The Trump Sounds & Volatility Shall Follow

McAlvany Weekly Commentary

Executive Orders Signal Immediate Change Mr. Bond Vigilante Still Has The Strongest Say Uncertainty The Best Driver To Gold "So returning to the executive orders, at the end of page 2, I was saying, "Wow." At the end of page 5, each page with at least 10 executive orders on it, it was awe-inspiring, ambitious in scope, sure to offend, and FDR and Reagan both came to mind. Massive change, very disruptive to the status quo. From a market perspective, I kept thinking disruption, uncertainty. These are things that drive market volatility." —David McAlvany Kevin: Welcome to the McAlvany Weekly Commentary. I'm Kevin Orrick, along with David McAlvany. Well, David, all I can describe is sensory overload. I think about punk rock concerts back in the 1970s through the mid '80s. You had the bright lights, the strobes, you had the loud music, you had all these different things going on, which purposely are trying to create sensory overload. I wasn't really part of that movement, but I remember getting my pilot's license. And the guy who was checking me out was trying to do the same thing while I was flying a plane. Now, if I'm the markets right now, whether you're happy about Trump, whether you're not happy about Trump, but if I'm the markets, how in the world do I know what to do next? David: It's an amazing week. Normally on MLK day, I read a passage from MLK, Jr. and discuss it with my kids. Not this year. We've got the inauguration, the announcement of sweeping changes into the late hours of the evening. I was reading word for word the five pages of links to the new executive orders, redirecting the usual practice and had me a little bit distracted. So we've got the rescindment of 78 Biden-era executive actions. The second executive order stopped bureaucrats from issuing new regulations. The third mandated federal workers return to offices. Imagine that. Kevin: You got to go to work. David: I know. Kevin: You got to go to work. David: Ending government censorship, freezing hiring of the IRS agents, ending some birthright citizenships, signing pardons for 1,500 Jan. 6 prisoners, and then six commutations as a part of that. It goes on and on. Kevin: I told you, bright lights, strobe lights, sounds, it's all happening all at once. David: Yeah. Kevin: And it's presidential. I mean, these are executive orders, Dave. Nobody's voting on this. David: The one word I would apply to the markets going forward—reflecting on the knowns and the unknowns, the intended changes, and really the actual paths forward—is the word volatility. Kevin: Oh, sure. Well, what do you do when you have sensory overload? And again, there may be many really great long-term outcomes coming out of this, but what do you do in the meantime while things are shifting back and forth? David: I'm trying to replay in my mind Sid Vicious soundtracks, cassette tapes—because it would've been a cassette tape. The best way of describing the financial markets in the current context is like a vast casino. And again, you talk about sensory overload. Vegas has gotten a little bit better, even leaving the airport's not quite as loud as it used to be. But our current context is like a casino. You've got high stakes bets. They're rolling through constantly. You've got currency bets and fixed income bets and equity and option bets, cryptocurrency and commodity bets. And all of these bets are based on economic inputs. They're based on external factors which are deemed to tilt the odds in the favor of a certain outcome. Make no mistake, it is a casino and it's no longer clear to the currency players what those external factors are going to be. It's no longer clear to the fixed income players, the options traders, the commodity traders, and the equity operators just how those external factors are going to impact pricing. Kevin: Well, how about crypto? I mean, crypto just has one direction, doesn't it? David: Well,