Insurance for Insurance

- ...Walk a Mile in His Moccasins. 

- Mary T. Lathrop

LA Fires

The expression is probably circulating within a lot of people at this time. It definitely will arise to all who lost their home in the terrible fires in and around Los Angeles. The region of the rich will have many repercussions. The ultra rich have other homes, but many who live in the location do not. They were fortunate to buy and live in a beautiful setting. Now, the above thought is running along with many others in their minds. Suddenly, they face and fear the specter of being poor. 

The only positive coming from the ashes is compassion. The other concerns our standard of living, our economy and our future. Sadly, it all starts with money. 

Who Pays?

Some insurance firms may look to bankruptcy. Lawyers will offer pennies on the dollar. Many of the larger companies have already begun to exit California like they did in Florida and Gulf Coast communities. The LA wildfire disaster is not only destroying lives, but draining insurance coffers and wiping out California's massive state sponsored insurance program. Apparently, capitalist firms will take your premiums until the rainy day comes. How can it be legal for a firm to collect for years and then, decide that they no longer want your business because they can see the clouds forming? There should be some sought of penalty like refunding part of the premiums received if the homeowner never filed a claim?

Anyway, government entered. In flood areas along the coast, they offer insurance to which is generally cheaper than market firms. California also entered the market with its "FAIR" program. They had to adjust their prices upward to cover inflation. However, the replacement costs just in this location could wipe out all of its funds. What then?

State Farm said, "It will not renew 72,000 homes and apartments policies statewide." This was back in  March. Did they have a crystal ball? They also canceled 69% of policies in the Pacific Palisades zip code. Most insurance firms, large and small, act like a bookie. If the man gets too much action like a super bowl, he lays off some of the action to large pockets. If he loses, he is still is in business. Insurance companies do the same thing with specialized firms that handle reinsurance or insurance for insurance. The problem is they too are refusing to add the call for reinsurance. The recent climate changes have caused big losses. These firms are the last resort and they closed their door.

More $Bucks

California is rewriting their laws to stop the pull out by home insurance firms. They are now allowing them to raise premiums due to catastrophic chart models. The bottom line here is everyone in the nation will see their insurance bill rise to go along with the cost for eggs and everything else.

Governments should not be worrying about potential conflicts and budgeting more for the military, but finding ways to help their citizens in this new environment of continual disasters like flooding, like earthquakes and wildfires. Then again, the LA homeowners are realizing the costs to replace and how little their dollar savings go to survive. They may finally understand what we have been saying for years. The reason for the loss of purchasing power of the dollar is because of the crooked cabal of the Federal Reserve to which our meme calls, "End the Fed!"  Peace. 

Outlook 2025: Part ll

- ...Lean on me when times are bad                                                                                                                     When the day comes and you're down                                                                                                            In a river of trouble and about to drown                                                                                                       Just hold on, I'm comin' Hold on, I'm comin'

- Dave &Sam   

Love those lyrics. Here, at Evolution, we do not like to advocate specific stocks because if they go a muck, we will feel pain as well as you. However, we do believe that we have an understanding of the economy. We also inform. We give praise when due. We object the way our leaders run the nation. If we lived in Communists China or Communists Russia, we be in jail or dead. We thank the founders of our great nation. With that said, we offer part ll. It will center around commodities.    

Oil

Contrary to clean energy, oil is still the most important product. China is the world's biggest importer. It is also the largest EV seller in total terms. Tesla's "Y" model is the largest model sold. When providing any new year outlook, one must realize China and its culture. The Chinese New Year or Lunar Holiday puts a major damper on many commodities. In addition, the growth of the BRICS alliance is slowly changing how commodity agreements settle. This may connect to the Chinese zodiac. This is the year of the green wood snake. It is yin or female. The passive nature reflects a slow, steady movement and a snake can swallow a larger animal. I don't like snakes and I don't like where this trends. Then again, I do not put faith in zodiac signs, but in God.

Oil has been consolidating in its bottom range. China is also getting unknown amounts of oil from Russia and Iran. This indicates that oil should test its low as the holiday ends. At the same time, Trump will be in office and we can see some effects of his new administration. That will be the time to determine oil's direction.   

Dr. Copper

The same forecast will be extended to copper. China has dual control as the largest consumer and largest producer. If Trump goes against clean energy, demand will shrink. Copper could decline to test the lows of 2024 and maybe even lower?  Housing demand is not helping either, but this direction will depend on mortgage rates. They are still hovering at highs around 7% and that kills copper demand. 

