This is the last post for 2021. If you read the last post of 2020, you could say nothing has changed, only the names. COVID-19 is replaced with Omicron. The stimulus of that year has been partially spent, but a new stimulus is already passed. The only question is when does the money get circulated? In 2020, airlines were cancelling flights. On Christmas Eve, the airlines cancelled over 1,000 domestic flights and over 3,000 worldwide. Retail was suffering then, and it still has problems. Holiday gatherings for Christmas and New Year's were scaled back in 2020. You can say ditto for 2021. The only thing off the top of my head that is constant, is the Federal Reserve. They have kept money cheap. They offer interest rates below inflation. No! Wait! I'm wrong on that. The negative gap on yielding rates and inflation has widened. However, I'm not the one who is wrong. It is the Fed. As we say here at Evolution, "The first step back to prosperity is to End the Fed!"
Speaking of the Devil...
The Fed announced last week that they see the US labor market at full employment by March 2022. Their "plot points" give them this reinsurance. We say, this will be another "transitory" moment. They will be wrong as they always are. This is our "plot points." The Fed's easy money made pigs out of our corporate firms. Going into the last recession, corporations added $6 billion in new debt. Today, they have $11.5 trillion in debt. Many firms cannot service their borrowing like the Chinese real estate giant, Evergrande. That company is in default. The Chinese government is doing their best to keep a lid on the damage. We see further problems in 2022. Anyway, the lowest rated level on a bond that is above junk is BBB. At present, over 57% of these bonds is at risk to falling to junk. This sad contagion is also putting households at risk. The Fed grew our money supply by 40% since 2019. This data does not even take into account all the new stimulus in the works. Consider for a moment: There are over 11 million renters who have not paid rent. They are covered from eviction due to both President Trump and Biden placing a moratorium on evictions. Students owe over one trillion in loans. They also have not paid a nickel. They too are covered by presidential decree. Then, there is inflation. It is not going away. The first commodity to show the effects was lumber. It rose fourfold. Then, it dropped. The pundits and shills for the Fed said, "See! We told you prices would stabilize." Well, they are back at highs. The inflation data keeps getting worse, month after month. We, at Evolution offer you this insight to the future. Containers! These large metal crates carry the imports to our nation. Before the pandemic, the rate to load one container was $1700. Then, it rose to $14,000. Today, it runs between $18,000 and $20 grand. This affects everything. We all can see the ladder at the gas station. We see the new price. We cannot see all the ramifications due to these shipping containers.
The new word for 2022 in inflation as it relates to consumer prices will be "Drip Price." The product price might be the same, but the package will be smaller. In banking, it could mean fees. Then, there is the aspect of labor shortages, especially skilled labor. A roof trust goes up in price on a daily basis. Housing, the biggest purchase by consumers will continue to rise. The only thing keeping inflation from spiraling off the charts is the dollar.
King Dollar
At present, the dollar remains high. We look at the price action on a daily basis. It is forming a triangle. This is often a continuation pattern. However, a breach will indicate a big change is coming. Watch the dollar closely in 2022.
Spiritual Relapse...
Israel is using aid to control free speech in firms and nations that receive their government aid or stimulus. If you say anything bad about their government policy, you will not receive anything from them. The only nation lower on "strings attached" is China. If you say anything that they deem harmful, you could end up in jail or dead!
Last Idea...
for 2022 is visit Doctor Copper. In a recent report on vehicle sales for 2020, electric car sales tallied 10% of all sales. The recent stimulus has money to create vehicle charging outlets. Electric vehicles require more copper. It creates a floor in the commodity. A higher demand will mean higher prices. Find yourself a good copper mine / firm. By the way, this will negatively affect the two million workers in auto parts because there are less components in the electric vehicle. Good news is robots need repair parts and the transition is not that difficult. HAPPY NEW YEAR! Peace.
