Alcoa Could Post 29% Earnings Drop Due to Higher Costs (Bloomberg)
According to a Bloomberg analyst survey, US aluminum giant Alcoa (AA) is expected to report earnings of 5 cents per share after the close today, down from 7 cents a year ago. A weaker dollar served as a ‘double edged’ sword, raising input prices in Europe, Australia and Brazil (bad) but boosting the price of Aluminum (good). Alcoa is already the worst performer in the DOW this year, down 23%, so any disappointment is likely priced in. Not a good start for what could be a make or break earnings season.
Watchdog Report: Taxpayers Turn Profit on Bailout After All (CNBC)
Hey taxpayers, quit complaining about the bailout! A new report suggests Geithner and Co. were prudent in picking firms to rescue. Use of outside experts prevented biases and careful reporting protected taxpayer interests. Treasury spokesman says report shows taxpayers likely to turn a profit on the program. The Treasury isn’t so crooked and bailouts work. Who knew!?
Have Too Many Investors Drunk the Kool Aid on Gold? (The Big Picture)
Gold is selling off hard this morning after hitting the technical $1,350 price target intraday yesterday. Is this a short term top? The trade has gotten crowded, and the cloud computing debacle yesterday illustrates what can happen when too many greedy hands jump on a bandwagon. Gold is a high beta momentum play, and when amateurs without proper risk management understanding get involved, the ensuing sell-off can be fierce. Still, based on three key metrics—Gold versus US Money Supply, Gold priced via SPX and Inflation Adjusted Gold—a $2000 dollar price target is perfectly reasonable. Wait for the ‘thrill of the chase’ to subside, and then consider making Gold part of your investment portfolio.
Apple Preparing For 45 Million iPad Sales Next Year; Somebody’s Hungry for Flesh (Wall St Cheat Sheet) Supply chain vendors in China and Taiwan disclosed that Apple (AAPL) is gearing up to sell 45 million iPads next year. If you had questions about whether Apple’s latest toy would be a hit, this should answer them. $45 Million iPads = ~$30 Billion. The entire PC industry is quaking in their boots due to iPad cannibalization, and Goldman Sachs recently pulled the plug on Microsoft after being bullish on the tech bellwether for the better part of 25 years.
‘Would You Rather Be Right, or Make Money’-Ned Davis? (The Big Picture)
When it is your job to make money in the markets, there is no room for stubbornness. A lot of people focus on what the market SHOULD do instead of focusing on what it is ACTUALLY doing. It is not our job, whether as money managers or traders, to be political commentators; it is our job to make the most sound judgment on how various asset classes will perform under the current conditions, which are out of our control. “Some people rush for the fire hoses, but my job requires me to grab some marshmallows and sticks and head over to the boy scout jamboree campfire.” Everyone who is missing out on this rally in equities is kicking themselves, protesting that the game is rigged. Well, if the game is rigged I want to be on the right side. Nobody knows the ultimate fate of this market (a correction seems likely at some stage) but in the meantime it pays to just let the rally happen.
