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3/31/2017 1:06:11 PM Eastern Time

Meandering Market Surging Manufacturing
By Charles Payne, CEO & Principal Analyst

 Click here to download PDF version

While the market meanders out of the fourth quarter, understand that this has been a great quarter.  In fact, this quarter marks the sixth straight winning quarter, a feat last accomplished during the fourth quarter of 2006.   I think all the pieces are in place for this party to continue and a lot centers on the rebound in manufacturing.  Today we got amazing news from the National Association of Manufacturers on optimism among their ranks.  

Not only did the headline number come at all-time record but the “right track” number surged to 59.9% from 25.7% quarter to quarter.  By the way I’m interviewing Jay Timmons the head of NAM tonight on Making Money w/ Charles Payne Fox Business 6 PM.

Manufacturing Renaissance

According to the Bureau of Labor Statistics there were 364,000 manufacturing job openings in January up more than 40,000 from last October.  There is a problem, however, and it is all about skills.

Last month manufacturers in the Philadelphia area were asked supplemental questions during the Fed survey and their replies were eye-opening.  More than 60% say they have a labor shortage and 68% point to a skills mismatch.

But what’s even more amazing is the skills mismatch isn’t about computers, heck, they say basic reading and writing are bigger challenges but it’s the ability to actually use the machines and tools.

What makes this remarkable is that 88% of these jobs that are out there right now can be had without a college degree. 

Here’s the bottom line and it is great news- you need skills but you don’t need a couple hundred thousand in debt or to put off having a family.  In fact, Michael Bloomberg put it best when as mayor of New York City he began transforming schools for technical careers stating: “College isn’t for everyone, but education is.”

The problem is America gave up on the German style industrial education a long time ago and people that have lost jobs feel hopeless.  That’s changing fast.  There are organizations like the Louisiana Economic Development (LED) program that works to develop nine areas of economic development including technical training. 

If you are against government being involved in any training consider that Nevada taxpayers are ponying up $750 million for a football stadium and US taxpayers forked over $41 billion for Ivy League tuitions from 2010 to 2015.  I think it’s smart for states to look into programs like LED.

Image result for las vegas football stadium

Finally, businesses need to step up and make the investment as well since only 54% are retraining existing staff and 29% are aligning with educational organizations on technical curriculum.

The great news is we are on the cusp of a Manufacturing Renaissance. We must seize the moment. 

Long Idea: ALCOA INC (AA) @ $34.58
Industry: Industrial; Metals & Miners
Click here to view the trading alerts that followed this recommendation

Trading Parameters
Status Closed
Entry Price$34.58
Entry Limitsee comments
Stop LossN/A
Target$41.50


Options Trade Parameters
Status Closed
Type Call
Option Symbol AA170721C000
Entry Price $3.20
Strike Price $35.00
Expiration Date 7/21/2017
  Add to Position Tracker

BACKGROUND: Alcoa Corporation, formerly Alcoa Upstream Corporation, is engaged in the production of bauxite, alumina and aluminum of various cast and rolled products. The Company is engaged in the production and management of aluminum and alumina combined through its participation in various aspects of the industry, such as technology, mining, refining, smelting, and recycling. The Company's segments include Bauxite, Alumina, Aluminum, Cast Products, Energy and Rolled Products. The Company's Bauxite segment represents its global portfolio of bauxite mining assets. The Company's Alumina segment represents its refining system across the world, and processes bauxite into alumina and sells it directly to internal and external smelter customers across the world. The Company's Aluminum segment represents its smelter system across the world. Its Energy segment represents its portfolio of energy assets, with power production capacity of approximately 1,685 megawatts.

SKINNY: Alcoa Corporation (AA) breaks out @ $34.80 and through there we see room to $41.50.


Key Fundamentals
PEG  -0.23
Book Value  30.91
Institutional Holdings  0
Price/Sales  0.68
Average Daily Volume  4.51M
Shares Outstanding  184.21M
Market Value  6.37B
Insider Activity  
52-week High  39.78
52-week Low  20
Annual Earnings Estimate  2.72

Analyst Coverage
 Berenberg Upgraded to  HOLD
 Goldman Upgraded to  BUY
 BofA/Merrill Upgraded to  BUY



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