Grains

Food inflation is real. The spiral could end with protective tariffs. There is no reason for the US to import food, but we do. We need to protect our fishermen too. We import too much fish from foreign soils. We do not need a supply chain across oceans when we have roads and truckers to move product here in the US. By the way, we definitely need to protect our citrus, tomato and vegetable growers. While I'm at it, we need to put some money in diary to protect our milk and egg industry.

Precious Metals

Gold had a great year in 2024. It rallied 27%. The reason is dual. The US deficit and the BRICS seeking to dethrown king dollar. We see the same reasons to push gold even higher. Charts help you see the staircase upward. The second phase or leg of the rally should occur sometime in 2025. The target is $3400. At that time, we will look at the price action and volume. We like Barrick Gold (GOLD) and Alamos Gold (AGI). Wheaton (WPM) is a good streamer play. Find a pullback level. We believe this is a safe bet. We have positions in the three.

The world is changing and chips could be looked at as a commodity. We do not like bitcoin as this is just replacing corrupt bankers with a new, unknown banker. The latter coud be hacked, especially if someone applies quantum computing. Then, what do you have? NOTHING!  Then gain, you had nothing anyway as this is just another form of fiat.

There is a reason why gold holds its place. We do not have to repeat the reasons. The founders understood the reasons and that is why they put gold as our currency. Of course, overtime, the corrupt changed this with the cabal of crooks, the Federal Reserve. It is why we say, "End the Fed!"      Peace.       

Outlook 2025: Part 1

- The darkest hour is also its peak, the change to light is coming.

- JFL

With that thought we, at Evolution hope for the best for President-elect Trump and his administration. He has made a lot of promises like all politicians. The ones that call for a return of manufracturing to the US is our biggest hope. 

Trump inherits a good economy, better than average unemployment and a strong dollar. In fact, King $Dollar had its best year in a decade. It rose 7.4% to close last Friday at 107.79 and hanging at its high. If Trump imposes strong tariffs, this would be the time. Manufacturers would receive a strong dollar that protects domestic production and the tariffs would give them a cushion to reestablish to their roots. He would be smart to utilize Biden's Inflation Relief Act to produce home grown chips. We fear that he will dismantle it as he is opposed to green energy like wind farms.

Our industrial leaders need a new outlook. They should seek to control the domestic market with exports being just gravy. The whole globalization thing hid the outsourcing of jobs, our declining standard of living and the loss of the middle class. If Trump allows manufacturers to just move production out of China only to relocate to VietNam or similar, the whole process will be a failure. To establish domestic dominance, Trump needs to look at auto producers. After a home, this is consumers biggest purchase.

Autos, EVs and Trucks

Our largest company, GM had 6.2m in sales for 2024. It was a good year, but the conglomerate is not the giant in the field or in the US. Car dealers sold 16m in the US in 2024 and Toyota is king with 10.8m in sales. The silver medal goes to Volkswagen with 8.8m. However, the company has lots of problems and we see another entering their position. The bronze medal comes as a surprise. It is Kia with 7.1m. Of the big three, Ford finished seventh and Dodge (Stellantis) was not even in the top ten. This is what I mean to control the domestic market. If you cannot get your fellow citizens to buy your product, what does that say about your product?

The surprise could be the merger of Nissan and Honda. If it happens, they will take the silver unless Trump follows through to protect domestic firms.  

Stock Market

Almost every analysis sees growth. A few are hedging their call by saying there will be bumps in the road. The year 2024 was very strong as the rally from 2023 continued. However, the inflation invasion made for a tough year for ordinary citizens. Wall Street never considers regular folk, but that will change as consumers rebel against inflation by cutting spending. Valuations will come into play. The present PE ratio is historically too high at 38. This is 54% higher than average. The same market "experts" see GDP growing at 1.8%. Of course, we, at Evolution say this is not only wrong and misleading, but needs to be changed to reflect wrongs like damage to the environment and climate.  We say look at...

January Barometer

The thinking is if the first few trading days are up as well as the month, this is a strong indicator of a good year. Also, in a related point to king dollar, follow the money supply and industrial utilization. Production has been at zero or below. This is a big negative as well as the declines in retail. A large department store, Nordstrom (JWN) has been in a slightly uptrend, but the down days come with strong  down volume. This could be a sign of distribution before the fall? This happened to Kohls (KSS). It was $27 last April and Friday closed at $14.36. Retail is the first solid indicator of the changing attitudes of the consumer. It has been a disaster for the last decade.

