Asset Reset

Last week King Dollar broke out of a multi-year trading range. The bottom was $.89 and the previous top was $1.0396 in March 2020. There are two points within this data. First, the currency moved in a large price action. Currencies do not move like this. Second, the breakout was decisive. On Friday, the dollar closed at $106.82. Currencies trend to move like slow, large boats. Think Titanic. In addition, they do correlate to interest rates. Our rates are rising and the dollar is coming along for the ride. 

Effects Everything

First off, the stock market hates a strong dollar. Since everything has been outsourced, the currency exchange eats profits. This is foremost to the market trending down. The second part of the whammy is interest rates. Rising rates cost firms that reply on cheap money a question of survival. These CEOs did not reinvest in their product or company. They squandered profits on buybacks to raise share prices and enrich their retirement options. We are faced with weak leaders in industry and poltics. 

Then, we have the geopolitical problems like the Russian/Ukraine war, China and soon, a global food crisis. These fears are also coming into the equation. This is why the "R" word, recession is in the air. With a recession, layoffs come. Our nation and many in the world are just getting back on their feet from the pandemic. For example, there are over 8-million people in the US who are behind on their rent. Being back to work and the stimulus got them pass the danger. Now, if a recession hit, a chain reaction could hurt everyone and everything in our economy. People would fall behind again on rents or mortgages. A consumer slowdown means less need for product. It also means less building (read less copper, materials, etc.) less gasoline (read lower demand and lower prices for oil). Both big purchases like houses and new cars will shrink. Even small pleasures like cable, eating out will suffer. This is how the chain connects. When you barely make ends meet, you have nothing to give to food pantry's or for nations in deficit to export charity to countries in need. It effects everything!

Precious Metals

Gold and silver have been taking it on the chin. The contagion is now moving to oil, copper and other commodities. I think there has been manipulation against the precious metals. With inflation roaring, they should be approaching $2000 per ounce for gold and $30 per ounce for silver. It could get worse. Time will reveal all the lies, especially with central bankers. There will be excessive heat to hold onto your metal holdings, but what goes up must come down. The dollar should only be worth $.74, but the same could be said about the euro, the pound and the yuan. We are in a financial reset.   Peace

Real Fear is Coming

When you talk about market fear with selling and a downtrend like the first half of this year, one usually begins with the VIX. Last Friday it closed at $26.70. Anything under $30 is not even in the fear category. The market's first indicator says no real fear on price. Then, you can chart the price action. This consistant negative trendline says there is selling in the market. Another strong indicator to which we, at Evolution like is volume. The down days have much stronger selling than the buying on up days. Market bulls should be aware and alarmed. We feel what is even more alarming is the price action on Friday. The bulls got a huge lift as the market reversed selling and ended up 321 points. However, when one looks at the week for a fuller picture, the market was down over 400 points and 1.28%. The volume was average. To us, this is a tell. The market had three keys for the bulls. The first was the calendar. The Fourth of July is always bullish. The second was the timing. The first of the month had new money with "window dressing." The other is the followers to the meme, "Buy the dip!" The volume on Friday was average. It is telling you that the bulls have no conviction. Not to toot our horn, but we predicted a Dow 29,000. Now, the real market concern is it falling to test the 2020 lows. With that said, our real concern is not for the market, but for our citizens. They are seeing fear in food, energy and shelter. They are hearing real fear with crime and the war in Ukraine. They are questioning (and rightfully so) our leaders and their decision making. Doubt is the relative and water that allows the seed of fear to grow.

Consumer Prices, Not Share Prices

Not everyone is involved with market share buying. They do the price action of our economy. When a citizen needs transportation other than public, he is looking at vehicles. Future shock is here. The average new vehicle cost over $47,000. In 1987, you could buy a 3/2 home for that amount. It doesn't get any better for used vehicles. They average around $22,500 this year. This is economic fear at its worse. The buyer cannot afford the price and there is no point in purchasing somebody else's headache. Just fix and put some tape on your old standby. The other fear is that individual's outlook. He cannot keep up economically and that is scary. Bottom line: car sales will fall and this shrinks our economy.

