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Airports towns like Luton and Hounslow are suffering as people fly less often – here’s how to help them

Green jobs are the way to avoid a decade of decline for towns dependent on airport employment.

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Thousands of aircraft were grounded during the pandemic. Now research is showing people might fly less JetKat/Shutterstock

Tens of thousands of aircraft have been grounded for well over a year due to the pandemic. In April 2020 air travel around the world was cut by 94% from April 2019. By June 2021 it was still 60% down on June 2019 thanks to holidays being cancelled, work trips shelved, and long-planned journeys to see family and friends moved to another time.

Never has any global industry collapsed with such speed. In climate terms, this has been a cause for celebration. It has represented a chance for reducing emissions that contribute significantly to climate change and pollute our air.

Some people who live close to an airport may also have welcomed the drop in noise. But many others will be worrying about the effect the long-term reduction in air travel may have on their community’s economy.

Will the industry bounce back?

Industrial bodies estimate that it might take five years for passenger demand to return to pre-pandemic levels. That’s a longer expected recovery than any other mode of transport. Globally, an estimated 46 million jobs have been deemed at risk. This isn’t just pilots or cabin crew; it’s also those who screen your baggage or make your lunch.

But will the air industry even bounce back in five years? Research our team conducted in early 2021 in Bristol, an English city with an airport and a century-old aviation industry, found that close to 60% of those surveyed expect to fly less in the future. Many of our respondents gave climate change and the pandemic as equally important reasons. Other polling has shown that many elsewhere remain wary of flying in the future too.

Businesses may also operate differently. Polling has found that four in ten business travellers are likely to fly less in the future. Business-class seats are an important part of airline income – on some flights corporate travel can represent 75% of revenue.

Setting aside ideas about electric planes for now, it seems obvious that we will need to fly less to move to a zero-carbon economy. Two-thirds of people want a post-pandemic economic recovery to prioritise climate change. This means fewer planes, and fewer jobs for crew and baggage handlers and so on.

Rebuilding communities

The decline of older industries such as mining, textiles or pottery resulted in high unemployment in towns which were massively dependent on one of them. We are all familiar with how the closure of a local pit or car plant caused the decline of once vibrant towns, leaving a generation to struggle with unemployment and the need to retrain.

Steel mills were nestled deep in the fabric of nearby communities. Their closure removed the pivot around which lives, work and leisure were based. So with the pandemic, whole communities are at risk of a similar economic decline.

In summer 2020 the rate of those jobless (be it unemployed or on furlough) was higher in areas near UK airports. In Hounslow (near London Heathrow) this was 40% of the population – with an estimated £1 billion loss to the borough’s economy. At Gatwick airport in 2020, there were job losses for 40% of its workforce, many of whom live in nearby towns such as Crawley.

Hounslow in west London
Towns like Hounslow are highly dependent on the nearby airport for employment. BasPhoto/Shutterstock

Many towns and communities are economically dependent on nearby airports. Luton Airport is estimated to have sustained over 27,000 jobs (directly and indirectly) and is a major employer in the region. The decline of the sector has broader effects on subsidiary industries too, such as taxis, maintenance, catering and hotels.

So what is to be done? The Green Jobs Taskforce, an industry and government initiative set up in 2020 to look at future employment, has called on the UK government to invest in jobs related to wind turbines, electric trains and replacing gas boilers.

Any version of a green new deal is necessarily a job-heavy economy, with a great deal of work needed to alter the infrastructure that powers our current lifestyle. The UK government’s Ten Point Plan for Green Industrial Revolution pledges 250,000 green jobs. The political question here is whether politicians and policymakers will be brave enough to resist a bounce back for aviation and invest in a longer term future for these airport towns, to avoid them suffering a decade of decline.

This is likely to see aviation jobs lost, and will require very targeted support for cities or regions reliant on airport employment. To build back better, a green recovery must seek to support these communities and provide them with new opportunities and livelihoods.

The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.

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Economics

MLB trade rumors and news: Padres DFA Arrieta, Severino pitches for first time since 2019

Photo by Jeff Curry-USA TODAY SportsThis could be the end of the road for the 2015 NL Cy Young winner. The MLB Daily Dish is a daily feature we’re running here at MLBDD that rounds up roster-impacting news, rumors, and analysis. Have feedback or have s…

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Photo by Jeff Curry-USA TODAY Sports

This could be the end of the road for the 2015 NL Cy Young winner.

The MLB Daily Dish is a daily feature we’re running here at MLBDD that rounds up roster-impacting news, rumors, and analysis. Have feedback or have something that should be shared? Hit us up at @mlbdailydish on Twitter or @MLBDailyDish on Instagram.

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Economics

Why Monday’s Decline Was So Shocking

It’s no secret that investors had become accustomed to a historic level of calm. We’ve been looking at this since the spring, it usually doesn’t last, and yet it did for months.Even with a late-day recovery on Monday, the loss in the most widely-benchm…

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It's no secret that investors had become accustomed to a historic level of calm. We've been looking at this since the spring, it usually doesn't last, and yet it did for months.

Even with a late-day recovery on Monday, the loss in the most widely-benchmarked index in the world was a rude awakening to those who believe that stocks only travel in one direction. Monday's session was more than two standard deviations from the average daily change over the past year. The only other day with a -2 z-score over the past year was May 12, which marked the bottom for that pullback.

