4-2-2021 CDC has issued new guidance

[chengkp75]

7 minutes ago, DCGuy64 said:

OK, so you're saying it's not just the taxes on revenue earned, but also the wage rate, that matters?

That would make sense, but I can see why the people who clean my cabin, fix my meals and pour my drinks often hail from countries with much lower wages than people in the US. It would be ruinously expensive to have to pay US workers, which means there'd be massive consolidation in the industry and cabin prices would skyrocket. I think the only thing keeping prices reasonable and more ships being built is that the wage structure allows the lines to operate at a profit. And it's a win for the workers, because they still make more on ship (so they've told me, anyway) than they would back home.

Yes, even without taxes being considered, the annual operating cost of a US flag ship is 3 times that of a comparable foreign flag ship.  Yes, a much as I have a quixotic wish that cruise ships homeported in the US would be US flag, that will never happen, unless there is a major catastrophe on one of the ships, as it would completely crush the US cruise industry.  Think of fares 3 times what they are now, even with the same capacity.

[chengkp75]

Just now, Mapleleafforever said:

Not to mention they'd be subject to US labour laws. No more 18 hour work days among soooo many others. 

 

 

That is not correct.  First off, no cruise ship crew work 18 hours a day, that is against the law, even in flag of convenience countries, by IMO convention.  You are allowed to work a maximum of 14 hours in any 24 hour period (and a few other restrictions) and those limits apply even to me, a US citizen on a US flag vessel.  Also, much of US labor law is overridden by collective bargaining agreements, even with US maritime unions. 

[Mapleleafforever]

2 minutes ago, chengkp75 said:

That is not correct.  First off, no cruise ship crew work 18 hours a day, that is against the law, even in flag of convenience countries, by IMO convention.  You are allowed to work a maximum of 14 hours in any 24 hour period (and a few other restrictions) and those limits apply even to me, a US citizen on a US flag vessel.  Also, much of US labor law is overridden by collective bargaining agreements, even with US maritime unions. 

Ah, thanks. Our cabin steward lied to us a few years ago then, told us he regularly did 18 hour days. We gave him a really good tip that trip, guess it worked. 

[chengkp75]

Just now, Mapleleafforever said:

Ah, thanks. Our cabin steward lied to us a few years ago then, told us he regularly did 18 hour days. We gave him a really good tip that trip, guess it worked. 

He may work from say 0600 to 2400 every day (and I doubt that, for a cabin steward, I know their hours), but in that 18 hours, he was allowed a certain amount of "rest" where he was not required to work.  The minimum of 10 hours per day of "rest" can be broken up into two periods, one of which must be 6 hours long.  The company is required to maintain logs of work/rest hours for all crew, and these are subject to auditing by port state control officials, and the ship can be fined or detained for violations.

[rjrpar]

18 minutes ago, chengkp75 said:

Yes, even without taxes being considered, the annual operating cost of a US flag ship is 3 times that of a comparable foreign flag ship.  Yes, a much as I have a quixotic wish that cruise ships homeported in the US would be US flag, that will never happen, unless there is a major catastrophe on one of the ships, as it would completely crush the US cruise industry.  Think of fares 3 times what they are now, even with the same capacity.

Your last sentence is way off.  Higher fares, sure, but not 3 times, not even 2 times.  

[Merion_Mom]

2 hours ago, rjrpar said:

Your last sentence is way off.  Higher fares, sure, but not 3 times, not even 2 times.  

I will gently suggest that you not debate chengkp75 about the accuracy of his information.

[not-enough-cruising]

2 hours ago, rjrpar said:

Your last sentence is way off.  Higher fares, sure, but not 3 times, not even 2 times.  

If expenses triple, then revenue MUST triple to remain cost neutral, business 101

[DCGuy64]

3 hours ago, chengkp75 said:

Yes, even without taxes being considered, the annual operating cost of a US flag ship is 3 times that of a comparable foreign flag ship.  Yes, a much as I have a quixotic wish that cruise ships homeported in the US would be US flag, that will never happen, unless there is a major catastrophe on one of the ships, as it would completely crush the US cruise industry.  Think of fares 3 times what they are now, even with the same capacity.

Thank you for that.

