Two Truths

First Truth:

Let I, JFL begin by saying that I do not know how the Federal Reserve will help the banking industry who suffered more loses due to the collapse of two banking institutions last week, but I do know they will. The banks have also taken big losses due to the new, lower value of their past bond purchases. The Fed has many tools to play and use in their machinations. They might even create a new one? However, this will prove the point that we continuously make, the Federal Reserve is socialism for the banking industry. They cover their losses with your taxes and let them keep their profits under capitalism. 

The largest, Silicon Valley Bank had a value of $609 billion. It is vanished money. The Fed will not let their rich influencers go unaided. The second bank, Silvergate will not be as lucky. That bank backed crypto and at the moment, crypto is out, fiat still rules. 

On a side note, last week's piece mentioned that after big run-ups in the market, pullbacks expose fraud cases. You cannot even trust some of the guys who made the most money. They eventually get caught as crooks. Funny thing. A report released by Silicon Bank a few days before the collapse stated, "That the bank had $180 billion in liquidity." It throws another dagger into the American psych on trust. Not good.

There will be some contagion due to the severity of losses. Bank of America reports that last week, depositors took out $68 billion from banks. The run started with people seeking a higher yield than what banks offer. Bonds received most of the funds. This aspect will continue. Watch out for more revelations of trouble. Cathie Wood's ARK comes to mind.

How about this point that did not get reported? The central bank in the UK (Fed in England) got HSBC to buy Silicon's branch bank for one dollar. I'll say this, the crooks are brazen. Anyway...

While the Fed does their real purpose, the shills like "yellen" Yellen will use the media like a pulpit to announce that there is no financial danger. You should know the lie. You should join the meme, End the Fed!

Second Truth:

This blame goes to the greedy, arrogant money producers and owners. Their hatred of unions and disrespect for workers led them to the concept of outsourcing. Let it be known, not all producers are guilty. Many had to follow the way of outsourcing just to be able to compete in the marketplace. 

Consider all American firms got their riches, their brand known, their start from within the US. Do they appreciate our citizens? Do they show love by taking care of their workers? NO! A thousand No's!

It would take a whole book to list all the grievances against owners, but take this recent profile. Norfolk Southern will not give their help sick leave in a dangerous job. They cut safety corners and they fire workers who protest. They never invest in their business, but they do buybacks to keep shareholders happy. Amazon will fight against anyone who seeks to unionize their company. Musk follows this same format. Boeing sends work to southern states to weaken the union membership in Seattle. They also cut corners in safety. I'm tired and upset. I look around. Their greed has lowered the standard of living in the US. A large percentage of children go to school hungry. There is no money for schools. People are living in their cars, RV's or on the street. Crime results. Broken families cause more crime and burdens to society. Do I mention our internal struggles with color, religion and nationalities? A recent report says that half of our population cannot now, or maybe never, be able to purchase their own home. We know the reason. The Fed destroys the value of our dollar. Corporate destroys the middle-class by outsourcing. When, in the near future, that percentage reaches 60%, I predict a sad vision, civil unrest.

All the above and let us not forget that the original workers who helped establish our many companies, had their pensions stolen, (yes, we once had pensions) their kid's future stolen and their towns ruined. Now, years later, the seed of sin is revealed in the second truth. We read this from China who benefitted the most from outsourcing, "There will be CONFLICT if America stays on its present course by hurting the Chinese economy." We are under the threat of war due to placing tariffs on Chinese goods? The gall! The nerve! It does not get any better with the ego, fools in North Korea. They also said war is possible if we shoot down any of their test missiles? Well, are you going to let them fly a ballistic missile that reaches our West Coast? Shoot down any and every missile that goes over Japan, an island or anywhere near the US. We need a change in our military policy. Remove our troops from foreign bases and act like Teddy R. You mess with us and we will play stickball with your head! By the way, this is for the warmongering, idiot general on Russian TV who said, "Russia should attack the US East Coast with their Poseidon Nuclear Sub. It is unstoppable!" That is what Germany thought with their battleship, Bismarck. It sank! Sorry, Lord about the violent thoughts.  Peace.

