// Bryan (an "analyst" downgrading yesterday) said American may lose passengers as it adds seats to many of the aircraft in its fleet, which translates to "higher fares for reduced personal space for flyers."
Now I may have this wrong, but aren't the added (new) seats just due to higher seating capacity of new aircraft replacing a lower capacity, older aircraft, and not due to squeezing in more seats in the same size aircraft? So, no reduction in personal space?
Money supply is (printed money X velocity of money). An economy of a given size needs a certain money supply to maintain it (or risk deflation or inflation). During the financial freeze the velocity of money collapsed and therefore the Fed did QE1, and that wasn't enough and QE2 was done ... most, but not all, of QE3 was to stimulate, I agree, but disagree with your interpretation of 1 & 2. 1 & 2 solved the velocity problem. I suppose saving the economy from deflation could be called a stimulation, but really it was to maintain.
I'm sure if velocity started to increase and the maturing rate of the Fed's balance sheet wasn't enough to counter the velocity, the Fed wouldn't hesitate to start selling. But some of the Fed balance sheet is there just for stimulating reasons and that could be sold off regardless of velocity.
It would depress long debt ... but we didn't need this current rise in bonds anyway at least not for economic reasons. It would also give the Fed room to raise short term rates without flattening the yield curve, which the yield curve is doing right now. I have not finished running the impact of that through the rest of the world though ... so still thinking about it, and that is why I brought it up on the board ... just to get some thoughts. Thanks
boils .... Energy is a supply issue, not a demand issue. Copper is economically sensitive, but what if there is another reason. Almost all agricultural, metals, etc are dropping. For example, rough rice has almost dropped 33% over the short term (there is really no economic reason for it dropping). I would think that if some commodities were being impact by something other than an economic reason that something is impacting almost all commodities, and maybe we are just returning to normalcy. And there is a non-demand rationale for it, and it is aimed at commodities. True or not true, that point of view ought to be considered.
unc ... all is true about LUV ... and you have to pay up to own it.
Just a side note ... AAL had a higher domestic PRASM increase in Q4 than LUV did in Q4.
// I think buying a stock on an earnings release is usually just gambling. //
I know a guy that does work surrounding the volatility around earnings. He dusted off some of his old work and looked at it. He said currently used programs are archaic, but now he's been able to isolate more/all the variables that currently used programs don't consider. He has plans for his insights. Anyway, if you think things may be goofy (or don't make sense), they probably are goofy (or don't make sense) ... some of the programs used are like dicing onions with a dull ax. Guess you cry either way. And who knows if the current systems get it right or wrong.
I have a high of 49.97, 1/16/2015 and low of 49.93, 1/20/2015. At some point on that day I thought it was going to leave a gap, but didn't looked closely at it until the next day, and it was showing filled. My charts come from a trading platform from a major broker. So, go figure ... unless there were trades not recorded during the day that were corrected after hours ... I don't know.
unc ... are you saying "less worse" is not "good"?
All companies have little problems here and there ... don't want disasters though. If there was any time to have "less worse" it is when oil more than doubles your earnings.
I wonder if Parker was really running the airline as if oil was at $105, if he would be handing out an extra 4%? Maybe if the unions turn down the contract, he should delay any good faith gesture until oil's trend is confirmed.
// It doesn't plan to start selling its portfolio until it raises the short term window rate. //
That was sort of the reason for my question, though I didn't know it was the Fed's rationale, just the rationale of the pundits I hear talking. My thought, ok, that is good for banks, but wouldn't that flatten the yield curve and what impact would that have on the economy.
Thanks nesto ... I know that a few years ago, either after QE1 or QE2, the Fed did a practice sale to look at the impact of reversing the QEs. I think they may have some idea of the impact now ... or at least not completely in the dark. It seems that housing doesn't have to count on the recent drop in long term rates, but understand what you are saying about mortgage rates. I'm only talking of a slight increase. If our economy is improving, should it be able to handle interest rate normalization to a slight degree at both the long and short end?
I agree that the Fed "normally" works with the short end, but they did do QE. QE had two parts in my understanding. First to counter the drop in the velocity of money (QE1, QE2), and maybe some of QE3. I would say most of QE3 was just to attempt to stimulate. So, even if velocity hasn't increased, some longer term securities could be sold, pushing long rates.
They have numerous options for their balance sheet. Maintain it, let it mature, sell it.
My charts don't show a gap then. I do remember the day and thought there was going to be a gap, but somehow my charts showed trading that filled the gap ... spooky
Looks like it didn't stop at the 20 dma ... and the other airlines (and market) are following in the pullback. On the bright side, maybe AAL will be the first to turn around when the time comes.
This is probably the wrong day to ask this but thought I'd ask this question on those that invest in bank stocks. Everyone expects a short rate increase well before the Fed starts to normalizes their balance sheet impacting long rates. I know a short end increase would help banks, but why wouldn't the Fed start selling off some of its longer dated securities if they feel the economy is strong enough? Just wondering what the logic is with raising the short end and putting off attempting to raise the long end. At least the yield curve would not flatten when the short rates are increased.
This is probably the wrong day to ask this but ... Everyone expects a short rate increase well before the Fed starts to normalizes their balance sheet impacting long rates. I know a short end increase would help banks, but why wouldn't the Fed start selling off some of its longer dated securities if they feel the economy is strong enough? Just wondering what the logic is.
It's starting to look like a lot of the airlines are going to take a breather. AAL was first, and others look as if they are starting to roll over for whatever reason. I don't know if the 20 dma area will be it, or another trip to the 50 dma area. Just have to see where the industry pullback takes us.
// 10.34 per share....! //
That in itself is pretty good. If you work it out using the numbers yesterday from the company it's $12.43 (+/- 51 cents) for 2015.
And that is using forward curve fuel, and current analysts revenue estimates. So, if fuel stays where it currently is, earnings will be higher, and as they fill the empty seats on the higher capacity, new aircraft that will go right to the bottom line.