It had been nearly 90 days since that "shocking" decline in May, which is a relatively long time. Over the past decade, this ranked as the 10th-longest stretch between shocking drops.

Most of us are concerned with the question of "so what?" To help give a clue, the table below shows every time since 1928 when the S&P 500 was within 5% and no more than three weeks removed from a multi-year high, then suffered its first -2 standard deviation move in at least four months. These show the times when reality paid investors an unwelcome visit.


What else we're looking at

  • Full returns after stocks suffer a shocking drop
  • What the risk/reward of all precedents suggest about the coming week(s)
  • Potentially ways to manage a couple of options trades that are now profitable
  • A quick update on copper
  • Looking at several mean reversal signals that have set up (but not yet triggered)

Stat box

Put option trading volume in equities and indexes across U.S. exchanges neared 22 million contracts on Monday. That was the 6th-highest reading in the past 5 years.

Etcetera

Heavy industry. Recent losses are weighing on sentiment in industrial stocks. Over the past 10 days, the average Optimism Index on the XLI Industrials fund has been below 25%, the 2nd-lowest in two years. These stocks tend to do well once sentiment starts to recover from a very low level.

xli industrial sentiment optimism index

Oscillators oscillate. The McClellan Oscillator for industrial stocks has plunged below -100, showing quick and severe internal selling pressure. It was above +50 as recently as the end of August. The current reading is on par with the most severe reactions in the past year.

xli industrial mcclellan oscillator

Sell (almost) everything. Heavy selling pressure is also evident in the 10-day advance/decline line for industrials. It's showing an average of nearly 20 more stocks declining than advancing, nearing the most lopsided selling pressure since the pandemic crash.

xli industrial advance decline line

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Economics

Fed Urged To Fire Officials Over “Pandemic Profiteering”

Fed Urged To Fire Officials Over "Pandemic Profiteering"

Two weeks ago, Fed Presidents Robert Kaplan and Eric Rosengren (and to a lesser, though still notable extent, Fed Chair Powell himself) were ‘outed’ for their multi-million-dollar stock

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Fed Urged To Fire Officials Over "Pandemic Profiteering"

Two weeks ago, Fed Presidents Robert Kaplan and Eric Rosengren (and to a lesser, though still notable extent, Fed Chair Powell himself) were 'outed' for their multi-million-dollar stock and bond trades, sparking widespread outrage, bolstering claims that not only is the market rigged and manipulated by the Fed but that it is rigged directly for the benefit of Fed members like Kaplan and Rosengren who - whether they intended or not - benefited monetarily from their own decisions and their inside information that nobody else was privy to..

While none of the transactions appears to violate the Fed's code of conduct, CNBC reported, municipal bonds are an asset class that are far more niche that stocks or ETFs. 

Officials “should be careful to avoid any dealings or other conduct that might convey even an appearance of conflict between their personal interests, the interests of the system, and the public interest," the Fed's code of conduct says.

It was such 'bad optics' that less than two days after the widespread public fury at this grotesque discovery, the presidents of the Federal Reserve banks of Boston and Dallas said they would sell their individual stock holdings by Sept. 30 amid "ethics concerns", and invest the proceeds in diversified index funds or hold them in cash.

While we are sure the Fed officials hoped this would satisfy the ignorant masses... it has not. And as The Wall Street Journal reports, two advocacy groups and a former Fed adviser have said that The Fed should fire at least one (and perhaps both) of the Fed officials over their "pandemic profiteering trading conduct."

Better Markets, a group that pushes for tighter financial regulation; the left-leaning Center for Popular Democracy’s Fed Up campaign; and Andrew Levin, a former top Federal Reserve staff member and now a professor at Dartmouth College, are calling for the Fed to take action against Messrs. Kaplan and Rosengren.

“It’s time for the Fed to do what leaders are supposed to do:  Lead by example,” Better Markets president and chief executive officer Dennis Kelleher wrote in a letter sent to Fed Chairman Jerome Powell Tuesday.

Messrs. Kaplan and Rosengren, both should resign or be fired “for having lost the confidence and trust of the American people and, one would think, the Chairman of the U.S. central bank,” Mr. Kelleher said.

As The Fed is about to shift policy regimes into a taper of its unprecedented fre-money-gasm-machines, Mr. Kelleher added:

“This is no time for the American people to lose confidence and trust in the Fed, which must be above reproach, not set the lowest bar for ethical and legal conduct,”

Some Fed watchers say the trading raises questions about who policy was designed to help.

“There are a lot of reasons that working people are right to wonder if the Fed has their best interests in mind,” said Benjamin Dulchin, campaign director for Fed Up.

“These trades are only the most obvious reason, but it makes it harder for the Fed to do its job,” Mr. Dulchin said, adding if he were Mr. Kaplan or Mr. Rosengren, “I would resign.”

There is, however, one man supportive of Kaplan - his predecessor at the Dallas Fed, Rich Fisher, who shrugged off the million-dollar trades as nothing, noting that in fact, Kaplan was "talking against his own book..."

But, 'Dick', actions speak louder than words eh? And now that he has been shamed into cutting all market exposure, who cares whether he is hawkish or dovish - he's made his!

Source: NorthmanTrader
Tyler Durden Wed, 09/22/2021 - 08:25

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