Virus Toil Keeps Hitting

 Everyone and every company, whether big or small is feeling the effects of the pandemic in one way or another. The president has to eat his own words about the disease. He repeatedly has said that the corner is turned. A vaccine is eminent. The problem turned up in his internals. Let us hope he recovers and in the cure, a more humane leader emerges... He didn't. He is rolling the political dice with stimulus. He has asked his party leaders not to work with the Democrats until after he wins the election.

With that said, the way that news is being delivered on network television reminds me of the Woodstock period. In those days, the evening news was more instrumental in its reach within our nation. The evening news was our periscope to the nation. The one point that is so similar is this. Today, every report contains a segment on the virus - the number of cases, deaths and related stories. Back in the day, every news cast contained a report on Viet Nam - causalities, deaths (body bags), and related stories. The negativity of this continual onslaught effects you in more ways that is understood. Even if you never get sick physically, your mind is effected. Thus, my opening sentence, "Everyone and every company..." is feeling pain in one way or another. However, since this is a political and economic blog, I turn my attention to what we here at Evolution are seeing.

Segment after segment...

are beginning to feel the economic pressure caused by the virus and the government's response. The stimulus CARES Act gave money to many industries, both small and large. Within this stimulus program, there were many cases of favoritism and fraud. It is not in the realm of this piece to argue about the inequalities of the program. It is about the lingering effects of the disease. The financial aid of the stimulus is over, but the virus has not passed as expected. As the data comes forward, it is like listening to the body count during the Nam days. It will drive the stock market lower. The market will "jump the creek" and pass support levels. How could it not? Consider these trends:

Airline Industry

The four big carriers expect to layoff 150,000 workers. American Airlines announced this week that 19,000 are getting pink slips. United says it will let go 16,000, but it is possible that number could rise to 36,000. Keep in mind that the airline industry employs one in fourteen jobs in the US. Then, there are the related segments of labor like car rentals, cleaning firms that take care of terminals and hotels. We covered that industry in our last article. In general, these are quality jobs and losses here will hurt the already shrinking middle-class.

Oil 

The word is small, but its reach is gigantic. Chemical firms need its energy. Utilities need its gas to make electricity. Plastic cannot be made without it. This hurts the packing industry. The oil industry offers higher pay and there are so many firms in the supply chain that a whole chapter would be needed to explain its real effect. According to the Dallas Federal Reserve Governor, oil companies need crude to sell at $45 and up to keep drilling. Currently, the price fell below $40 and sinking fast. The charts see $28. This is not pretty. It will lead to force mergers as the industry consolidates. It will also flood the bankruptcy courts. Already, two majors, Shell and BP are seeking to sell assets and reshape their firms into alternative energies. This is the world's most important commodity. The virus and government lockdowns has decreased the need for gasoline. With a stay at home an on again, off again response, the use of gasoline has been nullified. This too, will hit the middle-class hard.

Labor in general...

could be viewed in many ways. The difference in unemployment from Sept. 2019 and Sept. 2020 is 186%. A report by Challenger, Gray and Christmas on job losses states that job losses continue to rise. From August to September of this year, the losses roses another 2.6%. They go on to say that 21 million jobs have been lost this year. CNN reports that it will take five years for the US to recover job losses and that another 4 million jobs are lost forever. 

Explain this to me...

837,000 filed unemployment claims last week. The government also states that 661,000 jobs were created last week. Then, they say that unemployment fell to 7.9%. How can you have more people filing for unemployment benefits than people who found work lower the percentage of the unemployed?  Then, there is this alarming tidbit...

179 million...

citizens are at risk this month to have their water and power turned off due to lack of payment. If people cannot afford to cover basic monthly bills like their water and utilities, how can they pay their rent or mortgages? The disease is unseen, but soon its effects will be seen by all. 

Bear Flag Patterns

appear in many of the market leaders like Apple and Microsoft...and then, there is this...

EU versus Brexit, again...

X-Factor

The next is a list of restaurants that are closing their doors. They are mostly chains. The effects of the virus is like an economic cancer that is eroding these firms. Keep in mind that each store that closes multiplies the number of unemployed by X-times.

