Crisis of Trust

One of the founders of AI at Google quit. He cited multiple reasons. His biggest concern relates to the movie, Terminator. AI could get so smart that it could request more power to operate and thus, be able to control humanity. The more understandable reasons are fraud, polarization and corruption. 

Citizens can be misled with information coming from unknown sources that in fact could be AI. At the moment, we still have the human version of fraud, corruption and machinations. We, at Evolution have a fear that in the near-term future, our society will end up in fractions. Each may possess a kernel of truth, but not the whole truth. This will be bad for our collective nation. The sad aspect of this point begins at the Executive branch and includes Congress. Our presidents and elected leaders continually lie to us about things. They always have an agenda and if lying gets what is wanted, so be it.

Banking Dilemma

Last week, JP Morgan took control of First Republic Bank. What is not revealed by the corrupt Federal Reserve is the details. We gathered some tidbits. JP Morgan gets a $50 billion, 5-year loan with a fixed rate. The Fed won't reveal the interest rate. Morgan gets assistance in a loss-sharing agreement. The FDIC will cover 80% of losses and will contribute $13 billion to depositors. Bottom line: JP Morgan is already up $2.6 billion for the quarter. However, I would not buy as the charts reveal huge gaps and generally, gaps get filled.

Banking Oligarchy

The Fed set this crisis up by allowing human greed to put the parts in place. Small banks complained after the Dobbs-Frank Act. The regulations were too strict, especially with banking reserves. The Fed waited. They gave the meme of complaints time as they said that they took this point into consideration. Then, they waved the reserve requirements for small lending institutions. These small banks like Silicon and First Republic grew rapidly. They built their skyscraper without a foundation. It was only a matter of time...now you know the story. Except there are many other small, regional banks that followed the same script. When they fail, "the too big to fail" institutions will gobble them up. The Fed is creating a banking oligarchy. Waiting for the day of reckoning are PacWest Bancorp (PACW), Western Alliance Bancorporation (WAL) and First Horizon (FHN). The rich get richer and we all get poorer.

Solution?

Did you know that the banking industry can create money? True. Every deposit adds to the bank's reserves. Then, they can lend your deposit to gain profits. With lower reserve requirements, banks can do this repeatedly. They are adding to the money supply. We, at Evolution, suggest this idea: Tax this new money. Use the revenue to strengthen the banking system. In fact, Congress should tax the Federal Reserve whenever they create money which dilutes the value of the dollar and our nation's standard of living. Put that money toward reducing the national debt. We agree with Milton Freidman, "Inflation is always related to the money supply."

Back to Doubt

Do you recall just two months ago that Yellen and President Biden both declared the banking system sound? If you keep yelling "wolf" eventually, the cry will go unanswered. This is what our visionless leaders are doing by lying all the time. Our nation will enter a crisis of trust. However, you can trust us because we spell out our positions and seek to do something good for our citizens.  Peace. 

Point of Resistance

Later today, the Fed's decision will give direction to the market. Many are hoping for a pivot. Some believe a pause is in the cards. The Fed could pull the rug out as it seeks its true aims, which are never announced. They may go up again by another quarter point just to prove that they are independent and fight the inflationary forces that they created. When you look at their history, a concept by a greedy, manipulative JP Morgan or sincere men like Jefferson and Franklin, can you see why we say, "End the Fed!" 

We, at Evolution, stick by our call last year that our economy is already in a "stealth" recession. When you look at inflation, it moves from sector to sector. Each sector's higher price hurts someone or company. When we look at the market indexes, we see the indecision of investors due to the Fed, geopolitical concerns, the dollar, higher interest rates, and earnings. The charts reveal...

Dow is at resistance (34500). Interestingly, this coincides with today's Fed decision.

Transport is still in a downward trend.

S&P 500 is at resistance. 

NASDAQ has rallied, but it has a long way to go to reach resistance (13000). Actually, it is closer to continuing a downside move rather than an upside swing.

IWM, the small caps are weak.

Oil is in a huge consolidation pattern.

