201503.03
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It’s Not A Stock Bubble But A Bigger Corporate Bubble

With liquidity running somewhat perilously noncommittal since June, you would think the riskiest parts of the credit market would be most affected. That is incorrect and once again stands out as to the bubbly nature of the current age. Aside from liquidity draining enthusiasm into and around October 15 and December 1, high yield debt…

201503.01
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Currency Wars & Newton’s Third Law

Newton’s Third Law states that for every action there is an equal and opposite reaction. Economics is certainly not science so the application of Newton’s law would seem inappropriate for analyzing the global economy, but in today’s world I think it is apt; more growth here means less growth there, a zero sum game of aggregate demand…

201502.25
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Yellen Can’t Get Cooperation

Janet Yellen’s testimony concluded, no one gets any more clarity about what the FOMC actually thinks. However, that itself is in one sense an indication as she vacillated a little too much about making a firm commitment to either the recovery or “transitory” oil prices. QE3 ended months ago and we are seven years into…

201502.16
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Is It Time To Zig?

The US stock market made another all time high last week amid more mediocre – at best – US economic data. Much of the gain was credited to positive developments in the geopolitical arena as a ceasefire was announced in Ukraine and negotiations continued on Greek debt relief with some positive signs that an agreement…

201502.12
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When ‘Deflation’ Reveals ‘Inflation’

One of the curiosities of the commodity collapse since the end of last June has been how various financial derivatives have been thrown off. I’m not speaking of credit default swaps of small businesses that provide sand to fracking rigs or “products” like that, but something far more basic. The price of commodities should, you…

201502.11
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The Reality of ‘Flow’

To many, the “strong dollar” will always be an economic condition. If the price of the dollar is rising, then it will be assumed, mostly by economists, to be a relative judgment in favor of domestic growth potential and reality. That view misses the very relevant fact that “dollars” are not necessarily of domestic origin…

201502.08
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Investment Themes and Asset Allocation

Here is a summary of this week’s research from our strategic partner MRB. Allocation:   Trades to consider: “Short global luxury stocks versus multiline retailers.” “Short 10-year U.S. Treasuries outright.” As always, please feel free to contact me with any questions or concerns. Find out about your personal risk profile and working with Alhambra Click here to…

201501.30
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Research Charts: ECB and Commodities

From strategic research partner MRB…with Alhambra’s added commentary. QE is primarily a signaling device to demonstrate policymakers’ commitment to fostering the recovery and sustaining a cohesive monetary union. The policy is implicitly designed to reduce the equity risk premium. We expect a gradual re-rating of euro area equities. A cheaper euro, itself associated with QE,…

201501.25
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Investment Themes and Research Highlights

The cyclical rebound in global return on equity has further to run in an economic recovery scenario, despite having softened modestly in the past year. Earnings will be a tailwind for stock prices. Global equities are fairly valued relative to corporate profitability. Valuations are not an impediment to further stock price gains, and indeed have…

201501.22
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The ‘Dollar’ Enters The Real Economy

I am not fully sure as to why IBM’s reported figures haven’t been more widely digested for what they portend; likely it is just the still-hanging cloud of rationalizations about bubble behavior. Revenue at “Big Blue” dropped 12% in the fourth quarter, an alarming rate for any company let alone one that still serves as…