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Broken Signals: Bonds Say Stop, Stocks Say Go
Manage episode 456150389 series 3624741
Conteúdo fornecido por McAlvany Weekly Commentary. Todo o conteúdo do podcast, incluindo episódios, gráficos e descrições de podcast, é carregado e fornecido diretamente por McAlvany Weekly Commentary ou por seu parceiro de plataforma de podcast. Se você acredita que alguém está usando seu trabalho protegido por direitos autorais sem sua permissão, siga o processo descrito aqui https://pt.player.fm/legal.
Falling Yields Globally May Be Signaling Concern Rising Stocks & Cryptos Show Bulls All In Send Questions For Our Q&A Programs To: info@mcalvany.com "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 info@mcalvany.com, 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 info@mcalvany.com. 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.
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239 episódios
Manage episode 456150389 series 3624741
Conteúdo fornecido por McAlvany Weekly Commentary. Todo o conteúdo do podcast, incluindo episódios, gráficos e descrições de podcast, é carregado e fornecido diretamente por McAlvany Weekly Commentary ou por seu parceiro de plataforma de podcast. Se você acredita que alguém está usando seu trabalho protegido por direitos autorais sem sua permissão, siga o processo descrito aqui https://pt.player.fm/legal.
Falling Yields Globally May Be Signaling Concern Rising Stocks & Cryptos Show Bulls All In Send Questions For Our Q&A Programs To: info@mcalvany.com "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 info@mcalvany.com, 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 info@mcalvany.com. 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.
…
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×With this mid-week Christmas break, we won’t be going into the usual analysis as we normally do. Instead, we’re going to dive deeper into the fundamentals and a recap of why gold is a great investment tool. Regardless of what will happen economically or geopolitically, some things don't change and those fundamentals are what really move the gold price. Despite a lot of volatility in different investment categories and what policy makers do, gold responds and reacts to underlying fundamentals. Who Buys Gold These Days? There’s a misconception that people who buy gold are somewhat “weird.” And while you might hold a greater percentage of your portfolio in gold if you lose faith in the system, there’s nothing strange about owning gold. Investors buy gold because they want to have real money that’s valued anywhere. Gold is recognized everywhere around the world. You can get on an airplane and fly anywhere in the world, hold up a gold coin and smile. Even if you don’t speak the language, people will know that you’re friendly and you have money. It’s a universal language. Preserves Your Purchasing Power Gold today will buy what it buys in five years regardless of the price. It's a constant store of value. It hasn't changed. Our friend Kevin Orrick on our McAlvany Weekly Commentary talks about how an ounce of gold buys a loaf of bread every day for a year. It's done that for thousands of years, and it still does today. If you’re considering owning gold, it’s smart to think of it as a legacy investment, something that you can hold. Insurance for Your Portfolio Gold is often described as insurance for the rest of the portfolio, but aside from the Justin Case, you went into all these different things that are, because it's guaranteed. Just look at the track record of gold over the years, and you’ll see that it is asset preservation. Tangible and Real Gold gets you out of “paper promise” assets into a tangible commodity. We're not talking about ETFs, mining shares or stocks. We're talking about owning physical coins and bars in various forms in and through various vehicles. It could be in your IRA or in a regular account in a vault. Tangible precious metals also provide a privacy component in the instance that you are holding it at home. What Moves the Gold Price? Most factors that move the price of gold have to do with fear or greed. For example, geopolitical fears such as global instability and threats of war — when the future looks uncertain, fear drives demand and increases the price. Another example is central bank demand — What do they know that we don't know? Why are they stocking up on gold? Obviously they're looking at the same things we see, but thinking, “wow, I don't like what I see. I think I'm going to increase my allocation to gold.” How Much Gold Should You Own? If you want to fund your retirement with gold, the best way to think about it is how much you will spend per month. What's your burn rate? You need to know your projection as well — do you need something like a 10 year or a 20 year annuity? When do you want to retire? You can then put that amount into ounces of gold. For example, if you need two ounces or three ounces a month to live, you start accumulating that ounce by ounce. The other way to look at owning precious metals in our Investment Triangle model. A third of your liquid wealth should be in physical gold. A third on the left hand side of the triangle is for growth and income. A third on the right hand side of the triangle is liquid Add Gold Ounces Today Call us at (800) 525-9556 so we can speak with you individually and walk through your own portfolio. Our team of experts can help you understand the whys and the hows with acquiring gold.…
Kevin: Welcome to the McAlvany Weekly Commentary. Merry Christmas and happy Hanukkah. I'm Kevin Orrick, along with David McAlvany. Well, David, it's fun recording these programs. I had lunch with your son, who is a freshman in college, and I told him, "I'm thinking back 25 years, 26 years when we had lunch together, and what's happened, and then, before that, me working for your dad." What's amazing is these conversations have turned into the Weekly Commentary. And as I was talking to your son, I was thinking, wow, no wonder. There's so many interesting things to talk about, books, the things that we've studied, just our thoughts and dreams moving forward. The questions that our clients ask, I was reading through them and I was thinking, they're really family. Don't you feel like this is sort of family? David: Oh, I do. It's an extended conversation. It's a lot of what we experience, the two of us, when we get together for the regular Commentary meetings on a Monday afternoon and evening. Some of the questions are beyond what I have the capability to answer, so this will be the first Q&A that we bring in Philip Wortman and Morgan Lewis to tackle a couple of the ones that are just right down their alley. Kevin: I'm looking forward to that. Well, tell you what? Let's just go ahead and get started. And I hate to start saying that John Maynard Keynes might be right