Growing Evidence That The Upturn Is Upon Us
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Government makes £1bn paper profit as market bets on healthy RBS figures
The Government made a £1 billion paper profit on its 70 per cent stake in Royal Bank of Scotland yesterday on growing optimism that the lender will follow Lloyds today in predicting that the worst is over for the economy. But RBS, the UK’s biggest bank in balance-sheet terms, is likely to adopt a more cautious tone than Lloyds. It will probably say that it has broken even for the six months to June 30, with strong profits in its investment banking business wiped out by losses in the retail and corporate bank. RBS’s shares surged 10 per cent, closing up 4.75p at 53.45p. The Government took a stake worth £20 billion in RBS in October to prevent its collapse. Last night, that holding was worth £21.2 billion.
And I still stand by it, BTW ... That within 5 years from now we'll see $200 a barrel oil. If you think that last years oil spike was a once-off that's history now then explain why oil isn't trading at $20 right now - that should be the middle-of-big-recession price, not $60-70.
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And I still stand by it, BTW ... That within 5 years from now we'll see $200 a barrel oil. If you think that last years oil spike was a once-off that's history now then explain why oil isn't trading at $20 right now - that should be the middle-of-big-recession price, not $60-70.
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Interesting link of UK Airline stats:
http://www.caa.co.uk/docs/80/ERG_Avi...ds_Q1_2009.pdf
Disagree on $200 oil (and I mean in real terms, so with the exception of whether inflation takes us there), as on so many levels the $150 oil market last year was driven by speculative flows and not real demand. The market was in backwardation due to many people storing oil and creating short-term squeezes in supply, yet long-term there was a supply surplus.
Oil usage in the West is also a declining phenomenom. It is not particularly troublesome that supplies are declining as less is used per unit of output, and higher prices signal great capex, resulting in extraction of more difficult-to-extract oil in the long-term (eg oil sands).
A useful chart of oil prices in real terms (ie inflation is eliminated):
http://www.wtrg.com/oil_graphs/oilprice1947.gif
Read this to understand a little: Contango - Wikipedia, the free encyclopedia
http://www.caa.co.uk/docs/80/ERG_Avi...ds_Q1_2009.pdf
Disagree on $200 oil (and I mean in real terms, so with the exception of whether inflation takes us there), as on so many levels the $150 oil market last year was driven by speculative flows and not real demand. The market was in backwardation due to many people storing oil and creating short-term squeezes in supply, yet long-term there was a supply surplus.
Oil usage in the West is also a declining phenomenom. It is not particularly troublesome that supplies are declining as less is used per unit of output, and higher prices signal great capex, resulting in extraction of more difficult-to-extract oil in the long-term (eg oil sands).
A useful chart of oil prices in real terms (ie inflation is eliminated):
http://www.wtrg.com/oil_graphs/oilprice1947.gif
Read this to understand a little: Contango - Wikipedia, the free encyclopedia
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Hyperinflation and massive Interest Rates for 2014 - someone print that and put it on their office wall and call me back on it 5 years on!
Rates up for sure (depending upon QE exit), but hyperinflation just won't happen. It is a myth that generating inflation will allow governments to exit their debt responsibilities quicker, as debt rollover is constant, not at one point in the future (as is the case for homeowners).
I would also estimate that the rate rises would be earlier - perhaps 2012-13, and at that point they realise they need to get out of QE extremely quickly.
I am in full agreement with you about the pit we have yet to reach though. My earlier posts are clear!
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Oil at $200 in real terms is not going to happen for quite a while because it will induce a global economic collapse just as sure as 20% interest rates or another freezing of the money markets would. When the inevitable terminal nosedive in middle east production gathers momentum you'll see 200 for sure, but 5 years? - the people I know who are paid to know that stuff dont think it will happen on that timescale.
The casinos that own oil storage are playing a longer game - the feeding frenzy that was going on in 07/08 and got us to 150 was driven largely by 'tards hearing that the oil price is going up due to increased chinese consumption+constrained supply and putting their savings into commodity funds ... way too late ... both the boom and the bust were inevitable.
