Time To Start Getting REALLY Bullish? | Tom McClellan

This episode is brought to you by Google Chrome. You think you know a browser, but Gemini and Chrome? That's new. It can help you with practically anything on the web, like restoring a vintage motorcycle from a 50-page restoration block, or finally break down that long article you've had open for weeks. Gemini and Chrome is here for it. Ready to make anything online makes sense? There's no place like Chrome. Check responses set up require compatibility and availability varies 18 plus. Propel Fitness Water with Gatorade Electrolites, Zero Sugar, and Vitamins. Propel hydrates better than water to help you get the most out of your workout and get back to your best self. What propels you? Propel with Gatorade Electrolites. So I'm not bullish today, but I am looking for the moment. It's probably within the next week to turn bullish, and then I'm going to be bullish as I'll get out. Welcome to Thoughtful Money. I'm Thoughtful Money Founder in your host, Adam Taggart. Welcome you here for a discussion on the latest in market technical analysis with one of the best TA guys out there. Of course we're talking about Tom McClell and of McClell and oscillator. Tom, how you doing? Doing great, Adam. Great to see you again. Great to see you as well. So we are talking just so the audience knows we're recording this within an hour so of the latest federal reserve news. And folks, I'll be deconstructing that. In fact, by the time you've seen this video with Tom, you've probably seen my livestream with Axel Merck kind of doing a play by play deconstruction of everything that the Fed released today. But Tom, these are interesting times. And there are a few people I know who are able to sort of tease out the wise and the house of how times are interesting. And then you, you have all sorts of wonderful charts. We're going to go through a bunch of them. But the correlations that you come up with always just kind of blow my mind. So anyways, we'll get to the charts quickly. But first, can you just give a sense for the character and the tenor of this market compared to previous market times and cycles you've seen across your long career? This is a strong market. We are in the first two years of a presidential term, which are supposed to be sideways. And the market's doing a very, very upward version of sideways. And so if you want an explanation for why that is, I would say that we are not taxing Americans to the Hilt. And we're leaving more money in the economy as opposed to in the government's coffers. That creates problems for the government, but it creates great conditions for the economy because we're not eating our seed corn. And if you leave money more money in the hands of people, they go out and spend it and build factories and do things with it other than pay the government. As I said before, it creates problems for the government, but it's great for the stock market. And I see continued great things for the stock market ahead. If you want to jump right into the charts, I brought, we can talk about why. - Well, yeah, far bit for me to stand in between now and then. So yeah, when do you pull up your charts and elucidate all for us? - I call this my Rapunzel chart. And it's basically the way that we construct the presidential cycle pattern. That's the name that technical analysts use for talking about how the stock market has regular repeating four-year patterns of behavior. And so the way you find that out is you chop the market up into four-year chunks of time. You reset them all to the same initial value and then you average them together. So this is what they all look like independently and it looks like a mess. But when you average them together, it looks like this. I do it a little bit differently than other people do where I start at November 1st when election time is. And so you can see that for the first couple of years, the market is generally sideways. And then year three is great. And year four is also upward, although a little bit if year because we're heading into election. So we're about to head into year three, which is a wonderful time for the stock market. In fact, it's nearly always up a couple of times it didn't work that way. One was 1931 when we were in the middle of the Great Depression. Another was 1939 and when the Vermacht was marching through Poland and he didn't get up here. So absent conditions like that, you can count on the third year being an up year. The current stock market is doing compared to that. The scales do not match up and I have the two plus offsets so that we can see the correlation and see that it's not just the overall slope from beginning to end. There's correlation of the dance steps along the way. But we're generally speaking, we're doing a whole lot more upward of a version of sideways than we have done in other years. But we still have this bottoming process in the presidential cycle to get through. And we are in the zone for doing that. And then we get to climb the big wall of upwardness in the stock market going into the third year of the presidential term. OK, hey, a couple of questions on that. So it looks like that bottom is generally coincided with the midterm elections. And so is it safe to say in the next couple of weeks you expect some volatility and some market softness? We're in the squishy bottoming period right now. And actually it bottoms before the midterm election, which is in November, which is interesting. You would think that the market would wait for the results of the midterm election before deciding what to do. But no, the stock market tends to a bottom in late September to early October because that's when investors feel like they have figured out what they think is going to happen in the election. And so they're not so worried about it anymore. And in fact, the stock market right now, the S&P 500 right now, is running about a week ahead of the normal schedule. That's why all these alignment lines that I've drawn in here are pointed, are tilted a little bit because the stock market is making those turns a little bit early. So we had the top we're supposed to have. It was higher instead of lower, but we're still making the same dance steps. So we're in this bottoming multiple bottom formation structure right here. And somewhere between now and about a week from now, we should get the last of these bottoms and then we start really climbing. And so along the way, as we muddle through this, what you want to look for is you want to look for a day with a high put call ratio, you want to see a nice high vix. If I could ask for everything I want, you want to see breadth divergences, starting in especially breadth momentum divergences. So we look for a higher low and a McLean oscillator to say, okay, we're getting the conditions it's time to get on board to climb this. But you don't want to be too late in waiting for the last of these bottoming conditions because we're going to be starting higher. And there's been nice correlation of the dance steps, not generally of the overall slope, but of the dance steps, where there's been a disruption of the overall slope is where you have these anomalies like going to where with Iran or having the straight or hermos open and everything's fine. Those were not part of the normal program. And so you cause brief anomalies that change the slope. The dance steps are still there, which is fascinating that it works that way. Okay, so it sounds like what we'll give you a chance to give as much nuance and the rest of the discussion as you want to give. But it sounds like you're actually generally pretty optimistic about the direction of the market starting pretty soon. Can you go back to the previous slide for a second? I just have two questions for you. One is this presidential cycle pattern, you know, says, hey, as the midterm elections get resolved, the market tends to have a really strong following year, right? And of course, the debate leading up to the midterm elections is well, is the party that's in favor? Are they going to lose the midterms and is Congress going to go away from the administration? That's all taken to account historically in this cycle, right? So I'm assuming in your mind, it doesn't really matter so much what happens in the midterm elections just as long as they're over and there's certainty delivered to the market, is that true? That's exactly right. The actual outcome of the election matters way far less than the certainty of knowing that we have an outcome. People don't care, the investors don't care where the outcome is. They just want to know that we have one. And so once they feel like they know that we're going to have an outcome that is going to be certain to them, that then they start buying. And that's why the bottom is about a month before the election, which is fascinating. You'd think that it would be after the election, but it doesn't work that way. Okay, great. And then second question is, right now, you said we're following the dance steps. You would expect to see, although there have been some variations. And obviously the exogenous stuff like the wars. Yeah, that's just stuff coming out of the blue, it's surprising in the markets. When you say that we're stronger than normal right now, does that in any way make you think that the following year may not be as strong as the historical pattern average, just because we're maybe pulling some of that value into today? That's an excellent question. You got to figure that since the presidential cycle pattern is an average pattern of all the four-year terms, half of the time, we're going to be better, half the time we're going to be worse. And so it's really hard to characterize it because we don't have a sample size of 50 or 60 iterations. We've only got a handful since the 30s when we changed the 20th Amendment and changed the political calendar. And so if you try to squeeze too many new ones, insights out of it, you start running into trouble. But generally speaking, strengths tend to continue. We don't have signs of weakness showing up. We just have signs of the normal seasonality, like we're supposed to have. Okay, all right. So at very, very high level, at least looking through this T.A. type of lens, it sort of seems like markets have a green light. But I know you have a lot of other data here, so let me let me let you run. Yeah. Now, if you want to, since we're talking about average patterns, the