on something, but here's the question, "Dear Kevin and David, John Maynard Keynes was a complex human, but one thing he got absolutely right was the relationship between macroeconomics and wars. You and Doug (Doug Noland) have been warning of macro risks in China for years now, and we see those warnings playing out in real time. However, as China's economy falters, so does their ability to invade Taiwan. Are the Chinese still serious, and are they a serious military threat to Taiwan? Thanks, Seth." David: Well, thank you Seth. Yes, the Chinese economy has experienced much slower growth, and their primary source of growth has been impaired for many years from the real estate sector. And even now we're beginning to see yields on those companies, so their borrowing costs—numbers that you just can't even wrap your minds around. The very best case scenario is Vanke going from 17.5% to 21.5% just in the last two weeks. And then, on top of that, you've got other yields for companies that are 500%, 1,000%, 12,000%, and higher. So it's basically saying, in that sector, is game over. They do still maintain GDP growth well above that of the U.S. Even if you discount the official statistics by 30 or 40%, I would argue that the case for war does not go away. In fact, it increases with economic desperation. There's the aspect of public distraction on the one hand, playing to nationalist themes, and there's also the positive impact to youth employment, what is today an unemployment problem, both inside the military via conscription and in manufacturing employment growth, as well, for military hardware. So discouraged and unemployed youth need purpose. Low levels of inflation in China also leave them with the latitude to increase spending and money printing with less immediate negative impact to their consumers. Gas war is inflationary, so that's one other aspect of that John Maynard Keynes macroeconomic connection between war and the economy and macroeconomics, but the deflationary malaise they've been locked in is creating a dynamic which increases social and political pressure domestically. Thus far, they've not announced any radical fiscal measures to break that trend, and so I think it's worth keeping in mind that war could very well be an opportunity to redirect that negative attention. I think they understand the global demand for semiconductors and other manufactured goods from Taiwan. They may be inclined to invade Taiwan as if it were a hostile takeover of an industry or company. Not everyone's happy about a change in management, but your suppliers,…
1 Markets React Sharply to Fed’s Rate Cut: What It Means for Gold 10:20
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10:20Remarks from the Federal Open Market Committee meeting after an expected rate cut rocked the markets, with major indexes falling across the board. Let’s take a look at where prices stand as of December 18: The price of gold dropped to $2,560, or over $100 from a week ago. However, it’s still holding above the November lows and nowhere near longer-term correction levels. The price of silver broke below $30, dropping to around $29.21. It did break below short-term support levels and to the deep 786 fibonacci level on the market push since August. The US dollar rallied sharply above $108 after the Fed announcement. The Dow Jones Industrial Average fell 2.6% or 1,123 points. The S&P 500 fell 2.9% on the news. The Nasdaq Composite declined 3.5%, its worst day since July. The Dow Transportation Index fell 2.75% on the fed funds news. It was down over 10% since its November 25 high. Powell Rattles Investors Sentiment around the Fed’s expected 0.25% rate cut was dampened by hawkish remarks from the Fed Chairman. Markets expected to see four additional rate cuts in 2025, and were surprised when Jerome Powell remarked that, “We think the economy is in a really good place.” In one instance, the Fed noted that there would be at most two more cuts. A cut in the federal funds rate does help make banks more competitive. However, it has not translated into a decline in the 10-year yield on Treasurys. Nor has it dropped the 30-year mortgage rate to stimulate the housing market. Precious metals also declined, opening up a potential buying opportunity for investors looking to add to their ounces of gold and silver. Gold to Silver Ratio Widens With the latest dip in the gold and silver prices, the silver to gold ratio now stands at 88 to one. With silver’s drop disproportionately larger compared to gold, this is a new opportunity for investors to take a position in silver. Adding more ounces of silver on a dip will potentially open up a ratio trade to shift silver ounces into gold when the ratio narrows again. Typically, when the ratio widens as much as 90 ounces of silver equal to one ounce of gold, silver will then rally. So this is a rare time to get in at a good price. Year-End Fundamentals Wrap If you want to know a little bit more about why gold reacts the way it does, sometimes predictably, sometimes unpredictably, we'll discuss it next week. We will go into a deep dive on what causes the gold price to move in the short and the long term, and all those underlying fundamentals. Call for Expert Guidance The McAlvany Precious Metals advisors have decades of experience investing in gold and other precious metals, and they can help you find the best strategy to meet your unique needs. They are happy to speak with you about your strategy for investing in gold and other precious metals. Reach us at 800-525-9556.…
S&P 500: More Declines Than Advances Every Day In December China Adds 160,000 oz of Gold Send Questions To info@mcalvany.com "We're at this moment where, again, credibility gets thrown out the window for the Fed. And I think that is the final stage of a bull market in metals, where your central bank credibility is lost and investors go scrambling in an effort to survive a loss of purchasing power. And I think in this case, you're also talking about ramifications that are well outside of any central bank's control, and that is geopolitical issues." —David McAlvany Kevin: Welcome to the McAlvany Weekly Commentary. I'm Kevin Orrick, along with David McAlvany. Dave, before we start, let's just remind our listeners this is the last day to submit questions for our upcoming question and answer programs over the next two weeks. So those questions can be sent to: David: Info@mcalvany.com. Kevin: Yeah, info@mcalvany.com. Well, I'll tell you what? This has been a great week. I feel like I lived a month through this week just because of your birthday. What an amazing celebration at your house, various nights. But I was very honored to be invited to meet some of the people that you knew back in college, Dave, relationships that you've kept going all these years. David: Well, actually we had friends that came into town and some of those relationships go back 50 