Going back to the original movie, Charlton Heston, noted the world had gone upside down because it was run by apes and not man. The US has become much the same as it is "run" by:
1)Politically Correct thought mongers that substitute reasoned discourse for facism, divorce outcomes from personal responsibility and
2)Pass off unlawful behaviors as legitimate protests
Unfortunately, it is not going to end until:
1)The US bankrupts itself, such that Washington cannot pay its obligations-breaking the cycle of politicians "bribing" the public for votes and citizens allowing themselves to be seduced by "goodies" from Washington that cannot be paid for
2)Law and order are restored
Until then, the US will continue into its upside down world, Planet of the Apes, nightmare-its own dark ages with bouts of "Road Warrior" episodes.
For the 4th Q, top line will be flat, gross margin up and OpX down leading to EPS of $.05.
Top line for 2016 will be slightly higher, with earnings improvement from cuts in COGS and S,G & A leading to EPS to around $.30. Company not in trouble, even though the stock is selling like it is in trouble at about 2-3X cash flow.
If mgt doesn't improve results in 2016, I would expect CAMP or COMM to make a buyout offer. I remain a buyer under $5.00 as well.
Much of today's #$%$/Sunni conflict flows from Ayatollah Khomeini's-a #$%$-overthrow of the US Backed Shah of Iran. He viewed Saudi Arabia as a corrupt dictatorship and an American lackey. He also wanted to export his Islamic revolution. S.A. stepped up its religious "legitimacy" by:
1)Funding, money, weapons and manpower a Jihad in Afghanistan
2)Emphasizing its own native Sunni view of Islam-Wahhabism-both domestically and internationally
Wahhabi Sunnis view themselves as the "choose ones"-everyone else are to be hated, persecuted and killed-including #$%$s.
So, since 1979-80, you have two forms of Islam:
1)Fighting each other
2)Exporting and competing for their view of Islamic revolution and social order.
S.A has already rewritten the Quran with their form of Wahhabi Islam. I can't tell you what year it was or whether it was Wahhabi himself in the mid 18th century, but the S.A Quran of today has much and very meaningfully different language than the Quran outside the Wahhabi view.
Bottom line, the House of Saud must fall-the US should withdraw all support for S.A. and let the chips fall where they may. When the House of Saud falls (Isis's primary sponsor), Isis will fall within 6 months. Yes, oil prices will be higher, but the West has enough energy, in all its various forms, to move on economically. We can then, at a distance, protect ourselves and watch the #$%$/Sunni fight themselves over a faith that is in many ways is 1000 years obsolete and a danger to the world.
So what is the answer? S.A is the ultimate enemy. They are the one that are spreading "necromonger" Islam. Two actions by the West;
1)Force SA to rewrite the Q-bringing it up to date and eliminating its terrorist/killing language and if they don't
2)Withdraw all military support for SA-let the "House of Saud" fall so the Sunnis and #$%$ sort out their own differences without deaths to Western populations and military forces.
BO's lack of progress against ISIS is obvious. Saudi Arabia warned the BO administration that they would take extreme measures to protect Sunnis in Iraq if the US pulls out its 10,000+ troups-leaving a huge vacuum both politically and militarily. With the US pullout, #$%$ took over IRAQ, exicuted Sunni leaders and subjicated the rest of the Sunni population. ISIS is S.A.'s response to the US pullout. The US has not wanted to get rid of ISIS because ISIS is:
1)A counter to Iran's #$%$) complete control of IRAQ and eventual push to the Meditaranean-recreating the Persian Empire
2)A counter to Assad in Syria
Unfortunately for the world, ISIS in its pursuit of Islam in its purist form-in its purist form Sunnis don't acknowledge that #$%$ are Islamic-picked a fight with the rest of the world. Now the terrorist wing of SA has been exposed for what it is, SA is going to face alot of heat-at least they should. However, the Saudis "own" the US government-both democrat and republican. So what is the answer?
