Odds and Ends: December 2023

 - ...And if you get the chance -                                                                                                                         Sing with a joyful voice and sing with a loving heart                                                                                   Merry Christmas to all and happy birthday, my Lord.

- John Lipareli

If you are not familiar with the above Christmas hymn, it is because it will be released in 2024. You get a sneak preview as readers of our blog. JL is the founder of this blog and the writer to the carol above.

Yesterday connects to today and leads to tomorrow

In December 2022, when the experts were given their forecast, none predicted the banking failures or the weak financial conditions in the banking system due to the Federal Reserve hiking interest rates. They just said things are looking good, the economy is growing and the consumer will continue to spend. Their outlook for the markets was higher from 7% to 15%. We did not.

As for their call, only three sectors in the market had a positive return: Technology, communication service and consumer discretionary. Everything else is lagging or weakening. Their outlook on the consumer was correct, but with over $1 trillion in debt and many behind on rent, car loans and living paycheck-to-paycheck, clouds are on the horizon.

Fundamental Approach

We reminded you that a basic strong indicator of the present and future economy is revealed in the "Cardboard Box" supply and demand. It was down for 2022 and continued down in 2023. We just got a second confirmation with the earnings report from FedEx. They lost a staggering $7.68 billion due to plunging demand. 

Second Opinion - tech approach

The conference board of leading economic indicators reported another down month in a down trendline of reports.   

In addition, the Fed is always wrong, especially when forecasting unemployment. The Fed misses any of their estimates when they hike interest rates concerning unemployment. We bring this up because we feel that the consequences of their actions will be felt by labor in 2024.

In a recent meeting between the Fed chairperson, Powell and Congress, Kennedy of La. He did some math based on information from Powell and the Federal Reserve associated with interest rate hikes, inflation and unemployment. In the past, the Fed stated that in fighting inflation with interest rate hikes, unemployment could rise. For every 2% reduction in inflation, unemployment will rise by 3.6%. This has not happened, so far. However, Kennedy concluded that inflation hit over 9%. To get to the desired 2%, unemployment could rise to 10%. Powell rejected Kennedy. We predict this will reappear in 2024. A report on layoffs for October shows that the pink slip is up 24% for the month.

Same old, same old

China consumes more coal than the rest of the world combined. So much for COP28. Japan keeps their interest rates at negative even though the nation has 2% inflation. Of course, we know that figure is manipulated just like their currency and interest rates.

New Cuture

There are now Dog Bars. You get a play area for Fido and you can watch sports and have a beverage while your dog exercises and plays with other dogs. 

12 Days of Christmas

You would have to be in the millionaire class to purchase the 12 gifts of the song. It will run you $46,000 to shower your love one with the 12 presents. Are you kidding me?! Another proof that the Fed has destroyed our currency and standard of living. Anyway, like the lyrics from our founder's Christmas song, "...true gifts are from the heart."

Last Tidbits

Aside from the takeover by Nippon Steel for US Steel, steel prices are up 55% just since October. And yet, we read that the Fed sees inflation falling to their 2% target. Dear Reader, we remind you that price and volume must be in harmony to determine the market's direction. In most cases, king dollar dictates this motion. At the moment, the dollar is testing its low level at .99. This will be good for the market, especially for gold, but it will also cause inflation for the rest of us. This will be the central story for 2024.  Peace.  Oh yeah, Happy New Year!

Fed Cycle: Boom & Bust

First Crisis

After the influence and probably money corruption led by JP Morgan to create a central bank, the Federal Reserve established since 1913 faced its first test in 1920. The economy experienced a built-up demand from WWI that ended in November 1918. The rising imports put a strain on our currency that was still under the gold standard. To counter inflation the Fed began a series of interest rate hikes. From a war-time low in 1917 of 3.5% to then, a new-record high 7% in 1920. 

Result

This caused a dramatic slow-down to the economy. It led to a depression. Unemployment rose. Prices fell. This is deflation. Fortunately, the Fed had an intelligent leader in the New York region in Benjamin Strong. He felt that the economy would self-adjust. It might take two years, but there is no need to panic by adding stimulus or money printing. The government needed patience to allow the economy to self-adjust. It did. By 1922 the economy fully recovered. His thinking was a boom to bust period is a natural occurrence. The Fed passed the test. The economy continued to expand and the Roaring 20s is now folklore. 

