The McAlvany Weekly Commentary provides investors with valuable monetary, economic, geo-political and financial information that cannot be found on Wall Street. With economic expert and host David McAlvany, you will be given a solid strategy of wealth preservation for your financial and retirement assets while living in an unstable economy.
The Need For Risk Control In A Schizophrenic Market
Fed says it will stop telling the markets its next move
Quick rally in stocks doesn't change long term bear trend
Biden "given" really good jobs "surprise"
Whitehouse Declares “Not A Recession,”… Move Along Citizen
Talk is cheap, follow-through is what matters.
Former Dallas Fed Chief says Pelosi took advantage of inside information.
Gold tests $1675 then bounces $100 higher.
Whitehouse Declares “Not A Recession,” … Move Along Citizen
August 2, 2022
“As we exist in a stagflationary environment and contemplate stepping a first foot into recession, Congress’s way of dealing with these anxieties and pressers is to consider an extra 400 billion in spending and a tax increase of $739 billion. It sounds like genius at work.” — David McAlvany
Kevin: Welcome to the McAlvany Weekly Commentary. I’m Kevin Orrick, along with David McAlvany.
Well, you know this is the day you’ve been waiting for, at least I have. I wanted to hear how the trip to France was, and what is it like to ride a bike up the Alpe d’Huez, a 10% grade? Sometimes I think it’s 10% plus. What was that like, Dave, this last weekend?
David: Well, there were parts of it that were magnificent and beautiful, and there were parts of it that were absolutely brutal. And just one pedal stroke at a time was all I was responsible for. One of the reasons I like to do races like this is because so much of my life is focused in the present moment. It’s that healthy balance to find a future focus and have some aspirational goals that are way out on the horizon and require some daily disciplines. Because the daily grind of operating within the financial markets can have you so focused on this day and this moment in the here and now that I just think it’s a healthy balance to be very present, but also have some attention put on something that is months or even years ahead. This was so beautiful. Again, I can’t imagine a more beautiful course, the French Alps. I’d love to go back. I don’t know if I’ll to that race again. It was probably like childbirth. There’s enough pain associated with it. I think I’m probably fine for now, but we’ll see.
Kevin: One of the things I love about you, Dave, is we’re learning, especially right now with our leadership, talk is cheap; follow-through is everything. While you were doing the race, my wife and I were replacing a propane tank. We have a 500-gallon propane tank because in the wintertime that’s how we heat the house, and of course the stove uses the propane, and the hot water heater. So propane’s critical. We had a company who would fill our tank that we thought was local, and over time, they just went away. They didn’t tell us.
So it’s just interesting the difference between follow-through— When you say you’re going to go do a race, you do it and you follow through. It’s not like going and buying an exercise bike and giving it to the thrift store a year later. What we finally had to do, my wife and I, we would make calls and say, “Hey, when are you going to fill the propane tank?” And they’d say, “Oh, well, we’ll be there on Tuesday.” And it’s like, “All right.” And they weren’t there on Tuesday. Then we’d call and say, “You told us you would be there on Tuesday.” “Oh no, no, we’ll be there on Thursday.” Well, this happened a few times. This winter, it actually became very tense because we realized there was no real follow-through.
I bring that up, Dave, because if you say you’re going to do something, you need to do it. And that applies not just to racing, not just to propane tanks, which we switched companies who actually does follow through, but that applies even to geopolitical events. You look at what’s going on with the Ukraine. A lot of talk is going on with the Ukraine. China’s watching closely right now. Bill Burns, the head of the CIA, said that’s going to be critical. Are we going to follow through, or what’s the world doing with Ukraine? And what does that look like in relation to Taiwan, which China has on their radar?
David: I’m not sure why,
Doug Noland: A Core Crises (from the Periphery)
Can China survive when the debts cannot be paid?
