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

[TLCOhio]

Per the Wall Street Journal this morning, the negative stock slide continues, sadly!!

 

As of 10 am today, Royal Caribbean was down, down to $42.47 or a drop of-7.16% in the first half hour of trading.  The other two major cruise lines dropped this morning 8.5% to 9.7%.  Not exactly a positive vote of confidence for the major cruise lines??

 

THANKS!  Enjoy!  Terry in Ohio

•  

[TLCOhio]

What is the "honest truth" on cruise stocks and their real value?  It reminds me of a famous quote from the move "A Few Good Men."  Here is that key courtroom exchange:  LTJG Kaffee/Tom Cruise: "I want the truth!"  Col Jessup/Jack Nicholson: "You can't handle the truth!” 

 

Today was a super challenging day for stock values.  Here are the top Wall Street Journal headlines now: "S&P 500 Closes in a Bear Market as Dow, Nasdaq Slide.  Index falls 3.9%, Dow skids 876 points on inflation, rate fears." and "Fed Likely to Consider 0.75-Percentage-Point Rate Increase."

More at: 

www.wsj.com

 

Want the "Good News" for Silversea's parent of Royal Caribbean?  They did the "best" today compared to their other two main competitors.  Now for the "Rest of the Story"!!

 

From the Wall Street Journal late this afternoon, below you can see the RCL chart, dropping down $4.45 per share or a 9.73% negative slide.  How does that compare?  Much better than Carnival dropping down 10.32% to $9.91 and Norwegian negative 12.23% to $11.55.   Big drops?  For all three of these stocks, today was new lows for this most recent 52-week period.  

 

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 96,203 views.

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

 

[Randyk47]

Terry - obviously the downturn in the overall market is dragging down the vast majority of stocks….I don’t even want to think what it is doing to my wife’s retirement pro folio…but I wonder what will be the impact of the now apparent runaway inflation rate on the travel industry.   Here we have the obvious tendency to think and talk about Silversea but that is a relatively small part of RCL’s business.  Not to sound privileged or elite but the majority of us here can afford luxury travel on Silversea and are somewhat inflation proof.  That said Silversea Is not the revenue “bread and butter” of RCL.  I’d think sooner than later the mass market lines will start to feel the pinch as not only operating costs increase but reduced demand as their clientele start to prioritize their spending.    Certainly there have been times in my life when it came down to making some hard choices.   

[rkacruiser]

9 hours ago, Randyk47 said:

Not to sound privileged or elite but the majority of us here can afford luxury travel on Silversea and are somewhat inflation proof.  That said Silversea Is not the revenue “bread and butter” of RCL

 

"Inflation proof"?  I have not thought of myself in those terms.  Once, I was not.  (Should I spend $4.95 for that steak dinner?)  But, I have viewed myself in recent years as "comfortable" and if I want to spend some money on a luxury cruise experience, what will that mean?  Not a great deal other than those individuals and institutions whom I have named in my Will will receive a somewhat smaller check.

 

if our economy does dip into recession, as I think it will, cruise lines such as Silverseas may benefit.  Their guests ought to have the means to travel.  The news that Crystal Endeavor will become part of the Silverseas fleet ought to be good news for the cruise line.  Antarctic and Polar cruises are popular and they will command the pricing that will be beneficial to RCI's bottom line.

 

9 hours ago, Randyk47 said:

 I’d think sooner than later the mass market lines will start to feel the pinch as not only operating costs increase but reduced demand as their clientele start to prioritize their spending

 

That has already happened with the trip to the breakers of many ships of RCI and CCL.  It probably needs to happen, (to the breakers?  not so sure about that, but to moth balls or on the for sale block), to some of RCI's "apartments of the Seas".  There is too much capacity for the demand that currently exists.  If a recession begins, that situation will not improve.

 

9 hours ago, Randyk47 said:

Certainly there have been times in my life when it came down to making some hard choices.   

 

Many times when the answer to my question of "can I afford a $4.95 steak dinner" was a dinner visit to Burger King for a Big Chef and Fries.  (If anyone remembers them.)  

 

  

[Randyk47]

13 hours ago, rkacruiser said:

 

"Inflation proof"?  I have not thought of myself in those terms.  Once, I was not.  (Should I spend $4.95 for that steak dinner?)  But, I have viewed myself in recent years as "comfortable" and if I want to spend some money on a luxury cruise experience, what will that mean?  Not a great deal other than those individuals and institutions whom I have named in my Will will receive a somewhat smaller check.

I tried to be a bit “political correct” by saying “somewhat inflation proof” because certainly inflation and what looks like a potential recession hits all of us to some degree and I certainly can’t speak for all here.  Luckily we have reached that point in life and our professions that we have “comfortable” and steady income that is not tied directly to the economy.  I can’t say we haven’t noticed the increases in food costs and certainly notice the gas prices.  Maybe it has been the perfect storm of our day to day life style, much influence by the two plus years of the pandemic, but we eat at home more than two years ago, work from home 90%+ of the time, buy much of our needs via the Internet, etc., and that translates into lower costs of living inflation notwithstanding.