Timeline

The Federal Reserve would be challenged again in 1929. It would fail. In fact, they would be responsible for every economic crisis since 1929 and fail each time. The ego leaders believe that they can engineer an economy. They manipulate interest rates. They print money. Now, they even buy bonds (QE). They back government leaders who choose stimulus. The cabal at the Fed and our wealthy government leaders do not understand two things. One, busts occur naturally. The second is from the mind of the great economists, Milton Friedman. In discussing interest rate changes the Fed does not understand the difference in the date of the change to the time that the impact takes hold. He said, "...it is a long and variable lag of monetary policy..." Benjamin Strong believed it takes at least two years. Putting together Strong and Friedman, we come to this conclusion after we looked at the recent history of rate changes. The present journey of higher rates actually began under chairperson, Yellen in 2015. Prior to that time, the rates were kept artificially low. Rate went from 0% to .25% in 2015 to 5% and 5.5% today. Of course, the rate for you and we pay is considerably higher. Taking the 2 to 3-year lag time in monetary policy, the economy should have adopted well by 2018. It did, but COVID appeared in 2019. This disrupted everything. If we flash forward to 2021 and the end of COVID, monetary policy says the lag time for the effects of the rate increases would be the end of 2023 or some time in 2024. We should experience an economic slow-down and higher unemployment.

We have already stated that you and us at Evolution, already feel like that we are in a recession. We named it the "stealth recession." It appears that the rest of the nation will feel the effects of the idiots at the Federal Reserve sometime in 2024. In the meantime, try to enjoy the holidays by giving your best to one another. Maybe sing our favorite Christmas carol, "All I want for Christmas is to end the Fed!"  Peace. 

Highs and Distribution

We recently stated that you should look for signs of distribution within the stock market. It is your clear warning that a drop is coming. Maybe the people who get to declare whether the economy is in bloom or recession, will raise the dreaded recession flag. We stand by our "stealth recession" call. 

Life

We believe the level of your living standard is the final answer about an economy. The stock market is used as a barometer by government to reflect the economy. It is not. When you go to the grocery store and you cannot afford meat or fish only to see that vegetables are expensive too, you realize that it is difficult to make ends meet. When rent eats up 40 to 50% of your income, you realize that is is difficult to make ends meet. You fill-up your gas-tank because the price has dropped and you fear that it will spike again. This is how most Americans live. We may have some stocks, but whether they rise or fall, we do not sell unless it is an emergency. Stocks are treated like out home. They are part of our nest egg. 

Stock Market

It really has nothing to do with Main St. The retail customer does not move the S&P 500 index. It is hedge funds, institutions and wealthy investors. At the moment, these people believe that the Federal Reserve is through with interest hikes. This has caused the recent rally in the market. The "Magnificent 7" accounts for almost 30% of the S&P index. This is the wind to the market's sails. In addition, the Bulls are putting the squeeze on the Bears. This is always a problem for true value. Stay strong!

Highs and Distribution

When you look at a weekly chart of the Dow, the recent rally is only back to the August level. It is the same for the SPY. If you look at the Transports, they are less than half of the August level. This is disharmony. The volume is strong, but the price swings are muted. This is a sign of distribution. Then, we read where Zuckerberg (META) is selling shares as well as the Nvidia (NVDA) CEO. There are others, but they have not declared to the media. The only way to know is to wait one month. Then, anyone or firm holding 5% must report their investment levels. With that said, it is possible with the "Santa Rally" for the market to hit a new all-time high. See other reasons above.

At last count, analysts are on record believing that there is a 70% chance for the Christmas rally. Dear Reader, we remind you that all of the market crashes appeared just after the market hit a new all-time high. The Federal Reserve will announce their last decree for 2023. We expect no change. One reason: they do not know what to do. They hope for a soft economic landing. Then, they will claim success. If not, they will say we have a plan. Everything is under control. They control the media. However, we favor our holiday song, End the Fed!

Our Holiday Wish

Let's all hope and pray for peace in the Middle East and Europe and as always, we wish you peace.  

A "Golden" Time

- There are no good or bad stocks - only rising and falling stocks.

- Nicolas Darvas

King $Dollar

We expressed our concern about the dollar many times. We advised you to keep an eye on it. Have you? Well, it recently broke its support level at $104.99. It also broke its up trendline and on strong volume. This is big. The underlying problem for the dollar is debt. We all know the stated inbalance of revenues and expenditures. The government says that our debt stands at $31.46 trillion as of May 2023. Dear Reader, it is triple that figure. The debt report does not include benefits like social security and medicare. There are countless off the books billions to the military and other clandestine activities. There is also the little discussed fact that with higher interests rates, the compound total of debt multiplies rapidly. The Federal Reserve has put us in a dangerous position. 