*Sizzler: six stores closing.  *Dunkin Donuts: 800 have been dunked. *Burger King: hundreds gone. *Pizza Hut: 300.  *Even Starbucks: lost 400.  *McDonald's: Yes, they lost 200.  *Ruby Tuesday: 148  *Souplanation or Sweet Tomatoes: 97 and going to bankruptcy.  *Steak 'n Shake: 69. *Zinburger: 15.    *Le Pain Quotidian: 63. *IHOP: 49.  *Brio Tuscan Grille: 48. *Bar Louie: 38. *Craft Works: 37. *Denny's: 15.  *Taco Cabana: 19.  *Chuck E. Cheese: 34.  *Rubio's Coastal Grill: 12. *Pie Five: 10.      *Specialty Café and Bakery: 50.  *California Pizza Kitchen: several.  *Potbelly: 100 and maybe all.     

Then, there are these firms that are borderline, but heading the wrong way.

*Outback - Applebee's - Checkers and Rally's - Dave and Buster's - TGI Friday - Friendly's - Cosi - Too Jay's - Luby/ Fuddruckers's - Red Robin- Cheesecake Factory (sorry, Penny).

Bankruptcy

*Town Sports -  *Century 21 - *Lord and Taylor -  *Stein Mart -  *Virgin Atlantic -   *Tailored Brands -*Remington -   *Ascena Retail -   *Briggs and Stratton -  *Paper Store -  *New York and Co. -  *Muji -*Brooks Brothers -  *Sur La Table -  *Lucky Brand -  *Aero Mexico - *Wendy's (NPC International) -  *Cirque du Soleil - *GNC -  *24 Hour Fitness -  *Tuesday Morning - *Latam Airline - *Hertz - *Pier 1 *J.C. Penny -  *J. Crew -  *Gold's Gym -  *Neiman Marcus - *Avianca Air -  *Aldo -  *True Religion - *Frontier Communication -  *Speed Cast International -  *Stage Stores -  *Dean and DeLuca -  

Then, there are these firms that are getting closer to a court date.

J. Jill - Sea World - AMC Theatres - Sears and K Mart - Game Stop - Rite Aid -  Party City - and this  one who has been in and out of court, Forever 21. Even state sponsored firms are no longer being supported like Norwegian Air. 

All in all the list grows every month because like rent these firms have loans that need to be paid and they are past delinquent. All of the above is known data with the ongoing knowledge that there is more unknown data to which paints a cold winter that is coming to the US and world economies.

      

                           

  

Odds and Ends: September 2020

Here we are deep into the pandemic, recession and the year. It is now autumn. Have you thought about that? Can you recall all the shills from Wall Street in the media telling you about how you can get rich by buying their stock suggestion back in January? As we have stated in recent pieces, as the data gets collected, analysts will lower their forecasts for GDP and economy in general. We saw the early stages of this trend this past week. Of course, their new, lower call has never within its report, stated an admittance of error.

Even Elon Musk is showing signs of ego and BS. Did he not make bold proclamations about his company, Tesla and their forth coming, Battery Day? It came and went. It produced NOTHING! This is all around us. You get talk about this and that in the media to which leads to EVERYONE asking for something. They all have the ego sickness. They go to bed saying, "Give Me..." They wake up and say, "I Want..."

3,500...or whose America?

is the number of US companies that are suing the government and President Trump over tariffs because their product is made in China. These people are so greedy and unappreciative of America that they offshored their labor to a foreign nation and now, they want relief. Drop dead!...that is my answer to them. And those who used China for a supply line, well, you should have thought about that before you decided to sell a certain product. Pay the tariff!

Not alone

A report by Motley Fool says that 25% of hotels are at risk for foreclosure. Already 23% are delinquent on 30-days on loans. By the way, did you know that this is the highest percentage on record? To put this figure in perspective, only 1.3% were delinquent last year. They too, are seeking help from Congress with lobbyists pushing the HOPE Act. This is more cheap money for wealthy people to stay in business. They will probably get their way. They have leverage and real estate to which has been the best investment in modern history. Nothing like another bailout for the rich. 

More than 8 million renters have not paid rent for August according to the Census Bureau. They have their hand out to the government too. And of course, both presidential candidates offer cookies. The debates are nothing more than shouting matches that place guilt at the other party for any shortcoming within our nation. I wrote that sentence the other day. I watched the first presidential debate last night. It confirmed my original evaluation. The real sad point was that these two men are suppose to be the best. No wonder America is in decline and in turmoil.

