Election Losers

- Borrowing money to pay a previous debt is the curse of debt

- Brutus, Anti-Federalist paper

Harris or Trump

Whomever wins will probably be announced by Friday unless a new "chad" crisis emerges. Not likely. The real problem is that both of these candidates make all of us losers. Why, you ask? Go back to their one debate. Did either of the two talk about our national debt? The constant stalling of government to entertain the debt ceiling? The fact that 40% of the world's GDP (BRICS) are actively seeking to dethrown the US Dollar as the world's reserve currency and trading vehicle. The two made promises to buy votes with more spending and adding to our tragic debt. Dear Reader, it gets worse.

CBO

It stands for the Congressional Budget Office. They go over our lending to calculate the level of debt to our national deficit. Their most recent announcement is alarming. They admitted that they made a mistake. Now, the new debt level should scare everyone. Projecting from now, 2024 to 2033, just to service our debt will cost the nation and taxpayers, another $10.6 trillion. Think for a moment some of the ways that the money could be better spent rather than interest to debt? How about our medical? How about roads, bridges and general infrastructure? How about free trade colleges to address modern tech and machinery? I'm sure that you can add some of your thoughts to Sebastian's. By the way, the new debt projection is double the CBOs first estimate...Getting back to the election of 2024.

Influencers

It is estimated that there are 11,000 political groups (PACs). They will spend $14 billion to influence us on who to vote for. This should tell you a few things. The corrupt have money and they use it to maintain the status quo. Money buys results. You and I are being disenfrantized from government because they spend so much time with people who have money. Money may buy results, but it is also corrupt. This is why we, at Evolution do not vote. Our vote must be earned. By not voting we are actually voting. We are saying that we will not valid either of the two corrupt political parties. Let me end by adding a few more thoughts from Brutus.

On Debt

It should be a last resort. To make it difficult, he recommends a two-thirds majority in Congress to pass a debt bill. 

He worried that Congress may mortgage any or all the revenues of the union, as a fund to loan (think bonds) money upon, and it is probably in this way, they may borrow of foreign nations (they buy our bonds which is debt). This holding of debt by foreign nations could be an avenue for them to influence the nation. He goes on to say, "The interest of which will be equal to the annual revenues of the country. By this means, they may create a national debt so large, as to exceed the abilty of the countey to ever discharge it." No truer thoughts on spending more than your revenues.

Something Interesting

Here at two cycles concerning the market and elections. The first is a 96-year cycle on the S&P 500. It shows the market rises the day after the election and then, falls for the next four trading sessions. The second one is for gold. It too, rises the day after the election, only to fall for the next two trading days. Peace.

Odds and Ends: October 2024

- A people that values its privileges above its principles soon loses both.

- Dwight D. Eisenhower

The above words of wisdom can apply to the owners of production and the laborers who service their product. The creed of business is the priciple and the distribution of the net proceeds is the privilege. The creed should be to make the best possible product and to take care of the workers who produce it. 

Boeing Strike

The company was able to end a pension for its workers a while back. They knew the workers feel cheated by this issue. This hits hard when the CEO has excessive pay with a bonus of share options as well as many others in management. When the company offered a 35% raise, they thought that would win the day. This also made them appear better in the public view. What they should do is to offer a matching donation to the workers K401. Of course, an offer of $10 grand to go with the pay raise. Boeing would need to limit the matching offer or this will be a real big issue in the future. However, it would show a real concern for your workers welfare and the company makes more than enough to go this route. 

With that said, we, at Evolution predicted 2024 would be a year of strikes. When we read Kaiser Health Care workers are also on strike along with many smaller firms, our call is on the money. Many of these strikes are dated to previous contracts. Workers no longer go on spontaneous strikes. The government intervened a long time ago. There is a government arbitrary who steps into disputes, especially if it concerns the national economy. To work off the job without warning is like getting a strike, excuse the oun, against your claim before the mediator. In other news...

