Next Leg in the Inflation Relay

Two weeks ago, we gave you our outlook on housing/shelter. We mentioned briefly in our Odds and Ends segment last week, the second leg in the relay of inflation - food. The three main components as we see, are housing, food and energy. The Federal Reserve gets away with the BS that these three are not considered in their matrix formula for inflation due to their high volatile nature. We have no one with the bravado to challenge their formula. Our basis is built into reality. Everyone needs those three to live. They are essential. We do not buy a computer every day, but that item is in their formula. 

We can knock the Russians, the Chinese, blame the immigrants, but everything that is wrong begins with the Fed. They control the use of money. Lately, with inflation in the news, the Fed says it will act to fight inflation. Dear Reader, they are the cause of it. You cannot print dollars excessively without impunity. President Biden has the nerve to call our economy strong with record low unemployment. The only record that our government has achieved is record deficits. The president is ending tariffs which will guarantee a new record deficit. He is opening the borders. We will get more crime and gang warfare in our big cities. When we get a recession, we will begin to see record homelessness, our first proud school system reduced to third world status. Food banks will be our growing segment in society. Things are not looking good. Chris Rock won't be the only one slapped in the face. We all will feel the pain. It begins with the bureaucrats.

Unemployment at 3.6%?

Yes, according to government stats. However, if anyone looked deeper into the mechanism to determine unemployment, the labor participation rate tells us a different story. If one goes back to just 2002, the labor rolls showed 66.5% of us were employed. Today, it is down to 62.4%. Where did the 4.1% of us go? How many people is that? I can ballpark it for you. It takes about 150,000 to move one tick. This equates to roughly 6.1 million people out of work. Keep in mind that our population has grown in those 20-years. This means our estimate is on the low end of reality. These are just sample reasons why we at Evolution say that both of our political parties are corrupt. Anyway, we were going to get into food inflation. 

First, I need a cup of coffee. Question? Is coffee food? To me, yes. The charts show coffee is consolidating on the high-end price range. I don't know about you, but I did not need the charts to tell me the price of coffee. My supermarket never puts it on sale. It constantly cost more. I took to the dollar store to escape inflation. They had Spanish coffee in small package of 6-ounces. I did the math. It would be cheaper to buy 4 of these packages and get 24-ounces than buy my larger brand at the supermarket. However, inflation just killed my alternative.

Dollar Tree Store...

is no more. The store sold itself by claiming that anything it sold, it would only cost a dollar or less. No more! It should now be called the $1.25 Store. They raised all their prices by 25%. This is the clearest picture that you can get on food inflation. Even some of the Federal Reserve Governors are coming out to say that they see inflation for March coming in at 9%. They will BS about a half-point interest rate increase. People, you can get a better yield on the 3-year T-Bill than on the 30-Year note. This is revealing to you the truth on inflation. It is only in the early stages, but again, no one has the bravado to tell it like it is. The Fed Chairman, Powell will try to manipulate the market and media by declaring that inflation is peaking. We predict this will be his follow-up to the "transitory" remark on inflation that he gave. We told you before that the CEOs of food companies will be raising their prices this spring. Since the bottlenecks in the supply chain have not receded, we see higher prices across the board. Here is another insight to view inflation in food prices. Yesterday, the top thirty traded stocks were all down. They are selling everything. Now, I mentioned a food fund (DBA) in last week's piece. In the down day of yesterday, it was up. Next week, we will look at the third leg in the relay of inflation - oil.   Peace.

Odds and Ends: March 2022

We begin where we left off last week - housing/shelter. I use the two descriptions because many of the world refugee's or displaced people live in tents. We will have a dual problem in the US. We now have a serious civil problem in America concerning shelter. People are working; however, their wages cannot cover rent. There are visual protests and disturbing street scenes of people sleeping on cardboard or living in tents. City and state governments will soon be cracking down to remove them. Question? Where will they go? 

We have a suggestion. Maybe the federal government could pass a stimulus with the protection clause that the money should be used by the receiving state to build affordable housing? Tent cities will only become poverty zones and an easy target for crime and illegal drugs.