Deserving Hand...

A report shows that there are still over 11 million workers who were laid off and their claims are still not processed for benefits to which they are entitled. This huge number is also not reflected into the ranks of the unemployed. Think about that? How does that number effect the total unemployed percentage? Oh, yeah. Disney will add around 30,000 to that number with their announcement of layoffs at their theme parks due to the virus.

Then, there is JP Morgan...

the firm will be fined a whopping $1 billion with a "B." Why, you ask? They are guilty of "Spoofing." Can you guess which industry that they tried to manipulate? We told you in the past. Never trust banks when it comes to money and currency. They sought to "play" the metals market. Once a fiat, always a fiat. They are one of the forces that is causing precious metals to retrace. Don't worry. This is only temporary. 

Ray Dalio...

was in the news. He went on record saying that America needs to find ways to improve social mobility. We agree. It starts with quality jobs. We said it before and we will say it here again, my idea for a water project as a national goal is central to the answer. Ray goes on about the future and the challenge of China. He is correct and he is also right that America needs to create and produce. These two factors are necessary ingredients to produce wealth to which we need to pay our way out of all this excessive debt.

Jumping the creek...

in the stock market refers to a point where a stock skips its resistance point. Look for the market to break its 200-day average. It will jump the creek...on the express elevator - down.

Something else...

This tidbit won't make the news, but it is something that will effect commodity prices in the future. According to a report by Bloomberg, it says that seafarers are in turmoil. Shipping firms seek workers in low-wage nations. Most have little seafaring experience, but a job is the attraction. The workers find out that these firms offer little medical and now with the virus, offer no way to return them to their home port. The report says that 300,000 sailors are being put in this violation. There is an international maritime union that is providing this data. Shipping companies claim that they cannot get replacements due to the virus and lack of air transport. In addition, many ports are closed or due to the virus outbreak on ships (120 total). The ports won't let them enter. These sailors want out, but they are captives at sea. They have long past their time of duty at sea, but they cannot get off the boat or their situation. These sailors are tired and sick. Mishaps happen under those circumstances. Shipping insurance rates will rise along with future shipping costs and thus, inflation to all of us. By the way, Singapore seems to be the only port that helps sailors, especially in today's environment.  

One bit of encouraging news...

Mercedes is rolling out a semi-truck with hydrogen fuel. They say it can cross the entire US on one tank of fuel. Wow! A vehicle that runs on water. Hyde, of the 70s show was right, "It runs on water, man!"...Peace.

 

 

The Demonstrations Have Produced Some Light

People in America forget one of the most important aspects about the US. We are not a homogeneous nation. This is huge! The racial tension between black and white is the most prevalent, but it is not the only one. Long before there was slavery, there was prejudice against Catholics by Protestants. This has never been dissipated. It is under the surface like the next point to which this piece is centered. Wealthy producers have always exploited labor. The stories out of our early beginning in industrialization about labor abuse are not stressed enough in our school system due to possible dangerous outcomes. This is wrong because it allows the abuses to continue. We have idiots in this nation who believe Honda is American because they have a factory here. There are many examples like this. How about the corrupt leaders of Boeing? They made it known to their union employees in the home base of Seattle that they would move work out of the plant to the non-union South if they did not get the vote that they sought. As soon as they received the vote that they wanted, they shipped out the new work to the South. There are countless cases like when the steel workers during President Kennedy's term went on strike over wages, job security and benefits. The CEO asked JFK to mediate. He did. The CEO got his way and as soon as he did, he cancelled all the union requests. Labor felt betrayed by Johnny. He bought this issue to the nation as he berated the CEO nationally. We don't have leaders with that type of guts anymore.

Why are you addressing this, you ask?

There has been a lot of talk about fairness to blacks, especially with employment and also, the rise of homelessness in America and the wealth gap with a shrinking middle-class. 

