While the Government Slept

- When the cat's away, the mice will play.

- Medieval Latin Proverb

Government Shutdown...

...is not new news, but life goes on. If one forgets the playbook of presidential administrations, it calls for the president to take a "trip" when bad news will hit the fan. President Trump left for Asia. He thinks that he is using the time to "play" the Chinese leader, Xi over trading and tariffs with rare earth minerals. Xi thinks he is "playing" Trump by forcing him into surrendering tariffs over rare earth access? Both leaders are seeking to offer their respective nations some good news to counter some poor economic reports. We can never for certain give an accurate picture of China. We do know that housing is central and the recent defaults are still reverberating. With that said, we can still give an accurate picture of our economy. It has been able to ride a bumpy road, but we see potholes and sinkholes ahead. Two big bumps in the road will be revealed today. The Supreme Court will decide the case of Trump's tariffs. We feel this issue is for Congress to decide. The other is the outcome from election day. Behind the scene is the real danger to everyone and the economy.

Cockroaches?

Do you recall our piece using the quote by Jamie Dimon, the CEO of JP Morgan Chase? He said, "When you see one, there are more." The cockroach that he referred to was Tricolor Holdings. The used auto dealer filed for bankruptcy in September. It was soon joined by First Brands. The market shrugged it off. Then, we entered into the government shutdown over the debt ceiling. Reports on our economy are not forthcoming. What is known is sketchy. However, we do get reports from firms and of course, legal situations. One of those corporate reports was from Fiserv (FI). It highlights more banking risks. It missed its earnings by a lot. The firm's loftly projections fell way short. The stock plunged by 44%. It still has not found a bottom. The firm lost $30 billion in stock cap.

Enter Subprime!

If you remember, the financial crisis of 2008 began when subprime lenders were exposed and defaulted. We learned that big banks lend to these lenders and if a problem surfaces, they will feel a bite. If enough piranha's eat, the bite can be death. 

Subprime lenders deal with a large portion of our population with poor paying employment. Well, a large one, Primal Lend Capital Partners just filed for bankruotcy. Another report on auto loans reveals that there are $1.6 trillion in debt. That same report warned that auto delinquencies are rising to 6.43%. To put that in perspective, the failing to pay an auto loan has doubled since 2021 and it represents the highest percentage in decades. The repo man will be busy. You ask, "What's the worry?"

It is a slow burn, but it has a ripple effect. Not only in regions of our nation, but globally. As you know, our greedy producers have outsourced almost all our manufacturing. The supply chain has taken a hit with our tariffs. Now, with auto loans souring, lenders will tighten. This will mean less auto sales. This has a negative feeling to the industry. This relates to another report that says the average price for a new vehicle is $50,000. Since we import so much auto parts, these suppliers will feel the bite. They will do cost cutting or laying off help. At best, help everywhere will be less than full time. A bite to all economies. You throw in student loans. The bite to our economy grows. Now, throw in 42 million people who receive food stamps. They suffer as well as our grocery stores. Suddenly, our economy has an investation problem. The ripple is gaining force. It is becoming a wave. You say, "The government will reopen. The laid off federal workers and things like SNAP will be good again. Why worry?"

We Remind You...

...of another piece where a very conservative economist, Mark Zandi said, "Mass layoffs is the firewall between a recession and no recession." We add what we know...                                                                Amazon: laying off 14,000. Robots taking jobs.                                                                                          Target: cutting lose 1,000.                                                                                                                            Charter Communications: pink slip to 1,200.                                                                                          Paramount Skydance: good-bye to another 1,000.                                                                                  Novo Nordisk: a global medical concern will drop 9,000 - mostly Denmark and US.                            UPS: dropping 34,000 employees and another 14,000 corporate jobs that are going to robots.

Cargo

It moves by ships at sea and trains on land, however to reach warehouses and stores, it rolls by trucking. It is no secret that trucking is seeking drivers. There is a shortage of help as revealed by the aspect that there are 3.1 million more trucks sitting idle. You can get a lot of info from that sentence. Trucking firms have idle vehicles that they probably own with a loan. Big liability. We follow the results with the following trucking firms that extend from coast to coast. The following have all entered into bankruptcy. Best Choice Trucking LLC, Best Logistics Inc, C&C Freight Networks, ALA Transpotation Inc, Elite Carriers, Dolche Truckload Corp, Nortia Logistics Inc, CLB Trucking, and Daniel Trucking International. That is a lot of firms and lost jobs. The unemployment rate will be a lot higher.