Alert!    *****   Alert!   *****   Alert!   ***** --------------------------------------

Another "S" bank failed with rumors circulating about First Republic Bank, et al. The Fed is undaunted. We are also undaunted. We may not know what goes on behind the curtain, but we know action speaks lounder than words. Our call proves to be on the money. Read on...

We are not sure if we mentioned the next point before. Our weekly blog is generally written on Saturday with possible updates before publishing on Wednesday. Well, lo and behold! In this piece, we made one prediction on the Federal Reserve with another possible caveat. Dear Reader, both points came true even before this was published. The Fed created a new fund called, "Bank Term Funding Program." It will not only give loans to the banking industry, but the sneaky Fed also reassures the big boys that they will be protected with their treasury bond purchases. The Fed will purchase old bonds that are now only worth .80 cents on a dollar at a full one-dollar par value. Can you see why we are right to say, End the Fed!

Cloudy Window

If you regularly read our blog, you should know the term, "window dressing." For newbies, it means that the first few days of every month, new money is put into the market from funds. It is one reason why the market is biased to the up-side. With that said, last Wednesday (1st) was mostly down, but reversed. It closed with a plus 5-points in the Dow. Dear Reader, this demonstrates a very weak market. In the bullish case, the market did respond strongly the next two days. We, at Evolution feel that the market had many things to help produce a strong rally. In our estimation, it failed. The elevator is still going down. However, you decide. Here is the picture.

Positives

The Dow was heading to fall below its 200-day moving average. It held. Not only that, but all the indexes stayed above the dreaded line in the sand. By the way, the Transports were never close to piercing that marker. This is a big plus for the market. Will momentum carry into this week and month?

China revealed a strong return by its economy. This will help commodities, shipping, everything. We feel that China is the number one economy in the world. We are number two. That's how we see it. With China opening back up, it is like a high tide. It raises all boats. 

In the US, we passed the chips act and the stimulus for infrastructure. However, the money has not circulated or has had enough time to influence the two sectors. It should help both.

Coming into this month, the economy had a strong tailwind from the consumer. We mentioned that the three aspects for this is states raising its minimum wage law, the increase to social security and job switching by employees. At the moment, we see this as a neutral. 

Neutrals

Hanging with Doctor Copper shows it maintains its price around $4.00. The same could be said about oil. It seems to be forming a consolidation range. China's potential demand could change its direction.

Negatives

One would think that the strong labor reports with jobs would be a strength. It is not. Full-time labor has declined. Quality jobs are suffering layoffs. In the US, 800 more retail stores will be closing. The list includes big names like Walmart and Best Buy. Nordstrom is closing ALL of its Canadian stores. Every week, new names are added or announced. Facebook just announced more layoffs. This is not a strong economy. There are other clues. 

Evictions are back in the news. We feel this will be contagious as government protections have expired. Landlords are raising rents. Renters are using almost half of their income to meet this obligation. The same story will soon surface with housing. Home owners are barely scraping by to meet their obligations. State taxes, car insurance and utilities are not helping as they all are on the rise. Then, the automakers who offered incentives like delayed payments back in 2020 have seen delinquencies rise. People cannot afford the cost of a new car and a report says that one-half of the population cannot now and possibly ever, afford to buy their own home. This is sad and troubling. There are other reports revealing that consumer's are using their credit cards to make ends meet. This is a recipe for disaster. However, the data says this aspect is on the rise. 

When you add the war in Europe, geo-political problems, sabber rattling and other stupid forms of tension, the world is on edge. Then, we add the Federal Reserve who only make things worse by their arrogant, egotistical belief in engineering the economy. Their thinking is backwards. You do not worry about the richest class, but build your policy on how it effects the bottom class. If a poor person can get by, well, everyone else should too. Anyway, this is how we see it. 

Finally, the January barometer was down. The saying goes like this. If January is a plus, the chances favor a good year in the market. If it is down, it is more likely the year will be down. January was down.   Peace. 