Backwardation? - it was hypercontango that killed all the morons that piled into commodity funds 3-4 years too late believing that oil would get to $200 by now - the funds dont have physical storage - they play the futures market and cash settle, hence in the feeding frenzy futures prices were running way ahead of spot. Come the value date(s), spot was falling due to supply rapidly easing (thanks to the recession) and the funds and their 'tard investors got absolutely spanked, and deservedy so. They completely missed the point that spot is driven by real supply and real demand - or they just didnt understand what they were buying into.
The casinos that own oil storage are playing a longer game - the feeding frenzy that was going on in 07/08 and got us to 150 was driven largely by 'tards hearing that the oil price is going up due to increased chinese consumption+constrained supply and putting their savings into commodity funds ... way too late ... both the boom and the bust were inevitable.
Backwardation? - it was hypercontango that killed all the morons that piled into commodity funds 3-4 years too late believing that oil would get to $200 by now - the funds dont have physical storage - they play the futures market and cash settle, hence in the feeding frenzy futures prices were running way ahead of spot. Come the value date(s), spot was falling due to supply rapidly easing (thanks to the recession) and the funds and their 'tard investors got absolutely spanked, and deservedy so. They completely missed the point that spot is driven by real supply and real demand - or they just didnt understand what they were buying into.
To ReHeat and Penguin - I know the market is not what most people think it is and I thank you for sharing informed opinion. This thread exists, at considerable length and effort, in order to provide Joe Wannabe with an informed caution argument.
Hyperinflation is still me call thus I am buying assets. From ride on mowers, to oil futures, to gold, to land, to reliable second hand cars. In the inflation rampant world - they were all cheap...
WWW
Hyperinflation is still me call thus I am buying assets. From ride on mowers, to oil futures, to gold, to land, to reliable second hand cars. In the inflation rampant world - they were all cheap...
WWW
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WWW - I'm not in the deflation camp - I think that is b*ll*cks. I just don't buy oil at 200 in 5 years. I have a friend who works for Shell in Canada who was worried about her job prospects when oil crashed - I told her that Shell know very well that it will be back > 100 within 5 years.
You're obviously shrewd and you're a big boy unlike the incomprehensible text speak yoof unintelligentsia on this board (who should never be allowed anywhere near a cockpit). Still, I advise you to be careful with futures - you can make the right directional call and still haemorrhage margin to the point where you get stopped out in a dip/spike, and then watch with horror as the underlying px goes exactly where you thought it was going. You need big enough balls and wallet to withstand potential adverse margin calls AND be right about the timing of the move you called.
When Sterling/Dollar a.k.a. 'cable' last hit 2.00 I thought it was a no-brainer, and of course it bl**dy was, but I wasnt prepared to bet on the timing of the break so instead of buying futures I rang FD and opened a USD holding account. I made an absolute killing in 6 months - but it could easily have taken much longer and thats a problem if your futures expire before the break happens.
Now with oil you cant do that - unless you own oil storage facilities, so if you're sure about 200 why dont you go long calls at 150? I don't have Bloomberg Pro anymore so I'm semi-guessing when I say that's probably out of the money for contract dates within the next 3 years at least and if that is the case those calls will be cheap. There's no margin - but you're risking every cent of the option premium you put up. If spot is below 150 on the underlying futures maturity date you're out of pocket. For every $ over 150 your payoff gets bigger - if its >=200 you can probably retire to Sandbanks before you hit 40
You're obviously shrewd and you're a big boy unlike the incomprehensible text speak yoof unintelligentsia on this board (who should never be allowed anywhere near a cockpit). Still, I advise you to be careful with futures - you can make the right directional call and still haemorrhage margin to the point where you get stopped out in a dip/spike, and then watch with horror as the underlying px goes exactly where you thought it was going. You need big enough balls and wallet to withstand potential adverse margin calls AND be right about the timing of the move you called.