years. So we covered every decade from when I was a wee small lad to still a truncated and underdeveloped wee small lad. I was a late bloomer, so it was about college before I actually added a little bit of height. So then the timeframe of developing college friends and then professional friends, and it was a phenomenal week. Kevin: Dave, it wouldn't surprise our listeners to know that the people who did fly in for your birthday, who you had affected earlier in life, [The Intentional] Legacy is the name of the book that you wrote about—just what we're all about. And I listened to your friends. Some of them I had heard about, but I had never met. And I listened to them each saying, "Hey, this is how you affected my life." And it was very poignant because I realized there's just been a lot to you all the way back. And at the end of the evening with these friends who had known you, well, one of them had known you since you were a child. He's a professional musician. And he pulled a guitar off the wall, very impromptu. He took the first two minutes to tune a very out-of-tune guitar—so it was very impromptu. But what he did was amazing to me. He sang the various stories that people had told throughout the night at the dinner table. He wrote a song and sang it. I could tell it truly was a gift, but talk about a poignant moment. That was completely unexpected, and I really had no idea somebody could do that. I mean, I don't think he forgot a single story. David: Yeah, it was very special. Family and friendship have played a central part in the last five decades, and I can't imagine the future much different than that. So spending time with friends from across the country, very special week. Kevin: Okay, so we're going to get into business here. This is the week of the Fed decision. And inflation hasn't gone away, Dave, and things feel awfully loose for loosening of the interest rate. What do you think? David: We are in a new world. People know who Jerome Powell is. There was a day when the Fed chief was anonymous. Nobody took the time. Nobody really cared. But this week is particularly important. The next Fed decision is here. The bond market's pricing in 97% probability of a 25 basis point cut, a quarter of a point. But the interesting trend remains that in spite of rate cuts dating back to September when this cycle started, interest rates like the 10-Year Treasury have been on the rise. So 3.63 on the 10-year was the yield then, in September, and reached a peak this week of 4.44. So 79, 81 basis points roughly,…
Rapid Middle East Re-Shuffle With Assad's Exit Invisible Hand Of Free Markets VS Tariff Strategy Send Questions For Q&A Program To info@mcalvany.com "There's a long period of status quo. It was upturned quickly. In this case, you had the Gaza conflict in Israel's engagement with Hamas and Hezbollah. And then we have the Russian invasion of Ukraine, which, you look at these two factors, and they actually inadvertently blew up the 54-year-old regime in Syria. Without Hezbollah on the ground, without Russia in the sky, Assad could not keep the reins of power. So, yeah, timing is everything. Things change quickly, and I think we have to be honest with ourselves when things do change." —David McAlvany Kevin: Welcome to the McAlvany Weekly Commentary. I'm Kevin Orrick, along with David McAlvany. Well, David, today is your 50th birthday, and sorry, I just have to betray the age, but it's pretty darned exciting to have you sitting here and realize that I've known you since, what, you were 12. David: It's been a few years. Kevin: We've had a few Taliskers together. You studied for your pilot's license over at our house when you were just— David: You taught me how to fly-fish. Kevin: Fly-fishing. That's exactly right. But I couldn't wait. I had to give it to you unwrapped. I got you a copy, and one of our clients actually knows about this. I've shared with him just the other day that I found a copy of The Wealth of Nations by Adam Smith, written in 1776, but this was the published date: 1818. It's an amazing copy. You can tell the people who owned it ahead of you, Dave, from 1818 on. They treasured the book because they have marginalia in there and notes to themselves and little clips from articles and magazines from the 1800s that they pasted into the book that added to the commentary of the book. So I was just extremely excited to have you see this. David: It makes me wonder what happens to the books that I've read and the notes that I've made in those books. I don't know that anyone will appreciate the conversations that I've had with the authors, the way I have enjoyed and engaged and appreciated them. Kevin: As you write marginalia in your books. David: Yeah. But I mean, there is a hope that, like this, a couple centuries later, you get to look and say, that's the point, isn't it? Here's the conversation. Here's what he picks up. There's the debate. He nailed it. This is where he engages with the author. And no, Smith's not right on that point. So the engagement, the challenge, the debate, it's pretty cool to see it in the margins. Kevin: Well, and we've been talking about, with Trump coming in there are a lot of applicable things that we can be looking at because right now there's talk here in America of tariffs. Adam Smith addressed tariffs, and you've interviewed Michael Pettis, who recently has written about tariffs, and I don't know that he necessarily agrees with Adam Smith in all occasions. And so wouldn't it be fun if the two could debate each other and actually say, okay, Adam Smith's saying, "No, it's the invisible hand, not the government." And Pettis going, "No. Sometimes the government can get away with it." What do you think? David: Yeah, well, just as a reminder, real quick before we dive in there, we have our Q&A coming up, and so if you would submit questions, would love to engage with you as best we can. Send those over to info@mcalvany.com. That's info@mcalvany.com. If there are questions of a metaphysical nature, I probably will leave those for a private conversation with you. Let's schedule some time. If it's economics, if it's finance, if it's international relations, public policies— Kevin: Scotch recommendations. David: Oh, certainly, we can certainly— Yeah, the merits of peat, let me tell you. Kevin: But talking about timing, what kind of week do we have? What kind of month do we have? We've got a new president coming in here in just a month or a little ...…