Furthermore, we read that China is seeking to develop an alternative to the dollar in global trading. The BRICKS are real even though their efforts have not dented the dollar's strength and value in trading. However, it shows opposition. It shows change. To overlook threats is like Marie Antoinette, "Let them eat cake!" The poor in France had no bread and could not afford what was available. History has more than one reference to complaints by citizens about their government and their standard of living. The Czar in Russia. King George 111 in England with the American colonies. Our present leaders put the threats out of the news and on the back burner. We don't. There are many others who share our concerns. Central banks have been buyers of gold to have a reserve if something disturbs the market and the dollar. We know what could cause that disturbance. It is debt. 

Gold

It is in our constitution. The greedy and corrupt got us off the gold standard and away from the ideas and values of our founding fathers. The short sighted military leaders (read Pentagon) influenced presidents to appease allies to use our nation as a dumping ground for their exports. They threw a bone to producers by allowing outsourcing. Deficits became normal. After all, we are the reserve currency for the world. There is nothing to worry about. Ask the idiot, Dick Cheney, "Deficits don't matter."

We have abused the privilege. However, there is one refuge for our economic well being. It is the pecious metals. All the negatives about our foreign policy and deficit spending are pointing to a moment. Whatever happens, one thing is for sure, the staus quo will do anything to maintain power and gold will hold its value. It is not just that. It will return to prominence. It will rise in value. With that said, how does it stand with Darvas's quote?

Consolidation

Gold rises and then, it falls. Why, you ask? Because the fiat forces conspire against it. It is a constant battle that forms a lid on gold's advances in price. We always fear when JP Morgan Chase says, "That gold's time to shine is now." They just declared that. There brother in fiat arms is Goldman Sacks. They buy gold to use it later in a shorting process. This is their playbook. They sell the gold that they purchased and at the same time, short the precious metals.

Update Alert: Last weekend the overnight price action in gold burst to a new all-time high. When gold opened in New York, it immediately fell by $50 bucks. This is fiat attacking gold before it gets into everyone's radar. 

It will not work this time. The charts tell us that gold has broken out of a four year consolidation pattern. We also know that the longer the consolidation, the greater the breakout. When you combine this data with the recent price drop in the dollar, we see a floor in the price of gold. We also see a relationship in the falling dollar to the rising price in gold. It appears for each one point drop in the dollar, gold rises $100 dollars. Keep an eye on this coorelation. If we are corrct, the dollar should test its next resistance point at $101.5. If it does, gold should break to a new all-time high around $2290. 

If you cannot afford the bullion, we like Barrick Gold (GOLD) Wheaton Precious Metals (WPM) and a inexpensive, small miner, Argonaut Gold (ARNGF), 

While this may be great for us as investors, I worry about ordinary cirizens. Folks, whether the market rises or falls, people need to make ends meet. A falling dollar will put inflation back into our lives. It will make poor people fall to poverty. The rich like Marie cannot grasp the conditions of the poor until they protest on the street. It could be too late by that time.      Peace.  

Odds and Ends: November 2023

The year is almost over. This holiday season we, at Evolution would like you to remember all the information that we provided. Our predictions to which the majority of them, were correct and free of charge. We say this not to toot our horn, but keep it in mind because we have decided to self-publish our book. We need your support when it happens. Thank you.

LEI

The conference board of leading indicators has now fallen 19 months in a row. This only backs up our conclusion that we are in a "stealth recession." Everything is skewed by the government to make whatever administration is in power, to look good. They massage and manipulate all the data. We don't. How about unemployment? The shenanigans began in the 1930s. Look at the...

Population

The estimate is 333.29 million citizens. We have no idea on how many undocumented people are living among us. Anyway, the labor bureau says the current labor force is 164.29 million strong. Dear Reader, that figure drops to 132.34 million full-time employees to which means that there are more people without work (169 million) than are working. We did some math. There are 69 million receiving social security and or, benefits. This leaves us with around 100 million or more than any country in Europe less Russia. There are 73 million young people, but the stat includes all students. This means that 27 million citizens are unaccounted for and as far as the government is concerned, do not exist. So much for the labor stat of 3.9% unemployment. How about...