 

if our economy does dip into recession, as I think it will, cruise lines such as Silverseas may benefit.  Their guests ought to have the means to travel.  The news that Crystal Endeavor will become part of the Silverseas fleet ought to be good news for the cruise line.  Antarctic and Polar cruises are popular and they will command the pricing that will be beneficial to RCI's bottom line.

 

I agree that Silversea, and probably other luxury and premium lines, will weather a potential recession maybe better than other segments of the cruise industry.  If I have a concern it would be a deep recession on top of the residual pandemic impacts could really hurt the major parent cruise companies.   I remember back to the period after 9/11 and then the worldwide downturn in 2007-2008 and wonder how they will weather a recession in light of the significant debt they took on during the pandemic.

 

 

13 hours ago, rkacruiser said:

 

 

That has already happened with the trip to the breakers of many ships of RCI and CCL.  It probably needs to happen, (to the breakers?  not so sure about that, but to moth balls or on the for sale block), to some of RCI's "apartments of the Seas".  There is too much capacity for the demand that currently exists.  If a recession begins, that situation will not improve.

Agree that while most cruise lines took advantage, whether forced or not, of the pandemic to review their fleets and shed themselves of their less efficient vessels there could be more cuts.  Of course the secondary market for older ships is certainly not robust so that probably means more ships to the breakers.

 

 

 

13 hours ago, rkacruiser said:

 

 

Many times when the answer to my question of "can I afford a $4.95 steak dinner" was a dinner visit to Burger King for a Big Chef and Fries.  (If anyone remembers them.)  

Have to smile a bit at your comment.  Been there done that early on in life.  I worked my way through college and graduate school working a number of jobs.  One was working at a hamburger stand.  Luckily the owner let me have a burger, order of fries, and drink every day.  I can’t count the months and months that pretty much was my major and only meal of the day.   

 

  

 

[Randyk47]

Not that it belongs here but the midst of this discussion and thinking about inflation and potential recession we booked back-to-back cruises on the Dawn for next year.  We literally went from not interested to an intense exchange between us and our best friends and cruising partners.  Started with a brief “we need a vacation!” text from our friends to a all hands on deck five or so hour research and planning marathon.   Final decision was to book two 7-day back-to-back cruises on the Dawn in the Caribbean next year.  Amazing how quickly we went from dead stop to full ahead.   

[Lois R]

2 hours ago, Randyk47 said:

Not that it belongs here but the midst of this discussion and thinking about inflation and potential recession we booked back-to-back cruises on the Dawn for next year.  We literally went from not interested to an intense exchange between us and our best friends and cruising partners.  Started with a brief “we need a vacation!” text from our friends to a all hands on deck five or so hour research and planning marathon.   Final decision was to book two 7-day back-to-back cruises on the Dawn in the Caribbean next year.  Amazing how quickly we went from dead stop to full ahead.   

Hi Randy, I know this is OT too.....but have to ask, what weeks did you book?

[Catlover54]

On 6/14/2022 at 6:24 AM, Randyk47 said:

". . . . Not to sound privileged or elite but the majority of us here can afford luxury travel on Silversea and are somewhat inflation proof.  . . . ."

 

I think I understand your point that no one who cruises SS is a pauper (I agree!). But  perhaps   having  been a high level federal employee, and  receiving a generous federal pension for life, which is annually aggressively adjusted for inflation, is more likely to provide a sense of being somewhat "inflation proof" ? 🤔 

But if someone saved X amount of dollars for a pleasant retirement after running a small independent private  business, based on estimated conservative annual rates of return and inflation estimates a la best financial planning advice, it may have a more serious impact on their luxury cruise plans in retirement when inflation suddenly surges higher than it has been for 40 years, investment yields and market valuations of assets suddenly decline,  and social welfare taxes in their state and community continue to rise (not to mention when Covid-related travel expenses also rise -- testing, unreimbursed quarantine expenses, etc.) .  Pax who wanted to leave their kids a sizeable legacy may also be more concerned and less "inflation proof."

 

Over the years I have read CC, it has surprised me (and in hindsight, it shouldn't have) how many people taking luxury cruises are indeed VERY concerned about relatively modest price issues.  There are certainly people cruising SS whose income relative to expenses, even in retirement, allows them to be oblivious to  costs, even if they are still cruising commercial lines instead of just buying their own private yacht and private jet to get around the headaches of commercial. But there are dozens of posts on luxury line forums relating to how to save $100 here or $200 there (often requiring  great effort), how to get an extra discount, how outraged they are about "small" surcharges for this and that, etc.    I've also lost track of how many discussions I have overheard in person on luxury lines where people discuss strategies on saving a bit here and there with frequent flyer miles and other loyalty clubs.