When Sterling/Dollar a.k.a. 'cable' last hit 2.00 I thought it was a no-brainer, and of course it bl**dy was, but I wasnt prepared to bet on the timing of the break so instead of buying futures I rang FD and opened a USD holding account. I made an absolute killing in 6 months - but it could easily have taken much longer and thats a problem if your futures expire before the break happens.
Now with oil you cant do that - unless you own oil storage facilities, so if you're sure about 200 why dont you go long calls at 150? I don't have Bloomberg Pro anymore so I'm semi-guessing when I say that's probably out of the money for contract dates within the next 3 years at least and if that is the case those calls will be cheap. There's no margin - but you're risking every cent of the option premium you put up. If spot is below 150 on the underlying futures maturity date you're out of pocket. For every $ over 150 your payoff gets bigger - if its >=200 you can probably retire to Sandbanks before you hit 40
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You're right - much is cheap right now, but be careful on futures as Penguin says.
All I can guarantee is that few of us will be 100% right in life; thus informed debate is key. However, I would be willing to bet that if $200 oil arose, it would only be as a result of inflation taking us there as I allude to above (an not of the hyper variety).
Gold - careful, as it is already in bubble-land
Oil - careful, as prices are derived from ton-mile demand and location of extraction. It is not quite the homogenous asset that land is...
Wannabes - still, don't start training for at least another year!!
All I can guarantee is that few of us will be 100% right in life; thus informed debate is key. However, I would be willing to bet that if $200 oil arose, it would only be as a result of inflation taking us there as I allude to above (an not of the hyper variety).
Gold - careful, as it is already in bubble-land
Oil - careful, as prices are derived from ton-mile demand and location of extraction. It is not quite the homogenous asset that land is...
Wannabes - still, don't start training for at least another year!!
Last edited by Re-Heat; 8th Aug 2009 at 11:29.
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Wannabes should not borrow money for training, period. Even if you get a job the financial payoff is just not there but the interest sure will be. Work first, fly later.
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Mortgage lending hits 11-month high in June
Mortgage lending rose by 23 per cent in June, further bolstering hopes of an upturn in the battered British housing sector. The Council of Mortgage Lenders (CML) said that the number of loans made to homebuyers hit an eleven-month high of 45,000 in June up from 36,500 in May. The value of loans made surged 26 per cent on May, to £5.9 billion. Paul Samter, economist at the CML, said there had been a "welcome increase in transactions" helped by low interest rates and "realistic" selling prices.
Heathrow, the world’s busiest international airport, enjoyed its third busiest month on record during July, providing hope that demand for air travel is recovering. BAA, the airports operator owned by Ferrovial, the Spanish infrastructure group, said that Heathrow had handled 6.5 million passengers in July, an increase of 0.9 per cent on the same month last year. The rise in passenger traffic came despite a 3 per cent fall in the number of flights from the airport. A BAA spokesman said that aircraft were taking off with fewer empty seats because of fare reductions and because poor weather had encouraged people to take holidays abroad.
Sorry for the delay - lying in the garden most of the day thinking about mowing the lawn, glorious weather for a change and all that.
Sorry to say that you shouldn't get excited by the weekly spin put out by the Council of Mortgage Lenders (the clue is in their title). In a normal non-crashed market an average month sees about 75,000 housing transactions. Higher in the summer and lower in the winter but about that level as an average.
To be in July with base rates at 0.5% and still only be managing 45,000 transactions is pathetic and perfectly illustrates a crashed market state. Just because they fell to the mid 30's before slowly climbing to the mid 40's means very little. How's your FTSE tracking ISA looking? Good for the last month. Dire for the last two years. Torture statistics long enough and they'll tell you anything.