BCON and CRB indexes were hitting 16 yr and 13 yr lows all week long. The Baltic Dry Index hit all-time lows both Thursday and Friday. Various metals:copper, nickel, zinc hitting multi-year lows. Steel production continuing lower each week over week and now down near 14% y/y, after being down high single digits most of the year. RR car loadings continue to be soft as no more than 3 or 4 of 10 categories are up y/y since the end of the 1stQ
The DXY hit 99.85 this week, just short of the 12 yr high 100.40 hit in March. Simply put, the industrial economy is in recession with the resulting job losses eventually seeping into the services jobs so that even the most ardent "cheerleaders" for the economy will have to accept its weakness.
The ultimate question is will the "market" move up on this bad news or will it sell off because the FED will be slow to "ease". it is my view the FED will be slow to respond.
Further analysis of "jobs" numbers from the BLS. Including May, multiple job holders are up 477,000 and single job holders are down 152,000. So, as I have posted in the past, the economy is producing more jobs, but they of the part-time variety at the expense of the full-time variety. Now if someone works 35 or more hours per week, then they are a "full-time" worker as far as the BLS is concerned-even though their 2-3 part time jobs will have fewer benefits and most likely be at a lower wage than a full-time job.
One will have to ask the question, will the FED expose the "fraud" of the BO administration-which is approaching the fraud of the Johnson administration-in their explanations on why the don't raise or raise rates extremely slowly or will the FED be a co-conspirator with the BO admin and its various agencies to "talk-up" the economy stronger than it is.
DXY hitting 8 month highs in the 99.80s, which are very close to the 12 yr high of 100.40 in March. Euro hitting 7 month lows, China's Yuan has been down 10 of the last 11 days-going from 6.34+ to 6.38+. CRB and BCOM commodity indexes continue to hit 13 and 16 year lows-market doesn't care until it cares. Reward/risk profile for stock market averages getting worse vs getting better.
The "positive" to the Paris events is greater fiscal stimulus by Euro-zone governments. Not only will governments be given a green light to spend more, but the ECB will given the green light to increase their QE program-these are the reasons stocks have moved higher since the event. One may recall, one of the "prescriptions" I was expecting in 2016 was greater fiscal stimulus by many western nations.
The big question becomes, is this market going to melt up, especially if there are no more successful attacks? I think not, the market does not melt up, until the FED starts to ease, which is a 1stQ "event" to me.
Exactly! That possibility still exists. That is why a buy under $6 has never failed to pay off with 6-12 months and why a buy under $5.00 is even better. The math is simple, the liquid part of the balance sheet is worth $3.50/share. At $5.00, the business sells for about $25 million or about 3X cashflow-extremely cheap. The "bashers" always come out at the "bottom"-like clockwork and serves as a contra-indicator.
You should be welcoming the opportunity to buy PCTI under $5.00 again. The "market" is generally efficient, if mgt continues to under perform then the market will take the company away from them. Hence, a buyout at a higher price.
What has been going on, Univ or Missou, Dartmouth, Amherst, Ithyca and other univ/colleges is quite comical but sad. Politically correct leadership, at these schools, has not been PC enough and is being double down by even more PC oriented activist students. Attempts to pander, by the PC leadership, is being met with even more fascist demands that have no basis in law, procedure or moral frame of reference. What we are getting is a repeat of 1968 where criminal behavior is being passed off as legitimate protest.
Unfortunately, continuing attempts to "buy off" these protests with more PC type measures will not work-the US is going to enter its own "dark age". The PC fascists, which tolerate no narrative beyond their view, will bring upon this country: riots, recession, higher taxes, increased regulation, terrorism, social anarchy, increased crime, higher unemployment and lost confidence to this country over the next few years.
When will we "see" light at the end of the tunnel? Very simple, at the heart of PC thinking are affirmative action type "laws" and goals. Let it be known and it is clearly obvious, affirmative action is inherently racist. It is the government and other leadership type institutions using race as a basis for making decisions-when the 14th amendment specifically forbids the use of race as a criteria. Those that are in favor of affirmative action are the most racist people of our society and are in violation of the constitution. Political and other leasers have pandered to the "aa" view to the detriment of the country. Until "aa" is found unconstitutional, the US will continue to be in its own "dark age"-there will be no light at the end of the tunnel.
