Dr. Copper and Market

- I don't need no doctor, 'cause I know what's ailing me. I've been too long away from my baby, ahh!        I'm coming down with misery. I don't need no doctor...

- Ray Charles

Third Component

Our last two pieces dealt with the most important commodities (oil) and the best commodity (gold) for your economy and currency. However, central to both and next in importance is copper. The good doctor is needed for almost everything. At the moment, with the race to build data centers for AI, the demand is exceeding production. Silver and copper mines cannot need global demand. That alone should tell you everything that you need to know. It is why Barrick, the second largest gold miner, is developing the Reko-Dig Copper/Gold Project in Pakistan. It could become one of the largest copper mines in the world. At the moment, Chile produces the most copper for world supply.

Hold the Press!

Not everything is rosy for the red metal. US housing is in a slump and the outlook asks, what is lower than a slump? Mortgage rates rose over 7% which in itself is not bad, but since the medium home cost, from Redfin data is $407,730, affordability is falling off the cliff. If you want perspective on that, here is the math. First off, very few home seekers, especially first time buyers, can save the 10% to 20% down. So, let us do a VA, no down paynnt loan. 

Your monthly payment P/I is $2,707.78. Of course, you have to add insurance and taxes. To qualify, your weekly paycheck must cover the monthly P/I. This equates to a solid job that pays $100,000 per year. In addition, you must be debt free, no $30 grand car payment or student loans. So, what is lower than the housing slump? In baseball, it is the bench or back to the minors. For new home buyers, it is renewing their apartment lease. In addition, if the Fed hikes today, everything gets more expensive. A quarter point won't stop inflation, but it will strengthen the dollar. This is only temporary, stopgap measure. This brings us back to copper. It is losing its biggest user, but at the moment, data centers are covering that loss. 

Other Factors

Miners use diesel fuel. It hit its highest price level last week. (over $6.) This is a big negative along with payroll and the cost to find, dig and retrieve the metal. However, Mr. Market has given miners incentive by raising the price for copper to a new, all-time high last week at $6.80. It immediately fell and is in retracement at this time. How far does it fall is the question? Dear Reader, this could be a blessing in disguise. Doctor Copper had many house calls with gaps in pricing. The producers value rises and falls with the commodity price. The first test will be at the 50-day moving average ($6.46) and then, the 200-day around $6.02. We should hope it falls back to its consolidation range at around $5.60. This leads us to the copper stocks.

Southern Copper (SCCO) is the largest miner from Chile. It rose in anticipation to a new, all-time high at $220. It fell with copper's price to close last Friday at $193.49. A good entry point would be at $170, just below the 200-day moving average at $175.

Freeport-McRan (FXC) is a dual commodity producer. Its large mine has both gold and copper. It too hit a high at $80, but has retraced to $71. Its 200-day average is $61 and we see it consolidating in that range level. If you entered at $40 last December, thank the Lord.

Trekor Metals (TGB) did a name change when its new mine came into production. This is a personality stock. It follows the price of copper. When it falls, this firm crashes. It has touched $2 bucks, repeatedly. That is the time to enter and sell when it hits a high. At its present price level, we would not be interested.

Capstone Copper (CSCCF) is a miner to watch. We have. We were hoping to enter around $8.00 last April, but we missed. Strike one! It rose quickly to $11.50 and retraced. It never reached the April low and we missed again. Strike two! Recently, it climbed to $12.00 last week and fell with the price of copper. We are buyers at $8.00 to $8.25. This Canadian firm has three producing mines. One is in Arizona with another one in Mexico and the last in the big producing region in Chile. Earnings date is 30 October. Forecast is slightly less revenue, but big rises in the following quarters. Lastly, 16 out of 20 analysts have a buy recommendation on Capstone for a $18 price in Canadian money. Nice...Peace.

Golden Time

- All that glitters is not gold.

- An aphorism used by John Florio and William Shakespeare.

Cycle

We told you over a year ago that gold has a 12-year cycle. The last down version was in 2024 to which started the new cycle. It took less than two years (January 2026) to establish a new record high that broke over $5,000 to 5,600. In addition, like seasonal buying, hiring or selling and layoffs, gold is entering its seasonal buying period (end of August to early February).

4-Seasons

No, not the singing group although we love them. We are talking nature's cycle. Some people love the spring and some the summer, but we like the fall because His nature gives us such beautiful colors. It just so happens that baseball has its championship and football begins. We love it all and if you throw in some upside with gold, we say, "Praise, the Lord!" PS: Sorry, winter. As a kid, it was my favorite, but as an adult, no way, Jose.

Right on Cue

You may think that gold is down, but you would be wrong. The charts indicate the seasonal buying in gold. It did fall, but with war, trade wars, inflation and $40 trillion of debt, it is rising. The charts show that when it fell, it held around the $4,000 price level (give or take a daily price change). We stated that gold could fall to a $3,800 to $4,200 range. We pat ourselves on the back. Now, we see a new range level. The low around $4,200 to $4,750. Monthly, resistance is at $4,800. If it pierces that level, a test of the record high is coming. We can see this clearly in the ETFs for gold.

GLD...

...is the ETF for gold. It has broken out at $380 and hit $430. It retraced to $400. The next target is $440. Follow the 50-day (388) and 200-day (406) moving average. The sign that you want to see is the 50-day crossong over the 200-day.

GDX...

...is the gold miners index (ETF). It broke out at $80 to hit $105. It is now retracing. It should rise to challenge the all-time high at $117. 

We Like...

The same three miners that we mentioned in the past: Newmont, Barrick and Alamos Gold. Newmont and Barrick have very low P/E ratio. Any dollar weakness and they will rise, very high. They all pay a dividend. However, as always we worry about recommending a firm because if we are wrong, we feel a mental pain. With that said, we believe in the three above with one new, lower price company. It is an explorer. It does have income with a producing mine. The real benefit is its control of a mine in the top producing region in Nevada. Newmont and Barrick have adjacent mines. Some big names in gold are attached to it like Sprott and Peter Schiff. Scorpio Gold (SRCRF) had 5x the volume last week. Needless to say the stock rocketed from $.21 to $.61 cents. It retraced to $.26 cents. A good entry point would be between $.24 to $.26 cents. Also, there is the possibility of it being a takeover as it has all its permits and drilling results which are very good...Peace.

Energy Trends

- Nearly all men can stand adversity, but if you want to test his character, give him power.

- Abraham Lincoln

New Players

We all know the teams that comprise the energy oil sector. The world has national firms while the US has individual giants. Then, there is OPEC, but it is losing its influence. Teams that are not allowed into the global league are Russia and Iran. There are fringe teams like China, Venezuela, et al. 

While we have a fairly accurate amount of barrels produced daily and used daily, the stats change with supply and demand. It is no secret that the Hormuz Strait is central. The US/Israel vs. Iran conflict has damaged global needs. The US policy caused the problem. The initial deficits in oil supply caused a severe shock to the global oil league. However, supply passing through the strait is climbing. It is now 16- million barrels of oil per day (BPD). The old level is 24-million. 

Richer nations like the US and China had a national reserve while the remaining nations used their alternative sources. The conflict may continue, but behind the scenes, the smart teams are preparing for the future. We see a new pipeline in the region. Trump is so wrong to be against wind and solar, but that discussion is for another time. There are some "free agents" out there and they will change the energy league in the future.