I know it's tempting for many people to view the cruise lines as being greedy bloodsuckers who just want to fleece everybody and not pay their fair share, but the economic reality is far more complicated than that. Yes, they do make a lot of money, but then so do their shareholders, and that's kind of the point of investing in the first place, right? If those who consider them to be greedy tax cheats got their wish, then as you said, fares would likely rise 300%, which means demand would fall (unless they all became luxury lines with 400-600 pax), and lowered demand means layoffs, consolidation and/or bankruptcy, and suddenly the stock price sucks and only the well-heeled can afford to sail. Not really a great outcome.  

[B Midged]

1 hour ago, not-enough-cruising said:

If expenses triple, then revenue MUST triple to remain cost neutral, business 101

Labor is not their only expense. Business 102. 

[chengkp75]

43 minutes ago, B Midged said:

Labor is not their only expense. Business 102. 

I never said it was labor cost that tripled.  Overall operating expenses triple.  Labor costs actually increase nearly 5 times.

[HMR74]

1 hour ago, B Midged said:

Labor is not their only expense. Business 102. 

So lets go to Business 552 and just start throwing things up on the wall:

 

The Market cap of RCL is 21 billion. In 2019 the earnings were 2 billion. 2 billion on 10 billion of sales, give or take. That 2 Billion on a regular on going basis is a return on current  market cap of just under 10% and there is nothing great about that.

The stock is around 90 now and it was 140 before the lockdowns. So figure in 2019 with a market cap of 30 billion and income of 2 bil is a 6.7% roi--It stinks by historic metrics but with interest rates at 1.65% for a 10 year supposedly safe Treasury, is 6.7% is ok.

 

Right now food prices are increasing rather significantly-that will flow thru to cruise prices.

Oil prices will go up if the No fossil  fuels policy and New Green Deal is started. I wonder if the cruise lines can build nuclear fueled ships?  And whats the cost and  risk of that?

 

Interest rates will go up. They have been going down since 1981 because there has been a need to try to stimulate the economy for 40 years. One metric the Fed uses  is velocity of money and that's been going down steadily since 1997.

But the Fed has a problem. The US issues new debt and rolls old debt to the tune of around 7 trillion a year and the Fed is buying (via printing)  whatever is not sold to 3rd parties along with the banks. 2/3 of US debt is due inside of 5 years and all that supply with not nearly enough of real demand is a problem. A problem  that will drive rates up.

 

So lets assume interest rates go to 6% vs 1.5%

It changes everything, bad for stocks and bonds values, bad for economy, and bad for cruise lines which we are focusing here now.  12% rates like Volcker did in 1979 would be a disaster. 

 

RCL has 20 billion of debt, give or take. a lot of that is at fixed rate however the recent debt was issued at junk rates and short term, 5 years. But if rates go up 5% points that's another 100 million per year.

Now , if the economy is in a funk, we know occupancy will be lower than the 2019 peak.  Fuel and food are 1.6 billion a year. and headed up due to inflation

 

labor which is the discussion here will have to go up. No clue by how much. And the Cruise lines have to pay down the debt. Just do not know how.

 

Right now the cruise lines are booking 2023--and except for an oil inflator clause, they cannot raise prices-and cancellations at final payment date --who knows what happens.  Who wants to guess how much money the cruise line will be earning in 2021, 2022 and 2023, if inflation hits  tough?  And then in a rough economy, its going to affect most everybody, esp if retirees and near retirees see stocks and bonds down.

 

I just took 10 minutes of time to do a real quick analysis here and portray a rough situation. But  I think the cruise lines might be in better shape than other companies. No point in going into that but think Gamestop, Tesla, and a whole bunch of others including Exxon Mobil which has to borrow to pay dividends.

 

I care about all that but , here we talk cruises.

Who wants to pay 7,000 for a 1 week Caribbean cruise , balcony partially obstructed?

 

When the dust settles, we probably will look back and agree the lockdowns  wound up to be rather expensive , in various ways, and it could have been better handled. The Doctors and Scientists and CDC  etc probably do decent work, not perfect but that's true everywhere. The piece missing is somebody had to make a high level decision and we had  too many opinions and a media that screamed lockdown and fear with constant barrage of bad news.

It was a big story.

Now we pay the price.

 

agree, disagree, it does not matter, it's out of our hands. it's just nice to know what we should expect going forward.

 

Also give props to RCL: it was first to raise prices as they saw what was coming. And I think it was first to pressure CDC by moving to Caribbean ports, albeit small so far, and now NCL joined in, and CCL --has not as of yesterday. DeSantis files a lawsuit, which should be interesting , but its optics. If CCL would pressure CDC and Govt, it would be an interesting war.

