Liams Last Post : The see Saw continues on a quiet low conviction day. Ryanair a short ?

Good Afternoon ,

 

The see saw continues...A very quiet day , reminiscent of the Ireland Italy rugby match on Saturday when players could be heard talking on the pitch...

 

the Bright bit of news today in Ireland was the release of the KBC /ESRI consumer confidence index which showed confidence measuring of 64.6 up form 53.3 in December but way way below the 14 year average of 92.4. The KBC economist though did strike a note of caution saying that there may be a further negative move when the post christmas bills arrive... It was likely that there would be a boost to consumer confidence in December post the budget but how long that lasts will be the key from here. 

 

There was some small contraction in the overall level of CDS spreads on Sovereign debt today with ireland at 164 , Spain now higher than Irelanf at 167 and Portugal now at 226 , down from 230 on friday and Greece comfortably above 400 at 407 but below the 428 level of Friday.

 

The sharp turnaround in the US on Friday night inspired the markets in Europe this morning but from 10am on the malaise set in and markets fell through their depresses friday closes but in the late afternoon markets did rise to above those levels to close in positive territory but way off the optimistic opening highs.

 

 You could still get killed day trading the Irish Financials , CRH at the 17.00 level looks good here but like all stocks , volumes and conviction levels are low.

 

I have seen doing some work on Ryanair and I am ever more inclined to agree that taking on the bullish consensus may be the play. 65% of passengers originate in economies where economic austerity measure are in place or are coming soon. Longer sector lengths have been acknowledged by Ryanair as a significant Cost head wind also Higher Fuel costs so to get to the consensus earnings number , the company has to increase average fares by 9% whilst simultaneously adding 12% to capacity...I just don't think the European peripheral economies are strong enough from a consumers perspective for Ryanair to achieve their targets. And as the markets continue to be volatile and with Ryanair being a strong relative performer , it does come into focus as an interesting counter consensus call. 

 

Tomorrow we have Greencore numbers to look forward to , will be interesting if the latent strength in the stock on Thursday an Friday last week was actually a good indicator of the results when they get released.  

 

Have a good evening ,

 

Liam

 

 

 

 

___________________________________________

Liam Boggan

　

Merrion Stockbrokers

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