 

So even on the "luxury" cruise or other market, there are many people here who still pay great attention to inflation and other sources of high relative net costs .  Think back on when various currencies, be it the Euro or the Canadian dollar, had lost value relative to the U.S. dollar -- some people even declared they canceled cruises, or decided to cruise on a cheaper line. Others may save up to do just one or two "special" trips, (anniversary, birthday, etc.), and inflation may price them out.

 

And of course we also have pax who, just out of principle (even if they can "afford" inflated prices) won't  want to pay more, and will find something else besides cruising to amuse them.:)

 

 

 

 

 

 

 

Edited June 15, 2022 by Catlover54
Typo

[AmazedByCruising]

6 minutes ago, Catlover54 said:

But there are dozens of posts on luxury line forums relating to how to save $100 here or $200 there (often requiring  great effort), how to get an extra discount, how outraged they are about "small" surcharges for this and that, etc.

 

That has surprised me as well!  If a couple spends $8000 for a week, not ridiculous, that's 80 cents per minute. Whether you'r spending your time in port, embarking, eating in MDR, being told that you need to buy Tanzanite, sleeping or showering, it is costing you 80 cents each and every minute. 

 

The ticket might be seen as sunken costs, but even then. Once on the ship it's not the time to spend 30 minutes in line at GR to let them know you didn't get your free tote bag. Even if they give you 10 tote bags, of no particular value except making sure every street criminal knows whom to target, you're wasting your time being angry.

 

Not sure what percentage of guests on SS have heard of CC, maybe 60% asks their butler to arrange the vacation without a budget, and are only worried the best suite is taken. Then again, SS isn't stupid so they apparently need people who worry about $100, too, to fill the ships.

[rkacruiser]

11 hours ago, Randyk47 said:

Have to smile a bit at your comment.  Been there done that early on in life.  I worked my way through college and graduate school working a number of jobs.  One was working at a hamburger stand.  

 

I was fortunately employed in my profession as I began my graduate education, but those years prior to my B.A., working in the jobs that I did:  lawn work, hamburger restaurant, salesman for a well known soft water company, phone sales solicitor for a company--I certainly learned what I DID not want to do for a living.  But, I am grateful for having all of those experiences.  I think they have helped to make me just that much more appreciative of my position in life today.    

[Randyk47]

21 hours ago, Catlover54 said:

 

I think I understand your point that no one who cruises SS is a pauper (I agree!). But  perhaps   having  been a high level federal employee, and  receiving a generous federal pension for life, which is annually aggressively adjusted for inflation, is more likely to provide a sense of being somewhat "inflation proof" ? 🤔 

But if someone saved X amount of dollars for a pleasant retirement after running a small independent private  business, based on estimated conservative annual rates of return and inflation estimates a la best financial planning advice, it may have a more serious impact on their luxury cruise plans in retirement when inflation suddenly surges higher than it has been for 40 years, investment yields and market valuations of assets suddenly decline,  and social welfare taxes in their state and community continue to rise (not to mention when Covid-related travel expenses also rise -- testing, unreimbursed quarantine expenses, etc.) .  Pax who wanted to leave their kids a sizeable legacy may also be more concerned and less "inflation proof."

 

Indeed it really matters what your source or sources of income.  That actually was in the back of my mind when I said “somewhat inflation proof”.  Without lengthy explanation I was trying to give the nod to those maybe more comfortable right now but still tied to the economy through their business or annuities or other relatively fixed income sources.   We are by no definition independently wealthy.  In fact, we are mixture of retired (me) and still working (wife) senior level Federal employees.  Certainly having some hedge against inflation, though not 100%, is nice and better than a fixed retirement or annual salary.  We also have only one very successful son and no grandchildren so it’s not like we’re overly worried about inheritance.   Bottom line is there is no “one size fits all” for who and how continued inflation and a potential recession is going to impact even those of us who can still in this moment and time are able to cruise.

 

 

 

 

 

 

 

[TLCOhio]

On 6/14/2022 at 9:24 AM, Randyk47 said:

Terry - obviously the downturn in the overall market is dragging down the vast majority of stocks….I don’t even want to think what it is doing to my wife’s retirement pro folio…but I wonder what will be the impact of the now apparent runaway inflation rate on the travel industry.   Here we have the obvious tendency to think and talk about Silversea but that is a relatively small part of RCL’s business.  Not to sound privileged or elite but the majority of us here can afford luxury travel on Silversea and are somewhat inflation proof.  That said Silversea Is not the revenue “bread and butter” of RCL.  I’d think sooner than later the mass market lines will start to feel the pinch as not only operating costs increase but reduced demand as their clientele start to prioritize their spending.    Certainly there have been times in my life when it came down to making some hard choices.   

 

Appreciate all of these various comments, sharing and follow-ups.  Just when we thought the financial markets could not get more challenged, it keeps surprising us more.  What's next??  Overall, the Dow average dropped down more than 700 points as stocks slid on recession concerns. The Nasdaq fell 4.1%.  That's real money!!  Like billions of dollars in losses. 