Enter...

...Amazon has worked three nuclear deals this past year and it is not over yet. They want power for their AI data centers.

Microsoft is pushing to revive Three Mile Island nuclear plant.

Google is seeking partners in small, nuclear reactors. Meta is in the same market.

Beside being tech firms, they have something else in common. A quest for energy, specifically, nuclear. The US energy grid is short capacity. It will need an additional 35 gigawatts of electricity by 2030. 

Digress

Amazon signed a nuclear deal with Energy Northwest in Washington. They covered the South with Dominion of Virginia. It made a partnership with X-Energy to build more than 5 gigawatts of new, small nuclear power by 2039. Microsoft signed a 20-year PPA to take all the output of Three Mile Island. This will cover its data centers in Pennsylvania, Chicago, Virginia, and Ohio. These tech firms are developing their own source of power. Soon, their league will have Google and Meta energy firms.

Oil League

OPEC was once its king, but it is no longer number one. The US leads the world in oil production with 13.8 million bpd. and climbing. OPEC is removing its oil cuts. There will be more oil available in the future, but things change quickly. The suggested "toll" on the strait will only cause more conflict. It will not happen. So, where does the price of oil go? The charts indicate a rising price pattern. Brent started at $72 with a recent high at $95. We see some type of consolidation. WTIC, also shows a rising price channel. The low at $67 and its recent high at $92. It too will find a range. This will pertain to demand. The "old" level of 104-105 million bpd is the basis for oil's price action. The conflict is subject to politics. This is never good. There are a few wildcards. China's connection to Iran. Russia supplying oil to China and India and gas to Germany for winter. The new US policy with Venezuela. Politics is never good.

Related

US and world consumers get hurt with rising oil prices. In addition, necessities like food rise through shipping and production costs. The biggest unmentioned costs in the US is mortgage rates. In February, the 30-year rate was 5.99%. On Monday, it was 6.87%. This is 10% higher and consumers pay this rise in cost for 30-years...Peace.

Odds and Ends: August 2026

- It's not what you look at that matters, it is what you see.

- Henry David Thoreau

Treasury Secretary,

Scott Bessent is the poster child for the elite. The stupidest and most risky thing that you can do with your money is to enter currency. The secretary just wasted millions, no billions of our taxpayer money to prop up the Japanese currency. By doing this, you get a few days of relief with international trading, but whatever the trend was and the reasons behind it, will resurface. Bessent attempts to catch a falling knife.

It gets worse...

Since the Federal Reserve did not lower our interest rate, Bessent enacted his own form of QE. He wastes billions more of our taxes to buy "old" long-term bonds to lower rates. How stupid is that? He spends borrowed money to buy notes that used borrowed money (can you say, rollover) to present an economic picture that all is well. Is this what they teach (Yale) in the Ivy League? It is no wonder how our national deficit ballooned past $40 trillion and counting...He goes on to say these famous last words, "Most probably (expression to cover his ass), our budget deficit under President Trump has peaked."

Repercussions

The world will stop buying our debt because they will see that the BS of Republican Conservatism is just that, talk. They also see our debt growing at 7% while our economy shrinks. At that debt rate, it will only take 5 years to reach $50 trillion. That is doo-do land.

 Related

The government is changing its inflation formula, again. It takes effect in September, but the propaganda of lower inflation won't hit the news until next year. People will forget the manipulation to present a better picture. Maybe they will stop saying that breakfast is the most important meal? Why, you ask? Because inflation has hit: eggs, OJ, coffee, half-and-half/milk and bread. Breakfast is expensive.

AI Risk Growing

Broadcom (AVGO) is investing $60 billion in Anthropic's AI platform. Of course, they have to borrow that money which lowers their stock price and get this, they only get a first tranche share. This implies how excessive data centers and AI cost. These AI firms are throwing out money like leaves falling from trees. This is an example of excessive leverage. These type of investments ring the sorrows of the financial crisis of 2008. We already told you about Nvidia with its $225 billion in bonds (debt). However, we have other, new, smaller AI firms that are jumping on the bandwagon. They all are using leverage and going deep into debt. Tera Wulf (WULF) has over 3,000% of shareholder equity in debt. Nebius Group (NBIS) over 106% of shareholder equity in debt. Core Weave (CRWV) reported $46 billion of debt in the 2cd. quarter. None of these firms look economically stable.

Power Grid Problem

Instead of using our taxpayer money wisely like helping the power grid, our leaders only live for today's news. Well, the news for tomorrow is bleak according to CEOs in battery storage. They are saying, "We lack transformers, infrastructure and transmission lines to handle all the extra power that we need, especially with stored energy. We cannot move energy in both directions."

Sad, Shout-out...

...the passing of Father Benedict Chao in Hong Kong at 108. The Trappist monk helped all through the horrors of the Japanese occupation in WWII and the horrors of the Communist Chinese after 1949. Open the gates before him. Rest in peace...

Some Positives

Singapore needs hosing. They lack land. Wisely, instead of stripping its small forest land area, they are trying a new approach. They will attempt to make "manmade islands" designed for housing offshore. We hope it works and provides a blueprint for the world. Maybe they could raise investment money from the TNC ( The Nature Conservatory)?

Past Example

The Seychelles is a small group of islands a 1,000 milles off of Africa in the Indian Ocean. The TNC loaned them the money to maintain the natural features of their islands. This was one of the first bonds for nature. They used some of the money to develop tourism for their small population (100,000) and they are doing well. Very smart...Peace. 

Wrong!

- Sometimes you win, sometimes you lose and sometimes the blues get hold of you...

- Carole King, Sweet Seasons

Countdown @ 0...

Our call for a market correction after the Fourth of July holiday is a zip, zero, and maybe because it is so wrong, a negative? A recap not only shows the market rally continuing, but establishing new record highs in the Industrials and S&P 500. The only divergence comes from the Transports. It did rise, but it never came close to testing its last high. This is like an honorable mention for not making an all-star team. We were not alone as many analysts like the Oxford Club declared what we said. The most notable being the Big Short, Michael Burry. We can cry in our beer as the Bulls drink champagne. As for you, our Dear Readers, we find ourselves under restless nights. Our conscious won't let us sleep. This is why we rarely mention individual firms because if we are wrong, we might have caused you financial harm. With that said, this is the scoreboard as of last Friday.

Industrials = Closed at 53,732. This is over 1,000 points higher from our call date. Although the index was down for the week, don't be fooled. During the period it set a new record high with momentum.

S&P 500 = Closed at 7785. This is up over 200 points and along the way, it too, set a new all-time high.

Transports = Closed at 21,792. Around 400 points higher, but never came close to testing its last high.

NASDAQ = Closed at 26,729. This is 1,200 points higher and hanging at its high.

Russell = Closed at 305. The small cap index only rose 10 points and it had extremely low volume. This is like a consolation prize. If the market were to correct, say late September or October, this index would be the first to show a decline. If after the consecutive down days this week, one might think it coud be just the timing? The last word on that would be if the market tested and pierced the March low. With that said, we, at Evolution made the wrong call.

