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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: 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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Politics Get Weird, Markets Don’t Care

January 18, 2021

A mob, led by a shirtless man wearing a Viking helmet, stormed the Capitol building a couple of weeks ago and five people died before order was restored. A man from upstate New York sat in a Senator’s office and smoked a joint. Another roamed the halls of Congress with a Confederate flag. A Virginia man who was part of the riot wore a T-shirt mocking the holocaust. A Brooklyn judge’s son was photographed in the Capitol wearing an elaborate outfit of furs accented by a bulletproof vest. A Florida man – because there is always a Florida man – walked out with Nancy Pelosi’s podium. One of the rioters had recently been elected to the West Virginia House of Delegates and others were off duty police officers but most of them looked like they missed the off ramp to Comic

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Tesla Isn’t A Car Company

December 3, 2020

We have the luxury, the honor, of speaking to a lot of individual investors here at Alhambra. Whether they are clients or future clients (optimism is my default condition), the most common view of stocks is that they are overvalued and a fall – a large fall – is inevitable. And there is no stock that embodies that view more than Elon Musk’s Tesla Incorporated. It was once known as Tesla Motors but Musk changed the name in early 2017. There may never have been a more successful rebranding in the history of the world.
At the time of the change the stock traded for about $50 and it was expensive for a car company. Today it trades for $585 and it is not, as I have been told repeatedly by every Tesla bull I’ve encountered, an automobile company. Now, the rebranding

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Monthly Macro Monitor – September 2020

September 30, 2020

The economic data over the last month continued to improve but the breadth of improvement has narrowed. Additionally, while most of the economic data series are still improving, the rate of change, as Jeff pointed out recently, has slowed. I guess that isn’t that surprising as the initial phase of the recovery comes to an end. 2nd quarter was a giant downdraft and 3rd quarter saw an initial rapid climb out the giant hole dug by the shutdowns (an own goal of epic proportions in my mind, but I try not to get into politics on our work site so that’s all I’ll say). But even after that initial acceleration out of deep recession, we remain well below where we were when all this started.
A slowing of the recovery is okay and expected; a complete truncation is not.

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Uh Oh, The Dollar Has Caught A Bid

September 24, 2020

Anyone who follows Alhambra knows that we keep an eye on the dollar. It is a very important part of our process of identifying the economic environment. A rising dollar, when combined with a falling rate of growth, can be a lethal combination. That was the situation in March and of course during the financial crisis of 2008. So the recent rally is something that has got our attention. For now, though, we don’t see any significant stresses in the system that would produce that kind of liquidity driven event.
The dollar has been in a short term downtrend since the spike and peak in the heart of the COVID panic back in March. The vast majority of that decline was compressed in a roughly 2 1/2 month period starting in mid-May and ending in early August.


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Monthly Market Monitor – August 2020

September 8, 2020

Many of the weak dollar trends I noted in June’s update have moderated – even as the dollar has weakened further. US stocks surged over the last month, with growth indices leaving their value counterparts in the dust…again. About the only exception on the equity side was China, which outperformed for much the same reason as US growth – technology stocks. Generally, we expect foreign stocks to outperform in a weak dollar environment but so far any outperformance has been underwhelming. Just one more oddity in this oddest of stock markets.
In January of this year, when stocks were surging to new highs, I wrote that stocks had entered the “silly season”. Oh, if only I had known how wrong that was.
I am always loath to use the term bubble because we can’t know the

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We Have Reached The Silly Phase of the Bull Market

June 12, 2020

Have we entered a new bull market? Was the 35% pullback in the S&P 500 in March the fastest bear market in history? Or is this just a continuation of the bull market that started in 2009, interrupted by a rather large correction? Bull markets and bear markets are about behavior, about the human emotions of fear and greed. While we got a brief bout of fear in March, greed has since overwhelmed all sense, common and otherwise. What we’re seeing in the casino…er, market….today is not beginning of a bull market behavior.
What has been going on in markets over the last two months is the most glorious episode of human greed I’ve seen since 1999. I know there will be plenty who pooh-pooh that comparison but the speculative trading and the ignorance of those doing it is

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Regime Change

March 24, 2020

Stocks took another beating last week as the scope of the coronavirus shutdown started to sink in. The S&P 500 was down 15% last week with most of that coming on Monday after the Fed’s emergency rate cuts. Our accounts performed much better than that, but were still down on the week as corporate and municipal bonds continued to get marked down. Municipals recovered slightly at the end of the week as the Fed announced they would be buying highly-rated bonds with maturities up to a year.
The bill being considered in Congress right now would authorize the Fed to purchase corporate debt as well, but as of now, the bill is still being negotiated and there is considerable uncertainty about what its final makeup will look like. We are at a pivotal moment and dependent

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Is this the Beginning of a Recession?