Ukraine

The war in that nation of 44 million is seeing a mass migration. It is estimated that one-fourth or 10 million people are being displaced. We have another suggestion. The EU should put aside billions to build "Migration Cities" to house these people. Even after, (hopefully) the conflict passes, these structures should be maintained because the world is way too close to nuclear conflict and or, possible famine. These migration cities could then be used to shelter displaced people in Europe - Heaven forbid this happens. Sadly, there are too many idiots in the world. By the way, China built a "Ghost City" of tall, empty skyscrapers. Again, sadly this points to the thinking of a human tragedy. 

Silent Spring...

was a great work about the killing aspects of pesticides back in 1962. Sadly, we are still slow to change. With that said, we have another fear this spring. In 2022, the news is so scary for humanity and our climate. The ego in Russia is overlooking the dangers. If things go wrong and WWIII dawns, you will have an empire of ashes? Ponder that, you idiot!

Even if things settle down, there is another crisis on our doorstep. Before the first cornerstone is laid for affordable housing, we all have to eat. It is no new news that food costs are rising. However, did you know that Ukraine provides 26% of Europe's food supply in wheat, corn and other staples? They also export to the global community. The war will kill this supply. Prices are going to rise. Already there have been announcements by the largest companies in the US that food prices will rise this spring. Sadly, these food costs will stop the good nature of fellow Americans to continue to contribute to food banks as they will feel the pain of inflation. Indeed, this appears to be a silent spring.  

Another Outside Aspect

The House is set to vote on the legalization of pot this week. This is definitely food related. The effects of THC on your body is hunger. The "munchies" are a real side effect.

Behind the Scenes

President Biden made another mistake with our economy. He ended the steel tariffs with Japan, and he followed up by ending them with England. We have the need, but our manufacturing sector has been decimated by outsourcing. He has not allowed what is left the time to expand to cover the demand. On the plus side, he signed an agreement with the EU to deliver more LGN gas. This is where our energy sector should be putting money to work.

One Positive Note

There is an agricultural fund, DBA. It is run by Invesco DB Agriculture Fund. It is a nice way to protect your money with rising food prices. There are two gaps. The lowest is $21. The other is around $21.60. We still believe the market has another pullback. It probably will test the last high before declining. That would be a good time to enter. Maybe the crooks at the Federal Reserve do not count food in their phony matrix for inflation, but you and I know better. We need to eat every day.   Peace.

The Nightmare on Rental Street

We begin by reminding you that the three most important things one needs in day-to-day living is food, energy and shelter. The Federal Reserve gets away from including any of them in its matrix formula of manipulation about inflation. This should be the national protest and not just from a picket line, but the media, internet and Congress. It doesn't happen. Now, the third piece in the important items will become more visual both literally and physically. The moratorium is ending on evictions. We will see more people living on the streets, in cars and RVs. This will be an ongoing horror film just as sad as the videos from Ukraine. 

Landlords...

have been raising their prices on rentals in double digits. They are seeking to reclaim the lost rents due to the moratorium. They seek to prepare for the next moratorium edict. Rents are up nationally by 19%. Rents have risen by 0.6% every month! There is also another hidden problem in rentals. Because landlords have not received any rents for a long period of time, many of these small owners could end up in bankruptcy. This will only add to the problem of finding rental space that is safe and affordable.

Anyway, we start by showing life in the Big Apple. A medium one-bedroom apartment leases for $2,045 per month. Dear Reader, according to mortgage loan officers, to qualify for a home loan, one must be able to cover the P&I with one week's pay. By calculating the rental price in New York, this implies a salary of $8K per month or $96,000 a year. Keep in mind, that my example uses a small unit. I'm sorry, but very few of us make that much money. This is why we not only cannot afford to buy a home, but now, we cannot even make rent. People are using one-half of their income on rent. This is why living paycheck-to-paycheck, our poor citizens cannot sustain a car breakdown, dental need or any of the other of life's unexpected situations. 

Single-family homes...

give us another picture of inflation and affordability.  The above NY example is with an apartment or multi-family building. Many times, and locations in inner cities, these are areas where families do not want to raise their children. They seek a family neighborhood. However, single-family rentals are up 12.6% from a year ago. An Apartment Life report shows leases are rising even higher at 17.6% from a year ago. It seems whoever is releasing a study, their findings are one upping somebody else's work. In addition, other factors are causing costs to spike like repairs, taxes, and insurance. Even insiders like the Fed Governor of San Francisco says higher prices are coming. Former Secretary of the Treasury, Larry Summers says, "Another 7.4% rise leases is coming."

