Have just seen the Governor of the Bank of England on Bloomberg. He seems every bit as confused as me. Inflation has 'significant risks in each direction'. Bank capital maybe sufficient - or not. The economy may have troughed and be slowly growing - or not. Doesn't fill me with confidence.The impression I got ( reading my own book ?) was that after the 'massive stimulus' the authorities are still uncertain about the turnaround but are inclined to believe it will be slow and possibly very slow.
If I'm not getting any steer from the powers that be then self reliance in forecasting is the game. The numbers from the airline sector still aren't telling me that the pace of contraction in the economy is letting up. Lufthansa's passenger numbers are down 4.6% in April from year ago levels while cargo volumes are down an eye scorching 26%. Air France-KLM's passenger numbers are down 3.7% while their code share partner Aeroflot has said it plans to amend its 2009 capacity and budget due to falling demand. On top of all this Iberia's management said that they had ' low visibility regarding 2009 full year results' - so no sign of a stabilization there! The hopeful signs that the pace of contraction is slowing simply aren't being seen in business class or discretionary travel within and beyond Europe. The recent hike in oil prices is going to make the business planning for the legacy carriers much more difficult if it is sustained - rising input prices and trough levels of demand make an unholy alliance for any CFO. One airline exec made the comment that although there are some signs that Italy and France might have reached a possible trough in Q1, corporations in the UK are shedding staff at the fastest rate since records began in 1996.
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