Roots of Protectionism

- Men more frequently need to be reminded than informed.

- Samuel Johnson

Recap: Industrial Revolution

After England touched off the industrial revolution, the other European leaders took notice. Although they were still in their aristocratic, monarchy stage, the crowns realized that England would soon out produce them and maybe, overwhelm them? They saw the new technology in railroads, machinery and textiles. Their farmers were getting higher yields with less labor and lower costs. The British had coal for energy and they had a global reach with their foreign possessions with a strong navy to bring resources to the homeland. When the French helped the American colonies, this went through their minds beside the fact that they still possessed the central land of the new continent. 

Looking Ahead

These leaders were also egos and paranoid. The first thing that monarchies always do is to establish a strong military. At that time, they realized that technology was changing. It would also change warfare. They would need steel and bullets. The other thing was money and resources to furnish steel plants. They would welcome their rich, aristocratic moneybags to partner with government. This led to Europe invading Africa. They cut up the continent in search of riches. 

Europe continued its history of petty conflicts, but it also entered into the industrial age. They developed their cities around large economic projects. Their governments slowly changed due to the impact of the American and French revolutions. However, "old" money was the best source to provide investments for steel, coal and agriculture. This economic growth era for Europe lays in the partnership of money with government. After each nation built up its infrastructure and constructed a central palace, the only way to expand was through conquest or trade. 

When certain industries found success in trade, the government would soon become their partner. The marriage ensured success with regulations, protection and deep pockets. This is the first form of protectionism. It is in every European nation then and today. Global trade is only a banner mask to make each nation stronger by winning with exports. As for the Asian nations, their time development was stagnated, but it followed the same playbook.

Marshall Plan

As European industry lay in destruction, America showed compassion. It continued to spend beyond its means to help rebuild Europe. Yes, there were concerns about communist Russia, but by putting food on the table, all of Europe benefitted. How did it show gratitude? France, Sweden and Switzerland wanted our gold in trade. By playing the currency manipulation game, each nation could target an economic sector to which they did. European politicians could help their economy by "dumping" goods to the US market. They were not alone. Japan was also in disarray. Little was done until the politics of the Korean War. Logistics saved Japan and their economy. Toyota, on the brink of death was saved. Japan followed the European example. They invaded America with their cheaper products that were subsidized by government.  

As time moved along, the roots of American greed surfaced. With the law of Taft-Hartley, American producers could kill unions by shifting work to non-union states. This eventually led to oursourcing. This led to America's decline. China is just the latest to use our market to dump their crap to which grows their economy. The real danger is in the excess amount that China drops on our ports. One thing that Germany, Japan and China do that is noteworthy. They spend to help their economy. When America spends, it is money for the financial system that spreads to Wall St. They rarely offer programs that benefits the entire economy or citizens.

Today

Trump realized the discontent from the lost of quality jobs and little to no social mobility, the loss of hope and faith in our government. He used it to capture the prize. He, along with the paranoid elite, suddenly realized from the ravages of COVID, that we lack manufacturing. We could not even make masks. This is part of the reason why Trump would not allow Nippon Streel to buy US Steel. It is the same thinking in Italy. Baku Streel is seeking to buy Llva Steel. The loss of the firm by foreign control will have serious impact on the nation's manufacturing. The Democrats also understood the dangers. Biden's chip act was very smart. Intel is coming back. Trump understands the situation. With tariffs the government gets revenues. With money he can do things. He has a chance to actually make America great again. He has to convince producers that this new protectionism is not only for one administration, but a new wave for the future. We, at Evolution worry that the tariffs are not strong enough and Trump will use the revenues to push tax cuts that only help the rich. Maybe he will get an epiphany? We can only hope.  Peace 

More Than Retaliation

- Think before you speak

- Fran Lebowitz or maybe Catherine Molloy 

Although the words of wisdom could be attributed to either does not make the thought any less potent. This piece will offer a few gems. The only question is there more to the words of the moment?

Archive

After the financial crisis of 2008, central banks were basically in collusion. They were seeking more money to continue their game. There were three choices: IMF, World Bank and China. The world Bank offered this report around 2011. It expects the US dollar to lose its dominance by 2025. The report went on to say that a larger role for the renminbi (China) would help resolve the disparity between China's great economic strength on the global stage and its heavy reliance on foreign currencies.

