Van Halen, M&Ms, and the Next Market Downturn

The planet-sized egos of rock & roll performers are legendary.

Few things symbolize this better than the outrageous requests they often make when on tour.

These requests are referred to as "riders", and appear in the contract a tour venue receives in advance of the artist's arrival. These contract riders specify the physical conditions that the singer/band requires to be in place before arriving to perform. Stage lighting settings, sound equipment, furnishings, etc -- that kind of stuff.

And these rider requests can get pretty funky - often extremely so -- when it comes to backstage perks the performers want.

For example: A wooden pond filled with koi carp (Eminem). A driver who will not speak or make eye contact (Katy Perry). 20 white kittens and 100 doves (Mariah Carey). Seven dwarves (Iggy Pop). 50,000 bees (Slayer). A sub-machine gun (Mötley Crüe). And, yes, even a great white shark (Hank III).

The practice of making these kind of outrageous demands stems from a rider Van Halen inserted into the contract for its 1982 world tour, which insisted on a bowl of M&Ms to be provided backstage, but with all of the brown M&Ms removed.

As this image below of the actual rider shows, the band was very explicit in its seriousness about this:

Once the media got whiff of this, it had a field day roasting the band's narcissistic chutzpah. A new high-water mark of diva capriciousness had been established, which quickly became legend. A feat of prima donna pampering that subsequent performers have been trying to top ever since.

But as crazy as it sounds, Van Halen's "no brown M&Ms" rider had nothing to do with caprice. There was a solid rationale behind it.

In fact, it was quite brilliant.

The Importance Of Effective Indicators

Van Halen's 1982 world tour was a massive production, involving a tremendous amount of gear and technical complexity. The contract the band sent in advance to venues was so thick due to all the details within, it was referred to as the "Chinese Yellow Pages".

Non-compliance with the requirements in the contract could have serious consequences that could ruin the show, or even jeopardize lives.

So when the band rolled up to its next venue, it needed a quick way to determine if the stage crew there had complied with all of the specifications within its contract.

And that's why the "no brown M&Ms" rider was inserted. The band could simply hop off the bus and check the candy bowl. If they found brown M&Ms, they knew the contract hadn't been carefully read. And then they'd immediately call for a full-line check of the entire set.

As lead singer David Lee Roth detailed in his autobiography:

Van Halen was the first band to take huge productions into tertiary, third-level markets. We’d pull up with nine eighteen-wheeler trucks, full of gear, where the standard was three trucks, max. And there were many, many technical errors — whether it was the girders couldn’t support the weight, or the flooring would sink in, or the doors weren’t big enough to move the gear through.

The contract rider read like a version of the Chinese Yellow Pages because there was so much equipment, and so many human beings to make it function. So just as a little test, in the technical aspect of the rider, it would say “Article 148: There will be fifteen amperage voltage sockets at twenty-foot spaces, evenly, providing nineteen amperes …” This kind of thing. And article number 126, in the middle of nowhere, was: “There will be no brown M&M’s in the backstage area, upon pain of forfeiture of the show, with full compensation.”

So, when I would walk backstage, if I saw a brown M&M in that bowl … well, line-check the entire production. Guaranteed you’re going to arrive at a technical error. They didn’t read the contract. Guaranteed you’d run into a problem. Sometimes it would threaten to just destroy the whole show. Something like, literally, life-threatening.

Genius.

Through its rider, the band had created a easy-to-monitor and trustworthy indicator. No brown M&Ms, and the show was likely set up to go smoothly. But if otherwise, don't perform until the entire venue is scrutinized for other missed requirements.

The lesson to take from Van Halen's wisdom is that having good indicators is key to achieving success.

This is also extremely true for the world of investing, where you are deploying capital based upon an expected future return. How do you determine when it's a good time to enter into an investment? Once in it, how do you monitor the conditions supporting your rationale for holding it -- are those changing? And if so, are they getting better or worse? When should you exit the position?

For all of these questions, the better the indicators you use, the more accurate and informed your decision-making will be. And the better your returns as an investor will be.

When The Indicators Are Giving A Signal, Pay Attention

Over the years, we've compiled a large number of indicators that we monitor closely on an ongoing basis here at PeakProsperity.com. They most definitely inform our economic outlook and forecasting.

We'll dedicate an upcoming report to laying out the sources and metrics we place the greatest weighting on. But several that we're watching closely right now come from two market analysts that we highly respect.

The first set comes from Lance Roberts, chief strategist/economist for Clarity Financial. Lance is renowned for his excellent charts and ability to highlight key changes in data trends. Below are several indicators he's recently featured, suggesting weariness in the US financial markets and growing likelihood of economic recession.

First, the S&P 500 is showing signs of topping out, having broken below the trading range of its latest 8-month bullish trend, and its MACD momentum indicator displaying two recent sell signals:

Lance warns that such signals suggest that further price gains will be "volatile and limited" unless the S&P returns into its bullish channel. If it indeed does not and drops below the key resistance level of 2390, he sees a swift price correction of 12% as a real possibility.

