SS/RCCL Finances: Improving, Options, Questions??!!

[RetiredandTravel]

On 3/5/2023 at 11:06 AM, highplanesdrifters said:

Chart of the week. Island reversal anyone?

 

 

Looks like it, little like catching a falling knife.  I guess you are thinking a spec position, IMO from an investment prospective the short intermediate part of the curve has a decent risk/reward.  S/I funds & etfs offering 5 1/2 - 6% yield with a ~2.75 duration.  Over a year if yields (spread's constant) go up 200 bps I break even, base case I get the yield and rates down 200 I get ~11%.  Intermediate funds of course perform better in a lower rate environment.

 

The Fed has IMO moved from a proactive to reactive stance so the upcoming data remains very important.  The short end of the Treasury curve has already tightened for the Fed.  Honestly I'm surprised the stock market has done as well as it has given the surge in short term yields.

 

We were just in SE Florida for a couple weeks, definitely no recession there.  Every resort, restaurant and airport were booming.  I called for a dinner reservation three days in advance and they said all they had was 3:30.  I'm not that old.  🤨

 

I'm sure you know this but if you use 10 year futures make sure you know the cheapest to deliver.  One of my many rookie mistakes.

 

 

 

[highplanesdrifters]

On 3/6/2023 at 3:15 PM, cruiseej said:

 

When Mr. Luxury asks, one obliges. 😀

 

Seabourn is an even tinier part of Carnival than Silversea is of Royal Caribbean, because Seabourn is much smaller than Silversea, and Carnival is much larger than Royal Caribbean.

 

Seabourn has only 6 ships currently (one more expedition ship is coming next year; nothing beyond that has been announced), with a passenger capacity of 2,838. (Silversea has 10 ships with a combined capacity of 4,120.)

 

Silversea owner Royal Caribbean Group has 54 ships among its three cruise lines (not counting its joint ventures) with 147,000 passenger capacity.

 

Carnival Corp. consists of nine cruise lines with a whopping 92 ships: Carnival Cruise Line (23), Princess Cruises (15), AIDA Cruises (13), Costa Cruises (12), Holland America Line (11), P&O Cruises UK (7), Seabourn (6), Cunard (3) and P&O Cruises Australia (3).

 

Passenger capacities* are: Carnival Cruise Line (93,095), Costa Cruises (52,719), Princess Cruises (46,189), AIDA Cruises (33,190), P&O Cruises UK (24,193), Holland America Line (22,696), P&O Cruises Australia (7,234), Cunard (6,868), and Seabourn (2,838). Grand total: 289,022, which is close to double the capacity of Royal Caribbean Group.

 

Seabourn's passenger capacity as a percentage of Carnival Corp. overall: a hair under 1%!

 

 

(*Note: these tallies are my own from visiting various websites. There are likely discrepancies between some websites reporting "lower berths", which is simple double occupancy, and others reporting total passenger capacity. I also didn't try to parse which ships are soon to be retired or sold what new ships are coming online when over the next two years. Whew!)

Most interesting information.  Thanks! 

Fascinating that Silversea is a small fish in a big pond and Seabourn is a minuscule fish in a massive pond.

[highplanesdrifters]

22 hours ago, RetiredandTravel said:

 

 

Looks like it, little like catching a falling knife.  I guess you are thinking a spec position, IMO from an investment prospective the short intermediate part of the curve has a decent risk/reward.  S/I funds & etfs offering 5 1/2 - 6% yield with a ~2.75 duration.  Over a year if yields (spread's constant) go up 200 bps I break even, base case I get the yield and rates down 200 I get ~11%.  Intermediate funds of course perform better in a lower rate environment.

 

The Fed has IMO moved from a proactive to reactive stance so the upcoming data remains very important.  The short end of the Treasury curve has already tightened for the Fed.  Honestly I'm surprised the stock market has done as well as it has given the surge in short term yields.

 

We were just in SE Florida for a couple weeks, definitely no recession there.  Every resort, restaurant and airport were booming.  I called for a dinner reservation three days in advance and they said all they had was 3:30.  I'm not that old.  🤨

 

I'm sure you know this but if you use 10 year futures make sure you know the cheapest to deliver.  One of my many rookie mistakes.

 

 

 

Great analysis of the current curve, completely agree. And this says it all:

"The Fed has IMO moved from a proactive to reactive stance so the upcoming data remains very important."