president, the four-year presidential cycle pattern is one of those. The 10-year desenial pattern is another one that's been talked about since the 30s and it's still working. You basically average the market together in 10-year chunks of time. And in this case, I'm using the Dow instead of the S&P 500. And the correlation's been pretty good, except for when we had the Iran war that disrupted the correlation. But once people felt like, oh, okay, we've got that figured out. It got went back to following the normal dance steps. This, again, is a more upward version of sideways than the average. But this shows a bottom in early October. We're in this bottoming process that is very, that fits very well with what the Dow is actually doing. It's with that pattern. And then we get to the year seven effect, which is a bullish effect, except for 1987. Year sevens can have had some problems in the last century or so. But that's usually later in the year. But the first part of years ending in seven are very bullish and that actually starts in October. It's probably within the next week to turn bullish and then I'm going to be bullish as I'll get out. You think you know a browser, but Jim and I and Chrome, that's new. It can help you with practically anything on the web. Like restoring a vintage motorcycle from a 50-page restoration block or finally break down that long article you've had open for weeks. Jim and I and Chrome is here for it. Propel Fitness Water. With Gatorade electrolytes, zero sugar, and vitamins, propel hydrates better than water to help you get the most out of your workout. And get back to your best self. What propels you? Propel with Gatorade electrolytes. Okay, bullish is all get out. Okay, I like that. So let's see where to go from here. Let me just ask you this question because it might strike people the way it kind of strikes me. When you say years that end in seven tend to be pretty bullish. I think that's what you said. Yeah. Talk to the person who says like, come on, Tom, that sounds like astrology, right? I agree. Totally agree. That's a screwy idea that it should matter. And so since the hypothesis that I was operating under is that it's a screwy idea, it shouldn't matter. I gathered the data just to make sure. And I refuted the hypothesis. It's not such a bad idea because there is reliable similarity that we see from decade to decade in terms of the similarity, how they show up. Part of it is owes to the four year cycle pattern because years and in six, like we're in right now, half the time that's the second year of a presidential term, which is a sideways period. And so you're seeing that effect counted twice in the two different versions of it. It shouldn't matter. But it does, we are creatures of habit and the seasonal factors of an annual cycle versus a decade and versus four year, they all do seem to matter. They shouldn't, but they do. Okay. And folks, this is somewhat about what it was pruned to at the start where Tom has, he teases out in his charts, all these amazing kind of correlations that just do not seem intuitive, but you can't argue with the data that they exist. And so Tom, I'm sure you've got some more of those hidden in here. And I don't know if you're going to talk at all about your oil and gold, you know, correlation starts with the markets. They've met for last, but I want to talk some more about the stock market. Great. One of the things that we have going on right now, we have the advanced decline line has been fairly strong. We have no divergence between the advanced decline line and stock prices. The advanced decline line was making tops when stock prices were making tops. That's a bullish condition. When you have a strong advanced decline line, it says that there's enough liquidity around that even the lowly stocks, which all get the same vote in the advanced decline statistics, that even the lowly stocks can get some of that liquidity. When you have a new all-time high, or even a new three-year high in the advanced decline line, that is a very positive factor. In fact, I think I brought a chart. Yeah, this is a study I started years ago and I've kept it up. It asks the question, suppose you have a three-year high, and then in the New York Stock Exchange's advanced decline line, what's the worst case drawdown over the next three months going forward from that moment? How bad can it be? The answer typically is about 10% as the worst. You see, that's where the dash line is. I've brought in at 10%. That's about as bad as it gets after one of these conditions where you have a new three-year high in the advanced decline line. The big exceptions are, of course, COVID. COVID broke a lot of things, broke a lot of charts. Also, when the Fed suddenly ended QE1, we got a big dip. When the Fed suddenly ended QE2, you got another big dip. If the Fed is going to do something sudden and drastic, or if we're going to have a pandemic, then yeah, the 10% level can be broken. But generally speaking, the worst case you get after one of these new AD line highs is about a 10% decline. So that's a nice thing to know. Yeah, and start interjects, but at that 10%, that's not an average. That's like a maximum. It seems like the average is 4% or something like that. That's what these bars reflect. Yeah. So the worst case is about 10% is the worst it's going to be except for these. Best barring a black swan more or less. Yes. Those are true black swan events. Yes. We don't I don't think we have that coming. So we configure that we're not going to see too bad of a drawdown. Okay. All right. So I mean, I'm going to ask you this question at the end, if you've gone through all this stuff. But when you said in an immediate term, you're looking for a reason, you know, to turn to flip bullish, right, that we've we've fully bottomed out and that we're starting the beginning of the next, you know, 12 month upcycle. But then you said, you're going to be as bullish as all get out. And so I'm just preparing you. I'm going to ask you to expound on the all get out part of it. Like, what is the story your charts are telling you to make? You want to be like really bullish? I'll promise to get to that. Great. But first, I got to I got to do a little bit of caviating thing that we're not uniform in terms of strong breadth everywhere, where the breadth numbers are weak and where I'm concerned is in the corporate high yield bond market. I keep a daily, a domestic line line for those data as well. And they are very useful because these corporate high yield bonds, they trade much more like stocks than they'll do like T bonds. And they draw from the same liquidity pool as the stock market does. When you see a divergence between this domestic line line and prices, it's a sign of trouble. We've been operating under a divergence between the two of them for all of 2026. And I keep waiting for that to matter. And it just doesn't. The past ones that I've shown in this chart, they've mattered in a decent way. 2022 was when it mattered a whole lot. And so this is not good news. But this can get better. If corporate high yield bonds suddenly start doing better, then we can rehabilitate this divergence and start doing well. One thing I notice is that you see how steep the recent dip is. And that's a very vertical acceleration. We look at acceleration and domestic line statistics using the tools that my parents developed, the McLean oscillator and the summation index. And so I keep a McLean oscillator on this advanced decline line where we're seeing the same divergence zoomed in. This is the McLean oscillator for that corporate high yield bond, advanced decline line. And it's way the heck down there. It's saying we are ringing out probably the worst of it. You usually get the bottom, the lowest point in an advance of the lowest price low. You did that here in March. You get the lowest point in advance of the price low a little bit later. So we're having the worst point now. So that's why I'm thinking that the final price low is probably within a week or so from us and then we start going higher. Okay, so you think this will be relatively short-lived in terms of its potential to influence stocks. Do me a favor real quick. Just go back to the first chart you showed with the divergences. Yeah, right there. If I remember correctly, if I've taken good notes from my previous Tom McLean interviews, you are always looking for negative divergences, right? And that's what you would call this, right? A negative divergence. This is a, I'd call this a bearish divergence. I'm looking, if you're in an uptrend, which we are, except for a small seasonal pullback that we're doing right now, but this is, this is generally speaking is a is a lower left upper right kind of chart. Anytime you're in an uptrend, you look for reasons why is the uptrend going to end. And if you've got no divergence, then that's a good thing. If you have a divergence, that's a reason that the uptrend could end. And this is a one of a big concern. And it's been bothering me all year. But we're reaching the point where the bearish seasonality time window is ending. And so if it's this is going to get anything done, it's got about a week left to get whatever done. It's going to get done. And then we run out of time and we're transitioning into a new bullish time window. Okay, so forgive me. these are any of questions for the ones that come to mind. Because this is the high-yield bond, corporate high-yield bond line, I imagine that that asset class gets pretty impacted by rising bond yields, especially when a lot of these companies are finally having to start rolling over their debt at these higher interest rates. So is there an argument to be made for as long as bond yields keep rising? There's going to be downward pressure here, or do you look at your oscillator and say now that looks like this thing's pretty much played out? More like the second one of your choices. You would think that these would be interest rate sensitive, but they're way more sensitive to the stock market liquidity than they are to what other interest rates are doing. That's just one of those hypotheses that you got to check. These are horrible investments, corporate high-yield bonds, they're junk bonds, they're horrible investments, they don't deserve your money, and that's why they have to pay such a high yield in order to attract some money. They only do well when there's so much money sloshing around