If you believe the government through its agencies, the medium household income rose in 2019 in the US to $68,700. I don't. Stats show that 40% of Americans earn less than $30,000 a year and most of that percentage earn less than $24,000. The way that the government calculates these figures is skewed. The higher incomes raise the stats of the lower earners. However, the total amount of people is 40% of the population. The government says poverty fell from 38 million to 34 million in 2019. Oh, yeah? Then explain why in every city there are visible signs and not the ones in demonstrations, but people sleeping in parks, under bridges or in shelters. If I am wrong and the Census Bureau is correct, how come 26% of all Americans sought payment deferral plans under the CARES Act? Explain why unemployment claims keep a steady 800,000 every week? I am not alone in asking these questions, however my answers are different. Then, there is this one point to digest. We, at Evolution say that 40 million Americans are unemployed. If we are correct, consider this point. Of all the nations in the world (195), 158 have less than 40 million people. This is how bad and sad our economy actually is functioning. 

Michael Farr, a CNBC contributor says...

"The problem with the US economy is there are too many poor people." He is correct! He goes on to say that government stimulus is not really stimulating the economy. He is right again! If the government had spent their money in a massive infrastructure program like repairing bridges, roads and tunnels, we get more for our stimulus dollars. If it modernized our shipping ports, the result would be more quality jobs and revitalizing the middle-class. Quality incomes enrich society and this develops commerce which creates more opportunities. This would also ease tensions on race and religion. WEST SIDE STORY is a true reflection of our society when there is little social mobility. Poor whites blame poor PRs for their blight. The negativity breaths its own life of racial hatred. This is part of the BLM movement.

Back to Mr. Farr. He is wrong to say that the economist, Milton Friedman is wrong about inflation. Milton said, "Inflation is always and everywhere a monetary phenomenon in the sense that it can be produced only by a more rapid increase in the quantity of money than in output." Our debt has been increasing at 7% yearly while our GDP is only at 2%. Milton was right, but his conclusion goes against what the Federal Reserve wants to do. The reason why the US does not meet the so-called inflation target of 2% is due to the machinations by the Fed. When you do not count the three things that everyone needs: food, energy and shelter, then, you can show no inflation. The other point relates to wage earners. There are no quality job left in the US. Everything is imported. When the importers have to exchange their lower valued currency for our reserve currency, this negates any rise in purchase price. If you want inflation, protect American companies and workers! Keep in mind, a strong currency helps low-wage earners as it buys more for their limited income. The lower the value of your currency, the harder life becomes for your poorer population.

Inflation...

would rise in the US like it did in the 1970s if we can place tariffs on imports. The tariffs would force producers back into the US. Our higher priced labor would cause inflation. This is always dangerous to see inflation growing. However, the dollar would actually get stronger to which will help low-wage earners until they could find a new job in manufacturing. This would raise their standard of living as well as everyone - "The rising tide lifts all boats" Sadly, both presidential candidates talk about quality job growth, but they have little conviction. In any event, we must be aware that we are not a homogeneous society. We are a modern experiment. In history there have been a few enlightened people that favored the idea of tolerance for all people, creeds and religion. The greatest is Jesus of Nazareth with love for one's neighbor as one would love himself. The US is the only nation to try this approach with democracy in recent history. We take one step forward and two back. This economic recession will pass, but the return of the vibe to live in peace with one another is needed to last. We have had attempts to make our name "United" really mean that. The last effort was in the 60s with the movement and song by the Youngblood's, "...let's try to love one another right now..." Let the meme sing in our hearts. If we ever get this second chance to save America, we need to make sure that all our citizens get an equal opportunity. We would then be truly the United States. Peace.

   

Unemployment will hit the Market

- Those who make religion their god will not have God for their religion.

- Thomas Erskine 

There is a lot of conversations going around about the disconnection between the stock market and the economy, notably unemployment. We agree. With that said, the market looks further than the weekly claims numbers from state offices. They also take into consideration many aspects gathered about our spending practices. This is where we, at Evolution see the day of reckoning. If you have no income or resources, your only spending is on food and possibly, shelter. We say the spending on shelter as well as energy are categories of our economy that is in flux. We see homelessness. We see people in California buying RVs. They are living in them parked on the street. This change is spreading. Local authorities are already rewriting laws to limit overnight parking on streets. They are adding restrictions to RVs and campers. The Trump administration was quick to pass executive orders to limit evictions after the eviction forbearance clause expired under the CARES Act. He does not want to hand the Democrats an easy issue to blame Trump and the Republicans. As for energy, more and more people are seeking utility assistance. They won't be needing their car to go to work because they don't have a job or want one that does not provide a living.