Interest rates spike worldwide while Japan fights against hope to keep rates down
Dollar and gold rise as currencies fall
The McAlvany Weekly Commentary
with David McAlvany and Kevin Orrick
Doug Noland: A Core Crisis (from the Periphery)
July 27, 2022
“The world has never seen anything like what we’ve witnessed for the past 13 years. I mean, we talk about China; it’s the emerging markets; what’s happened here in the US; the debt growth in Japan has been just crazy. So from my standpoint, David, this has been the worst-case scenario. As an analyst of bubbles for three decades, I never thought it would get to this point, and I hope things are not as dire as I suspect they are.” — Doug Noland
Kevin: Welcome to the McAlvany Weekly Commentary. I’m Kevin Orrick, along with David McAlvany.
Well, I always love this time, Dave, when Doug is in the studio—Doug Noland. Of course, for decades we’ve read his work, but I just pinch myself that he actually works with the team here at McAlvany. I love it when you two talk.
David: Last week, we gathered with clients and interested parties and our Tactical Short offering to review the last quarter. I encourage all our Commentary listeners to take the time to read the transcript or give it a listen. The content is so critical. I wanted to have my friend and colleague Doug Noland on to candidly talk about the markets here in what is a vital week inside a vital quarter and a really intriguing year. There are some key transitions we need to unpack. Doug, is there anything that we absolutely can’t miss in our conversation today?
Doug Noland: Well, David, thanks for having me on. It’s great to be back with you. I would just say a lot of my focus is on international developments that don’t get a lot of attention these days. We talk about these things throughout the week, David, so I’ll just follow your direction.
David: Well, you followed the evolution of the credit markets for decades now. First, the nature of money shifted and fiat was born. Then credit became a near-money equivalent. Finally, all sorts of financial assets became “money-like.” So this evolution—maybe it’s a devolution—of money and credit has promoted a unique form of growth. Let’s talk about its flaws. Let’s talk about its sustainability.
Doug: David, as you know, I’ve been following this now for— it’s been three decades. It was back in the early 1990s that I saw these fundamental shifts in finance where we started to gravitate away from traditional bank lending as the focus of credit growth to market-based credit. I watched the evolution of policymaking to bolster this market-based credit. I’ve always been concerned about this because the history of credit— Credit can be very unstable. It tends to be very unstable. Then if you make it market based, you don’t have hedge funds speculating in bank loans. They speculate in marketable securities. You don’t have leverage like that if bank loans are your credit. We changed this into all these market-based instruments that we leverage, we speculate. And the credit bubble kind of took on a life of its own through this evolution to more market-based credit. Then the Fed, of course, anytime this market-based credit turned unstable or a crisis, then they would act to perpetuate the growth of this credit. Unfortunately, I think we’re kind of at the end of the road for the great credit bubble.
David: So the bubbles have been created, and then they somewhat resolve themselves only to be propped up through policymaking and central bank interventions so that we don’t end up with something the equivalent of Armageddon. So there’s an interventionism, and it seems like that causes a migration. So we had the technology bubble,
Peak To Peak To Peak Inflation, The New “Transitory”
Gold provides certainty in uncertain times
China feels the pressure of loaning good money to bad bets
Central Banks losing credibility fast
Peak To Peak To Peak Inflation, The New “Transitory”
July 19, 2022
“They are losing the last vestiges of credibility, and somehow think that projecting an image is sufficient to carry the day. If you say it, therefore it becomes reality. It brings me back to a significant reason to own gold in any period of time. That is stupidity insurance because here you have a recreation, a regeneration of Plato’s cave sequence, where you’ve got shadows cast against the wall and that is supposed to be reality.” — David McAlvany
Kevin: Welcome to the McAlvany Weekly commentary. I’m Kevin Orrick along with David McAlvany.
I think all of us sometimes wonder if we’re going to just wake up from a very long dream, like we’ve been missing something. We have certain things in our life where it’s like, “This is too good to be true.” We’ve talked about this for 10, 12 years. How is it that America, the United States, could just print trillions and trillions of dollars? In all these years, we really didn’t experience inflation. We scratched our heads, but strangely enough, you had the Berlin Wall falling. You had the communist countries like China that were producing goods for much, much less. We should have been experiencing falling prices. We didn’t, but are we waking up from a dream where we were getting something we didn’t deserve, and now we’re finding out what it costs?
David: Isn’t it funny how we internalize those things and normalize them?
David: This must have something to do with us and our exceptionalism that we can do something that’s never been done in the history of the world, but that’s because we are who we are.
