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Today's big stories

Ryanair reported better-than-expected results, and the low-cost carrier gave an optimistic outlook for the summer
One remarkably accurate predictive model says bitcoin should be worth $83,000, but you might want to tread carefully – Read Now
China cracked down on the private education sector over the weekend

Bon Voyage

What’s Going On Here?

Ryanair reported better-than-expected results on Monday, as Europe’s biggest low-cost airline lives out all its mid-pandemic fantasy of seeing the world again.

What Does This Mean?

A few factors have been working in Ryanair’s favor lately: a successful vaccination rollout, Europe’s introduction of digital travel passports, and, of course, huge pent-up demand to go somewhere, anywhere new. That led to a surge in late summer bookings and a smaller-than-expected quarterly loss, and it’s been stoking hopes for a long-awaited rebound for Europe’s airlines.

Ryanair’s expecting to post a profit this quarter too, which should help the company just about break even when its financial year ends in March 2022. It also said it’s now expecting total passenger numbers to exceed 90 million by the same point. That’s up from a previous forecast of 80 million, sure, but it’s still a long-haul flight away from the 150 million people a year it used to ferry before the pandemic broke out…

Why Should I Care?

For markets: Choose your low-cost fighter.
Investors sent Ryanair’s shares 4% higher on Monday, and the firm’s optimistic travel outlook helped boost the stocks of other regional carriers: EasyJet and Wizz Air saw their share prices tick up 4% and 1.5% respectively (tweet this). But don’t be fooled: these three budget airlines are in fierce competition with one another to poach as much recovery-driven business as they can, which is why they’ve all outlined plans to grow rapidly as the pandemic starts to fade.

The bigger picture: Ryanair thinks long term.
Airlines often enter hedging contracts that allow them to buy a certain amount of jet fuel at a predetermined price, to protect them from the rising price of oil. And Ryanair, for its part, has already locked in 60% of its anticipated fuel purchases for the financial year at $565 per metric ton. That was probably a shrewd move: the price of oil hit a six-year high earlier this month, pushing the cost of jet fuel to $628 per metric ton.

You might also like: How to analyze and invest in airline stocks.

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2. Analyst Take

Is This Bitcoin Model Too Good To Be True?

What’s Going On Here?

It’s true, there are plenty of models out there claiming to be tried-and-tested predictors of bitcoin’s price.

But there’s no doubt that one stands head and shoulders above the rest: it’s based on the “stock-to-flow” ratio, and it’s called bitcoin’s price right time and time again.

And right now, it’s saying that the OG crypto should be worth around $83,000 – almost three times more than it’s worth today.

Trouble is, a good story with great results has arguably made the model a little too sacred in the bitcoin community, and you’d be right to treat it with a healthy dose of skepticism.

So that’s today’s Insight: how the stock-to-flow model works, and whether you should be paying attention to what it has to say.

Read or listen to the Insight here

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