Related

Sometimes President Trump does some good things and sometimes some really stupid things like last week. He stated that he would not allow the Transparency Act of 2021 to be enforced. This act says firms must report all details. By doing this, he allows "zombie firms" to continue to operate and that can hurt a lot of people. The big boys love it like Nvidia which has issued $225 billion in bonds with no transparency. They are hiding the true cost for data centers and AI along with Amazon, Google, Meta and et al. Leverage and its overuse is why banks and firms collapse. Not good...Peace.

Countdown: 2,1...

- An investment in knowledge always pays the best interest.

- Benjamin Franklin

Last Two Weeks

The market's action last week shouts loudly that our call for a correction is wrong. The only consolation is that we have one more week in our outlook. With the Industrials and S&P 500 each claiming a new record high and Nasdaq rising over 1,000 points, it seems all over but the crying. With that said, the market is not in full harmony. According to Dow Theory, all three indexes must be in accord. The Transports were up last Friday, but still down for the week. The only index with subpar volume was the transports. At the moment, the bulls are in control. They do not worry about the over leverage spending on AI and data centers by high tech. They have forgotten the red flags posted by private credit market. They are escaping the summer heat by swimming in their profits and placing bets on the "souless" Polymarket platform. 

Behind the Scene...

...As always the revisions by the BLS are never shouted or even hardly mentioned. They confirm what we saw in making our correction call. Jobs were revised DOWN for April, May, June and July. They even had the audacity to say that unemplyment fell to 4.1%. They present their data like a puzzle. The central piece falls with the lack in their research of hearing people say, "I cannot find a job." What the sentence lacks is this continuation, "Cannot find a job...that pays a living wage."

Related

Our Treasury secretary, Scott Bessent says, "The K-shaped" economy is over." He means lower income levels are regaining footing. We see this as funny since he never mentioned the "K-shape" economy before and like the last Fed Chair, Powell, no idea or lying about "transitory" in reference to inflation. 

In addition...

Facts are being gathered about failing businesses in America. Bankruptcies in major firms (those worth over one billion) are rising to alarming levels. There were 785 such firms in bankruptcy court in 2025. We read where Walgreens and Staple's are closing stores and Wendy's saw its revenue shrink for six consecutive quarters

Lastly,

Keep an eye on the dollar. It fell hard last week and it is under 100. Resistance is at 98, but after that the 96/95 range is possible. Even if it stays range bound at its present level, inflation will pick-up. Gas is up as well as mortgage rates. This is not good for summer trips to a water hole or seeking a home before school starts. Our countdown ends next week. so far, our call is looking poorly...Peace

Countdown: 3, 2...

- A 1,000 point drop, a 1,000 point gain leads to foreboding and foreshadowing.

- Sebastian, Evolution of Democracy

Rocky Road

It maybe hot enough that you think of ice cream. We like Rocky Road, but not in the market. As our countdown nears completion, the market reversed. Last Wednesday, our call for a correction was looking good until Thursday. The market reversed. Is the rally still on? Is our call wrong? This is the picture that the stats gave us.

S&P 500 low was 7316 on heavy volume on Wednesday. It closed up last Friday to 7489. Reversal? Yes and no. Although the index was up for the week and broke above its previous support at 7473, the S&P 500 was down for the month. The volume was good. This is two months in a row of a down trend. Foreboding and foreshadowing...  

Industrials offer a similar picture. On Wednesday, they fell to 51,594. Last Friday, they closed up at 52,485. The volume was strong. However, this index fell for the month. The second straight down month.

The Transports had a down week. Although the volume was light, the price decline was severe. The index fell over 1400 points for the week. It too fell two straight months.

Nasdaq was the most volatile. On Wednesday, it fell to 24,442. It closed on Friday at 25,373. The monthly volume was heavy and like the other two indexes, it fell for the second month in a row.

The small cap, Russell was neutral for the week. It was down for the month, but unlike the other indexes, this index was up in June. However, it was down in May. 

What It Means?

There is no conclusive aspect and the countdown has two more weeks. We sampled some of the market leaders. It gives the same confusing answer. 

Apple: This stock hit a new, all-time high, but failed to hold price. For the month it was up, but it fell hard last week on heavy volume.

Meta: Looks like it is collapsing. It was 740 in February and last Friday it was 556.

Google (Alphabet): It was down for the month and fifty points below its June high.

Microsoft: This tech leader shot higher than a Musk rocket. It was up 83 points for the week on good volume. It was up for the month.

Micron: The chipmaker fell like one of the booster rockets falling off a rocket. It was down for the month with heavy volume.

Sandisk: It continues to fall in price. It fell 221 points for the week with a down month.

Amazon: Bezo makes rockets too. His firm exploded for the month from 235 to 271. Problem. There is a huge gap in price and gaps generally get filled.

Bottom line: A new month and the first week is very important and telling. What is the market foreboding and foreshadowing? We will see says the blind man...Peace.

Odds and Ends: July 2026

- When things go wrong don't follow them.

- Elvis Presley

Countdown Continues... 4, 3...

We continue our countdown call. Last week all the indexes fell, however there was little conviction as the volume was low. If our call is correct, the volume should pick up.

Indu      = the industrials fell on average volume. The next resistance point is 50,000.                                Spy       = the S&P 500 broke its first resistance point at 7473 on average volume. Next one up is 7200. Tran      = the transports fell the least on very low volume. The resistance point is 21 ,500.                      Nasdaq = It fell over 2% on average volume. Resistance is at 24,500.                                                        Russell = The small caps fell the most (almost 3%). However, the volume was low. Resistance at 280.

Note: The big bounce back rally last Tuesday was in our view, a short cover bounce. The proof came as the remaining week saw the indexes fall. This could repeat itself, but discovering the market trend is the real knowledge as to where price is going. One related aspect. A few weeks ago many chipmakers and new IPOs saw parabolic moves. We have learned that investors have used margin money to enter the market. Retail debt set a new, all-time level at $1.5 trillion. In the past when investors over use margin money, the market falls. This strengthens our belief in our call.

Tale of 3 Data Centers

The first in Texas was stopped by the owners call. Change of heart? Maybe or maybe something else? Please continue. Microsoft is halting its work. It leaves us the same question, why? Meta canceled its Michigan plant. However, this one has an answer and it is the same answer for the other two. These huge energy using locations cannot get its future need of...electricity. 

Related

We are not backers of the AI use to purchase carbon credits, but we see a lot of activity from a Singapore firm, Thryve.Earth. They are operating on the island of Sulawesi. Among their participating concerns are some big players like Tencent Holding, Google and the consulting firm, McKinsey & Co. The project increases forest cover, so we all can breathe better. Hope it works.

Closer Look

If you think that Space X fell hard (Half of opening high), there must be a reason. Yes, they scrubbed a launch, but not that. Apparently, the company is set to release a ton of shares into the market. This dilutes value. The shares can fall all the way back to earth.

AI Hack?

Can AI hack? Yes, it can and it can do so without human direction. Open AI hacked a firm last week on its own. This exposes another danger in the making of AI. Just like the early founders of the internet covered up the danger and problem of safety by hackers, the new developers of AI are not putting safeguards into their framework. This is greed. This is so wrong. They love the praise and riches, but they do not deserve either. Their work is corrupt and it endangers all of us. In addition, there are other problems like piggy-backing on someone's work. Case in point is Kimi K3. They used an AI model to track and train itself on American knowhow. Then, they claim a new advanced AI model. This is stealing! This is the root of almost every Chinese firm. Steal, cheat and lie!