We see...

...the unemployment percentage growing even with manipulation. We see our fellow consumers struggling to make ends meet. The stock market has lost its relationship to how our economy is doing. Individuals do not move the market. It is run by hedge firms and investment institutions. There is no longer a connection to the market and the economy. Our auto nation is driving over potholes and steering to avoid sinkholes as our phony political parties point fingers at each other. The only help wanted will be to be a repo man. Let's hope for a mild winter because running the heat also costs too much. Do the best that you can. Peace.                                                                                                                        

Odds and Ends: October 2025

-  Autumn, the year's last, loveliest smile.

- William Cullen Bryant

Next Season

We are not going to argue with Bryant about the seasons. We see His magistry in all four. We are using his quote as a timeline, metaphorically. 

We are not talking about winter per se, but the economic future and sadly, it resembles winter. The big money is all-in on AI. The only benefits the US citizen will see is higher utility bills, internet outages, general blackouts, loss of jobs and social mobility. The wealth gap will widen. 

Our politicians are finally revealing their true nature, power. What they do is to seek ways to make the other political party look bad with no true direction to help our citizens. As citizens, we are disenfranchised. We need a new political party to really put America first. We, at Evolution have suggested the Liberty Party. JFL's unpublished book will lay out the cause and platform. Meanwhile, we suffer the fools. 

China's Vision and Ours

Last year, China made $120 billion in new clean energy. The US made $80 billion in oil. Chinese technology dominates alternative energy that generate profits and a growing middle-class. In fact, they have more middle-class (around 700 million) than we have in population. Do you recall a recent piece where we reported that China sold more EVs in the last quarter than the US had in all vehicles for the entire year? When you put the two together, who has the better future picture?

Home Ownership

This is central to the American Dream. Well, every year we make less homes than are needed. The demand is great, but affordability is poor. The good news is home ownership has remained steady at around 65%. The bad news is forecloures are rising, again. In this environment, home builders show a worried picture. Lennar (LEN) was $175 last December. It had momentum with the hope of interest rate cuts. It is down 50 points as of last Friday. We do get a slightly different picture with DR Horton (DHI). It was also $175 last December. It fell to $115 this year only to rally and then retraced. However, it revealed a Cup and Handle pattern which is very bullish. The price last Friday was $150. Its price action could reveal where housing and our economy is headed. Also, on the plus side, new home construction rose 4%. If rates continue to fall, this will be a boost to the economy. People with higher rates can refinance. This could stop the foreclosures. More people can enter into home ownership. Because housing effects so many aspects within the economy, a boom will occur.  With that said,, we read a disturbing report on our economy. 

Disaster Economy

A report shows that over one third of our economic growth is tied to severe storms, fires and nature problems. The figure is 36% of GDP or around $7 trillion. The growth comes from restoration in recovery from or preparing for disasters. We now have records connected to storms and fires. The US had more than $101 billion in losses just in the first half of 2025 and yes, this is a new record. Our economy has escaped a recession from two factors, disasters and AI. You don't need artificial intelligence to tell you that our nation has deep, economic problems. We need to drastically reduce our importing and return to being self-sufficient. A beautiful by-product of being self-sufficient is less debt and a higher standard of living. The only real growth that our two political parties give us is in our national debt to which just surpassed $38 trillion. If we do not change, the next info will be a our daily news. The economic body bags, the razor cuts to our lives and standard of living.

Long John's Silver: closing 150 locations.                                                                                                Nestle: cutting 16,000 jobs from its global workforce.                                                                                Coors: cutting 9% of its help.                                                                                                                      Walgreens: closing 79 stores.                                                                                                                        Starbucks: cutting 9,000 jobs and closing stores.                                                                                        Meta: cutting 600 AI jobs. These are high quality and with the money going into AI, quite confusing?    Target: is dropping 1,000 corporate employees.                                                                                          Amazon: The king of internet retail is laying off 14,000. Why, you ask? Robots taking over!                    UPS: laying off thousands. Why, you ask? See above with Amazon. Robots taking over!

