Fed Speaks, Now Us

The Federal Reserve is bluntly obvious. They have resorted to this technique for the last six months. One month prior to their scheduled meeting, they take turns addressing the media. They are using the media as their BS, bully pulpit.  Here is a sample from October. Of course, we know that they did nothing at the meeting with rates, but BS to the nation.

Philly Fed President, Patrick Harker:

"Absent a stark turn in what I see in the data and hear from contacts...I believe that we are at the point where we can hold rates where they are."

Fed Chairman, Powell:

"Additional evidence of persistently above-trend growth, or tightness in the labor markets is no longer easing, could put further progress on inflation at risk and could warrant further tightening of monetary policy." 

Atlanta Fed President, Raphael Bostic:

"I really do try to keep people focused on what inflation is still at 3.7%. Our target is 2%. We have to get a lot closer to the 2% before I would consider any relaxing of our posture."

Fed Chairman, Powell:

"Financial conditions have tightened significantly in recent months, and longer-term bond yields have been an important driving factor in this tightening. We remain attentive to these developments because persistent changes in financial conditions can have implications for the path of monetary policy."

Minnesota Fed President, Neel Kashkari:

"It is certainly possible that higher long-term yields may do some of the work for us in terms of bringing inflation back down, but if those higher long-term yields are higher because their expectations about what we're going to do has changed, then we might actually need to follow through on their expectations in order to maintain those yields."

Dallas Fed President, Lorie Logan:

"If long-term interest rates remain elevated because of higher term premiums, there may be less need to raise the fed fund rate. However, to the extent that strength in the economy is behind the increase in long-term interest rates, the FOMC may need to do more."

Fed Reserve Member, Christopher Waller:

"While there is some basis for expecting inflation will continue to fall, let me remind you, as I have done repeatedly, that we have seen a string of good inflation reports evaporate multiple times in recent past. So, I will be watching the next several reports for clearer indications that inflation is on a trajectory to 2%." 

Boston Fed President, Susan Collins:

"With rates in restrictive territory, I do expect that payroll growth and economic activity more generally will slow in the coming months."

Our Two Cents

What the Fed members did not address or mention is this: Interest of US debt is now over $1 trillion. This is destroying our nation. This growing negative now consumes 15.9% of the entire budget. They never admit or address their role in the "boom and bust" economic policies instituted by them. They make interest rates artificially low for the boom and then raise them high for the bust. They will be the reason as to why the global community will seek to end the dollar as the world's reserve currency. It is why we say, "End the Fed!"

Our View on Inflation

Workers at Chipotle earn $20 bucks an hour in California. We predicted last December that in 2023, workers would strike, mainly because of inflation. We see many more strikes in 2024 with this news.

Is your oil a little low in your vehicle? Well, a can of oil that used to sell for less than a dollar, now costs $5.99 Ouch! Remember the Christmas Hess truck? When they raised the price from $2.99 to $4.99, I thought no one would buy. I was wrong. Flash forward to today. The Christmas truck goes for over $42. Are you kidding me!? Inflation is not only not going away, but worse, it is ingrained. When you check your oil and decide on a different present at the gas station, as your vehicle fills up, don't let the lower price fool you. The winter blend for gasoline is cheaper to produce, but OPEC still controls 40% of the product and they want higher pricing. The two wars will not help the situation.

The recent rally in the market should stall. It is at resistance. The dollar is central for the next market move. We will have more on the Fed and our economy and inflation next week.    Peace.

Choice of the Founding Fathers

- Sun, sun, sun here it comes...

- George Harrison

Gold

People ask people who buy gold, why? We will only answer for ourselves. We realize the wisdom of the founding fathers who chose the precious metal to back our initial currency. It would provide stability in pricing (read anti-inflation). It would ensure that future leaders of the nation kept spending in a balanced form (read no deficit spending). It would be accepted everywhere and the thrifty would be rewarded with social mobility. There are other reasons. They are all good. However, the corrupt understood the limitations it placed on them to expand, control and of course, get rich. Many came to America with money from their aristocratic families. They sought the easiest way to get money, through banking. It is why the attempt to form a national bank was opposed. The founders knew debt is a danger in all its forms. Nevertheless, the rich keep plotting. They keep trying. In their heart they do not believe that all men are created equal. They fight against social mobility and workers to be paid fairly.