By the way, the president and co-founder, Greg Brockman of Open AI says, "This is indicative of the time we live."  Sebastian say, "This is indicative of lying, greedy people."

Meanwhile...

Another month passes and along with it, the continuing retail and economic disasters in America. Patreon is cutting 20% of its labor force. Dairy Queen is closing 46 locations. Denny's is closing 150 plus restaurants. Papa Murphy's is cloing 50 locations and KFC is closing 207 locations. How can our unemployment figures remain so low in the face of all these failures? This is why we do not believe the BLS. If you leave out the "L" then you see the truth. Speaking of BS, the Fed reveals its latest today...Peace. 

Countdown 6...5...4

- It's not what you look at that matters, it is what you see.

- Henry David Thoreau

Market Call

We continue with our countdown call for a market correction after our Fourth of July holiday. The first week had little change. Last week, we saw the first real sign with the recent market leaders (chips) falling hard. Some high tech firms like IBM, Micron (MU) San Disk (SNDK) fell off a cliff.                                  

IBM = -74 points and in bear territory.                                                                                                    SNDK = -561 points and in bear territory.                                                                                                MU = -130 points and close to bear levels.

Not Everything

The banks like we called had banner profits. Apple (APPL) was up almost 6% on good volume. Brent oil closed up 15% for the week at its high of $88.05. This is very inflationary. The two big, recent IPOs fell hard on strong volume. SPCX is below its original, asking price. SKHY fell on double its initial offering and close to its original, asking price. Not good.

Unemployment

We never believe the BLS on employment. We look at the participation rate. It fell again. In fact, this is the lowest level (61.5%) in the last 50-years. Terrible!

Finally, the Scoreboard

Industrial (INDU)   = down on good volume.                                                                                                S&P 500 (SPX)      = down on strong volume. The lower resistance price is 7473.                                    Transports (TRAN)= up on lower volume and far from its high.                                                                  Nasdaq (COMPQ)  = down on average volume.                                                                                          Russell (IWM)        = down on rising volume.

Bottom line: If our call is correct, we should see another down week. However, we point out that the transports must be in harmony with the industrials. They are not. The ongoing saga of AI and data centers will continue to impact the market. We see the rising costs to high tech. This will lead to more borrowing and hurt the bottom line. We noticed a rumor. It says that the Fed will start some type of QE by the end of the year? The Fed's next meeting at the end of the month will answer a lot of questions, especially for those who took a "wait and see" attitude. Finally, in the mixing bowl of everything that is going on in the world, King $Dollar remains strong...Peace.

  

Countdown

- One man's ceiling is another man's floor.

- Paul Simon

Our Call

We stated in our amended piece that if our call for a market correction were to happen, it would begin after the Independence holiday. For the first week, the Industrials were down a half percent on average volume. The S&P 500 was up a full percentage point on average volume. The transports were up a half point on low volume. NASDAQ was neutral with low volume. The Russell (IWM) was down a half point on low volume. Bottom line: Little change on summer trading. No clear trend.

Next Week

This period begins the earning season. The banks will lead the parade. We see them making big money, but the real effect upon the market will be high tech. They spent a ton of money on chips for their data centers and AI. This will impact the market. We know from their recent actions that they are feeling it in the bottom line. They have begun layoffs and they are seeking money through notes. This is a red flag.

Related Aspects

At the end of the month, the Fed under Warsh will have his first meeting where he cannot BS the public. Wherever he directs the Fed, it will directly effect the market. If he shows that he intends to fight inflation, a raise in interest rates will have consequences. Higher rates will attract bond money. This will take money out of the market into the safety of bonds. If he does nothing, this is something. It could show patience or a lack of a plan and conviction? If he lowers rates, he will make Trump happy, but this will hurt the dollar. King $Dollar has been very strong lately. Any fall will pump inflation that needs no pumping. Prices will rise across the board and the precious metals will awaken. News of our federal debt has been kept quiet as well as the rumors in private credit. We read this interesting thing about our debt. The US spends $24 billion each week on...Can you guess? Interest on our debt. This does not lower our debt which compounds, but it just services interest on the debt. All these stories will be back on the front page.  

In addition...

...The market has seen a recent flurry of IPOs. The latest was the big firm from South Korea, SK Hynix (SKHY). The firm raised $26.5 billion. It became the largest foreign company IPO. It helped to pump the market last week and the week before SpaceX. The problem with these and all the other IPOs is that they take money from one stock to their stock. This is a form of distribution. When a man dances on his floor, the person below suffers the noise. When there is a sudden drop in price, the danger is that it can cause a catagious withdrawal. Then, there is the court battle between Open AI and Apple. These things happen along with fraud cases just before a market drop. We will see says the blind man...Peace.

All Talk, No Change

As we celebrated Independence Day this past Saturday, I began this week's piece. My mind drew a blank. Upon reflection, I began looking at past pieces around our national holiday. I would use it like a time capsule to compare what was talked about and what changes have taken place. The chosen article, posted on 5 July 2023 was titled, "Surprises." It began with the thoughts from two icons. The first was Niccolo Machiavelli from his famous work, The Prince.

- Wars will begin where you will, but they will not end where you please.

The second comes from the lead character (Clint Eastwood) in the movie, A Fist Full of Dollars.

- When a man has money in his pocket, he begins to appreciate peace.

The two thoughts found their way into the world of 2023. We had the turmoil of China/Taiwan and Ukraine/Russia. Three years later, we add the US/Israel conflict with Iran and all the other unsettled problems in the Middle East. All talk, no change.

Back then student debt, environment, combustion/electric, old energy versus alternative power and whatever else was happening in your world. The baggage gets carried to our present day. The media was fragmented with so many choices, but they just repeat the news. Some, especially with the presence of AI will provide misinformation to outright lies. It only gets worse today. The power of the pulpit overshadows any challenging voices. This goes all the way to the founding of our nation.

Federalist Papers

When Alexander Hamilton, John Jay and James Madison wrote the "Federalist Paper," they were the pulpit. In seeking to influence the other colonies to ratify the constitution, they exaggerated the truth concerning the judicial system. The job does not separate one from their personal baggage. One court with baggage says separate but equal is fine and another says it violates our rights as citizens. You get the verdicts you seek by appointing like minded people. In our unpublished work, we will provide an answer.  

Anyway, we continue to spend too much on the miitary and use flawed economic theories. The GDP does not consider the cost to our environment, communities and water bodies in its matrix. Our government is controlled by greedy, small minded people whose anti-worker sentiments has outsourced all the strengths of our economy and lowered our standard of living. We are not number one. We are not even in the top ten. Men do not have money in their pocket. We see the results: Lower education, homelessness, mass shootings (mental health) and crime.

The Fed

We have allowed corrupt bankers to establish the Federal Reserve. It is destroying our democracy by creating two classes within our nation: Haves and have-nots. They have consistently destroyed the purchasing power of the dollar and this lowers our standard of living. The Fed, along with the government cater to the wealthy and all their actions result in a top down formation. It should be directed from a bottom up where everyone gets a pursuit of happuness. Today, the next financial crisis is already forming. It centers on our excessive debt and all the new debt that high tech is using to seek the elusive AI dominance. The Fed's answer will be to throw money at the problem. This devalues our currency. Milton Friedman had it right, "Inflation is always a money supply issue." Yet, somehow, we survive. We still can enjoy our day of independence. Hope yours was good and pray for no more negative surprises...Peace

  

Mid-Year Report

- Wisdom is knowing what to do next, virtue is doing it.