Other Factors...

like the recent lockdown in China where 51 million people are in curfew. This will mean more supply chain problems. Governments are putting more budget money into the military due to Russia and Ukraine. Again, this means less consumer items which will result in higher prices. Law of Economics: more demand, less product = higher costs. The recent Federal Reserve interest rate hike is a joke. Speaking of which, the chairman, Powell said that six more hikes will come this year. This is pure BS! He follows that lie with the claim to fight inflation with six more hikes next year. The Fed is for the wealthy. It steals from citizens by using fiat money, which is artificial and in violation of the constitution. Never forget that! This is why we say, End the Fed!

People, rates should never have been this low. It actually causes inflation because the rate was below the actual inflation level all along. This is negative rates!

All these belated rate hikes will accomplish is making home ownership more difficult. Even if we are wrong, the interest rate at the end of this year will only be 1.9%. That is a tragic joke when inflation, even by the government's manipulated formula is running at 7.9%. 

Second Example

The household medium income in 1950 was $2990. This amount actually covered 40% of the average selling price of a home. You could have your castle for $7,354. This is what inflation does to the value of the dollar, our standard of living and social mobility. This is how central bankers and the Fed have destroyed America. End the Fed!   Peace. 

$6900 Gold!?

The headline makes you think, "Another crackpot?" Dear Reader, you should know by now that I may be a lot of things, but not that. If one were to project the technical chart based on the history of advancements or declines using Fibonacci math, this is the number. It probably will never happen, but we do see gold at $3400 a real possibility. This is how we came to this conclusion.

New 1965 Mustang, only $1995.

Yes, people. That is no typo. In fact, a new VW bug sold for even less. This is the silent assassin of inflation at work. It is mainly due to excessive money printing alongside of deficit spending. You know who the guilty party is, The Federal Reserve. Anyway, back in the day, gold was still under government machinations. It sold for $35 an ounce. However, if you move the dial to 1975 and gold was allowed to move by the markets, it rose to $160, and a new Mustang rose 5x to $8,995. Gold, by the way was still under the influence and pressure of the anti-gold system that settled upon fiat money. It still is. Anyway, fiat money is only money because the government says its money. If you do the math, gold rose with inflation.

Now, fast forward to today. The new Mustang is over $44,000. Inflation has made the same car multiply in value by another 5x. Now, when we do the math, we have to realize that ten years (1965-75) is missing from the equation. Nevertheless, this is how we addressed the formula. We looked at gold's first peak price in 1980. It reached $850 an ounce. So, we multiply that price by 5x to equal $4250. This is what gold is really worth today. Think about that? Gold is always under influence and pressure from the anti-gold standard people. 

So, how did we come up with the $6900 figure? We took the yearly inflation rate of the ten missing years and added it to the final result. However, gold will never reach that number unless we return to the gold standard. The only way that could happen if people realize that central banks destroy your currency and standard of living. End the Fed!

What the world needs is a new basket of currencies based on real value. 

What is real value, you ask? Any nation could tabulate their currency value by including its precious metals, rare earth minerals, copper, lithium, etc. Then, global trading will have a standard based on commodities that are necessary and add real value to a currency. One should include gas & oil in the mix, but those commodities would gradually shrink due to its polluting nature.

Cup and Handle

If you go back to 2013, gold has formed a cup and handle pattern on a monthly and yearly chart. This is very bullish. If you do an ABC advance or breakout from 2016, one will get a 5x multiple or close to it. The breakout level was $1000. It rose to $2059 in 2020. You get a retracement from then until now. You multiply the percentage, and you reach $6900. We believe the natural progression from today will settle at $3400. The number 34 is a golden Fibonacci number. We love it. With that said, we stand by our three picks. There is a pick in everyone's price range. Our first choice is...

Barrick Gold. It closed last Friday at $24.35. The first test is $26. We see it piercing its previous high of $30. We see $35 a share price. It also pays a dividend that it constantly increases.