Precious metals slow down their climb, but continue to show strength after the Thanksgiving break in the US. Let’s take a look at where prices stand as of December 4: The price of gold inched up about $12 from the previous week, still hovering around $2650. The price of silver is up 4% or $1.20 from a week earlier, to around $31.50. Platinum up about $17, or a little under 2% from the previous week. Palladium about $8, or just under 1% from last week. Looking at the broader markets, most of the major indices are sitting at new, strong highs leading into the holiday season. The S&P 500 is up 81 points, or 1.3% from the previous week. The only exception is the Down Transportation index. The Dow Transports is down 470 points, 2.5%, from the previous week. They are almost back to the November 2021 all-time highs. Gold Continues Predicted Path As we discussed before, the price of gold dropped 13% during the last Republican president term in 2016. But six months later, it rebounded and caught back up to where it was trending. Now that Trump has been elected again in 2024, we are seeing a similar trend. While gold hasn’t dropped quite as much yet, the price has declined about 9% since election day. Looking back further, that’s about a 50% retracement in this last breakout pattern. And while there’s still a chance that gold will drop further in the short term, we don’t expect the lower prices to last. It’s likely that gold will rebound in 2025 and reach a new all-time high around $3,000 or higher. Trump, Musk and Spending Cuts The new administration has promised to make dramatic changes to help reduce excessive spending that’s contributed to the massive US debt. To that end, Trump is bringing in Elon Musk and Vivek Ramaswamy for a newly-created Department of Government Efficiency (DOGE). These two entrepreneurs are tasked with cutting wasteful spending and finding ways to restructure the bloated bureaucracy. It remains to be seen what they will actually cut. Meanwhile, Trump is also pushing for additional interest rate cuts to get more money back in the hands of the people. He is essentially ignoring the long-term inflation problem with a short-term solution that will make his administration look good. If they really want to get the problem under control, they’ll need to do what no one wants to admit needs to be done — and that’s cutting spending AND raising taxes. When to Buy Gold? Given the geopolitical situation and the US financial situation, it makes sense to begin dollar cost averaging ounces of gold with cash sitting on the sidelines. Gold is not affected by inflation, and it allows investors to preserve the purchasing power of their hard-earned money. Purchased consistently every two weeks, it allows investors to stockpile ounces of gold over time. Build Your Gold “Retirement Annuity” How many ounces do you feel like you need to have set aside when you come to retirement? Do you expect to need a 10-year or a 20-year “gold annuity”? For example, if you know that you’ll need two ounces of gold each month to cover expenses, you can plan how many ounces you will need to accumulate. Now is the time to start stacking ounces of gold. The easiest way to do it is to automate your gold and silver investments through our Vaulted app. Get Guidance from an Expert If you haven’t had a meeting with an advisor at McAlvany Precious Metals to talk through your financial objectives, now is a great time to start. Our advisors have decades of experience investing in gold and other precious metals, and they can help you find the best strategy to meet your unique needs. They are happy to speak with you about your strategy for investing in gold and other precious metals. Reach us at 800-525-9556.…
1 Broken Signals: Bonds Say Stop, Stocks Say Go 38:28
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38:28Falling Yields Globally May Be Signaling Concern Rising Stocks & Cryptos Show Bulls All In Send Questions For Our Q&A Programs To: info@mcalvany.com "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 info@mcalvany.com, 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 info@mcalvany.com. 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.…
Top Execs Selling 5x More Stock Than Buying Goldman Sachs Calls For $3,000 Gold In 2025 Will Powell Drop Rates Again? "The Wilshire 5000 to GDP, this is a modified Buffett ratio. It touched 202% last week, which is an all-time high. It's a measure like the Buffett ratio, covers the aggregate of 5,000 companies, telling us something. There's notable insider selling. Five to one is the ratio. Actually, just above five to one. Historically, to be fair to the executives who are doing this, they're not making a market call today. They get to a period where they're comfortable and they want to get liquid, and they're usually two to three quarters early before a major downturn. When you see a significant uptick in insider selling, that's two to three quarters. You're on notice." — David McAlvany Kevin: Welcome to the McAlvany Weekly Commentary. I'm Kevin Orrick along with David McAlvany. Well, David, you did it. You did it. You're down in Texas and you told me you were going to do a Spartan race, but I haven't seen you training like I had in the past. How'd it go? David: Not training like I have in the past. How about not at all? It's been a nice 18-month break. The annual pilgrimage to Texas, it's here, it's arrived, like other holidays we spend feasting and celebrating together as family. The special highlight for this one is my second son's birthday. He turned 16 over the weekend. Kevin: Wow. David: On his birthday, he requested that we race together something called an OCR or obstacle course race. You mentioned it, the Spartan race to be exact. Kevin: Okay. If he's turning 16, you're just about to turn 50, aren't you? David: This is a huge year for us. My oldest turned 18; the next, 16; the next, 13; the next, 10, so we're out of single digits. My wife and I celebrate our 25th anniversary, and it's my 50th birthday in about 10 days. Yeah, this is a big year for us. After watching the Tyson-Jake Paul fight a few weeks back, I figured we might have another version of the old lion being surpassed by the young lion. Again, maybe I'm just feeling a little unenthused turning 50, but we did both bleed a little. It was not a competitive race between the two of us. It was just a great day. We ran, we suffered a little, we started and finished as a team, and we hopped over prickly pear in quantities I've never imagined, working through the 25 obstacles over the course. And then the course is about six and a half miles. We got to the end and they gave us this interesting pitch as we crossed the finish line, "Do you want to do an extra mile?" It was like one of those fear of missing out moments. He was like, "Sure, I guess we'll just run an extra mile," but it was a great memory maker. Kevin: And you did that. You did that. Well, that's awesome. I remember one of the people here at the office, Dave. I won't name them. When we were doing the Half Ironman on the big island in Hawaii, the last part of the run was looped. I remember we all had to run two loops. Remember that? David: Oh, yeah. Kevin: You patted me on the back and you passed me quickly. But one of the members of our team thought the loop was just once, not twice. When she got to the finish line, they said, "Oh, no, you need to loop again." That was a miserable feeling. Running that extra mile, I can see that, but if you recall, I think that was an extra six and a half miles for her. David: That's right. That's right. Kevin: Yeah. Let's take it to the economic side of things, talking about running the extra mile. Dave, we were doing this commentary back in 2008, but after the global financial crisis was really playing itself out to look like it was going to be a depression, there was a choice to be made. Do we let the depression happen—which usually is the best thing to happen because you come back out of it? We've talked about other depressions in the past where, if left alone, you come back healthier, not in bad shape.…