In the last early 1990's crash you had months when prices rose. Sometime sharply. Sometimes for several months in a row. But they fell more than they rose for three straight years after the initial crash. This chart shows how it looked in terms of monthly fall and rises for UK property over three years post crash:
We've had a brutal 25% fall. Now we'll have several years of drifting down. Then a period of failing to keep up with inflation so a fall in house prices in Real Terms. Then housing will start to outperform as an asset and then it will do well again. I'll let you into a secret as to how I know.. I checked the history of all the previous house price crashes.. cheeky, I know.
Oh, and one other thing, house prices have never ever ever gone up whilst unemployment is rising. Given even Gordon in his bunker admits unemployment is set to surge upwards over the next 18 months then is it different this time?
I wouldn't have a clue about Heathrows monthly passenger numbers. Never been there and hopefully never will. Could mean anything. Though seeing as its biggest airline BA is losing over £2,000,000 a day I would again urge you to suppress any champagne celebrations a while longer.
WWW
Sorry to say that you shouldn't get excited by the weekly spin put out by the Council of Mortgage Lenders (the clue is in their title). In a normal non-crashed market an average month sees about 75,000 housing transactions. Higher in the summer and lower in the winter but about that level as an average.
To be in July with base rates at 0.5% and still only be managing 45,000 transactions is pathetic and perfectly illustrates a crashed market state. Just because they fell to the mid 30's before slowly climbing to the mid 40's means very little. How's your FTSE tracking ISA looking? Good for the last month. Dire for the last two years. Torture statistics long enough and they'll tell you anything.
In the last early 1990's crash you had months when prices rose. Sometime sharply. Sometimes for several months in a row. But they fell more than they rose for three straight years after the initial crash. This chart shows how it looked in terms of monthly fall and rises for UK property over three years post crash:
We've had a brutal 25% fall. Now we'll have several years of drifting down. Then a period of failing to keep up with inflation so a fall in house prices in Real Terms. Then housing will start to outperform as an asset and then it will do well again. I'll let you into a secret as to how I know.. I checked the history of all the previous house price crashes.. cheeky, I know.
Oh, and one other thing, house prices have never ever ever gone up whilst unemployment is rising. Given even Gordon in his bunker admits unemployment is set to surge upwards over the next 18 months then is it different this time?
I wouldn't have a clue about Heathrows monthly passenger numbers. Never been there and hopefully never will. Could mean anything. Though seeing as its biggest airline BA is losing over £2,000,000 a day I would again urge you to suppress any champagne celebrations a while longer.
WWW
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Maybe I'm just lucky. I have just completed the sale of my house and made a 39% "profit" in a little under 6 years. It took 10 weeks to sell, made the asking price and was valued at 7% less than 18 months ago. I know it isn't exactly a meteoric return compared with the past, but I don't think I'm crying too much over it.
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Sorry for the delay - lying in the garden most of the day thinking about mowing the lawn, glorious weather for a change and all that.
Nice to see in recessionary times some are living it large. You may spout off all your economic mumbo-jumbo but I'm getting on just fine. Thanks for wreckin' me head though! Scratching it here thinking "am I thick?" or "does some man on a distant land just like talkin'
"? Where do you get all the figures though? They mustn't work you half as hard as they should in your airline if you have such time to consider all the reports you apparently read.
Good old copy and paste a new story,
BBC NEWS | Business | Fed says worst of recession over
"Fed says worst of recession over"
I'm inclined to believe that, however aviation is a different matter. Look at pilot recruitment to increase in 2011, I don't hold out hope to be pulled from the hold pool until then.
BBC NEWS | Business | Fed says worst of recession over
"Fed says worst of recession over"
I'm inclined to believe that, however aviation is a different matter. Look at pilot recruitment to increase in 2011, I don't hold out hope to be pulled from the hold pool until then.
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Cows_Getting_Bigger ... you were very lucky to be living in Scotland.
I sold my 5 bed detatched in the 'saarf daahns' in Nov 2008. Bought it new in Jun 2002 - not peak of the market. Didn't make a cent on it over 6 years. If I'd sold it 1 year earlier I might have made 30-35% but we weren't looking to move at that point. The people 2 doors away still cant sell theirs (been on the market 16 months now) despite knocking 75k off the price.