 

From the Wall Street Journal late this afternoon, things got even worse for the three major cruise line stocks.  Royal Caribbean dropped 11.4% to $35.17.  Carnival was down 11.18%.  Norwegian dropped 11.64%.  In basketball scoring, hitting "double-figures" is good.  But for stocks, a double-digit loss downward is really, really bad.  At one point today, RCL was down to $34.835, a new low for the past 52-week period.  

 

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 69,977 views:

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From the Wall Street Journal, below is the chart late today for Royal Caribbean.  Their stock was dropping down, DOWN as a part of an overall negative slides for stocks and the economy.:

(Open your screen/viewer wider to see this visual larger/better!)

 

[RetiredandTravel]

MF has another article on cruise stocks today.  Their methodology for estimating increases in interest payments for cruise lines  is overly simplistic but the impact of higher rates is interesting. 

 

Quote from report

 

"This is actually not a surprising reaction. Consider that if the Fed does go through with a 0.75% rate hike in July, and then perhaps lets up on the brake just a tad at its subsequent September meeting and raises rates 0.5% then, this would still leave Carnival, Royal Caribbean, and Norwegian Cruise facing the prospect of paying two full percentage points more on their debt ... than they were expecting to pay as recently as last month.

For Carnival, that works out to about $725 million more in interest payments on its $36.2 billion debt. For Royal Caribbean, investors can count on profits being lower (or losses higher) by $462 million given that company's $23.1 billion debt. And Norwegian Cruise Line Holdings, the smallest of the three cruise operators, can expect to take an additional $285 million hit from higher interest rates."

 

Result: Crunching the numbers with help from data from S&P Global Market Intelligence, it appears that over the course of a year, these higher interest rates have the potential to consume as much as a full quarter's worth of forecast operating profit at Royal Caribbean -- and nearly a quarter's worth of income at Carnival and Norwegian Cruise.

 

https://www.fool.com/investing/2022/06/16/why-cruise-stocks-sank-again-on-thursday/

 

 

[cruiseej]

1 hour ago, RetiredandTravel said:

this would still leave Carnival, Royal Caribbean, and Norwegian Cruise facing the prospect of paying two full percentage points more on their debt ... than they were expecting to pay as recently as last month.

 

Huh?? So MF is saying that the cruise lines all have variable rate loans tied to the Fed Funds rate? I don't think so. Did they all take out loans/sell notes at specific interest rates and durations? So this change in interest rates may change how much they'll pay in a year or two or longer if/when they need to borrow to pay off those loans or continue to fund operations — but it shouldn't affect their payments on their current loans. Right?

[rkacruiser]

3 hours ago, TLCOhio said:

From the Wall Street Journal late this afternoon, things got even worse for the three major cruise line stocks

 

Hey, Terry.  Haven't you heard?  The cruise line stocks are doing the Limbo Dance.  😆

[RetiredandTravel]

12 hours ago, cruiseej said:

 

Huh?? So MF is saying that the cruise lines all have variable rate loans tied to the Fed Funds rate? I don't think so. Did they all take out loans/sell notes at specific interest rates and durations? So this change in interest rates may change how much they'll pay in a year or two or longer if/when they need to borrow to pay off those loans or continue to fund operations — but it shouldn't affect their payments on their current loans. Right?

 

Correct thats why I put this is my thread

 

"Their methodology for estimating increases in interest payments for cruise lines  is overly simplistic"

 

Having been an Institutional Fixed Income Portfolio Manager for 17 years at major Wall St firms  I know a little about this.  Actually the day the Fed raised rates cruise line interest expenses probably went down because intermediate treasury yields declined and high yield spreads contracted.   I'm only doing this recreationally but with the 2yr Treasury +250bps &  5 yr +200bps YTD and high yield spreads widening (I'm guessing cruise spreads more than that) I would bet cruise interest expenses have gone up far more than 2% YTD and the MF 2% (although the wrong methodology) for the last couple months might not be unreasonable.  So the impact of rising interest rates on cruise lines in the MF is interesting. 

 

Honestly your "they don't have to pay it now" is also overly simplistic and lacks understanding of market mechanics.  Markets are forward thinking and analysts project financial performance years into the future, this is a big factor in stock prices.   Bond markets are also much more complicated than just refinancing upcoming maturities.  If you don't believe me look at the stock prices.

[TLCOhio]

2 hours ago, RetiredandTravel said:

Your "they don't have to pay it now" is also overly simplistic and lacks understanding of market mechanics.  Markets are forward thinking and analysts project financial performance years into the future, this is a big factor in stock prices.   Bond markets are also much more complicated than just refinancing upcoming maturities.  If you don't believe me look at the stock prices.

 

Appreciate ALL of these very good comments and follow-ups regarding the complicated aspects of corporate finances.  Yes, way above my college business degree from back in the early 1970's.  These issues are interesting and challenging.    