Housing and Rent

We are turning into rental nation as higher home costs, poor wage earnings and now, higher interest rates are locking people out of the "American Dream" of home ownership. Then, they see the price action in renting. It is a nightmare. Nationwide rents are increasing at record pace.We told you in past pieces that the moratorium on mortgages and rents is ending. Landlords are seeking lost revenues. In many cases, they too are behind in their payments. This is a contagious problem.

The medium monthly rent in May hit $1849. This is a rise of 26.6% since 2019 and we're talking before the pandemic. Feel for your Miami residents. Rent increased there by 40%. Ouch! 

How Do They Live?

Consider low-wage earners. They are now spending 31% of their monthly income on gasoline or transportation and groceries. They need another 40 to 50% for rent. They have no wiggle room for utilities, phone and whatever else life throws at them. Then, if the economy slows, they face layoffs!

Meanwhile, market shills still proclaim the market will return 18%. Dear Reader, that is 47% higher than the price of the S & P 500 before the pandemic.    Peace.

Odds and Ends: June 2022

We begin with King $Dollar. It is a mystery. One week it appears to want to break to a new high, and the next week a new low? We are at the mid-point of the year. We are presently in a bear trap. Even with our group of highly educated souls at Evolution, we purchased RIG. We are in a losing postion. We don't want to sell and take a loss because the EU is finally attempting to breakaway from Russian oil. They will need gas for winter, for electricity and for industry. They need their oil firms to dig. Rig will benefit. We just bought too soon. Bottom line: Be patient! Lower prices are coming and if you cannot take the heat, readjust to prepare. Keep in mind, that oil and commodities move in opposite direction to the dollar.

Inflation...

is showing itself in big purchases. The average price of a new car ballooned to over $47,000. You could buy a 3bed/2bath house in the 1980s for that price. We predict car loans will approach a ten year range. By the way, before banking became consumer friendly, that was the term limit for a home mortgage. 

Speaking of home loans, we also predict the 40-year mortgage will come to pass. Why, you ask about our two predictions? Because the Federal Reserve has destroyed our standard of living. These are the type of market manipulations that they do to continue to keep power, to continue the game. They never admit that they are wrong as well as their policy actions. Back to where I begun this paragraph, the medium price for an existing home is $407,600 and rising. 

Inflation...

is also showing itself in aspects that consumers do not realize until they need or use something that inflation is wrecking like hotels. John Feneck is a fund manager for mining firms. He travels a lot. He sees hotel pricing at $300 per room. Then, they add fees, some add parking and of course, the car rental fees are way up. The industry is pricing itself out of the market and yet, the stock market has not caused them any real pain. I agree with John, the pain is coming. Some of these firms who did not borrow when rates were low will end up in bankruptcy.

Future Shock...

will be coming as car insurance and home insurance firms raise their rates to meet the higher cost of homes. There will be other price increases, but I think you get the point. The inflation genie is out of the bottle. It happens as standard of living rises in other countries who seek more value for whatever they export. It is why we always say, "Protect American workers and jobs!" Anyway, it happened with the first oil embargo. The dollar got wrecked. We are approaching this life and world changing moment, again. Maybe all the gyrations in the dollar reflect this behind the scene activities? We can tell you that the International Monetary Fund (IMF) already developed a new currency if the market crashes. The SDR is a basket coin of weighted of world currencies. Have you heard of the book, the "Big Reset"? The author, Willem Middelkoop, says our monetary system is already at war. China no longer buys US Treasuries. They want more power for their coin, the Yuan. They buy gold and they are anti-dollar. They will be the world's largest economy if they are not already. 

The Fed's answer of higher lending rates to combat inflation is just more manipulation by them to calm consumers. Our economy is already in stagflation. This is the worst level for citizens and a nation. It appears when inflation is higher than the growth. The Office for National Statistics says, "Inflation for May rose to 9.1%." Our growth? Maybe 1% ? Whatever it is, it is nowhere near inflation, especially with the three things that we need every day: food, energy and shelter. Some people this week call out to end the Supreme Court because things did not go their way. We have an answer to bring the court back into the fold of true checks and balances, but you will have to wait for our unpublished book to be published. Here and now, we repeat our meme, End the Fed!