Media and Telecom

The consumer is also cutting the cord in their effort to fight inflation. Wall Street will be watching media and telecom closely. Overall, media is projected to a stabilized version. However, recent activity suggest big changes are coming. The big boys are hoping that Trump provides looser regulations. Trump is putting Brendon Carr as head of the Federal Communications Commission. He favors deregulation. The warchests are filling up. Warner Bros (WBD), Discovery and Paramount Global (PARA) took a $15 billion hit on their declining value of their cable companies. The linear networks are cutting costs and laying off people. Comcast is spining off its cable firms. All this points to having cash and where their future lies. They are not alone as Amazon and Netflix took a piece of the NFL. Verizon paid big bucks to acquire Frontier Communications for $20 billion. Meanwhile, Google and Microsoft are preparing for the future as they make their own chips and seek quantum. We gave that update in a piece last month.

Housing

We would be remissed if we did not include the biggest consumer putchase and heart of the American dream, home ownership. One word describes it, disaster. The average price for a home in the US is $420,000 as of September. When November ended, it rose to $430K. Our current morgage rates hover around 7%. This breaks down to about $3583 per month and that figure does not include taxes and insurance. To qualify, you need about $12,000 a month on income. This equates to a yearly salary of $144,000. The only people that I can think of who make that much bread are in the professions. This makes home ownership almost impossible. This obstacle stops social mobility. This is what is killing ordinary citizens. We know who the blame falls upon. This is why we say, "End the Fed!" 

Immigration

Trump will do something. We believe private prisons firms will make money off of hardship. However, the truth is we cannot provide for the excessive number of people at the border. The proof is our rising homelessness. We need quality jobs and then, we will have room at the inn.

If you can find it on the internet, check out the new year celebration in Dubai. Got to be one of the best and a beautiful second to Sydney, Australia. Oh, yeah, Happy New Year! - Peace.

Odds and Ends: December 2024

- The CEOs of the top four tech companies met with President-elect Trump at his home in West Palm         Beach last week. The group consisted of Meta, Amazon, Google and Apple. The clues were there all       along, but to what end, we can only guess. One thing is for sure. We cannot blame or get mad at lazy       people, they didn't do anything.

With that said, we, at Evolution wish you all a Merry Christmas! For those of other denominations, Happy Holidays!  

Before we end this short version, we leave a suggestion for those who have to work, for those who are far from home and for those who are isolated in our fragmented society. You can find solace and help in the Bible. When you are facing...

Anger: Ephesians 4:31-32, James 1:19-20 and Proverbs 15:1.                                                                    Anxiety: 1 Peter 5:7, Matthew 11:28-30 and Proverbs 12:25.                                                                      Crisis: Jeremiah 29:11-13, Lamentat 3:55-58 and Proverbs 3:5-6.                                                              Depression: Nehmiah 8:10, Hosea 6:1 and Psalm 5-6.                                                                                Discouragement: Romans 12: 11-12, John 14:27 and Deuteronomy 31:8.                                                  Fear: Isaiah 41:13, Joshua 1:9 and Psalm 461-3.                                                                                          Grief: 1 Thessalonians 4: 13-18, John 11: 25-27 and Matthew 5:4                                                              Illness: Acts 3:16, James 5:16 and Jeremiah 17:14.                                                                                      Loneliness: 2 Corinthians 6:18 and Deuteronomy 31:6...Peace  

Quantum Change

 - A group of research scientists decided to approach their computer in a different way. Instead of seeking money investing ideas that would ensure their futures, they would ask the computer to solve man's oldest question: Is their a God? The computer readout said, "Insufficient power and data." They took their findings to the UN. They sought to get the world behind their idea. The UN got all nations to connect their energy power grid to the lab's computer. When ready, they asked again, "Computer, is their a God?" At first, there was a silence. Then, the computer had a rumble sound. The scientists looked for the tape readout. There was nothing. They asked again, "Computer, is their a God?" A loud voice was heard, "Now, there is."

- Old joke from the 1960s.

Quantum Computing

The idea has been around for a long time. The reason was speed. Regular comuters chips use bits. This is a binary system of just two levels, 0 or 1. It is safe, but slow compared to the idea of quantum. Early research on quantum came up with the same problem. Errors can find their way into the system from the operation. It could be just air.

Quantum exploded onto the news last week. Anything with the word in it went crazy. IBM has led the way, but last week news circulated from Google in the US and Rigetti Computing in the UK. Behind the scenes, there are many firms that trade based on finding the quantum problem. Strangely, there was no news from China. I'm sure that they are working on it or they will resort to their playbook, steal it by hacking. Then, they deny. Anyway...