 

Rarely take a spec position anymore. But there is regular portfolio rebalancing which requires some timing and speculation. 

 

Just think of 3:30 as a late lunch. 😃

[RetiredandTravel]

3 minutes ago, highplanesdrifters said:

Great analysis of the current curve, completely agree. And this says it all:

"The Fed has IMO moved from a proactive to reactive stance so the upcoming data remains very important."

 

Rarely take a spec position anymore. But there is regular portfolio rebalancing which requires some timing and speculation. 

 

Just think of 3:30 as a late lunch. 😃

 

 

Two Year Yield 9 day RSI  ended yesterday at 87.8 .  2 year high yield  in 2006/2007 5.15 - 5.30 

 

Aging

 

https://www.youtube.com/watch?v=_xaAM23ShVw

[Catlover54]

3 hours ago, highplanesdrifters said:

Great analysis of the current curve, completely agree. And this says it all:

"The Fed has IMO moved from a proactive to reactive stance so the upcoming data remains very important."

 

Rarely take a spec position anymore. But there is regular portfolio rebalancing which requires some timing and speculation. 

 

Just think of 3:30 as a late lunch. 😃

 

I call a large 3:30 meal a "lunner" (lunch and dinner combo)

[Mr Luxury]

2 hours ago, Catlover54 said:

 

I call a large 3:30 meal a "lunner" (lunch and dinner combo)

In London we might call it a LunDin 😁

[highplanesdrifters]

OUCH! That's going to leave a mark.

 

Silicon Valley Bank

[TLCOhio]

Very good posts on charts, curves, etc., from R&T, highplanesdrifters, Mr Luxury and Catlover54,  Keep it coming!!

 

From the Wall Street Journal late yesterday, some "things" has been happening that is not good for the cruise ship stocks since Monday morning.  Later today, I will have a more complete weekly summary with charts for all three cruise companies. .

 

As example that you can see below is the WSJ chart for Royal Caribbean. Since Monday at $75.60, RCL has gone, down, DOWN to $68.25 late yesterday.  That's a three and a half day drop of nearly 10%. Kind of like real money?  The other two major cruise lines suffered accordingly.  

 

THANKS!  Enjoy!  Terry in Ohio

 

 

[RetiredandTravel]

19 hours ago, highplanesdrifters said:

OUCH! That's going to leave a mark.

 

Silicon Valley Bank

 

 

This article says SIVB was recently recommended by Mr James Cramer of CNBC.

 

https://nypost.com/2023/03/10/cnbcs-jim-cramer-touted-silicon-valley-bank-stock

 

 

 

 

[TLCOhio]

2 hours ago, RetiredandTravel said:

This article says SIVB was recently recommended by Mr James Cramer of CNBC.

https://nypost.com/2023/03/10/cnbcs-jim-cramer-touted-silicon-valley-bank-stock

 

Ouch!!  Agree that Silicon Valley Bank failure hurts the overall financial confidence and raises more serious longer-term questions.  Not Jim Cramer's finest hour, nor his best tip!!!   A Wall Street Journal headline late today noted: "Bank failure is second biggest in U.S. history, rattling investors."  Here was one of their reporting highlights: "The bank is the 16th largest in the U.S., with some $209 billion in assets as of Dec. 31, according to the Federal Reserve. It is by far the biggest bank to fail since the near collapse of the financial system in 2008, second only to the crisis-era collapse of Washington Mutual Inc."

Full story at: 

https://www.wsj.com/articles/svb-financial-pulls-capital-raise-explores-alternatives-including-possible-sale-sources-say-11de7522

 

From the Wall Street Journal late Friday afternoon, below are the charts for the three major cruises lines.  Clearly, things finished in a down, DOWN manner.  With the chart shown below for the S&P 500 during the past five trading days, it was an overall negative trend.

 

When and if will things starts to turn around? 

 

THANKS!  Enjoy!  Terry in Ohio

 

Norway Coast/Fjords/Arctic Circle cruise from Copenhagen, July 2010, to the top of Europe. Scenic visuals with key tips. Live/blog at 246,401 views.

https://boards.cruisecritic.com/topic/1172051-livesilver-cloud-norway-coastfjords-july-1-16-reports/

 

From the Wall Street Journal, here are the charts for the three major cruise ship lines during the past five trading days.  It was not a "roller-coaster" week of ups and downs.  It was just a straight slide downhill!!  Right?:

(Open your screen/viewer wider to see these visuals larger/better!)

