Good morning contrarians! Russia-Ukraine continues to hang over the market. Yesterday we had a nice relief rally. Was that it now? Nobody knows, which is why this is still very much front and center in investors’ minds. Earnings are a bit of a distraction but only really for individual stocks.

On that note, Hilton Worldwide ($HLT) just missed on EPS but beat revenues while Owens Corning ($OC) beat both top- and bottom-line estimates and announced a stock buyback to boot. Kraft Heinz ($KHC) and Shopify ($SHOP) are also due to report before the open at 0930. After the close at 1600 we get Cisco ($CSCO), Nvidia ($NVDA), Applied Materials ($AMAT), Marathon Oil ($MRO), TripAdvisor ($TRIP), AIG ($AIG), DoorDash ($DASH), and Cheesecake Factory ($CAKE).

Underneath the surface, retail sales (out at 0830) could create a fresh point of concern if they come in weaker than anticipated.

And of course we have the Fed looming, but not sure what the FOMC minutes (out at 1400) will do about that. Fed officials have made their stances pretty clear in public comments these last couple of weeks.

Add it all up and it could make for a pretty quiet day — Russia-Ukraine notwithstanding.

Full briefing and podcast here:
Have never met someone that actually owns $CAKE but I sure do enjoy the restaurant. I'm not sure about their business model but I sure am bullish on their waiters'/waitresses' memories. That menu is an encyclopedia!
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The Travel Sector Needs Corporate Travel Back
The travel sector continues to be hit by COVID-19. Almost two years into the start of the pandemic and most companies in the travel sector are still well-below their pre-pandemic levels. However, there's optimism among the industry executives that travel will come back strong in the coming year.

The latest Fincredible MacroTalk goes over what company executives are seeing regarding the demand for travel. Here are three quotes that stood out to me:

  • $HLT: “Business travel continued to gain momentum, with midweek occupancy and rates improving meaningfully versus the second quarter. In the quarter, business transient room nights were roughly 75% of prior peak levels. Studies show that nearly 70% of U.S. businesses are back on the road, up 28 points from the end of the second quarter. With roughly 80% of our typical corporate mix coming from small- and medium-sized businesses and with the lagging recovery of larger corporate travel, we've taken the opportunity to continue our work from before COVID to further increase our focus on this segment of demand.”

  • $ABNB: “On October 15, I believe it was that date that President Biden announced the reopening of the borders for international travelers come to the United States. Within 1 week of that announcement, we saw a 44% spike in nights booked for stays, crossing borders coming into the United States on Airbnb for stays November 9 and later, which is when the borders would open. So what we are seeing kind of across the board is evidence of pent-up demand.”

  • $DAL“We hear regularly from our corporate customers that they're ready to get back to travel, see their clients face-to-face to renew business relationships and develop new ones. That sentiment is coming through loud and clear in our most recent corporate surveys. More than 90% of our respondents mentioned that they expect travel volumes in the December quarter to either be the same or outpace September quarter. Nearly 60% of our accounts are telling us that they've already reopened their offices with an additional 10% expected to open their offices before year-end.”

It's clear that demand for leisure travel is strong. All of the quotes in the MacroTalk point towards pent-up demand for leisure travel. When allowed, people are going on vacation and traveling.

However, corporate travel is still lagging. The decision to travel or not is a lot more complicated for companies, which has resulted in muted demand for corporate travel this year. There's hope that next year the demand for corporate travel will pick up, but there's no guarantee it will. Without corporate travel, a lot of travel stocks face an uphill battle.

If you'd like to read the whole post, here's the link: Fincredible MacroTalk December 15: Travel Demand.
Hi Alberto this is a great memo ! I am curious to know which companies you believe are best equipped for the uphill battle if corporate travel were to take longer to pick up?
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Hedge Vision's avatar
$105.4m follower assets
Gabe Plotkin's Melvin Capital got crushed by $GME, but the fund still has a massive $14B in AUM with a record of outperformance.

Here's what Melvin Capital did during Q3:

-Increased: $LYV $MA $BILL $SNAP $HLT
-New Buys: $AFRM $MAR $SQ $MCD $ASML. Call options on $MA $HLT $SNAP
-Sold Out: $V $TGT $M $HUBS $PYPL. Call options on $ADSK $JD $AMZN

Top 10 Positions ⬇️
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It's interesting to see $MCD alongside the likes of $SQ, $AFRM, $BILL. I like the company and think the have decent pricing power (though they should take care not to raise prices so high as to kill their value prop!)
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Sarah Guo's avatar
$81.5m follower assets
Post COVID Consumption

Where are the plays on the extra $3T sitting in bank accounts post-critical mass of vaccination?

  1. travel
$UAL $AAR still at half of precovid levels
$MAR $HLT at basically precovid levels
Why have hotels stocks recovered faster?
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I wonder if hotel occupancy rates have been better than flight utilization / rates since there's still local travel and many hotels have been repurposed
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