Enter Willow Chip...

...by Google. It uses 105 qubits. This system allows this chip to operate on multiple levels. The speed is like a race between a toy dog and an Afghan. Google says that it addresses errors, so the solutions are clean.  Don't go out to buy! Applications are years away and as I will show you, any stock with quantum attached to it, had a huge runup last week with the quantum news. It is never wise to chase a stock. If you like what you research, then be patient. If it never retraces, forget it. Safe with capital is key.

Small Sample:

RGTI (Rigetti) It rose 461% to close last Friday at $7.16. There is a gap at $1.90. Gaps usually get retested. This is an entry point if you are so inclined.                                                                                    IONQ (IonQ Inc) It rose 93% from $16 to $33 last Friday.                                                                          QUBT (Quantum Computing) It went parabolic. From $1 dollar to close last Friday at $6.70. UP 539%!

There are other firms that attach themselves to quantum like Wisekey (WKEY). The Swiss firm deals in security, but it too enjoyed a ride higher. It rose 263% from $2.50 to $7.84 last Friday. 

D-Wave Computing will integrate your program. It rose 300% from $2.00 to $5.00. 

This week the parabolic moves continued and extended to chips stocks like Broadcom (AVGO). Do your diligence, but be patient. It will be years before profits and all these companies lose money to which will lead to a retracement. Enough said. However, their is one point that we, at Evolution will leave you with - Bitcoin.

Bitcoin...

...uses the SHA-256 crytographic algorithm. If quantum becomes a reality, it can crack the security of bitcoin. A hacker will steal yours and everyone eles's capital.  Bitcoin says that it has a protocol with updates to address vulnerabilities. Yeah, like nuclear is safe? We told you in the past many reasons for not accepting bitcoin. We believe in gold. Now, you have some reality to bitcoin. Peace.

Trouble in River City

 - There are two kinds of people in this world. Those who have loaded guns and those who dig.

- Blondie: The Good, the Bad and the Ugly.

Culture and AI

The title is from the Music Man. The words of wisdom is from big, Clint Eastwood. The two cultural hit movies carry inter-generational realities. The lead character in the Music Man is a con man. He cries a half-truth that resonates. This is happening in politics around the globe. The strong military nations know the loaded gun today is nuclear. Their problem is when politics crosses over with economic burdens. The intersection becomes like a chemistry lab experiment that turns combustible. 

AI has a danger of bots spreading propaganda and misinformation that comes in half-truths. If it resonates, the consequences could be more than fatal. 

Geo-Political Picture...

...at the moment it is reaching the crossover point of half-truths of politics along with economic worries to violent actions. This is a dangerous intersection. You can see the effects.

The war in Europe is escalating. The war in the Middle East could only hold a cease fire for a few hours. Syria has reexploded. After the dictator was disposed and before the new Syrian leader could demonstrate his intentions for the nation, the war-monger, Netanyahu began bombing Syria and annexing land. Netanyahu says Israel needs more buffer space. His actions only foretells more tension and conflict. Israel needs to get rid of this man or they will never see peace. There are other conflicts like in Sudan. The list of political disturbances and violent outbursts grows each week.

Recap:

There are three nations in southeast Africa that have serious political unrest. Mauritius has economic problems everywhere. Mozambique had protestors cause a blackout. Somalia is up and down. The loaded gun is aimed by China with its Silk Road project. China is using the Greek Trojan Horse. They come offering financing for pet projects and when the bill comes due, they steal what they were after. Russia also has an appearance. The two (bad bandits) are seeking natural resources. 

The ugly has the rope around the neck throughout Europe. There are political problems in France, Germany, Poland, Hungary, Moldova, Italy and Romania. In South America, Argentina always has inflation and economic situations. Brazil is playing cat and mouse with China and the US. The Korean peninsula has the disconnect of government with its citizens. The situation in South Korea has the eyes of North Korea, but that nation also has a serious disconnect between its government and citizens. In the communist nation, the internet is opening the eyes and mind of the lies of its government. This knowledge is already known in Hong Kong, but China has a strong hand of oppression. Where is the good when we need him?

The US is caught between the transformation of a new government and the old administration. We will soon learn the phony promise by Trump of ending the war in Europe on day one. We will soon find out what we stated in the past. His tariffs will be tokenism.

Meanwhile...

