"If there's one sector that stands to benefit handsomely from a further slide in oil or, at least, a moderation in crude's rally: the airlines," explains energy sector expert Elliott Gue.
In The Energy Strategist, he says, "Airlines may make a terrible long-term investment but can be an outstanding short-term trade." Here he looks at Delta Air Lines (NYSE: DAL) and, for the even more speculatively-inclined, US Airways (NYSE: LCC).
"Some investors will rightfully cringe from any mention of this sector; after all, the airlines have consistently lost money throughout their post-deregulation history.
"Most of the majors have declared bankruptcy on multiple occasions since that time. However, we've traded the airlines on a few occasions; we took some triple-digit percentage gains in the airlines back in 2005.
"The airlines' leverage to oil prices is well known. Expectations are so low, in fact, that several major air carriers actually managed to beat consensus expectations in the second quarter.
"And although sentiment is already at rock-bottom, there's a real basis for cautious optimism. First, if I'm right about oil, fuel costs won't rise appreciably in the third quarter. This huge headwind is dissipating.
Your Money: McCain vs. Obama See where the presidential candidates stand on the major economic issues like gas prices, taxes, mortgage crisis, jobs, health crisis and more. Your Money: McCain vs. Obama - CNNMoney.com
If Only Martha Stewart Was a Little More Patient If they only had been more patient investors of ImClone Systems, Martha Stewart and others might have done just fine, and avoided jail time. In a strange twist, ImClone -- the biotechnology company whose stock was dumped just before bad news was announced about an experimental cancer drug -- has received a multibillion-dollar takeover bid pegged to the success of that very same drug. Once Dumped, ImClone Soars - NYTimes.com
You've been enjoying yourself too flying US Airways flights, haven't you? No more frivolity. The US Airways experience will make the Chinatown bus look lush. US Airways Group (NASDAQ: LCC) announced these latest passenger torture methods: no movies, no curbside check-in at 34 airports -- and that's on top of recent plans to charge $2 for cokes or coffee. You'll pay extra to use some of your frequent flier rewards, an additional $15 for checked bags and $25 to book on the phone. And if you want a window or aisle seat in the front of coach -- 16% of coach -- it'll cost you $5 to $30 more per segment.
The stock is down about 5% today on these grim announcements and word that the airline is cutting 2,500 jobs (and perhaps on oil prices). It had already planned on cutting capacity, though it had positive news yesterday, with good scores for being on time. US Airways says the current new fees will bring in $250 to $300 to $400 million. I don't think price-conscious passengers are going to remain oblivious to the idea that an airline ticket is not the real price anymore. It'll be like renting a car -- you know that it's really going to cost you twice as much as the rate.
US Airways says it is cutting movie service because the 500-pound machines cost them $10 million in fuel and other costs. It'll keep the movies on flights to Hawaii and overseas. The real problem with the big airplane screens is that nobody is renting the headphones anymore. I don't remember the last time I watched a movie -- or even one of those schlocky sitcoms the airlines seem to love -- on a big airplane screen. We all want our own entertainment -- and bring it in the form of MP3 or DVD players. In an effort to appeal to the broadest audience, the industry has bored everyone. Reuters says that a cut in inflight movies -- if it goes further -- could hurt the entertainment industry, which makes roughly $240 million a year from airlines.
Oil at $200 and a Two-Year Recession The predictions of $200 oil have made it to the front page of The Wall S Journal. They have been hanging around in less prominent places, but now they gain some further legitimacy. The Journal predicts this would push gas prices to $6 a gallon. Oil at $200 would seize up the economy to the extent that virtually no industry would me immune. Fixing the problem could take a year, and, perhaps, much longer. 24/7 Wall St.: Oil At $200 And A Two-Year Recession
One Grandmother's Mortgage Nightmare The nation's housing meltdown is disrupting lives and devastating families. One New York grandmother is trying to put the pieces back together. Life after losing your home - CNNmoney
Fuel prices seem to be the number one concern on just about everyone's mind lately, and it seems like things are not going to be getting better any time soon. As prices have risen to record levels, many of us have decided to cut back on our driving, especially on long trips in order to save a little on our fuel prices. Well, the airlines are no different, and there's an interesting report today in The Wall Street Journal showing how airlines are cutting back on long flights in order to save a little on fuel consumption.