One Last Thought

This is wild and crazy stuff as Johnny Carson would say. We generally do not pay attention to the heavens, at least not like in ancient days. We are presently in a planetary rarity. There will be five plants in align. Now, there are people who follow such things. They say this always has a huge market move associated with it. We are in such a phase. Now, this is what I see. We had a comet pass by. We received the virus not long after. We had record wildfires, hurricanes, tornadoes and earth quakes. Now, we got war in Europe. Maybe, we should put aside all these secular people and look at Scripture. There are many readings where the Lord blesses Israel, but they foresaked Him. They worshipped false idols, killed, robbed and rapped on a daily level. Then, he took His favor away. The US has been blessed. However, we kill, rape and rob on a daily level. Maybe His favor is being vexed against us. Sebastian offers this: Hawking was wrong about the Big Bang! He says, if something exploded that began the living organism process, there had to be something formed that exploded? His work. Sebastian goes on to say that there is no such thing as an on-going Black Hole. It is just space weather like a hurricane or tornado on earth. Motion in space forms friction with gravity. Things that are pulled into the Black Hole are the same as roofs and flying cows being pulled by weather. These scientist had better find some faith becuse it is His world. Said enough!   Peace.

Oil and Recession

Every time oil begins to spike, the boom / bust cycle is completed. You should realize by the price action at the pump that the good times will be ending. It is ironic that the last few years have been anything but good. We experienced the pandemic, the continuing collapse of small businesses, another outbreak of senseless, mass shootings, inflation and looming, the prospect of stagflation or even worse, nuclear war.

We, at Evolution have continually sang the meme to End the Fed! They have destroyed the dollar, our standard of living and if the banks become distressed due to their rate hikes, you will see whose corner that they are really behind. Clue: It is not us. Keep in mind, they do not count oil in their phony, manipulated inflation formula. Our outlook on oil says things will get worse. We begin...

How much oil does the...

global community need on a daily basis? It is a nice round figure. It is 100 million barrels per day. Do we need a 100 million new computers on a daily basis? Yet, computers are in the Fed's formula and oil is not as well as housing and food. The US needs 19.6 mbs per day. China is the second largest consumer at 12.7 mbs per day. India is third at 4.4 and Japan is fourth at 4 mbs per day. Quess who is fifth? Russia. The Energy Information Administration (EIA) says world use grows by 1.1 mbs per day on a yearly basis. Now, the US also needs to refine oil to gasoline. We have multiple problems here. There is maintenance. There is seasonal blends and the biggest, not enough capacity to cover demand. High prices will only get higher. We will have to live with the way things are until electric vehicles becomes popular. There will never be another refinery built in the US. We only get more debt by importing refined oil. The US should seek to build even more oil reserve tanks. We should also seek to build food reserve banks too. The stimulus to build the infrastructure to build-out electric charging stations is a good use for a future need. It will also help the climate / environment.

Russian / Ukraine War

has disrupted the global community. The EU should have started to breakaway from Russian oil supply years ago. The elite idiots like the ones at Davos have a conviction if the communist and third world nations saw a rising middle-class that they would never seek conflict. This thinking of the New World Order (NWO) is behind the shrinking of the middle-class in America. They are now sleeping on the street and their work is to go to a food pantry for a handout. Rising oil will multiply that problem. It could lead to civil unrest, but we are getting ahead of ourselves.

When sanctions stopped Russia from selling their 10 mbs per day, the world had a huge peroblem. Where do we get that much production? The true answer is it cannot. As a result, we get oil inflation. Russia sells its 10 mbs to China. The only positive is China does not buy from suppliers like Mexico and Canada. Their oil does fill some of the gap. We already know from COVID that the US as well as the global community will consume less oil to avoid inflation. During the pandemic the US used 9 mbs less per day. Some of the reasons are sad like loss of a job or worse, death.