 

From the Wall Street Journal's sister publication of Barron's yesterday, they had this headline: “Carnival and Other Cruise Stocks Tumble. There Is Too Much Working Against Them.” with these highlights: “Cruise stocks were tumbling to their lowest point since 2020 on Thursday as fears intensified over rising inflation and a potential recession.Carnival was down 9.5% to $8.91, and was on track for its lowest close since April 2020. Rival Royal Caribbean  was down 8.5% to $36.31, and Norwegian was trading at $10.67, down 9%. Both Royal Caribbean and Norwegian were poised to close at their lowest points since May 2020, according to Dow Jones Market Data.”

 

From another financial website yesterday, they had this headline: “Why Cruise Stocks Sank Again on Thursday” with these highlights: “Yesterday, the Federal Reserve announced a 0.75% rise in its interest rate target, and the stock market turned green. The stock market is glowing bright red, and so are the cruise stocks, with Carnival shares falling 10% as of 11 a.m. ET, Norwegian Cruise stock down 9.1%, and Royal Caribbean shares shedding 8.8%.  So what exactly is going on here, and what does it mean to cruise stock investors? Basically, the story goes like this: Up until a few days ago, investors were expecting the Fed to raise interest rates 0.5% in an attempt to tamp down rising inflation.  But then the U.S. got hit by its highest inflation rise in 41 years, spooking the Fed into raising interest rates even more.  Consider that if the Fed does go through with a 0.75% rate hike in July, and then perhaps lets up on the brake just a tad at its subsequent September meeting and raises rates 0.5% then, this would still leave Carnival, Royal Caribbean, and Norwegian Cruise facing the prospect of paying two full percentage points more on their debt ... than they were expecting to pay as recently as last month.For Carnival, that works out to about $725 million more in interest payments on its $36.2 billion debt.”

 

Not sure these media estimates for added interest payments as 100% accurate as there are many, many different borrowing rules and cost set-ups.  Overall, for consumers and financial operations, however, these inflation factors and interest rate hikes do not make these issues easier and positive for charting the future.  

 

Full stories at:

https://www.barrons.com/articles/carnival-cruise-stocks-recession-inflation-covid-51655394000

https://www.nasdaq.com/articles/why-cruise-stocks-sank-again-on-thursday

 

THANKS!  Enjoy!  Terry in Ohio

 

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www.boards.cruisecritic.com/showthread.php?t=2310337

[RetiredandTravel]

2 hours ago, TLCOhio said:

 

Appreciate ALL of these very good comments and follow-ups regarding the complicated aspects of corporate finances.  Yes, way above my college business degree from back in the early 1970's.  These issues are interesting and challenging.    

 

From the Wall Street Journal's sister publication of Barron's yesterday, they had this headline: “Carnival and Other Cruise Stocks Tumble. There Is Too Much Working Against Them.” with these highlights: “Cruise stocks were tumbling to their lowest point since 2020 on Thursday as fears intensified over rising inflation and a potential recession.Carnival was down 9.5% to $8.91, and was on track for its lowest close since April 2020. Rival Royal Caribbean  was down 8.5% to $36.31, and Norwegian was trading at $10.67, down 9%. Both Royal Caribbean and Norwegian were poised to close at their lowest points since May 2020, according to Dow Jones Market Data.”

 

From another financial website yesterday, they had this headline: “Why Cruise Stocks Sank Again on Thursday” with these highlights: “Yesterday, the Federal Reserve announced a 0.75% rise in its interest rate target, and the stock market turned green. The stock market is glowing bright red, and so are the cruise stocks, with Carnival shares falling 10% as of 11 a.m. ET, Norwegian Cruise stock down 9.1%, and Royal Caribbean shares shedding 8.8%.  So what exactly is going on here, and what does it mean to cruise stock investors? Basically, the story goes like this: Up until a few days ago, investors were expecting the Fed to raise interest rates 0.5% in an attempt to tamp down rising inflation.  But then the U.S. got hit by its highest inflation rise in 41 years, spooking the Fed into raising interest rates even more.  Consider that if the Fed does go through with a 0.75% rate hike in July, and then perhaps lets up on the brake just a tad at its subsequent September meeting and raises rates 0.5% then, this would still leave Carnival, Royal Caribbean, and Norwegian Cruise facing the prospect of paying two full percentage points more on their debt ... than they were expecting to pay as recently as last month.For Carnival, that works out to about $725 million more in interest payments on its $36.2 billion debt.”

 

Not sure these media estimates for added interest payments as 100% accurate as there are many, many different borrowing rules and cost set-ups.  Overall, for consumers and financial operations, however, these inflation factors and interest rate hikes do not make these issues easier and positive for charting the future.  

 

Full stories at:

https://www.barrons.com/articles/carnival-cruise-stocks-recession-inflation-covid-51655394000

https://www.nasdaq.com/articles/why-cruise-stocks-sank-again-on-thursday

 

THANKS!  Enjoy!  Terry in Ohio

 

AFRICA?!!?: Fun, interesting visuals, plus travel details from this early 2016 live/blog. At 52,854 views. Featuring Cape Town, South Africa’s coast, Mozambique, Victoria Falls/Zambia and Botswana's famed Okavango Delta.

www.boards.cruisecritic.com/showthread.php?t=2310337

 

Cruiseej is correct in that the Fed raising rates had a minimal impact on cruise line barrowing costs, it was already baked into the cake and long term debt isn't spread off the short end of the curve.  The bond market tightened with higher rates way before this week. Actually intermediate treasury yields have declined since the fed tightened, I would guess corporate spreads have widened tho.   In my opinion the bigger issue is that the Fed is way behind the curve and has started to lose credibility, I think they should have raised at least 100 bps.   Where is Paul Volcker when you need him, he was the best with those cheap cigars.