Flash Forward

The nation experienced a series of bank runs that ended up as recessions for the nation. Looking back at those boom and busts situations, we see two basic reasons. One, banks buy into each other's investments. Two, they leverage to the hilt to maximize their investments. Before the introduction of the Federal Reserve, there were no rules. All their profit is basically from debt. The more loans that can be serviced along with government notes, the three o'clock country club cocktail life is a sure thing. Until more and more people seek that style of life by any means. Enter fraud. Word gets out. Bank run. Bank collapses. Enter recession.

Enter J.P. Morgan

He realized that leverage is a weak link. If there was a "special bank" like they had in Europe, it could provide capital to cover a crisis. This would stop a run. He pushed the idea. He got a Rhode Island senator on board by having the daughter marry a Rockefeller. He got a weak president (Wilson) to sign the bill which created the Federal Reserve. This was the first nail in the coffin for our currency and gold. Clouds began blocking the sun.

Enter FDR

The new president realized that he needed to get people back to work in order to get the economy going again as the Depression was on hand. His first act was to ban gold. He knew deficit spending would be needed and gold kept the government in check. Gold died on that day. The sun no longer shined in America. Since then, our dollar has lost 95% of its value. This is inflation and what it does to our standard of living. It has declined. We were number one until deficit spending became a way of life. Today, the liability column exceeds $50 trillion. Dear Reader, the US is no longer number one in the world. We are number 22 in reality. 

How can that be and why, you ask? 

Because we are innovative. Because we have a strong military. Because intrinsically, we offer what no one else offers. An immigrant to America can become a citizen. This is not the case everywhere else, although some of the obstacles to citizenship are changing. However, the rich keep plotting. They fought unions by outsourcing. The wealth gap began. By controlling the media, citizens are misled for the cause of problems in our economy, our standard of living, in America.

The cabal started by JP Morgan controls our currency. The military got on-board because most of the deficit spending went to them. The world trades in US Dollars, however this is being challenged. 

Outlook

We have nations seeking to break the control of the dollar being the world's reserve currency. We have record deficits with even more "off the book" liabilities. We have the reckless danger of world war, and we know one thing, gold will retain its value. We told you in previous pieces that gold will rise. Last week, it went past the $2000 level. If you look at a daily chart for the last month, it reveals a cup and handle chart formation. This is very bullish. We see it rising to $2129. We get a second support from both the XAU and HUI gold indexes which also showed a cup and handle pattern on the weekly chart. When gold tests this projected level, we will reevaluate. Keep in mind, in 2022 as the Federal Reserve began raising interest rates, the word against gold was it did not pay a dividend and higher rates would cap any advancement in price. Folks, many growth stocks do not or did not offer a dividend, but they advanced in price. Gold fights the Fed and they know it. They are Fiat. They are fake money. No matter what they do with interest rates today, gold is the real thing. It is why we are for gold. 

- Little darlin', it's been a long, cold, winter                                                                                                    Little darlin', it feels like years since it's been here                                                                                        here comes the sun, doo-doo-doo-doo                                                                                                            here comes the sun, and I say, it's alright.

Thank you, George Harrison. Miss you. RIP...Peace.  

Odds and Ends: October 2023

In last month's piece on odds and ends, we opened with distress. We included a report from the US military that stated, "...war with China is coming by 2027." We also talked about the market and the false propaganda coming out of China about the islands off their coast. One month later, we find ourselves thinking about the expression, "A New York Minute." It means things are going along in a normal manner and suddenly, something dramatic happens.