At present, the recent correction within the market is the diversion being considered by investors. They are taking money off the table. They will probably seek new positions after the election. This is a percentage conjunction. If the government passes another stimulus bill, the market will resume its climb to record territory. However, we see either reason as only painting over rust. Eventually, the rust stain will reappear. We see this happening in the first quarter of 2021. Why, you ask?

Houston, we have a problem.

Every week the number of filed unemployment claims is 850,000 or more. Dear Reader, this isn't even the total story or figure as you will read. There was another 839,000 weekly claims that were not included with the unemployment claims. This is due to our low-paying service society jobs. There are millions of workers who do "gig" work. They are categorized as self-employed. These workers like drivers do not qualify for unemployment benefits. They also won't be building a solid social security net in old age. This will be another economic problem for the US in years to come. Anyway, if you want a clearer picture, I refer you to the work of Edvard Munch, the Norwegian artist and his piece called, "The Scream." The Bureau of Labor Statistics (BLS) reports that at present, 31 million workers are collecting unemployment benefits. This translates to a 63% participation rate. The US has 164 million eligible workers. They say that one in five workers are unemployed. When I went to school that came out to 20%. This is the real unemployment rate. Wall Street thinks that the figure is 8.4% to which the BLS claims. When they read reports of less spending by consumers, they will begin to awaken to the truth. When the impact of rent revolts and utility assistance is constantly in the news, the market will sink like a stone in water.

People, the real number of unemployed is 40 million and that means the unemployment rate should be 25%. This is politics! These phonies create new job categories to keep the public clueless. This is not new. Check out the comedy routine on unemployment by Bud Abbot and Lou Costello. They, and their work is classic.

Other factors...

There are different aspects in our economy that no one considers or looks at. For instance, the Blackstone Group (BX) is considering a buyout of the Kansas City Southern Railroad (KSU). When mergers happen in the US, it is a calling card for job cutting and layoffs. This is only one example. There are others. How about our history of exploiting workers and anti-union actions. Recently, due to the virus, some unions have gotten the Occupational Safety and Health Administration (OSHA) to investigate work sites where infections are high as well as deaths for workers. They just levied their highest fine against two meatpacking plants, JBS and Smithfield. The pork producing Smithfield plants produces 5% of our nations total production. The fine was a joke. It had no real teeth. Sadly, there will not be any real changes. 

Seasonal Help...

will be very important this year. The fliers are already out. Michael's, the retail art shop, is looking for 16,000 workers. They need that many, but come January they will let them go. UPS says it wants (read needs) 100,000. I-800-Flowers needs 10,000. The list goes on-and-on. The deal is this. If you add up all these holiday hires, you begin to realize the extent of our true unemployment picture. 

Add it up...

There are 11 million fewer jobs available due to the pandemic. In July there were 2.5 workers chasing any job offer. This recession and the prior economic crisis of 2008 has resulted in another 5.5 million manufacturing jobs lost. This is why we cannot get a company to make face masks or PPE for our health workers. When you look out into the future the picture is even worse. Self-driving vehicles and robotics will eliminate another 7.5 million jobs. Not only will our nation be unprotected as a self-sufficient country, but it will have a serious unemployment issues for an extended period of time. Congress better put in place some measures to renew manufacturing that offer quality wages to stop the bleeding of the middle-class or the US will become a Banana Republic with nuclear power.

The only thing politicians know is how to buy votes. The spending is reckless. The Congressional Budget Office reported that this fiscal year, the deficit will hit over $3 trillion. Keep in mind, last May they said this years deficit would be "only" $892 billion. Now, you know why the Trump administration has been slow with the requested additional stimulus. They want to buy votes, but they want it on next years budget. POLITICS!

 

Elevators: They go UP and DOWN

- Those who wish to succeed must ask the right preliminary questions.

- Aristotle

Going Up 

The word elevator when used by Wall Street refers to the price action of a stock. In our sound byte world, the media will not detail the most important aspect within the word. When the stock market rallies like it has been doing since the March lows, it is a slow grind upward. It is like getting into the elevator on the ground floor. Everyone has a stop. This is the price that they are happy with their investment. The exception to this is the example of only a few riders in the cab as it climbs. These are your big hedge funds that move an individual stock, sector or an index. They can push a market higher than anyone could imagine. This is why you can get some no-name getting ink saying, "Dow 50,000." Like in many expensive high-rise buildings, they have their own express elevator to the penthouse. This also reflects the present state of the market. The market has reached highs that most would could not foresee. It is like trying to build the tallest skyscraper. The architect realizes that he will be a few feet short of the record. So, he adds a cupola or spire. He sets the record just like our stock market.