- David Starr Jordan

What We Said...

...We called for a maket pullback. The market did attempt a few, but not at the level that we felt was more closely resembling the economy. This makes our initial call wrong. We did amend it after we saw the huge amount of money flowing into AI and data centers. Our updated version says the pullback should begin after the July 4th celebration. We could be wrong. 

Thanks to Tom Bowley of Stock Charts who showed us charts related to the money flowing into semi-makers. For example, Micron looks parabolic on a chart until you look at their earnings. They made over $43 billion in the last 90-days.  Its guidance indicates the boom will continue. This is central to our outlook call. The entire producers of chips are seeing their stock price go parabolic. The question becomes for how long? Placing an order is one thing, however orders can be cancelled. This is the risk in the current state of the market. Dear Reader, it gets worse because the market indexes are rigged. 

Do you realize that 38% of the SPY is tech and 18% is the semi's. Firms that once were included in the index are no longer a part of it. It is like creating a team of all-stars. Only the best is on the team. This is why maybe an analyst from Morgen Stanley calls for the S&P 500 to hit 8300? It is even worse under NASDAQ. They allocate 58% in tech and 32% is in the semi's. It is no wonder that index is going bananas. Everyone overlooks that 40% of both indexes have stocks below their 200-day moving average. We don't. Anyway, we feel that since our economy is consumer controlled and the consumer is deep in debt, the break in the market will happen. Apparently, our call due to the collapse of retail does not matter to Wall St. They only look at all the money flowing into AI and data centers. They do see some risk associated with the continuous influx of money into this special field. We see it too. High-tech is seeking money to cover this investment. They are up against the government which has to cover the national deficit. This will push up rates and then, everyone suffers. Anyway, this is our outlook, but we offer you the view from two leading brokerage houses, Morgan Stanley and Charles Schwab.

Schwab and Morgan

They both agree that AI has pushed the market prices at a parabolic rate. They both see the boom time continuing. Some investors do not realize that the expression boom and bust can include semi's. Most think the term only refers to the oil industry. Semi's experience the same type of spike demand and then, no demand just like oil producers. 

Schwab noted that more retail customers are in the market than in the past. If there is a pullback, retail has a tendency to sell.  Many buy on margin. They are considered by Wall St as weak hands. However, selling has a way of creating panic. Morgan mentioned that the new Fed chair might change the way the Fed looks at inflation. Generally, a spike in oil leads to higher interest rates and versa versa with lower rates.   

The two agreed that bitcoin is in a bear market. The price has been cut in half. They think some of that money went into chips and AI. They both feel a "wait and see" approach to the new Fed is the proper course of action. 

What They Didn't Say...

Neither mentioned precious metals or copper. Copper is needed for data centers and AI. In a future piece we will name our new favorite copper stock. As for precious metals, our floor price for gold was $4800. We are wrong. We feel the metal will be in a consolidation range until August. The top is $4200 and the bottom is $3800. 

Our silver floor was way off the mark. We do not like to use an excuse like the rigging in this market. You should know by now never to trust Goldman or Morgan Chase as they are for fiat and debt. However, the present range of $50 to $55 appears to be the resistance price. It is a full retracement from the time that it rallied over $120. This metal should awaken in August. We'll see says the blind man. By the way, the first crack in AI expenses is from Oracle. They announced the cutting of 21,000 workers. If that sounds high, maybe it is, but then again, consider Volkawagen. They plan to close 4 plants and laying off 100,000. No, that is not a typo...Peace. 

Odds and Ends: June 2026

- Peace is not made at the council tables, or by treaties, but in the hearts of men.

- Herbert Hoover

60-Day Ceasefire?

It didn't last one day. Why? Ben Netanyahu. It is clear by now that he uses any excuse to continue the conflict with his Middle-East neighbors. His purpose is to take land. He not only allows illegal settlements, but he encourages it. In any peace deal, he demands a buffer zone to "protect" Israel. Then, he uses this land for new settlements. This aggressive act only emboldens the negative thinking of the groups that hate Israel. Two wrongs don't make a right. It is because of people like him that we realize there has been no peace in this region for a thousand years. 

Strange Prices in Oil and Stocks

Although oil is testing its recent low and not to debate if that price is low for consumers, investors appear cautious. Not difficult to understand. Maybe peace or the ceasefire doesn't hold. They do know that oil producers are scaling up and if peace holds, a possible glut? 

A study in two outcomes. Western Digital (WDC) was around $40 last August. Last Friday it closed at $746. How about Sandisk (SNDK)? It too was around $40 last August and it closed last Friday at $2184. Are these two a study in parabolic moves? On the flipside, Strategy (MSTR) was $440 last August and last Friday ended at $112. Trade Desk (TTD) was $90 last August and closed Friday at $18.51. We also read where the US Dept. of Justice has charged three leaders in SuperMicroComputer (SMCI) of smuggling billions of dollars in artificial intelligence technology to China. We remind you that these type of sins appear just before the market crashes. However, there is one analyst who calls for the S&P 500 to clear 8300. We'll see says the blind man.

The market dismisses consumer sentiment at a 80-year low. We realize the market is crushing upward with new records, but 40% of its stocks at below their 200-day moving average. When we look at one of the big indicators, King Dollar, we are confused. It closed back over 100 last Friday. I believe this is positioning with the perception that Warsh will hike interest rates. Anyway, this is a tough market.

Space X

We did not seek the IPO, but how could we not follow the debut? Musk generates enthusiasm, but in his soul, if he has one, he disrespects workers and he is anti-union. Too bad. He pushes some good ideas. With his demands for money and control, we wonder about one of his predictions. He stated, "The US will 100% go bankrupt." We sadly see the US facing a financial crisis, but the whole world is in deep doo-doo of debt. We don't know when, but there will be a world financial crisis. Sadly, the people who led us into this predicament will say that they have the answer.

Inflation Report...

...it came in at 4.2%. We say that this figure is short by 6 percentage points. How about this connected aspect? Grown-ups: A new report says that one in three adults under 35 still live with their parents. 

Shout Out!

In the world of lying politicians this man deserves a pat on the back. Prime Minister of Pakistan, Shehboz Sharif is probably going without sleep as he works to end the conflict between the US/Israel and Iran. You are going a great effort and work?

Meanwhile...

...in the US we read about more firms laying off workers or worse, closing their doors. One of the saddest is from Coca-Cola. They are shutting down a California plant that had been functioning for 114 years. By the way, this is the third bottling plant closed by the soda giant. Long John Silvers is closing 700 locations along with their jobs. Popeye's largest franchise owner is filing for bankruptcy. He will close 20 locations. Giant Eagle Food and Drug announced the closing of multiple grocery stores. An operator of 53 Applebee's is declaring bankruptcy. You can add to the list of stores, Subway and Domino's. High-tech, Cloudflare (NET) is laying off 1,000. Another high-tech, Oracle (ORCL) is dropping 21,000 workers. This is not a typo. The race to AI is expensive and needs a lot of power. High-tech firms in the race are seeking to maintain their stock price as they spend excessively. Something has to give?...Peace.