 

I am now thinking about booking a late 2023 cruise--the 1800 of deposit is basically a 2 year option for that cruise at a set  price.

 

But here is a trade: and I do not know how this really turns out, but if you are optimistic and think the stock of rcl goes back to 140, buy 200 shares which if hte stock goes back to 140 wil pay for a coupe week long cruises, and if pessimistic , buy a put on a few hundred shares  and if RCL goes back to the 19 price at its low a year ago, you also pay for 2 weeks of cruises for 2.

Always have to look for angles.

 

If only I knew for sure.

 

 

 

 

 

 

 

Edited April 9, 2021 by HMR74

[not-enough-cruising]

12 hours ago, B Midged said:

Labor is not their only expense. Business 102. 

you may want to go back to school if that is all you have gotten out of this conversation

[livingonthebeach]

Richard Fain to go on CBS shortly -- don't know if it's a repeat of yesterday or new interview.

[B Midged]

46 minutes ago, not-enough-cruising said:

you may want to go back to school if that is all you have gotten out of this conversation

Look whose talking. LOL. You just don’t get it. 

[boscobeans]

Brett P. Giroir is an American pediatrician and a former four-star admiral in the U.S. Public Health Service Commissioned Corps. He last served as the 16th Assistant Secretary for Health from February 15, 2018 to January 19, 2021.

 

Admiral Giroir when interviewed this morning stated he would feel perfectly safe sailing on a cruise with vaccinated passengers and vaccinated crew.

[not-enough-cruising]

38 minutes ago, B Midged said:

Look whose talking. LOL. You just don’t get it. 

Sorry pal, 30 plus years post MD/MBA and running my own business successfully, I get it very very well. 

[HMR74]

This might be construed as slightly off topic (but why should that stop  anybody including me) , but if we are searching for CDC or government credibility, just glance at this link below. Anybody  with a decent size business knows how important good internal controls are and as well as data reporting. The GAO-audit arm of the US Government says in this (and since at least 1995)  the US books and accounting records are un-auditable. This is never in the news 

So why do we want to trust govt data whether financial or operational data like CDC or IRS, or jobs data or inflation data  etc. , when the GAO says its mostly unauditable. At a minimum it should all be questioned, but lately if anybody questions anything, they get marginalized and we see that here with the divisiveness.

 

"Material Deficiencies"  is a kiss of death for a CEO running a business.If money was literally leaking out of RCL or CCL or NCL, each CEO would be quickly canned (not that anybody really wants those jobs now) .  Not for the US Govt. and that includes Congress and thus all entities reporting to Congress or the President. We are on President #5 that's ignoring this, and #5 while "new" was Senator and VP, so he too should be accountable.

 

https://fiscal.treasury.gov/files/reports-statements/financial-report/2020/gao-audit-report-2020.pdf

[HMR74]

Now, take my comment that the govt accounting and data collection is all messed up and layer this in:

 

This is from the CDC report  for last week

 

 

If I was at the CDC, I would be focusing on protecting people with the 4 co morbidities. But they threw a blanket over everything. And still are driving  down the cruise lines, to which I would say, just do not let anybody on a cruise with the high risk of 4 co morbidities

here is link to CDC page with this info:

 

https://www.cdc.gov/nchs/nvss/vsrr/covid_weekly/index.htm

 

and here is link to a report from lat fall that points this all out yet nobody seems to know about it till I found it today-why is there the "kabash" (supression)  on anything that challenges covid and the selected process.? (BTW, it appears the Vaccines in EAU status,really should have been meant for just the people with multiple comorbidities)

 

https://chironreturn.org/documents/comorbidity-federal-law.pdf

:

do what you want with it all but this goes way beyond the beat up on cruises.

 

You all see the news on the  volcanic eruption in the Eastern Caribbean?

 

 

 

 

[smokeybandit]

That same CDC report also found that 35% of pediatric covid deaths likely had nothing to do with covid.

[DCGuy64]

45 minutes ago, HMR74 said:

If I was at the CDC, I would be focusing on protecting people with the 4 co morbidities. But they threw a blanket over everything. And still are driving  down the cruise lines, to which I would say, just do not let anybody on a cruise with the high risk of 4 co morbidities

here is link to CDC page with this info:

Bingo! The irony is that places around the world that fared better were able to quarantine the most at-risk populations rather than the shotgun approach of "lock everybody down."