Second Opinion

Leon Cooperman says, "The S&P 500 will not hit a new high...for a long time." He worries about our banking system. In related news, Moody's has downgraded 11 regional banks.

Continuing Worry...

about King $Dollar. The IMF has gotten into the fray. It is introducing the "Unicoin." It is now in use. Strangely, it is not a currency, but acts like one. It is being used to settle transactions. It is acting like a "monetary commodity." This is another nail to dethrone King $Dollar.

We worry that the IMF is seeking to become the "world's" central bank. This plays into the One World concept and danger for our nation.

Back to the Fed

The vice chair for bank supervision at the Fed, Michael Barr says, "The Fed did not do a good job of supervising smaller banks." He goes on to say that the Fed needs to do a better job. He does not mention the fact that the Fed ended all reserve requirements in smaller banks which allowed greed to determine their actions.

The biggest retailer, Amazon says it sees lower future sales and Walmart continues to lay off people. Every week there are new firms announcing layoffs. Remember the old Wall Street slogan, "Sell in May and go away!"                   Peace.

Odds and Ends: April 2023

 We begin with the market. It displayed some clues that we believe adds conviction to our recession call. This will send the market elevator down.

Market Clues:

Last Friday, during the trading session, the dollar began an upward bounce. The market immediately tanked. This led to the market low of the day and had enough steam to carry the Dow index lower for the week. This is a BIG tell. It confirms our point that the market still works in conjunction with King Dollar. Dollar up, market down and conversely, dollar down, market up. There are other clues. 

Market Breadth

The McClellan Oscillator is decisively bearish. Market action has more stocks down than up. Tesla is a firm that highlights the negative effect. It is not just charting that uncovers problems. The fundamentals of companies also indicate internal problems. P&G is a well-known firm with a dividend. However, did you know that that had 165 products for sale and now, only 65? In addition, they raised their prices by 20% last year and now, they have increased their prices by another 10%.  They are not selling anymore. They are receiving higher income from their sales. Generic items are cutting into their sales due to inflation. Higher price brand names are losing market share. In addition, many firms across many sectors are continuing to lay off workers. The latest report says another 1400 stores will be closing. If you multiply the stores with workers in each one, the numbers become quite high. This is a slow razor cut to the economy. At Evolution, we put no faith in government reports on unemployment.

Commodities

Unlike the Federal Reserve, we always include oil as an important indicator. It failed to breakout above $87. It is out of gas (can I say that). The easiest price move is down. There is also a gap at $75.13. This will be the test in oil.

If you check with Dr Copper, he had a bad week. Together, these two point the market down. It a related aspect, the Federal Reserve stated that they will not be saying anything until their next meeting in May. I'll believe it like Thomas believed the Lord rose from the dead. 

Other Aspects

We told you that commercial real estate is in big trouble due to short loan time that is combined to rising rates. We also mentioned that bankruptcies will happen, especially to zombie firms. It has begun and Bed, Bath and Beyond are added to the list. Not good.

Last point: Consider in 2000, China exports to the US was worth $25 billion. Today, even with the BS about tariffs, China exports is worth $3.5 trillion or 140x more! Tax all imports and protect American jobs! The Communists' egos do not thank us for taking their nation from peasant status to number one in the world. They are our enemy. They constantly lie, cheat and steal. We should end all trade with them. I know that cannot be done overnight. We should mandate to our greedy, outsourcing firms that they have five years to get out of China. We find our solution quite ironic. We use a five-year plan on the Commies. 

In other news, a report on alternative energy proves that our leaders have no vision. Our solar influence is nowhere near where it needs to be. JFL gives one great idea. In our cities, the mayors should pass a construction mandate: All new construction of four stories or more, has to have a solar roof. This will create a movement in the American solar industry and create high paying quality jobs. This will not affect residential housing, but as solar gets cheaper with the mandate, new homes could afford the change for the better.

However, our wind power production continues to grow. We, at Evolution, are getting older and our solution for our nation's fresh water is still not published. Then, we read this: In California, our leading state, 920,000 people are drinking tainted water. Not good.   Peace.