Middle East

It became the New York Minute. We stated our concerns last week. No need to repeat except this point. We stated that the status quo loves this conflict. It gives them an opening to repeat all their negative claims to continue military spending, to continue debt spending and this is money in their pocket.

Meanwhile...

The average citizen suffers from inflation and stress about their job, their future. Consumers are tapping credit to make ends meet. Total credit card debt is over $one trillion. People looking to purchase a home or sell their home and seek their retirement location face 8% mortgages on expensive housing.

Repo-Man

We found a report that says car owners are falling behind in their payments at a new record level. Then, the media declares the consumer, "resilient." We know why. The status quo controls the media. We are glad that Google offers us this freedom of expression in this blog space. We turn to the market...

Rapid Price Swings...

...indicate a change in perception. This will direct the future outlook since the market likes to peer out six months in advance. We noticed two important trendline rapid price swings with changing direction.

King $Dollar

It has broken its upline channel for a higher price. It can either consolidate or fall. Keep your eye on it.

Gold

It has tested its lows. It also broke its downtrend. It needs to break $2009. Keep your eye on it.

Oil

We told you in our last discussion on the commodity that it needs to pierce $93. It tested that figure, but it could not hold price. We feel another test is coming due to two factors. One, it ran out of energy rising to that price from the low consolation level ($83). Secondly, it had high volume at the peak price ($95).

Last Thought

Do not believe the hype about November being a top month to get into stocks. Buy some time with short-term CDs or bonds. Things can change in a New York Minute.  Peace. 

WAR. What is it Good for?

- One of the most distressing signs of contemporary times is the denial of guilt.

- Fulton J. Sheen

...I say it again, war: What is it good for?

Absolutely nothing!

We live better than any historical society and yet, students kill each. Kids shoot each other and ego, militarists start wars that destroy lives, cities and nations. What does any of the above achieve? Sing it, Edwin Starr, "Absolutely nothing!"

In the above quote by Cardinal Sheen in the 50s, he saw how leaders, political parties and regions in the US denied guilt for their negative ideas, legislation and foreign policy. Today, we can expand his observation to many global nations. Extremism is never the answer and Hamas are extremists. With that said, people like the Israeli leader, Benjamin Netanyahu is also an extremist if you consider his ego is so big that he no longer lets other ideas and answers see the light of day. He is also a militarist that believes, "might is right!" People in his nation realized this and they tried to unseat him from power. Hopefully, they will succeed the next time.

Peace

It can be achieved in the Middle East if the radicals are put down and out of power by the good and peace-loving citizens in Palestine and throughout the whole Middle East. When you delve down into the anger between Israel and the Palestinas, it comes down to one word...

Land

When Israel was established, land was seen as being taken by the Jews to form a nation. The first years had some bumps, but the idea began to be accepted. However, with the success of the new nation, more and more Jewish people from around the world began to move there. The nation is a small land mass. The government expanded settlements. This encroachment on land gave the radicals a cry. In addition, Palestine never received diplomatic, world recognition. If you do not have sovereignty, how can you say that someone is taking your land? Palestine must be recognized. Boundaries must be established.

Back to Netanyahu

After the six-day war in the 70s, he pushed for expansion which included Gaza and the West Bank. Good peace-loving people in the government overrode his plan. Israel forced their own people to re-locate back to within the Israeli borders. The road to peace had its first chance, but extremists continually cause roadblocks and trouble.

Worst Outcome

Israel has asked all Gaza citizens to vacate the region because of air-bombing and a possible land invasion by their troops. The danger is Netanyahu BSs about future protection which would only be a cover for expansion. He may include the West Bank region. This is imperialism.  If this happens, we should end all of our support for Israel. If this happens, there will never be peace and another possibility, WWIII. 

It seems like a never-ending struggle. There is hope. Saudi Arabia and Emirate nations are accepting Israel. If they can get the remaining nations, especially, Syria and Iran to the table, a deal could be achieved. If not, extremists could cause the destruction of the world. Gaza City will resemble New York, Moscow and Bejing. The rest of us will starve to death. And for what? 