that everything can get a little bit of it. When the liquidity starts to dry up, these horrible investments are often the ones that show that pain first, and they've been showing that pain all during 2026 saying liquidity is having a problem. I think that liquidity is going to get better and is going to start doing well. It hasn't been really affecting the stock market that much. The pain has been confined here in the corporate high yield bond market. I think it's going to start getting better, and so this will be one of the confirming signs I'll be looking for as we get into October and November is looking for junk bonds to start doing better, which will say, "Hey, there's gobs of money, even the crappiest investments can do well." Okay, so you think liquidity is going to win out? All right, sorry. I think that's a side quest, but just useful. Let me jump to something else that's really important right now that has been getting a lot of attention. This is margin debt, or more appropriately, the debit balances and margin accounts as tracked by FINRA. They publish this data every month, out since 1997, and it's way the heck up there. Whole lot of margin debt, which has been a problem in the past when too much borrowing to fuel stock purchases is getting out of control. People start to get worried. Because this is just going parabolic, and I've shown it intentionally on an arithmetic scale just to make it look more alarming, it looks worse than it maybe is. If we normalize it by comparing it to a GDP, then it doesn't look quite so scary, but it still looks pretty scary. That's still pretty scary. I mean, that's the same in the dataset. This is that same margin debt just divided by a GDP. So it's not quite so parabolic, but it's higher than it's ever been, at least since 1997. And whenever you get a big peak like this, it coincides with important stock market tops. In fact, the peak has to occur before the stock market top. And that's really important. But there's something else I want people to do. I want everyone who's looking at this to look mentally do a little bit of math in your head and look at the period between these peaks in this margin debt versus GDP. It's about seven years. There's a very reliable seven-year cycle that in market tops that goes back a long ways more than just the data that Finra has in this data back to 1997. And so counting forward from the last peak out of this series in August of 2021, counting forward about seven years, that gets us to about 2028. And we're in 2026. So even though this is really high and concerning because it's high, we're not yet at the seven-year cycle point for this to be topping out. So I think we have a little bit more room. All right. So our astrology tells us we still got a year and a half until we really have to worry about this. And I'm sorry to be talking cheek about astrology, but it's these tight correlations that even Earth, yeah. Well, and if it was astrology, then you could point to some planet with a seven-year orbital period, but there isn't a good one to point to. So we can dismiss the planetary aspect. I don't know why seven-years matters except that people get frenzied at tops and then they get discouraged and it takes them a while to decide to get frenzied again. And humans tend to operate on a cycle of about seven years. That's the best explanation I have. Wow. Okay. But this same cycle, there's other data. This is data that Fred, the St. Louis Fed has. And this is not as good a data because it's only quarterly instead of monthly that Finra has. But this one goes back to 1945 and you say that see this same seven-year cycle going back, showing up in these data and in prices going all the way back to the early 70s. So it's a pretty regular thing. It's not precisely 7.0 years. It's seven-ish. And so I can't tell you exactly when the top is going to come just based on this because it's not precise enough. But I can tell you that five is not seven. And we are five years from the peak, the last of these peaks. And so somewhere out in 2028 is when we should expect the seven-year top to arrive. Okay. So it sounds like this is going to be a bullish as all get out interview. But you're marking that at some point. You may come back on in a year. So I can deliver the bearish as all get out one. I promise I will. If we start seeing the bearish signs again, but there's a lot of bullish to get through. There's one concern, though, and the one way that this could get screwed up is involving the Fed and quantitative easing. Maybe some of your viewers hopefully know that we are in a period of quantitative easing right now. And by my count, we are in QE five. The first one was in Balbobeck in 2009. And every time we've had them, they've been invariably bullish. But when worse took over, without saying anything, the slope has changed. We were in a much steeper slope before a worse took over in terms of the total, the increases in the total treasuries and mortgage-backed securities. They're selling off some of the mortgage-backed securities now, but they're more than making up for that by buying treasuries, except that without saying anything, he didn't announce anything about QE. But it just is noticeable that the slope has changed. And now it's changed even more with the latest data. And so if we get into full-blown quantitative tightening, which they didn't talk about in the most recent FOMC announcement, I don't remember hearing anything about quantitative tightening, I think they're just doing this very quietly. If they start yanking money out of the banking system, that could, it would be a fly in the Ironman, but we haven't heard anything for sure. But okay, although I do want to say that Worsh in his during his consideration as Fed Chair, and then I think early afterwards, has said, look, I don't really plan to be munking around with the balance sheet. In fact, I think it should be lowered over time. I'm going to really focus on using interest rates as my main policy measure. So maybe this is a consistent sign with what somebody with that mindset might be doing. We're just going to slow the acceleration and eventually we'll start tightening, but who knows? Without talking about it, yeah. So this is one of the reasons you got to not just watch the press conference, you got to look at the data. And that's what I do. One place where QE is bad is the bond market. You would think that having the Fed decide to step in and buy more bonds, that would create more demand for bonds and it would be bullish for bond prices, the exact opposite occurs. Every time you have QE, like we had back in 2009, the bond market tanks. And we had QE 2 in 2011, the bond market tank. We had QE 3 in 2012 and 2013, the bond market tanks. We had QE 4 after COVID, the bond market tanks. When they stopped doing QE, we hit a low in the bond market and bond prices started going sideways until we started QE 5 again and the bond market has been tanking. So bonds have been doing poorly during this period of QE. It's been a very gentle QE round this time compared to some other ones, but it's not been bullish for bonds. And so I'm bearish on bonds right now for a lot of reasons and I can talk about that a little bit more later. But this, if we do end QE 5 and transition to even quantitative tightening, that would be other than bearish factor for the bond market. You think you know a browser, but Gemini and Chrome, that's new. Propel Fitness Water With Gatorade Electrolites, Zero Sugar, and Vitamins, Propel hydrates better than water to help you get the most out of your workout and get back to your best self. What propels you? Okay, all right, just to be super clear, if we were to resort to QT4, that would turn you into a bear bowl, a bond bowl, correct? Not necessarily because there's other factors that I think are more important, but that could mitigate those other bearish factors quite a bit. Why this works this way, this is very counterintuitive. It shouldn't work this way, but we've got a lot of data that says it it does work this way. And so. At some point, you got to stop arguing with how it should work and realize how it does work. Got it. Okay. All right. All right. So what else is in the grab bag here? I see oil. Oil. Oil and interest rates. They are joined at the hip right now. And this is not news. I am not breaking news right now. But it's worth seeing it on a chart to realize how much of an effect it is. The 10 years been zooming up, crude oil prices have been zooming up. This is data current through Tuesday, the 15th. So it may not reflect anything that might have happened on Wednesday with crude oil prices down a little bit. But you can see that there is this relationship. What's interesting though is crude oil prices are not yet up to a higher high than they were in the peak in March, but interest rates are. I explain this by saying, well, when we were making this peak in crude oil prices, that was ridiculous, nobody thought that was going to last. And it's all going to come back down. But now people are taking this renewed spike up much more seriously than they took that initial one. And they're thinking that this matters a whole lot more. How this comes into play for me is in a predictive way is that gold prices give us about a 20 month leading indication for what interest rates are going to do. So this, the upper plot is gold prices and I've shifted that plot forward by 20 and a half months in the chart to reveal that all the dance steps in gold get echoed in bond yields about 20 and a half months later. It's not always exactly 20 and a half months. Sometimes the lines are slanted to get the alignment of the dance steps. But we have this sideways period that interest rates are supposed to be in. And then we at the, for the end of this year, we get the really steep advance in interest rates to match the steep advance in gold prices 20 months before. So folks that remember how violently gold moved at the end of last year and in the beginning of this year, you're basically saying we should expect a violent run up like that in treasury yields, you know, in the next 14 months. Yes. And now what I am not saying what I am not saying from this equivalent point where we are right now in gold's plot, gold went on to double. I am not saying that that means interest rates are going to numerically double. That doesn't work that way. But the direction of travel and the timing of the turns does match