. Take last Friday’s stock market selloff. The widely cited “reason” for the selloff was Jerome Powell’s speech at the Fed’s Jackson Hole Symposium. Frankly, I don’t think Powell said anything new, his message remarkably similar to his last post-FOMC press conference. But two passages drew attention as being sufficiently different to upset the market. First was this bit,

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Rate Hikes Are Working

August 25, 2022

New home sales were reported for July as down nearly 13% to 511K, a number that is just about the average since 2010 (543k). But that doesn’t tell the whole story obviously. New home sales have fallen sharply since December of last year, down 39%. The drop from the peak in August 2020 is even more dramatic, down nearly 51%. Obviously, the fall this year is related to rising mortgage rates but that can’t be the reason sales have been falling for nearly two years. For that, I think you have to look at prices which rose 34% from the beginning of 2021 to the peak in April of this year.

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For housing though “price” isn’t just about the price of the house but also the financing and we all know mortgage rates have risen in recent months. A $250,000 mortgage at 6% has

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The Economy Improved In July

August 22, 2022

The Chicago Fed National Activity Index rose to 0.27 in July with all four categories of indicators rising. The 3 month average was unchanged at -0.09. That indicates growth is slightly below trend and is far from the recession threshold of -0.7.
The index had been down for two consecutive months and both May and June were revised slightly lower. The data in August so far has been positive as well, particularly the production data with IP last week surprising to the upside.
I know it is trendy to see the US economy as heading for or in recession but the data just doesn’t agree. I am not unaware of the risks and if I had to guess I’d say we will have a recession, probably starting in the first half of next year which is when futures markets indicate rates are

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Weekly Market Pulse: Same As It Ever Was

August 22, 2022

History never repeats itself. Man always does.
Voltaire
Mark Twain is credited with a similar saying, that history doesn’t repeat but it rhymes. Of course, there is scant evidence that Clemens said anything of the sort just as Voltaire may or may not have penned the quote above. But both men were much wittier than I – than most – so I’ll take them both as being representative if not genuine.
I have been a professional investor for now over 30 years and I have seen investors make the same mistakes over and over, as if they are ruled by some mysterious force that prevents them from learning from their past. And that may well be true. Reality is, as Einstein may have said, an illusion, albeit a very persistent one. What we see as reality is in actuality merely an

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Weekly Market Pulse: Opposite George

August 1, 2022

It all became very clear to me sitting out there today, that every decision I’ve ever made, in my entire life, has been wrong. My life is the complete opposite of everything I want it to be. Every instinct I have, in every aspect of life, be it something to wear, something to eat… It’s all been wrong. Every one. – George Constanza
If every instinct you have is wrong, then the opposite would have to be right. – Jerry Seinfeld
From the Seinfeld episode “The Opposite”
I was talking with a friend last week about the markets and the economy and she said she didn’t understand why the market went up after the GDP report. After all, it was the second quarter in a row of GDP contraction and that’s a recession.
Shouldn’t I be selling stocks? I explained that markets are

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Weekly Market Pulse: There Is No Certainty In Investing

July 18, 2022

Investors crave certainty. They want to know that there are definitive signals for them to follow as they adjust their investments to fit the current market and economy. They want to know that A leads to B leads to C. Tea leaf readers are always in high demand on Wall Street and they continue to find employment despite their almost universally dismal track record. In this case, it is demand that drives supply rather than the other way around. The constant demand for answers creates an audience for those willing to give them and also drives engagement on social media. You don’t get Twitter followers with a series of posts that effectively say “I don’t know”. I can attest to that personally. Prognostication in the investment business is more about drawing an

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Weekly Market Pulse: A Most Unusual Economy

July 11, 2022

The employment report released last Friday was better than expected but the response by bulls and bears alike was exactly as expected. Both found things in the report to support their preconceived notions about the state of the economy. I do think the bulls had the better case on this particular report but there have been plenty of others recently to support the ursine side of the aisle too. My take is that everything about the economy right now, and really since the onset of COVID, has been so unusual that anyone confidently predicting anything about how the economy will develop over the coming months is lying – to themselves or you or both. Any model or indicator or rule of thumb that has worked over the last few decades to predict the future course of the

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Weekly Market Pulse: Things That Need To Happen

July 5, 2022

Perspective: per·​spec·​tive |  pər-ˈspek-tiv
b: the capacity to view things in their true relations or relative importance
Merriam-Webster
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

June 24, 2022

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.
There’s

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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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