Slight Concession

Back in January of 2022, our group stated that our economy is in a "stealth" recession. No one else agreed. Last week in the Fed's minutes, they said that they now see a recession within the economy. They did not date the occurrence. They did say that unemployment could reach 4.5%. If it takes 150,000 to move one tick, this translates to 1.5 million more unemployed.

We scanned the market. We found many reports indicating that a recession is knocking on the door. We stand by our call. One notable investor, Jeremy Grantham, sees what we see: Stagflation is slowly wrecking earnings and causing havoc to consumers. Then, we saw this...

Bank of America Report

The bank report lists factors that could direct the economy into a "full-blown" recession. They see the market believes that a rate cut is coming and a lack of fear by investors.                             

1) Manufacturing fell below the break-even point of 50. It resides at 46.3 with a poor outlook.                2) When you get lower manufacturing, lower earnings follow.                                                                    3) The yield curve is a very good indicator. It points to a recessionary outlook.                                          4) The oil price contract has a large gap that needs to be closed. Prices could fall to fill it.                        5) Job reports generally follow manufacturing and that outlook is poor. Layoffs will be coming.              6) There is a global reduction in home values as well as the US.                                                                  7) There are less dollars in circulation to which means less to lend = Credit crunch. Affects everything.  8) We see this in data from the US and Europe = less lending.                                                                    9) When you add just these aspects, it points to a stock market that will not blend with recessionary forces. When and if the Fed pivots, this change will create fear in the market.

Our team also notes that commercial real estate is a serious do-do. Commercial loans are much shorter in terms. At present, there is $1.7 trillion that needs financing. Now, with higher interest rates, many of these buildings will go bust. It is already happening. Brookfield, the largest office owner in downtown LA, just defaulted on two buildings. More will be coming. This also connects to banking who supplied these loans. Bottom line: The Federal Reserve creates inflation with cheap money and then destroys everything, especially the poor with their policy to correct their mistakes. We say, End the Fed!   Peace.

Trouble for King $Dollar

 When there are leaks in the dike, who are you going to call?

In the last section of our last posting, we noted an aspect of troubling news for the dollar. The grumpling is among trading nations at the US currency for its price due to actions of its central bank (Federal Reserve) has developed into action. We know that China is central to oppose the dollar because it is the foundation of world trade and especially, for commodities. China's ego wants that position and recognition. Even our allies complain. Many times this drama connects to foreign policy. Nevertheless, the waning of the power of King Dollar is happening.

BRICS

The alliance grounded by Russia and China also has India, Brazil and South Africa. They account for 40% of world trade. They are planning to introduce a common currency for their group and encourage other nations to trade with it.

It has started as China and Brazil trade each other's currency with each other. No dollars!

A new alliance is developing. At a conference called ASEAN. The group are seeking ways to detach from the dollar to trade among their region. They also opppose US allies and their currencies: Euro, Yen and British Pound. This is the Pacific Rim.

Saudi Arabia is seeking to trade more with the BRICS. They announced that they are open to join the Shanghai Cooperation Organization. This could be a death blow to the petrol dollar.

China pushes anyone who trades with it to trade with the yuan or China's money.

India has thrown its hat into the world trading market by offering to use its currency in world trade. (We see some conflict as China wants this status.) However, the annoncement is open opposition to the dollar.

Saudi Arabia is throwing more curve balls at the dollar. Recently, it agreed to accept an emerging nation currency (Kenya) for an oil trade.

These things are like an engineer's report on a dam. Areas are under stress. A leak could become a disaster. King $Dollar's position will not change overnight, but world action is in a trend that opposes the dollar as the world's reserve currency.

When our nation disregards the privilege of the dollar with excessive money printing that dances with debt, everyone holding dollars worries. At this time and in this space, we will not get into the dangers of the dollar being de-thrown. We all will be poore. In the meantime, we have the two world lending institutions: IMF and World Bank. 

Ego's Everywhere

The International Monetary Fund's purpose is to lend money to stabilize currencies. Their ego wants more. They have developed a non-currency called Special Drawing Rights (SDR). It is a basket of currencies. The US has the highest value ratio at 43%, but China is in the mix with 12%. They seek to have the dollar replaced with their SDR (currency) basket of value. 