What is happening now with oil is it is looking for its valued price. There is also a speculation price. That is the dangerous one. We can see this from last Friday's close on the oil contract. It dropped by over 6% or $7.26. Don't be fooled! The trendline for US crude has been up since it sold for $33.64 a barrel in Octomber 2020. It is the same story for BRENT except you can go back further to April 2020. The price has gone straight up and that was before the conflict that rages today.

Oil firms are selling at their highs. The two US giants (Exxon and Chevron) reached all-time highs. We do not recommend a purchase. There will be big price swings due to news. With that said, oil will pierce the $127 price and it should test the all-time high of $147. When it does, the word recession will be dropped due to the worse possible economic outlook: Stagflation will be here. As you know, we rarely recommend a stock because if it does poorly, we cannot sleep at night. Nevertheless, we feel that RIG at less than $4 per share has great value. Oil is not going anywhere because of electric cars and technology. At these high prices, oil firms will dig and under-water has the biggest finds. This is what Transocean (RIG) does. We also recommend with warm weather to use a bike. You save on gas. You get healthy and in shape.   Peace.

My Populism Rant

- A little rebellion now and then is a good thing, and as necessary in the political world as storm in the physical. 

- Thomas Jefferson

Some of you may be familiar with the quote to his buddy, James Madison, but do you know the rest of the story? Jefferson goes on to say, "When rebellions are unsuccesful, incroachments follow on the rights of the people."

Jan. 6, Hearings

This is where we are today in America. The people in power are seeking to milk the event to crush their opposition and at the very least, never have to worry about Trump as a political opponent. Our nation is further cut off from the people with barricades, fenses and armed security in Washington. A future protest could end up with deaths with over-reaction by security. This leads to violence like the sad episode with then, President Trump visiting the local church to proclaim freedom of speech. How ironic? There is nothing new under the follow-up investigations to the sad episode. Let me begin by saying, "This was not a rebellion." There were idiots within the demonstration who hid under the crowd which they manipulated to become a mob. That is all it was. There were no guns to seize and retain control. Most people left by their own volition. They were not sure in what they participated was good or bad? If we look back on the day's proceedings, then, we realize that President Trump is an egotistical coward. He said from his platform, "Let us go walk down to Congress and let them know that we are here." However, he was nowhere to be seen. He did not lead the group like a man of conviction. He is guilty of that. The manipulators within the crowd are guilty of the violence. End of story.

American History

When our first seated government passed its first tax in 1794, it caused protest by farmers. Why, you ask? The tax was on spirits and the revenue was needed for debt from the Revolutionary War. Whiskey was a farm product and used by farmers like money. You can understand their dislike of the tax. However, the government needed to show many things like resolve and ability to govern. The whole episode is called, "Whiskey Rebellion."

I understand the farmers point of view, but the President Washington led government was right. However, history shows that government favors the wealthy over the ordinary. This is not right. In 1883, Andrew Carnegie purchased a steel plant in Homestead, Pa. It was an early union site. He upgraded the plant while hiring new non-union workers. In 1892, the union guys sought to get everyone in the union. They went on strike. The plant hired Pinkerton cops who shot at union protestors. Violence erupted with 12 people dead. The hired cops feared no reprisal from the law which aided them against the union protestors. If you want real education, American wealth and power is anti-labor and anti-union. This deeper feeling is a big part of the January protest.

Real Causes

People appered at the rally for a variety of things. We, at Evolution would like to think that we share our thinking with the majority of them. I think we all feel that our governmental leaders do not listen to us. They label our concerns under a category as if that explains everything with the condescending attitude that the public is wrong. They call it "Populism." We are disenfranchised from government. This is where we stand.

Outsourcing: Our manufacturing concerns are guilty of excess greed. The IMF reports that they fear the growth in the middle-class worldwide will stop due to COVID and protectionism. That growth came as a result of our middle-class shrinking along with our standard of living. You can see the results sleeping on the streets and the no future acting out tragedies with violence and guns. Our government should have imposed tariffs on all imports years ago. It would have protected workers, our standard of living and domestic firms. This is one of the few things Trump had right. The only other thing that needed to be done was lowering the taxes that companies pay to 25%. This was to spur firms to relocate to the US. However, these people are so greedy that they just moved from one foreign nation (out of China) into another like VietNam.

