Market Musings 8/9/11
I was pleased to see a snap-back in equity markets yesterday, with strong performances on both sides of the Atlantic. I haven’t been too surprised by the recent market gyrations – regular readers of this blog know that I’ve been cautioning about extreme volatility in share prices for some time. Hence all of my trades this year have been ‘for cash’, with none on margin.
So what has been grabbing my attention of late? The main items of note are an interesting follow up on Switzerland’s interventions in the FX market, speculation around the Obama jobs announcement, Aer Lingus’ traffic stats and share register, the UK retail sector and assorted macro indicators.
ZeroHedge had an interesting chart following the SNB intervention – “Here is how Switzerland caught up to the rest of the world in devaluing paper currencies against gold“.
President Obama will announce his jobs package later today. Reports suggest that it will cost in the region of $300bn, which works out at over $20,000 for every unemployed American. This is, of course, like many of his administration’s other economic policies, completely unsustainable. I was amused to see a number of Irish commentators praise this sort of Keynesian intervention. Ireland had some similar ‘stimulus programmes’ in the late 1970s that nearly bankrupted the country, so clearly having a poor memory is no obstacle to building a profile in this part of the world.
In terms of what the US should be doing, I can not better the always-excellent Jill Kerby, who writes:
“America’s jobs crisis will solve itself when debts are cleared, budgets balanced & competitiveness restored. A long haul…”
(Disclaimer: I am a shareholder in Ryanair plc) Elsewhere, Aer Lingus reported its latest traffic statistics yesterday. While I am a huge admirer of the carrier’s CEO Christoph Mueller, I was a little disappointed by Aer Lingus’ year-to-date performance. On this measure, passengers carried are down 1.4% relative to year-earlier levels, while load factors have declined by 2.4ppt. This is despite the absence of last year’s volcano-related disruption and a huge increase in traffic at its Aer Lingus Regional partnership, which acts as a feeder into AERL’s other services. Transport Minister Leo Varadkar indicated that the government could sell its stake in the airline yesterday. Here’s the response of its biggest shareholder, Ryanair. Here’s Davy on it.
It appears that rioters are the only ones frequenting Britain’s High Street these days – Dixons reported a 10% drop in like-for-like sales in the 12 weeks ending July 23. And for more retail woe – Both Argos and Homebase recorded big drops in like-for-like sales in the 13 weeks ending August 27.
Speaking of matters macro related, Greece’s 1-year bond yield hit 97% yesterday.