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PCTEL, Inc. Message Board

commandor58 102 posts  |  Last Activity: 23 hours ago Member since: Dec 7, 2005
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  • Reply to

    Coming Currency War

    by commandor58 Nov 20, 2014 12:29 PM
    commandor58 commandor58 23 hours ago Flag

    1st week in a long time M2 up big, as were loans, and M1 velocity. Implications, if all were to continue higher, then US economy will accelerate and commodities would get a bid. However, before that happens, because M2 was so sluggish for 14 weeks, I expect the 4thQ/1stQ to show some slow macro-econ numbers. If stocks fall, that may prove to be a buying opportunity for "reflation" type trades.

    For example: stuff that was up big today: DBC, BHP, RIO, GLCNF, SLX to name a few will get sold off again, with slow macro-econ data, but if I am correct and the FED eases through the back door (M2 money supply) then the reflation trade/commodity play will have the best reward/risk as the rest of the stock market is way over-valued vs historical norms and GDP.

  • Reply to

    M2 Money supply

    by commandor58 Oct 17, 2014 12:37 PM
    commandor58 commandor58 Nov 21, 2014 3:58 PM Flag

    M2 up $63 billion, now up 4.3% annual rate ,the last 10 weeks. $ index, as measured by the DXY, hit another multi-year high today above 88 indicating the world is still short $ vs other currencies.

    What the central banks are doing, with their easing programs, is trying to increase aggregate demand in their own countries. If their currency falls relative to their major trading partners, then export industries will be helped, but the stronger currency country's exporters will be hurt. At some point, I think we are getting close, the FED will push back against the Yen, Euro, Real, and #, to increase the supply of $s to keep the $ from making new highs against all these other currencies. In addition, the FED has to be concerned with the Chinese Yuan as the PBOC has accelerated their easing.

    Stocks have already had a great run, so I'm cautious on them as liquidity is pushing them up-ahead of fundamentals. Once the FED turns, with conviction, to reign in the appreciation of the $-commodities will take off. I'm still thinking the best buying opportunities will be late 1st Q or 2nd Q 2015. Investors may have to pay higher prices, but the time risk will be reduced. As noted in another post, gold may be making an inverse head and shoulders formation. However, it will take several months before the "right" shoulder is formed.

  • Reply to

    Coming Currency War

    by commandor58 Nov 20, 2014 12:29 PM
    commandor58 commandor58 Nov 21, 2014 11:08 AM Flag

    PBOC just responded with interest rate cut and new loan programs to add liquidity and get their currency down to compete vs Japan. The ECB chimed in with "ready to do more". M2 was up $63 billion and perhaps just as important M1 velocity of money, although at a still low level, was up to a high since 9/13.

    Bottom line, the central banks are easing to:
    1)Get their currencies down
    2)Ward off deflation to get inflation to 2-3%
    3)Get GDPs up to use up slack in the economies

    Today, the "reflation" trade has started with stocks, commodities, gold/silver all up at the same time.

    W/R to gold. We could have an extremely bullish scenario setting up-an inverse head and shoulders. Left shoulder was $1180, head was recent low of $1130, so if $1180 holds in the coming days/weeks, then gold will have bottomed and will march to new all time highs in the coming 2-3 years.

    If M2 continues up $20+ billion/week in the coming weeks, then the FED will have "eased", without announcing it, through the back door. Bullish for the reflation trade-mostly commodity related stuff will be the stuff to buy.

  • commandor58 by commandor58 Nov 20, 2014 12:41 PM Flag

    Recent commentary offered up the view that Euro-zone carrier spending is going to see sustained increases in coming years. The catalysts are:
    1)Accelerated 4G rollouts
    2)Increased data demand

    Implications: Good for PCTI and good for MRVC. MRVC, will probably continue to get hit with tax-loss selling, but sales have been increasing y/y with the introduction of new products. Getting into 2015, I expect sales to continue to increase as another set of new products will be released during the year. I'm a buyer under $8.50.