Francis Scott Key Bridge

The Department of Justice (DOJ) has reached a settlement with the owners of the vessel that destroyed the bridge. The Singapore shipping firm's insurance will cover $102 million case. However, the owners are not out of hot water. The FBI is conducting a criminal investigation due to the poor maintenance and lying reports about repairs. The owners should reflect. They are blessed with money, but they only seek to enhance their wealth rather than protecting their vessels (product) and the seamen employed (workers). They should read the words of wisdom at the beginning. The CEO of Boeing should read it as well. In seeking another buck, the shipping firm is losing many more. The state of Maryland is also filing a lawsuit against them. 

Good News

Form Energy has developed a battery that feeds electrical power grids up to 100 hours. Of course, you and I do not realize what this means. It means their battery is 25x better than anyone else. Sorry, we cannot buy their sares. This is a private company. That does not take away the good news by an American firm. Peace.

Market Gravity

- What goes up must come down.

- Law of Gravity

Market Movement

The price action says loud and clear that our market call of a large retracement is wrong. There are many reasons that we believe it is correct, but the charts do not lie. However, they can deceive?

Anyway, the Industrials hit a new all-time record at 43,325. The volume was okay. The SPX also broke a new record at 5872. Finally, in true Dow Theory, the Transports joined the rally. This constitutes a bull market. The only point that keeps our conviction is the transports did not hold price. When you cannot hold price, you have to look at other indicators. We did.

Big Boys

Apple (AAPL) is hanging around its highs. This is a big plus for the bulls.                                                Microsoft (MSFT) could not hold price. It fell back into its consolidation range. Question mark?    Google (GOOG) also could not hold price. It too fell back into its consolidation range. Question mark? Facebook (META) is at its highs. Another plus for the bulls. We continue looking...

Semi's

The chips always lead the charge up and conversely, down. They have been acting weird. They hit new highs and then, fell hard. Then, they rallied hard. We look at a few.

Intel (INTL) Fell hard on poor earnings and outlook. Rallied hard, but fell back into consolidation.          Nvidia (NVDA) Was at $140 in June. It fell to $95 and now has rallied back to its highs.                        ASML Holdings (ASML) It reached $1100 in July only to fall to $675. Last Friday was at $723.              Advanced Micro (AMD) It was over $225 in February and fell back into consolidation at $155.

So, the semi's are mixed, but indicate more downside than upside. Next...

Commodities

The most important is falling sharply. This is happening while the Middle East is spiraling in war. This is happening at the same time the market indexes are hitting new all-time highs. Brent fell to $69 last Friday and US crude hit $68. Low resistance for American oil is $65. This needs to be watched closely. The best indicator for commodity pricing is King $Dollar. It has rallied hard from low resistance. It pierced the upper resistance at 103.5. However, it failed to hold price. If it attacks the upper level of resistance and holds price, commodities should fall. However, there are other aspects to each segment within the sector. We had a great week in...

Precious Metals. Gold hit a new record and silver joined the party. Last Friday, the old coins rose $2.15 to $33.23. This relates to the BRICS and their fight against the dollar. It also points to the Fed and their cutting of interest rates which could also hurt the dollar. Like I say in my unpublished book, "All things are connected."

Other Points...

in commodities is lithium. Bloomberg reports that 10% of all car miles is from electric power. Lithium and copper are the two chief needs in electric power. Doctor Copper fell from its record high, but it is in its upper consolidation range. You can see that through Freeport-McMoRan and Taseko Mining. The two are in their upper consolidation range. However, lithium stocks reflect a deep fall in price. The leader is Albemarle. This material giant was $155 last December and fell hard to $75. Last Friday it was $95. Lithium American Corp (LAC) rose to $7.50. It has a great mining location in Argentina. However, it fell to $4.50 and last Friday was at $3.14. The two lithium stocks say demand is falling. This is a market tell in our book. Finally, we look at the present state. We see...

