Wall Street airline selloff

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http://m.us.wsj.com/articles/heard-...ry-on-the-airline-selloff-1402592909?mobile=y

 

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[Turtle21]

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[waveflyer]

June 12, 2014 1:26 PM
The Short Story on the Airline Selloff
By LIAM DENNING
Islamic insurgents in Iraq can be blamed for many things, but they aren't the main factor in this week's airlines selloff.
Delta Air Lines, the biggest by market value, slumped Thursday. The sector overall has lost the gains of the past two weeks. Many have blamed the jump in oil prices amid Iraqi violence.
Yet the sector's relationship with fuel costs isn't what it was. In the five years through 2008, if oil prices went up, airline stocks generally fell. But in the past three years—roughly since the start of Libya's civil war—oil has been flat while the sector has more than doubled.
Airline stocks did fall heavily through the first 10 months of 2011 as Libya's war intensified. But oil's initial surge stalled in May of that year and the sector's weakness likely had as much to do with Europe's intensifying economic crisis.
What has given the sector resilience against high oil prices is consolidation and rationalization. That has led to full planes and high ticket prices.
But investors appear to have forgotten that this remains a notoriously cyclical and highly leveraged industry. And worrying signs about global growth are accumulating, be it Deutsche Lufthansa's weakening guidance or the World Bank cutting economic forecasts.
That is a problem after such a sustained rally for airlines. Short interest, representing bets that stocks will fall, is now down to just 2% of the sector's float, from about 5% at the end of last year, according to UBS.
JetBlue Airways is the exception, with short interest of 20%. That its shares surged more than one-fifth in May despite falling earnings estimates on the back of weak first-quarter results adds to the sense that investors had run ahead of themselves.
Iraq may have provided the excuse, but the seeds of this selloff were sown on Wall Street.

 

[LearLove]

What? We pull out of Iraq and the bad guys come flooding back in. Say it isn't so. Never saw that one coming.

 

[scarlet]

The worst Resume to hold this office !!

 

[BILL LUMBERG]

The worst Resume to hold this office !!

But Ronnie Raygun had "actor" on his resume before governor, and that got us huge deficit spending involving our military (let's kick Grenada's arse) and Iran Contra......talk about a scandal.

 

[JumpersAway]

Whoa, whoa, whoa there Bill! This is Obama's fault. Do not attempt to shift blame away from Obama. Everything is his fault, all the time. Can't you keep up with Fox news?

 

[BILL LUMBERG]

my bad Jumpers.....

Faux news knows all.

 

[Tarheelherk]

I just love revisionist history. I guess double digit unemployment, massive inflation and 14% interest rates under Carter just cured themselves! Iran contra never killed a single US ambassador and when Beruit happened we had a standup guy who took full responsibility for it and vowed to not let that happen again. It didn't under his watch. Tip O'Neal and Reagan had a working dinner every Friday night unless other engagements kept them from it. That's what leads do!