 

We've discussed how cruise lines need to quickly fill the ships to pay off the debt.  In the current environment they are getting hit on both ends.  Basically a recession may be necessary to tame inflation, a recession/inflation will hurt bookings and higher interest rates coupled with weaker bookings is increasing the interest rate will have to pay on their debt.  Its also hard to do an equity offering with the market and individual stock prices down so much.  Covid mandates aren't helping the situation.

 

I don't want to be a wet blanket here and certainly hope it all works out but these guys are in a very difficult spot. 

 

 

Edited June 17, 2022 by RetiredandTravel

[rkacruiser]

7 hours ago, TLCOhio said:

Why Cruise Stocks Sank Again on Thursday”

 

Will the next headline be "Why Cruise Stocks Rose on Friday"?  At least CCL and RCL did with RCL having a nice pop.  

 

4 hours ago, RetiredandTravel said:

Basically a recession may be necessary to tame inflation, a recession/inflation will hurt bookings

 

I regret typing this, but, I think a recession may well be needed for our economy.  

It seems sensible to expect a recession will hurt bookings?  But, will it?  From what little I know there is still much money in many bank accounts that has not been spent because of the pandemic and its effects on people and the economy.  Will those that have such funds spend on leisure travel?  

 

4 hours ago, RetiredandTravel said:

In my opinion the bigger issue is that the Fed is way behind the curve and has started to lose credibility,

 

I agree!  But, who gets the blame by Mr. and Mrs. Regular Citizen for inflation?  I don't recall learning in my Civics class as a high school Senior that the President of the United States could cause the quart of milk I bought today to rise from $1.79 to $2.19.  

[TLCOhio]

18 hours ago, rkacruiser said:

Will the next headline be "Why Cruise Stocks Rose on Friday"?  At least CCL and RCL did with RCL having a nice pop.  I regret typing this, but, I think a recession may well be needed for our economy.  

It seems sensible to expect a recession will hurt bookings?  But, will it?  From what little I know there is still much money in many bank accounts that has not been spent because of the pandemic and its effects on people and the economy.  Will those that have such funds spend on leisure travel?  

 

Yes, the cruise stocks did bounce back, a little, Friday.  See the detailed Wall Street Journal charts below.  Overall, it was a highly-negative week for the cruise stocks, plus a bad past month.  All three of these major cruise lines hit 52-week lows on Thursday.  Part of it was the overall lack of confidence with most all stocks.  

 

Will Friday's upswing continue during the next week?  Or, continue the downward slide?  Higher interest rates and a looming recession has many investors and consumers very worried.  Do you book a cruise six or ten months in advance, putting down serious money, when there are too many questions and serious doubts???  Plus, if and how does Covid re-bound later this year?

 

Great comments and follow-ups about the economic trends and shifts by RetiredandTravel and our SW Ohio neighbor.  Yes, Presidents get credit for good trends and blame for the negative events. Whether they control it  . . . or not.   That is the way it goes.  Not always fair and accurate.  The "blame-game" always happens and is debated by both sides.  That's politics!!  

 

From the Reuters news wire yesterday, they had this headline: “Stocks in biggest weekly loss since 2020 on interest-rate worries” with these highlights: “World stocks on Friday closed out their steepest weekly slide since the pandemic meltdown of March 2020, as investors worried that tighter monetary policy by inflation-fighting central banks could damage economic growth.  The U.S. Federal Reserve's biggest rate hike since 1994, the first such Swiss move in 15 years, a fifth rise in British rates since December and a move by the European Central Bank to bolster the indebted south all took turns roiling markets.  For the week, the S&P 500 dropped 5.8%, also its biggest fall since the third week of 2020.  'Inflation, the war and lockdowns in China have derailed the global recovery,' economists at Bank of America said in a note to clients, adding they see a 40 percent chance of a recession in the United States next year as the Fed keeps raising rates.”

 

Full story at:

https://news.yahoo.com/shock-swiss-rate-hike-sets-015937838.html

 

THANKS!  Enjoy!  Terry in Ohio

 

Athens & Greece: Many visuals, details from two visits in a city with great history, culture and architecture.  Now at 44,628 views.

http://boards.cruisecritic.com/showthread.php?t=1101008

 

From the Wall Street Journal, below are the charts from late Friday for Royal Caribbean and the other two major cruise lines.  New lows this past week.  Seeing Carnival down below $10 a share has to be rather shocking.  With stock prices so low now, it is harder for the cruise lines to raise added cash by floating out new shares of diluted stock.:

(Open your screen/viewer wider to see this visual larger/better!)