Factor in maintenance and cost of carry and its pretty obvious I got spanked. Lucky I made 80% in 4 years on the previous one otherwise I'd be in the poor house now instead of at the beach
.
I sold my 5 bed detatched in the 'saarf daahns' in Nov 2008. Bought it new in Jun 2002 - not peak of the market. Didn't make a cent on it over 6 years. If I'd sold it 1 year earlier I might have made 30-35% but we weren't looking to move at that point. The people 2 doors away still cant sell theirs (been on the market 16 months now) despite knocking 75k off the price.
Factor in maintenance and cost of carry and its pretty obvious I got spanked. Lucky I made 80% in 4 years on the previous one otherwise I'd be in the poor house now instead of at the beach
.
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FYI, as of today, been announced that France and Germany are no longer in recession, something like 0.3% growth. The GDP figure to be announced.
The UK will take a while longer, but the light is emerging at the end of the tunnel, or is that a 747?
The UK will take a while longer, but the light is emerging at the end of the tunnel, or is that a 747?
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Hmmmm.
The light at the end of the tunnel is a beacon guiding us into the next and longer tunnel. Sorry. Wishful thinking abounds at the moment, which is normal. But the pundits who called this recession believe it has a long way to run.
And the majority who missed seeing this one coming are those who are saying it is over, and all is well.
Not a chance. Hold tight, and do not spend money on type-ratings, line-training, or even fATPL courses. Trust me.
And the majority who missed seeing this one coming are those who are saying it is over, and all is well.
Not a chance. Hold tight, and do not spend money on type-ratings, line-training, or even fATPL courses. Trust me.
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I agree, our turbulence will last a bit longer. I'm in no hurry, still progressing with Atpl but will wait for times to improve significantly before completing it. Things will improve, just got to be patient and not let impatience be your weakness.
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What might be the "light at the end of the tunnel" may not be the landing lights of a 747, it could easily be car headlights rushing toward you, or equally the light on the front of Gordon Brown's economic bicycle...
bear in mind...
"time to pay off part of their £1.4trillion debt mountain, while the Government raises taxes"
"King warned that banks may further reduce the supply of loans to firms and households as they rebuild their own finances; ... 'the recession appears to be deeper' than the Bank's own Monetary Policy Committee thought likely at the time of their report in May."
"joblessness has soared to its highest level since 1995. The Bank of England predict the level of unemployment will carry on rising 'for some time'"
"'Mervyn King has once again underlined how hopelessly optimistic the Government's assessment of the length and depth of the recession really is."
"in a further blow to the Government's credibility, the Bank said that this year's downturn will be even sharper than previously expected, with gross domestic product tumbling around 4.4 per cent, according to the Bank's forecasts.. That is significantly worse than the Treasury's 3.75 per cent worst-case scenario, again suggesting Chancellor Alistair Darling's March Budget forecasts were far too optimistic"
"Mervyn King warned that the recession is 'deeper' than officials feared and the 'mayhem' caused by bank meltdown will do far-reaching damage to the economy... the Bank predicted only a 'slow and protracted' recovery in which redundancies will soar further and more firms will go bust. "
Don't break out the bubbly and race off to an integrated course just yet !
bear in mind...
"time to pay off part of their £1.4trillion debt mountain, while the Government raises taxes"
"King warned that banks may further reduce the supply of loans to firms and households as they rebuild their own finances; ... 'the recession appears to be deeper' than the Bank's own Monetary Policy Committee thought likely at the time of their report in May."
"joblessness has soared to its highest level since 1995. The Bank of England predict the level of unemployment will carry on rising 'for some time'"
"'Mervyn King has once again underlined how hopelessly optimistic the Government's assessment of the length and depth of the recession really is."