Strikes, Layoffs and Store Closings

The striking leader is Boeing. The company might get an agreement. The union votes Wednesday. The big point is a pay hike from 25% to now, 35%. These workers make on average $75K per year. This is a good paying job. but Seattle is very expensive. However, most of us do not even make the $75K? What does this say about our economy? Meanwhile, three large drug chains are showing collapse. Walgreens is closing 1200 stores. CVS has closed 1300 in the last two years and Rite Aid is in bankruptcy. Consider all the workers who will lose their job? Consider the supply chains that will layoff workers because their main customer is dropping demand? Consider the lie from the BLS about unemployment? We still say that our economy is in stagflation and that is not good. We stand by our call. Peace. 

Flawed October Thinking

- The great stock market rally looks like a permanently high plateau.

- Irving Fisher, leading economist of the 1920s. (Note: Two days after the proclamation the market            crashed. 

Every school kid learns about the Great Depression of 1929. The problem in the classroom shows itself in the stock market. 

The central defect in teaching about the economic fallout that autumn lays in the defense of the Federal Reserve. The blame gets shifted to the Smooth-Hawley Act. People, that bill that put tariffs on 900 imports was passed in 1930. Classroom history books were not good in math as clearly the blame comes after the event. 

My problem here is losing focus because I see another problem. Obviously, Congress was anti-labor prior to 1930. The tariff bill had the central idea to protect workers. I ask, why didn't they seek to protect them before 1929? By the way, this is the same central problem in our economy today except it is worse. Now, we import everything. And yes, it is true by putting tariffs on imports we will add to inflation.

Dear Reader, this is the sin of outsourcing in the first place. When we outsourced jobs, the products that we purchased became cheaper due to cheaper foreign labor costs and currency manipulation. Now, with onshoring, the opposite economic effects take place. However, once we return to higher paying manufacturing jobs, inflation will fade. The middle class will grow again and so will social mobility. Family structure will help to stop drugs, crime and regain our schools to a level where innovation will reappear. Long-term, it is all good while long-term outsourcing is all bad. We see the results today with homelessness, unaffordable housing, no social mobility and a shrinking, dying middle class.  

Now, the Federal Reserve as they usually do, made things worse. All of a sudden they cautioned against "call loans" (margin loans). They raised interest rates which had unintended consequences. International banks raised their rates in tandum to protect the outflow of money. The result was a world slowdown that hurt all economies.

Why didn't they say something about call loans during the Roaring 20s? Why didn't they raise rates to limit speculation in the market during that period? One reason is ego. The Fed in 1920 raised rates sharply to prevent inflation and the outflow of gold. Their action gave the nation a recession and deflation. They never do anything right except protect the status quo. We say, "End the Fed!"

Anyway, the month of October has a historical spell on it that is really due to farm loans. When farmers harvest in autumn, they repay seed loans from spring. If prices fall or a poor harvest, loans go bad in October. This is no longer a big deal because farmers have insurance and the size is corporate with strong financial backing. The stock market should really be looking into late February/March time period. Christmas seasonal help is let go. There is less travel and consumer spending. The weather limits construction and infrastructure. On the flipside, Christmas spending must be repaid as well as all our monthly bills. Late winter, early spring is the new October crash time.   Peace

No Respect!

 - I was beginning to believe that no one cared about my feelings. My psychiatrist told me that I'm going crazy. I said, "If you don't mind, I'd like a second opinion." He said, "All right. You're ugly too."

- Rodney Dangerfield

Rodney is my favorite comedian. I miss him. We could all use his wit, observations and a belly laugh. This brings me to an analogy between American workers and the owners of production. From the very beginning of our nation, producers have exploited labor. This is not to say that the ruthless behavior of management is in all cases. However, the bad overwhelm the good. You can see this with outsourcing. When a firm receives cheap foreign labor that gives them an advantage to domestic producers. They will gain a greater market niche with cheaper prices. They may even be able to put the competition out of business. This is the exporting concept behind cheap Chinese EVs. Of course, they do this technique in many other fields like furniture, medical supplies, construction supplies, etc. They play off the manipulation of currency and local laws. 

