Pack Your Bags | The Daily Peel | 4/22/22

Markets started yesterday morning in the green and advancing, but they gave back their momentum and finished Thursday lower. We hit another post-C19 low for jobless claims. Earnings season is in full swing. The talking heads can’t stop talking about Elon’s bid to take Twitter private. The 10-year yield moved as high as 2.95%.  The Dow shed 1.05%, while the Nasdaq ended down 2.07%. The S&P was down 1.47% for the day.

Pent-Up Demand — People want to travel. That time is finally here.

They want to take a trip, board a flight, grab an Uber, stay at a hotel, eat at restaurants, and see the world again.

This is the very definition of pent-up demand for travel. While this demand situation is usually just another symptom of a recession, interestingly, the culprit this time was C-19.

Lockdowns, travel restrictions, bureaucracy at the borders, and other exacerbating factors dissuaded many of us from even attempting to make travel plans for the last 24 months or so.

But according to the CEO of American Airlines, now is the time. They see a booming quarter in the coming months, and the guidance from the major hotel brands echoes this sentiment. Leisure and business travel are already up, and travel industry insiders predict even more of a boom in the coming months.

Especially now that the TSA mask mandate is dead (until the next variant), consumers are eager to get out and update their IGs with selfies taken on crowded beaches and popular travel destinations.

That being said, it won’t be all champagne and sunshine.

This might be an interesting summer for travel: some experts predict jet fuel shortages at some of our airports, particularly in the Northeast.

Not only will JP-8 be really expensive and make your trip cost a few extra bananas, but it also might be a limiting factor for you to even take off to get to your destination.

Hear me out: this might actually help out the airlines.

As things pick up for the summer travel season, your airline experience might be well-served by a touch of demand destruction caused by higher prices due to jet fuel problems.

Having fewer passengers makes it easier for the airlines to operate, particularly if they can charge more per seat mile. On the margin, they make more money off of us, and they have fewer needy pax to service.

Lesser travelers equals more on-time flights, and last I checked, those $hitty airplane seats are more comfortable when your flight is on time. Those cheap biscotti cookies taste better when your flight is on time.

It might be hard to see the bright side of an extra $75 to fly from NYC to Miami, but what is your time worth?

Sitting on the tarmac at Laguardia waiting in the summer heat because your flight is delayed is miserable. Trust me; I’ve done it. I bought the t-shirt.

Let’s hope that pent-up demand is not too overwhelming for the travel industry this summer.

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Tesla ($TSLA) — Elon Simps unite! Finally, some good earnings news about a stock that I know you degenerate apes adore. Tesla reported its earnings after the closing bell on 4/20 (of course), and I bet we both know how Elon celebrated a strong quarter. Shares of $TSLA initially effing ripped, but they closed Thursday up only 3.2%.

After being down almost 5% going into their earnings announcement, shares popped after hours on a pretty stellar quarter beating estimates for both revenue and EPS. 

They opened not one but two new factories. Even as input prices have risen, demand for the iconic automaker’s EV models has proven to be sticky even at increased prices. For Tesla, this was a record print.

United Airlines ($UAL) — Pack your f*cking bags, apes. According to United’s guidance, it’s time to hop on a plane, even if that jet will likely be delayed almost 20% of the time.

We mentioned a couple of weeks ago the importance of guidance and sentiment this earnings season relative to previous quarters. Here’s a great example: even in a quarter where United missed on the top line and was unprofitable on the bottom, the Street loved their earnings. 

The reason: United expects to return to profitability this year, especially with increased demand. Even as fuel costs skyrocket and ticket prices go up, arguably the worst major airline in the United States thinks that business will boom this year. $UAL was up 9.3% yesterday. 

Datadog Inc. ($DDOG) — Datadog has had a rough week. Down almost 15%, this puppy keeps going lower. 

$DDOG was a C-19 winner and is purely regarded as a growth name. Its software enables observability for cloud-scale applications. It appears that not being as profitable as your peers and being behind the interest rate 8-ball is bad for its stock. Shares of Datadog were down 7.4% Thursday.

Salesforce ($CRM) — The biggest loser in the Dow yesterday was Salesforce. We didn’t see any real news, so maybe people have finally realized that Marc Benioff has a super punchable face.

$CRM touched a new 52-week low on Thursday, proving that even the biggest winners of the 2021 bull run can quickly fall to new lows. Shares of $CRM closed down 4.8%.

Death and Taxes — Ah, yes. The old cliche: in this world, nothing is certain but death and taxes. 

I think we should add another thing to this list: ston- nope! Housing prices only go up. The only time housing prices have *ever* collectively gone down in the last 60 years was immediately following the mortgage-backed crisis in the Fall of 2008. One time, that’s it.

It’s a tough time to be a renter or to try and buy a home. The housing market is still tight on supply, and that doesn’t bode well for renters or buyers in an already inflationary environment.

So does that mean you shouldn’t try and move out of your parents’ basement? 

I don’t know. You do you. 

What I do know is that property taxes are also moving higher as well. Broadly speaking, they rose 4% in 2020 and 6.5% in 2021. I like a good write-off like the next ape, but these increases make owning a home more expensive, and they’re almost immediately passed on to renters, particularly in major metropolitan areas. 

One thing about a tough economy is that people feel it. Their bank accounts feel it. Their mental health feels it.

Luckily, we’re quite in r-word territory, and there’s still hope that we won’t plunge into one anytime soon. Looking at you, Daddy JPow.

Here’s to hoping that our saviors at the Fed can help find some magic to guarantee a soft landing.