Fed Day: Warsh Takes Command

- "...I can scarcely contemplate a greater calamity that could befal this country, than to be loaded with            debt exceeding their ability ever to discharge..."

- Brutus, Anti-Federalist Paper #8

Split Thinking

In our early days our young nation had many obstacles. The biggest was war debt. When President Washington appointed Hamilton to be our first Secretary of the Treasury, Alexander copied the blueprint of the England's central bank. Immediately, it was opposed by the Secretary of State, Jefferson and almost all the leaders of our revolution for independence. When you have Franklin and Adams in your corner, Washington took notice. All these opponents to Hamilton wanted a strong currency that would act as a deterrent to debt. They chose gold.

We can thank God that their ideas prevailed. Not only that, Jefferson put the message into the ratified constitution: gold is the currency of the nation. The only set back to gold was the formation of a national central bank. However, there were clauses within the bank that advocated gold, its use as the stength of the nation. Our nation instituted tariffs to protect our early domestic economy. We received so much revenue income from tariffs that by 1800, our bonds were the most respected in the world. We arrived!

Opposition...

...never went away. Keep in mind that over half of our early population still remained loyal to the English King and nation. The elite of this group still had hopes that we would return back to England. When those hopes were dashed by our success and ability to transition from one administration to another, they returned to their greatest want, wealth and power.  

As our nation grew, these elite's still had their nest egg. They capitalized on the emergence of American innovation. As time moved along, a new breed of elite's developed, the barons of industry. Sadly, these wealthy titans leaned toward the weathy ideas of "old" money which had its thinking in aristocratic ways.

Nothing's Perfect

Even though our nation kept growing, we suffered economic relapses or recessions. One of the most recognized titans of industry was the banker, JP Morgan. When JP traveled around the world, he found an idea through France. Its economy also had recessions from time-to-time. They instituted a central bank and had regional banking divisions throughout the country. They reported on their district. In this way the central bank would be alerted to problems. They could move money (playbook) to a troubled district to stop any contagion. JP saw his answer to the dangers of his greed and the use of leverage to increase his buying power.

Enter the Federal Reserve

JP pushed for the return of a central bank. If a crisis happened, he had his flunkies remind the government that a central bank could have prevented the problem (BS). When a leading senator from Rhode Island had his daughter marry a Rockefeller, JP's influence had an important ear. Together, they got President Wilson to establish the Federal Reserve. This is like the morgue ordering a coffin. In this case, the dead body was gold. 

Think About That?

A greedy, corrupt banker develops an idea to protect his interest. This is the root function of the Federal Reserve. Our once wealthy nation has seen the purchasing power of our dollar decline every year since the Fed was created in 1913. We have fulfilled the dangerous warning of Brutus and others about debt. The only way a bank makes money is by DEBT. This is the heart of the Fed. In every economic crisis, most of which was their cause, they solve the problem by throwing money at it. This makes our nation and its citizens poorer as we are drowning into economic bondage of debt. This is the central point in the many examples of why we at Evolution say, "End the Fed!" ...Peace.

Second Thoughts?

- A fool bolts pleasure and then complains of indigestion.

- Minna Antrim

Title Refers...

...to the big downturn last Friday. Insiders know that the market is at all-time highs and yet, 40% of its stocks are below the 200-day moving average. They also know the PE ratio is off the charts as well as the Shiller CAPE Index. Their thinking counters this aspect with strong earnings, big tech investing into chips, AI and data centers. They no longer consider what ordinary people talk about. The lack of quality jobs, affordable housing and the continual loss of retail establishments. The break between the market and the economy is just noise in their thinking. 

We worry. Data centers and AI are feeling robust enthusiasm while everything else starves. The geopolitical environment does not help in the Iranian and Ukraine conflicts. And do you know what else is kept quiet, but is the most dangerous economic factor? Our national debt has exploded over $40 trillion...and counting. With that knowledge, how does the dollar rebound to 100 as it did last Friday? This should remind you that the market is irrational. 

They also hear about Jane Street. We told you about the firm. It leads all investment houses in profits. They are hitting on all cylinders. They made $39 billion last year and made $16.1 billion in the last 90-days or first quarter. Wow! They want to grow. They are entering the fray to build their own data center. They need the power of new tech. This is a big plus in their ledger. These big cats see last Friday as a blip on the chart.They sleep well at night knowing analyst like at Morgan Stanley who see the S&P hitting 8300 this year.

We See...

...people seeking to avoid inflation at the grocery store. We see and hear more and more firms closing for good. We read where high tech is laying off 108,000 cumulatively and the lies of a strong jobs report. The latest was 170,000 new jobs. We told you with our large population, the neutral point is 150,000. We informed you about the dangers in the private credit market. Now, we hear that the giant, Blackstone is also limiting withdrawals. They saw requests hit 10%. They immediately imposed restrictions to redemptions. If you are not free to withdraw your money, you are not in an open, free market.

We see this same contagion spilling over into bitcoin. The value ($BTCUSD) was $127,000 last October and closed last Friday at $60,496. Ouch! This connects to Strategy (MSTR). It was over $460 last July and closed last Friday at $120. Someone is crying in their beer? It gets worse. Jim Chanos, the famous short seller who sees financial fraud began shorting MSTR. The CEO countered with a parlay stock, STRC to MSTR. It supports Strategy by offering a high dividend. Now, STRC is losing its price. Can it afford to continue the dividend? I trust Chanos, but nevertheless, this is another nail in the recent rally by the market. 

In addition...

...we see a bearish engulfing candlestick in the Dow on the daily chart and the same in the S&P 500 in a weekly chart. We also see disharmony in the indexes. We told you when the transports hit a new all-time high and on the same day, gave it up. This is a red flag. The S&P fell 200 points last Friday while the Dow fell 695 points. Our calculations formulate that one S&P point equals 10 points on the Dow. The market should drop another 1300 points in the Dow as this is a weight on the down elevator. Space X IPO comes out this Friday and the new Fed chair has his first meeting next Wednesday. Any second thoughts? Peace. 

Odds and Ends: May to 3 June 2026

- One man with courage is a majority.

- Andrew Jackson

Good, Bad and the Ugly

It is our favorite cowboy movie. In real life, it has many similarities. The good is a Maryknoll sister working in Hong Kong. Sister Warioba, along with a priest, Fr. John Wotherspoon spend countless time and energy to combat human trafficking. They work a program for prisoners in the leading Asian city. It is called, "Voice for Prisoners." Beside our shout out, I ask those in Hong Kong to give them a donation. We all know that the power-to-be use the law as a weapon.    

The bad was the Supreme Court ruling against President Trump's tariffs. Any nation has the right to protect itself. This ruling takes away more than tariffs. It destroys a nation's sovereignty. 

The ugly is the manipulated stats on our economy. The present state is designed to protect the psyche of the public and the image of whatever is the current administration. The Bureau of Labor Stats (BLS) stated the GDP grew at 1.6% for the first quarter in 2026. They added the Personal Consumption Expenditures Price Index (PCE) came in at 3.3%. This phony created index is the height of manipulation. It does not include food and energy. What do people need every day? They need to use fuel (energy) for warmth or air and or to cook or get to work. We all need to eat every day. The BLS moniker should be shortened to read, the "BS" agency.