Thank you, songwriters, Norman Whitfield and Barrett Strong for your great song and lyrics, "War (h'uh) Yeah! What is it good for? Absolutely nothing!"     Peace.

Timing

The word can be traced to so many outcomes in sport, job opportunity, life and of course, the economy. You can probably think a few more where it applies. We, at Evolution, are using the point of the word as it pertains to the stock market and the economy. 

Last week...

...we stated that a market bounce could be coming, but it should peak by Friday. Our timing was off. It showed itself late Thursday and continued into Friday. The indicators that we apply still point to the same outlook. Why, you ask? 

Many Aspects

The stock market uses the current trend price as an outlook for six months in advance. With that concept, the investors are seeing earnings, the leading component to price action, as a negative. This is their thinking:

1) Higher interest rates make the future earnings of companies a lot less.                                                    2) Higher yield on bonds along with their safety, makes them more attractive than stocks. This moves          money out of the market to go into bonds.                                                                                                3) A stronger dollar means less profits and thus, less earnings because most of the company's income          comes from the outsourcing of their product.                                                                                            4) Inflation increases costs to all firms and consumers. The results lead to a slowing economy.                5) Finally, the effects of higher interest rates on residential and commercial activity are becoming a              larger worry as construction affects so many aspects of the economy.

Fraud

This corrupt activity always seems to show itself just before a market crash. We are seeing it now. Think back to recent recessions and the revelations of fraud just prior to the market sell-off: Long Term Capital Investment, NINJA loans in the financial industry and the king, Bernie Madoff. Today, we got the crypto-currency poster boy, Sam Bankman-Fried. We bring this up because last week, oil changed course in a volatile way. The contract dropped $10 bucks for the week. This is an unusual price movement with little news. However, it does relate to the market's future outlook. Investors took profits, but then conflict broke out in the Middle East. 

Oil Bounce

It actually only popped to its upper range, consolidation level. When there is trouble in the world, the US military lobbyist gets to work. It means more military aid. It means more spending which means more deficits. It means a return to the status quo. The bounce could turn into a rally. The SPX could hit 4450. There is a gap at that price. However, there is resistance at that level and with more unpleasant revelations about the economy, the rally will end.

Getting back to oil, a little blurb about oil contracts and fraud. We feel there is more to the story. Then, we read about a Singapore oil tycoon, Lin Oon Kiun. He falsified oil sales to a bank, HSBC Holding Plc. I don't know all the details. We will not speculate, but we give credit to the Singapore High Court to find justice. All these cases can lead to other cases and since the oil contract moves so quickly, we say maybe the timing of more bad news is coming.  Peace.

Bearish Engulfing

...on the daily chart of the USD last Thursday could be a signal for a market change? However, the weekly chart shows a continuous rise and breaking over the resistance level at 105. What gives? This is not harmony in the market. King Dollar did fall back into the 105 range and then, it touched 107. By hanging at highs, it could go higher. The question: Can it hold price? So, what else do we see?

Last week...

...we concluded that a short bounce is possible. If it appears, it should reach its peak this Friday. Nevertheless, the price action of the dollar will be the determining point. Now, consider the price action in the oil contract. Oil broke out above the 93-resistance level. It also gathers steam from the aspect that a golden cross of the 50-day moving average over the 200-day moving average with stronger volume on the upside as opposed to weaker volume on the downside. This is impressive when you throw into the equation the strong dollar. If oil pierces $95, then $100 oil comes with a new resistance level of $105. The Fed may not include energy in their phony matrix inflation formula, but we do. This oil price action says inflation is not going away. 

New Dilemma

If inflation persists as we indicated, how does the Fed address the problem? At the moment, commercial real estate is in do-do land. They have loans coming do that they originally received with low interest rates. During this period, COVID-19 caused havoc. Workers left the office. Many of these rentals left the commercial building. Income has gone negative. Many commercial property owners have let their buildings go to bankruptcy court. Now, they face higher interest rates that will make commercial projects lose their position. A conservative estimate puts the figure at $4.6 trillion by 2026. Joel Litman, an influential money manager says, "Credit is the key to market direction." We cannot argue about his point. The signs of higher interest show themselves in the fact that last month, 57 companies went bankrupt. 