 

 

 

For the past month, here is a look at how RCL has slid downhill in a significant manner.: 

[TLCOhio]

From the Wall Street Journal this morning, they had several top headline that caught my attention.  This includes: 

 

“Bitcoin’s Price Falls Below $20,000" with this sub-headline: "The cryptocurrency has lost 72% of its value from its record high in November.”  

 

Here were  the story highlights: “The price of bitcoin lurched below $20,000, and below a level widely monitored by cryptocurrency enthusiasts, as a brutal selloff in crypto showed no signs of abating.  Bitcoin fell as low as $18,739.50 and stayed below $20,000 on Saturday, according to CoinDesk, losing 72% of its value from its high in November. Concerns about the Federal Reserve’s actions to tame higher-than-expected inflation have pushed both stocks and cryptocurrencies into a bear market.”

 

“The Crypto Party Is Over" with this sub-headline: "The cryptocurrency industry was built on swagger, enthusiasm and optimism. All three are in short supply these days, as losses and layoffs mount.”

 

Here were their reporting/analysis highlights: “On Super Bowl Sunday, a Crypto.com ad featuring billionaire NBA star LeBron James lit up millions of Americans’ TVs. 'If you want to make history, you gotta call your own shots,' Mr. James said in the 30-second spot for the popular cryptocurrency-trading platform. The words that splashed across the screen as the commercial ended read 'Fortune favors the brave.'  Last week, Crypto.com laid off 5% of its workforce as its chief executive officer said on Twitter that the company was making 'difficult and necessary decisions.'  Bitcoin backers’ rallying cry to rebuff skeptics was, 'Have fun staying poor.' Those who didn’t buy in were letting the future pass them by.”

 

Here is more: "At times, crypto has looked like a combination of Beanie Babies, dot-com stocks and the Velvet Underground: It is manic, it is money, and all the cool people are into it. It has also shared characteristics with other bubbles throughout history, marked by speculation bordering on delusion, disregard and disrespect for risk, and greed."  Cute analysis and summary?

 

Crypto never sounded solid and honest to me.  Sure glad, sorry LeBron, that I was not "BRAVE" and ignored such a phony, over-hyped game.  Am I missing something important that will be rebounding strongly?  Or, smart by avoiding it as Crypto continues its negative slide??

 

My prediction: There are a certain number of Crypto "investors" who will not be using those "profits" to pay for future cruises.  

 

Full stories at:

https://www.wsj.com/articles/bitcoins-price-falls-below-20-000-11655542641?mod=hp_lead_pos1

https://www.wsj.com/articles/the-crypto-party-is-over-11655524807?mod=hp_lead_pos7

 

THANKS!  Enjoy!  Terry in Ohio

 

Lisbon, NWSpain, Bordeaux/Brittany: Live/blog, June 2017 from Portugal to France along scenic Atlantic Coast on the Silver Spirit.  Now at 32,357 views.  Many interesting pictures, details for history, food, culture, etc.:

www.boards.cruisecritic.com/showthread.php?t=2511358

[rkacruiser]

5 hours ago, TLCOhio said:

Cute analysis and summary?

 

Crypto never sounded solid and honest to me

 

Cute analysis and summary?  Yes.  

 

Investing rule #1 is, at least in my investment theory, is "If I don't understand the investment, don't buy it."  I don't understand Crypto.  And, the proliferation of other such types increases my lack of understanding.  

 

On the other hand, "cruising" and a Big Mac/Fries are things that I do understand.  Thus, my investments in some cruise companies and McDonald's.  

[highplanesdrifters]

14 hours ago, rkacruiser said:

 

Cute analysis and summary?  Yes.  

 

Investing rule #1 is, at least in my investment theory, is "If I don't understand the investment, don't buy it."  I don't understand Crypto.  And, the proliferation of other such types increases my lack of understanding.  

 

On the other hand, "cruising" and a Big Mac/Fries are things that I do understand.  Thus, my investments in some cruise companies and McDonald's.  

You had me at McDonalds French fries.🤣

 

I understand Crypto which is exactly why I never speculated in that market. Once it passed the Trillion $ market cap I figured I better understand it. It's quite fascinating how the block chain system works although different for different coins.  There were times when I wondered if Crypto was a new world paradigm that as an oldster I couldn't comprehend beyond the Tulipmania concept. The questions I have now are:  In what future form will Crypto exist? Will it whittle down to a few of the more popular and liquid coins, especially those used for nefarious purposes? Will the greater fool theory find more greater FOOLS? Will those greater fools be more pension funds and third world governments? Will the current Crypto winter turn into an Ice Age?  

 

I'm headed back to the Metaverse where I can now outfit my Avatar with Balenciaga sneakers.

[TLCOhio]

23 hours ago, highplanesdrifters said:

I understand Crypto which is exactly why I never speculated in that market. Once it passed the Trillion $ market cap I figured I better understand it. It's quite fascinating how the block chain system works although different for different coins.  The questions I have now are:  In what future form will Crypto exist? Will it whittle down to a few of the more popular and liquid coins, especially those used for nefarious purposes?