It is a pretty nasty cycle we are seeing with the airlines. The higher fuel costs have led to higher tickets prices and extra fees. These higher prices have led to less air traffic, and that has led to an even greater need to find more ways to cover rising costs. Definitely a tough situation.
The new way they are starting to combat the high costs of flying is by cutting back, or postponing long international flights, in particular flights that are in excess of 12 hours.
Gather around the campfire and let me tell you such scary stories Jason's mask would fail to impress you after that.
Of course, the theme that runs in the background of these scary stories is the state of the economy in the U.S., from the housing slump, inflation and soft labor markets to weak dollar, excessive government spending and increasing national debt load and trade gap.
1. Exxon Mobil and Oil
So scariest of all stories is oil. With prices reaching new records nearly daily, gas prices have also zoomed higher, crossing the $4 a gallon mark. Why, then, is Exxon Mobil (NYSE: XOM) exiting the retail gas business. To be sure, BP (NYSE: BP) and ConocoPhillips (NYSE: COP) have either indicated taking such measures or have taken them already. Apparently, gas prices haven't been rising fast enough to keep pace, causing margins to narrow and for cents-earned-per-gallon to be dismal.
One would then think it's a good move by Exxon and the other oil giants to get out of the retail gas business, but I have questions. First, it's alarming that companies with revenues in the hundreds of billions of dollar look for ways to make even more money (even if YTD XOM is down 6.4%). Second, and most important, what could it mean for the consumer? As Doug McIntyre suggested, would the price of gas at the pump increase even more after the sale to private owners than when it was sold under Exxon? Scary indeed.
5 Stocks Dad Will Love Forget ties. For Father's Day this year give him something of real value -- shares of some great companies that make products men love. They include O'Reilly Automotive, The Stanley Works, Diageo, Dick's Sporting Goods and Best Buy. 5 Stocks Dad Will Love - Kiplinger.com
Is Water the New Oil? By 2030 nearly half of the world's population will inhabit areas with severe water stress. In the coming decades, as growing numbers of people live in urban areas and climate change makes some regions much more prone to drought, water -- or what many are calling "blue gold" --will become an increasingly scarce resource. Billionaire T. Boone Pickens thinks water is the new oil -- and he's betting $100 million that he's right. If he's right, T. Boone Pickens is a modern-day John D. Rockefeller. Pickens owns more water than any other individual in the U.S. and is looking to control even more. There Will Be Water - BusinessWeek
U.S. stock futures were mixed to lower early Friday morning as investors awaited data on inflation. News about companies cutting workforce and Yahoo!'s failed talks with Microsoft also soured the mood.
On Thursday, U.S. stocks closed with gains following a surprisingly strong retail sales, but the gains were tempered as the day went on due to rising oil prices and the Yahoo! announcement about the failed Microsoft talks.The Dow industrials ended 57 points, or 0.48%, higher, the S&P 500 rose 4 points, or 0.33%, and the Nasdaq Composite rose 10 points, or 0.43%.
What may yet change the atmosphere on Wall Street is the Consumer Price Index is scheduled for release at 8:30 a.m. EDT. Economists surveyed by Briefing.com expect CPI to show an increase of 0.5% in May following a 0.2% rise in April. Core CPI, which excludes the volatile food and energy prices, is expected to have risen 0.2% in May, after it rose 0.1% the month before.
At 10:00 a.m., the preliminary University of Michigan consumer confidence gauge for June is also due.
How the mighty have fallen, at least in the stock market. GE (NYSE: GE) trades near a 52-week low at $31.
Now, short sellers have added insult to injury. The short interest in GE has moved up 11 million to 68.7 million between May 15 and May 30. That percent increase is almost as high as the jump in the short interest at US Air (NYSE: LCC).
The fact that so many shares are bet that GE will fall further is extraordinary. The company still holds one of the best credit ratings of any corporation in the US. Its infrastructure business, the firm's largest division, continues to do remarkably well.
But investors are assuming that GE's industrial, medical and financial operations could have more bad quarters ahead of them.