Going Down?

In days of yore, upscale buildings actually had an attendant that worked the elevator. When it reached the top floor, he could be heard saying, "Going down." This pertains to our piece on stock market prices. As stated, the up cycle is generally a slow grind with many support and resistance points. However, when the elevator goes down, you can almost feel a "G" with the force. It drops rapidly like it is out of control. This is the details that get overlooked when the media reports on the prices of the stock market on a daily basis. 

Apple and Tesla...

 are the two big dogs that have moved the market to record highs. Although Tesla is not included in the S&P 500, many expect it to be added and quickly. This aspect is deep behind their purchase. If Tesla does get added, it will be bought by funds to which will drive the price even higher. Elon Musk had this point in mind as he recently split the shares. The company was the most shorted stock in the market. They lost and BIG! The electric car company is up 435% since January and looking back, it is up 891% for one year. Wish I had it? Of course, with a PE ratio of 1088, I never would buy any stock like that. I am what the market classifies as a 

Weak hand...

Be truthful with yourself. Tesla hit a high at $502 and fell last week to $375. Could you take that pressure? This is the present state of our stock market. Dear Reader, it could get worse. As expected and indicated, the market will correct. It is possible that Tesla could retrace to its breakout price. Are you sitting? Tesla could fall to $173. Ouch!

The price of everything that you might want to invest or buy is selling at Zimbabwe price levels.  Apple reached an all-time high of $137 and closed last Friday at $120. It touched $101. Could you handle that heat? We are talking a lot of money that is multiplied by the number of shares that you bought. 

I have concentrated on these two firms because they have been the driving force for the elevator to rise. If you recall, the FAANG stock group was the reason behind the market rally prior to the flu crisis. They have been mostly range bound. Microsoft moves from its high at $232 to $204. Amazon made a new all-time high at $3552, but fell with the market to $3144. That could give you a heart attack. It can get worse. It has a high volume low at $2401. Any trade problems with China or talk of taxing internet sales and $2401 is a given. Netflix hit $575. It too is range bound, but the size is huge. The bottom of the bracket is $450. Can you see my point about prices? Everything is expensive. Always keep in mind the volume at highs and lows. The market was down 2.2% on Friday before big money scared weak hands. Nasdaq was off by 5% before making a comeback. The media was quick to say that the falling of the unemployment rate to 8.4% was behind the price movement. Our Economic Evangelist says, "Permanent job losses have risen to 3.4 million and the market has not priced this reality." Buyer beware!

Rare phenomenon 

The purpose of trading firms is to get you to buy. They are selling. This is why it is very rare to have an analyst recommend selling a company due to a negative outlook. However, we have tracked 37 analysts that follow bigger firms. The following are firms that they have designated as sells. Who is at the top of their list? TESLA.

List: Exxon, Southern Copper, Walgreens, Paychex, Hormel Foods, Public Storage, Tiffany, Occidental Petroleum, Carnival, Gap, American Airlines, Rayonier, Xerox, Park Hotels and Resorts, Chesapeake Energy, Nordstrom, McCormick and Co, and Brown-Forman.

Last thought

In trading, there is a pattern called, "Three black crows." This is where a stock shows three gaps to the downside in price. Needless to say this is not good. However, this is what usually happens to a stock with this pattern. By the way, we mention this because this pattern is appearing within stocks at the moment. Anyway, there is a short period of consolidation after seeing the three black crows. Then, there is a surge back to the original level. But and this is a big BUTT, the elevator going down comes. If you ride it down, you will want to die. Don't! Like Kenny says, "Know when to fold them!"

End the Fed!

 - "Ask not what your country can do for you, but what you can do for your country..."

