AIR's been going up steadily - not sure if it's ready to land yet.
The latest price action is the little down-blip at the end.
Attachment 6343
Printable View
AIR's been going up steadily - not sure if it's ready to land yet.
The latest price action is the little down-blip at the end.
Attachment 6343
Ebola Concern
Risk as previously mentioned appears all to the downside. My read on the Ebola situation after spending countless hours watching CNBC overnight is the American health care system is NOT well equipped to handle an outbreak, (Trust us we are well prepared) YEAH RIGHT, risks abound in other parts of the globe and all the indications are there is a very real and present danger of a world-wide pandemic. Cleaners in particular are starting to ask, we aren't paid to take this sort of risk, (cleaners in hospitals and aircraft). Its easy to see a labour revolt causing major problems down the track for airlines and hospitals among other institutions.
American airlines fell in steep decline steadily overnight with Delta and united for example down a whopping 6 and 7 % respectively.
It is not my intention to be alarmist but after switching my radar to long range and turning up the sensitivity to maximum this Ebola thing looks like a very real concern. The American airlines, (despite enjoying oil prices at 2 year lows), are now down over 20% in just one month so anyone who thinks this is trivial might like to reconsider. I feel it is the right thing to do to post my concerns seeing I have been positive on this stock in the past.
Economic conerns
Further we have major concerns regarding the N.Z. economy with a $5-7 billion hole opening up in the Dairy industry with little prospect for a near term recovery. In addition we have the weakening situation in Europe, China, America
I like AIR and its management and they are in a very strong position to withstand a bad storm on this front but I have decided to ground myself temporarily and watch the turbulence from the sidelines.
The exchange rate is a very minor concern compared to the above two factors.
Obviously somewhat mitigating above concerns is the cheaper oil price, how long that lasts is anyone's guess.
When the storm is over i'll be very keen to be back in.
You must have taken a good hit on your sale Roger.Lol
Taken it on the chin mate. Airlines are cyclical, something no investor should ever forget.
Dow airliners indices 6% down, put to the Ebola situation, which one would imagine it becomes clearer and out of the media spot light AIR and other airliner pick up some pace and head for the green. Its not just AIR that has been hit recently, all alrliner have been.
Also please note that Saudi oil suppliers have stated overnight they are happy to continue supplying oil between $80-90 USD/barrel, which is a gold mine for any air liner. I expect a solid tick up once Ebola is removed from the headlines.
ED: Just saw you already posted the 7% Dow airliners, ha I'm too slow ;D
When is the next oil hedging update due out guys?
Agreed that oil is helping and could do for some time http://www.cnbc.com/id/102082753?trk...ack:topnews:18
Interesting take on Sauid's new position which appears to be to accept lower prices, trying to squeeze out shale and fracking production ???
Spain's actions to contain Ebola also cause concern
http://www.cnbc.com/id/102080089
It will most defiantly be hurting US fracking operations, look at the oil sector for the past 90 days over there its been softening.
OPEC have a conference with all the oil leaders next month I believer, will be interesting to see if they reduce supply to try reinstate back towards $100/barrel - but with the Saudi's doing this, who knows?
Certainly will be. I heard it takes about $10 a barrel to get Canadian shale transported to market which is something that could be crucial going forward, more pipelines needed.
Some Opec members are very unhappy, one in particular
http://www.cnbc.com/id/102078794
Saudi's seem fairly aggressive
http://www.cnbc.com/id/102078717
The low oil price will he hurting Russia that's for sure which apparently needs $100 oil to balance its budget.
Nothing to do with the cycle, just plain fear in markets at present. There is a lot of hype around ebola in the US press, but really its just that the market (in the US), got a little expensive after a great run, and we are seeing investors bailing out. As usual its a disorderly exit, with hedge funds etc amplifying volumes, and lemmings/sheep capitulating. The NZ market is not a bad place to hide given our low volumes. AIR is trading down as you would expect, but I wouldn't panic. Outside the currency move I haven't seen anything fundamental to change the outlook, its pure risk-off and short term sentiment driving the move lower.
The US economy will grow slowly, while QE is becoming increasingly likely in Europe as data deteriorates. The UK is healthy. EM is a mixed bag, slower than historic growth, but still decent. Australia is slow but ok, NZ is still humming.
What people forget when the look at dairy prices alone is volume. Last year prices were high because of a drought and low volumes. This year prices are low and volumes are high, no it doens't fully offset, but its not as bad as some suggest. Meanwhile immigration, christchurch, property, and the service economy (most of the economy), is doing fine. Lower oil prices will support the global consumer and the recovery.
I disagree - as does the Airliners index on the Dow. Fundamentally AIR is currently well undervalued (in my an many others view). With the Ebola situation and oil prices trending down I am happy to continue buying in tranches over the next couple of months.
EU is a growing concern of mine and overnight a FED official (unnamed) announced they are holding rates out further which leaves a lot up in the air (excuse the pun).
Disc - Holding and accumulating in trances
Re the oil price and hedging.
Hedging in place puts a floor on brent to AIR at c.$98bbl, which means about $122.5 into wing cost. This is down from c.$128-130 last 6 months. This hedging rolls off progressively over 12 months.
There is an interesting conspiracy theory around that the US and Saudi and conspiring to drive oil price lower, to pressure Russia, but also as a token of thanks for US intervention in Syria. Not sure how much truth to it, but certainly pressure building on OPEC to cut supply.
Nice balanced opinion modandm, the Ebola effect is overstated in my opinion and wont be flavor of the month for that long, sure it will keep ticking away behind the scenes but in general people should be more concerned about catching measels which are highly contagious:cool:
American airlines have indeed had a good year until recently and that's another reason on a flat market overall prudent investors are taking some profits in a risk off environment.
Delta was on a 2015 PE based on consensus analysts forecasts of only 8.6 when it was $33, now under $31. Delta is a fast growing airline and has a strong consensus analysts recommendation but that hasn't stopped it getting a 20% haircut in the last month.
Technically the S&P 500 has broken the 200 day moving average, the volatility index VIX is spiking hard, AIR has broken its 200 day MA...you join the dots or fasten your seatbelt tight and good luck :)
I'll leave you guys in peace for the rest of the day as I'd better do some real work done but final thought, beware the usual late afternoon overseas sellers this afternoon.
Market sentiment often has a lot larger impact on prices than fundamentals. Being worried about ebola and being worried about people worrying about ebola are completely different things. Your criticisms of Roger seem unduly harsh given they're ex ante. I'm sure he'll concede he was wrong if and when prices stabilise/he loses out but at present he's doing what he thinks is right and for that matter exactly what I have done.
I won't lower myself to get into a personal slanging match with a certain person but for the record I really like this company but the headwinds are now something I consider are simply too strong.
This was a very, very carefully considered change in position that I mulled over at great length. I began exiting my position earlier this month and my vwap exit price was $1.944, considerably better than the current prevailing price. Sometimes watching the match from the side-lines and taking a rest to reconsider the optimum point of re-entry is a very good risk mitigation strategy.
Obviously I can buy back in whenever I want and am already ahead of the game so to speak.