- 2 out of 3, ain't bad...

Meatloaf sang the hit, but Powell can't sing. If he stands pat, the damage will continue. If he raises rates, it will get worse. His only way out is to lower rates and admit defeat. Admit the Fed does not know what they are doing. Neither will happen because ego, big money and the status quo are at stake. All this adds to our meme, End the Fed!               Peace.

Odds and Ends: September 2023

- Let me issue and control a nation's money and I care not who writes the laws.

- Mayer A. Rothschild

Those words are true, but I feel it put an arrow on Jewish people because most problems in society can find their root in money. Today, in the US, the Federal Reserve prints and controls our currency. In China, the Communist Party dictates to its central bank in the same way. This does not fall under an "odd" in our monthly piece, but the other half, "ends" has a whole other meaning. 

Last week, the US military released a report where they predict war with China by 2027. Talk about the end, this would be it. The report claims China is in preparatory stages to start the conflict.

In a different style and approach, the Chinese government offered a "carrot and stick" to the islands off its coast, mainly Taiwan. The missive states that its province, Fujian, would tender beneficial trade and development to the coastal islands which include Kinmen Islands, some Matsu Islands and some Wuqui Islands. Many of these islands are under self-rule. The ultimate goal is to find a way for Taiwan to return to China. At the same time, Chinese warships circled the Island of Taiwan. 

We Say...

...all those islands were never really a part of China, so the propaganda is a lie. Taiwan had 17 different ingenious tribes before an influx of people from the China mainland, mainly the Yaggi clan. This was due to the constant warfare under different Chinese dynasties and other invaders. There are records of Chinese and Vietnam Chinese trading from the islands. This Chinese claim amounts to nothing more than any conqueror like Rome controlling the Mediterranean Sea, saying that all those lands should belong to Italy.

Nothing New

This is how China operates. They offer help to a nation to develop a project, mainly shipping ports. Then, they wait for corruption or other problems. They offer more money for full control. China now controls 17 large world ports like the Panama Canal and shipping centers in Germany. They are in the process of controlling trade in South America and many parts of Africa. This is their playbook. 

The US military has too much say in our government and you can see the results by their lion share of our yearly budget. Our military and the Chinese Communist party have only caused ill well and distrust throughout the world. The final "end" would be using war to solve domestic economic problems in both nations.

Our Answer

Both nations agree to cut trading and go their separate ways. No hard feelings. No more threats. No more hacking and stealing data. Both governments seek to do the best for their nation, climate and peace. Because the other way, millions will die, the world climate could be destroyed, many millions more will die a slow death of starvation and both nations will face WWIV like Einstein said, "With rocks and stones."

Meanwhile

The Federal Reserve admits losing $100 billion. How, you ask? They receive less for the old bonds that they purchased and they pay out more to the newer higher yielding notes.

We told you back in our yearly forecast that this year, strikes would be in vogue. There have been 70 strikes so far. 

Sadly, rising inflation and health costs are forcing more health concerns to close. The number is shocking - 580. There are waiting lists to see a doctor or an assistance care facility. I feel for those workers. Patients enter too late and die in a bed that these workers have to service. A new patient enters in the same poor condition. Death calls and the cycle continues. Needless to say, depression fills these workers.

Market

A small bounce could be in the works. However, the calendar turns to October. This is the worst month for the market. The Dow appears weak. NASDAQ has more strength. Keep in mind that the dollar rose over 105 and the next resistance is 107. Even with window dressing approaching, King Dollar will act like a lid on the market. In addition, there are many gaps in the high flyers like Amazon, Apple, Google and Invidia. The chip stock looks bullish, but the others are trending lower to close the gap and or, remain in consolidation.        Peace.