FED: UK Style

Market Outlook

What we here at Evolution called our present economy, "Stealth Recession." It is slowly filtering into bigger investors mindset. This recession style is similar to inflation. It pops up in different sectors at different times. Speaking of the devil, inflation, the cousin of debt, is hitting Europe and last week, made a serious threat in the UK. Their central bank like all their sibblings acted for the elite. It is their true purpose. Before we get into that, we review the US market and our outlook.

New Lows

We stated that we felt that the market bulls would seek to rally or at least get a bounce? That call was late in developing, but it turns out correct. Keep in mind that we declared to participate in this market environment is dangerous. We refer to our original call over a month ago. We stated that we feel our economy is in a stealth recession. This fear gage is slowly taking hold as the market could only generate a poor bounce and then, fell to new lows. All 30 of the Dow stocks were red last Friday. Keep in mind this is twice as powerful because the date coincided with option expiration. The market showed strength in the decline as the price pierced the March 2020 low. The price is now in the high of the low which is a whole new range level. 

Crucial Level

We love Fibonacci math. In retracement moves, we look for two price levels. A fifty percent decline is normal in Bull markets. A .618 says further declines could come. At present, the market says it could fall to the 26,000 level. The S&P could hit 3136 and the transports touch 10,000. The fear level is rising and we are in October. Buyer beware! 

UK

The central bank over in England acted just like our Federal Reserve. It should. It was the blueprint for ours even though ours is more important. Anyway, their banks made the wrong calls in trades. Their pension funds were about to collapse. They intervened. They purchased bonds which we call QT stimulus. The good news is it saved the day. The bad news is the pound will continue to decline. Debt, the cousin of inflation will rise along with inflation. Pick your poison.

PS: Putin annexed land in Ukraine. What he is doing is escalating war. If the Ukraine troops enter their home-land to retake it, they are technically invaking Russia. If NATO accepts Ukraine into membership and comes to their aid, war could be enacted in all Europe. Then, to add fear, Putin reminded the world that the US is the only nation to use the atomic bomb, but laid the presicent. He didn't mention that Russia was not smart enough to develop their own. They stole it from us. He better heed that insight. The US is capable of inventing and sadly, this includes warfare.

Famous Last Words

Hitler declared the Reich would last 1,000 years. Putin said the Ukraine land is Russia's forever.              You reap what you sow.   Peace.