Is there really a recovery?

[markis10]

All the current sales and promotions have got me thinking, are we really recovering from the GFC or are we double dipping, I have never seen so many sales, QF have one daily (Budget Busters started this afternoon), DJ have $48 fares, and JQ now have $36 fares, including $59 BNE-ADL for travel from May 22 including Ozfest! Throw in the QF double SC's promo for the lucky, and I cannot help but think things are not so good at present for those in the travel industry? Not that I am complaining about the bargains!

 

[Mal]

I think most of the world thinks that recovery from the GFC has occurred, or is in the advanced stages. I don't really believe that. Australia was never affected as much, but with so many companies having big US or UK type head offices - there are still big issues with spending money.

However, JQ and DJ shouldn't be affected by corporate budgets as much. Perhaps instead we are seeing people tighter with money now that interest rates are increasing, and even a realisation that credit card rates won't remain "low"?

If Qantas etc were really hurting, then we'd see big sales on J or "kids fly free" or similar sales. I don't think that is required, and Qantas has remained bullish about their prospects.

Also keep in mind that it only takes one of the carriers to start a sale in Australia for others to follow (although everyone doesn't always follow). Perhaps someone just wants additional sales before a reporting period etc.

 

[QF WP]

I think the sales are there to continue to stimulate demand, because the higher demand, the better yield per pax mile the airlines are getting.

All the economic data that I see weekly, points to the US posibly starting to grow (albeit less than 3% this year). Asia and emerging countries I see as positive outlooks for the next 2 years, so travel to/from these markets should be OK.

The data about the Greece issue, is merely the first country in the EU to experience problems. I'm waiting to see the further effects. Europe's web of debt shown in this chart is indeed scary (amounts are in USD). I now wait the rest of the PIGS to start feeling the pain.

 

[drron]

I think the sales are there to continue to stimulate demand, because the higher demand, the better yield per pax mile the airlines are getting.

All the economic data that I see weekly, points to the US posibly starting to grow (albeit less than 3% this year). Asia and emerging countries I see as positive outlooks for the next 2 years, so travel to/from these markets should be OK.

The data about the Greece issue, is merely the first country in the EU to experience problems. I'm waiting to see the further effects. Europe's web of debt shown in this chart is indeed scary (amounts are in USD). I now wait the rest of the PIGS to start feeling the pain.

And to me the greater worry is that both the UK and US government debt is of the same order.Both of them though are creating money as fast as they can.Eventually should mean lower US dollar and UK pound.
As to Australia I think the effect of the GFC has been patchy.In regional Australia it certainly has been worse.Just one example here in Tassie.3 of the top 4 restaurants between Ulverstone and Latrobe have closed since October 09.
On a recent visit to Hervey Bay there were a lot of businesses that had disappeared.
Although in Australia we dont have a lot of public debt,the private debt is becoming a bit of a worry.Read today that the amount the big 4 banks have loaned out on residential housing has gone from 634 billion in Oct.2007 to 935 billion today.
So if China does tank the Government may be OK but a lot of ordinary people are going to really hurt.
My personal belief is that there is a second shoe to drop-but this is only a gut feeling, but the same feeling I had throughout 2008.

 

[Mal]

And to me the greater worry is that both the UK and US government debt is of the same order.Both of them though are creating money as fast as they can.Eventually should mean lower US dollar and UK pound.

The UK has an astonishing amount of national debt. The EU zone is full of debt too (certain countries - not every country). I also see another crash occurring, but can't foretell when. Perhaps the world will ride through it... but surely the pressure on the EU/$US/UKP must be high.

Even Australia's property market is overheated and due for a crash. Not sure what to do with my investments. I'm hopefully in them for the long term - so not overly concerned, but it would be nice to pick up some cheap bargains.

 

[QF WP]

Australian business and consumer confidence has recovered in 2010, however the recovery is beginning with little spare capacity in the economy.

Business investment is set to soar (caex expected to be up 15% YoY), however whilst there was a high estimate of mining investment this will now be dampened by the new resources tax.

Inflation will be a challenge with the RBA moving ahead of the rest of the world in raising rates. The US rates are expected to move up soon (according to Futures markets). Analysts are revising growth rates higher (Europe moving from -2 to +1% GDP growth, USA from -2.5 to +3%, whilst India is mexpected to move from +6 to +8 and China +7 to +9.5).

In the US, non-farm payroll are positive again and unemployment has topped at 10% and come down to about 9.75% recently).

The biggest worry for me is the sovereign risk, as it's a growing global concern surrounding the cost of capital. According to IMF, Datastream and Macquarie Research, gross Government debt in Australia looks excellent at ~25% of GDP (2010) compared with Canada, France, Germany and UK (between 50 and 100% of GDP, with all noting a rise from 2010 numbers to 2014). The basket cases however are US (~85% GDP 2010 rising to over 100% of GDP) and Italy already over 120%, with an expected rise to ~130%.

To my thinking, global growth will come from Asia and emerging markets over the next couple of years, as their economies are in a much better position. Infrastructure needs to be a key policy focus, to allieviate the pains of growth and geneate jobs.

According to Maquarie Research:

Downside risks to the global outlook – 10% chance​

> China is attempting to slow its economy from 12% to 8%, but could it go too far?​

> European and US growth could relapse as governments are forced to cut spending and raise taxes​

> Australian consumers get crunched by high interest rates while stronger A$ undermines competitiveness of firms

> Potential impact of tighter regulation of financial markets and institutions

> Wary investors in North America/Europe over-react to surprises (eg Greece)

Upside risks to the blobal outlook – 15% chance

> Asian economies allow their exchange rate to rise, boosting growth in US and Europe as competitiveness improves

> Firms in developed countries step up business investment

> Global inventory cycle delivers a strong boost to growth as confidence returns

Ah, that's enough for now, bed beckons...​

 

[NYCguy]

Recession? What recession?