1 Metals Bounce Back Amid Market Volatility 17:38
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17:38Precious metals continue to follow the playbook laid out by our analysis of a Republican presidential win. Let’s take a look at where prices stand as of November 20: The price of gold is up about 4.3% or $108 to $2,650 from last week, a really nice bounce up in a week. The price of silver is up 3.9% or around $1.15 at $30.86 from a week earlier. Platinum is up about 3.6% or $33 to $958 from a week earlier. Palladium is up 12.5% or $113 to $1,024 from the prior week. That’s a nice recovery from last week’s dip of 5.3%. Copper's up about 15 cents, or around 3.8% to around $3.80. There’s a good chance copper will reach $4 in the next few months. Looking at the equities markets… The DJIA is down 1.5% or 670 points to around 43,200. The S&P 500 is down 80 points or 1.3% to around 5,920. The Dow Transports is off 600 points or 3.5% since last week. The US dollar index is up 7% since October, or 3.5% since the election with a strong bounce off the trading range floor. It’s now pushing up against the ceiling. The Meteoric Dollar Rise The rise in the dollar right now is insane. What’s driving it higher? When you look at where it’s going, it’s knocking on that ceiling right now. This rise isn’t just an influx of money from Asia because of Chinese concerns. And it’s not just the average American thinking Donald Trump will be better for the US dollar. It may also be the flight of capital coming out of Europe due to fear. While the BRICS alliance is trying to put up a strong front for a new BRICS currency, it is not a done deal. It takes a long time to compete with a global reserve currency. Just look back at how the Euro evolved. It was proposed in the 70s and 80s, but it didn’t become the powerhouse currency that it is today until the mid 2000s. With respect to BRICS, there was some infighting between India and Russia and China about how India would pay for their oil. China demanded it be settled in Yuan. Instead, India left the deal to settle it in dollars with the US. So there’s no real agreement yet with the BRICS currency. Gold Doesn’t Follow The Dollar There may be investors out there that believe that gold will correct and go lower — and that will be their entry point. But that’s not what we’re seeing from our years of analysis. Gold isn’t supposed to follow the dollar. But with the dollar at $107 right now and gold at $2,650 per ounce, it’s because of the sheer magnitude of money printing over the last decade. It represents the number of dollars in circulation. The velocity of money is picking up the US dollar. If there’s also economic stimulus with a Trump economic plan, we’ll likely see the dollar rally and gold would follow suit if this is driven by geopolitics. Don’t Miss Out on Gold While China and other international markets have been heavily investing in gold, Americans have been missing out. If you don't own gold yet, now is the time. Get your position now. If there's pullbacks, buy a dip. But the bottom line is you don’t know what gold's going to do. Trump is not the save-all cure- all in these markets. The McAlvany advisor team is here to help guide you. With decades of experience in precious metals investing, they are happy to speak with you about your strategy for investing in gold and other precious metals. Reach us at 800-525-9556…
Trump Is Not In Yet & He's Already Being Blamed Pre-Election October Deficit Largest Ever Ukraine Strikes Into Russia With U.S. Approval & Hardware "I think without tariffs as negotiated and leveraged on other items we lose the power to encourage energy imports from the US. It's the art of the deal. Economists may worry about the inflationary impacts of tariffs, and to the degree that we see it—see that inflation—I think it's going to indicate that Trump didn't get what he wanted. What he really wants is to address the balance of payments deficits via exports, not via penalizing imports." —David McAlvany Kevin: Welcome to the McAlvany Weekly Commentary. I'm Kevin Orrick, along with David McAlvany. David, I did something sort of strange this weekend. I really focused on a year, 1818, because I had heard about the second US central bank tightening credit when inflation was running away. The American economy was booming at the time. People were taking huge debts and buying land, and they were exporting produce to Europe, which was war-torn because of the Napoleonic Wars. So America was booming, but the problem was the debt was creating a lot of growth that wasn't real, that could not be sustained, and it was creating inflation, to be honest with you. And so the head of the second US central bank—we've had three tries at the Federal Reserve in one way or another—went in and just basically tightened credit, and he said, "No more loans." And he called his debts in, and it created what I had not really paid much attention to. It created what they call the Panic of 1819, and a very, very severe depression after that. So we went from, it was called the Era of Good Feelings at the time, to actually one of the worst depressions America's ever been through. And I'm thinking right now, you had a call this morning with an international client who said, "You guys actually are looking like you have a pretty strong economy." But is that being run by a basis of something that can be sustained or is it just purely debt, Dave? David: Well, that's the key. I think when you look at GDP growth, the Atlanta Fed puts their GDPNow number together. It's been coming down a little bit, but it's still, say 2.5%, and the larger figure compiled is 2.8%. So GDP growth just shy of 3%. Now the question is, what would that number look like if you sucked out $2 trillion in deficit spending? Because government spending is a factor in GDP, and there's no distinguishing between debt spending—deficit spending—and just regular old spending. It's economic activity. So it does look pretty good. It reminds me of many years ago. I lived in Los Angeles, and I tell you what, at least 50% of the people who owned BMWs and Mercedes lived in really