- JFK

Do you really think and believe that Chairman Powell is motivated to do what he can for America? We, at Evolution, definitely don't. He is motivated by ego. The whole concept of the reserve was formulated by the rich, JP Morgan and company for the status quo. They privatize the profits and socialize the losses. This is the way he thinks, "The American economy won't descend into a depression on my watch." So, he goes with the playbook of zero interest rates, savers be dammed, the 40% low wage earners will continue to suffer and the wealth gap continue to grow. He plans to keep his job and this policy until 2025. Yes, he says as well as anyone who gets the post that the Congressional mandates of fighting inflation and full employment are the cornerstones of the Federal Reserve thinking and policy. So much BS!

Second thoughts?

You have doubts about our feelings for the private firm, the Federal Reserve? Consider what the same chairman stated almost three years ago. The Fed's policy would return to normalize interest rates. The move would be gradual so as not to spook the market or international currencies. He said by 2020, the 10-year note would be around 3.75%, Let's take a look at this man's convictions. The 10-year rate is now 0.72%. He is saying that whatever US citizens purchase for the next ten years that inflation will hold prices below three-quarters of a percent. Can you remember anything that has not gone up in price in ten years? Put it in concepts that everyone understands. A new car today versus 2010? Rent today versus 2010? The price of a medium, new home today is $320,000 versus the medium price of $200,000 in 2010. The cost of a stamp in 2010 was .44 cents and today, .55 cents. So much BS!

Chinese look to gain...

Guo Shuging is the equivalent of Powell in China. He is the chairman of the Chinese Banking Regulatory Commission. He recently criticized Powell and the Fed for excessive money printing which could cause international currency problems. His policy is wrecking trade and putting all nations in financial jeopardy. He is right, but of course, we can see through his agenda. China does the same excessive printing and worse. The government tells banks to roll over all debt in all circumstances. He is a hypocrite! So much BS!

Not alone...

The chairman only reflects the type of people and thinking that dominates America. Did you read in the news where Microsoft and Walmart might partner to buy the Chinese firm TikTok? Why, you ask? Simple, they want the firm for advertising. Advertising works! They brush off the fact that this is nothing but a info gathering concern that the Chinese government will use to influence America. Our firms are free to act in our open society, but their greed is excessive. This is what is wrong with present  day America. Yes, we have investors who put their money into green energy and partner with firms that are trying to do something for our country, but their numbers are insufficient to enact any impact for the better. Last week, Warren Buffett reached his 90th birthday. It took him a long time to show wisdom for the general good and not just for the pocketbook. He always was against gold because it did not pay a dividend. Maybe the founding fathers knew that too, but they chose gold because it limits spending, keeps your currency strong and fights inflation. It retains value. You cannot print gold. It gave our nation a cornerstone of stability. That is the dividend! Glad he joins Jefferson and Franklin and Evolution of Democracy. By the way, do you know who first realized this weak point about capitalism, which is nothing more than good and evil among people? That they will sacrifice any principle if they can get more profits? Stalin. He stated it over 100 years ago.

Budget numbers are out

The Fed has printed in excess of $9 trillion and our revenues to the government is $3.5 trillion. The gap of $5.5 trillion to the debt side is not just alarming, but continues to grow. Both political parties seek to "buy" voters with stimulus plans. They are asking the government to do rather than what they can do for America. This is more debt. This is how you destroy a currency. Keep in mind that the US is the world's reserve currency. Powell is putting that gift in peril. You read above where China is seeking to capture this position. If we ever lose this economic trading pedicle, inflation will run rampant in the US. Gasoline could easily double. The pandemic showed the dangers of importing everything. We imported our face masks, our PPE, everything! Do you realize what inflation will do to prices? Everything will go up! The Fed is taking the road to hyperinflation. If anyone from 1920 Germany was still alive today, this is what they would say, "Stop in the name of Love..." I never thought that the Supremes would be an economic indicator. However, this is the Oracle of Omaha's favorite indicator. You take the total market cap(TMC) and apply it to GDP. Do you know what the present reading is? 183%! No wonder Buffett saw the shine in gold. Both political parties are going to make it worse. Neither will admit the Federal Reserve destroys the dollar and our standard of living. This is why we need a new political party. If I ever had the money and resources, the Liberty Party would end all foreign entanglements and promote the general welfare like our founders envisioned. And of course, we would End the Fed!