Inflation

The government says it has dropped to 3.2%. We say this is a lie because it does not provide the compound rate of inflation. It means that prices have risen another 3.2% to the previous inflated level from 2022 and does not show how this ingrained menace adds costs when you look at the previous years 2021 and 2020 and 2019. Milton Friedman said it best, "Inflation is always and everywhere a monetary phenonmenon". The Federal Reserve has been on a 6.5% trendline of money printing since 2011. In 2019, they exploded by adding another $5 trillion. The printing press now sits at $4 trillion over the trendline. Inflation is not going away. Will you join our chorus, "End the Fed!"

King $Dollar

It broke support at 105. The next stop is 101.5. This is great for commodities. See next week's info on projections. Each full percentage basis tick adds to inflation. With that said, those low gasoline prices will soon spike. 

Last Tidbit

Filings show that 50 more firms are no longer in operation. Gone. Over. Belly-up. The total for the year is 561 and counting. This represents more than 2-per day every business week. This is another indicator that reflects the weakness in our economy. After you read and digests these facts, one must realize that we need a new political party that supports citizens and workers. One party that does what is best for all Americans and gives the truth. One that explains what it does and why.   Peace. 

Changed Outlook

We stated last December that our nation and economy is in a "stealth recession." One of our decisive indicators was the labor participation rate. It stood at a little over 62%. When we added inflation to those poor numbers, we knew people were hurting no matter what President Biden or Jerome Powell of the Federal Reserve said. 

We also knew that 48% of our labor force is in service be it trucking, retail or similar. We put two-and-two together. The conclusion would be a slow-down in these firms that would result in layoffs and bankruptcies. We were correct on that aspect. However, what we didn't know until now is this: what happened to those employees who lost their job?

Do the Math

We did. Beginning from a full employment level which correlates to a 69% participation rate and the actual 62% rate. Our estimate is 10-12 million workers. We also knew many women left the labor force due to COVID. Many have not returned. They are among the lost workers. So, how did these people adjust to a life without a paycheck?

Disability

Ambulance lawyers fill nighttime television on smaller channels with ads. One of their best and most repeated sound bites concerns unemployment, "Maybe your lost job has caused you mental distress and or, other internal problems? Maybe you filed a claim and you were rejected? No longer. We're here to help." These type of lawyers are gaming the system. We all lose.

They take a piece of your benefit, and they generally win. We now have the answer to where all those who lost a job have gone. There are 12 million people in the age group of 18-64 who collect on the dole. This has nothing to do with unemployment insurance. This is a separate agency. Even if a new plant came into their district that offered employment, these check-living souls would not seek to reenter for employment. Why risk a sure thing when this company may pack up and leave after a few years? This new psyche is terrible. It goes against our American character of self-reliance. It goes against our optimistic outlook. This is very sad.

It Gets Worse

The above disability claims are predominantly men who are over 30. The younger group (18-30) are wasting away in their parents home. They found a hobby that makes them happy in their present state. They are not on drugs, per se. They are abdicted to video games. They have friends locally, nationally and internationally on the internet. They will wake up one morning to their 30th birthday with no job, no relationship skills and no future. There are untold millions like this who are not looking for work or continuing with ther education. Many cannot afford college and living in the present does not force them to feel that they need to change their lifestyle.

3.9%

That is the stat released by the government for our unemployment rate. It really is around 15%. This lie is covered with disability payments. Then, you add the millions of immigrants on the border and we will go from the most productive nation ever, to one that is living by government subsidence. This will lead to a more declining standard of living. When neighborhoods decline in value, people will burn their homes for insurance to flee because no one will buy them. These potential negative spiral needs action now before it is too late. We have nothing against compassion, but people need more than meeting rent and food on the table. We need to feel safe. We need a purpose. We need to know and trust our neighbors. We need belief in a better tomorrow. When you outsourced jobs, you put a nail into a coffin for our American way of life. The greedy, the Republicans, the Democrats and the Federal Reserve are all guilty.  