Continuing: The last reading by the BLS for the fourth quarter of 2025 came in at 0.5%. This includes Christmas. That should tell you everything that you need to know about our economy. Wall St. does not reflect Main St. By the way, year-over-year inflation gauge came in at 3.8%. Together, even with all the manipulation, the bottom line is our economy is in stagflation. We are the only ones to call it like it is. We see the "Stealth Inflation" getting worse as food prices continue to increase. We do not have to remind you that energy is up 50% this year. The movie was better than our reality. 

Precious Metals

They quietly are consolidating. The next leg up is coming. They just received more help from Abaxx. The Singapore firm is launching their second product Silver Singapore (SSP). It will be a US Dollar denominated to a 1,000 Troy ounce physical product. It will be held in a Singapore vault along with their first launch gold product in 2025. We add this fact. Singapore is now the largest Southeast Asian Stock Market. 

Energy Trend

A new form of power is being utilized. It combines gas with batteries to make electricity. Battery prices have fallen 75% since 2018. We know we have plenty of gas from our politicians and oil rigs that flare it. 

Market and Economic Worry

The stock market overlooks many dangers while riding high with the bulls. With the Dow touching 51,000 last week, no one noticed the momentum was also being carried by margin debt. At the moment, this investment debt vehicle exceeds the 2,000 internet bubble and the financial crisis of 2008. These retail investors are listening to the misleading info from pundits. They tell this tale. If you purchased in NASDAQ after COVID-19, you have in excess $200,000 in profits. This is only one story. We have other influencers citing Nvidia or any of the other chipmakers. These stories effect your thinking. The risk to leverage your investment with margin overcomes any fear...until it is too late...Peace 

Calendar Impact

- I'm not afraid of storms, for I am learning to sail my own ship.

- Mary Louise Alcott

Second Thoughts

I am developing some doubts about my call for a market pullback. All the indexes have hit new record highs. This is in harmony to Dow Theory. It indicates that the market will rise higher. The only blimp on the chart came from the transports. On the day that it hit a new record high, it pulled back to form a bearish engulfing pattern. Then, it dropped all the way to resistance at 19,950. This is worth watching.

We maintain our belief that the market no longer corresponds to the economy. The break happened a while back, but it is clearly evident in our present state. Inflation is crushing the poor. It is shrinking the already shrunken middle class. They have given this a new label, the E-economy. They love labels. Anyway, homes sales are down. This effects labor and construction. Car sales are down. This effects many providers to make a vehicle. The recent surge in EVs hit a roadblock. The money starved government is looking for revenues. Word abounds about a yearly tax to EV owners. Why, you ask? Because combustion cars pay two taxes with gasoline on fillups. There is a state and federal tax. President Trump was talking about giving a tax holiday as we mentioned previously. We also stated that we do not like this idea as the US Department of Highways needs the revenue for roads. 

Then, President Trump, seeking to keep his already depressed voter's approval rating, has given Russia another 30-day waiver to sell petro. Very, very bad. He asks us to be patient with inflation due to the Iran conflict and quietly, shows he lacks conviction. Again, very, very bad. 

With that said, King $Dollar is staying strong and the charts show a bullish rising pennant pattern. This puts a cieling on inflation. California needs that. Gasoline is $6.95 a gallon in San Diego and over $6 bucks all over the state. This could be our future? 

Title Translation

There are certain dates on the calandar that for one reason or another, the market responds favorably. We just past a big one, Memorial Day. The market popped! This coincides with lull in the conflict. President Trump would like nothing better for the conflict to end before the next one. It is very big. This Fourth of July will mark the 250 anniversary of our independence. President Trump is a lot like Fernando who was famous for saying, "It is better to look good than feel good." 

There are a few other calandar dates that the market watches. The January Barometer, which came in positive, the Santa Claus Rally and Thanksgiving Day. However, this years Independence Day is special. The market could consolidate and then, rise for the holiday. 

Related

The new Fed Chair, Kevin Warsh takes the seat with Iran conflict, inflation and a divided FOMC. His first meeting is June 16-17. What does he do? We'll see says the blind man.

Bottom line: We feel that the market should temper its gains until we get closer to the big event. Then, a blow-off rally that is followed by razor cuts by the market as it finally pulls back. If we are wrong, all that $650 billion that is being spent by big teck for data centers and AI will rally the market even higher. We see Fernando's lifestyle in these CEOs. They are laying off people like Meta just did last week (10%) to balance out the money invested into AI. This approach makes the stock evaluations look better, but it is only magic misdirection. If you don't produce and AI has not, a day of reckoning is coming...Peace.  

  

History Repeats

- History may not repeat, but it rhymes.

- Theodor Reik or Mark Twain (confusion does not distract the wit).

Recession Delayed

It is no secret that the world is losing 20% of the economic commodity, oil due to the Iran / US-Israel conflict. The big summit between the US and China did little to nothing to change the outlook except to agree that no nation can place a toll on waterways. So, how are nations coping under the stress of this important supply chain disruption? 

Strategic Oil Reserves

The US learned way back in 1973 with the OPEC oil embargo to have an oil reserve for emergencies. Currently, it is estimated the SPR stand at 392 million barrels of oil. The figure represents the weekly decline from 397 million barrels of oil. President Trump has also kicked around the idea to provide an oil tax holiday during this conflict. This is the federal tax on each gallon that consumers pump. 

We believe the tax holiday is foolish. The US needs this money for road service. Trump made a critical error in forgiving Russia of the oil sanction imposed on them due to Ukraine conflict. He must accept responsibility for his actions. His decision has caused oil prices to rocket higher. We all suffer together until this mess clears itself and peace is restored.    

You may not like our stand against the oil tax holiday, but our national deficit does not need any more juice. The fact that our yearly budget now has to pay $1 trillion every year just to cover the interest on our debt. The total still compounds every day, week, month and year. To give you a perspective of this sin consider this point. In 1981, the total debt under President Reagan was $1 trillion. Flash forward. Now, it accounts for 10% of our yearly budget. Our nation has many problems. This is one of the most serious.

IEA

It stands for International Energy Association. This was the global community's answer to develop an energy policy after the OPEC oil embargo. It started in 1974. It has 32 member nations and 13 associate members. They represent 75% of the global demand for energy. They have deployed 164 million barrels of oil to its members. They are ready to release another 210 million barrels more. This is how the West has been getting by due to the oil disruption. 

However...

...the West was not ready for the sharp oil price increases to its economy, especialy with jet fuel and deisel. The tipping point is at hand. Then, we have to take into account the Asian nations. China has an SPR. Many, if not all the other Asian nations do not. President Trump has told China it could buy US oil because almost all of its oil comes from Persia. China keeps secret all the oil it buys from Russia. That oil can be delivered by train and over land routes. All those other Asian economies are in peril due to the lack of oil to keep their economic engine running. The worst has the largest population. India is contemplating ways to stop its citizens from buying imports like precious metals to concerve currency. The country not only lacks a SPR, but currency reserves to purchase oil. They are in a bind.

Looking Ahead...

...we can easily see an oil spike to $140 a barrel. Not good for anybody. JFL is old enough to remember seeing signs like "no gas" on service stations. If the conflict continues and at the moment, it appears to do so, he says this will happen...