Argonaut Gold. It closed last Friday at $1.96. It has a big, down gap due to losing their CEO. However, they will have a new mine that will be very profitable in the near future. They are already profitable. We see $7.75 in the future.

Wheaton Precious Metals. It closed last Friday at $48.10. This is a streamer company with a solid dividend, no debt and strong future mining production. The charts say this stock should rise to $64. Its last earnings report showed a miss. It was due to the Salobo Mine which had excessive rainfall. This is a minor glitch. This caused damage to the mine. We hope that we are right. We get very depressed when we mention a stock and it fails. Let's pray for peace and give thanks to all our blessings. Amen.   Peace.

The Elevator is Going...

down!

We have many indicators that influenced our thinking. More on that after this. It appears that my book will never be published by conventual means. I may have to resort to self-publishing. Dear Reader, this blog is free. When you consider all the correct forecasts that you have read on this site, I ask you one favor. If I self-publish and offer my work on this platform or elsewhere, please purchase it. If you like what I suggest, please suggest it to two of your acquaintances. Thank you.

Indicators

We gave our readers many predictions in 2021 and even prior to then. An important recap: When oil was in the $70s in November 2019, we liked it. The COVID-19 crash sent it down to $10 bucks. We thought this was crazy. We predicted the seasonality would recover any losses. We were right. Last Friday, West Texas hit $115 a barrel and Brent rose to $117 a barrel. Our first indicator says every time oil spikes over $100 a barrel, a recession follows.   

The precious metals are not indicators, but they fall under our calls in the recent past. We stand by our founding fathers and favor a strong currency. We stood firm on Barrick Gold. It went nowhere for two years. It is awake! It should test and breach its $30 high. We called gold to hit $1946. Now, $2,000 gold is a given. If volume picks up, a new all-time high will happen this year. You might ask yourself, if these people know so much, how come they are not rich? Well, we don't have the financial resources. When we make a recommendation like Barrick, we are buying 500 shares. If we had the means to purchase 10,000, then, we would be rich. Continuing...

Housing gives up a clear picture of our economy. We believe that everyone should seek to have their own property and domicile. Now, we fear what is happening in real estate. The medium-price home in the US is well over $200,000. Prices are rising over 10% everywhere. If one compounds the price, the results are frightening. Picture your home value or mortgage as a bond. The crooked Federal Reserve keeps rates artificially low. A 30-year bond only yields 2.16%. Get real! Anyway, we will use the 10-Year T-Bill. Why, you ask? Because we want you to understand the near-term big picture. Your house grows 10x more than what the government will pay you. This translates that the medium price home will double by 2028. Maybe President Biden let this secret out in his State of the Union speech? He said, "No one making $400,000 a year will be taxed." First, no average citizen makes anywhere near that much money. Consider, in three years, that person is technically a millionaire? Secondly, housing will not be affordable for police, nurses, firemen, postal employees, etc. We will see more cities planning affordable housing measures. They fear that all service people will flee due to a lack of affordable housing in a safe neighborhood. This is and will continue to be a big problem in our society and economy.

Crime

It will rise with the wealth gap. It will rise with the lack of opportunity. We must remember that we are not a homogeneous society. The lack of clean, safe and affordable housing will negatively affect our economy. "Black Lives Matter" won't help this picture.

2cd Indicator

Do you know what "window dressing" means? It refers to all the funds associated with the market. They purchase stocks at the beginning of every month. This is a hidden Bull aspect to the market. Big money coming in every month. It pushes up prices. Well, last week we had a very poor window dressing. If the Bulls could not move the market, this says the Bears are gaining control. We have had a series of lower highs and higher lows. In addition, NASDAQ displayed a "death cross." The 50-day moving average fell below the 200-day MA. Consider this? The stock market has a circuit breaker of 7%. Trading will be halted if this level is breached. We had it happen 4x in 2020. None since then. However, if it appears, expect some panic selling and margin calls.