No Respect for Business Creed

Every firm should put two things as commandments in their business. The first is to make the best possible product and continuing to improve that product. The second is to take care of your workers who produce the product. Sadly, American firms do not follow the two greatest aspects related to their existence. They came up with the idiot idea of planned obsolesence. Product has an expiration date (cheaply made), so you need to buy another. They seek to keep labor at sub-existing, nonwage-living wages. They broke unions with the Taft-Harley Act and they outsource at every opportunity. They will employ robot automation to keep from hiring help. This leads to two recent examples, Boeing and Dockworkers. 

Boeing

They have continually lied to their workers like the last contract negotiation. They told the union that they were planning a new jet, Dreamliner. They asked the union to accept a lower wage in lieu of keeping the new jet work in Seattle. Before the ink dried on the accepted contract, Boeing shifted the work South to a non-union state. Of course, we now know that they cut corners in safety and parts. Their new CEO should read the creed of Evolution in regards to running a company.

Union Dockworkers

They just ended their strike. Managment offered a higher wage and worked on their conscience about chain lines, consumers and the economic health of the nation. They accepted. I fear that the other aspect in their dispute, automation, was not considered. Management will screw them. It will happen during the slow period around February or when they get a good deal on new robotic equipment. This is the history of labor and management. I hope I am wrong.

Meanwhile

CVS is laying off another 3,000. Last year, they dropped 5,000. This leads to the recent jobs report. If there is one agency that is manipulated and corrupt in their work, it is BLS. Last Friday, they reported that 254,000 new jobs filled. Unemployment dropped to 4.1%. This gets a double upswing because prior to Friday, the consensus was only 145,000 jobs. This makes the Democrats look good. Then, news came out about a revised upward of the August report. It changed from a 142,000 to 159,000. Nothing like having ammunition in an election year. 

Well, there was little news about this truth in jobs reporting. The July report of 114,000 turned out to be  revised down to only 89,000. This happens twice as many times as changes for the better. The labor participation rate is 62.7%. It has not changed in the last three reports. So, if the participation rate remains the same, how can the unemployment rate drop? They also claimed wages rose .04%. How is this calculated? Is it an average? If it is, then the results are flawed. Why, you ask? Well, say if lawyers made much more and everyone else remains the same, you get an increase in the average. See? This is manipulation to make the economy look better. 

Market

It is running out of gas in the recent rally. The breadth is turning down. One strong reason is the breakout of the dollar. The last rate cut had the dollar test the 100 level. The downside channel has the top of the channel line at 102. The dollar burst through it. This will hurt the market and commodity prices.  Keep an eye on King $Dollar...Peace.

Golden Time

- Faith is taking the first step even when you don't see the whole staircase.

- Martin Luther King, Jr.

The Founders...

took the leap of faith by agreeing to put gold as the currency of the nation into the constitution. At the time, inflation was running rampant due to money printing of "Continentals." This was the fiat currency during the American Revolution. Today, it may take another leap of faith by you and I to purchase gold. You should know by now that the Fed and banks are against gold and are for fiat. We, at Evolution believe in gold because we believe in the wisdom of the Founders. We do not like the term, "Gold Bugs." Anyway, this is what we see as the outlook.

Seasonal Pattern

Gold has shown a seasonal pattern in the charts for many years. The best period for the metal to advance is the October to January time. This times well to this piece. The worst period occurs during April to July. 

King $Dollar

It does not matter what commodity that you buy or stock equivalent, the dollar will determine your investment. Also, keep in mind that there are forces, notably the BRICS that are seeking to dethrown the king. They are formidable, but a long way from being a threat. With that said, a closer look at the dollar at this time is necessary in considering the precious metals. 