China also gets support from the leader of the IMF. Christine Lagarde in 2017 said, "If we have this conservation in 10 years' time...we might not be sitting in Washington, DC. We'll do it in our Beijing head office."

The truth behind the lies of China came out in 2011 from their past president, Hu Juntao who said, "The dollar is a product of the past."

The dollar and its top spot is the biggest question and worry from now on...

So much for our allies. Then, we get president Trump announcing tariffs to China, Mexico and Canada only to change his mind a few days later. Why, we ask?

Maybe he is negotiating something? Maybe he has a bad habit of speaking without thinking? What we do see is his new idea to end government waste and limit our deficits with Musk (as head of DOGE) to which we feel is a great idea, but it is getting backlash. Trump is right to stop all foreign aid to review the process, but the Democrats are only offering examples that make this decision look bad. Then, we see this from Time Magazine. They put Elon Musk on the cover. He is sitting behind a desk like the president. This is blantantly seeking to upset Trump's ego. They appeal to the ego of Musk, but they are hoping to put a wedge between him and the president. Again, why, we ask? They do not want the positive results of ending government waste and debt. This is a status quo front and center.

Anyway, Trump will amend his tariff thinking this week. He did on Monday. We believe his tariffs will be a tit-fot-tat. We do not like tokenism. We say, tax the hell out of all nations because they all use protectionism in one form or another. We also noticed that China responded poorly to the president of Panama. This leader did not accept their renewal contract to operate some ports in the canal. We hope Trump gets a deal that gets China out of the canal.   

Market

It is still in an uptrend, but we worry when we read reports like this: Pension funds have their highest allotment in the marker, ever. This is also from the archive. The last time that pension funds had their highest level of investment was 1974. The market soon crashed after that. The market considers us and pension funds dumb money. Pay attention to price and volume, especially follow the charts on semi's and Walmart...  Peace.

 

Eerie Quiet

- We don't know what will happen with tariffs, with immigration, with fiscal policy, and with                     regulation policy.

- Federal Reserve Chair, Jerome Powell (Last week).

What?

Don't fret! This is not a mea culpa. If it were, Powell would admit the Fed was established for the rich - to protect against foolish, risky ventures by using taxpayer money as a back-up (privatize the profits, socialize the losses). However, with so much happening last week and so much passed as "a matter of fact" that something began turning in our stomachs. 

We had President Trump signing executive orders, one after another. We had the yearly meeting in Davos and the first meeting of the Federal Reserve for 2025. We got news, but no ramifications from acts. Actions have consequences. The stock market quivered, but ended up for the month to which is usually a good indicator for the year. Nevertheless, there were too many actions. This is the root of our worry.

Of course, we expect a tit-for-tat in tariffs. This is why we advocate not tokenism of 10% to 25%, but real, harsh taxes like 100% or MORE. We force our manufacturers back home. The politics of small actions only hurt ordinary Americans with higher inflation. In either case, an economic slowdown will happen. Our method will have the results intended, but pussy-footing around will cause serious economic repercussions. The yearly GDP came in at 2.8% and the yearly inflation rate came in at 2.9%. We still are in a stealth recession. The people are suffering and Wall St does not represent our economic struggles. Even the ground hog sensed the poor vibes. He decided to go back to sleep for another six weeks and then, maybe things will appear better. The only problem with that is the date. It will be around the Ides of March. If you combine that with the year of the snake, something will hit the fan?

 A quick recap of the first year in office...

Previously

New administrations usually get a honeymoon period before a shoe drops. This use to be the thinking. One year into Bush's first term, nothing until 9/11. The first shoe led to war that lasted over twenty years. His last two years saw the second shoe drop. The financial crisis. We all suffered except the rich. They received tax cuts worth millions and our deficit hit $9 trillion. President Obama was greeted by the recession. He listened and followed all the greedy, idiots that caused the problem. He bailed out the rich and left the rest of us to our own devices. No honeymoon. President Trump's first term had a short honeymoon and then, COVID-19. The rich got richer and more of us got poorer. In the decade, our deficit added another $10 trillion. It was $19 trillion and growing...

President Biden wanted a legacy of doing for everyone. His chip and infrastructure acts were home runs. Everything else was not. His spending was reckless. During his term, we should all realize that government lies and that the Federal Reserve do not know what they are doing except burying all of us in debt. The cycle says that $40 trillion is coming even before the decade ends. This is where we are except no one mentions how many enemies of the US and our democratic experiment are out there.

