Seeking Alpha

Michael Clark  

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  • Santa Klaus Is Coming To Town For Alcoa [View article]
    Does Alcoa just sell to American customers? A strong dollar will make American exports MORE expensive. So Alcoa gains on expenses if their input costs are in local currencies, however selling in a strong dollar means the finished product will cost more, and be a drag on earnings.
    Mar 27, 2015. 01:49 PM | Likes Like |Link to Comment
  • This Is Not The Same Alcoa [View article]
    You write well; I enjoy your post.

    Why would the FED support a stronger US Dollar when it would hurt America's multinational corporations? That's a good question. And to show you that there is no internal inconsistency in my logic, I will try to explain why the FED now MUST raise rates to support the US Dollar.

    We are at war. The first stage of this war, as is often the case, is financial. Currency wars at a part of this. But our war with Russia (and her allies, who are fully committed to destroy the US Dollar, and to overthrowing the Dollar as the currency of international trade) requires a strong dollar. The strong dollar deflates oil and commodities generally, attacking both Russia and China (and also some of our allies -- Canada, Australia...-- could not be helped). A weak dollar strengthens both Russia and China. They want to destroy America's advantage (King Currency) and replace it with a currency of their own -- so the war is on.

    The FED, which had gleefully weakened the Dollar over and over again, especially since 2008 with QE and ZIRP, but also many other times, now understands the Dollar and the US is in a fight for its life. The FED cannot let the dollar weaken now for political reasons. We are heading for a shooting war with Russia, China (and their allies, North Korea, a few others perhaps -- perhaps even some of the Arab countries) -- an axis is being formed today, even as we refuse to see it or pretend it is not.

    The strong Dollar weakens America's enemies. This is the new logic, more primary now than 'what is good for the global economy'. War is being assumed. And a strong dollar, while it hurts America's multinational corporations, and American exports, does not hurt Americans trading and selling goods in the US; it makes all imports even cheaper; it makes possible America's buying of foreign assets and reverses the scenario of foreigners buying American assets more cheaply.

    The strong Dollar makes America richer, and the world poorer. The weak Dollar makes America poorer (because more indebted), and the world richer. Money is currently flooding the US from all around the world; foreigners who took out billions of US Dollar loans during the weak dollar phase must now pursue the dollar higher and higher (pushing it higher, in fact) in order to re-finance their US Dollar debt, or try to pay it off. Suddenly, everyone needs more dollars, and the dollar is getting more expensive, so default becomes more likely over time.

    In the early 80's we had a bull market in the US Dollar -- South America and Mexico collapsed in debt default; in 1998-2001, the dollar raced higher, and the Asian Economies collapsed through a currency crisis, and Russia had their defaults crisis. In 2008, the dollar raced higher, and oil collapsed, and then the global economy collapsed. We helped foreign countries to overcome their crises then. Today, whom are we helping overcome their default crisis? Ukraine. Why? Because Ukraine is fighting the first combat phase of World War III against Russia.

    The world will get religion. That is why war and economic destruction are such a major part of the Winter Season of the Economy; so that the proud intellects who are superior to the God-Idea will be brought to their knees and re-discover their own weakness. The Ego gets demolished when he meets God face-to-face.
    Mar 25, 2015. 03:07 AM | Likes Like |Link to Comment
  • Santa Klaus Is Coming To Town For Alcoa [View article]
    I have been engaged in another article on the future of AA. It became a discussion of illogic vs logic (fundamental analysis). I informed the reader than technical analysis was also mathematical and was a visual way of seeing rather than a data-cruncing way of seeing.

    You guys might enjoy the blog I created as a result of this conversation, especially the chart that shows why I am short AA and expect it to be trading at around 8 in the next 3-4 months.

    I'm long AA October 15 Put Options on AA.
    Mar 19, 2015. 08:08 PM | Likes Like |Link to Comment
  • This Is Not The Same Alcoa [View article]
    I put together a blog for you, with a picture of AA, and with 'visual' technical reasons of why I believe AA is a shortsell now. This is NOT a perpetual condemnation of AA. This is about timing, something at which fundamental analysis is chronically weak.

    Also, I 'm taking the liberty of adding links to other blogs that explain my 'spiritual' understanding of why FED actions since 2001 break (God's) Laws of Nature and will result in damnation. And how the strong Dollar has begun taking apart many stocks, oil and commodities first, apparently multimation tech stocks now.
    Mar 19, 2015. 06:04 PM | Likes Like |Link to Comment
  • This Is Not The Same Alcoa [View article]
    I realize you are in love with AA, which is breaking the first rule of investing -- never fall in love with a stock -- and that I am attacking your sacred cow.

    My prediction is that AA will be below 10 before it is above 20. Simple prediction, either right or wrong. All the rationalization you do with fundamental information is just that -- rationalization, a form of a prayer. Your reciting margins and EPS and debt level and cost per ingot is just a form of prayer and says nothing about where the stock is going. You have come to believe that fundamentals drive the stock price; in truth, investors' GREED drives the stock up, investors' FEAR drives the stock price down.