We see the above when we visit our malls, that is if you still have one? Even with the above info, King Dollar remains fairly strong and that is with a 95% of an interest rate cut, later today. We feel that maybe some manipulation is afoot? 

Good News

A dutch firm, Mammoet is shooting to displace Taisun with the strongest crane that you can buy. You have to hand it over to the small nation that achieves so much. Sadly, the US that faces two oceans and the gulf waters lacks even a contender in this most important aspect to ports.

Down, but not out. The great US engineering school, MIT has developed a new way to clean air dust off of solar panels. President Trump may not like alternative energy, but solar isn't going away. MIT's process will extend the life and efficiency of panels and it requires less water. Bravo, MIT!

The best for last. The Nobel Prize for chemistry was won by an American professor, Omar Yaghi. His technology is going commercial. It can retrive water from the atmosphere. This could turn arid locations into farmland. This will lower food costs and lessen food insecurity. I thank God for blessing him and us. Peace.

Banks Again and?

- The question for the financial crisis of 2008 was the big banks too big to fail? Now, a new worry                 surfaces within the banking sector. Could smaller, regional banks collapse the system?

- JFL 

Cockroaches...

...when you see one, there are more. This is the quote from the CEO of JP Morgan Chase, Jamie Dimon in reference to the large charges suffered by Western regional banks. He considers these small banking institutions as cockroaches, but in his condescension, there is a worry and truth.

We, at Evolution do not trust Wall St. investment banks. They lie with a smile, especially concerning the precious metals. In their dark soul they oppose sound money. They are for fiat and the Federal Reserve. This does not mean that they are not intelligent. They are. They have a deep understanding of economics and they are connected to influence their agenda. With that said, we see in his above quote, the worry and truth of contagion. Banks, large and small, buy each other's paper. This connects them. What was revealed last Friday will reverberate as more details and banks reveal their connection. We already see a growing number of institutions that are taking losses. 

Jeffery (JEF), an investment firm has loans to two banks, ZION (ZION) Bankcorporation and Western Alliance Bankcorporation (WAL). The two banks and the financial firm lost over $100 billion in stock value due to their charges concerning bad loans last Friday. Zion and Western Alliance are tied to California Bank Trust to which started the chain reaction due to unpaid debt. We feel there are more cockroaches hiding somewhere?

Related Aspect

JP Morgan Chase have their own bad loans. The firm is too big to feel deep pain from their losses to Tricolor Holdings, but other players might not be so fortunate. The auto parts maker is not the only one to suffer unpaid debt or other economic problems. Delinquencies on auto loans are rising along with the price of vehicles and lending terms to acquire one from dealers. In the last decade, consumers continue to struggle to make ends meet. Delinquencies have surged over 50% concerning vehicle lending. It is no wonder since it was announced last week that new vehicles have crossed the $50,000 barrier on average price.

The buyer finds insurance costs are higher along with costs for upkeep. Because they chose a longer term for lower monthly payments, they find that after 7-years they need a new car, but they still owe on their last purchase. If they trade in and rollover their debt into a new debt structure, they will be trapped into this never ending debt cycle. We can see this as Americans now carry over $1.6 trillion in auto loan debt.

Back to Tricolor Holdings. The Fifth Third Bank (FITB) is connected to the blues tune of $200 million in potential losses. Ouch! Thank God for busses and they discount if you purchase a monthly pass...Peace. 

Hats Off to Netherlands, Political Weaponizing of Food

- You can feed a man for a day or teach him to fish for a lifetime

- Anne Isabella Ritchie

Price of Tomatoes...

It is kept affordable in the Netherlands due to the intelligence of its people that seek to work with nature. Everyone knows the story of reclaiming land from the ocean in this low, sea laying nation. They are the inspiration for today's alternative energy in wind power. They made a fortune in flower power and now, it is showing us all how to survive food insecurity. 

Although small in land mass, through determination, investment with trail and error, this little country is the second largest food exporter after the US by value. 

Its greenhouses should be desired and copied the world over. They can grow tomatoes a foot in one week, (Wow!) and they use small amounts of water. (Double wow!). They employ LED lighting along with AI computers to manage the rows of crops. It regulates the temperature, water and lighting. No, robots do not rule. Humans cultivate and harvest. Granted, they use robot carts to transport loads and they have another AI program in the processing plants. It aids in soughting size, color and shape. Bottom line: Everyone can start to grow their own as the hippies once said. Congrats to you. 