I've harped on this so much I've got a headache from beating my head against the wall, but few people seem to listen. It's a constant litany of "not safe, no cruising," "not safe, no cruising."

 

[HMR74]

45 minutes ago, DCGuy64 said:

Bingo! The irony is that places around the world that fared better were able to quarantine the most at-risk populations rather than the shotgun approach of "lock everybody down."

I've harped on this so much I've got a headache from beating my head against the wall, but few people seem to listen. It's a constant litany of "not safe, no cruising," "not safe, no cruising."

 

From a problem solving aspect, the vaccines should cut down significantly on risk.

The vaccines are also supposed to limit severity even if someone gets it

I have also mentioned the immune system many times and I believe vitamin d deficiency is a problem  the studies I saw highly suggest that if you take vitamin d supplement the severity of covid declines significantly

 

then, do an extra step in what was suggested a year ago where anybody over 70 get a doctors letter saying its ok for this person to travel. I would extend that to everybody and should not be a big thing, except it would cull out people who have co morbidities and young or old would not be in in a position to become seriously ill on board creating havoc beyond covid.

 

I say this as a senior, because its unfair to the cruise line and other passengers to knowingly go on a ship where a known non infectious illness could reroute or delay a cruise. It is tough enough if somebody falls and breaks a bone, but there are many health things that the risks are elevated to begin with.

 

As an aside,  when folks are "slow" on say an excursion, that is irritating too. I do not want to single anybody out on anything, but somewhere basic logic has to kick in. And I do not want to miss a port if the ship had to divert, nor do I want to be the person causing that problem.

 

I also do not want to  be the person who croaks suddenly and people saying, wow he was the picture of health, but that's a fact of life and difficult to manage around.

 

Nothing is easy.

 

BTW, one thing unique about cruising is in many instances the ship and Captain cannot just snap their fingers and it can offload a problem within 2-3 hours, whereas a jet can land in 3-4 hours from just about any position.

 

 

 

Edited April 9, 2021 by HMR74

[DCGuy64]

1 hour ago, HMR74 said:

The vaccines are also supposed to limit severity even if someone gets it

I have also mentioned the immune system many times and I believe vitamin d deficiency is a problem  the studies I saw highly suggest that if you take vitamin d supplement the severity of covid declines significantly

Thanks to my wife, I began taking several vitamin supplements, including Vitamin D, in 2019. One of the reasons I believe my Covid-19 reaction was mild is, I believe, due to that. My personal doctor says he can't say one way or the other. I choose to believe it was a good thing to do.

[HMR74]

and speaking of credibility, this link on masks should raise eyebrows. I am not afraid to go on a cruise now, esp since I have the vaccines,  but am afraid if I have to wear a mask, and now that stance is softening except apparently  on cruise out of the US

 

https://www.aier.org/article/the-dangers-of-masks/

[JABTPS]

1 hour ago, HMR74 said:

then, do an extra step in what was suggested a year ago where anybody over 70 get a doctors letter saying its ok for this person to travel. I would extend that to everybody and should not be a big thing, except it would cull out people who have co morbidities and young or old would not be in in a position to become seriously ill on board creating havoc beyond covid.

I was on the 2020 Pacific Princess and though we had no Covid 19 cases, there were over 50+ passengers out  of our 650+ that said due to the cruise pause, they couldn't fly back to the USA from Perth due to a health issue!  That was incredible!  People on chemo, severe health issues, and on a  111 day cruise ship that could have jeopardize all others on completing our dream cruise!    We were very fortunate.

Now I don't have the information, but at the time ships were coming down with Covid cases, how many ships were sailing at the time and had no cases of Covid?  Possibly 100 to 150?  Just because your on a ship doesn't mean there's going to be a outbreak.

[HMR74]

2 hours ago, smokeybandit said:

That same CDC report also found that 35% of pediatric covid deaths likely had nothing to do with covid.

that possibly goes back to the incentives given to report deaths as covid. Also, I wonder how many people who were put on respirators passed because of respirator.

Its complicated because in theory if you are put on a respiratior  you are already in deep trouble, but then what about all the people who had the 4 comorbidities  where a gust of wind could  have finished them off.

 

I think that cruises can go from US ports, without masks, if people coming off the prior cruise were vaccinated, people getting on the next cruise are vaccinated and as well the crew is vaccinated and there are periodic test.

 

And we can go on ship or independent excursions if vaccinated. All this is based on info out there, if for example they said the  vaccines are not 95-100% effective, but significantly less, then we all should have a problem.