cheap apartments. They could not afford those cars, but it was what they had to impress the ladies, and they lived on a larger scale with perhaps an ulterior motive. They needed to prove something. And so you live beyond your means so that you can make an impression. Kevin: Well, and a lot of times you can afford something you can't afford for a little while just based on monthly payments. William McChesney Martin, who basically said it's okay to pull the punch bowl back before the party gets out of hand, and we really have left the punch bowl out continually, haven't we? David: Yeah, absolutely. So you've got today the run-up to unsustainable valuations in the stock market. These valuations, it's pretty easy to ignore them because mainly people are making money and they're playing the momentum game, which packs a lot of euphoria into a little bit of time. And we share a good deal in common with the late '20s euphoria, with the year 2000 as well, what you described—was that 1818, in the era of happy feelings? Kevin: Oh yeah, yeah, good feelings. David: Good feelings. Kevin: The Era of Good Feelings, but boy, you take the punch bowl away. But this is why what you brought up last week was so...…
This week it’s more than just a weekly recap but also a bit of a look ahead. There’s been a lot of price action in the last week. So let’s take a look at where prices stand as of November 13: The price of gold is down about 3.9% or $85 from last week. It is down $211 or 7.6% from its high on October 30. The price of silver is down 2.7% or around $0.83 from a week earlier. It is down $4.50 or 12.9% from its pre-election price on October 29. Platinum is down about 5.3% or $52 from top to bottom over the week. It is sitting down 11% or $115 since it reached its peak. Palladium is down 5.3% or $105 from where it was last week. It is down $322 or 25.8% since October 29. The S&P 500 is up 40 points or 0.6%, sitting just under 6,000. It is up 264 points or 4.6% since the election. The Dow Transports are up 62 points or 0.3% since last week. And they’ve risen 1222 points or 7.5% since election day. The US dollar index is up 1.3 points or 1.3% since last week, at around $106.5. They’re up 2.8% since election day. Short-Term Prediction for Gold Looking at the 200-day moving average chart for gold, it appears that gold will likely drift down from its record high levels. It would likely land around the $2,400 per ounce level. This downward movement would likely happen within the next 4-6 weeks. However, this short-term dip will not last long. We are still in the midst of a multi-year bull market that will continue. You can see it when you zoom out a few years to when it started. Gold’s Stair-Stepping Bull Market Looking back, gold had hit a bottom around December 2015. Back then, it was trading just around $1,050 per ounce. Gold continued to trade sideways for the next couple of years, but the floor was slowly rising. And finally it had a breakout point in May 2019. That’s when it had clearly entered a bull market, and it was trading around $1,280. Gold then traded within its 200 day moving average. The only exception was at the start of the pandemic, when the uncertainty took over as no one knew what would happen when the world shut down. But since then, gold has been slowly stair-stepping higher and finding new floors. What we see happening throughout this period is gold has a breakout and reaches a new high, and then the exuberance wears off. There’s a natural selloff and recalibration. So for example, gold went from $1,200 to $2,000 in the beginning of the bull market. The emotional high wore off and gold dropped back down to around $1,700 — a more “reasonable” price. Now that the election has happened, gold has again rallied to a new record high, breaking out from its 200 day moving average. And with this most recent sell-off, we expect it again to drop down even further to sell off the exuberance of knowing who the next president will be in the White House. Build Your Nest Egg No matter what happens in the short term or long term, gold will continue to retain its value. That’s why it is the perfect asset to preserve your purchasing power and build a solid foundation for retirement. Gold’s average is almost 10% a year over time, regardless of the period of time. An ounce of gold will buy in 20 years, what that ounce of gold buys today. So for the sake of your retirement planning, it is smart to include gold in your portfolio. Gold is the guaranteed income when you need it. Buy Gold on The Dip How many ounces of gold can you accumulate on price dips to meet your objective of a secure retirement? It’s best to prepare in advance, because price dips are typically short lived. Speak with a McAlvany financial advisor to put together a strategy so you’ll be ready to buy on the dips. Reach us at 800-525-9556, Monday - Friday. Call or email us, and an advisor will get back to you shortly.…
Left Cannot Ignore Electoral & Popular Sweep Head Of $11 Trillion BlackRock Likes Hard Assets When Will Western Investors Move To Gold? "The adjustment is beginning in their investors' minds to a higher-for-longer environment, an adjustment to debt and deficits which are not quickly resolved, not by a person, not by a party, but this is a dedication to resolving an issue which may take decades. And that's partially through economic growth, that's partially through an increase in revenue, that's partially through a reduction in deficit spending. But until we get to those long-term solutions, we deal with critical issues. And Rieder is saying, avoid the long end of the curve. Rieder is saying, take a look at hard assets." —David McAlvany Kevin: Welcome to the McAlvany Weekly Commentary. I'm Kevin Orrick, along with David McAlvany. David, a lot has changed in a week, but I can't help but think of a man named Onoda Hiroo, who after World War II, Japanese soldier, he fought on 29 years. He was on a Philippine island, and he absolutely refused to believe that the war was over, even when Japanese generals and commanders would come and try to talk him out. He could not believe that. I can't help but think that that's a lot like Arizona and California right now. My wife and I turned on Jimmy Kimmel, and instead of him being funny, he was just standing and crying and talking about the end of the world. And we watched Saturday Night Live on Saturday night, the opening skit, we thought it might be funny, but instead they just really stood and cried and talked about the end of the world. I'm just wondering, is the war over or is it just beginning? David: Yeah, it's a great question. Well, yes, a lot has happened in the last week. We've got President-elect Trump in line for another four years. The cabinet positions are being lined out, and yet a full week later, they're still counting ballots in Arizona and California. Kevin: Yeah, it's like the Japanese