up. And so I don't really care how far interest rates rise in the long term. I just want to know what direction they're going to go because that tells me how to position myself. Okay. I'm going to ask you a macro question here. First off though, this treasury yield index, is that the 30 year? That's the current yield maturity on the most recently issued a series of 30 year treasury bonds. Okay. Got it. All right. So you've said it's the direction of travel. It's not the magnitude, but let's just guesstimate here for a moment. You know, let's say the 30 year cracks 6% along following gold's path here. In the 10 years, I don't know, five and a half percent or something like that. I know you're much more of a charts guy, but do you have a sense of whether you think the economy can handle bond yields that high? I first of all, I don't dispute those numbers. Those sound reasonable to get there from here. And second of all, anybody wanting to buy a house is going to be in the most misery based on those because that's where the long term rates affect things way more than in business than in corporate expansion and in PAPX and those kinds of things. Those are much more tied to shorter term interest rates. It's in the mortgage market that the 10 year and the 30 year matter. And so that's where you're going to see the most pain. And I'm sorry to be the bearer of tidings to all the real estate agents out there and all the new young first time home buyers. I bought my first house at 13%. So I know what you're going through and it's not going to be fun. Well, Tom, I'm going to do you a favor here and I'm going to tell you exactly when the Max Payne moment is going to be for yields, which is going to be next summer. So summer of 2027 and I know that with absolute certainty because I, you may have heard, have just become a first time homeowner, first time in my long 55 year life. And the house is being built. And so we don't actually assume the mortgage until the house has handed over to us, which is going to be summer of 2027. So I'm going to talk about construction now that's going to be the Max Payne moment. Yeah. That makes sense. And it really does. But this same 20 month leading indication for interest rates. It also works in gold prices with oil prices. This is the same time offset practice that I was doing before. This one uses a 19.8 month offset just because with oil prices, that's worked better historically. And this is a really long chart. This goes back all the way to 2014 to see that all the dance steps you get in gold, you get those same dance steps in crude oil prices. And that this up move that we're seeing now is right on schedule coming out of this little consolidation in gold prices. So oil prices, according to gold, still have a lot further to go. Now you can have things like COVID come along that bend the curve a little bit. Or the Russia Ukraine war came along and bent it higher. Or the Iran war got gains a little bit pulled forward, but then we gave them back. So you're going to have events like that that will disrupt it, but the general trend, sorry to say if you're a win a big owner, the general trend is going to be toward higher crude oil prices. We can get used to that. It sucks. It's awful. But we've gotten used to higher oil prices before we'll just have to learn to drive smaller cars or drive less or not get door dash deliveries or bundle up with with grocery deliveries because those are all using expensive diesel fuel. It won't be fun, but that's what the message is from gold prices. All right. Well, you're just array of sunshine today and a number of issues. So if you're not enjoying what's happening at oil prices, you're saying, sorry, folks, the foreseeable future, the beatings are going to continue. But let me ask you this about gold and gold is an asset that a lot of people who watch this video are pretty invested in literally a lot of them or gold owners for oil to retreat back and perhaps for the market to correct according to some of the previous correlations you showed. Does that mean that gold has to correct in advance first or can gold go sideways? Well, oil prices and interest rates are going to follow the path of what gold was doing 20 months before. So whatever gold does today, that'll matter for oil prices, but not until 20 months from now. Right. There is a little bit of feedback in that in that relationship where what oil does matters to gold today, there's a little bit of that feedback. But it's the longer term feedback is much more important than the short term feedback. And so I'm expecting gold, as you may recall, topped in January of 2026. So if you count forward 20 months from that, you get about August of 2028. It should be the peak for interest rates and peak for oil prices. Oil prices. Okay. When you're going to get your mortgage on your, on your house done is August 2028. No, no, I won't take that long. Yeah, no, no, it's 2027. So at least I can refinance, you know, after that peak. Okay. And so the spirit on my question, which I think you kind of answered, but is, yes, so we know we have a pretty sharp decline in gold that's now working its way through the following 20 months to then get reflected in oil and in, and how you'll interest rates. When I look at something like oil that, you know, kind of historically hangs out in the 60 to 70% dollar a barrel average. My question is, is, is this more of a direction of change rather than a magnitude? In other words, over the next decade, let's say, can oil kind of, you know, be volatile, but still deliver an average price of 60 to 70 a barrel, while gold may still continue increasing up to 5,000, 6,000, 7,000 an ounce? Perhaps. And, and the one question I have is that, that big rise in gold prices was done not so much by normal investors who are the gold market, but by central banks deciding that they needed to weigh in on, especially China. And so does that diminish the message? That's a, that's a question to keep to me up at night, and I wish I had a perfect answer. What I can say is that those players who are in the oil market are expecting higher oil prices for longer. And one way I know that is I look at the commitment of traders report data. This is the net position of the commercial traders in, in crude oil futures. And right now they are net short, just like they have been continuously net short since 2009. The important thing to understand is who, who, who, and what is a commercial, a commercial trader in futures is one who produces or who uses the subject commodity in their trader business. So a lot of the commercials, especially in crude oil, are oil producers. Some guy owns the oil well, and he wants to lock in the pricing on his production going months out. So he will use the futures market to do that. And when you see them get up to a really high net short position, that tells you you're at a topping condition for prices. When they get to a low net short position, you're at a bottoming condition. They're saying, no, I don't want to lock in at this price. price, but I want to lock in this price and that's what the numbers are saying. When we have the initial spike on the Iran war, they got up to a really high net short position. They're saying, I want to lock in these prices. And of course, prices backed off and they backed off in their positioning, got back to a nice low net short position. What's happening now is we're seeing oil prices back above 100 and these guys are a little bit more timid. They don't want to get short yet. They don't want to lock in these prices. They were willing to lock in those prices back here and had a high net short position. Now they don't want to do it, which says these experts know something. They are thinking, I'm going to sit on my hands and wait for even higher prices before I start locking in. So that's another confirmation that oil prices have higher to go. So Tom, give me a number that wouldn't surprise you to where oil could go in the next couple months. I hate thinking in price level terms because there's other factors that come along and do that. I wouldn't be surprised though if we start changing the units because if we're having trouble charging the right price for for diesel fuel because the pumps won't go higher than 999, well, then we just need to change the pumps to reflect courts or leaders and then they'll solve that problem. So any number I give you may be subject to change due to re-versiguring of the units. Okay. And I don't want to put you on the spot here, but I was just trying to get a sense and that is a prediction, but just as a sense of like given how much room to run there still may be here. I mean, obviously, if you look at the gold chart, you know, it looks like there's an awful lot more to run given what gold's 20 and a half month example has shown us, you know, we're talking, you know, 10 or 20 bucks a barrel, are we talking $100 a barrel that could be tacked on? Well, there's longer, there's longer to run, which may or may not be the same thing as more to run in terms of price distance. So the uptrend is due to last until 2028, if we're going to perfectly echo gold prices. But you, even with an uptrend, you overshoot and pull back and overshoot and pull back. And so if I try to give you a number and a date, it would be a fool's errand to try to do that. Okay. No worries. But what I am taking away from what you're saying, both for oil prices and for interest rates is it looks like higher for longer is the bet to make. Sadly, yes. And I say that as a F-150 driver. Okay. Okay. Moving on a little bit, that's the last to what I got. If anybody wants to find out more about these charts, which feature regularly in our newsletter and our daily edition, you can go to our website, you can sign up for free for a weekly chart and focus, or you can pay to get the good stuff. But I can go back over any of these charts that you have any other questions, Adam, if we got a little bit of time left. We do. And folks, I highly recommend you check out MC oscillator. I don't need to give you the song and dance. You've just seen a lot of the goods that Tom delivers regularly to his audience there. And I love that you anticipate a number of questions I'm going to ask, Tom, you make my job really easy. So thank you for that. And the only thing I'll say about this that Tom hasn't said yet, this video, but we've gotten to it in more depth than ones in the past, is this is