  • commandor58 by commandor58 Nov 20, 2014 12:29 PM Flag

    Japan exports, for the month Oct, were up 9.6% y/y and 3.8% m/n-the strongest y/y comparison in 6 years. Takeaway, the fall of the Yen is working. Unfortunately for S.K. and China, at the expense of their exports-as their data continue to be soft. I am expecting soon, further "easings" by the central banks of China and SK to weaken their currencies to help their exports industries better compete with Japan exporters.

    Also, of note Italy exports were relatively strong with their latest reading. So, the drop in the Euro is also benefiting Euro-zone exporters. Still the Yen, hit a multi-year low vs the Euro recently, so China and SK are feeling the export pinch into the Eurozone as well.

    Ultimately, my guess is by March/April, US exporters will feel the pinch of the $ making new highs vs many of its largest trading partners. It will be then, that the FED, if they haven't eased by then will have to supply more $s to the world to:
    1)Help US exports industries
    2)Stop importing deflation
    3)Accelerate job growth, that will have softened in the 1st Q of 2015

  • Reply to

    My observations

    by bodybag2006 Nov 13, 2014 5:24 PM
    commandor58 commandor58 Nov 18, 2014 2:44 PM Flag

    LF up another 3% today.

    Well done BB06!

  • Reply to

    gold/silver

    by commandor58 Nov 2, 2014 11:39 AM
    commandor58 commandor58 Nov 14, 2014 12:35 PM Flag

    In recent days the WGC has released supply and demand data for gold. The demand data is down y/y for various different segments: central banks, jewelry, investment. What is interesting to note is what is going on with China demand.

    China demand, in recent years has been inferred based on Hong Kong exports. But late last year, China authorized 3 new import centers that don't get their gold from Hong Kong. China, purposely, is hiding exactly how much gold they import. Predictably, China's gold imports all year have been down each month y/y. It is my view that China is importing much more than the often quoted numbers that only reflect H.K.'s exports to one destination in China.

    Of additional importance were the supply numbers from the 3rd Q WGC report. 3rd Q supply was down 7% vs the 3rd Q 2013. 3rd Q production was down 1.8% vs the 2nd Q. The estimate for 2014's supply is down 1.4% vs 2013 and down 6% vs 2012. Much of the supply shrinkage is because of the falling price is reduced recycling supply-which was down 25% y/y in the 3rd Q.

    In recent days, the GOFO rate (gold forward offer rate) has been negative. This is an indication of low physical supplies. Swiss refiner premiums have also gone up in recent days-a sign there is a shortage of gold coming out of Western vaults, being refined in Switzerland to Asian preferred sizes, and shipped to Asian buyers.

    Today we see gold move higher in the face of a stronger $. This reinforces my view, gold is getting close to making new lows based on the scarcity of $s and the strong $, but underlying supply/demand fundamentals will have gold grinding higher over time only to take off later when the FED is forced to "ease" again due to weak macro-econ data.

    In summation, like most all markets, including individual stocks, there is a move up, followed by a retracement on lower volume, before the big, sustained move up. The retracement could make new lows, but if on low volume, that becomes the best time to buy.

  • Reply to

    My observations

    by bodybag2006 Nov 13, 2014 5:24 PM
    commandor58 commandor58 Nov 13, 2014 8:02 PM Flag

    I've looked at LF on and off in recent years-have always stayed away because I have no idea when one or more of their products takes off enough to sustain a rally in the stock. Cash/share of $1.55 and insider buying do make the reward/risk favorable. Good luck.

    Otherwise on the macro-econ front, M2 was down $66 billion in the latest week, now flat the last 7 weeks and up only 1.3% the last 10 weeks annualized. Implications, the world will continue to be short $s, pushing the value of the $ up and commodities down. Also, it is my view that will not be enough "juice" to sustain broader stock market indexes. AAII investor sentiment bullish view hit a 4 year high this week. From a contrary point of view-a warning shot. Steel production mostly flat in recent weeks, RR car loadings y/y % increases are slowing-was mid/high single digit y/y increases now more like 0-2% y/y increases.