MONEY: Route of Problems

 - The best things in life are free, but you can keep them for the birds and the bees                                        GIVE ME MONEY. That's what I want. That's what I want.

- Janie Bradford - Berry Gordy

Recently, when Trafigura purchased a cargo of nickel only to find nothing in the cargo bed, it lost $577 million. Fraud and a con? Absolutely! However, these things happen all the time. Central to every story is money. Retail investors get misled all the time even by respected names like Steve Madden and the king, Bernie Madoff. These revelations usually get revealed after the market has had a huge run-up with "cheap" money supplied by the Federal Reserve. They are the bearers of the corrupting vehicle. They run the elevator. They send the economy up and then, down.

Money...

...is not cheap. It is suppose to be a store of value. It is suppose to keep prices stable. It usually works until it is manipulated. Enter: the Fed and interest rates. It is why GOLD is the best money. It is why the crooks replaced it with fiat money. In the game of life, these crooks already made their fortune. Now, they seek ways to grab more and keep anyone else from attaining money. One main reason, it is the biggest influencer. It is why the rich established the Federal Reserve. The central bank controls our currency and that gives it the ability to control our lives.

Labor Shortage?

Well, if jobs were scarce, labor would be plentiful. At the moment, labor is in short supply. Many people have not returned to work after COVID. How they get by, I do not know. What I do know is people are tired of dead-end jobs with no raises, benefits or opportunity to advance. Job switching has been beneficial. The word has reached the Fed. The answer is inflation. With the smoke and mirrors of combating higher prices, the Federal Reserve has made money "expensive." They will keep at it until the economy slows to a recession. People will be laid off. Jobs will be scarce. Labor problem solved. Then, they can lower rates and repeat the process. Money will be cheap for those who have it and expensive for the rest of us. Consider this example. It is based on the price of a dozen eggs that we, at Evolution purchased at Albertson's. Here is your option: You can buy one dozen for $1.00 or an 18-count for $3.00? What are you going to purchase?

We won't insult you, but those are pre-inflation prices. Now, we give you an example of today's US government bond prices. Here is your option: You can purchase a 2-year note that yields 4.81% or get a 10-year note that yields 3.94%? Dear Reader, it gets worse. The government offers a 30-year bill that yields only 3.93%. This is how they insult our intelligence. Why, you ask? Because we all know that inflation is higher than any of the rates offered. Even if you are smart enough to choose the short term rate, you still lose. The only note that can actually cover inflation is the I-Bond. Of course, if inflation gets worse, even the I-Bond won't be enough. 

Where is this going...

The debt ceiling is still out there. Politicians are gambling with our lives. Crooks like Scott of Florida want to cut social security. He is a lying, piece of ****. Social Security is given to people who paid into the fund. It is our money! Corrupt politicians have added other recipients who have not contributed. His argument is the same BS that the younger Bush declared when he offered his tax cut bill. He said, "The deficits will be paid off in ten years because the tax cut will stimulate the economy and the government will have more revenues." 

We say, if we had cut our military and used the money for our nation, we would have quality jobs with a living wage. There would be less crime and more opportunity. However, money is in the way. People cut back on newspapers to save money. This lessens government opposition. The internet supplies the info, but there are so many sites, the impact is minimal. Now, it will be even less due to robotics. Are postings true facts or even written by humans? Enter the ChatGPT. It is sad but true. Even worthwhile sites like ours has little impact. If we had the third political party we could have a common demoninator. It would be the anchor to give hope and get our nation back to the tree of freedom. As it is...

Our economy...

is hanging on a thread. Concumers cannot get by on the paycheck-to-paycheck playbook. They needed an ourside source. They are using their credit cards. I hope that they are not thinking that their debt will be forgiven? They added the largest jump in January at 6%. If that sounds low, that is a 18.5% increase. What will they do if they get laid off? Then, we look at the global picture.

