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QE or NOT QT? That is the Question

October 12, 2022

“We know that quantitative tightening is a temporary policy statement. It basically says, “We’re not buyers today. In fact, we’re selling.” The UK was scheduled to sell products this week, but because of market dysfunction, they were forced to reverse policy course and go back to buying. If they had not done so, we would already be in the throes of a global financial market panic. And this is where, again, if you look at asset inflation on a global basis, what it has revealed is just how interconnected the world of finance is.” — David McAlvany

Kevin: Welcome to the McAlvany Weekly Commentary. I’m Kevin Orrick along with David McAlvany. 

Well, I thoroughly enjoyed the last few days, Dave, with our clients coming in for the McAlvany Wealth Management Conference. What really hit me as I was talking to these wonderful people—and they were enjoying each other, too, a lot of them had not met each other—what hit me was there really is a grand narrative, or there’s a theme, there’s a framework for thinking that when you share that with other people, it can become very rich if it’s based on truth.

David: We do this once a year, where the clients will gather here in Durango. In addition to that, we have our quarterly calls just exclusively for clients. And again, it’s a venue for exploring what our thinking is on the markets up to that point, and prospective ideas looking ahead. It’s also an opportunity for Q & A to occur. This is not a common thing for most asset management companies to do, but it is something that we feel is very important to be proactively communicating, and dissecting what is happening in the markets in real-time with our clients. Of course, we do have a framework for thinking about what is happening, and so that was a really great couple of days with clients. So glad that some of them could make it in. For those who couldn’t make it, of course, they’ve got access to the video archive. Unfortunately, it is a client-only video because we do talk about the unique things that we have in the portfolio. But a great job by Robert and Doug and Philip and Morgan, and very helpful insights, so—

Kevin: I was impressed just listening to the team talk. Each one knew their area really, really well. And for the listener who wants to go back and hear what Doug Noland had to say, he did publish word for word what he said in the meeting in the Credit Bubble Bulletin, at least the first part of it. So, that would be worth going into the Credit Bubble Bulletin and reading. 

Dave, we have limited time, I know we think based on the stacks of our books and what we just buy with one click at Amazon, we have this idea that we have the time to read all these different things. But one of the things through the years that I took the time, almost every day, to read, there were two things. If I could only read two things in the morning before talking to clients, I would read Bill King, the Bill King Report, and fortunately, thank you, Dave, for paying for the subscription for that for all of us, so we would get a chance to look at it. But Richard Russell, this was a man that going back even before World War II, he was looking at something called Dow theory, which went back another 40 or 50 years, back to Charles Dow.

David: It’s a healthy framework.

Kevin: It’s a framework. Yeah.

David: Yeah. He was a fan of Dow theory. I think when he encountered it, what it unlocked for him was an understanding of the markets that he didn’t have previously.

Kevin: Didn’t he start writing in the ’50s? And he picked up the baton from the person who was using that system before that?

David: Yep. Mid to late ’50s,