We Conclude:

The market bulls are placing bets that the Fed is done with rate hikes. They see a return to the way "things get done." We don't. The market may continue to rally, but our economy is built on sand. There are too many problems for everyday people to make ends meet. $King Dollar has peaked. This will help the market, but hurt the rest of us. Inflation is now ingrained and all it needs and what we see is this: more worker unrest and more strikes in 2024. One geopolitical disturbance like one that affects oil and a wave will disrupt the market's present thinking. We believe that the haves will sell at the next high. If you look for distribution selling, this will confirm our belief. If we enter a recession by government standards, things will take a turn for the worst. AI and robotics will take millions of jobs. This will not be an overnight occurrence. It will be like the weather, sunny in some places and raining in others. The result is danger. It could lead to social unrest. Let us hope that the government stops using our nation as a dumping ground for foreign products. We need more tariffs on all imports. There are other options. Our water solution could be the answer, but first our book needs to be published.  Even with this pessimistic outlook, be of good cheer and try to have a wonderful and blessed Thanksgiving. Peace.

Fed, Market and Peace Killers

We promised some more jabs at the Fed this week, as well as some market views, however, we feel some comments on the conflict in the Holy Land are in order.

Fed First

With every crisis they seek to expand their power and control over our economy and lives. They now can buy from the marketplace mortgage-backed securities, courtesy of the latest disturbance in the economy. Soon, they will seek to purchase stocks. The lie will be to save the nest egg of many. They will be covering the big boys. 

We predict that as many as (5) five more banks will need to be bailed out in the coming months. Of course, they will cover their asses. This is their real purpose. They will probably arrange for the largest banks to gobble them up and become even bigger. Remember too big to fail? This is what they are doing. Anyway, we further predict that within six months large commercial management firms and building owners will file for bankruptcy. The Fed realizes this too. This is one reason for their pause and possible rate cut. The coming debt on loans to these firms is coming due. It exceeds $17 trillion. All their actions weaken the value of the dollar which makes our standard of living decline even further. When these things happen, don't think that we have a crystal ball. There are many who think like us, but we all need to get on the same meme, End the Fed!

Near-term Market Outlook

The Dow as well as the NASDAQ rose higher than we thought. Thinking about this price action, we concluded that the market feels the Fed is done in interest rate hikes. They began placing bets. However, the charts tell us that resistance volume is stronger than the upward volume. We could be wrong. The target resistance points will seal the decision. We stated that the economy is in a "stealth recession." We feel that we are correct as we see inflation is ingrained and the dollar's rise has peaked. Here are our price levels to watch and study the volume in the movement.

INDU = 35,000. On a weekly chart this is in the upper range, consolidation level.                                      Trans = 15,200.  On a weekly chart this too is in the upper range of consolidation.                                    SPX = Strong resistance at 4500. This is also in the upper range of consolidation on a weekly chart.        NASDAQ = This has been the strongest index. It has resistance at 14,500. Upper-level consolidation.

Peace Killers

The Middle-East region has been in conflict ever since the creation of Israel. After years of murdering attacks on each other with open conflict of war on many occasions, peace seekers found their voice. Israel's greatest warrior, Yitzhak Rabin led the charge. Yasser Arafat was the leader of Palestine in resistance to the very idea of Israel. President Clinton pushed both sides to the peace table. After many ups and downs, the two finally made a deal. What happened, you ask?

Old Palestine Observation

- Palestine will never miss a chance to lose an opportunity.

Arafat recognized Israel's right to exist and recognized their borders. Rabin pulled back expansion land that previously was recognized as Palestine. He would recognize Palestine as a nation. 

Many Palestinas called Arafat a traitor. A group called; Hamas began. These extremists stated that they would never accept Israel as a nation. They call for continuous war with Israel until it ceases to exist. Arafat lived the remainder of his life like a prisoner in his compound because Hamas would seek to assassinate him.

In Israel, many called Rabin a traitor. Before peace could be given a chance, a Jewish extremist assassinated Rabin. 

This only shows that there are extremists on both sides.

Luke's Gospel

He writes what Jesus said, "A man who cannot be just with little, can never be just with much."

Prime minister Netanyahu was just starting out during Rabin's peace effort. He was against the peace treaty. He had little power, but now he has much power. There will never be peace with him calling the shots. Israel needs to elect a peacemaker. 

With that said, the real problem is idiots and extremists are on both sides. I suggest "Tough love."

Why do we offer Israel $114 billion in aid when Hamas does not have one tank or aerial aircraft? Our support should have been tied to a peace effort. Now, what JFL suggests is not in the tradition of love, but it is logical. We should not provide humanitarian aid or any assistance to Palestine. We should not provide any assistance to Israel. Let the idiot radicals kill each other off. Then, when each citizen in each domain has had enough bloodshed and the peacemakers find their voice again, let us offer a table to find what He commands, "Love thy neighbor as thyself."                            Peace.