something that not just Tom, but his family has been involved in this type of analysis for basically two, two full careers at this point in time. So this is a technical approach that has been honed over many decades. So when you're looking for something that's really stood to test the time well, I can't give enough recommendations to check out Tom's work here. I'm glad you mentioned that. And I want to mention that my father, Sherman McClellan, is 92 years old, still driving, still working with me every day, contributing to the newsletter and enjoying it because this is what he's wanted to do all his life. He did other things in other careers, but he really wanted to do stock market analysis. He and my mom developed the McClellan oscillator back in 1969 with no computers. They did all their computations on ledgers. And I still remember it was about three or four years after that. My dad got his first calculator, electronic calculator that ran on four C-sail batteries, which was great. And you could add some track, multiply and divide. And that made the process of tabulating all the numbers and plotting them on graph paper whole lot easier. So we've come a long way, but my dad is still turned on by analyzing the stock market, still doing great things. And still I get the benefit of learning from him little tidbits that he's picked up over the years. He'll he'll try it out every once in a while patterns that he sees that I missed. And so I'm very privileged in that in that regard. That is just amazing. Well, please give your dad a huge kudos and thanks and high from the Felfamoney audience. And your mother, that story about the calculator that got powered by four C-batteries, which is amazing. They're powered now by like these teeny tiny little disc shaped batteries. But I mean, your mother was very accomplished, but she basically kind of daily did the hand calculations and then chart creations based off your father's work. And then that was what the news report showed at the in the business hour, correct? That's that's true. My mother was a math major. And so she was a wizard doing calculations just in her head. She could just do it and make the computations easier. And this was really my dad's joy, but it took both of them to to pull it off because my dad was the business and econ guy. My mom was the math was and without those two talents combined in a couple willing to work on it, you couldn't have done this in 1969 without computers. Now it's easy. And you get chart server. You can pull up stock chart.com and get it headed to you in three seconds that we we are spoiled. They had to do it all in pencils and ledgers and graph paper if they wanted to see it. So that's amazing. But did the generation that, you know, all the moonshot, you know, calculations were came from as well. So that's just amazing to still be leveraging that and to still have one of the participants be active in the business with your dad here at 92. Tom, I'm just curious, do you have, you know, is there a next generation of McLeodans coming up to pass the torch to here? I have two kids and one grandchild, both my kids are doing great in other types of careers. So I don't know who is going to pick up the baton, but I have had thousands of subscribers and even more than that on Twitter, people who see my work. So the work will go on in other ways by by successive generations of people. And then so that's kind of gratifying to know that something I noticed and something I built could could get picked up and be liked by people. And so that's kind of fun. Well, that's amazing. And look, Tom, hopefully you've still got, you know, 40 years left in you just like your dad. But if you ever get to a point where I know you have your audience of subscribers who, you know, are your most passionate followers, but if you ever get to the point for the open casting call where you want somebody whose life passion would be stepping into that role, you know, let us know and we'll announce it here on Thalphamany. But hopefully that's not for many decades from now. I'll think about that one. Okay. All right. We'll look in the in our last couple of minutes here. Let me get back to that question I teased earlier. So I understand the reasons why you are an anticipatory bull here, right? In the very short term, you're looking for the market signals over the next week or two. That may tell you that this bottoming process is over and it's kind of game on for the next 12 months. I get the bullish part. Why bullish as I'll get out. It can help you with practically anything on the web, like restoring a vintage motorcycle from a 50 page restoration block or finally break down that long article you've had open for weeks. Propel fitness water with Gatorade electrolytes zero sugar and vitamins. What propels you propel with Gatorade electrolytes? Because the negatives that are counter arguments to the bullish argument start falling by the waste side. The high yield bond is the one thorn in the argument. There's still weakness there. That could get resolved and then you stop having that argument. Seasonality is weak right now for another week and a half at most. That goes by the waste side and we transition to bullish seasonality. We already have strong breadth in the advanced decline numbers. We have low taxation in terms of percent of GDP that the federal government is taking. That's bullish. We have the bullish third year effect. We have the Fed not getting too stupid yet. We do have problems from oil and from bonds. Those are negative. But the third year effect in the presidential cycle is a super bullish time to be in the stock market. When you have something that always works, but it's really hard to argue about that. I argue against it. and so if you think that no, it's going to be different this time. Well, you're bedding against a lot of history with in thinking that 30-year of a presidential year, a German office is going to be a bad time. Yeah, I'm thinking about your Rapunzel chart. There were very few years that were actually negative. Right. It's, you know, it's 1939 in World War II, since the 20th Amendment changed the political calendar. That's the only time. And so it's, unless we're going to have a condition like that, which seems like we're trying to have a condition like that in the whole Persian Gulf and the whole Middle East. There's a lot of, there's a lot's to end. But hopefully, smarter heads will keep us from getting into the whole world blowing up. And if that does happen, then we'll be spending even more money, which and deficit spending as a bullish factor. If Congress ever decides to rain in its spending and have a balanced budget, that would be a big bearish factor. I don't see that happening anytime soon. It needs to happen. I wish it would happen, but I don't see it happening. And bearish, mostly because it would be removing liquidity. It would, yeah, it would be taken money out that is doing things to lift stock prices. You know, spending on a credit card makes for a great party. It's when you have to pay it back. That's not so good. Right. And that's what Congress keeps doing. Well, I was just just listening today about the tremendous number of, you know, regular Americans that are now starting to put more and more of their, their everyday purchases on by now pay later. So maybe the government, you know, still has one more phase of, you know, forgetting about issuing treasury bills, they just put it on a by now pay later plan. Well, and that's part of the margin debt party that I was talking about, which, you know, keeps increasing until it reaches a breaking point. But that breaking point does not do until 2028. And so we have, we have simultaneously, we have 2028 is when the seven year cycle for the stock market and for margin debt shows up. We have 2028 is as when crude oil prices and interest rates are due to top out. It's going to be very interesting. And I hate to be whoever gets elected president in 2028 because you're going to be suffering from the downside of the margin debt collapse in your first year in office in 2029. That's going to be bummer for whoever that guy hears or whoever that gal is. And it won't be their fault. It'll just be the market cycles that they're going up against. Okay, super interesting. Well, Tom, thank you so much for coming on here. I've already earmarked to get you on again and our regular cadence of having you appear in this channel. But let me, let me ask you the idea every time as well. It sounds like, you know, you've got a pretty, I feel like you get, feel like you have a pretty solid sense of what's going to happen in the near term if your charts prove out to be right. But if anything happens that you think impacts those correlations, it might change them in some sort of black swanish way, right? Maybe it's the war, maybe it's something else. You've got an open invitation to come back on here and tell this audience. Obviously, after you've told your, your paying subscribers first. Roger that. I'll be happy to do that. All right. Thanks so much, Tom. Again, fantastic delivery. You always leave it on the playing field. I really appreciate that and look forward to having you back on again soon. Good luck with the new house. And the advice I would give you is the advice I got from my uncle when I was getting married. I said, you know, you've been married 28 years, uncle, and you, you seem happy with it. How, what's your secret? And he said, well, when my wife and I got married, we agreed on one thing that she would handle the small decisions and that she would turn to me to handle the big decisions. And he says, and that's worked out pretty well. And so I asked him, well, who decides what is a big decision? And he said, well, she does. And I said, well, what's an example of a big decision? He says, I'll let you know when we have one. So just your wife, she's going to know what you want in your house better than you're going to want it. And it'll turn out better if you say, yes, dear. Let's do it that way. Thank you. I very much appreciate that. And I will just for the audiences sake, I have largely followed that path so far. There have been one or two parts of the house where I've said, hey, look, this is where I really have strong opinions. And basically like my recording studio, you know, the office that we're going to use for me to record the studio. But everything else, I've just basically deferred to her and