Yeah! Look At That Future Demand!

Come on, now, the Alcoa news is just silly. They lost exactly as much money as everyone expected them to, yet people tore through the reports looking for a rosy story. They found one in higher revenues. How nice.

Never mind that the US Dollar will continue to eradicate all profits should it continue to run higher from here.

Alcoa’s announcement is not even unique. Oh wow! Alcoa had shitty performance and said it expects things to be better going forward. What a novel surprise…they’ve only been saying the same thing for five or six consecutive quarters now…

Tell me, what did you expect AA executives to say? “Hey all, if you think our performance was atrocious this quarter, wait until you see the next one!” Them throwing the “aluminum demand to double in a decade” spiel should be as irrelevant to their stock price as it is to outlook. A decade is a long time frame; none of these guys could tell you what is going to happen between now and Friday.

The shear level of utter bullishness makes putting money into this market a serious risk, and makes me very uneasy. At some point, expectations need to better match fundamentals. That doesn’t mean we get sucked into a vortex and see the world end. It does mean people shouldn’t be holding equity at prices that will take companies fifty years of labor and untold business cycles to see break even.

You would do well to be cautious about accepting highly suspicious demand reports of future aluminum consumption from companies that are losing money as an all clear to the economy. Will aluminum demand really double in the next decade? It very well could. But even if it does, a decade is a very long time during which a great deal of side roads could be taken. There is good indication pointing to us being on one of those detours at this very moment.