World Bank lends money for projects like dams. Their record is terrible. Corruption steals millions with very little progress with their loans. China is big in this loan area. They take possession of a nation's collateral if that nation defaults. With corruption, this is a guarantee. China will eventually be hated for stealing valuable resources in nations around the world. A leopard cannot hide its markings. For now, this is another threat to the dollar. 

The biggest threat to the dollar is our money printing and our national debt. When your debt is 120% of your GDP, you are in do-do land. It gets worse every minute. Both of our political parties are guilty. The biggest sinner is the Fed. This is why we say, End the Fed!            Peace.

What's the Buzz? What's the Happening?

 -  Ah, gentlemen, you know why we are here                                                                                                 We've not much time, and quite a problem here.                                                                                         ...We need a more permanent solution to our problem...

- Andrew L. Webber

Market Outlook

In His honor, we submit the rock opera. Time changes, humans don't. The Bulls seek to regain control of the market. They want to capitalize on the dangers to the banking system to which could stop the Fed. The long awaited "pivot" is at hand, according to them. They also seized the date. We are in "window dressing" time and the end of the month. They do have some positives that could sway your thinking. We say, "No!" However, the decision is always yours to make. Let us look at the picture...

The Dow ended the market in a strong rally. With a short week due to Easter, they will seek to keep the market rising. We say that the real conviction will show itself if the Dow can pierce the 34,000 range. Keep in mind, that the month of March saw another new low and the volume is the strongest on down days.

The transports also rose. This is a strong sign for harmony in the market. However, the transports also hit a new low in March with heavy volume. Its test will be 15,000?

The SPX followed the two leaders in the New York exchange. Its real strength will be revealed if it can pierce 4300?

Nasdaq is the leader in the uptrend. It too has a test in its sight. It needs to surpass 13,000.

IWM, the smallcap is still the weakest link. Its firms are the hardest hit by the Fed's policies.

With all of the above, there are a few fundamentals to the charts. Have you looked at a new electric truck? Ford lists its F-150 at $61,000. Ouch! It is the same for all the carmakers. We already know that the biggest consumer expense, housing, has prices over half of our nation cannot meet. Can the other half afford a new car with the already high house costs? This does not bold well for the economy that is under inflation stress and the Fed placing higher interest rates to their budget.

At present, oil is bouncing. Where it goes is anyone's guess. As soon as you catch your breath with the sentence, OPEC and Russia agree on an oil cut. However, even with the uptick, it is still in consolidation range. It would have to pass $82.62 to show conviction. One reason why all the previous worries about supply did not come to pass was a simple aspect that Russia did not sell to the West, but China took all the supply. The West did not have the Chinese to compete as buyers. Enough supply to go around. With the late winter, we will have to wait for a clear signal as to where the oil price is going.

Meanwhile...

The present uptrend in the market could be traced to the falling dollar. Like we have said many times, the market moves opposite to the dollar. Now, the retracing dollar is giving the market breathing room. Keep in the back of your mind, dynamics can change as other factors come into play. We noticed one big disturbing bit of news. The BRICS alliance is calling for their members to put forth a new common currency for them to trade. We see this as a positive when you view the consequences of such a move. China has always wanted this as "...a more permanent solution to our problem..." We see it resulting in greed, anger, jealousy, disappointment and the second step in ending the Russia/China pact.

- No riots, no army, no fighting, no slogans...                                                                                                One thing I'll say -- Jesus is cool. Thank you, Andrew for Jesus Christ Superstar.   Happy Easter! Peace.

Odds and Ends: March 2023

- He, who controls the money supply, controls.

- Rothschild

We begin with the bandito, blindfolded, hands tied and standing before a blood stained wall. We hear a voice,

Listo, Apunta, Fuergo! (ready, aim, fire).

It is now legal in five states. With the claim that letal injection is inhumane and a limited supply with the fear of lawsuits, the old firing squad in back in vogue. The only thing that we see before the wall is small banks, small businesses, workers and consumers. Before we begin to look at the four categories, we must include this sad point.

