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.

Several months ago, at the Miss Universe competition, two women took a selfie, then posted it on Instagram. The caption read, "Peace and love." As a result of that selfie, both women faced death threats, and one of the women, along with her entire family, had to flee her home country. The occasion was the 2017 Miss Universe competition, and the women were Miss Iraq and Miss Israel. Miss Iraq is no longer welcome in her own country. The government threatened to strip her of her crown. Of course, she was also badgered for wearing a bikini during the competition.

RELATED: Media's anti-Israel, pro-Islam bias sweeps THIS fact under the rug

In an interview, Miss Iraq, Sarah Idan, said:

When I posted the picture I didn't think for a second there would be blowback. I woke up to calls from my family and the Miss Iraq Organization going insane. The death threats I got online were so scary. The director of the Miss Iraq Organization called me and said they're getting heat from the ministry. He said I have to take the picture down or they will strip me of my title.

Yesterday, Miss Iraq, Sarah Idan, posted another selfie with Miss Israel, during a visit to Jerusalem.

In an interview, she said that:

I don't think Iraq and Israel are enemies; I think maybe the governments are enemies with each other. There's a lot of Iraqi people that don't have a problem with Israelis.

This is, of course, quite an understatement: Iraq, home to roughly 15,000 Palestinians, refuses to acknowledge Israel as a legitimate country, as it is technically at war with Israel. The adages says that a picture is worth a thousand words. What are we to do when many of those words are hateful or deadly? And how can we find the goodness in such bad situations?

No political bias. That's the catchphrase you're likely to see blasted all over the news today. The Office of the Inspector General found no evidence that political bias played any role, either with former director Comey or other FBI agents, during the Hillary Clinton email investigation. So is it "all good now"... "carry on"... "nothing to see here"? Hardly. Here are a few of the highlights from the 568 page report.

The report makes it clear that there's no evidence that political bias influenced this investigation, but why did they take five hundred and sixty eight pages to make that point? Well, after reading it, I kind of think they want us to understand how difficult it is to prove political bias. I think the Inspector General wants us to read this report in its entirety, and read between the lines. Here are a few of the highlights.

RELATED: Day of reckoning? Inspector General's report is here.

First and foremost, this report straight eviscerated James Comey. You know one of the most controversial decisions of President Trump's tenure - so far - has been his decision to fire the former FBI director. Let's imagine for a second that Trump never did that and Comey was sitting at his desk at the Hoover Building yesterday. I can almost guarantee you that after the release of this report yesterday, Comey would have been fired by this morning anyway. Here are just a few quotes describing his behavior:

"Extraordinary and insubordinate"... not "reasonable"... "engaged in ad hoc decision making"... "serious error in judgement"

So the Hillary train keeps on rolling. She'll escape a courtroom for the fourteen thousandth time.

It goes on and on. This report just destroys Comey's behavior. There's no way he could have remained FBI Director.

The report goes on to analyze the behavior of several FBI agents that were involved in the Clinton investigation. Strzok and Page were but two of five employees that showed questionable behavior, either through text messages or instant messaging. If you read the texts and transcripts, they're pretty damning. In Strzok's case, his bias could have caused a delay in analyzing the contents of Anthony Weiner's laptop. I say again, it could have, but as the OIG alludes… political bias is hard to prove. Another agent that had been caught saying questionable things on an instant messaging service, was actually one of the agents that conducted Hillary Clinton's interview. In that interview, the OIG seems to acknowledge that the FBI had caught Hillary in a lie, and still they let her go. But… political bias is hard to prove.

See the theme here?

So the Hillary train keeps on rolling. She'll escape a courtroom for the fourteen thousandth time. But, as is the common theme for the entire Clinton family, it is those around them that suffer the most. The FBI has been tarnished. People have lost their jobs. Agents have been humiliated. All this for an arrogant and corrupt politician.

Attention earthlings: a "climate emergency" exists. It's official now, because the Berkeley City Council declared it. So, it must be true.

Frankly, you must be living under a rock if you didn't already know that a state of climate emergency exists. And if you don't do something about it, like now, you could be living under a rock very soon. Because according to the foremost authority on climate doom — the Berkeley City Council — this emergency is as dire as World War II.

RELATED: Americans Aren't Having Kids – and Some Say Climate Change Is a Big Reason Why

Council Member Cheryl Davila warns that global warming is driving us toward, "…the sixth mass extinction of species, which could devastate much of life on earth for the next 10 million years."

The city council resolution says:

During World War II, the Bay Area came together across race, age, class, gender and other differences in an extraordinary regional mobilization, building and repairing Liberty ships, converting car assembly plants into tank manufacturing facilities…

The Berkeley City Council says the only way to avert World War II-level disaster is if Americans mobilize in the same way now to confront climate change as we did in 1942 to confront Nazism. Because climate change and Nazism are definitely the same.

It gets worse. The resolution calls our current climate emergency "the greatest crisis in history."

Seriously, their resolution sounds straight out of the Galactic Empire handbook — "mobilizing workers" to build and install "renewable energy infrastructure."

Technically, that means Berkeley will have to completely transform into an Amish community in 12 years.

Berkeley committed itself to becoming a "carbon sink" by 2030. For the uninitiated, that means they want the city's greenhouse gas emissions to be in the negative. Technically, that means Berkeley will have to completely transform into an Amish community in 12 years. Except they won't be able to use any farm animals, because you know, too much methane.

Becoming a carbon sink is not their only strategy. Their resolution also mentions that earth has too many people screwing up the atmosphere, so we must "humanely stabilize population." Interesting — there were some World War II-era figures also interested in "stabilizing" population. They just forgot the "humane" part.

This weekend, June 15-17, Glenn Beck and Mercury One will be hosting the "Rights & Responsibilities" pop-up museum at Mercury Studios. Private tours through the museum will be led by Glenn Beck, David Barton, Doc Thompson, Stu Burguiere, Jeffy Fisher and Brad Staggs, each providing their own unique perspective on our rights and responsibilities.

Find out more about this special Father's Day weekend event or purchase tickets here.

Watch the video below to get a behind-the-scenes sneak peek at just a few of the amazing historic treasures you'll find at this weekend's "Rights & Responsibilities" museum.

Take a look behind the scenes

Glenn Beck and Mercury One will be hosting the "Rights & Responsibilities" pop-up museum at Mercury Studios.