soldier on the island. Why are they still counting, Dave? David: It's hard to believe that in states like Florida you can finish the count the day of the election, while states home to Silicon Valley and some of the greatest hardware and software inventions ever, they can't figure it out. The vote count a full week after the election day is still going on. In my mind, election integrity has a black eye from that kind of incompetence. Kevin: Well, and last week you were critical of both parties, and had a little bit of cynicism going, but there seems to be an overwhelming message that's being sent to the United States right now. David: Reflecting on my pre-election comments, I think they were adequately critical of the parties running, maybe overly cynical about the American public. Whether you regard the election outcome as a good thing or a bad thing, there was uniformity in the political shift. It was across ethnic and socioeconomic lines, all swing states, a significant shift in the African-American and Latino communities. There was a sea of red on the American map, 49 out of 50 states shifted red with a wide margin, enough margin in the popular vote to give Trump an unambiguous mandate to fix a few things. The exit polls noted that inflation, immigration, and a fixation on cultural issues which don't help the middle class were top of mind, and threats to democracy ranked high as well, with a good number of those citing that concern voting for Trump, interestingly. So, the shift towards Trump included a surprisingly large college-age contingent, and of course the minority contingents I just mentioned. But maybe minorities have figured out that rhetoric is insufficient to make your life better. And that a strong economy—that tends to lift all boats. The opposite, if you're looking at strong inflation, that uniformly sucks the tide out from under those same vessels. Kevin: Yeah, Dave, the question was asked of Kamala,…
This week, the markets breathed a sigh of relief after a contentious election season. Let’s take a look at where prices stand as of November 6: The price of gold is down about 4.5% or $125 from last week. The price of silver is down a little over 10% or around $3 from a week earlier. Platinum is down about 7% or $74 from top to bottom over the week. It is sitting down below $1,000 again. Palladium is down 15.5% or $190 from where it was last week, hovering around $1,020. The S&P 500 jumped up 3.8% to 5,930, a new all-time high for the index. Gold Dips on Trump Win As discussed in our election market expectations episode, with a potential Republican win in the election, there would be an initial gold decline. It's an immediate response of exuberance of a healthy turnaround in an economy, hopefully some fiscal responsibility. We'll see if that actually ends up being what plays out. At the same time, we see the S&P 500 reaching an all time high. So is the NASDAQ, up over 2.5% today, while the DJIA is up 3.6% or 1540 points as of the day after the election. These are other indications of market exuberance with an expectation of a turnaround in the economy with the Trump administration. If we look at the first election win for President Trump in 2016, we saw a very similar price action as in other elections. It was a short-term, two day response followed by a reversal for a few weeks before resuming that decline. But when Trump won in 2016, we actually saw an unchecked decline of about 13.5% in the gold price. It was a very short period of time — just by December 22nd, 2016, we had bottomed after that November 4th date. We believe that the opposite would've been true if Harris had won. You would have seen a gold spike as a vote against fiscal policies of the left as well as a continuation of some of what they had been doing, and the equities markets likely wouldn't be rallying. De-Dollarization and BRICs News and talk radio veteran John Loeffler, former host of Steel on Steel and co-host of the Financial Sense News Hour with Jim Puplava, joined as our guest in the studio. We asked Mr. Loeffler for his take on recent BRICS discussions of de-dollarization and the US debt dilemma. While it’s impossible to say what’s next, he did share some wisdom on what could happen. “Every fiat currency historically has a shelf life of no longer than 200 to 250 years before it gets inflated into oblivion. And that's what we're watching happen right now with the dollar.” “It's significant that the BRICS discussion is revolving around de-dollarization. In the case of the BRICS countries, they're going to use the stabilization of their own currency with gold and or other precious metals as some kind of a hedge or a block against getting their currencies pulled down as the dollar ceases to be the currency of last resort around the world.” “In other international circles, you’re beginning to hear discussions of the post-dollar era. That means everybody else is thinking about what will happen if the dollar dies or if it ceases to be the currency of last resort that they're actually talking about.” Seek The Truth, Plan Ahead Will the US get the debt under control? It seems unlikely. As we discussed last week, austerity is never popular. Every time the Fed Chair makes an economic prediction — no matter if it’s Janet Yellen, Ben Bernanke, or even Allen Greenspan — they never get it right. The job of the Federal Reserve is to maintain expectations, not tell you the truth. So the most important thing to do is to find sources of information that have been telling you consistently the truth, warning you of things to come bravely and also as you say, have a plan, but be flexible. Plan Your Metals Strategy Now is the time to develop an economic game plan for yourself, for your family, for your loved ones. The Federal Reserve won’t protect your wealth.…
Morgan Lewis On Emerging BRICS / Gold Strategy Buffett Sells 2/3 Of His Apple Stock Gold Up 33% YTD Is Only The Beginning David: "Friends of mine will point to the legitimacy of one news source or another as if pedigree matters. And ironically, all pedigree gets you today is uniformity, is conformity, is educated imbecility. What matters is integrity, and the mainstream media has demonstrated it has none. News outlets are dying because they failed to see the need for respecting the truth more than what they're choosing as a priority, which is worshiping power and conforming to ideological pre-commitments." —David McAlvany Kevin: Welcome to the McAlvany Weekly Commentary. I'm Kevin Orrick, along with David McAlvany. David, I just really enjoy our Monday nights before we record the Commentary. The Talisker scotch is— A lot of times people say, "Well, why is it that you like Talisker?" And it's way too complicated to explain. It's not just the taste of the scotch, it's the years and years and years of friendship that went into it, and it's just become the taste of when you and I