List

The real dangers start at home. The rich have lobbyists in the ear of ALL politicians. If you look at the above patterns in government, only the rich benefitted with tax cuts and the lie of the Federal Reserve saying that they pump money as stimulus into the economoy. They pump it into finance which is the pocket for the wealthy. This needs to change! Change the tax structure and loopholes to put a 50% tax rate on the wealthy. This is needed to save the dollar or we become a third world nation which the anti-democracy people aspire.

European banks generally follow the Fed.They say this is cooperation. We use a different word, collusion. With our no rate cut, we expect the ECB to do the same. They get a cheaper euro that will help with their exports unless new tariffs give cause for concern and a change in policy. China has put them on notice with its subsidized EVs that threaten the economies of the EU. Then, the old problems of Europe, the aristicracy. The elites use Davos. They use their power and influence to push ideas that cause many problems in American society. Many large firms had ties to Nazi Germany and they resent the US for WWII. Immigration is causing budget and economic problems. The war in Ukraine does not help. Overall, things do not look good for the EU.

South America begins in Mexico due to culture, religion and language. Mexico sends 80% of its exports to the US. Tariffs will hurt not only Mexico, but US citizens with inflation. China is also seeking to use the new NAFTA to push their EVs into the US to which will further hurt our economy. We say end the lie of free trade. End NAFTA! Go back to taxing some things with the idea that balances trade with our two border nations.  

Brazil is playing us and China. This will explode on them. The leading economic nation in the southern hemisphere will find that their BRICS alliance is a tool being used by China with Russia being duped. They should emulate Paraguay, Uruguay or Chile. Hey, Argentina, are you listening?  

China is building "ghost" cities because they are looking at war. Their other choice could be their long game option. We have a feeling that they will try another end run to change the world away from the dollar to the IMF's Special Drawing Rights. This egotism will not end well. What will the first option bring? What will their new empire get? The loss of millions of Chinese, destruction to the planet and loss of resources. Wake up! Learn to live and let live.   Peace.

Odds and Ends: January 2025

 - The only constant is change.

- (Great minds think alike) Heraclitus and Ben Franklin

A week into the new administration and this week begins the new year for the Chinese people. It ends on 3rd of Feburary. The stock market is riding high with Trump euphoria, but there are cracks beneath the surface. Trump has declared openly that he wants rates lower, both here and in Davos. The Fed will announce their first decision for 2025 on Wednesday. The only constant is change.

What We See with the Periscope

Since the president didn't mention the things that we see and none really do, we will offer them here.

Retail: The only thing growing since 2023 is store closings. They are up 69%. Ouch!

They are not alone. Manufacturering shed another 13,000 quality jobs last month. Their share of employment is down to 10% and falling. 

Debt: The budget deficit rose in December. It is now 40% higher than it was a year ago. Many economists see a financial crisis coming during Trump's administration. Sadly, the only thing the Democrats offer is hoping he fails with an eye on the next election in two years. They seek power not solutions. A good reason why they lost.

Housing: Since we are a consumer society, this is the most important. It effects and connects to every- thing. Homebuilders are showing a serious decline on the charts. This is a dark cloud on the market and the economy. Home sales in 2024 were the lowest in 30 years.

Energy: Trump declared, "Drill, baby!" He knows we need more energy. It creates wealth and it helps family budgets when it is cheap. The "experts" predicted coal usage would decline in 2023. Now, they say it will increase through 2027. Trump is against wind energy. We feel he is totally wrong on the issue. He has not said much about solar. Together, this will not help climate and world heating. This leads us to a more dangerous topic, the movement of the magnetic poles. In our deeper self, we, at Evolution feel this is the source to climate change with wind, rain and sunlight. 

Magnetic Poles are shifting. No one knows or has an answer to the problem, but it causes problems to navigation and communication beside our belief in climate change. We also think that the world will see more earthquakes due to the movement.

Tariffs: They start soon for Canada and Mexico. They should be to all nations and much, much higher. This is tokenism to fulfill a campaign promise.

