Equity markets continued their rally this last week leaving me still on the sidelines. Everyone is rejoicing in the green shoots that are appearing but all I can manage to see is weeds. My former colleagues in investment banking tell me that trading desks are still commiting proprietary capital and that they are being joined at the party by hedge funds freed from redemption fears. Why fight the wall of money? More fool me.
I'd be tempted to think about stepping back into the market ( after all equities are a pretty good hedge against inflation ) but then reality intervenes. This time it was the British Airways April traffic figures. Over thirty years I've found that British Airways is as good an indicator of sentiment in the business market and of the health of the underlying economy as it is possible to get. In April their premium traffic fell a staggering 17.7% - the sixth month in a row of double digit falls. The CEO said he sees no signs of improvement in the economic environment and said that things will deteriorate further before they get better. To make matters worse yields at the airline are also under pressure due to a ferocious discounting war going on among the European carriers.