But he then combines this near-term technical analysis with more far-sighted data to make the point that the financial markets are not just overbought, but dangerously overvalued at this point. Similar to John Hussman (another producer of market indicators we value highly), Lance shows that, because today's prices are the result of pulling so much of tomorrow's valuation into today (e.g., via the suppression of interest rates and overexuberant speculation), we are living at a rare time in history where the average market return for the next 20 years may well be negative:

And he recently caught our attention by surfacing this chart of the change in annual Real Value Added to the US economy, a metric that hadn't been on our radar beforehand. This has been a reliable indicator of recession in the US for nearly 70 years, and is now signaling that we've likely already entered one:

Couple Lance's indicators with those of our other expert, Grant Williams, portfolio advisor at Vulpes Investment Management and co-founder of Real Vision TV. Grant and the team at Real Vision recently issued their latest Killer Charts series, which adds validation and additional weight to Lance's warnings.

First off, Grant and his team see similar technical signs of "exhaustion" in the S&P 500 and predict lower prices ahead:

Note that they don't just expect the S&P to correct slightly and then continuing powering higher. Other indicators they track, like the equities-vs-commodities ratio, strongly suggests a bubble peak for the S&P. From here they predict a secular bear trend for stocks (possibly paired with a new bull trend in commodities):

And like Lance, Grant sees signs that the US economy is poised to slow further...

.. and is likely, as Lance also concludes, tipping into recession:

When smart analysts independently find the same patterns in the data, it's time to take notice.

The charts above are only a few of the indicators Lance and Grant monitor that are now sending strong cautionary warnings about the near-term prospects for the financial markets and the underlying economy. What other key metrics should we also be tracing closely right now?

To dig much deeper into this, Lance and Grant will be presenting their latest indicators, analysis and forecasts at the Dangerous Markets webinar on September 13th -- where they will take ample questions live from the audience. For more information on the webinar, click here.

Editor's Note: The following is a guest post by Adam Taggert with PeakProsperity.com.

People should start listening to Nikki Haley

ANDREW CABALLERO-REYNOLDS/AFP/Getty Images

Okay. Let's take a vote. You know, an objective, quantifiable count. How many resolutions has the UN Human Rights Council adopted condemning dictatorships? Easy. Well. How do you define "dictatorship"?

Well, one metric is the UN Human Rights Council Condemnation. How many have the United Nations issued to China, with a body count higher than a professional Call of Duty player?

Zero.

How about Venezuela, where socialism is devouring its own in the cruelest, most unsettling ways imaginable?

Zero.

And Russia, home of unsettling cruelty and rampant censorship, murder and (actual) homophobia?

Zero.

Iraq? Zero. Turkey? Iraq? Zero. Cuba? Zero. Pakistan? Zero.

RELATED: Nikki Haley just dropped some serious verbal bombs on Russia at the UN

According to UN Human Rights Council Condemnations, 2006-2016, none of these nations is as dangerous as we'd imagined. Or, rather, none of them faced a single condemnation. Meanwhile, one country in particular has faced unbelievable scrutiny and fury — you'll never guess which country.

No, it's not Somalia. It's Israel. With 68 UN Human Rights Council Condemnations! In fact, the number of total United Nations condemnations against Israel outnumbers the total of condemnations against all other countries combined. The only country that comes close is Syria, with 15.

The Trump administration withdrew from the United Nations Human Rights Council on Tuesday in protest of what it perceives as an entrenched bias against Israel and a willingness to allow notorious human rights abusers as members.

In an address to the UN Security Council on Tuesday, Nikki Haley said:

Let's remember that the Hamas terrorist organization has been inciting violence for years, long before the United States decided to move our embassy. This is what is endangering the people of Gaza. Make no mistake, Hamas is pleased with the results from yesterday... No country in this chamber would act with more restraint than Israel has.

Maybe people should start listening to Haley. Hopefully, they will. Not likely, but there's no crime in remaining hopeful.

Here's a question unique to our times: "Should I tell my father 'Happy Father's Day,' even though he (she?) is now one of my mothers?"

Father's Day was four days ago, yes, but this story is just weird enough to report on. One enjoyable line to read was this gem from Hollywood Gossip: "Cait is a woman and a transgender icon, but she is also and will always be the father of her six children."

RELATED: If Bruce was never a he and always a she, who won the men's Olympic gold in 1976?

Imagine reading that to someone ten — even five — years ago. And, honestly, there's something nice about it. But the strangeness of its having ever been written overpowers any emotional impact it might bring.

"So lucky to have you," wrote Kylie Jenner, in the Instagram caption under pre-transition pictures of Bruce Jenner.

Look. I risk sounding like a tabloid by mere dint of having even mentioned this story, but the important element is the cultural sway that's occurring. The original story was that a band of disgruntled Twitter users got outraged about the supposed "transphobic" remarks by Jenner's daughter.

But, what we should be saying is, "who the hell cares?" Who cares what one Jenner says to another — and more importantly and on a far deeper level — who cares what some anonymous Twitter user has to say?