Outsourcing takes many forms. Close a factory in the Mid-West and relocate to a Southern state that provides the clause, "right to work." This is code for no unions! This is anti-worker which the paid off Congress has allowed since Reagen came to power.

Our so-called leaders have allowed products into our economy which are dangerous. Monsanto people have no conscious when they develop a product that is toxic to humans like Roundup. When drug companies go unchecked with untested drugs like fentanyl. When too-bit oil firms sink shale rigs that leak chemicals into the water table. The list goes on-and-on. This is America today. We get a virus and we realize that we cannot even manufacture a mask?! By the way, it comes from China like everything else.

Immigration

The whole world cannot come to America. The southern border is gone crazy. We cannot accept that many people. Our nation will always take immigrants. There will arise global crisis where we will have unexpected people seeking help like with Ukraine. Tell those Spanish speaking people to move to the many other nations in Central and South America where they have a common language. We can only assimilate so many at one time.

Student Debt

I do not know how this became an issue. Individuals make a choice. I gave up football because I realized that I had to work to pay for college. My cousin was a cop. He attended night school which is a long, slow process. You might only take one or two courses. You are always tired. You will not get the best grades, but you persevere. This is a great American trait. Today, he is a lawyer. God bless. Now, kids today take loans. That is their choice. They used the money for school, room and board. Who knows, maybe a car for transportation. Now, they want a free ride by asking, no demanding their loans be paid by us, the taxpayers. No damn way, Josie! I hate this with a passion. 

Miltary and Pentagon

We went from a peaceful, nuetral country to being a world danger for the annilation of humanity. The freaking military takes over half of our nation's budget as it wastes resources, lives and sending all of us into bankrupcy and third world status. Oh, yeah! Please tell me when we were electec to be the police force for the world? End forign entanglements!

Protectionism, Protectionism, Protectionism.

Every nation in the world practices protectionism. Our government, to which is why we stress a new third political party, must start to protect American workers and our way of life. If we can accomplish that starting point, the people will again begin to have faith that their government is following the founders belief to "Promote the general welfare."   Peace.

 

Market Signs

This week, we, at Evolution will devote this piece to the stock market and related aspects. We cannot go into deep detail due to the lack of space. With that said, we look look at the present prices with an near term outlook. 

Oil

The most traded commodity and most important item for any economy. Both Brent and US light crude appear ready to challenge their recent highs set back in March. If Brent breaches $139 and US passes $130, every economy will be in trouble. One serious negative that has not come to light is refinery capacity. At present, the US is running full tilt with around 18-million gallons of gasoline. A plus for the climate and economy is more electric cars because the US will never build another refinery. If our economy was full trottle, we would need 20-million gallons. Gasoline is at highs. Last Friday, it was $4.25 per gallon. Diesel broke $4.30 and nationally, the four dollar per gallon fears the approaching $5 per gallon. Can you see the problem? Do you hear that Chairman Powell? How about the Fed's shill, Janet "Yellen" Yellen who admitted that she was wrong on inflation? We stand by our call, End the Fed!

Dr. Copper

The US has passed an infrastructure bill, so the long-term outlook is for higher prices. This translates to its testing of the high of $5.04. At present, copper appears to be forming a sideways or consolidation pattern. We like two firms, Freeport McMoran (FCX) and Taseko Mining (TGB). Electric cars need a lot of copper.

Wheat and Grains

Prices have declined despite higher costs for fuel, fertilizer, pesticides and labor. In addition, most state utilities are seeking price hikes. Nationally, 80% of corn has been planted, 73% of spring wheat and 66% of soybeans. The market is very sensitive to news like Russia allowing food exports from Ukraine. I would not trust them. They could claim any shipment and keep the commodity. This relates to our next section...

Shipping

The Baltic Dry Shipping Index (BDI) is in an uptrend after diving down in February. The high is 5650 and low is around 1300. This too appears to be forming a consolidation pattern. The top of the range is around 3400 and bottom resitance at 2000. We do not recommend any firms due to new technology and oversupply. Bottlenecks appear to be easing, but this can change overnight with news.