Shares in rival conglomerate United Technologies (NYSE: UTX) have far outperformed GE during the last year.
That says a mouthful.
Douglas A. McIntyre is an editor at 247wallst.com.
Starting with an aggregate of recent airlines news:
Continental Airlines (NYSE: CAL) said it would cut 3,000 of its 45,000 jobs, about 6.5%, and cut capacity 11% in the fourth quarter. The company will eliminate 67 planes and the company's chief executive and president say they will not take a salary for the rest of this year and will decline bonuses.
Delta Airlines (NYSE: DAL) May traffic rose 4.2% from the year-earlier month to 10.51 billion revenue passenger miles. Delta's May capacity increased 1.5% to 12.67 billion available seat miles. Load factor, or the percentage of seats filled with passengers, in May rose to 82.9% from 80.9%.
US Airways Group Inc. (NYSE: LCC) said its May mainline traffic rose 0.6% to 5.39 billion revenue passenger miles from last year. May mainline capacity was flat at about 6.54 billion available seat miles. Mainline load factor in May rose to 82.3% from 81.9% a year ago. It also said Wednesday it is cutting up to 1,100 more jobs, about 3% of its workforce.
$8-a-Gallon Gas Americans should be celebrating rather than shuddering over the arrival of $4-a-gallon gasoline. We lived on cheap gas too long, failed to innovate and now face the consequences of competing for a finite resource amid fast-expanding global demand. Here are eight reasons higher prices will do us a world of good. Eight reasons you'll rejoice when we hit $8-a-gallon gasoline - MarketWatch
Answers to All Your Tax Rebate Questions Tell 200 million taxpayers that they'll be getting a share of $130 billion in tax rebates and you're sure to bring smiles to a lot of faces. You'll also prompt many quizzical looks ... and an avalanche of questions. Now one month after the rebates started going out there are still many questions people have. Kiplinger answers over 20 of the most common questions. Answers to ALL Your Tax Rebate Questions - Kiplinger.com
The Charleston Gazette reported that Chesapeake Energy Corporation (NYSE: CHK) has decided not to build its Eastern Division headquarters in Charleston, West Virginia in the wake of a West Virginia Supreme Court ruling on May 22.
WEB SITES:
AppleInsider reported that Apple Inc (NASDAQ: AAPL) is expected to announce a back-to-school deal soon that will encourage students to buy new Macs by offering some of the largest incentives in the history of the company.
Stock futures were higher early Friday morning as oil futures continued to drop and Dell reported surprising strong earnings. (Read the full transcript of the conference call that followed the earnings announcement.)
Some upcoming economic readings about personal income might affect the Street's mood yet, but as long as oil prices remain at around $125 a barrel or go even lower, investors may feel more positive on the day.
If last week stocks witnessed one sharp-drop session after another, this week stocks have been more consistent on their way up and on Thursday U.S. stocks rose for the third session in a row due to a big drop in crude-oil futures. The Dow industrials rose 52 points, or 0.41%, the S&P 500 added 7 points, or 0.53%, and the Nasdaq Composite rose 21 points, or 0.87%.
On the economic calendar today several releases:
At 8:30 a.m. EDT April Personal Income and spending is due. While not perfect, personal income is a decent indicator of future consumer demand. Once personal income starts to stagnate, meaning inflation has caught up with income growth, this is another indication of a recession. A price index is included in the income report. The personal-consumption expenditures is often considered to be the Federal Reserve's preferred inflation gauge.
A little after the open, May Chicago PMI, a regional manufacturing survey, is due out.
Finally, at 10:00 a.m., a revised reading on consumer sentiment from the University of Michigan for May will also be released.
Fuel prices seem to be the number one concern on just about everyone's mind lately, and it seems like things are not going to be getting better any time soon. As prices have risen to record levels, many of us have decided to cut back on our driving, especially on long trips in order to save a little on our fuel prices. Well, the airlines are no different, and there's an interesting report today in The Wall Street Journal showing how 
Gather around the campfire and let me tell you such scary stories Jason's mask would fail to impress you after that.
U.S. stock futures were mixed to lower early Friday morning as investors awaited data on inflation. News about companies cutting workforce and Yahoo!'s failed talks with Microsoft also soured the mood.
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