When are we going to stop playing into the hands of the Twitter mob?

When are we going to stop playing into the hands of the Twitter mob? Because, at the moment, they've got it pretty good. They have a nifty relationship with the mainstream media: One or two Twitter users get outraged by any given thing — in this case Jenner and supposed transphobia. In return, the mainstream media use the Twitter comment as a source.

Then, a larger Twitter audience points to the article itself as proof that there's some kind of systemic justice at play. It's a closed-market currency, where the negative feedback loop of proof and evidence is composed of faulty accusations. Isn't it a hell of a time to be alive?

These days, when Americans decide to be outraged about something, we really go all out.

This week's outrage is, of course, the Trump administration's "zero tolerance" policy toward illegal immigration along the southern border. Specifically, people are upset over the part of the policy that separates children from their parents when the parents get arrested.

RELATED: Where were Rachel Maddow's tears for immigrant children in 2014?

Lost in all the outrage is that the President is being proactive about border security and is simply enforcing the law. Yes, we need to figure out a less clumsy, more compassionate way of enforcing the law, but children are not being flung into dungeons and fed maggots as the media would have you believe.

But having calm, reasonable debates about these things isn't the way it's done anymore. You have to make strong, sweeping announcements so the world knows how righteous your indignation is.

That's why yesterday, the governors of Maryland, Massachusetts, New York, Rhode Island and Connecticut declared they are withholding or recalling their National Guard troops from the U.S.-Mexico border until this policy of separating children from their parents is rescinded.

Adding to the media stunt nature of this entire "crisis," it turns out this defiant announcement from these five governors is mostly symbolic. Because two months ago, when President Trump called for 4,000 additional National Guard troops to help patrol the border, large numbers of troops were not requested from those five states. In fact, no troops were requested at all from Rhode Island. But that didn't stop Rhode Island's Democratic governor, Gina Raimondo, from announcing she would refuse to send troops if she were asked. She called the family separation policy, "immoral, unjust and un-American."

There's so much outrage, we're running short on adjectives.

The governors of Connecticut, Massachusetts, and New York all used the word "inhumane" in their statements condemning the Trump administration policy. There's so much outrage, we're running short on adjectives.

In a totally unrelated coincidence, four of these five governors are running for re-election this year.

I've made my position clear — separating these children from their parents is a bad policy and we need to stop. We need to treat these immigrants with the kind of compassion we'd want for our own children. And I said the same thing in 2014 when no one cared about the border crisis.

If consistency could replace even just a sliver of the outrage in America, we would all be a lot better off.

I think we can all agree, both on the Left and the Right, that children who have been caught up in illegal immigration is an awful situation. But apparently what no one can agree on is when it matters to them. This past weekend, it suddenly — and even a little magically — began to matter to the Left. Seemingly out of nowhere, they all collectively realized this was a problem and all rushed to blame the Trump administration.

RELATED: These 3 things need to happen before we can fix our border problem

Here's Rachel Maddow yesterday:

I seem to remember getting mocked by the Left for showing emotion on TV, but I'll give her a pass here. This is an emotional situation. But this is what I can't give her a pass on: where the heck was this outrage and emotion back in 2014? Because the same situation going on today — that stuff Maddow and the rest of the Left have only just now woken up to — was going on back in July 2014! And it was arguably worse back then.

I practically begged and pleaded for people to wake up to what was going on. We had to shed light on how our immigration system was being manipulated by people breaking our laws, and they were using kids as pawns to get it done. But unlike the gusto the Left is using now to report this story, let's take a look at what Rachel Maddow thought was more important back in 2014.

On July 1, 2014, Maddow opened her show with a riveting monologue on how President Obama was hosting a World Cup viewing party. That's hard-hitting stuff right there.

On July 2, 2014, Maddow actually acknowledged kids were at the border, but she referenced Health and Human Services only briefly and completely rushed through what was actually happening to these kids. She made a vague statement about a "policy" stating where kids were being taken after their arrival. She also blamed Congress for not acting.

See any difference in reporting there from today? That "policy" she referenced has suddenly become Trump's "new" policy, and it isn't Congress's fault… it's all on the President.

She goes on throughout the week.

On July 7, 2014, her top story was something on the Koch brothers. Immigration was only briefly mentioned at the end of the show. This trend continued all the way through the week. I went to the border on July 19. Did she cover it? Nope. In fact, she didn't mention kids at the border for the rest of the month. NOT AT ALL.

Do you care about immigrant kids who have been caught in the middle of a broken immigration system or not?

Make up your minds. Is this an important issue or not? Do you care about immigrant kids who have been caught in the middle of a broken immigration system or not? Do you even care to fix it, or is this what it looks like — just another phony, addicted-to-outrage political stunt?

UPDATE: Here's how this discussion went on radio. Watch the video below.

Glenn gives Rachel Maddow the benefit of the doubt

Rachel Maddow broke down in tears live on her MSNBC show over border crisis.