Meanwhile, the "RED" Deception

The Russian Communists as well as the Chinese Communists always point out and exaggerate their successes with little mention of their failures. When the Soviet Union was the shining example of Cummunism and started the Cold War with the US and West after WWII, they found a problem at the kitchen table. Food insecurity. Their dictating farm programs were failing, big time. The US was the only nation that grew enough to feed their problem. The Russians never thanked us nor either the Chinese Communists today with their economic miracle.  

The sad truth is the US government under Republicans and Democrats used food as a political weapon in negotiating policies. 

Case in point: In 1972, Russia had another terrible crop failure. They had been buying US wheat and corn for years. Our government kept the trade silent until the last minute to keep prices low. Yes, the Republicans deceived their "Red" state followers and farmers. 

At the time, Russia purchased one-fourth of the US harvest. This led red state farmers to believe that the Cold War was ending. They expanded and took up debt to grow. When Russia invaded Afghanistan in 1979, President Carter ended selling food to the Soviet Union. This embargo would go on and off again in different administrations. This would not worry Russia. By that time global farms had recovered and they could buy whatever they needed from many sources. However, the repercussions of the embargo caused hardship to US farmers. Many family farms died. This led to the agricultural change. Industrial size farming. Family farming has suffered ever since until China began buying soybeans, wheat and corn as well as pork.   

Communist Trojan Horse

Now, China has stopped buying US grain as a repercussion from tariffs.This not only hurts what is left of family farms, but even the giant, industrial conglomerates. China, like their fellow Russian Communists, dangle trade and then, use it as a political weapon. Brazil is benefitting from this political ploy, but when they expand and cut up the Amazon, a day of truth will emerge. China will want something that Brazil may not want to give and then, they will no longer buy from Brazil. They will try Peru, Argentina or Africa? Let us hope the world follows the Netherlands and the next time there is a crop failure in a Communists nation, tell them our door is closed. Our farmers may lose a large customer, but we over 300 million fellow Americans as customers. Forget greed and persevere. Pass on your farm to your family...Peace.     

EVs, China and the Market

- At the heart of capitalism is creative destruction.

- Joseph Schempeter

He called it...

Capitalism makes for innovation, but the creation of new destroys the old. A quick example is the cassette wiping out the 8-track. Now, we have electric vehicles. As they develop, the days of the combustion engine is on the horizon. However, in the near-term, gasoline will still have a strong demand. Sales is demand. Although electric vehicle sales as a percentage of demand is small, things are looking better for the EVs.

Chinese Are No Fools

When ideas are circulating, the Chinese Communists are quick to react. We can see that in the two biggest alternative energy sectors, windmills and solar. China put money and investment at a far greater level than the West, especially the US. They dominate the market. One might even see the apoptosis of capitalism and democracy being replaced by socialism. However, governing under socialism kills human rights and freedom. There is more to human happiness and fulfilment than economic success. Our founders chose wisely. With that said, one aspect of a change within the auto sector is resales. There are more pre-owned vehicles sold than new ones every year. 

What Is Happening...

It is not just the new models with better batteries that is selling, but the used market is looking extremely strong. Consumers are finding deals that are to good to refuse. For example, in 2024 a new Mustang Mach-E GT sold around $55,000. Last month, locations offered the same model for around $33,000. When customers find opportunities like this, the pull to change from combustion is too great. 

With the above example, there are still obstacles. The big one is the tax credit of $7K is ending. Many dealerships used the tax break and put the advantage into leasing. This will create a problem down the road because as many as 250,000 EVs will come into the resale market. This could ultimately benefit consumers as EV prices will sink on used models. The buyers are working the Schempeter theory without even knowing about the Austrian economist. The second obstacle is President Trump. He backs oil. He has three more years in office. Unless a miracle happens with his "old" ally, Musk, there will be no stimulus for electric. 

With that said, according to Cox Automotive, the reselling in the two different styles is closing. EVs are gradually winning over the public. However, one concern to piercing the 50% barrier is the worry within buyers that as technology expands, the resale value will shrink, dramatically.

