Tag Archives: 5.) Alhambra Investments

Between November 1998 and February 1999, Japan’s government bond (JGB) market was utterly decimated. You want to find an historical example of a real bond rout (no caps nor exclamations necessary), take a look at what happened during those three exhilarating (if you were a government official) months. The JGB 10-year yield had dropped to a low of just 77.2 bps during the depths of 1998’s Asian Financial Crisis (or “flu”, so noted for its regional contagious dollar...

Is it a race against time? Or is it trying to set aside today so as to focus entirely on a specific kind of tomorrow? It’s easy to do the latter especially when today is what it is; you can’t change what’s already gone on. You can, however, think that today won’t impede or even impact a much better tomorrow yet to be determined, especially when the heavy hand of government is anticipated to intervene after sunset. On the one side, more fiscal “stimulus” is purported...

In mid-December 2019, before the world had heard of COVID, China’s Central Economic Work Conference had released a rather startling statement for the world to consume. In the West, everything was said to be on the up. Central banks had responded, forcefully, many claimed, more than enough to deal with that year’s “unexpected” globally synchronized downturn. This view had been punctuated by Fed Vice Chairman Richard Clarida, among many others, who in early January...

There is a lot of evidence which shows some basis for expectations-based monetary policy. Much of what becomes a recession or worse is due to the psychological impacts upon businesses (who invest and hire) as well as workers being consumers (who earn and then spend). Once the snowball of macro contraction begins rolling downhill, rational prudence dictates some degree of caution on all parts (pro-cyclicality). Bathed in the unearned glow of the Great “Moderation”,...

Over here, on the other side of that ocean, the US economy can only dream of the low levels Chinese industry has been putting up this late into 2020. At least those in the East are back positive year-over-year. Here in America, manufacturing and industry can’t even manage anything like a plus sign. Summer slowdown extends in Industrial Production. According to the Federal Reserve, the outfit which has kept tabs on this economic sector for more than a century, the...

Before there could be “globally synchronized growth”, it had been plain old “global growth.” The former from 2017 appended the term “synchronized” to its latter 2014 forerunner in order to jazz it up. And it needed the additional rhetorical flourish due to the simple fact that in 2015 for all the stated promise of “global growth” it ended up meaning next to nothing in reality. Oddly the same for 2017’s update heading into 2018 and 2019. If currency wars are the...

Macroeconomic slack is such an easy, intuitive concept that only Economists and central bankers (same thing) could possibly mess it up. But mess it up they have. Spending years talking about a labor shortage, and getting the financial media to report this as fact, those at the Federal Reserve, in particular, pointed to this as proof QE and ZIRP had fulfilled the monetary policy mandates – both of them. A labor shortage would’ve meant full or maximum employment, the...

Sticking with our recent theme, a big part of what Inflation Hysteria #1 (2017-18) also had going for it was loosened restrictions for US oil producers. Seriously. Legacy of the 1970’s experience depending too much on OPEC, subject to embargoes, American oil companies had been prohibited for decades from exporting oil. Not that it would have mattered before 2014, the country never producing near enough to have ever done so. Export limitations removed, shale boom...

What had given Inflation Hysteria #1 its real punch had been the benchmark 10-year Treasury note. Throughout 2017, despite the unemployment rate in the US, globally synchronized growth being declared around the world (and being declared as some momentously significant development), and whatever other tiny factors acceding to the narrative, longer-term Treasury rates just weren’t buying it. Instead, the eurodollar monetary system continued to cling to these safest,...

If anything is going to be charged off, it might be student loans. All the rage nowadays, the government, approximately half of it, is busily working out how it “should” be done and by just how much. A matter of economic stimulus, loan cancellation proponents are correct that students have burdened themselves with unprofitable college “education” investments. Without any jobs, let alone enough good jobs, an entire generation of Americans has been hamstrung,...