    Fundamentals may be a fuel for the GREED, but not always. Often, stocks with good fundamentals tank, completely collapse. Because FEAR eclipses GREED. Fundamentals is ALWAYS a picture of the past -- even the fundamentals indicator that peek into the future (future earnings projections -- projections being the key word) just extrapolate the past and present into the future. So how do we gauge the transition of investor GREED into investor FEAR? Well, interest rates are a key gauge of GREED/FEAR transition mechanism. But they are not the only one. There are others. FEAR generally can overtake a bull market, since Fear of war, political collapse, depression also weigh into the balance.

    Fundamental equations are often helpful in telling the investor which stock to buy, but rarely if ever WHEN to buy or sell. Value is a guide, but not a very useful guide: one can buy an undnervalued stock and sit on it for two years waiting for it to move. When a stock gets overvalued, and the investor sells he may watch the stock double or even triple after he sells because of valuation.

    I think you are just defending a convention. Conventional wisdom is always conventional (I want to belong to the big, successful group) but very rarely wise.

    So, I don't believe in your logic. Why should I participate in this thinking. I believe it is a false prayer. As with any discipline or learning, it has value as a discipline, as does technical analysis have value as a learning discipline.

    In a bull market, when all boats are lifted by the tide, fundamental analysis seems like the law. Investors apply the rules of fundamental analyis to stocks, and stocks go up, and investors believe there is a causal relationship between their religion and the wealth-results. But in the Bear Market, that faith breaks down. So get ready.

    I use technical analysis to try to view, directly, the struggle between FEAR AND GREED in a specific stock. At the moment, in AA, there is more FEAR than GREED. That is what I'm saying. Your fundamental positives are all weighed on the GREED side; but there are more FEARS about future fundamentals and about macro liabilities (the strong dollar being one).

    Technical analysis is also mathematical. But it is more about measure psychology than about measuring the body.
    Mar 19, 2015. 05:10 PM | 1 Like Like |Link to Comment
  • This Is Not The Same Alcoa [View article]
    "Very negative": negative from what perspective? From the perspective of prosperity and comfort which you probably think is or should be the eternal condition. Read my description below.

    Prosperity and comfort is a passing stage, and certainly is not meant to be perpetual. Clinging to riches in perpetuaity is, from the spiritual perspective, a sign of sin and of coming damnation. I believe that greed is a negative. I believe that love of wealth, in perpetuity, becomes also a negative.

    From the spiritual perspective, worldly wealth, power and sensual pleasure is a negative, for it traps you in the false world, the world of illuson, where glamor misleads you. From the spiritual perspective, our world is evil; and is a temptation for the soul.

    I mention this to remind you that 'negative' is a relative judgment. It really depends upon which side of the circle you are standing, which world and judgement appears to be positive and which negative.

    From the spiritual perspective, the material world is evil, negative, and dangerous to the soul. From the material perspective, the spiritual world, is evil, negative and dangerous to one's life.

    To the material world, materialism is life and the world of spirits death. To the spiritual world, materialism is death and the world of the spirits life.

    I won't say any more. If you want to hear more about the spiritual world, I will be glad to share; if not, please think about this idea of perspectives the next time you want to judge someone's views as being negative.
    Mar 19, 2015. 03:31 AM | Likes Like |Link to Comment
  • This Is Not The Same Alcoa [View article]
    The 'mistakes' of the past were not mistakes. When Financial Winter hits, all the structures get taken down, financial, political, social, etc. Yes, armageddon, in a sense. The old world will be destroyed; and a new world will be quickly built, out of the chaos.

    I'm not saying AA will necessarily underperform. When the Bear Market does hit -- it the FED allows the dollar to appreciate -- then AA will go down, and so will nearly everything else. We've been spoiled by a FED that sees its duty to protect investors. The FED's job is to lead the economy through periods of expansion (the business cycle), 1983-2001, the SPENDING CYCLE, for example, and then lead the economy through the SAVING CYCLE, which is nothing like the SPENDING CYCLE, is the opposite of the SPENDING CYCLE, with higher rates and the destruction of bad debt. The Spending Cycle was supposed to run from 2001-2019. However, FED 'intervention" has kept us from completing task of the SAVING CYCLE, which includes destruction of debt and generation of a nest-egg through interest rate gainst to be used as fuel for the nest expansion. As Japan shows, if you trick nature by protecting debt instead of destroyingn it, you don't get financial rebirth. And we are heading down the same road that Japan has taken -- so we will probably get a similar result.

    As bad as the armageddon in the 1930's was, we didn't die from it; we were reborn.

    The world that was created in the SPENDING CYCLE of 1911-1929 was destroyed from 1929-1947. THE world that was created in the SPENDING CYCLE of 1947-1965 was destroyed from 1965-1983. The world that was created in the SPENDING CYCLE of 1983-2001 is being destroyed from 2001-2019 -- against the worst intentions of the central banks. The plan is that worlds will be created and destroyed and re-created in the interest of evolution -- each new world is a little better model that the world that preceded it.