A historical perspective, Islam a 7th century social contract, has had trouble adjusting to the world since the industrial revolution-about 200 years. it was the hope by many Islamic leaders, at the turn of the 19th century into the 20th century, that Islam could successfully adjust to the modern world-Turkey was part of that hope. However, as the world passed from the 20th century to the 21st century, the mantra from the Islamic world is to make the world more Islamic-this is the basis of the conflict today. The ultimate question being, is the world going to turn Islamic-adapting Sharia law and follow some of the practices of the Q's 7th century social contract or is the Islamic world going to adjust to the modern world?
I think everyone knows the ultimate answer, yet the "question" does exist and their exists a conflict because western leaders have been so weak and feeble handcuffed by their own "politically correct" induced thought patterns and action restraints. Indeed, PC induced behavior is driving the West to another "dark age" with its fascist views.
However, if the world is going to win, it will win because its will, its confidence in itself will overcome the rabid dogs (they are dying and they are killers)-the followers of the Q. This is why the Q has to be rewritten, modernized if you will, so that it can no longer be a religious and language source of death to infidels. In fact, "infidel" type language will have to be dropped from the new Q.
The main problem is the leadership of the West-mostly gutless and clueless of the larger picture. The exceptions are Russia and China as they have been actively but quietly eliminating their problems-you don't hear much about the Chechnyans these days.
Indeed, the followers of the Q are the "necromongers" in "The Chronicles of Riddick"-convert or die-simple as that. The west will continue to lose as PC type thinking dominates our leadership.
Abbas Shoman, Sunni leader out of Egypt is the only guy, I see on the world scene, that is even talking close to what I think has to be done. He still falls way short of rewriting the Q-which has to done.
All the blather, after the Paris attacks, miss the point. Within the Quran, is specific language that non-mulims are infidels and so can be marked for death-clear and simple. All the ISIS, Al-queade, Boco Haram etc etc do is within the guidance of the Quran-plain and simple.
The solution is to rewrite the Quran to get rid of this language. The original forms, many exist, of the Quran were started to be written about 20 year after Moham. death-around 650. The Q is a 7th century social contract , that has been obsolete for over 1000 years. So until the world forces the leadership of the various Islamic factions to rewrite the Q, expect more infidels to die. Until the world forces the "moderate" Muslims to expose and fight internally amongst themselves against the Muslims that will kill-then no solution will be at hand.
So until these two things are done:
1)Rewrite the Q, by their religious leaders
2)Force the "moderate" to confront the killers-make them fight their own internal war
Is is going to be same #$%$, different day.
All the other talk, of the past few days, is just cheap talk-that will solve nothing.
1)When will the FED ease?
2)What forms will it take?
As far a "1". I think the FED is going to continue to play its game of chicken until March. By that time, the BLS may have adjusted their birth/death model (taking down jobs since 2010) and Jan and Feb jobs number may print net job losses.
W/R to "2" M2 has to grow at 8%+ annual rate, Reverse repo data consistently lower, monetary base growing at 3%+, balance sheet growing 3%+, DXY below 93 and oil over $60.
The FED has a long way to go-whether they announce their change of policy or not.
If I'm correct in my timing, stocks will bottom in Feb. Until then, rallies should be sold into.
Well, the evidence of my "bearish" view of stocks and the US economy are just overwhelming in recent days. Retail sales, soft the last 3 months-not just soft but ugly at:flat, flat and up .1% for Aug, Sept and Oct. Sales for Oct, less auto up only .5% y/y, Sept was up .7%-the economy is getting worse. Recent job gains are:
1)100,000+/mo mythical because of the birth/death model of business formation has turned negative vs the positive assumptions by the BLS
2)Switch from higher paying mfging, energy and mining to lower wage part time and services jobs-hence there is little income growth. If fact Sept wages and salaries were down vs Aug
US importing deflation at at 3+% rate. PPI numbers, down y/y every month this year, except for Jan when y/y was flat.
Many commodity indexes are hitting 16 year lows
Corp profits, margins and guidance are falling-layoffs have started, but massive layoffs will start after the holiday season.