 

Excellent above questions, comments and follow-ups about Crypto and other such "innovative" and highly-speculative "investments".  Not for me!!  Too much of the "casino" concept??   

 

For those seeking positive "spin" and hope related to cruise stocks, this article might be of interest.  From a key financial website last week, they had this headline: “3 Top Cruise Ship Stocks To Watch in 2022” with these highlights: “Despite the proliferation of omicron COVID-19 variants, the cruise industry has rebounded remarkably well, with major cruise lines returning their full fleets to service and, in some cases, anticipating record-breaking bookings, according to The Washington Post.  Although cruise ship companies have suffered financial losses due to the COVID-19 pandemic, investors can be hopeful for a strong rebound.  The stock is down significantly since last June despite Carnival making good headway toward a return to profitability by the third quarter of 2022, according to The Maritime Executive, reporting on an earnings call with investors. Major markets other than China have reopened, and the company is operating at 75% capacity.  Royal Caribbean, like other stocks, lost much of its recent gains to the spread of omicron. However, in the first-quarter earnings last month, CEO Jason Liberty said the company is seeing strong demand that’s moving toward pre-COVID levels. He also noted that Royal Caribbean is implementing aggressive hiring efforts to overcome staffing shortages. Those shortages have prompted the cruise line to sail at less than full capacity at a time when capacity is already reduced. But over the long term, Royal Caribbean’s ability to adjust to changing economic conditions could prompt investors to seriously consider adding RCL stock to their investment portfolio.”

 

Here are their final conclusions: "People worldwide have been waiting anxiously to resume their vacations aboard cruise ships. Investors could consider this eagerness a sign that the cruise industry might be a great place to invest despite economic uncertainty and ongoing challenges due to COVID.  Despite being one of the hardest-hit industries by the pandemic, cruise line stocks could be poised to rebound. Recovery thus far has been uneven, however, and some of the cruise industry’s early gains have been lost as the omicron variant tempers the cruise lines’ ability to meet demand."

 

Hope?  Could be?

 

Full story at:

https://www.nasdaq.com/articles/3-top-cruise-ship-stocks-to-watch-in-2022

 

THANKS!  Enjoy!  Terry in Ohio

 

Panama Canal? Early 2017, Fort Lauderdale to San Francisco adventure through Panama Canal.  Our first stops in Colombia, Central America and Mexico, plus added time in the great Golden Gate City. Now at 31,338 views.

http://boards.cruisecritic.com/showthread.php?t=2465580

[TLCOhio]

Now, here is a look from another, maybe opposite viewpoint.  Will it take this long for cruise stocks to recover and bounce back UP?  

 

From the Wall Street Journal this morning, they had this headline: “Stocks Historically Don’t Bottom Out Until the Fed Eases" with this sub-headline: "Investors ask how long the selloff will last after the S&P 500 posts its worst week since March 2020.”

 

Here are some of their story/analysis highlights: “Another week of whipsaw stock trading has many investors wondering how much farther markets will fall.  If history is any guide, the selloff might still be in its early stages.  Investors have often blamed the Federal Reserve for market routs. It turns out the Fed has often had a hand in market turnarounds, too. Going back to 1950, the S&P 500 has sold off at least 15% on 17 occasions, according to research from Vickie Chang, a global markets strategist at Goldman Sachs Group Inc. On 11 of those 17 occasions, the stock market managed to bottom out only around the time the Fed shifted toward loosening monetary policy again.  The S&P 500 has fallen 23% in 2022, marking its worst start to a year since 1932. The index declined 5.8% last week, its biggest decline since the pandemic-fueled selloff of March 2020.  And the Fed has only just gotten started. After approving its largest interest-rate increase since 1994 on Wednesday, the central bank signaled that it intends to raise rates several more times this year so it can tamp down inflation.”

 

Their final conclusion: "The silver lining for investors is that, when the Fed begins to shift toward easing monetary policy, markets have historically responded positively and quickly—especially if the primary cause of their slide was related to central-bank policy, according to Goldman Sachs’s analysis.   What no one is sure of is when exactly the Fed will shift gears, and how much more pressure the economy might come under in the meantime."

 

How long can the cruise stocks sustain themselves and maintain "cash-flow" if it takes 18-months or more for this turn-around?

 

Full story at:

https://www.wsj.com/articles/stocks-historically-dont-bottom-out-until-the-fed-eases-11655594823?mod=hp_lead_pos2

 

THANKS!  Enjoy!  Terry in Ohio

 

From late 2018, see “Holy Lands, Egypt, Jordan, Oman, Dubai, Greece, etc.”, with many visuals, details and ideas for the historic and scenic Middle East. Now at 20,944 views.  Connect at:

www.boards.cruisecritic.com/topic/2607054-livenautica-greece-holy-lands-egypt-dubai-terrypix’s/