Broken Signals: Bonds Say Stop, Stocks Say Go

McAlvany Weekly Commentary

Falling Yields Globally May Be Signaling Concern Rising Stocks & Cryptos Show Bulls All In Send Questions For Our Q&A Programs To: [e-mail] "I think there's perhaps too many currents swirling together today, just under the surface, to sort out precisely what's happening in the markets. What is undisputable is that credit markets globally have moved to unsound levels, and a variety of pressure points and vulnerabilities, areas of uncertainty, exist in the spheres of public policy, of fiscal policy, and international relations. And so, on the surface, you have a host of catalysts for consequential movement within the markets." —David McAlvany Kevin: Welcome to the McAlvany Weekly Commentary. I'm Kevin Orrick, along with David McAlvany. David, before we get started, let's just announce to our listeners that we would love to hear their responses, their questions. Every year, toward the end of the year, we ask for questions. We ask that you keep them short, something that we can actually read in a short way, and then answer. And so we would ask our listeners to just send that to [e-mail], and over the next few weeks we'll gather those. And Dave, I know you put a lot of time and effort into every question, so it's very much appreciated. David: Every year gets a little harder. I feel like it's a competition of stump the chumps. The questions get better and better, the answers get thinner and thinner. Now, we'll do our best to put something together that's coherent and reflective. Thanks for sending the Q&A material over. We'll do that on Christmas Eve and New Year's Eve. Just send your questions to [e-mail]. Kevin: Yeah, and just to reiterate, please do keep the questions just to a few lines, because we try to get through everything in several weeks. You know, Dave, you and I, when we were sitting down—and I love the fact that we have our meetings at Table 30—we're 17 years in, but they were out of Talisker last night, but we had Lagavulin instead. So we sat down at Table 30, we had our Lagavulin, but I think we both were on the same page. There's a lot of noise going on right now, and some of it's information with meaning, some of it's information without meaning, and it's an exciting time because there is a change in the wind. But a lot of times when you have changes like that, it's hard to analyze the data. David: Yeah. Times we can stretch our limits in terms of inputs, and for the child with Asperger's, sensory inputs can aggregate and then overwhelm. For the average inquiring mind, my own included, there's a lot of complexity embedded in price trends today, pick your market. There's a lot going on. Not all of it is cohesive and coherent. A lot of it is contradictory or at least sufficiently complex enough to keep you second-guessing real hard conclusions. So what we do on a weekly basis as an asset management team, we review—twice weekly, actually—a spreadsheet with over a hundred financial market variables. These oscillate minute by minute, and they indicate all the nuanced shifts within the financial markets. They provide us with a mosaic very much like the tiled art with a million pieces that in aggregate create a theme. And some days the theme is clear. Other days, all we have is movement with the meaning piece remaining a little bit elusive. Kevin: You and I were talking about Doug Noland last night, that he's got some disciplines, models, that he follows. That can be very, very valuable in an environment of noise. And I remember, Dave, you and I for decades read a wonderful market analyst named Richard Russell. He also had a model that he used called the Dow Theory, and there were times when he disagreed with what his model was saying, and there was still the human element. In other words, it wasn't just an algorithm everybody followed. I think Doug and the team do the same thing, don't you? There's models that you follow that tell you certain things to do.