 

 

 

For the past month, here has been the movements, mostly negative, affecting Royal Caribbean.:

 

During the past five trading days, this WSJ chart shows the negative slide for this major sampling for broad-based stock market values.:

[highplanesdrifters]

On 3/10/2023 at 4:36 PM, RetiredandTravel said:

 

 

This article says SIVB was recently recommended by Mr James Cramer of CNBC.

 

https://nypost.com/2023/03/10/cnbcs-jim-cramer-touted-silicon-valley-bank-stock

 

 

 

 

I bought some with my Bear Stearns profits. 😂

[RetiredandTravel]

20 hours ago, highplanesdrifters said:

I bought some with my Bear Stearns profits. 😂

 

😁JPM did the government a favor in 2008 and bought Bear Stearns for $10.  JPM was rewarded by paying billions of dollars in fines/legal actions for Bear Stearns pre purchase actions over he next ten years.  I seriously doubt any bank will step up and buy these failing banks.  There would certainly have to be some major assurances.  

 

https://www.cnbc.com/2018/03/14/a-decade-after-its-fire-sale-deal-for-bear-a-look-at-what-jp-morgan-got-in-the-bargain.html

 

I'm not an expert on these banks but it seems the assets are held off balance sheet so not marked to market but when there is a run on deposits the banks are forced to sell the bonds at a loss.  There was a huge IPO market when rates were near zero.  It would be interesting to see what types of bonds were bought by the banks when rates were at zero.  Taking significant duration/convexity risk probably isn't wise when you aren't getting any yield to off set the risk.

 

Ironically there is been a massive rally in bonds which should help the losses some.   

 

"island reversal anyone"  nice call HPD

 

[RetiredandTravel]

I'm running late today with the time change.  Great WSJ editorial on SVB.

 

https://www.wsj.com/articles/the-silicon-valley-bank-bailout-chorus-yellen-treasury-fed-fdic-deposit-limit-dodd-frank-run-cc80761e

[TLCOhio]

1 hour ago, RetiredandTravel said:

I'm running late today with the time change.  Great WSJ editorial on SVB.

https://www.wsj.com/articles/the-silicon-valley-bank-bailout-chorus-yellen-treasury-fed-fdic-deposit-limit-dodd-frank-run-cc80761e

 

Appreciate these great comments, follow-ups and sharing from the smart and savvy R&T.  Very good and helpful.  

 

From that Wall Street Journal editorial this morning, they had some of these key points and highlights: “A nationwide guarantee for uninsured deposits, even for a limited time, means this will become the default policy any time there is a financial panic.  There’s also a question of the legality of such a guarantee. The FDIC created a 'transaction account guarantee' program amid the 2008 panic, but Congress explicitly let it expire in Dodd-Frank. Congress set the $250,000 insured limit to protect average Americans, not venture investors in Silicon Valley.”

 

There is a "claim" that this current action does not involve taxpayer money.  Even on MSNBC this am, they were saying that hopeful policy statement stretches the "truth" somewhat.  Also, if hedge funds, tech risk artists and crypto firms with potential losses above $250K per account at these banks are bailed out, is that really legal and/or smart longer-term?  

 

Lots of serious questions and uncertainty that will probably drive down the stock market for the future?  How will cruise stocks and their shaky finances be affected.  Customers at these failing banks above that $250,000 limit knew their risks!!  At a time when the Fed were raising interest rates, that failed bank was borrowing short-term from its. depositors.  But, then they were lending long-term, without any interest-rate hedging.  Who pays for that lack of supervision and poor management?

 

Full editorial at:

https://www.wsj.com/articles/the-silicon-valley-bank-bailout-chorus-yellen-treasury-fed-fdic-deposit-limit-dodd-frank-run-cc80761e?mod=hp_opin_pos_1

 

THANKS!  Enjoy!  Terry in Ohio   

 

Sydney to NZ/Auckland Adventure, live/blog 2014 sampling/details with many exciting visuals and key highlights.  On page 23, post #571, see a complete index for all of the pictures, postings.  Now at 242,419 views.

https://boards.cruisecritic.com/topic/1896175-solstice-live-australianzhawaii-many-pix’s-jan-20-feb-3/

[TLCOhio]

For what it is worth in the first hour of the NY stock market being open, the value of Royal Caribbean dropped down to $63.98.  That is a -4.31% decline.  All three of the cruise stocks fell in a similar pattern, a much deeper decline than hit the overall market this am. 