March 10, 2020

As I sit here Monday evening with the Dow having closed down 2000 points and the 10-year Treasury yield around 0.5%, the title of this update seems utterly ridiculous. With the new coronavirus still spreading and a collapse in oil prices threatening the entire shale oil industry, recession is now the expected outcome. Most observers seem to question only the potential length and depth of the coming downturn.
The case of recession does seem to be one of those open and shut, slam dunk versions we don’t get very often in markets. The economic data has certainly deteriorated over the last year – although that was true before the arrival of the virus. In some respects, more recent economic data had actually improved somewhat. But with the actions being taken to combat

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Monthly Macro Monitor: Market Indicators Review

October 29, 2019

Is the recession scare over? Can we all come out from under our desks now?
The market based economic indicators I follow have improved since my last update two months ago. The 10 year Treasury rate has moved 40 basis points off its low. Real interest rates have moved up as well but not quite as much. The difference is reflected in slightly higher inflation expectations.
The yield curve has also steepened as the 10 year Treasury yield rose faster than the 2 year. This is not the type of steepening we normally expect to see just prior to recession by the way. That would be if the 2 year yield was falling faster than the 10 year. On the other hand, the change here is not large even if it is in the right direction.
As you’ll see below, some of our other market

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Monthly Macro Monitor: Market Indicators Review

August 30, 2019

This is a companion piece to last week’s Monthly Macro report found here.
The Treasury market continues to price in lower nominal and real growth. The stress, the urgency, I see in some of these markets is certainly concerning and consistent with what we have seen in the past at the onset of recession. The move in Treasuries is by some measures, as extreme as the fall of 2008 when we were in a full blown panic. That to me, is evidence that this move is overly emotional since the economic conditions today are nowhere near as severe as that time. As Jeff and I have both pointed out, the next recession is unlikely to look like the last one.
The banking system, at least in the US, is in much better shape than 2008; bank failures are probably not on the next recession

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Monthly Macro Monitor: We’re Not There Yet

July 21, 2019

It’s been a slow turnin’
From the inside out
A slow turnin’
But you come about

Slow learnin’
But you learn to sway
A slow turnin’ baby
Not fade away

Now I’m in my car
I got the radio on
I’m yellin’ at the kids in the back
‘Cause they’re bangin’ like Charlie Watts

Slow Turning by John Hiatt

“How did you go bankrupt?” Bill asked.
“Two ways”, Mike said. “Gradually and then suddenly.”

The Sun Also Rises, By Ernest Hemingway

I first wrote about the current economic slowdown a year ago and Jeff Snider actually started seeing signs of slowdown in the Eurodollar market as early as May 2018. So, the slowdown we’re in now certainly isn’t a surprise here at Alhambra. I think though that we often forget how long these

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Monthly Macro Monitor: Economic Reports

June 4, 2019

Is recession coming? Well, yeah, of course, it is but whether it is now, six months from now or 2 years from now or even longer is impossible to say right now. Our Jeff Snider has been dutifully documenting all the negativity reflected in the bond and money markets and he is certainly right that things are not moving in the right direction. But moving in the wrong direction, even deeply, as we discovered in 2015/16, doesn’t necessarily mean recession. This slowdown – and that’s what it is right now – like all slowdowns we go through in a business cycle, puts the economy in greater danger of recession. It is a lot easier for growth to turn negative when you are growing at 1% than it is when you are growing at 3%. So,

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Monthly Macro Chart Review – April 2019 (VIDEO)

April 13, 2019

Alhambra CEO Joe Calhoun discusses the charts from the past month and what they indicate.
[embedded content]

Related posts: Monthly Macro Chart Review: April 2019
Monthly Macro Chart Review – March (VIDEO)
Monthly Macro Monitor – March 2019 (VIDEO)
Monthly Macro Monitor – February (VIDEO)
Monthly Macro Chart Review – March
Monthly Macro Monitor – October 2018 (VIDEO)
Monthly Macro Monitor – December 2018 (VIDEO)

Tags: Alhambra Research,Featured,Monthly Macro Monitor,newsletter

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Monthly Macro Chart Review: April 2019

April 9, 2019

The economic data reported over the last month managed to confirm both that the economy is slowing and that there seems little reason to fear recession at this point. The slowdown is mostly a manufacturing affair – and some of that is actually a fracking slowdown – but consumption has also slowed. On a more positive note, housing seems to have found its footing with lower rates and employment is still fairly robust. The US economic growth rate in this cycle has been disappointing and the forces that have made that so haven’t changed. The short burst of higher growth last year has faded – as we expected – and in the short term I don’t see much reason to expect another burst. There are, however, some positive signs

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