US travel catch-up boom begins. Australia next

Over the weekend we saw another 1.9tr stimulus package passed in the US. This comes on top of what is an accelerating vaccine rollout and second leg virus recovery. Before long, we can expect US shalers to add a third leg of renewed oil investment to the boom as prices skyrocket.

In short, the US is entering its recovery proper. Some charts from Cornerstone:

We’re expecting the strongest recovery since 1950 – 9% real growth this year. A big pickup in consumer spending going into 2Q is in the cards, particularly for travel & leisure, with 1) an increasingly successful vaccine rollout, 2) states reopening, 3) high-end fiscal stimulus likely ($1.9tvs.our expectation of $1.2t), and 4) tremendous pent-up demand. Indeed, our Daily Consumer Confidence Survey is starting to move back up, and markets are discounting the return to normalcy.

The trigger is growing fast:

As of Wednesday, 16.4% of the U.S. population had at least started the vaccination process. About 8.4% are fully vaccinated. The number of months to vaccinate 75% of the population is down to 6 months:

Who will benefit most? Travel:

Spring Break is in the air, as airlines (and their shares) anticipate an increasing “return to normal” for travel patterns. Up, up and away?There’s been an increase in demand for summer travel. We’re seeing a huge surge in demand specifically for spring and summer travel in the last two weeks alone. We’ve seen more than 100% increase in searches.

Hopper, Mar3—Last week,12.4% of American travelers said they have a Spring Break trip planned. Interestingly, over two-thirds of the se travelers say it’s important to them that they experience a new destination for this trip. Half of these Spring Break period travelers plan to use an airplane for their trip and head more than 500 miles away from home. Destination Analysts, Feb28

Despite relatively flat performance for hotel revpar, the sector’s shares (like airlines) appear to be pricing in more normal travel patterns. Watching The week-over-week decrease was the country’s first since late January. Florida, California, and NewYork reported the largest drops in demand. Texas, on the other hand, led the nation in room nights sold as hotels continued to house residents displaced by winter storm damage.SmithTravelResearch, Mar4

Despite weak theme park foot traffic (Disneyland is closed, Disney World is open), Disney stock has been very strong (both absolute and relative).They were well-positioned for the crisis, thanks to their investment in Disney+ streaming. This illustrates one of our big themes: companies that invest in their businesses (read capex/digitization,etc.), adapt, growing productivity, and profitability. And now, California is starting to reopen. Stay tuned.

The other two big beneficiaries are homeware retail and eating out:

The news on the vaccines is all good, even exciting. I can now foresee a time soon when COVID is effectively history (fingers crossed).

Despite the Australian Nanny State having the slowest vaccine rollout in all developed economies, I think we can expect precisely the same patterns to play out here with a lag:

• Sell stay at home, buy going out.
• Buy travel, lodging, and eating out.
• Buy home improvement as the property bubble swells.
• Buy consumer services over goods.

Still some great value stocks on the ASX in these categories and, yes, we own them.