said, look, you're going to care much more about this and probably know how much, you know, how to know how to use the space much better than I. So I'm just here to tell you what we can afford and what we can't. And other than that, you just tell us what we're doing. And she'll probably pick colors that go well together. I can't do that to save my life. I can see colors. But if you want me to match wallpaper in a carpet, I can't do that. So my wife, my wife is in charge of all color decisions. I'm in charge of spiders and light bulbs. And they're not well. And to be honest, that's that's pretty much my purview now too. I will say with these new homes, they, you know, some of the rooms are pretty tall. And the light bulb thing is become, you know, a lot more existential, you know, you get a really good up there on a tall ladder to replace some of these light bulbs now. It's not as easy it was back in our parents' day. Hopefully you get the kind that lasts forever, at least according to the label. Yeah, hopefully, and, you know, hopefully my wife doesn't do the math and realizes, you know, with the life insurance payout might be and just want to be there to kick the ladder out from under me. So we'll see. But thanks a bunch, Tom, and again, really look forward to having you on soon. It's a pleasure, Adam. All right. Tom, that was great. Thank you. Couldn't have asked for any better. All right. Good. And we hit the time mark. Yeah. So we'll let you get out to do your stuff. And then I'll bang out here with the guys in your harbor, and then I'll go on to the live stream. But again, this is going to go out tomorrow, Tom. So I'll send you the link when it does. Perfect. All right. Tom, John, you want to tell Tom how smart he was before he hops off? Hey, there, Tom. Yeah. Thank you. Tom was great. We always enjoy your charts. We're engineers by academic training. So we data data is kind of a sweet spot for us. We would love to see it and love to dive into it. I was aerospace engineering at West Point. And engineers definitely think differently. Yes. Sometimes sometimes it's a blessing. Sometimes it's a curse. Well, and I usually explain it. Well, you know, the optimist pessimist glass half-full, glass half empty thing tells you about optimist pessimist. The engineer would say that the vessel is adequate to contain the available fluid with a safety factor 2.0. The probability of X. Yeah. And of course, the philosopher would say, well, the glass is always full, it's just sometimes full of air. That was great. I had the opportunity to attend a West Point graduation. My wife's cousin graduated from there quite a number of years ago now. But it was a, you know, wonderful experience. West Point in May is a beautiful place. And in October, that's a beautiful place. It is not a beautiful place in February. Don't want to go there in February. John went to Cornell. He knows all about New York and the winter. It's lucky weather in New York. You probably know this, but do you guys know who was the original surveyor at West Point? Make who actually surveyed the land for them to build West Point on it? I can't say. He had his winter encampment of 1777 there. So he kind of knew a little bit about it. About it. Yeah. And and the US Army Corps of Engineers and its infinite wisdom decided to put the sewage treatment plant for the whole post on the site of his military encampment, having no, no insight about history. Really? They said they just ruined all the archaeological value it might have had. I don't know. I was an archaeology major. So that that that hurts my heart. Yeah. All right, Tom. Well, look, thank you so much, my friend. Love you guys. Good day. All right. I'll say good luck. Great job. All right, Jen, you ready to start off? Yeah. Yes, sure. Memory, sir. John went first last time. Mike, you ready? Yeah, just one point of confusion I have. The corporate, the corporate advanced decline line. He was talking about his corporate credits, I think. And that was diversion versus something for all of 2026. And that would portend a big decline. But it hasn't happened. I can't remember the details. I might just strike that point. I don't think it was that big of a deal. Do you guys remember? Basically, it's the thing he's most worried about except that when you look at kind of the momentum oscillators, which is basically what his, you know, hope family came up with, it is showing that that trend is just about played out. Me, okay. I forgot to write down that part. That gets a little wonky. Yeah, you don't have to mention it, but that's that's the explanation. That corporate advanced decline line was just a corporate credit, right? It was for corporate high yield credit. Right. High yield credit. Just about played out. All right. All right. Ready to go. Yep. All right. Three, two, one. All right. Well, now's the time in the channel. We were bringing the lead partners from New Harbor Financial, one of the indoor financial advisory firms by Thoughtful Money. Please to be joined this week as usual by lead partners John Lodra and Mike Preston. Gentlemen, thanks so much for joining us. Mike, when do we start with you? Any key takeaways you feel worth commenting on from the conversation there with Tom? Sure. Hi, Adam. That was a good talk with Tom McLean. We've been following his newsletter on and off for a lot of years. We're not a current subscriber, but we know of his work. We've got clients that mentioned his work and he's been around and his parents have been around doing this work for so long. We've got a lot of respect for him. And, you know, he said That bullish is all get out. I think that in general encapsulates what he talked about, not just in stocks, but in other things that we'll talk about like oil, but bullish is all get out and why? The government's been running a huge deficit and it's really been doing it since the great financial crisis. In fact, we've said on here and a lot of your guests have said on here that there is no real plan B. This is all about stimulus, one way or another, and it doesn't really seem like they can ever take their foot off the gas. Well, the government's been running a budget deficit for a long time. I think you'd have to go back to the Clinton area to see a budget surplus, but it really got worse, a lot worse, after the GFC. And while this is awesome for markets, it's great for consumers, it's a really bad long-term for the country. We're 40 trillion in debt and going up by about close to 3 trillion. And that's before we've had a recession because we haven't seen a recession. I don't think you can count the little blip in 2020 really as a recession. We haven't had one since the great financial crisis, so we'll see what happens. But he talked about a lot of charts. I'm going to try to encapsulate them as fast as I can. I may not hit them all. I'll tell you the ones that we agree with, maybe tell you if there's ones that we don't agree with. But the third year. What before you do? I just want to contrast this and correct this anyway you like. At New Harbor, you guys use technical analysis in Fairmount. You walk us through it every week, but you map that with your macro analysis and bring into things like the debt or what's happening in the economy. Tom is much more of a classic TA guy of, I'm just looking at the charts and I'm looking at the patterns of the charts and what the charts tell me. And those two things aren't always compatible. So some of the differences are going to be, you might actually see the TA in a similar way, but your macro outlook may be causing me to have a different position. I just want to let the audience sort of know there's somewhat of a difference of methodologies here between Tom's pure, just the charts analysis versus how you guys look at things. Absolutely. Tom really gets into the weeds, more of an engineering viewpoint. He mentioned to us that he was an engineering major at West Point, I believe he said. And so John and I also are engineering majors and I think that's probably why we have some commonality and how we look at things. The actual methodology that he uses is different. I think he leans heavily or more heavily into seasonality than we do. A number of things, a number of these charts were about seasonality, for instance, the presidential election cycle. We're really close to entering the third year. And I think he said that that actually starts somewhere around October, November, because he starts from November first. So yeah, it starts in November. We're really close to that turning higher and it's a, if you remember his chart, it was, it's a big up move. He's predicting a big up move based on that seasonality, third year presidential cycle. In fact, he said about one to two weeks away, he thinks we could be from that, from that line to start climbing. People talked about the midterm elections, a lot of our clients have been concerned about the election saying, if it's a democratic sweep, we think that'll crash the market or that's kind of the conventional wisdom. Tom is on here saying it doesn't matter what happens, it doesn't matter. It just matters that there's a decision that the market knows is a decision and we agree with that. At New Harbor, we don't really put much weight into into whatever happens. We really don't think it matters. We think whatever matters is predetermined based on the cycles of the charts. Here's ending in seven or bullish. I'm not so sure about that one, but I wrote that down and next year is 2020-7. But that goes to the correlation of Tom and again, I'm not, you know, I'm not evangelizing one approach to the other, although I think there's a lot of merit to both. But Tom's approach is sort of like, look, if seven and a half times out of 10, this happens, you should probably expect it to happen on average, right? So that's sort of where he comes up with this, first, you know, as he says, when I pushed him on, he said, look, there's some reason I can, you know, see your seven and sometimes your halfway, you know, enjoying some of the booms of these midterm elections. That's about 50% of the time the other half, he's like, I don't know. But all I know is that the data shows that this is much more likely to happen than not looking at in the past. That's new. You would practically anything on the web, like restoring a vintage motorcycle from a 50-page restoration block, or finally break down that long article you've had open for weeks. Propel