Resistance and Support

King dollar's last high was in November 2023 at 107. It dropped hard and fast to 100, but rallied quickly. However, it could not pierce 106.5. This is resistance.  Whether market forces were anticipating a Fed rate cut, the price action had the dollar drop back to 100. This becomes support. Any break below this level will add juice to gold. Since the outlook from the Fed is more rate cuts, the dollar will feel pressure and probably fall. After 99, there is no resistance until 91. This gives gold a strong floor.

Gold's Outlook

It is no secret that gold hit a new all-time high recently. We use Fibonacci for up or down movement. The math says that gold will reach $2805. This is a solid gain from the present $2660 level. Gold has strong support at $2585. 

Past Calls

We told you in the past that we liked three gold stocks: Barrick, Wheaton and Argonaut. The three cover all price levels. Since that time, Alamos Gold took over Argonaut Gold. It is a good deal as this is an excellent company. They spun out to shareholders a new company with decent mines. Florida Canyon Gold (FCGVF) is a cheap buy (.44), but Alamos gets added to our buy list. AGI has been in a strong uptrend since the merger. There are eleven analyst who call the firm a strong buy with a target of $24. The miner has grown revenues by 84% yoy and 54% yoy for the last five years. The only negative is the high P/E (39). However, like a tech high flyer, the firm is increasing revenues. The current outlook is for earnings to fall in the next report, but revenues will grow. That would be the time to buy. We will buy at $16, but the stock might not fall to thst level.

We still believe in Barrick (GOLD). It is vastly under valued. We feel the problem lies in a lawsuit at one of its biggest mines. Nevertheless, Barrick has grown revenues by 530% yoy. Wow! The five year average of 293% beats any and all comers. There are 22 analysts who call it a buy and to reach $23. We see a lot higher than that.  

There are a few other good miners. Newmont is the world's largest gold miner and Wheaton is a strong streamer. One more note. Agnico Eagle (AEM) has been the best performing gold stock for years.

Bottom line: We do not give stock recommendations often. We feel terrible if we are wrong, but gold has proven the founders to be right. It retains value and with inflation that is comforting. Gold has solid support from the Fed with its rate cuts looming. We will take the leap of faith.   Peace. 

Odds and Ends: September 2024

 - Let us not look back in anger, nor forward in fear, but around us in awareness.

- JamesThurber

Fed Fake

With all the fanfare of the Fed meeting last week and the big half-point interest rate drop, the overlooked other announcement was the real one with impact. In both cases the magic was performed for the public, but the misdirection of the trick was for the banking industry. The rate drop helped banks with their losing position (underwater) of government bonds purchased at 2% and 3%. It lowered costs for large corporations issuing their own bonds. 

The quietly held second meeting gave banks what they wanted. The Basel III accord sought higher capital requirements for banks. The proposed level was 19%. The Fed always has their greedy back. They put all of us in danger because the banks are borderline insolvent. The Fed lowered the reserve level to 9%. 

Banks Know...

that they are in trouble. They have been playing manipulation by increasing mergers (54) that allow tax loopholes to make balance sheets appear better. They also have been closing branch banks (2400 last year) to cut costs along with layoffs. So, the Fed rate cut was an appetizer to the main course of lower capial requirements. Like we always say, End the Fed!

Meanwhile...

Bankruptcies continue. This one will bring tears to my mother's eyes. Tupperware filed last week. 

Middle East

The Israeli PM, Netanyahu never misses an opportunity to prove that he is an arrogant, warmonger. He keeps provocating the Arab opposition and has the gall to declare that he is justified. He knows that no matter what damage he creates, the US has his back. He is no different that the North Korean dictator who causes damage all the time because he believes that he can count on his Communist brother, China. 

Market

The rate cut gave a huge rally in the market. The Dow, S&P 500 hit new all-time highs on strong volume. It gave us here at Evolution, pause. Then, we checked with the Transports. They rallied hard, but gave up all their gains. In addition, it never came close to its last high. This is a dangerous market, but gold did hit a new all-time closing high. Yay!   Peace.