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Before the current conflagration, I appeared on David Linn’s financial podcast and was asked what I expected from the new presidential administration. I said the only certainty was increased volatility, which meant a high possibility of either great outcomes or the opposite.
While the markets are signaling bad news, it is difficult to predict the outcome in isolation because we are all far from the machinations that will drive it. I’m now a major bear, but the market doesn’t listen to me – I need to listen to the market. Only a fool thinks they are never wrong. Success in the market comes from the flexibility to adapt and pivot with changing circumstances. Beyond mere malleability, it requires tools that highlight shifts in market dynamics.
Let me give you an example: gold. Gold moves before we understand why, serving as a strong indicator that something ominous is on the horizon. Bitcoin behaves similarly but in a different way. Gold signals that bad strategic developments are unfolding behind the scenes, while bitcoin reflects acute crises bubbling to the surface. Whether the issue is chronic or acute, these assets react before the news breaks – by the time the headlines arrive, the market has already adjusted. These are examples of leading indicators.
Right now, we need leading economic indicators.
Here is an example from a recent article:
Defense stocks: U.S. decling, European rising
Credit: ADVFN
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