Petrol Dollars

This refers to Saudi Arabia and their oil. We buy their oil. They buy our bonds. Howver, they do not like our politics. When you add the fact that they received a previous, low-rate yield and the value of those "old" bonds continue to decrease, they are looking elsewhere. The BRICS alliance gave them an open invitation. If they drop our dollars for a new BRICS currency, world trade will go into chaos.When the dust settles, life in the US will be like a third world country. Everything will be expensive. We say, End the Fed!    Peace.

Odds and Ends: February 2023

 We begin with the most corrupt influencer to our nation and the world, the Federal Reserve

Disinflationary...

...is the latest catch word thrown around by the Fed chairman. It means that prices are falling. It's true! A dozen eggs fell from $6. to $5.98. Wow! Telsa dropped its $36,000 EV to $35,900. Can you believe it? Let's get two! Get real!

When will America wake up? When will people realize the Federal Reserve is socialism for the rich? If they screw up (like they always do) the Fed has their back. If they succeed, well, they can keep the profits (because we don't tax them either). 

Meanwhile...the inflation report for January says inflation is at 6.4%. People, the Fed uses a manipulated index to rely upon. It is the PCE (personal consumption expenditures) to guide their policy. Do you know what leads the list? Furniture. When was the last time that you bought some? How about this twist? China decimated the American manufacturers in this industry. Remember, China's government backs their industry. Free trade does not have a chance. This is what happens when you don't protect workers and industries. This the core reason why nothing is made in America. Failure to protect our economy. Now, almost all the furniture sold in the US is made in China. Back to the Fed. It uses furniture as their top inflation indicator. They rely on a foreign nation to guage inflation in our economy. This reveals that we have surrendered our economy. We have lost more than our national boundary borders. We have lost our economic borders. Can you now understand why we at Evolution call for a third political party?

Next on the list, cars. Yeah, we go out looking to buy one every week. Get real! 

The only true inflation index is what everyone uses every day: food, energy and shelter. The Fed does not count them and no one calls them out on it. Wake up America! Join the meme: End the Fed!

January Retail Report...

...was good. We say, "Maybe the aspect that social security was increased. Many states raised their minimum wage law and job switching by employees ended up with higher wages?"

Future Outlook

It does not look well. Consumers have added to their debt levels. In January it rose by another $368B. This is the highest jump (6%) in one month, ever! Credit card debt hit its highest level, ever! By the way, delinquencies are rising. It hit 4% for that month. So, you say. This translates that consumers are 90-days late. That translates that Febuary's report will show another rise. Not good. 

Speaking of jobs: the unemployment report stated over 500K jobs created. Well, we looked into it. Yeah, the jobs were almost all part-time. Full time jobs actually fell. What does that tell you?

NSC (Norfolk Southern Corp.) is a perfect example of what is wrong in capitalism. It allows greedy, ignorant, arrogant management to place their workers in unsafe working environment. They do not value their help. This also puts anyone adjacent to their rail lines in a dangerous situation. For years, railroad workers have voiced the dangers of excessive train cars being pulled around tracks that the company never invests to maintain or upgrade. Government agencies that check into these operations are appointed shills. Ever notice how many train accidents has happened in recent years? That says it all. These type of crooks also know that only 1% of security cases go to court and then, their chances are 50/50. This is why our society needs regulations. If for no other reason, than to put an obstacle to these bastards. We need to protect our workers which will also give protection to families. We need a watchdog to watch the watchdogs. This is a dangerous job and likeso many in America, workers don't  even get sick leave.

In recent years, rail lines cut 20% of labor and increased train load with no investment in their business other than necessary. Sue the hell out of them!

Terminator

The next time you watch the great sci-fi film, consider this: Big Brother is an IA app called, ChatGPT. Not to be outdone, Google has launched, BARD. They are replacing human ideas and writing with robots. Wake up America!

Balloons...

...use to be associated with parties. Now, the communist (party). Well, in the latest tit-for-tat, the Chinese say, "The "weather balloon" is nothing more than force majeure situation. It shows their greedy, arrogant leaders can spin as well as ours. OR, did the robot write their reply?   Peace. 