Kevin: Yeah. We’re Americans. We’re here to help.
David: Yeah, and so it is curious to see the monetary policy experimentation, the fiscal policy experimentation. Books have been written about this, deficits without tears. We run the deficits without tears. Of course, Jacques Rueff’s point was that ultimately there are significant prices to pay, emphasis on the word ultimately, because nothing is free in life. Although, that’s what we’ve internalized and normalized is this world of easy money and free access.
Kevin: Now we’re facing double-digit inflation. But here’s the strange thing. Here in America, we’re feeling the inflation, eggs and butter and rent. Everything’s going up. But if you were from any other country in the world, the dollar’s going up, gold’s going up. We’re getting sort of an altered reality as we look at it right now.
David: Yeah. Often, our colleague Doug Noland will look at trading dynamics that seem healthy, but are actually an expression of another dynamic once removed, somewhere else in the system, which is anything but healthy. Perhaps the dollar trading to multi-decade highs is an example. When an asset at the core of the financial universe trades well, like the U.S. dollar has in recent weeks, of course it can be on its own merits, or it can be on the demerits of an asset at the periphery, somewhere else. Frontier and emerging market stress has, in recent weeks and months, intensified. The dollar has moved into higher gear, moving into territory un-trod so far this millennium. As frontier and emerging markets have calmed down here in the last day or two, lo and behold, the dollar has come off the boil a bit as well, so maybe it’s not the merits of the dollar driving it higher.
Kevin: Okay. The pound’s lost its prime minister. We’re already looking at the English, seeing a weakness. The yen, they’re trying to keep anything from happening with the yen, and it’s just— the currency is crumbling relative to the dollar.
Formerly Free Money Now Getting Very Expensive
Companies weaned on easy credit now facing bankruptcy
Milton Friedman warned you can't fight inflation without loosing jobs
China facing credit crises, high yield debt at 24.9% yield
Formerly Free Money Now Getting Very Expensive
July 12, 2022
“During the worst of the pandemic, if you go back to the spread between high yield and Treasurys, it reached a thousand basis points. If you go back even further to the global financial crisis, it was 2000 basis points. That is a tough environment to survive. So, of course, bankruptcies proliferate as the spread to Treasurys passes a series of key thresholds. We’re not there yet, but there are good reasons to believe that we will be before too long. When we get to the Chinese numbers, I think you’ll fall out of your chair.” — David McAlvany
Kevin: Welcome to The McAlvany Weekly Commentary. I’m Kevin Orrick, along with David McAlvany.
It’s funny, my family’s from Texas, the Panhandle of Texas, that’s where my dad grew up. I spent every summer there. I ended up going to school at North Texas for a while, but you know, I’ve never been to San Anton. I would love to go visit the Alamo and just, what is it called? The River Walk. You sent me pictures the other day. You and Miles were there in San Antonio. You went over to the Alamo. And just looking at that, I think back as to what a small place that building was, the Alamo, yet small places can change very, very large points in history. Can’t they?
David: For sure. We sat with a gentleman who was there to guide and answer questions. And I asked him, why are you here, of all the places that you could be, of all the things that you could be doing? And he gave me a short history of his great, great grandfather. Maybe it was great, great, great grandfather, I don’t remember. But it was basically the history of the Tejanos, and these were Mexicans in the north part of Mexico, and they weren’t getting the benefits of being a part of the nation, but they were expected to pay taxes and everything else. And so they were like, nope, this isn’t working for us. So they were in support of this revolution, right, that happens at the Alamo. They’re fighting at the Alamo against the Mexican government.
Kevin: So you, in a way, because you’ve talked often about how the financial leads to the economic, which leads to the political or the geopolitical, when it gets political, it starts to get bloody. That’s where the blood flows, right? It’s not the economic, but it can lead to that.
David: That’s right. Now, the tragedy was that after the Alamo, they were Mexicans and the Americans didn’t trust them. And the Mexicans didn’t trust them either. So they were at the losing end. At least this is the story that I was told while at the Alamo.
Kevin: Didn’t you get to the bar where— Okay. I don’t have a lot of first edition books, but I do have a first edition Rough Riders by Teddy Roosevelt written in the last couple of years of the 1800s.