Fitness Water with Gatorade Electrolytes, Zero Sugar, and Vitamins. What propels you? Yeah, absolutely, absolutely. A couple more quick points and then I'll just wrap up with what I thought were a couple assets he was really bullish about. Number one, corporate, these two things, these two last eight points are concerning to him. And I'll just quantify or qualify them a little bit more. The corporate advanced decline line for high yield credit has been diversion for all of 2026. And generally, that's a bad thing. He actually looked, he drilled in, you might have asked him to, he drilled in on the next chart, taking a look at the momentum oscillator for that for the corporate high yields and they were actually showing signs of turning. So maybe that warning sign is not going to be a warning sign for much longer. Yeah, or just to be clear, signs of nearing a turn, you know, bottoming out. He hadn't had reversed yet, but it looked like it was close to an exhaustion point. Absolutely. And then margin debt. Margin debt is way, way up. I'm not really sure that he offered a counterpoint for that. Margin debt is a concern. We think we're in a late stage cycle that might even blow off to the upside. So we could see this market squeeze. We could even see margin debt have one more impulse up and then everything comes down hard. So, you know, that is a negative signpost that we should be aware of. Sorry, interject, he did actually address that. That's where his, there was another seven year cycle where margin debt tends to peak every seven years. And so doing the math from the last peak, it would be at least 2028. So he's saying, you know, even though it's at a new all time high, it could easily get even higher for the next year, year and a half before it reaches its next peak based upon that seven year average cycle. Well, thank you. I forgot that Adam. And so that would make sense and that would that would fit in line with our idea of some kind of blow off top. We're not predicting a blow off top. We're not trading by that viewpoint. You got to be careful. But I know you personally think that's more likely, right? But we do think it's more likely. But you know, bear in mind folks, we're 50% stocks here. We're not 100%. We're not in margin. But we do think that's probably likely. Given how big this whole cycle has been, we probably need some kind of fireworks show to finally end this whole thing. So lastly, he's really bullish on crude oil. Yeah, the charts are up. And I don't know, crude oil has been hugely volatile. I'm surprised. We went from about 100 on crude 105 down to 60, then right back to 105. That's a surprise. But he thinks we're going to go even higher for longer. We'll see. We do have energy stocks in our portfolio because we just follow the strongest sectors and energy stocks, specifically oil service stocks have been moving higher and they've given us no reason to sell them. Bonds, he's bearer. That's probably somewhere we disagree. We're actually bullish fundamentally on where bonds are here. The sentiment has really washed out a lot of folks are really negative. Bonds are, it's path dependent. We can see a point where the stock market tops out, drops hard. The Fed comes in, starts printing money. QE spigot goes on and I know you showed something about QE is generally bad for bonds. But in my, in our view, and this is far from a technical viewpoint, this is a macro viewpoint or even some a bit of a gut feel based on experience. We think the rates will likely come back down in a flight to safety trade. And so we're actually bullish on high quality U.S. bonds. We don't have a lot, seven and a half percent in our model. But we'll see who's right. I think we're probably pretty squarely in opposite camps on high quality U.S. bonds. Okay. Just two things on that. And again, I'm doing my best to speak for Tom. So it might be imperfect here. Obviously, his bond outlook is driven by the 20 and a half month shift between golds action and then interest rates action. And so I don't think Tom would disagree that in between now and then you could actually have a big rally in bonds. But it would be more of a cyclical rally versus a secular one, right? And then that could reverse and then the trend of bonds over the next two years or so could still be, bun yolks could still be up even though there could be some violent rallies in between now and then. And I don't know if you would necessarily completely disagree with that or not. Not at all. We, you know, if you just as an example, if you take a look at TLT, which is the 20 plus year U.S. government bond, it's trading at 81. It's down year to date and it's been really weak. I could see that going to 120. These are not predictions. Just guess is based on the charts, if we have a stock market drop that falls hard, rates come back down to 10 year, comes back down to three and a half, four, even three percent, which I think it might, we could see TLT go even higher and that would be a 50 percent gain. You could see all of that happen and then afterwards stock market drops yields come back down. The market figures out that inflation is going to be a problem and then so between now and two years from now, there could be a good trade in something like TLT, i.e. long-term U.S. government bonds, but after that there could be a headwind for the following 10 years. So a lot of people that are negative bonds are thinking that we want that we're recommending buying them and holding them for 10 years and we're not. We're talking about the next couple of years. Yeah, and just a point underscore there, we talk a lot about as market uncertainty grows. It gets more and more dangerous to identify a long-term trend and just say I'm just going to put all my chips on this and then I'll look at it in a couple of years because you could actually be right on the destination, but given your positioning you could get killed six ways to Sunday, you know, several times along the path between here and there, depending upon how volatile that path is, right, and your knightings, I'm saying all this might. So last question for you and the general will bring you in. So Mike, let's assume for a minute that Tom's correlations prove correct and that the markets, you know, get a nice jolt to the upside in the next week or two and then it's game on for the rest of the year and in next year. Where that to happen, how is New Harbor a position for this, how might you start changing your allocation if you begin to have a lot of confidence that hey, Tom's forecast is starting to play out? Yeah, this is where the art comes in, you know, I think the definition of art I read recently is skill combined with interpretation and so we've got skill and we've got experience. We don't know exactly what the market's going to do. We're going to see what the market does and then we're going to interpret that and then combine it with the skill that we have of the past. And so if we get a parabolic vertical move up and I'm talking about 8500 on the S&P 9000 plus that goes straight up, there's a number of things that we might do. We might literally reduce equity into that parabola and we'll probably be early but we might do that because we know where we are in the story versus just pass it by and hold people. We might even buy long-term puts to try to defray downside and or make money on a downside break. That's different. A parabolic vertical move up in the space of a few weeks or a month is different than a move higher over the next 6 months, a move higher over the next 6 months that's steady 45 degree angle. We're probably more likely to stay close to where we are with 50% ish equity. I don't see us going much higher and I don't see us dropping equity in that scenario. And so we'll probably just ride the trend as much as we can under that scenario but it depends upon the shape and the speed of it, really from a tradeability standpoint a parabola might be easy to trade in terms of timing the turn and nobody's going to be perfect with that and trying to reduce the deductible or the give back on the turn. So that's how I see it. It depends upon how it looks and feels, what it happens. Okay. So obviously folks will have a new Harvard team on, you know, weekly going forward here. So as they start, as their interpretation becomes clear to the point where they're starting to make portfolio adjustments, they'll be sharing that with us here in real time along the way. All right, John, feel free to add anything to what Mike said and I also want to give you a big question too, which is, you know, not long before we hopped on the Tom, we just find out that the Fed did the first rate hike in several years. Love to hear your reaction about that terms of the decision and the implications you think it might have. Yeah. Thank you, Adam. And thanks for having us join. I'm fascinating to listen to Tom's comments. We really appreciate that the data he brings to the table. That's where we are brains like to go sometimes a lot of the times. You know, I guess I'd like to, and I wish we could have a texture conversation with Tom right here now because I think he would agree with what I'm about to point out as much as his, a lot of his charts focused on averages and cycles. I think he would, if we're here to talk with us right now, he would agree that there's some signal that's lost when you average things out. You know, he used the, I think he first showed up a chart there where it was like a different presidential cycles. It was kind of a speedy bowl of charts and he averaged them out and came out with this nice, you know, kind of profile on average, the third years, you know, higher and this and that. Look, we manage money for real people. So we've got to kind of concern ourselves not with the average, but the outliers because the outliers aren't random events. And markets go through their inevitable cyclical challenge points. Our very strong take is that it's not a random event. In fact, usually when markets have prolonged negative periods of returns and things like that, there are a number of coincident factors that you call conditional probabilities if you want to get technical that are almost always present, things like extra high valuations. These are not accidents. They happen not to the precision of days or calendar months or whatever like this, but they happen with very strong reliability and when you zoom out from a broader standpoint. I