Alcoa — the first cuckoo of Wall Street? About-to-split aluminium giant Alcoa is among the first reporters each quarter for US companies. Its results are out around eight days after the close of the quarter, and for that reason, it is watched by investors, analysts, etc — and mostly ignored because it’s an old-line commodity-driven company with no relevance to the modern agile world of disruptive technologies: smartphones, Amazon, etc. But this time, Alcoa is suddenly relevant because of the way the Fed has raised the questions of the slowing global economy and the rise in the value of the dollar and its impact on the health of the US economy, and the future direction of interest rates. But the company’s third-quarter results, released this morning (our time), had the company reinstalled as something of the first economic cuckoo of this reporting season as sales and earnings slumped. Alcoa revealed adjusted earnings of 7 US cents a share, missing Wall Street estimates for 13 cents, and the 31 cents a share from the same quarter in 2014. Triple oops for analysts.
Sales fell 11% from the year-ago period to US$5.57 billion, under market estimates of US$5.64 billion. And CEO Klaus Kleinfeld said, “The third quarter brought economic headwinds and significant volatility in some of our markets.” That dotted a few Ts as well because it contained the current economic/financial buzzwords: “headwinds” and “volatility”. The shares fell almost 4% in after hours trading, adding to the 30% plus slide in the past year (as aluminium prices had faded by 20% as well). Now watch analysts pore over every reporting company with offshore operations, sales, etc, for signs of more “headwinds” and “volatility”. — Glenn Dyer
Oil burp lifts prices. US crude oil prices jumped by close to 4% overnight, with the price cresting above US$50 a barrel for the first time since July, following Brent crude lifting higher. A weaker US dollar helped, but not that much — the greenback was down around 0.4%. Oil prices have been lifted by not unsurprising claims from a handful of investment banks and oil executives (most notably Shell) that a sharp drop in US production could put upward pressure on prices. Well, blow me down, that’s “new” news and must have been uttered hundreds of times since late 2014 when the slide accelerated. Actually there’s some groupthink in oil at the moment that is notably absent from other commodities. Take the 3.1 million barrel rise in US oil stocks last week to 461 million barrels (yet another 80-year low), and a small rise in weekly oil output to 9.172 million barrels a day — they were dismissed as a “hiccup” by one market trader in news stories. — Glenn Dyer
Golden oldies glow online. According to the respected US research group, Pew, social media usage among American adults has soared in the past decade with about two-thirds now on social networking sites. The 65% of US adults using social media is up from 46% in 2010 and just 7% in 2005, the year Pew began tracking usage (and pre-smartphone and Facebook, but when MySpace was the apple of Rupert Murdoch’s eye). As part of its search, Pew examined 27 national surveys of Americans, about 47,000 interviews among adult internet users and about 62,000 interviews among all adults conducted from March 2005 to July 2015. Pew said that while the overall number of users of social networks has slowed, social media use among the golden oldies (that’s me) is surging — among those 65 and older it has more than tripled to 35% since 2010, when just 11% used social media. Of course, 18- to 29-year-olds are most likely to use social media. Pew said usage among those aged 30 to 49 is up from 53% five years ago top 77% this year. And that’s why dead-tree media has been flattened in the past five years, hurting the once predicted saviour of digital advertising. — Glenn Dyer
VW engineers went rogue? On Thursday, three state attorneys and 50 state police officers raided Volkswagen’s headquarters, as well as private homes, in Wolfsburg (where VW has its HQ, and where its more modest senior executives reside) and other locations. Volkswagen’s US boss Michael Horn told a US Congressional committee overnight that the emission-control software scandal was not a company-driven decision, but due to the work of a group of unnamed individuals. “To my understanding this was not a corporate decision, this was something individuals did,” Horn told the committee, adding, according to media reports, that he felt personally deceived. Naturally that didn’t impress the committee. So if that’s the standard of the explanation German authorities are getting from head office (the “rogue engineer” defence), it’s no surprise that German prosecutors raided the offices of Volkswagen AG to secure evidence in their investigation of the company’s role in the emissions-cheating scandal.
VW Chief Executive Matthias Mueller said this week January would see the company launching a global recall of vehicles affected by the software. The total of 11 million vehicles spreads across several Volkswagen brands, including VW, Audi, Skoda and SEAT. Some of the cars require a quick fix, a simple software update, while others would require switching out the fuel-injection nozzles. The entire recall is expected to be completed by the end of 2016. — Glenn Dyer
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