The average price of a used EV is around $34,600 and gas models will run about $33,900. Of course, different models and features react differently with depreciation. Sales executives see used EVs outselling used gas powered models as they take optimism in data that has EV sales rising by 34% in the first half of this year.  

Then, we read this data point from China. In the last quarter, China sold more EVs that all the car sales for the entire year in the US. If there ever was any doubt that China is the number one economy in the world, reread the last sentence. It is not the value put in price, but the actual number of sold items. Our economy has the lie of inflationary pricing to conclude the value of the GDP. I realized this aspect in the observation of movie lines for a show and the pricing value of the picture with people buying a ticket. The error is the actual number of tickets sold. More people attended the showing of "StarWars" than any of the budget, record pricing of the latest action flick. The cost to see the sci/fi classic was from $2 to $3 bucks. Today, the cost to see the make-believe is $10 to $12 bucks. There are no lines in small, multi screen theaters. Back in the day, we had beatiful, large, one-screen building. There were lines around the block and the theater held 5x as many people. This is the lie from our two poltical parties and the Federal Reserve. Then, we extend this aspect to the stock market.  This is the latest...

Friday Close

JPM posted this point. The S&P 500 had a PE ratio of 22.8. This is the highest in this century. It gets even more scary by using the CAPE Shiller ratio. It reads 37.97. The only time it was higher was before it crashed in 1999 turning into 2000. It was 44. We believe that demand and growth are not the same due to pricing. We want to see units sold. We want to see better paying jobs and most of all, social mobility. Oh, by the way, we would love to see a balanced budget or even Congress submitting a budget? All we get is ego and hypotocy of our two corrupt political parties. When the Democrats were in power, the Republicans would not subport the debt ceiling to keep government active. The Dems said, the spending measures were voted and passed. This is wrong. Now, they do exactly as the Republicans did because the ball is in the other court. Peace. 

All the Fuss About AI

- Knowledge is power.

- Sir Francis Bacon (note Thomas Jefferson often used the expression.) "Great minds think alike."             To which I think fits here. This is attributed to Carl Theodor Von Unlanski.  

"Everyone's talking about AI now..."

Dear Reader, that is all it is, talk. I see the computer producers claiming AI assistance. These computers are just more efficient versions of past offerings. They are quicker with more storage, but everything else is just PR. AI is in pre-season like in the NFL. It is getting better, but it will take time. Do you recall the propaganda around the famous chess match between grandmaster Gary Kasparov and IBM's Deep Blue? Gary won the first time, but the computer beat him the following year. Chips do "learn" from their past mistakes unlike many humans. The real question is who benefits and what and where AI will be implemented?

Founder...

Berners-Lee who invented the worldwide web says, "AI is an agent like a valet of the rich." We, at Evolution fear that AI will be like the atomic bomb in the next global war. However, the actual AI thing is really a work in progress. Every nation and firms are seeking its power. One big problem that they all missed is that in developing these data centers, AI requires a lot of energy and water. Too many locations were chosen far from populations. The firms were seeking easy permitting. Now, they discover not enough water or electrical power. Meta, to which we mentioned in a previous piece, purchased a defunk nuclear plant to get energy. I find giving a firm who cannot control their own platform the right to operate a nuclear plant, very troublous for our safety. What is not mentioned is that data centers need power, a lot of power. In any area where new data centers are developed, consumers will suffer higher energy bills. President Trump is wrong on alternative energy. We need all sources. This is not oil versus clean, but low priced energy for all. Meanwhile,

Recent Success

IBM developed the smalest transistor. Amazon is developing their data centers that have new and better chips like Tranium and Inferentia. These two chips use less water and are highly efficient. Google's Deep Mind , uses the web as an aid to its AI chip. Remember all the hoopla around China's Deep Seek? It is just BS like we stated in our opening paragraph. With that said, we must acknowledge the great contributions from early transistors and today's chips. This led to our cell phones, drones and a host of developments in our appliances, cars and life. However, the latest from business leaders and scientists suggest concerns to our economy as AI can replace humans in many functions like paralegals, surgery, transportation and moving of product with robotic carts. Robots have secured their place in auto manufacturing and in warehouses. AI, along with drones have been fabulous for agriculture. It has become a must for satellites and weather forecasting.