    Lack of M2, no QE, RR slowing, steel production flat is a backdrop for 1-2% GDP growth, lower commodity prices and the return of deflationary fears around the world.

  • Reply to

    Ukraine

    by commandor58 Nov 9, 2014 8:40 PM
    commandor58 commandor58 Nov 12, 2014 11:26 PM Flag

    NATO said today, that Russia is moving military hardware into Ukraine-nice of somebody to fess up.

  • Reply to

    Ukraine

    by commandor58 Nov 9, 2014 8:40 PM
    commandor58 commandor58 Nov 10, 2014 8:59 PM Flag

    I still think the ultimate lows in gold/silver will be in the 1stH of Dec. What I will be looking for in the interim and during that time will be:
    1)M2 money supply growth
    2)While gold/silver making new lows, the miners will not be

    It has been my historical observation that the miners outperform the metals themselves at significant turns in the market.

    I favor silver based stocks over gold as the gold/silver ration has been 75+-a 5 year high. This means silver has been sold off more than gold has.

    In order: HL, SLW,AEM, AUY, GFI

  • commandor58 by commandor58 Nov 9, 2014 8:40 PM Flag

    Going back 30-40 year ago, our satellites could read Pravda if some one had their paper open in the central square of Moskow. I just can't fathom our state department not being able to confirm or deny that Russia is sending in convoys of war material into Eastern Ukraine with further commentary that if the government in Kiev can't confirm or deny then our "intel" has nothing to add.

    Bottom line, the BO administration is lying to the American people about what it knows about the very high degree Russia is sending in war material. Of course, if the state department were to tell the truth, it would show how bad the BO administration has been doing with its "reset" of US/Russian relations and how clueless their foreign policy is-almost everywhere. Implications: harvest gains in stocks and accumulate gold/silver because the the dung will hit the fan. It is just a question of when-the $ will get sold off hard as a crisis of confidence will occur.

  • Reply to

    M2 Money supply

    by commandor58 Oct 17, 2014 12:37 PM
    commandor58 commandor58 Nov 9, 2014 7:35 PM Flag

    So far, my DVN has done very well. Otherwise, take your pick of oil companies, they all will go up if oil moves up. ECA, this year, has become more "oily", they are cheap now and should catch up this week.

  • Reply to

    gold/silver

    by commandor58 Nov 2, 2014 11:39 AM
    commandor58 commandor58 Nov 7, 2014 9:51 PM Flag

    In recent days, as gold/silver have continued to fall, the World Gold Council has reaffirmed their prediction the peak gold production will occur this year with industry production staring to fall in 2015. YTD gold production is 1840 tons up 1.2% vs 2013. Miners are harvesting their highest grade ore, which is also their lowest cost, during this current low price environment. However, in time they will go through their high grade ore leaving lower grade ore-which will reduce the supply industry wide. Declining production while central banks are adding liquidity in a "beggar thy neighbor" currency war is a backdrop of much higher gold/silver prices.

  • Reply to

    M2 Money supply

    by commandor58 Oct 17, 2014 12:37 PM
    commandor58 commandor58 Nov 7, 2014 9:41 PM Flag

    M2 up $34 billion, the FED is adding liquidity to the banking system-now up 4.9% at an annual rate the last 10 weeks-mostly because 3 of the last 4 weeks there have been big jumps in M2 of $55, $42 and $34 billion. Any amount plus or minus $10-15 billion is a big change in a week.

    Implication, it is positive for the stock markets, but it is also positive for the "reflation" trade I've been writing about for a few weeks-gold/silver stocks had a strong rebound the last two days. Perhaps more importantly, with the FED adding $s to the financial system, the $'s rise will slow and perhaps peak soon-although the BOJ and ECB are hell bent on "flooding" their financial systems with liquidity.