"in a further blow to the Government's credibility, the Bank said that this year's downturn will be even sharper than previously expected, with gross domestic product tumbling around 4.4 per cent, according to the Bank's forecasts.. That is significantly worse than the Treasury's 3.75 per cent worst-case scenario, again suggesting Chancellor Alistair Darling's March Budget forecasts were far too optimistic"
"Mervyn King warned that the recession is 'deeper' than officials feared and the 'mayhem' caused by bank meltdown will do far-reaching damage to the economy... the Bank predicted only a 'slow and protracted' recovery in which redundancies will soar further and more firms will go bust. "
Don't break out the bubbly and race off to an integrated course just yet !
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Guys,
I thought I would bullet point a few "Outlooks" from the CX Investor Meeting Document.
Cost saving initiatives (cont’d)
•Others
•Implementing a hiring freeze and offering voluntary unpaid leave
•Negotiation with manufacturers to defer deliveries of new aircraft
•Review of aircraft leases that expire
•Deferred completion of cargo terminal from 2011 to 2013
•Pushed back capital expenditure, eg. airport lounge renovations in HKG and LON
•Landing charges: various reductions at airports around the world including 10% in Hong Kong for 2009
Outlook
•General market
•Airline industry faces continued turmoil due to economic downturn.
•Seasonal nature of business means that second half is traditionally better than first half
•H1N1 flu still a threat
•Market capacity is down
Outlook
•Our situation
•Asian economic recovery still uncertain
•Demand and yields seem to have stopped falling but not started to recover
•Fuel has more than doubled in price since early March
•Fluctuations in currency will continue to affect our results
•Cargo prospects a little better due to a slight pick up in demand and reduced market capacity
•Commitment to future expansion
•Have not and will not cut customer-facing spend
•Pledged to keep network integrity intact for both pax and cargo services
Basically, things aren't as bad but still nowhere near good! It is still an uncertain world to live in at the moment. Best advice for any budding pilot is maintain flexibility if you are intent on starting training now (i.e go mod) or work and save for the next 18-24 months before you embark on an Integrated course.
By the way, I thought I would stoke the fire somewhat:
I've hard that the CAA will increase costs in the next couple of years for Integrated FTOs so an integrated course will cost even more. Apparently though, the loop hole around this is as long as an FTO has an "office" in another country, it can be approved by that country's own Aviation Authority.
Am I spouting BS?
I thought I would bullet point a few "Outlooks" from the CX Investor Meeting Document.
Cost saving initiatives (cont’d)
•Others
•Implementing a hiring freeze and offering voluntary unpaid leave
•Negotiation with manufacturers to defer deliveries of new aircraft
•Review of aircraft leases that expire
•Deferred completion of cargo terminal from 2011 to 2013
•Pushed back capital expenditure, eg. airport lounge renovations in HKG and LON
•Landing charges: various reductions at airports around the world including 10% in Hong Kong for 2009
Outlook
•General market
•Airline industry faces continued turmoil due to economic downturn.
•Seasonal nature of business means that second half is traditionally better than first half
•H1N1 flu still a threat
•Market capacity is down
Outlook
•Our situation
•Asian economic recovery still uncertain
•Demand and yields seem to have stopped falling but not started to recover
•Fuel has more than doubled in price since early March
•Fluctuations in currency will continue to affect our results
•Cargo prospects a little better due to a slight pick up in demand and reduced market capacity
•Commitment to future expansion
•Have not and will not cut customer-facing spend
•Pledged to keep network integrity intact for both pax and cargo services
Basically, things aren't as bad but still nowhere near good! It is still an uncertain world to live in at the moment. Best advice for any budding pilot is maintain flexibility if you are intent on starting training now (i.e go mod) or work and save for the next 18-24 months before you embark on an Integrated course.
By the way, I thought I would stoke the fire somewhat:
I've hard that the CAA will increase costs in the next couple of years for Integrated FTOs so an integrated course will cost even more. Apparently though, the loop hole around this is as long as an FTO has an "office" in another country, it can be approved by that country's own Aviation Authority.
Am I spouting BS?