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 Our nation needs my unpublished book more than ever.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.

Odds and Ends: June 2024

 - The most powerful weapon to conquer the devil is humility. As he does not know at all how to                  employ it, neither does he know how to defend himself from it.

- Saint Vincent de Paul

The US had streaks of humility and periods of ego. The pendulum is making the devil smile as the military has a strong grip on our government. We are not alone. North Korea and Russia embody the word. Netanyahu has Israel deep in ego with the false flag of doing whatever it takes to defend itself. They do have hope. A moderate leader has emerged. Yair Golan will work for peace. He has the rightful concerns for security for Israel. Peace is a two-way street. Palestine, if given recogition as a free state, must arrest any zealot against Israel. If they want to live, they must also let live. This is the way towards peace and end the reign of the devil. 

Other Devils

The consumer is using a debt vehicle in shadow banking. Firms like Pay Pal have a plan for the consumer to "buy now and pay later." Interest payments are high and consumers using this loan are falling behind. Data is not accurate or known. It is only estimated. The figure of $50 billion is thrown around. If correct, that translates to one in three US households. We, at Evolution fear an unpleasant surprise is coming.

Enter the Fed

The Fed watches the above loans as well as all debt liabilities. Quietly, they have pushed our too big to fail banking institutions to process a "Living Will." If an unpleasant surprise happens to one of these firms, they must have a plan whereby their assets and liabilities will be "moved along." The Fed just reviewed the banks plan and they are unhappy. More news will be forthcoming. Negative commercial loans and derivatives could be causing a serious problem behind closed doors.

Speaking of which...

it must be nice to have in your banking firm a partner, Beth Hammock who is about to leave to take a position in the Fed. The corruption of big banks like Goldman Sachs has been going on for over 100 years. Of course, the poster child is JP Morgan Chase.

Meanwhile...

summer trading is in effect. That means there will be low volume on Monday and Friday. The market is showing signs that the Bulls have no more juice. Techs are retracing. We get a more definite indicator with King Dollar. It is rising. Last Friday it closed at 105.44. It is in its higher range. Commodities and the market do not like a strong dollar. It appears to want to test its last high at 107. If it does, look out below. With the national holiday approaching, we expect the change in direction after the Fourth.

During this interlude, be aware that the etf, XLK will reassess Apple and Nvidia. They will sell a lot of Apple and buy a lot of Nvidia. This well make some volatility. Then of course, this is campaign time...

"Yellen" Yellen

She is using her pulpit position to campaign for Biden. We got a laugh out of her latest rant. She says, "Biden is seeking to address the area of inflation." She goes on to admit this has been a problem, especially in healthcare costs, energy costs and housing costs. Can you see the irony in this past Fed Chief? Two of the three concerns are not included in the matrix formula of the Fed. Ha! Ha!

Sadly, the joke fades and this reality comes to the forefront. Deficit spending by both political parties and candidates is so bad that at the present rate, the US will reach a point in the 2034 budget that the interest alone will exceed the whole budget of 2006. Try not to ponder that too long. It will give room for the devil. So, I say in humility, peace.