meet. David: Well, and it's something that I think many people would appreciate in those terms. If they don't like single malt, they certainly appreciate the depth of relationship and the ability to bob and weave and go lots of different places. We're going to start this morning by bobbing and weaving with Morgan Lewis. We just came out of a company-wide meeting, and I thought I'd ask him a couple of questions as it relates to foreign currency reserves, the BRICS nations, and kind of a continuation of last week's conversation on that topic. Kevin: Yeah. We had discussed last night, have Morgan come on, just because the Hard Asset Insights that he writes every week. They're fabulous, but this one in particular this week was really good. David: And it should be a part of everyone's weekly staple. That's a Saturday morning read along with the Credit Bubble Bulletin. Not to be missed. * * * Kevin: Morgan, thank you for joining us. David: In the office, we often talk about our debt issues. We talk about the transition for the US dollar system as it is today, as it could be tomorrow. And in last week's Commentary, we did spend a bit of time talking about the meeting in Kazan, Russia, the BRICS meeting. The significance of that we're still trying to figure out, we don't know what exactly will happen. We know the intent. We know the desire amongst the parties involved to see a shift in the status quo. Give us some perspective, Morgan, on the important points that you're connecting. Morgan: Yeah. Well, I mean, I would say that nothing profoundly new came out of the Kazan summit, but there's a lot we already know. And I think it confirmed some of the aspects that are powering the gold market, I would say, in particular right now. The BRICS, the criticism coming out of Kazan has been that they haven't announced some alternative reserve currency, but I think that misses the point. I don't think their intention is to create a US dollar-centric reserve currency model. David: Take me back to 2015 when we had sort of a clear intent expressed by leaders within the People's Bank of China as to the role that they saw gold playing in the future as they were literally just launching and developing this new thing, the Shanghai Gold Exchange. Morgan: Yeah. We know that they are interested in an alternative to the dollar. The PBOC member in 2015 wrote a piece that was titled "The World Needs a New Reserve Currency." In it, he referenced the intention to use the yuan for trade invoicing for commodities like oil and gas, and he said they would like to increase the uses of the yuan in trade using gold. So, this has been talked about for a long time. I think people get a little tired of— The King Dollar narrative is brought up frequently to belittle these claims. And the idea being that they really can't de-dollarize,…
1 Tactical Short 3rd Quarter 2024 Recap 1:48:54
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1:48:54Late-Cycle Bubble Fragilities MWM Q3 2024 Tactical Short Conference Call October 31, 2024 David: Good afternoon, this is David McAlvany. I want to welcome you to our Tactical Short Third Quarter Conference Call. Thank you for participating in this call. As always, we want to give a special thanks to our valued account holders, we greatly value our client relationships. I came across a quote from Carmen Reinhart, who has been a guest on our weekly podcast in the past. She's spent time at a variety of universities and with the IMF and World Bank, working as an economist. Co-wrote a book with Ken Rogoff a number of years ago. If you don't know Ken, he's a chess Grand Master, Harvard professor, author of many books, including one that they co-wrote, This Time it's Different. They look at debt and what is ultimately sustainable or not sustainable. And as we go into the conversation today with Doug, there's a lot of complexity and a lot of detail, and I appreciate how simple and focused this one quote from Carmen is, because it gets to the nub of what we're dealing with. She says, "If there is one common theme to the vast range of the world's financial crises, it is that excessive debt accumulation, whether by the government, banks, corporations, or consumers, often poses greater systemic risks than it seems during a boom." And just holding onto that simple idea, where we begin today is with that simple idea, we'll move through complexity, and I want to come back around to that simple idea of too much debt ends up being a bad idea when you get out of the boom times. So a little context: With first-time listeners on today's call, we'll begin with some general information for those unfamiliar with Tactical Short, and there is more detailed information available at mwealthm.com/TacticalShort. The objective of Tactical Short is to provide a professionally managed product that reduces the overall risk in a client's total investment portfolio. At the same time, we'd like to provide downside protection in a global market backdrop with extraordinary uncertainty at extreme risk. The strategy is designed for separately managed accounts that gives us the ability to— The advantages of that are that it's investor-friendly. There's full transparency, there's lots of flexibility, reasonable fees, there's no lockups, and that's why we've chosen that structure. We have the flexibility to short stocks and ETFs, and our plan has been to, on occasion, buy liquid listed put options as well. Shorting entails a unique set of risks and we're set apart both by our analytical framework, as well as the uncompromising focus on identifying and managing risk. Our Tactical Short Strategy began the third quarter with a short exposure targeted at 80%. The target has held steady throughout the quarter at that level. Focused on the challenging backdrop for managing short exposure, a short in the S&P 500 ETF, SPY, remained the default position, which is the case for high-risk environments. I'll give you an update on performance, and then I will pass the baton to Doug. Tactical Short accounts after fees returned a negative 4.28% during Q3. The S&P 500 returned a positive 5.89. For the quarter, Tactical Short accounts returned a negative 73% of the S&P 500's positive return. And as for one year performance, Tactical Short after fees returned a negative 20.99 versus the 36.33 return for the S&P. So, Tactical Short's loss was that of 57.8% of the S&P 500's positive return. We regularly track Tactical Short performance versus three actively managed short competitor funds. The first is Grizzly Short Fund, which returned negative 5.48 during Q3. And over the past year, Grizzly has returned negative 14.14. Ranger Equity Bear returned a negative 9.27 for the quarter, with a negative 12.47 for their one-year returns. Federated Prudent Bear Fund returned a negative 3.58 during Q3, and negative 18.63 for one year.…
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