Steel production falling off a cliff. RR and trucking indexes falling back to 2009 levels-all while the FED starves the US and world economy of $s-the DXY near 12 year highs.
Now, "deflation", is not automatically a bad thing, but because government, corporate and individual debt is way up since 2009, the ability to service that debt becomes extremely harder in a deflationary environment.
Bottom line, the FED has to ease. Continuing delays will increase the odds of:
1)US recession with massive layoffs-services will feel the weakness of industrial America
2)Financial shocks-similar to 2008/2009
The longer the FED waits, the greater the odds of the above-the "evidence" has become overwhelming.
DXY hit 99.50 today, another 7 month high-getting close to the 12 year high of 100.40 back in March. The Bloomberg commodity index hit another 16 year low. Trade and inflation data out of China was soft-further deflationary forces there-providing the "ammunition" for China to devalue again.
US import prices, x-fuel, were down 3.2% y/y for the month of Sept and running down 3% or so y/y all year. Implication, the US has been importing deflation all year, in the 3% area, which has led to my conclusion that the "real" FED funds rate is 3-3.25% vs the published rate of 0-.25%. Industrial America is in recession, the $ is near 12 year highs, US corporate sales and earnings are in decline and the "effective" yield curve has inverted with the real FF rate above 3%, while the 10 yr is 2.35%.
The FED wants to raise rates bad, but it is the exact wrong policy action to take. Their "game plan" to raise rates coupled with their hesitation to lower rates, once they figure out they have to, constitutes their game of chicken with the US and world economy. The longer they wait to ease, the greater risk of a financial event-with stocks hitting another 1000+ point Dow Jones air pocket.
Some analysis on the Oct "jobs" numbers. First of all, the birth/death model of business formation added arbitrarily 145,000 jobs in Oct. As noted by me in prior posts, the birth/death model assumes 100,000 new net business formations per year. When actual research is done, net new business formation has been falling since 2008. The assumptions in the birth/death model are no longer a positive, but a negative.
2nd, 109,000 of the jobs were multiple job holders-folks getting a 2nd or third job. Third, 44,000 jobs were created in retail. Retail sales have been soft, for months with many announcements by retailers of store closings. So, either the BLS's season adjustment is wildly optimistic or full time retail jobs are being lost to net increases in part-time retail jobs. 4thly, I want to reemphasize, for the age range 25-54, the net job loss for males was 119,000.
To sum it all up, the economy may have had a net increase in jobs, but it was a substitution of full-time higher paying jobs for more part-time lower paying little benefits jobs. This analysis is consistent with soft retail sales this year and personal income slowing-Sept salaries and wages were actually lower than August's.
BLS's fraud will result in stocks selling off and bonds rallying as other measures of the US economy, over the coming weeks, will show the Oct jobs data to be "soft" vs "strong".
1)Bloomberg commodity index hit a 16 yr low on 11/6
2)Maersk CEO says world growth slower than official stats
3)Trimtabs says US economy is declining and wage growth is lowest its been all year. Their macro-econ index peak in January
My conclusion, is the FED is starving the world of $ liquidity. The supply of $s to:
2)Grow US and world GDP
3)Stave off deflation caused by tanking commodity prices.
Trimtabs CEO says next FED move is too ease because of all the macro econ weakness.
As a result of the budget deal, the federal government is set to spend $50 billion more this fiscal year than was previously expected. Could mean increased spending for:defense, infrastructure, education and of course to buy votes for the 2016 election. Along with Canada and some Eurozone countries, it does set up a more bullish tone for stocks. Still, the FED looking to increase rates, a too strong $, does put a lid on earnings expectations. I do expect, macro-data to turn soft in the US, which will change the FED's bias after they make a mistake raising rates. If correct, the selloff will create great bargains, when the FED decides it has to get into the currency war game.
Interesting to note in the Oct jobs number. Jobs for those age 55 and older were up 378,000, jobs for those age 25-54 were down 35,000. Jobs for males age 25-54 were down 119,000. Where were most of the jobs? Healthcare, retail, restaurant and temps. In summation, not a strong foundation for higher income and spending dynamics.