    W/R to all the "jobs" numbers this week and all the "happy talk" around them the Challenger and Grey jobs cuts monthly indicator for Oct was up substantially from Sept-51,000 vs 30,000-but also up y/y 51,000 vs 46,000. Implications:monthly jobs numbers, as reported by the BLS, are a lagging indicator. So, jobs will still be "strong" or peaking while the economy rolls over. It is my view that recent strength of the US economy is very similar to last year's situation when all the talk was about the US setting up for escape velocity. It didn't happen.

    I think we are going to have some soft macro-econ data in the coming weeks. The FED won't change their recent "hawkish" view to be move dovish until there are several months of soft data. In the meantime, if they keep adding liquidity, the reflation trade will continue to get fuel-commodities will catch a bid as the currency wars between the PBOC, BOJ, ECB and the FED will depreciate their respective currencies vs hard assets. Hense, gold/silver/oil will start sustained rallies.

    W/R to oil, the rig count for oil was down 14 in the latest reporting week-hitting an 11 week low. Less CapX will mean less oil production, fewer jobs and higher oil prices.

  • Reply to

    3rd Q GDP

    by commandor58 Oct 31, 2014 4:02 PM
    commandor58 commandor58 Nov 4, 2014 10:57 AM Flag

    With recent soft data w/r to construction spending and a larger trade deficit, 3rd Q GDP will be revised lower in the coming weeks from 3.5% to 3% or below. Specifically W/R to the trade deficit for Sept exports were:
    1)Down 6.5% to the Euro-zone
    2)Down 3.2% to China
    3)Down 14.7% to Japan

    If it weren't for our oil exports, our trade deficit would have hit a 7-yr high at $47.2 billion.

    Bottom line, our economy is not as strong as the current consensus opinion. So sell into strength as recent gains in the broader averages are the result of trying to get ahead of Japanese expectations of buying and getting ahead of the fundamentals.

  • commandor58 by commandor58 Nov 2, 2014 11:39 AM Flag

    gold discovery has been below gold production for the last 24 years. As a result, if not 2015, then 2016 gold production will start falling industry wide from the prior year and will continue to do so for many years. Likewise, silver will see peak production no later than 2015. With central banks increasing bank reserves and money supplies much faster than gold or silver production, the supply/demand situation will overcome negative sentiment in the future. Obviously the question is when. Being early and high in many of my gold positions, I have in recent posts cautioned that the absolute low will be reached in the 1stH of Dec-I'm figuring sentiment will continue to be negative and tax-loss selling will continue to keep a lid on gold/silver ETFs and miners. I also believe that world inflation stats will reach their low in Oct-data to be reported throughout Nov-and the Nov will start-data to be reported in Dec-an uptrend in inflation. Inflation grinding higher will be a positive backdrop for gold/silver-especially as BOJ, PBOC and the ECB will easing more aggressively. The rally will really start when the FED if forced to reverse recent Hawkish commentary to more dovish, as I expect softer macro-econ data in the US. Timing will be in the 1stH of 2015.

  • Reply to

    3rd Q GDP

    by commandor58 Oct 31, 2014 4:02 PM
    commandor58 commandor58 Nov 1, 2014 1:01 PM Flag

    W/R to oil, I think it is very close to the bottom. Two dynamics:
    1)In the coming weeks refineries will complete their change over from summer blend to winter blend-during this time capacity has been running around 86-87%
    2)For the latest reporting period,10/24, gas inventories are historically very low at 203 million, a year ago we were at 214. Under 200 million is a critically low number

    So, demand is likely to increase as refineries increase production to rebuild inventories. Increased demand from refineries, coupled with increase demand from consumers because of the lower price-will keep oil from falling to far from $80 (WTI) Brent should stay above its recent low of $82.60.

    With oil grinding higher, M2 moving higher-up two of the last 3 weeks up $55 billion, down $39, up $42 billion, the FED looks to be adding liquidity to the financial markets-the reflation trade looks to be getting some footing. This week WTI, Brent, the CRB index and the BCOM index all stayed above recent multi-year lows even in the face of a very strong $.