    The FED believes it can trick Nature by 'extending the Business Cycle' through the SAVING CYCLE by 'borrowing' or 'printing' extra money (stolen) from the future so we won't have to go through the pain of the Bear Market. That is folly, as we are about to discover. It is folly; and it also works against the Law of Nature, that uses the Winter Season as a force for evolution.

    Seasons are not 'mistakes'. The economy grows, gives its harvest, and then goes dormant during the Winter of the Economy. And we have to learn to deal with this, We don't like it. It makes us poor. We want to always be rich. We are like spoiled children. We want everything easy. But we don't get everything easy. We get tested by Winter. We get to rediscover our Souls during Winter. There is a plan to all of our earthly experience, a plan beyond all the food you can eat, all the pleasure you can experience, all the comfort you can manage. The Spirit and Soul become lazy and weak with too much comfort. So the Winter seasons are built in to the system to keep us from becoming too weak and too lazy, like the Romans before the barbarians appeared.
    Mar 19, 2015. 03:10 AM | Likes Like |Link to Comment
  • This Is Not The Same Alcoa [View article]
    If the Dollar keeps appreciating it will bring deflation to the world. Why did the FED spend trillions to sink the Dollar in QE's and ZIRP programs and policies. Because the Dollar kills inflation. If you want to grow debt, you attack the Dollar. But the Dollar has its own life. It was strong in the early 1980's and the result was the Latin American and Mexican default crisis. It was strong 1998-2002: Asian Crisis, Russian Default Crisis, Nasdaq Bubble Bursts; it was strong in 2008-9: global economy collapse.

    What the world NEEDS but does not necessarily want is the destruction of the global debt bubble. Debt needs to be wiped out everywhere, through default, bankkruptcy, or payment. The world is stuck now -- it can't get back to zero, without help from a strong Dollar. But twe are afraid of this experience, because it will be painful and frightening. But it is what we need.
    Mar 19, 2015. 02:56 AM | Likes Like |Link to Comment
  • Santa Klaus Is Coming To Town For Alcoa [View article]
    Me too, Gedankonomist: I just bought puts on AA, expire in October or November.

    Love the way the chart looks at this point. Looks to be going much lower, especially with strong dollar hammering it.
    Mar 18, 2015. 05:19 AM | Likes Like |Link to Comment
  • This Is Not The Same Alcoa [View article]
    I think AA will be under 8 in the next 2-3 months.

    The bull market is over. The strong Dollar is going to execute the Bull. (The Weak Dollar creates the Bull; the Strong Dollar executes the Bull.)
    Mar 18, 2015. 01:11 AM | Likes Like |Link to Comment
  • This Is Not The Same Alcoa [View article]
    TECHVET: No I mean "The strong dollar...just started a bull market."

    The bull market in the US Dollar just began, and should last 2-3 more years.
    Mar 17, 2015. 02:32 PM | Likes Like |Link to Comment
  • This Is Not The Same Alcoa [View article]
    Stimulus has been ongoing in Europe and China since 2009. The strong dollar will eat them up and spit them out.
    Mar 17, 2015. 01:15 PM | Likes Like |Link to Comment
  • This Is Not The Same Alcoa [View article]
    AA is crashing. Buy put options of at least 6 months duration. Expect a 30-50% decline.

    The strong Dollar is a Deflation Machine. And it just started a Bull Market. See what it has done to oil and commodities. This is just the beginning.
    Mar 17, 2015. 03:10 AM | 1 Like Like |Link to Comment
  • Update: Alcoa Earnings Crush It Once Again Thanks To The US Dollar [View article]
    Maybe their gig is up. Maybe everyone knows how they are inflating earnings.
    Jan 15, 2015. 02:29 PM | Likes Like |Link to Comment
  • Update: Alcoa Earnings Crush It Once Again Thanks To The US Dollar [View article]
    Generally, a strong dollar hurts all US companies with strong operations overseas. This artlcle explains why:

    From that article:

    The effects have not been restricted to companies in the consumer space: IBM on Monday said it expected dollar appreciation to have a significant impact on its fourth quarter and 2015 results - one more negative element in a generally gloomy earnings report.

    And United Technologies Corp on Tuesday cited the stronger U.S. currency in cutting its full-year profit forecast for its Otis elevators division, which generates a large chunk of its business outside the country, by about $50 million.

    The U.S. dollar index, which measures the value of the greenback against a basket of currencies made up of United States' major trading partners, rose 7.74 percent in the third quarter.

    A one percentage point move in the dollar typically translates to a two percentage point impact on earnings, said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.


    Corporations are having to adjust to a new environment after more than a decade of enjoying the benefits of a relatively weak dollar on their earnings, analysts said. That means investors can expect more changes to guidance going forward.
    Jan 13, 2015. 08:26 PM | Likes Like |Link to Comment
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