 

THANKS!  Enjoy!  Terry in Ohio

[highplanesdrifters]

15 minutes ago, TLCOhio said:

The FDIC created a 'transaction account guarantee' program amid the 2008 panic, but Congress explicitly let it expire in Dodd-Frank. Congress set the $250,000 insured limit to protect average Americans, not venture investors in Silicon Valley.”

Ironic that Barney Frank was on the board of Signature Bank and lobbied for the changes.🤣

[highplanesdrifters]

One more post for entertainment value.  Lovie and I usually check markets before we go to sleep. This bloke popped up with what we are calling the Barclay's shower curtain behind him. It's still giving us a laugh. 

 

[RetiredandTravel]

Thanks HPD those posts made my day.😆

 

Come on Terry this bailout will cost the taxpayer nothing.  All you have to do is say it enough and its true like a modern day "there's no place like home". 

 

The High yield market (HYG) and credit spreads have been remarkably stable, actually up on the day.  IMO any significant deterioration in high yield (credit spreads) would be an ominous sign for the market and cruise lines.  Currently IMO the spread stability is a positive so far.

 

Here's a list of Treasury prices, focus on the longer dated Treasuries.  Specifically the 1 1/4 of 5/50 trading at 58.  So if you bought that Treasury at par at issue (5/20) you are down 42% in principal in less than 3 years but hey you got to clip that nice 1 1/4 % coupon.   Which raises another question why didn't the government significantly shift to much longer dated bonds and lock in the interest rate. 

 

https://www.wsj.com/market-data/bonds/treasuries

 

Now the talk is the Fed won't tighten, not sure if that's good or bad.

 

 

[highplanesdrifters]

8 hours ago, RetiredandTravel said:

 

😁JPM did the government a favor in 2008 and bought Bear Stearns for $10.  JPM was rewarded by paying billions of dollars in fines/legal actions for Bear Stearns pre purchase actions over he next ten years.  I seriously doubt any bank will step up and buy these failing banks.  There would certainly have to be some major assurances.  

 

https://www.cnbc.com/2018/03/14/a-decade-after-its-fire-sale-deal-for-bear-a-look-at-what-jp-morgan-got-in-the-bargain.html

 

I'm not an expert on these banks but it seems the assets are held off balance sheet so not marked to market but when there is a run on deposits the banks are forced to sell the bonds at a loss.  There was a huge IPO market when rates were near zero.  It would be interesting to see what types of bonds were bought by the banks when rates were at zero.  Taking significant duration/convexity risk probably isn't wise when you aren't getting any yield to off set the risk.

 

Ironically there is been a massive rally in bonds which should help the losses some.   

 

"island reversal anyone"  nice call HPD

 

Aw curses. I wrote a response to this about Duration Risk. It's gone.

Short version....

SVB - no risk manager for 8 months.  FTX- no risk manager. Gee, is there a theme?  Black Swan, or incompetent swan?

 

Thanks for kudos on island reversal. S&P head and shoulders, not so much.🤣

 

[highplanesdrifters]

4 hours ago, RetiredandTravel said:

but hey you got to clip that nice 1 1/4 % coupon

It came with a set of Ginsu knives. 

[Mr Luxury]

5 hours ago, highplanesdrifters said:

One more post for entertainment value.  Lovie and I usually check markets before we go to sleep. This bloke popped up with what we are calling the Barclay's shower curtain behind him. It's still giving us a laugh. 

 

Very befitting of the Global Chairman of Research.

[RetiredandTravel]

These young people crack me up.  We used to wear suits and ties on Sundays flying First/Biz class to Europe.

 

Move chart to "Max"

 

https://fred.stlouisfed.org/series/BAMLH0A0HYM2

 

 

Edited March 13, 2023 by RetiredandTravel

[dawntrdr]

So now, when somebody says "OK Boomer", is is OK to respond "OK SVB"?  How about "OK FTX"?

[TLCOhio]

18 hours ago, highplanesdrifters said:

Aw curses. I wrote a response to this about Duration Risk. It's gone.  Short version....SVB - no risk manager for 8 months.  FTX- no risk manager. Gee, is there a theme?  Black Swan, or incompetent swan?   Thanks for kudos on island reversal. S&P head and shoulders, not so much.🤣

 

Appreciate ALL of these various comments and follow-ups.  Agree with highplanesdrifters about the lack of these areas having no-one in charge of and responsible for watching "RISK MANAGEMENT"!  Huge failures!!  

