Key Manufacturing Industry Crumbles To Post-Crisis Lows

Tyler Durden's picture

Via Dana Lyons' Tumblr,

Aluminum stocks are hitting their lowest levels since 2009.

The past few weeks have brought a resurgence of the deflation theme. All matters of commodities and their associated equities have, to varying degrees, resumed the selling pressure that has characterized much of the past 18 months. The aluminum industry is no exception. In fact, using the Dow Jones U.S. Aluminum Index as a gauge, aluminum stocks closed today at their lowest levels since April 2009.

 

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To be sure, the index is dominated by its largest component, Alcoa. Alcoa, of course, is widely known for its distinction as the first major U.S. company to report earnings each quarter (isn’t it time to think about juggling that lineup around?) The similarity of the charts is unmistakable. However, the weakness is not just due to Alcoa. Notice that, even with today’s drop, Alcoa is slightly holding above its 2013 levels.

 

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The concern with the degree of weakness seen in this industry in particular is its ties to both the manufacturing scene and the labor market. Yes, we have seen some examples of solid metrics in those areas. However, aluminum is said to be a $150 billion industry and directly or indirectly responsible for 670,000 jobs in the U.S. It is tough to imagine that things are that robust given what is happening in the aluminum market, not to mention other resource markets.

We’re not suggesting that those rosy economic numbers are bogus. Just consider us objective skeptics…minus the tin foil hats.

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More from Dana Lyons, JLFMI and My401kPro.

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firstdivision's picture

Must suck for those in ivory towers when reality slaps them across their faces with it's dick. 

Dr. Engali's picture

That's a micro-aggression, and I'm telling Tyler you're invaded my safe space.

knukles's picture

It's sexist too.  Making me very uncomfortable.  Gimme a hug, Doc.  Lower.  Uh     ummmm   acckgah!

Dr. Engali's picture

Sorry, but I'm sexually bi-curious. If I hug you, I'm not sure if I'm supposed to like it or not. 

 

http://goo.gl/4R9xrH

oklaboy's picture

you hugging Dr. Yellin again?

knukles's picture

But wait.  The data (reality) is wrong because it doesn't fit with the theory that we have no industries, living in a world of perpetual plebe vacation and free shit.

                                        PRINT MOAR!

Baa baa's picture

I see a great future for reality porn.

LawsofPhysics's picture

What?  Is "mark to fantasy" not working out for you? 

Yes, you are correct, moral hazard is a real motherfucker.

Global Weimar bitchez!!!

duo's picture

Boeing starting to make planes out of plastic probably isn't helping,

Dr. Engali's picture

The thought of that makes me feel safer already.

LawsofPhysics's picture

Sure, but at least the plane is fucking real and that's real innovation. I can live with that.

what is the average compensation of the worker that builds those robots that builds those planes?  How does it compare to the motherfuckers selling financial "products"? 

See the real problem yet?

duo's picture

More worrisome is the Chinese maintenance facilities where heavy overhauls are done.  Saves money over using American mechanics that can read the manuals.  Because markets...

LawsofPhysics's picture

manufacturing has always been this way, so fucking what?  I still support any operation/craftsman that can deliver real value-added innovation. 

My point was simply that the people getting truly wealthy from all this fraud are in fact nothing but useless fucking paper-pushers.

Get long sharecropping and guitllotines because none of these fuckers, or their political puppets are going to give up the reigns of power and control.

As the Chinese say, "Interesting times"...

Prepare.

yogibear's picture

Stocks are still up so everything is still awesome for the Federal Resereve and Obama.

It's the only indicator they care about. Everything else they can lie about.

They'll say, see stocks are still doing well so we are still recovering.

FranSix's picture

This is not the low you were anticipating. Jedi mind trick.

buzzsaw99's picture

as long as we don't have any lehmans everything will be great. banks and billionaires bitchez. nothing else matters.

Dr. Engali's picture

You may not be suggesting that the rosy eCONomic numbers are bogus Tyler, but I am. Look around, the deterioration of the infrastructure tells you they're all full of shit.

Grandad Grumps's picture

Why look at equity price? It means little. Pull up the LME or Comex and look at the prices and inventory levels (which are not real inventory levels, just those counted by the exchanges ... read the annual Silver Institute report.

You should see that there is no connection between fundamentals and price.

css1971's picture

Aluminium, copper, zinc, steel. All the same. Plus oil.

 

The figures are fake.

LawsofPhysics's picture

None of those things are required to "manufacture" financial "products"...

Everything is awesome!  Say it! or report to your nearest FEMA camp for re-education immediately!

NotApplicable's picture

Why, they're absolutely required! You can't do "mark to unicorn" accounting without having some form of tangible collateral to base the entire edifice upon, rehypothetically speaking.

Exeter is laughing in his grave at "modern" finance.

LawsofPhysics's picture

So fucking what?  manufacturing is no longer a significant portion of GDP.  No real resources are required to "manufacture" the financial "products" of mass destruction America sells...

Duh.

 

"Mark to fantasy" forever...

/s

 

moonmac's picture

 

Last crash everyone took a 10% paycut at our factory. We slowly got it back but our 2% yearly raises are now extended out to 14 and 15 months. When it’s so slow that shipping clerks and machine operators start worrying the 10% pay cut might comeback you know we’re in a recession.

LawsofPhysics's picture

The irony of course is that with every "market" crash the people employed in the financial sector have manage to get significant raises!!

See the real problem yet?

Roll the motherfucking guillotines already!!

scubapro's picture

 

 

one factoid of enlightenment ZH has brought to me:    zirp/qe/cheap money creates capacity, but cannot create demand...if demand doesnt keep pace (via spending of savings or borrow and spend)  supply outpaces and prices fall.    next step SHOULD be creative destruction where the weak are killed off and the effecient survive and society gets more and better stuff and real lower prices setting up the next cycle.

as well as introducing Austrian Econ credit cycle theory....for thank, I thank you Tyler.

LawsofPhysics's picture

ZIRP/QE only benefits those who push fucking paper and their political puppets!!!!

Moving digital credits around does not add anything of real fucking value, period!  in fact, it can actually increase capital mis-allocation and mal-investment!

As far as "demand" goes, be specific!!!!  Demand for what? With 7+ billion people (and growing) there is plenty of demand for anything that is required to maintain a decent standard of living!!

Tell me, have rents, utility bills, education, healthcare gotten cheaper?  Especially relative to wages?  I don't think so!!!!

Government needs you to pay taxes's picture

It's time to stop ignoring valuation and focus on your assets themselves.  What can you (or others) use them for, particularly in a scenario where there are interrruptions of uncertain duration in the supply chain and .gov functions.  Think this is crazy?  Have a look @ the US .gov debt.  This isnt sustainable, and a global supply chain is vulnerable to conflict involving mid-large size nations.  A pile of Zimbabwe currency or Confederate dollars is useful kindling.  When our growing instabilities unravel, it wont be useful to have a 'leg-spreader' 1-bedroom overlooking Central Park with a small safe full of gold and currency.