Odd / Even

It is a designation by the last number on your license plate. If the number is odd, you can buy gas on odd number calendar days. If even, the same way to buy gas. I wonder what vanity plates will do? Anyway, let's hope things do not deteriorate to that point? ...Peace

Numbers: Fear and Risk

- Faith means trusting in advance what will only make sense in reverse.

- Phillip Yancey

10 New Millionaires

Last week 10 chipmakers added a combined $10 trillion in value in price and maket cap. Some like Micron's boss who says that they see another 80% growth. We know big teck has spent trillions on new data centers for AI. Someone had to feel the effects of all their spending. The chips on the table are all-in on the chipmakers. Anyone who had a chipmaker last week is rolling in big bucks. The NFL isn't the only one printing new millionaires.  

Chip Snapshot

Microm (MU) rose an incredible 38% just last week on strong volume. The chart agrees with the CEO. It says momentum will continue.                                                                                                                  Nvidia (NVDA) is now worth over $5 trillion in market cap. Even at highs and highly priced, it rose another 8% last week. The volume was steady.                                                                                            Broadcom (AVGO) is not as strong as its peers, but rose with them.                                                            Intel (INTC) is one of the big turnaround stories. Since late March, it has been on a tear. It rose another 25% last week. The volume is very strong. It could rise even more.  

Sounds Great, but...

...we stand by our call on the market. We see a pullback. Remember, we told you that the market indexes are overly influenced by teck firms. The money spent like Nvidia on its partner, Coreweave (CRWV). The firm loses money, but Nvidia keeps the stock up. Together, this is pumping up the market and related sectors in technology. A cheaper way to play is the ETF in technology, XLK. However, when we look at that chart, there is no conviction in volume. This is a red flag. This is another reason why maybe you should know when to walk away from the table, have a nice dinner, treat your family and self a night on the town. There will always be another trade. Why, you ask?

NASDAQ

It was 23,000 in March. In less than 10 trading days, it rose to 26,000. The Nas- 100 has climbed a crazy to 29,000. The market says there is no risk and no fear. Consider cybersecurity in data centers. The AI models are not perfect. Hackers are breaking into these platforms. They are just stealing from big teck with no investment other than their time to hack. 

Then...

...look at the rest of the market. The high tide is not lifting all boats. Check out the price of Avis (CAR). It was $850 in April. Last Friday, it was $145. How about doing some laundry? Whirlpool (WHR) was over $107 last July. Last Friday, it was $44 on strong negative volume. How about Nike? They got shot with a 44 too. The stock was over $78 last August. Last Friday, it was $44. Not good. There are many others. I think that you get the point.

In addition...

...the government released its jobs report. They BS was about a strong showing. Folks, it was 115,000 new jobs. Well, that is a lie! With our population over 325 million, it takes a minimum of 150,000 just to stay even. So, this is a negative and yet, the government claims unemployment held steady at 4.3%.  This lie will quietly be changed in the next update to read 4.4% which in itself is another lie like the inflation report. You can get a clearer picture with the labor participation rate. It fell again. It is below 62%. This is a danger zone. As we put the pieces together, we say there is serious risk in this market. When the tide goes out, it leaves all boats stranded. Beware!   Peace.

Really? 3.2% and 2%?

- The real problem is not why some pious, humble, believing people suffer, but why some do not.

- C.S. Lewis

Sell in May...

...and go away is an old Wall St. saying. Last week the government broadcasted two important stats. They claimed inflation grew in March at 3.2%. They followed this by announcing that our GDP grew by 2% in the quarter. Really?

Infaltion: This is only true by their phony matrix formula that does not include the three necessities that we all need everyday. We all know that fuel has risen by 40%. Every time we go to the grocery store, prices rise from week-to-week. Your rent only changes when the lease is due. Your home may have risen in value, but the expenses to keep and maintain it have risen. The worst is utilities and insurance. So, does anyone believe that inflation only rose 3.2%? We don't think so. It is more like 10%.

DGP: Our economy grew by 2% in the quarter. We find this misleading. We point to two facts with our conclusion.

First, the government, especially the administration, by now knows that war pumps the economy. They keep the debt caused by it out of the limelight. Ever since Russia invaded the Ukraine, we have aided the Ukrainians with weapons, supplies and other aspects. This aid has added strength to the economy. The recent conflict with Iran only adds to military spending which helps the economy. It masks my second point. Our economy has been consumer generated since the late 1970s. Then, our retail environment grew radiply along with housing. This created a problem. We overbuilt shopping centers and malls.  

As inflation slowly worked itself into the pocketbook of consumers along with the impact of shopping on the internet, brick and mortar locations began to suffer. The gradual decline was not alarming as everyone knew developers overbuilt. However, this decline saw two dramatic surges in the decline. The first was the financial crisis of 2008 and this was followed by COVID-19 in 2020. 

We have posted in many of our pieces the continuation of retail damage. It is now at the catastrophic stage. It is no longer just retail. Spirit Airlines is just the latest firm to go to bankruptcy. It seems every week another business announces job layoffs. Almost every firm cuts back on investment research. This implies no future products or service. Of course, you may doubt our point when you read about high-teck and their investment in AI and data centers. Dear Reader, this is a two-sided sword. Case in point: Meta announced that they will be risking $600 billion in AI and data centers. Folks, that extremely high number does not come without repercussions. In another statement, Meta is dropping 8,000 skilled positions. 

This type of investment and subsequent cutbacks appears with all the big players like Oracle, Apple, Microsoft, Amazon and Tesla. There are many more firms that are seeking the benefits of AI, but so far, and as far as we can see, there is no financial reward. Google is seeking money to do their entry into the field with a 100-year bond. That is crazy! This money has enticed chipmakers, servors and other infrastucture in the sector. It has also caused the stock market to hit new all-time highs in the S&P 500 and NASDAQ. We already told you that their indexes are closely tied and over represented by these same firms. This is misdirection. We said it before and we will repeat it here: there is a disconnect between the market and the economy. The market has nothing to do with the economy and the lives of our citizens. It may hold positions that could effect our retirement and things like that, but nothing in our present state. Oh yeah, the hidden dangers looming in private credit market.

2cd. Opinion?

Gary Shilling, the past, famous economist from Merril Lynch, sees recession as definite with the market dropping 30% by the end of the year. He sees some of the things that we see.

Present State:

Nike: they are cutting 1,400 jobs.                                                                                                                  Lammes Candies: famous candy store in Texas that had been in business for 141 years is gone.            Microsoft: is offering buyouts to 7% of their firm.                                                                                      Meta: is laying off 10% of its help.                                                                                                              Amazon: throwing in the towel on 16,000 workers.                                                                                    Oracle: They can't decide on how many they will lay off. Somewhere between 10,000 & 30,000.        Block (part of Square): they are dropping 4,000.                                                                                        Salesforce: so long to another 1,000.                                                                                                            Snap: Goodbye to 1,000.                                                                                                                              Eddie Bauer: is filing for bankruptcy.                                                                                                          Popeyes: is closing 3,193 locations and all the jobs tied to them.                                                                Starbucks: continues store closings. They added another 568 locations and jobs.                                      Coinbase: is cutting 14% of its workforce.

Bottom Line: Our consumer economy cannot keep retail from declining which means consumers do not have enough disposable money to maintain our economy. We advised you to save for a rainy day...Peace.