State, After the Fourth

Thank you, Founders and Veterans

We can thank one of our founders, John Adams for the concept to make our independence day a day to celebrate our freedom. Thank you, buddy. Our veterans deserve a better nation. Our country has two elderly men running to lead us. One could ascertain that men of age and experience would be good choices, but politics gets in the way. The two men will seek to use the playbook of throwing money at any problem. That is central to our problem. The deficit, full of wasteful spending, is leading us to inflation, poverty and division. This is not good, espcially since our nation is the poster child for democracy with a non-homogeneous population.

One aspect to spend is being displayed by Trump. He wants to control the Federal Reserve. He wants it  to be part of the Executive Branch. This is a no-no. The constitution says that Congress will control the purse. The Federalist Papers warns that if the three branches are of one spirit (party) that will lead to tyranny.

Biden does things for voting blocks to gain their vote. His student forgiveness is a sin. With these type of leaders, it is no wonder the nation suffered a terrible blow from the Supreme Court who are appointed by the Executive Branch.

Snyder v. US

The court case of a private firm giving money and gifts to the Mayor for giving the company a local contract. Sounds like bribery? The court reversed a lower court decision by saying you can give government officials gifts if they do something that you approve of, but only after the fact. Yeah, right! So, you meet Sunday afternoon. Crooked firm says to the official, you vote this way on Monday. On Tuesday, meet me at the auto dealership and pick out any one that you like. This decision legalizes bribery. This is corruption! Ironically, it is statue code 666. Nothing like the devil front and center. Our nation needs my unpublished book more than ever. It has the answer. By the way, any Libertarians reading this should wake up to reality. This is why you need government watchdogs. The only problem is they become bureaucratic. Maybe a watchdog to watch the watchdog with the power to remove or replace based on merit?

Market Call

We said in our last piece that the market appears ready for a pullback, but not until after the Fourth. We are more convinced this will happen. We note that the Fed's chair, Powell stated that the banks are in good shape. We do not believe. We read that bankruptcies increased by 18% in 2023. If one looks around, there does not appear any consequences of these business failures. One reason is the Fed keeps providing credit to keep these zombie companies floating by purchasing corporate debt bonds. Another worry is commercial real estate debt that banks hold. The value is declining and this puts derivatives and loans in question.

Falls Under Transports and Inflation

According to Dow Theory the two main indexes, Industrials and Transports must be in sync for a true market rally. This is not the case. The S&P 500 is misleading. In a related aspect, AirBus and Boeing are not meeting plane orders. This translates to less seats for airlines, which translates to higher prices, to which adds to inflation.

Cargo shipping costs are rising. One factor is the danger passing Yemen and the other is water shortage in the Panama Canal. Vessels are going the long way. This adds to fuel costs and chain supply delays. One example: Last June, shipping costs from Shanghai to New York was $2000 per container. Now, it is $8000 per container. Ouch!

Where is Disinflation?

The phony economists warn that we could enter a disinflationary cycle. Well, we, at Evolution say this is just BS! Data shows that in 2023, US production exceeded consumption. Prices did not come down. In addition, this reveals that the consumer is maxed out. The growth of 1.4% in the last quarterly report on GDP is also misleading. The growth was due to military spending to aid Israel and Ukraine. We support Ukraine, but we are against further aid to Israel until the PM is replaced with someone like Golan that gives peace a chance. With that said, enjoy our freedom and have a wonderful Fourth of July.  Peace.