20120603-162029.jpgGood morning

The headlines:

  1. Qantas says that its profits may drop by as much as 91%. Link: They should use more ipads.

    The loss is being attributed to an A$700 million increase in the fuel bill (about 80% of the drop), and a doubling of losses at Qantas International (presumably – the rest).¬†That said, there was also that labour dispute not so long ago – which may have something to do with it. And on the external front, the international division faces competition from “Middle East carriers” like Emirates.

    The threat now is that Qantas will lose its investment grade rating on its debt (BBB), one of only three airline carriers to carry it. Rating downgrades, as we know, are no fun – higher borrowing costs just as the company is going through a tight-patch. Ah well – that’s the way the cookie monster crumbles it.

    But the “biggest threat” is apparently the fuel bill. So follow Scoot, get rid of the televisions and buy ipads. Over a 7% saving on their fuel bill AFTER they increased their seating allocation by 40%!

    Impressive.

  2. Australia drops its benchmark interest rate to 3.5%. Link: Growth slowdown fears.

    That’s really all that’s interesting. The usual “China’s slowdown” and “Euro Crisis fears” causing pre-emptive drops in interest rates.

  3. Facebook hits new low. Link: The need to save face. Also, some analysts are saying “it’ll be gone in 8 years time“.

    So – from what I can tell, the push now is to get kids to join Facebook before the age of 13 without having to lie. I can’t exactly remember how I set up my Facebook account – but I do remember there being something about an age restriction. And I’m left asking myself – what type of revenue generation will come from children below the age of 13?

    It all just feels a little dirty, if I’m honest.

  4. Johnson & Johnson to stop sales of vaginal implants. Link: ?!

    More on the topic of things unpleasant…

    J&J will stop selling the mesh implants (four different types) after over 600 women say that the implants caused internal injuries. The implants are meant to help incontinence and weak pelvic muscles, and are threaded into place via vaginal incisions. It seems that the internal injuries are caused by the devices eroding and shrinking over time.

    Oh the pain.

    I challenge J&J to find the jury that’s not going to find excessive pain and suffering damages in that. And given that J&J FAILED to get FDA approval for the products before they started selling the products that they’re no longer going to be selling…

    Can you say “class action suit”? I’m willing to bet there’s another Erin Brockovitch film in this. That’s the second one this week.

  5. The Ultra-Wealthy are shunning stocks. Link: Against Warren B’s advice?

    In his last shareholders’ letter, Mr Buffett was all about the “investing in productive assets”. So not gold or bonds – but companies and stocks.

    According to the CNBC article, the rich are voting with private companies, real estate and commodities. And not fixed income**. Which makes a lot of sense: firstly, the business universe has plenty more private companies than public ones. And secondly, what do companies need to be productive? Well, raw materials (commodities) and real estate for a start.

  6. Expectations of Quantitative-Easing grow. Link: So say the men on the Street.

    58% of the money managers, investment analysts and economists that responded think it’s coming. Within the year.

And that’s all for now.

Have a good day.

*Admittedly, not the biggest fan of the name of this CNBC daily.

**Leave these investments to your pension fund that has no other choice.