Stock/Commodity Ratio (3rd-Indicator)

As stated, oil is on fire. It is not only over $100 per barrel, but the charts say West Texas could hit $167. Ouch! Anyway, this ratio says when it falls below 41, a recession follows. We are below it. Forget palladium. Russia controls almost 90% and they are in no mood to help anyone. If you need a doctor, you will find inflation running rampant. Dr. Copper has his prices at all-time highs. Bottom line: inflation is the virus in commodities. The temperature says our pocketbook will feel the pain. This will not help our economy or the market.  

Two More Nails

After the market closed on Friday at the lows, the market received two more indicators. One, there was follow-through on Monday and secondly, the market had the conviction of strong volume to the downside.

Dichotomy

King Dollar rose to 98.67 last Friday. The war in Europe is the reason. Last March with the virus, the dollar hit 104. If things calm down, we expect the dollar to correct. If things get worse, it won't matter?! Anyway, King Dollar should always be on your radar as well as interest rates. Speaking of the devil, the Fed will probably raise the discount rate by one-quarter. This is basically no change. However, their BS controls the narrative. We predict that they won't mention the compound effect on housing. They will mention the unemployment rate which fell last month to 3.8%. Of course, no one here at Evolution believes that. Peace. 

What Needs to be Done, Now!

 As you know, my two biggest pet peeves are the Federal Reserve and the military. This piece may make our comments sound hypocritical, but bear with me. When you spill milk, shouting is not the proper response. Why did it happen? Usually, the answer is carelessness. You should seek to be more patient. Anyway, the Fed gives us our cross of debt. The military gives all of us the cross of a nuclear war to which is death for everyone and the planet. The problem is the Federal Reserve violates the constitution with fiat money. This "fake" money allows the military to run up our deficits, year after year. Everything that they do or say is wrong. The word intelligence is a joke. They just wasted over $3 trillion in the past twenty years. Then, there are the lives that were harmed or lost due to their stupidity in the Middle East. The lies that they spread to achieve their aims. They are squanderers with self-interest. The only time that the military should be heard is in times like now. Consider for a moment, what we could have achieved with a proper use of that money? My water idea which I remind you would end flooding along all rivers, provide relief for farmers, clean Hydo power and clean water for all our citizens. Green innovations? Other ideas to help our society and maybe the global community?

Sadly, this leaves us little options. The warmongers in Russia and their leader are predicably following an ancient philosophy. Putin is at an age where power consumes your soul. The theory states that there are four stages in life. Being born (first stage), and we grow to reach the childbearing stage (2cd). This is followed by wealth and consumer period (3rd). Then, one seeks a legacy of power (4th). This is dangerous for all of us. The person knows that death awaits. He could care less about other lives. We need to prepare and prepare properly. There is some hope in the philosophy. A person mellows in the later stages of the fourth quadrant. He seeks to do good. The only fear is if the person is a sociopath like a serial killer. 

Nevertheless, an agreement should be reached among all the allies on what to do if Putin pushes the envelope? It is foolish to die a thousand cuts. The correct answer is scary and tragic. It does no good rusting in a silo. This is why we never should allow the military to influence government. Their machinations and schemes lead to these situations. Now, we must do what we normally do and believe. Society gives the death penalty for murder. War is murder. Hey, Putin, can you figure what I'm suggesting? Stop, this ego BS!

EU, US and Global Community...

should find a solution to help border nations with Ukraine to assume the wave of refugees. This should not be tent cities that gives photo opts. We need a continuation plan to help everyone involved. 

Cyber-security...

is foremost on the list. An enemy would love to win a conflict without nuclear. Cyber is the way. Every day in the news, someone or firm is attacked for ransomware. In war, it could mean cutting of communications, power in utilities and production to supply our troops. Dear Reader, our internet was allowed to function without the proper security. A computer should tell you that a malicious or unknown address is seeking into your system the moment that it happens. We don't have that. We have patches after the fact. The government needs to set up a new closed-circuit system. It would have the power to over-ride a hack on any member deemed necessary for our nation to continue. So, the moment a firm is attacked, they close their system. They reopen through the closed system until the threat is removed. By the way, no one in the government can have access to this system from outside the system. We don't need another Rosenberg like in the Manhattan Project. 

We also do not need to use a cyber-attack on Russia. It would only allow them to know how we would do it and then, plan a counter. We don't need to give them any real intelligence. This is really dangerous because we have demonstrated that we don't have any intelligence or patience.