The billionaire, Sam Altman and AI's "godfather, Geoffrey Hinton both warned about the loss of jobs due to AI and they feel it will widen the wealth gap. The two advocate a basic universal income. Ray Dalio says, "AI is a great tool, but it presents dangers for workers." He also believes it will worsen the wealth gap. To us, at Evolution, this type of serious economic problems could lead to social unrest and we have enough kindling floating around as it is right now. With all of the above, the modern truth comes from the great American, Gordon Moore. He co-founded Fairchild Semiconductor and Intel. He stated...

Moore's Law

In 1965 he said, "That the number of transistors in an integrated circuit (IC) doubles about every two years." His observation held true, but when numbers go to infinity, no one can give an accurate answer. The problem is the capability to continue to design chips that make progress possible. This has led scientist to declare Moore's Law is dead. Evidence can be seen through the timeline of advancements in improvements in the field. The last step forward took over five years. In building these new data centers, the producers are finding that costs are high as well as energy and water needs. 

Top scientists say that future gains well come from software, algorithms and hardware architecture. There is also another concern, coding. What works for one program may not be the most efficient in another like 3D integration, photonic computing, carbon nanotube transistors and neuromorphic computing (We have no idea what that is?)...Peace

 

Odds and Ends: September 2025

 - The market retreated after President Trump's tariff day back in April. Nasdaq entered into bear territory and all the indexes sold off. That was then. Now, the S&P, Nasdaq and the Dow all hit new highs in September and this is suppose to be the market's toughest month. The odds and ends complete the story.

- JFL

What We Know

Any economy will slow just like your home budget when you add debt that needs to be paid off. Our leaders get around this obstacle by abusing the reserve status of the dollar. The under-estimated $37 trillion in debt needs to be paid off. Doubt is growing. One big indicator is every year we enter into a debt ceiling crisis. Consider what Sebastian says? If we somehow paid off one trillion every year for 37 straight years, we would still not pay off our national debt. What are the odds of that, you ask? Not very good. We cannot even recall one decade without some type of crisis. When we hear that banks are misbehaving again with the top four accumulating $180 T in derivatives, nails are being assembled for a coffin for the dollar. The market always has tops before the bottom falls out. We see a worldwide currency reset coming.

Market Indexes

As stated in the opening, the Dow hit a record, however we notice no conviction, no volume. The S&P also broke a new record and it did this on good volume. One strong indicator was that both Nasdaq and the Russel (small caps- IWM) made a new record high on strong volume. This points to the market continuing to its uptrend. When there is doubt about the market, the large caps get all the attention. When the market is rallying, the small caps take the lead. When you combine these two aspects, the market is telling us at Evolution that our call is wrong. With that said, we turn the the last piece of Dow Theory, the Transports. Not only did they not participate in the rally, but continue to decline with strong volume. We stand with our call as this year has seen market whiplash. We expect more.

Consumer Economy

It has been stated many times that since we do not make anything anymore in America that we are a consumer economy. The world knows since they dump all their crap on us. If that is so, why do we we find ourselves addressing our retail catastrophe? In addition, if our economy is so strong, why does retail close stores? Does this effect other sectors? Apparently, it does as we list the losers. We also notice this is not all firms. Some are growing, but the math has the liabilities over the assets.

7-11: They are quietly closing stores - 400 was the last count. This is a lot of jobs.                                    Walburgers: They are closing 79 stores.                                                                                                      Petco: They closed 25 locations last year and adding 25 more this year.                                                    Kroger: The grocery chain is dropping 60 stores and laying off 1000 workers.

Bankruptcy: Del Monte after 140 years in business. Spirit Airlines, again and Target.

By the way...we mentioned that layoffs have even hit oil and now, we read, Novo Nordisk, a rich drug maker is laying off 9,000. I got a headache! They make Wegovy. The layoffs are spreading. Softbank is dropping 20% of help. Quess where? AI. The robot has a headache. 

Now, the other side. Trader Joe's is expanding into 7 more states and adding 41 stores. There are others, but the math is heavily on the negative side. 

Ongoing Tariffs...it changes from month to month. We feel the pain when we buy our morning elixir. We read that Bolsonaro has been convicted of a coup. He received 27 years. What will Trump do? What well be the consequences? How much will the price of coffee rise? Another headache.

This is how we read the tea leaves. Peace.