Travel business is in trouble.
Airline, hotel and cruise line stocks slipped on Friday ahead of Thanksgiving week after the CDC issued a warning on travel for a holiday amid the Kovid case count.
In Expedia data released prior to the CDC announcement, 60% of US consumers said they would not travel for Thanksgiving. Those who travel will travel an average of 250 miles from 450 miles a year before home.
According to O’Boris Schlossberg, managing director of FX strategy at BK Essential Management, the recovery of travel stocks will likely be a bumpy ride.
“The market is discounting exactly the scenario that hasn’t happened yet,” the market said Friday on CNBC’s “Trading Nation,” which is the idea that a vaccine is going to vaccinate everyone and we all travel Are going . “
“Between now and then, all these companies have a very hard time surviving and actually making a profit,” he said. “For me, a lot of names are overloaded at this point, and I think they are too weak to actually sell because they see very little engagement with the consumer.”
Schlossberg warned that consumer activity risks a “retreat” in the coming weeks amid a nationwide increase in Kovid cases.
“At this point, consumer behavior takes longer than coming to market, because these companies have to do really well to come back,” he said.
It seems that a travel drama was “vaccinated” before the rest of the industry, said Craig Johnson of Piper Sandler in the same interview.
“Look at the Jets ETF,” said the firm’s senior technical research analyst. “I think most investors are beyond this near-term travel season.”
“The first chart I look at is the correlation of JETRO ETFs to coronovirus cases,” Johnson said. “In the June-July timeframe when there was a spike in cases, you actually saw the ETF trade down. Now, you’re getting the exact opposite that a vaccine is out, and you’re seeing those cases. Fast up. And still you are watching the ETF … move higher. “
For Johnson, this meant that investors did not care how long a full return to the place of travel could be.
“They are focusing on that vaccination, and a move above $ 21 will open a new foot high on the Jets ETF, probably around the $ 30 range,” he said.
Schlossberg did not quite agree.
“For me, the fugitive trade in JETS is just going to fade at this point,” he said.
JTS was down about 1.5% to close at $ 20.76 per share on Friday.