Dollar Up, Market Down

Gravity says, "What goes up, must come down." 

Market Says...

When the dollar rises, equities fall. Values never change. It is just the machinations of currency exchange. This is part of the thinking, "Don't fight the Fed!"

We called for the dollar to bounce back in January when it held resistance at 100. We said that we think that it will rise to 106. This price action has put pressure on the market. So far, we are correct. The market is falling and the dollar is rising. 

Commodity Trouble

Dear Reader, you know by know that we like the precious metals and oil is a necessity. It is sad that it is a big pollutor, but until someone can achieve a new, safe energy source, it is what we got. 

Dr. Copper, has done a full fibonacci upward price move from $3.13 to $4.36. It should retrace with the dollar strength. Then, we will find out if China reopening can effect its price? The calendar must also include the next Fed meeting.

Gold, has already begun its retracement. We would like to see that it holds $1800, but we think it will find resistance at $1798. The precious metals have shown solid pricing power in the face of the Fed interest rate hikes. We believe it will rise over $2,000 this year. 

Oil, we are not hypocrites! We may support the Sierra Club, but the need for oil is basic to our way of life. We do not want to get into the politics of the environment group, but we do not follow all their beliefs. Anyway, oil appears to be forming a head and shoulders pattern on a daily chart. If it completes the configuration, oil should fall to test the lows at $70. Then, like with copper, the reopening of China could change the price after that point. 

Now, we like to address the State of the Union Speech...

We love "Made in America" however President Biden has done little to make that happen. His quote about the supply chain is nice BS, but action speaks louder than words.

He gave a few truths. Our infrastructure is 13th. We have stated this many times. We are not in the top ten in all categories that matter. We lead in homelessness. Poverty is a growth category - action speaks louder than words.

$400,000 tax free! Get freaking real! President Obama showed that he was out of touch when he used the income level of $200,000. People, if you make $400K per year, you are wealthy. Biden did point out one truth that corporations made $40 billion in profits and paid no taxes. We need to tax them all, especially the ones who outsourced jobs. We need higher tariffs! We need a fairer tax on income and we need to balance the budget. Does anyone realize that last month, we had $968 in the RED in our import/export column. Does this sound like a supply chain made in America? Action speaks louder than words.

Defense, is led by incompetent idiots! Their lack of action says it all. When they do act, they usually  make the wrong choices. God, please, help us.

Summation: Biden said, "Hooray for our side." The Republicans offered nothing. The only truth is a point about the American people, "Never bet against America!"    Peace.

Barbarians at the Gate

 Market Outlook: We called a retracement last week. We feel that we are correct with the outlook. $King Dollar has shown resistance at 101. It moved up last week. We see a possible return to 106. If we are right, the market will pullback until this level is reached. At that point and time, the market will be deciding on the Fed's next move in the late March meeting. Inside the market, the Bulls and shills have put forth many reasons for the return to a bullish market. 

We do not see what they see. We are in a stagflation economy. Prices are at levels where even those who received a wage increase, find that it does not make ends meet. We are worse than paycheck-to-paycheck. We are credit card bill-to-credit card bill. Who buys eggs at $6.00 per dozen? EV cars begin over $32,000. The GDP report reflected the strong demand for military uses. When you spend billions of dollars, you move indexes. This does not help the masses. The unemployment report at 3.4% is one big lie! 

With that said, we are very upset, angry and fearful concerning the Spy Balloon. We are in Rant Mode!

