Signs of Reckoning

- A budget deficit is inflationary if, and only if, it is financed by printing money.

- Milton Friedman

When you realize how true the observation by Friedman is, it is amazing that the US dollar is still the world's reserve currency. We have run deficits forever and financed them by printing money. It is also no wonder that he does not get the recognition that he deserves. Why, you ask? His wisdom goes against the status quo, the Federal Reserve, the military machine and both political parties. 

Market Signs

The health of the stock market seems to be the indicator for Americans. Many have their retirement nest egg involved within it in one way or another. The politicians know this point. They use it as a pro or nay depending on which party is in power or local politics dictate. Each party has their claws in some segment of the media to acknowledge their position. At Evolution, we only have this blog site. Our agenda is truth. As faithful readers, you give us that credence. Thank you. Anyway, we saw signs in the market as well as on the street. They are pointing to what we dclared in January of 2022. We are in a stagflation economy. We called it a "Stealth Recesssion." The market does not acknowledge it, but ordinary citizens know it.

S&P 500

The index continues higher. The Bulls are in charge as we have noted in recent pieces. We also told you in the year ahead forecast that the "experts" called for a down first half of a year in 2024 and a big upswing in the second half. The question is their analysis a self-fulfilling prophecy? We saw some signs that the market is beginning to see what we saw back in early 2022. There are less and less stocks paricipating in rallies. The index sways the price action. This is a form of manipulation. The S&P pushed over 5350, but it could not hold price. This is the line in the sand for a continued rally, deep consolidation or a fall. 

Bonds

The 10-year is at 4.43%. It is trending higher. This is not a good sign for the stock market. Your money is safer in good paying bonds.

King $Dollar

It touched the confluence point of 103.5, but held. It immediately rallied higher. One aspect is the ECB cut their interest rate by a quarter point. Since the US is higher, this attracts money. It could also explain the dramatic drop in precious metals on Friday? The Fed will probably pause again, later today. This will be key. The dollar's fall is the first test of the crucial level. There will be a retest. The results will determine the market action. If the dollar remains strong, the market won't.

Meanwhile...

The unemployment report showed a big swing to higher levels. It reached 4%. It broke the streak of 20 consecutive months at or below that low figure. Trump, by the way, had a streak of 24-months. Neither matters.

What we have included from time-to-time is bankrupcy data. The retail sector overexpanded in the 1990s. At the time many factory workers lost their job, but they found work in the service sector. The pay was poor as it still is. The outlook was terrible as it still is, but it put food on the table and paid the rent. Now, it no longer can pay the rent because money printing by the Fed keeps destroying the purchasing power of the dollar. Food comes from food banks. This is unsustainable for ordinary citizens. 

At the end of each month the Fed holds its breath. They know and worry about commercial real estate meeting debt obligations. The latest news is not encouraging. A New York landlord annouced the sale of an office building at a 67% discount. In Hong Kong downtown property could lose $270 billion in value. London is also having problems.

Also, the continuing retail catastrophe. The over-building has long past the retracement level. Now, the consumer cannot afford to buy anything. Retail firm after retail firm are going out of business as they close stores to stop the bleeding. Sadly, we watch Under Armour and Rite Aid. The two will soon join Radio Shack whenever bankruptcy puts the last nail in the coffin. The count is 3,200 retail stores have already closed this year and we are only at halftime. Keep in mind this point, both poltical parties are guilty and the first thing that needs to be done is end the crooked cabal. End the Fed!  Peace.