Meanwhile

The Chinese are out celebrating. Maybe they will take time to read? They will find that a BRIC member, India is complaining (as we predicted) about China being a hypocrite. China will not give them access to tech and other quality products. We know why. China fears that foreign forms will move production to India. Then, we read this. China is not accepting Russian oil due to sanctions. Since when did China follow US policy? Maybe they are opening a door to ease tension? We say, do not fall into this trap. This will connect to the Panama Canal and Taiwan. After all, it is the year of the snake.  

Good News

There is a international goodwill concerning wildfires. Nations help each other by offering fire fighters to help in an emergency. Our northern neighbor, Canada has welcomed over 9,000 fire fighters from other countries to help them and now, they sent over 4,000 to LA to help us. We love this, but do not be misled by One World advocates. Just like social security is a great idea, does not mean socialism is a great idea even though this is one of their contributions.   Peace. 

 

Pre-Inauguration and Inauguration

Best Wishes:

- Heavenly Father, please give me discernment to recognize Your peace above everything else. Give me the guidance to recognize the signs of Your divine wisdom. Help me to seek confirmation and assurance in making decisions that align with Your perfect plan for my life. I rely on Your peace and the Holy Spirit's wisdom to lead me in all things. In Jesus's name I pray, Amen

- Inner Peace (anonymous).  

Cheers and Blues

We all see what we want to see. We all hear what we want to hear. In this special piece, I have divided the work into two parts, the pre-inauguration and inauguration. I did the first part on Saturday and the second after the new president was sworn-in. The early thoughts were things that I hoped the president would give direction. The second part is a reflection on what PresidentTrump didn't or did say.

Before

To us, here at Evolution, the most important thing that connects to everything is the dollar and our debt. Our government needs to rein in spending. Why do we give food stamps to illegals and fight about giving food to our poor? There is speculation about more money under tax cuts. The belief is the rich will use the money for investment. We say, "Yeah! For themselves!" The concept of tariffs to push manufacturers home is the right call. However, the tax must be high enough and to all nations to induce the change. We say, what is needed is an objective. Domestic producers should have a minimum of 40% market niche. We need to reverse the economic loss of quality jobs to which kills our middle class, hurts social mobility and are overall standard of living. Our nation is not even in the top 20 in standard of living.

The first place President Trump should address is affordable housing. Give citizens a stake in their communities. We need to turn the tide against drug usage and selling. We need to put money into mental health that has kids acting out violently. When you help the lowest, you build a foundation that promotes the general welfare. Lastly, our military is misguided, misdirected and misled. We don't need to waste time on "wokeness." We need technicians to run programs for drones and to protect against hacking. We do not need sitting duck aircraft carriers. We need nuclear subs, self flying planes, supersonic missiles and end the wasteful use of troops in over 100 foreign bases. We need to put pressure on our so-called allies to spend on their military. We need to put pressure on Israel and Netauyahu to stop being a bully, war-monger or we will not provide anymore support for Israel until they turn a cheek and to allow a two-state deal. Trump is right about the southern border with nations emptying their jails to jump across our border. We saw the same thing with Castro back in the day.  

Inauguration Day

Trump began, "I will put America first." He went on and on about how our nation will return to its greatness, but he offered no details. He spoke about our concerns about about government and the way it is used to weaponize against opposition. This is correct except that he plans to do the same thing to his enemies. I did like his comment on, "Revolution of Common Sense." We can only hope. He directed his message to the Southern Border and illegals. He added that he sees a connection to terrorists cartels and he will get them. We say, "Good." He will stop the EV money and favor regular auto production. He will overhaul our trade deals. Again, we say, "Good." His department of efficiency (DOGE) is excellent, but will the recommendations be followed? He declared that he is taking back the Panama Canal as that nation violated the gift agreement. This will be a conflict with China unless some other deal is made. He tried to invoke JFK by saying that we will go to Mars.

Later, in a second speech given in Emancipation Hall, he cited how ex-president Biden pardoned 33 murders. Who, you may ask? We don't know the list, but it includes, his son Hunter, Dr. Fauci and General Mark Milley. 

He did not mention his tax cuts, TikTok, our debt or his pardoning of the "hostages" of January 6th. We will add this one tidbit. Steve Bannon, the self-appointed populist leader for Trump has said this, "He will get rid of Musk!" This is a big cloud because Trump's last term had one in and one out month after month. 

With that said, our last thought is one of hope like with spring. "May He grant you joy of heart and may peace abide among you...

- Sirach 50:23        Peace.

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.