Dear Reader, the military cannot be trusted. We are talking the Pentagon. This so-called "weather balloon" by the Chinese is a slow, moving 19th century device. It should have been tracked the moment it left the air-space of Asia. When the upper air currents took it over the Pacific Ocean and over the Aleutian Islands (an archipelago off Alaska) action should have been taken. It wasn't. This is how stupid and egotistical our military leaders are. We feel that this should be known. During WWll, the creative and crazy minds of the Japanese came up with this idea. They would float air balloons filled with gasoline. They would be carried by the jet stream to the West Coast where they would crash and cause many wildfires. Some of these balloons completed the journey. The Chinese are only copying the idea like they copy and steal many of our ideas by hacking. Public concern has alarmed President Biden. He says, "We'll take care of it." He is a phony politician who does not have the balls to go against the pentagon like JFK did in the Cuban Crisis. With modern technology, the damage is already done by this balloon. It gets worse. When they shoot it down, (they did) they will not reveal any truths in what they discover. Again, our military cannot be trusted. And then again, worse still. With public pressure, it is revealed that the military now says that they know of three other episodes of Chinese spy balloons passing out our nation. With all their money, satellites and other tools, how incompetent is our military. They all should be fired except they will be replaced by the same thinking that is taught by the present leaders. These are the people that we have watching and protecting out homeland. We are in serious trouble with a caoutal "T."

Cameras...

...that you see everywhere are almost all made in China. They are on in all our military bases. Could the teck in the balloon be passing updates to these cameras? Maybe uploading data on base movements and other info. That is only one fear. There are many others, but space is limited. When you consider the last days of Rome, our nation is following history. Rome debased their currency and we did too. Our Federal Reserve has too much power and influence. They not only hurt US citizens, but they anger the global community with their policy and actions. Recently, China flew a hyper-sonic jet around the world. Russia has one too and we don't! Our space satellites are interconnected. The danger is if you knock one out, the rest get knocked out. We are still building air-craft carriers in an age where smart bombs and torpedoes can find and sink any ship. Imagine the loss of 5,000 men, planes and equipment in one minute?! We are being led by egotistical, arrogant idiots! Pray for peace because things are looking very bleak. I could go on about civil unrest, but forunately, the calendar says the Super Bowl is coming. It connects all of us. Let us keep that thread of unity for the coming year. Peace.

Retracement

 - Whatever goes up, must come down = Gravity.

- Isaac Newton

Recent Market

It has bounced. It still has not touched or breached the last high. We, at Evolution say it has run out of gas. The Federal Reserve will make its annoucement later today. It does not matter what the hike becomes, as long as they show a committment to continue to fight inflation. The only thing that the Bulls will view is the outlook. Will they pivot in March? In any event, King Dollar should also end its decline. It should bounce. Together, these points will cause the market to pause, reflect. This points to a possible consolidation period leading up to the March Fed meeting.

Meanwhile...

The market continually hears big firms laying off people. Newell and Coinbase join 3M and a host of teck companies that are issuing pink slips. Bankruptcies are growing. You can add Serta Simmons for an appearance in court. At some point in time, this has to be added to the market's thinking and price action. 

Then, the ongoing debate over the debt ceiling. Dear Reader, there is no debt ceiling. Our leaders only know one thing, SPEND! Their playbook says, "Add debt to existing debt. Inflation makes everything cheaper because we can always print more money." This is another reason why we say we need a new third politcal party with a platform that puts citizens first as in the constitution (promote the general welfare) and end all foreign entanglements. Speaking of which, last week the GDP came out. It stated that the economy grew by 2.9%. This is also misleading. Billions of those growth figures came from the military. We are running a military economy with ammo, weapons, drones, etc. No one is buying cars.  Many of those who purchase a big item are falling behind on payments or they are overloading their credit cards. Not good.  There is one chart comparison that everyone should read, understand and keep in mind. It displays the last 20-years to the present.

              Last Two Decades                                                               Today                                                 low interest rates                                                                    higher rates                                                     high stock P/E ratio                                                                   low P/E stock ratio                                     Buy theDip                                                                                Sell the rally                                                Risk-On                                                                                     Risk-Off                                                      Innovation - no worry about profits                                          Seek assets that generate cash                    Stocks rule                                                                                 Bonds and Commodities                            growth firms                                                                              value firms                                                  Institutions move the market                                                     Retail influence returns                              Market depends on economic policy                                 Ideology influences economic policy.

Today's Fed action and outlook will have a hold on the market until their March meeting...Peace