    With BOJ easing, data from China and the Euro-zone continuing to be soft and in my view US data will turn soft. For example:
    1)Consumer spending was down in Sept .2% according to Friday's data
    2)Mortgage applications to buy are at their 2nd lowest level in 20 years
    3)Exports will be pinched by the stronger $
    4)Oil and gas industry employment will stop growing and may decline as low oil and gas prices have already forced many companies to reduce exploration budgets
    5)With M2 nearly flat for the last 12 weeks, will lower GDP growth for the 4th and 1st Qs.

    So, it may take 2-4 months, but I think the FED will take back its recent hawkish language and have to "ease" sometime in the 1st Q. In the meantime, stocks are getting ahead of fundamentals-soft data coupled with recent hawkish FED language set up sell offs in my view.

  • commandor58 by commandor58 Oct 31, 2014 4:02 PM Flag

    Defense spending was up 16% annualized pace, contributing to GDP being up .76% higher than it would have been. Federal government spending was up 10%, contributing to GDP up .83% higher than it would have been. Bottom line, defense spending and federal government spending are not going to repeat those figures in coming Qs. Chances are 4th Q GDP will be much lower, closer to 2% as that approximates consumer spending-1.8% in the 3rd Q, down from 2.5% in the 2nd Q. Also M2 has been growing much slower in the last 3 months-2.26% annualized-which would imply GDP will be 1.0 1.5% with CPI around 1-1.25%.

    Also, today was the 2nd Q in a row of the employment cost increase of .7% for the 3rd Q. Wages were up .8%, but in the last 6 months up an annualized rate of 3%. Good for consumers, it they decide to spend, bad for profit margins as increased labor costs will hurt profits.

    With the BOJ, causing a worldwide short covering rally in stocks, not only did they increase QE, but they increased their worldwide stock allocation in the national pension fund, with stocks already expensive and the Japan 10-yr at a record low yield (.45%), the BOJ is going to be buying stuff that is already expensive.

    Buy high, sell higher is working, but if I were Japanese or a European, I would be buying gold and silver to hedge against my falling currency.

  • Reply to

    M2 Money supply

    by commandor58 Oct 17, 2014 12:37 PM
    commandor58 commandor58 Oct 31, 2014 11:25 AM Flag

    The "ideal" price and time to buy gold/silver stocks will come if:
    1)M2, in the coming weeks starts growing 7%+
    2)Tax-loss selling takes gold/silver stocks to new lows
    3)Silver starts to outperform gold as measured by the gold/silver ratio
    4)The US starts to see softer macro-econ data

    Then it will time to buy hand over fist.

  • Reply to

    Chronicles of Riddick

    by commandor58 Aug 7, 2014 9:11 PM
    commandor58 commandor58 Oct 31, 2014 11:05 AM Flag

    Obviously I'm high and early in buying gold stocks earlier in the year-good thing I harvested gains in some. To answer the question, I thought I posted that gold would bottom in the 1stH of Dec around $1075-$1085. Why that range? Gold started its rally from around $250 many years ago, peaked at $1920, so a 50% retracement is $1085.

    As a clue for gold bottoming, I am expecting silver to outperform as a leading indicator. On 10/30 the gold/silver ratio hit 73.59, a 5yr high. If economies are going to improve with more QE and other stimulus measures, then demand for silver should get stronger relative to gold-which is mostly a monetary equiv vs silver also has industrial demand.

    Perhaps the gold/silver ratio gets below 70 as an indicator. Also, with the $ so strong, the FED may be induced, through open market operations to increase M2, which would arrest the $s advance and take the pressure off the algorithmic trade of $ up, commodities down.

    I think the GDX hit a 12 year low today. Clearly gold/silver stocks are undervalued and the cheapest sector by far. But with tax-loss selling, insufficient M2 growth and a selling climax (wash-out) not yet at hand, I think lower prices are to come, but we are within 10% of the ultimate lows.

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