The stock market shows its disconnect to reality with its Santa Claus rally. The con men of Wall Street are giving half-truths about firms that have PEs off the charts. The only index that is not in sync is the IWM or small caps. This is a market tell. If the economy was truly strong, the small caps would be out-performing the large caps.  The one important indicator is the dollar. In Europe, the Polish leading candidate seeks cheap money as does Trump in the US. The Fed has their next meeting on the 17th and 18th of December. They have already given three rate cuts which was their dot plot forecast. Whatever the Fed does will not change the trouble in River City.  Peace.

Next Plague

- When humor goes so goes civilization.

- Erma Bombeck

The words of wisdom from above and if they are really good, come from above. We will need some laughs to keep our heads together because the economic outlook keeps seeing plagues.

First Plague

You could argue that the Taft-Hartley Act of 1947 reopened the coffin for American labor. It paved the road for outsourcing. The first site was the South with the right-to-work laws. Then, any foreign soil that offered a manipulative currency and or, land concessions, tax privileges and similar bribes.

After the 1950s, Europe was on better footing. However, their big industries needed a boost. They found it in the US. With a little state supported help, manufacturers in Europe and Japan realized that they could undercut US corporations. The slow destruction of the manufacturing power that was the US began. It would go full force when President Clinton signed NAFTA trade agreement. Millions of middle class jobs were lost and the exodus formed the Rust Belt. The last firms are being killed off with the lie of globalization. Many of these people went to states like Florida because that state does not tax income. The state boomed its population by over 25% from 1980 to 1990. It is now the third largest state by numbers. This group of citizens will learn that service orientated jobs is a life of subsistance.   

Meanwhile...

The service industry and housing grew. Developers grabbed any commercial property that had traffic flow. Retail chains bid for the leases to these sites. We built too many. The overexpansion led to creative destruction within the retail field.

Joesph Schumpeter

He developed the idea of "creative destruction" from Marx who claimed industrialization would be its own destruction. To give you an example, think of vinyl records. The innovation of the eight track put the end to records. Tapes took less space to store and move. Then, the disc put the eight track out of business - creative destruction.

In economic terms, manufacturing jobs were gone. People turned to find something else to get bye. It is like Charles Darwin's, "Origin of Species." When one food source vanishes, animals sought and adapted to find something else. 

This opened the door to the service and hospitality industry. There will arise two different problems. For retail, it was competition. Everyone wanted to be the next Sears, but they were all selling the same imported crap. Advertising helped, but in the long run, only a fad like with designer jeans. The same cut-throat action for consumers showed itself in the kingpin of shopping, the mall. The over-supply led to the destruction. 

When the new millennium arrived, Wall Street discounted the loss of old economic icons like Sears and jumped on the band wagon of Walmart. They hopped onto online retailers like Amazon. Internet shopping has added to the slow death of brick and mortar locations. The early advantage of no sales tax began the razor cuts into the retail sector. Job losses mounted as strip shopping and malls died off.  Wall Street paid no attention on how citizens existed. Sadly, many faked a disability and took an early retirement with a life on the dole. Many others get by with the help of food banks or cut rent costs by living on the street or RVs. They suffer because there are few wage livng jobs. In addition, the few service jobs available are in competition with excessive immigration that only cuts wages and everyone suffers. We, at Evolution have chronicled the loss of retail jobs and the catastrophy continues. The first list is the firms who refused to outsource, but with no help from our government, they too are moving offshore to complete this plague. The second grouping is the ongoing struggle to survive.

Harley Davidson, Whirlpool and its subsidery, Kitchen Aid, Levi's, Wrangler, Crayola, Wilson Sporting Goods, New Balance, Craftsman Tools, Converse, Gibson Guitar and yes, even Hershey's.

Retail Closing: 

American Freight is closing.                                                                                                                        Advanced Auto Parts is dropping 700 stores.                                                                                            7-Eleven, Denny's, and Best Buy are closing outlets. Macy's, Family Dollar, JC Penny, Foot Locker, Rite Aid, CVS, Walgreens, Victoria's Secret have and continue to close stores. Sears, once over 2,000 is down to one. 

Cargill, the giant in grains is culling jobs. Why, you ask? Because labor costs cut into profits.

The list of banruptcies continue with Spirit Airlines. Each week there is new firms heading toward the economic graveyard of KMart and Radio Shack. As for those of you that may be seeking a better job or just work, keep in mind the wisdom of humor with my favorite, Rodney Dangerfield, "Always watch out for number one, but don't step in number two."   Peace.