David: The Menger Hotel is where he rallied— shots going off through the roof. You don’t want the room right above the bar. That’s for sure. Not in those days. But, yeah, Roosevelt rallies the Rough Riders at the Menger Hotel. And so to sit and have a beer sitting there where he was decades before was fun.
One other really fun thing from the San Antonio trip was a Commentary listener approached me. We’re just at a breakfast spot meeting with a client of ours. And he says, “Are you are David McAlvany? I’ve been listening to the Commentary for years.” Anyways, it was really— It was a special moment for me. And I went around to say something to him later on, and he’d already left. Again, breakfast spots, people come and go pretty quick, but that was a highlight from San Antonio to run into a Commentary listener who’s been a part of this for years and years n...
Markets Fall: The Difference Between Old VS Bold Pilots
Secular Bear Markets are substantially longer & deeper than cyclical bears
Dollar up over 11% - Gold only down 3.3% YTD
NFTs (Digital Rocks) lose 90% YTD
Markets Fall: The Difference Between Old vs. Bold Pilots
July 5, 2022
“You have bear markets account for up to 40% of all timeframes in terms of market trading going back to 1877, and then the last six months of pain are just the introduction following a greater than 12-year expansion. Cash and gold. Haven’t we said that before, Kevin, where— You want optionality. There’s your justification for cash, but you have to have stupidity insurance.” — David McAlvany
Kevin: Welcome to the McAlvany Weekly Commentary. I’m Kevin Orrick along with David McAlvany.
I can’t help but think back to the year 2000, the tech stock bubble. I’m thinking January, February, about the time of the Super Bowl. And the tech stock bubble, it was flying high. You had sock puppets that were representing companies that were worth more than all the airlines combined, and it was just pet food online. It was this vision, vision. I think of the commercial—this was in the year 2000 before the tech stock bubble blew up—I think of the commercial—this Super Bowl, Dave, with Matt Damon. It starts out and he says, “History is filled with almosts.” So he starts shaming people immediately for not buying what he’s talking about. “There are those, however, who embrace the moment and they committed.” Then he ends the commercial. He says, “Fortune favors the brave.” Of course, you remember the scenes. He’s walking past guys climbing mountains and Magellan and his boat, and trying to let you know that if you go to crypto.com, that’s the future. Now, here’s what I remember from that. The year 2000 changed within a very short period of time, and those who had those tech stocks that were just never going away, a lot of them did. What we’re seeing is the same type of thing right now in the crypto space, even in the speculative FAANG stock space. What are your thoughts? Is this going to be short lived, or is this going to be long and painful?
David: This weekend over the 4th of July, we stopped in a place called Pagosa Springs. It’s known for its hot springs. Right along the edge of the river, there’s a place where you can go and soak for free. We call it the hippie dip because it’s kind of a locals-only.
Kevin: It’s right in the river. These hot springs are in the river.
David: If you want to pay 40 bucks, you can go to the spa—per person, or you can just go to the hippie dip and kind of hang out with the locals. And it gets colorful. I’ll say that. On the 4th of July, we’d never seen that many people down at the hippie dip.
Kevin: Just the whole family?
David: You say fortune favors the brave, the whole family’s there. We’ve got to pull the kids aside and say, “Sometimes bravery can be confused, and it’s just flat stupid.” There’s a kid probably 16 years old. Into the rapids, he decides that it’s a great idea to dive head first straight into the rapids. You can’t see what’s underneath the waters. You have no idea what’s going to happen next. You have belief that you’re going to make it through. It looks as if the way the water curls up and out, there is no major rocks.
Kevin: At the moment you feel like fortune favors the brave.
David: And that’s how he’s feeling, is fortune favors the brave. I’m downstream in the middle of the river actually waiting to drag him out because this does just not look good. Fortunately for him, nothing bad did happen. Mary Catherine and I are comparing notes, going, “Let’s make sure the kids understand, floating is fine. Diving headfirst is not a mark of intelligence. It’s a mark of someone who hasn’t had their prefrontal cortex fully developed yet, and in that sense,
Balance and Nuance
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Top-tier intellectuals discussing the philosophical and financial reality of our world.