Odds and Ends: August 2020

 Much Ado About Nothing - Shakespeare

The dog days of summer are passing and the hope is that it takes Corvid-19 with it. For many, these last days of the summer are spent with relaxing reading. We, at Evolution feel the Bard of Avon is appropriate. In contrast, the market is in a rotation period. Market watchers understand that the market has leaders, best power forward, cleanup batter or QB. This period is marked by what big money sees as the next big thing and they rid themselves to what they see as fading. One can clearly see this with Buffett. He cut his financial holdings and (this falls under Ripley's Believe It or Not) purchased gold. He chose one of our favorites, Barrick. Yay! 

You can also see this in the steady rise of hedge funds favorite chip-maker, Nvidia. It is expensive, but the company is expanding. It looks to capture the upgrade cycle period from Google and Microsoft. It is not just graphics anymore. With those examples, the recent records set by the market indexes is very deceiving. 

- Men were deceivers ever - One foot in sea and one on shore

Apple is king! We do not refer to New York, although the Yankees are fitting. We are talking markets. The FAANG tech leaders of last year are no longer a group, but just the chairman - Apple. The stock is responsible for the record highs. If Apple rises, so does the market. If it declines, which is rare, the market follows. This is due to the weighted structures which are led by Apple. This reality is giving a skewed view of the strength of the market. The cell phone leader has a new buddy in Tesla. Together, they are pushing the market higher. We dug deeper. The Advance/Decline line is trending lower. We see that new market highs barely edged out new market lows. The other aspect is the phoniness of the people who determine the stocks that make up the Dow and Transportation Index. This week they kicked out one of the most important company that America produced - Exxon. This has big ramifications for the market. There are many funds that mimic the indexes. They will buy the new like Salesforce and sell the old like the oil giant. This action just prior to options expiration on Friday is reeked with corruption. The words of wisdom from William began this paragraph. Know their intent! 

- I would challenge you to a battle of wits, but I see that you are unarmed!

China is smart. They always enact plans that look out further into the future. They control many rare earth items. In addition, they copied the US idea for a reserve petroleum reservoir. They just ordered 2,000 tons of cobalt. This commodity is a key material for battery operated electric vehicles. They do these things to be prepared unlike the US which did not even have basic health items like face masks or hand sanitizer. With the elections coming, the way we see things here at Evolution, both the Democrats and Republicans suck!

Of course, relations with China will be a big issue as the public finally became aware that we are to dependent on imports, especially from China. A Bank of America report says that it will cost the US economy $1trillion to get out of China. With all the wasted trillions that the government spent due to the virus, I say that this would be money well spent. Saudi Arabia agrees! They just pulled out of a $10 billion deal to have a oil refinery built in China.  

- I rather hear my dog bark at a crow, than a man swear he loves me.

Do you remember the mantra, "Dow 36,000?" Well, I guess with inflation, their new version is, "Dow 50,000." These unknown, want-a-be make statements with no conscious. We have one. A report stated that mortgage delinquencies are up more than 8% in the second quarter. This trend is up 4% from the first quarter. The forecast in the 3rd quarter is (are you sitting) 12%. Yowza! These stats are from bank loans. The FHA government loan program hit its own record at 16% in the 2cd quarter. Note: Almost all these problem loans are protected by the CARES Act, but it is expiring. President Trump signed an executive order to shield the public from this dangerous crisis, however we feel it will not stand up. Eviction notices and defaults proceedings are happening. When this news hits the market in mid-late September, we see a Dow at 23,000. 

If your region is under the virus stress, don't call Pizza Hut for dinner. They just closed 300 stores. Green Street Advisors stated in a report that they expect more than half of all mall-based department stores to close by the end of 2021. The process is under way with 14 major retailers filing for bankruptcy. If you prefer to glance at a magazine rather than a book, check out Rolling Stone. In it, Wade Davis writes about many issues we have noted here at Evolution. He fears that a change is happening in world leadership. The US time is passing to China. We say that if the US ever publishes my book and enacts some of my ideas, the US will experience a new surge like Constantine gave the Romans before it all ended. Another writer that we like is Michael Sandel with his book, "Justice." Of course, this week ends with the Fed annual meeting in Jackson Hole, Wyo. In their last published report the Fed did not disclose how much in dollars the amount of bonds that they will buy. They did say that they would not mind if inflation surpassed their 2% goal. Everyone knows that food and shelter is way above the government stats on inflation. This returns us to Shakespeare, and his work, Much Ado About Nothing. Peace.