Tuesday, June 8, 2010

Alcoa Inc.(NYSE:AA) Up on No News but a Lot of Hot Air

Some attributed the rise in some blue chips like Alcoa (NYSE:AA) to unprovable statements from Federal Reserve Chairman Ben Bernanke that not only is not another recession not likely, but we're in the middle of a recovery, and it will continue.

My first thought is when did we leave the first recession Ben?

The idea of even taking Bernanke seriously is ridiculous of course, and to imply we're in the midst of a recovery will have an impact of about one day - if that - as the real economic conditions in China, Europe and the United States continues to weigh down on demand for raw materials and products.

I'm not going to get into Bernanke's silly assertions, as how can you argue with someone that says it's going to continue to be a jobless recovery and won't feel like one?

In other words, it's not a recovery but we're going to pretend it is. So don't bother me with data and facts. Bernanke wants us to trust his assertions even if it doesn't line up with the realities of what we're experiencing.

As far as Alcoa, it's going to continue to struggle along with other suppliers and producers of raw materials based on low demand and the resultant low prices.

If there was a real recovery, we would see prices going up, new jobs being created, and no need to say things like it won't feel like a recovery even though it is one, from people like Bernanke.

Alcoa will go up or down based on reality of the markets and not from blowhards like Ben Bernanke who has done as much harm to keep the recession going as anybody has through his endless spending and printing of money.

The aluminum producer did finish the session in positive territory, closing at $10.75, a $0.25 gain, or 2.38 percent increase.

1 comment:

Edward Danielson said...

Do I worry about China? Yes. But I think the real reason that Alcoa moved is more about valuation. It is currently trading under book value even after today's move. The market is nearing th bottom for this correction. Dow 5000? Highly unlikely. Technicals do indicate we will may still move lower. I think Alcoa has most of ts downside priced in at this point. Disclosure: I own 2012 7.5 leaps.