Shootings vs. Train Derailments

If you count every train car in the recent derailments, it is a neck and neck race to death with school and public shootings. So much for the quality of life and giving thanks to God?

Now, we begin...

Small and Regional Banks...

...were set up by their own greedy nature and a perfect trap by the Federal Reserve. When a bank fails in the US, the Fed seeks a buyer. FDIC covers the regular depositors and the Federal Reserve covers the big guys. We say this all the time. One would think that since we have been right most of the time, that more people would back our call to End the Fed!      

Anyway, after the financial crisis of 2008, Congress passed the Dodd-Frank Bill. It is mostly BS, but it did touch a few strong points. Among those, is bank leverage. It got raised because banks can create money just like the Fed. It is based on their deposits. Say, you put $100 into ADIOS BANK. They can now lend $90 out. They created $90 dollars. Well, the small, regional firms yelled at Yellen, "This is not fair. We can't compete against the big boys. We can't make it!" The cry becomes a worry in what you wish for. Beware the...

Ides of March

On the 15th of March in 2020, the Fed granted the wish by small banks. They eliminated ALL bank reserve requirements for smaller banks. Yes, you read that right. These banks envisioned themselves as the next Goldman. They expanded, rapidly. Someone got worried. Maybe we should cover ourselves with bonds? They purchased "grenade bonds." They bought low yielding 3% bonds that blew up in their face as the Fed raised interest rates. They had a limited cash reserve. The run exposed their weakness. Enter the Fed.

In their machinations, they actually bailed out the big boys by declaring that they will buy up grenade bonds at full value. Would you buy something for a dollar when you knew you could purchase it elsewhere for .50 cents? This is how the Fed helps the money class. Not only that, they will divide the spoils among the big boys who now will grow through this "crisis?" 

It is the same everywhere that central banks control the money supply. Credit Suisse had a phony market cap of $8.51 billion on the day that they crashed. The home central bank was ready to cover all their losses with a $54 billion dollar loan. Could you get a loan for 7x your value? See, what we mean? Keep in mind, these are commercial loans are with a 7-year max and not a 30-year mortgage. Foreign nations make use of socialist concepts. It is why our capitalist firms are at a disadvantage. All their big corporations are backed by the government. This is why China is so formidable. 

As it turned out, they realized this BS manuever will be public knowledge. They covered their ass by "merging" the bank into UBS. Sri Lanka got saved by the IMF from defaulting. This is happening around the world, but kept behind the curtain. 

In a related story, Powell appears before Congress. He is asked by Congress-woman Lummis, "Is our level of debt borrowing sustainable?" He says, "Yes." By the way, our debt level is 120% of GDP. Very bad in our eyes. Will you join the meme? End the Fed!

Small Business...

will suffer due to higher loan costs, shortage of workers and consumers who will pullback due to inflation. At the same time, bigger firms are cutting jobs like Amazon and Accenture. Walmart is closing stores, ending the night shift and cutting jobs. These actions lead to delinquencies and evictions. You can see this aspect in the market in the IWM. This index is the hardest hit of all the market price movements. This also gives foreign firms more ground to expand within our nation. This is very bad in our eyes. 

Workers

We stated last year that this year we would see more strikes by workers. The LA school district starts off our prediction. It is happening in the UK and EU. Sadly, we see job cutting causing more pain. McKinsey announced 2,000 job cuts. Disney just laid off 7,000 to the growing number of firms cutting jobs like the ones mentioned above. We add that to our other prediction: evictions will be back in the news. Very bad in our eyes.

Consumers

they are pulling back with inflation. They somehow manage to make ends meet. With that said, too many are using their credit cards to get by. This is a serious cloud on the horizon. Not good.

One More Prediction?

In the nation of the Central African Republic, Chinese mine workers were shot and killed by alleged Russians. Their mine looted. China vows revenge. This will be the first mistrust of China with Russia. There will be more in the future. Someday, their alliance will bust just like the Russian/German deal before WWll. The Russians will beg the West to become friends again. We can only hope.  Peace.