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The Chart That Scares Alcoa Shareholders The Most

Tyler Durden's picture


Ahead of this evening's earnings report (and Alcoa outperforming today), and amid Alcoa's ongoing capacity reduction, the yawning chasm between production (of aluminum) and price continues to suggest significant pain ahead. With China and the Middle East seemingly unwilling to follow the market's signals and reduce production (helped un-economically by their respective governments no doubt), the 'if you produce it, demand will come' view of the world is just not working out (and hasn't for 18 months). As Bloomberg reports, "the market is still looking at over-capacity, over-production and an unprecedented overhang of metal," and furthermore, while prices have plunged 12% in recent weeks, there is doubt that producers will follow-through on planned production cuts. Of course, we are sure the Alcoa CEO will be on CNBC to tell us all how great it is and how the world economy is about to pick up... this chart suggests otherwise...



Chart: Bloomberg

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Mon, 07/08/2013 - 15:09 | 3731558 Peachfuzz
Peachfuzz's picture

Conspiracy fact instead of conspiracy theory = bearish for aluminum.

Mon, 07/08/2013 - 15:15 | 3731585 LawsofPhysics
LawsofPhysics's picture

As someone who knows how to weld aluminum and fabricate all kinds of useful structures, I am looking forward to it!!

Mon, 07/08/2013 - 15:33 | 3731626 flacon
flacon's picture

It's about time for the paper world to meet reality. I am short 2500 stocks right now (IWM, SPY) and a bonus of shorting the banks (XLF).

Mon, 07/08/2013 - 16:18 | 3731778 flacon
flacon's picture

Alcoa beats expectations. Surges. 

Maybe the stock market really is grossly undervalued at these "all time highs"... /j/k

Mon, 07/08/2013 - 15:33 | 3731627 aint no fortuna...
aint no fortunate son's picture

oh look, another "crocodile snacks on breakfast on the Mara River" chart - dozens of them showing up lately

Tue, 07/09/2013 - 03:50 | 3733398 Onohymagin
Onohymagin's picture

Second that sentiment. Beats the rusting stuff hands down.

Mon, 07/08/2013 - 15:11 | 3731567 firstdivision
firstdivision's picture

Not to worry, Uncle Ben's got your back.

Mon, 07/08/2013 - 15:15 | 3731582 Dr. Engali
Dr. Engali's picture

Already priced in by an efficient market.

Mon, 07/08/2013 - 15:36 | 3731587 francis_sawyer
francis_sawyer's picture

Blue Horseshoe 'hates' Anacott Steel...

<== Divine Wind 'therapy' button here...

Mon, 07/08/2013 - 15:15 | 3731583 willwork4food
willwork4food's picture

Monty, I'll what's  behind door #2.

Mon, 07/08/2013 - 15:16 | 3731589 thismarketisrigged
thismarketisrigged's picture

earnings dont mean shit for companies. ive been saying this for a long time.


if companies beat expectations, the stock will just continue to rise.


if the companies miss expectations,you may see a day or 2 of red, but either way, the stock will be back at the pre earnings price and beyond within a week or 2 of the miss.



Mon, 07/08/2013 - 15:24 | 3731603 darteaus
darteaus's picture

"earnings dont mean shit..."

Just on the face of it, I'd have to agree with you.

Mon, 07/08/2013 - 15:21 | 3731601 darteaus
darteaus's picture

China is more of an If you don't report producing it then you betrayed the Party's plan kinda place.

Mon, 07/08/2013 - 15:22 | 3731605 Yen Cross
Yen Cross's picture

    How do I get on the Alcoa earnings, {early release list}?

Mon, 07/08/2013 - 15:30 | 3731617 Lady Heather...UNCLE
Lady Heather...UNCLE's picture

Why doesn't Alcoa just produce a whole lot of 'invoices' for its excess supply. Cash flow report might stink but eps 'beats the street' and voila!...up she goes. What's that you say?  auditors?...hahahahahaha

Mon, 07/08/2013 - 15:37 | 3731624 ebworthen
ebworthen's picture

Yeah, saw that the Alcoa CEO was going to be on CNBC, so I know it will be a "we beat expectations" (on reduced earnings expectations) stock pumping cheerfest of bullshit.

p.s. - Ron "the John" Insana on now saying that the recovery is here; so yes - CNBC is pulling out the sock puppets.  Other analysts comparing things to the 80's and 90's (leg warmers!).

Mon, 07/08/2013 - 15:34 | 3731629 orangedrinkandchips
orangedrinkandchips's picture

well, Asiana is going to have to buy a new plane....soon.



Mon, 07/08/2013 - 15:38 | 3731643 yogibear
yogibear's picture

Alcoa should just make themselves a bank.

Access Bubble Bernanke and the Fed's liquidity and live on easy street. There is a sea of QE out there. Suck up the Fed liquidity  and make it disappear.

So many ways to cook your books if your a bank and offshore the funds. The best way to rob a bank is to be one.

Mon, 07/08/2013 - 15:47 | 3731664 Pinktip
Pinktip's picture


Can anyone explain the flat line of USD ?


Mon, 07/08/2013 - 15:53 | 3731678 akak
akak's picture

It's not actually flat, it's just that the value range of the y-axis is overly large compared to what it normally is, or should be.

Mon, 07/08/2013 - 17:03 | 3731919 RockyRacoon
RockyRacoon's picture

Akak is correct.

A Kitco graph?   Puuuleeze.

Try this:  


Oh, and the dollar situation is never off topic.

Mon, 07/08/2013 - 15:58 | 3731693 Lmo Mutton
Lmo Mutton's picture

It stopped breathing.

Mon, 07/08/2013 - 16:13 | 3731759 orangegeek
orangegeek's picture

Actually, I think it moved.

Mon, 07/08/2013 - 16:05 | 3731721 sunny
sunny's picture

I don't understand.  Why should any chart of performance, irrespective of how bad it is, scare a shareholder?  As long as the Fed prints, the markets will never have a meaningful correction.  Benny has your backs --- pretty much forever.


Mon, 07/08/2013 - 16:11 | 3731749 Lady Heather...UNCLE
Lady Heather...UNCLE's picture

Results out and guess what? They beat the Street...yawn

Mon, 07/08/2013 - 16:15 | 3731761 ebworthen
ebworthen's picture

Klaus Kleinfeld on CNBC now:

"Ze performanze of ze company iz spegtagular, zhere are no problemz.  Ve are building out our value-added buzinezz."

Yeah, firing employees and cutting corners.

Klaus on Chinese economy:  "Ze Chinese economy iz fine, do not worry."

Bill Griffiths asking a hard question about the 75% collapse in Alcoa stock price in the past five years.

Klaus pulls out the "apples to apples" meme, and legacy issues, and "create shareholder value".

Mon, 07/08/2013 - 16:13 | 3731762 thismarketisrigged
thismarketisrigged's picture

its impossible not to beat with how low expectations are.


it would be like needing to get a D to pass, and u get a C-.

you beat what u had to do, but ur grade still fucking sucked,


this report sucks, and no surprise, 



Mon, 07/08/2013 - 16:14 | 3731765 orangegeek
orangegeek's picture

I just finished a can of shasta and threw out the can (no recycling).


There.  That should help Alcoa's price.

Mon, 07/08/2013 - 16:33 | 3731823 SheepDog-One
SheepDog-One's picture

No problem, Alcoa up like 16% now all is well again, AND the free money will also never stop flowing either! yay

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