Monday, April 6, 2009

Dire wasn't good enough to keep this rally stoked - BA, Air Canada, Airbus

It looks as if common sense has reasserted itself and markets are waking up to the fact that 'dire' data doesn't equate to good data. Sure, some of the numbers last week could have been worse but they sure weren't an excuse for the recent rally to continue. The whole thing has slightly had the feel that the trading desks were getting ahead of themselves. Today's desperate rumours that the Abu Dhabi Investment Authority may buy Opel is a sign that the recession is really biting and that we are segueing into the stage where consumer demand slumps, savings rates soar, and bankruptcies start to appear on the front page of the papers.None of this is good for earnings over the next nine months at least.

I'm still hugely negative on the banks believing that their balance sheets simply aren't stressed to stand the level of corporate and consumer delinquencies that are on the way. We have to see a wave of capital raisings a la HSBC in order for the banking sector to continue to function and that's going to be massively dilutive.

The G20 meeting was great. Nobody promised the earth and the leaders were remarkably sensible in their criticism of protectionism and their mutual agreement not to do too many stupid things. This is a huge result.

The retracement continues to work its course:

BA expects to make a £150 million operating loss in the year to end March '09 and will also take £75 million of redundancy costs. Downward pressure on yields and volumes continues.

Air Canada trans-Atlantic passenger traffic down 15.6% y-o-y

Austrian Airlines is reducing pilots salaries by 8.5% and pension contributions by 75%!

The owner of London's Evening Standard newspaper said he would be cancelling an order for 20 Airbus A-320's following the German Federal Aviation Agency's revoking of the operating license for BluWings.

UK new car sales fell 30.5% in March y-o-y

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