 

In the first 90 minutes of trading today, the three cruise stocks have rebounded a little.  But, the markets are still trying to figure out of these challenged economic factors.  Who knows what is next??? 

 

From the New York Times this morning, they had this headline from a media source that is not considered as very conservative: “Was This a Bailout? Skeptics Descend on Silicon Valley Bank Response." with this sub-headline: "The government took drastic action to shore up the banking system and make depositors of two failed banks whole. It quickly drew blowback.”

 

Here are a few of their analysis/reporting highlights: “A sweeping package aimed at containing damage to the financial system in the wake of high-profile failures has prompted questions about whether the federal government is again bailing out Wall Street.  And while many economists and analysts agreed that the government’s response should not be considered a “bailout” in key ways, many said it should lead to scrutiny of how the banking system is regulated and supervised.The reckoning came after the Federal Reserve, Treasury and Federal Deposit Insurance Corporation announced Sunday that they would make sure that all depositors in two large failed banks, Silicon Valley Bank and Signature Bank, were repaid in full.”

 

Yes, as an editorial today in the Wall Street Journal details, former Congressman Barney Frank is on the board and highly paid by the failed Signature Bank.  He was the co-author of the Dodd-Frank Bill that was supposed to stop these abuses, etc.  

 

Also in this NY Times analysis, they detailed: "While the definition of 'bailout' is ill defined, it is typically applied when an institution or investor is saved by government intervention from the consequences of reckless risk-taking. The term became a swear word in the wake of the 2008 financial crisis, after the government engineered a rescue of big banks and other financial firms using taxpayer money, with little to no consequences for the executives who made bad bets that brought the financial system close to the abyss.  Monday’s action by the government was a clear rescue of a range of financial players. Banks that took on interest-rate risk, and potentially their big depositors, were being protected against losses — which some observers said constituted a bailout."

 

There is one absolute fact for sure:  The cruise lines will not get bailed out by the Federal government and/or the banking system.  They have their billions of dollars in high-interest debt and will have to dig out slowly.  And, hope any future, upcoming recession is not too deep or long.   Having big deposits and advanced payments with cruise companies carries certain risks and questions.  

 

We all have to be our own "risk managers".  No Federal bail-outs for us as the "little people".  Remember what happened with certain Crystal customers?  Right or wrong?

 

Full story at:

https://www.nytimes.com/2023/03/13/business/economy/svb-bailout-questions.html

 

THANKS!  Enjoy!  Terry in Ohio

 

Venice: Loving It & Why??!!  Is one of your future desires or past favorites? See these many visual samples for its great history and architecture.  This posting is now at 101,759 views.

http://boards.cruisecritic.com/showthread.php?t=1278226

Edited March 14, 2023 by TLCOhio

[TLCOhio]

Appreciate the kind follow-ups from R&T, etc.  

 

From the Wall Street Journal in the first hour+ of stock trading this morning, the three cruise line companies are all down 3-4%.  Lots of other questions and challenges with stocks this week, especially focused on the banking sector.

 

Right now, the lead headline at the Wall Street Journal is: "Market Stress Snarls Treasury Trading" with this sub-headline: "Traders say it is as hard to make a deal as it was in the early stages of Covid."   Here are some of their reporting highlights: "The markets for the world’s safest and most liquid assets, the government bonds issued by the U.S. and other rich countries, are coming under immense stress on Wednesday following a week of worries about the health of global banks.  Liquidity, the capacity to trade quickly at quoted prices, has fallen sharply in two of the keystone markets, those for U.S. Treasurys and German bunds, traders said."

 

Full story at: 

https://www.wsj.com/articles/market-stress-snarls-treasury-trading-a84a5417

 

This thread is now over 100,000 views.  Glad there is interest for keeping an eye on these various issues and questions related to the major cruise line operators.   

 

THANKS!  Enjoy!  Terry in Ohio

 

Amazon River-Caribbean 2015 adventure live/blog starting in Barbados. Many visuals from this amazing river and Caribbean Islands (Dutch ABC's, St. Barts, Dominica, Grenada, San Juan, etc.).  Now at 71,109 views:

https://boards.cruisecritic.com/topic/2076101-live-amazon-river-caribbean-many-pix’s-terryohio/