want to make this point. I want to give you a chart here that was put together. This actually is data that was just put together by a data service that we subscribe to called NASDAQ Dorcerates, a division of NASDAQ. And this looks at, it's a little busy, I'm going to cut right to the chase. So it looks at average real return, inflation adjusted return by over different time horizons. Now, key here's average. So this is like essentially the equivalent of the average trance that Tom shared. Let's look at a 60/40 stock bond portfolio and look at a 10 year period. So on average, a 60/40 portfolio has returned 87%, a real return cumulative over a 10 year period. That's the average. Now, that sounds great, right? The reality, though, is that it's not always so nice. In fact, if you look at the worst real return by period for a 60/40, for a 10 year period, you lost 32% in real purchasing power of your portfolio over a period of 10 years. And there was a drawdown in that, in that sense, of nearly 41%. You can see these length of times by drawdowns 12 years, essentially, for a 60/40 portfolio. Now, Harkens back to a chart that I've shared many times, and I'll keep sharing it. This is a chart that GMO put together looking at so-called lost decades. And this is for a 60/40 portfolio, real returns, just like the chart I just showed you. And you see all these great periods here. Our periods where, you know, in a good scenario, you went nowhere. But in some series, you lost money on a real inflation adjusted basis. So for example, the decade falling, the tech cycle, that's the thing that I think is lost in when we talk about average analyses. And we have to be worried about those kinds of things, not just for the sake of, hey, it might happen. But there are signposts and data conditions that are very, very lively and indicative of an increased probability of those kinds of things happening. And we're kind of right square in one of those phases right now. It doesn't mean we top out today, or we crash tomorrow, or whatever. But in the vicinity, if history is any guy, we think the next decade is likely to be very subpar compared to average and maybe even negative on a real return basis. That's one real important thing, I want to bring back to the practicality of what we do for everyday people in their retirement scenarios. When you need to build up your team to handle the growing chaos at work, use Indeed Sponsored Jobs. It gives your job post the boost it needs to be seen, and helps reach people with the right skills, certifications, and more. Spend less time searching, and more time actually interviewing candidates who check all your boxes. In terms of this shell, we'll get a $75 Sponsored Job Credit at Indeed.com/podcast. 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Don't receive Botox if there's a skin infection. While your doctor, your medical history, muscle or nerve conditions, including ALS, Lugeric's disease, Myasthenia Gravis or Lambert Eaton Syndrome, and medications, including botulinum toxins, as these may increase the risk of serious side effects. Why wait? Ask your doctor, visit BotoxCronicMigraine.com or call 1-800-44 Botox to learn more. Okay, great. And just one thing I want to note, and we're all talking for Tom, which is, you know, take with a big grain of salt folks because we're not Tom. And I think Tom would say, "Hey, look, you know, I shared kind of why I'm bullish in the here and now." But he said, "Look, you know, there are periods I can see. Certainly once we get close to 2028, where I could be making the exact opposite argument and being very bearish about a lot of these things." So, yeah. And no way do I think Tom is his current. bullishness is excluding the type of risk that you're talking about, John. Exactly. So let's talk about the Fed. Yeah, today the Fed raised the so-called federal funds rate, probably the least uncertain Fed meeting in history mankind. I think we went in today, today with 93 or something like that, present market implied probability that the Fed would raise. Yet there were still people, I think Colin Bluff and saying no, the wash won't raise. He's the guy that Trump brought in to cut rates. So there was a 25.25% raise in the short term federal funds rate. Maybe one of the surprises that came out of today's meeting is that it was unanimous 12-0 vote in favor of that. Recent meetings, the big news has been the lack of unanimity. Today was unanimous and unanimous for a rate increase. And the messaging also, I think, said very probably we'll have at least one more rate increase this year. Okay. So that was the first rate increase since July of 2023. I'll just show you a chart here to show kind of the profile. This is the federal funds effective rate. So the last rate increase was back here in July of 2023. There was a long period of pause and then there was a rate cut campaign pause rate cut and then a pause for the last several months. And then again, today that was raised a quarter percent. If we look at the federal funds, Fed watch on the CME. This is a way to we can read the market market probability for a future rate action. I'm looking at the December of 26 meeting here. The meeting two meetings out from now, the end of this year. And you can see the probability, the market assigns zero probability of of any cuts from here. And an 88% probability of further hikes. And you can see there's a hike of another quarter basis point or 25 basis points, 48% probability of that. And almost a 40% probability of a full additional two quarter percent hikes. Okay. So quite a different story. If we rerun the tapes to where we were back a year ago, it was almost the exact opposite story here. So there's been a dramatic change in the expectations by the market and even the actions by the Fed. So this is this is pretty pretty big stuff. The initial market reaction is always confusing. Today we saw quite a bit of volatility. If I just pull up a couple of charts here, you can see I'll pull up an hourly chart so we can just minute by minute chart. Let's pull up an hourly. Just zoom out a little bit. Or we'll go a minute. Why not? So this is today's action. If we look at the S&P 500, you know, we're not seeing it. Oh, sorry. This is a minute by minute chart of the SP. Let me go to the ETF here. This dark black window is the market hours between 934. You can see right around when the Fed announced at two o'clock, there was an initial spike higher. But then when war started giving the press conference, you know, we saw pretty notable decline in the markets, closed down about not quite yet half a percent. If we look at TLT, which is long term treasury bonds, similar kind of thing, we saw spike, but then a sell off. I will note that it was one of the few areas of green on today's screen. If you look at a broad swath of assets, long term bonds actually did end up on the day slightly higher. You know, precious metals, commodities sold off pretty hard. So pretty, pretty, pretty ugly day in the sense of the reaction. I wanted to pull up a chart of a longer term chart of 10 year treasury yields. This is a monthly chart. And you can see for the last three plus years, we've been trading in a range here on the 10 year yield between about 3.2 and let's call it five. Today, the yield topped out at just a little bit over five. This is off by a decimal place. So 5.016 is where it topped out today, closed down a little bit below there, you know, slightly below. But we're at the upper end of the range. So Mike's point about, you know, being quote unquote bullish bonds, I would, I would kind of, you know, caveat that and Mike did so, I think as well, that we're not pounded table bullish. There's really fundamental reasons why the bond market has been as challenged as it has. It's not the buy of the century. We wouldn't pound the table here and say, sell everything, load up on long term bonds, you're going to be perfect. That's not what we're saying. But the degree of negative sentiment and distaste for bonds, we think has gotten really overdone. So we have about a 32% allocation to fixed income right now. The average duration of our fixed income sleeve is about five years. Again, one piece of it, about seven and a half percent of our portfolios in long term treasuries. We'll probably look for opportunities if we see technical improvements to extend out on the maturity spectrum there and lengthen the maturity of our bond holdings. I'll pause there, Adam. I do want to give a quick update. I mean, we have seen a material degradation in our broad stock market indicators. So we're increasingly, you know, poising to be on defense here. We can certainly do this. I hate to do this, John. I'm going to have to earmark that for next week. We're about two minutes from me having to hop on the live stream with Axel Mark about today's Fed announcement. So my apologies for having to cut this a bit short. But I think it's a great point actually to expound on in some detail when we have you guys on in just a couple of days next week. That sounds great, Adam. And we'll watch for you now, Axel, coming on momentarily. All right. Thanks. So folks, you're just wrapping up here. If you enjoyed having Tom on the channel, would like to come on again, as soon as his schedule or as developments allow, please let us know that by hitting the like button and then clicking on the subscribe button below, as well as that little bell icon right next to it. 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So if you haven't registered yet, go to thoughtfulmoney.com and get your ticket, sorry, thoughtfulmoney.com/conference and get your ticket now. John and Mike, thanks so much, hey, that I'm having a hop off early here for you guys, but like I said, we'll do a deep dive next week into what you were just talking about there, John. Sounds good, Adam. Thanks so much, and then we'll see you soon. Thank you, Adam. See you soon. All right, everybody else. Thanks so much for watching for a limited time. You can get a Big Mac meal for just $8. That's a burger, fries, and a drink. They don't call it an extra value meal for nothing. Get a Big Mac meal only as McDonald's. Price and participation may vary. Promotion pricing may be lower than meal pricing. Show button here. Football is finally back and price picks is going crazy with the deals to start the season, giving out promos every day in September. 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