In addition, we need every chip maker in Taiwan to send their chip blueprints to this system, immediately! They also need to have a self-destruction system with all data and blueprints that could be utilized at a moment's notice. The BS from China about Chinese culture and history of the island is a smokescreen to the fact that we built up Taiwan as the chipmaker to the world. They seek to control the chips. If they did, they can stop an economy. Hopefully, after the threat is removed, the data can be returned to these firms. They can begin again to produce for everyone.

Hypersonic Jet

We had strange moving objects in the sky last year. At the same time, Russia announced that they have developed the first hypersonic jet. I believe that they tested it. Maybe, they think that they can control the skies? We need another Chuck Yeager! We need to start yesterday at producing a flyable, hypersonic jet. It should be similar to the Virgin Atlantic plane that flies passengers to a trip in space. The military version should be able to break the atmosphere to enter space. Then, we will control the high ground. This is better than nuclear. The ability would give all of us peace because this jet could destroy any satellite. We would control communications. Only an idiot would start trouble knowing that we can shut down all their communications. Then, we need to return to our previous problems. We need to End the Fed! We need to end all military entanglements! We need to Give Peace a Chance!

Odds and Ends: February 2022

 The market is up 100 on Monday and down 100 on Tuesday. This is our current state. The NASDAQ composite posted a "death cross" last week. This is the 50-day moving average falling below the 200-day moving average. However, this is on the daily chart. If you look at a weekly or monthly, the index is moving sideways or a consolidation pattern. You can find harmony in this aspect. The "Dow" is also in the same pattern on a longer chart. The transports appear to be bearish on a daily, but bullish on longer patterns. To sum up: the market is in a state of flux. 

Of course, the new major element by Russia (Ukraine) will affect the next trend. As we stated weeks ago, Russia would not do anything while the Olympics were in progress. We felt that if they were to do anything, the date would coincide with the closing of the world event. Again, we were right. Now, we see two terrible options. Russia gains complete control, or they use the excuse of the separatist to cause civil war. Either way, they neutralize the nation. They got what they desired, a buffer zone. We don't need the stupidity of military intelligence (big euphemism) to relate the news. The first big fear will be China with Taiwan. The second, will be our military asking for even more money. They are our biggest danger and the world's. Also, an idiot in NATO could trigger a disaster?

Gold...

on the other hand, broke above resistance at $1882. It is on a bullish run. The next stop should be $1946. We have to look at the volume at that time to determine whether a pullback, consolidation or continuation pattern evolves. Our recommendation, Barrick Gold has finally awakened from a deep sleep. The company has the best mines. It raised its dividend, and it is doing a buyback to support the stock. Now, if only our other two recommendations would join the party? 

Good Act...

was signed into law. It did not get much fanfare, but we like it. It says that medical institutions cannot spring unrequested tests and surprise medical billing to patents.

King Dollar...

has formed a triangle pattern. This means a big move is coming. Maybe we will get an idea when the Fed meets in two weeks. We will find what strength of conviction to all their machinations and BS about inflation?

Evergrande

We have not heard anything about the Chinese real estate firm lately. We already know that they are overvalued and basically bankrupt. I think some cooking of the books is going on behind closed doors. An announcement will probably come forth that a reorganization took place. All is well. It is nice to know that all these central bankers attended the same "acting" school. In a related aspect, the "Economist" magazine has a picture of a roller coaster on its cover. The riders are about to drop after the big rise. It is a message about the market. What happens if there is a crash? 

Whenever a big crash happens, deflation appears. However, our weak economy could suffer a repeat of stagflation. This is the worst. You get rising prices (inflation), and a stagnated economy with little or no growth. With two more big consumer firms announcing that they are raising prices, the trouble with Russia and China after the Olympics ends, we see higher inflation with oil prices as a leading cause. This will push inflation higher. Not good. Sadly, stagflation could appear.

Not much good news as we are in the middle of the dark days of winter. Dear Reader, take care. Spring is just one month away. Let's hope the feeling of rebirth fills the souls of the discontented as well as the rest of us. Hey, Russia! Give peace a chance.  Peace.