Odds and Ends: June 2023

Dichotomy...

Appears to be the perfect word for the present state of the world, market and Russian/Ukraine War.

Argentina...

is suffering extremely high inflation as well as drought hurting their crop production and exports. As a result, the nation has a shortage of dollars in reserve. This causes contagion within the nation and in trading. Whirlpool has a factory in that nation. With the shortage of dollars, the US firm is turning to the Yuan to purchase parts within that nation. China and Argentina have a trade pact that utilizes each other's currency. The US dollar is still the top choice in international trading, but necessity is causing players to turn to the yuan. This is small, but that is how things change. Dichotomy in trading.

Market...

After an intense rally two weeks ago, the market dropped last week. The up and down movement provides no clues as to strength of conviction or sentiment. The calendar points to the nation's big holiday. Historically, the market turns upward. We, at Evolution, feel that this trend will stay in place. We look for the market to turn upward. With that said, when the market hits resistance (Dow - 35,000), the true character of the market will be revealed. We stand by our call for the market to test its lows (Dow - 29,000). Tip: One indicator that we use is the weekly Bolinger Band. If a price drops out of the band and stays out for a week, you have your new direction.

Russian/Ukraine War...

just took a new direction. Russia could enter into a civil war to which would be good for Ukraine. However, just as this twist was like a magician pulling a rabbit out of a hat, Putin and the railing general could reach an agreement. Not 24 hours after Sebastian wrote this sentence, an agreement is reached. Bed fellows make promises that the morning light disperses. What is the future? We cannot say, but the outcome in this dichotomy will have lasting effects.

Internet...

A report states that one-half of all internet traffic is performed by Bots. This sad development can only cause more fragmentation in the US and global community. Dichotomy in spades.

Last Thought...

...goes to the Fed. Who else? The chairman, Powell stated last week that new regulations will be set for the banking industry. They will be tighter; however, the smaller banks will probably be exempt. This dichotomy in thinking only allows the greed of smaller banks to resurface. In the last debacle by the Fed, they allowed the smaller banks a "loophole" in leverage reserves. Banking greed caused their demise. They overleveraged. The failure allows the big banks to grow by taking the assets and the Fed covering the liabilities. This is setting up for a repeat. If the Fed wanted to be truly fair, all they have to do is put the new requirements in proportion to the size of the bank. Every player will feel the same proportion of the requirements. Instead, when greed appears and these smaller banks fail, the big boys will eat and grow due to this dichotomy in thinking. As always, we say, "End the Fed!"   Peace.