$Gold

We love what our founders love, but it is the enemy of fiat. I read an article about the ex-central banker of Canada (Dodge) who hates gold. The nation sold all its reserves. He says, "It cost money to hold and it doesn't pay a dividend." The liar! Governments and central banks set regulations. If they recognized gold as money, then you could use your gold as collatteral for a bond and then, gold pays a dividend. Central bankers are liars!!! 

Anyway, gold is in its second attempt to challenge the high of $2078 it reached in March. It is building cause to retest the high. With the world at historic highs in debt, the future looks good. There is one thing in the long-term charts that gives me concern. There appears to be a reversr H&S pattern. At the moment, top resistance is $2078 and bottom strength is $1750. We like three firms. Wheaton Precious Metals (WPM), Barrick Gold (GOLD) and Argonaut Gold (ARNGH).

Housing

In the US, housing broke to a new all-time high for an existing home at $391,200. The mortgage rate broke over 5% to which means less buyers for homes. The outlook is not very promising with higher rates coming. However, all commodities will hinge on the dollar.

$King Dollar

There is a new test/price point. If the dollar surpasses 103.82, watch out! It could test the high of 105 and then, 120 could come at us. This will hurt all economies.

Market Indexes

We stand by our previous call for the Dow to test a low of 29,000. The transports to hit 11,000 and the SPX to touch 3400.    Peace.

Dinner: Rice and Beans, if...

... you can afford it; know how to cook this nutritious, hot meal. The sentence says a lot. Let's start with the purchase as we continue with connecting the dots within our economy and life. According to Oxfan, a global charity, 52 million Americans earn less than $15 an hour. To put that number in perspective that is 32% of our workforce. When you plan meals for the week and your wallet is running on empty, rice and beans is a good option. Get use to it because you will be eating it many, many more times in the near-term. I would suggest checking the internet on the various ways to prepare the meal. The two staples are among the least expensive food items. However, all food costs are rising. Food prices are up 9.4% for April and 8.8% year over year (yoy). 

If you find a recipe to mix up the R&B dinner with chicken, forget about it! A bird flu is causing the culling of millions of hens to which will also increase the cost for eggs. It will get worse!

No Wheat and other Grain Exports

You read that correctly. There are no wheat and other grains coming out of Ukraine which is a very large global supplier. No one wants anything from Russia, but they are also a food exporter. Then, we hear this: India is stopping wheat exports due to fear that the nation won't have enough for its population. Other nations are proposing similar measures. In the US, the drought is holding back food production. We have enough for our nation, but the costs are rising due to inflation on fertilizer, gasoline, diesel is at record pricing and labor. Then, we read this report from the...

FAO 

The Food and Agriculture Organization says food will spike to record levels this year. The war in Europe has already pushed up wheat prices by 36%. This increase will eventually filter to everyone just like the jump in oil prices. The US Department of Agriculture has changed their yearly food price outlook due to world circumstances. It was 2.5%. Now, it is 6%. 

Here Come the Shills

However, the latest inflation reports for April present a different picture. It is one that "Yellen" Yellen is using to claim that inflation has peaked. The shills dominate the media. Goldman says the Fed has done enough. The danger has passed. These are some of the crooks that control our lives. It is another reason why our nation needs a new third political party that is for the people to do like the Founders desired, promote the general welfare. Anyway, let us do a little math to prove that they are liars. The April report says inflation slowed to .02% for the month.They adjusted their overall inflation stance to 6.3% yoy. Then, we have a different picture by the Bureau of Labor Stats (BLS). They adjusted their inflation figure to 8.3% yoy. We, at Evolution say BS! Why, you ask? 

If food jumped for the month in costs by 9.4% and you have to eat everyday, your wallet tells you the truth. Meanwhile, these crooks smile as they say, "Inflation was only .02% higher for the month." You can realize how everything is manipulated. Nothing has peaked like the Fed's lie of "transitory" oil prices. This month of May saw record gas prices for the nation with the average price well over $4 per gallon. The Federal Reserve has destroyed the dollar and our standard of living and the crooks know that, but they need cheap money to continue the game and screw the people. This should lead you to join our meme, End the Fed!   Peace.