8 BARRON’S July 12, 2021
REVIEW
34,870.
Dow Industrials:+83.
Dow Global Index:-0.
1.35%
10-year Treasury note:-0.
It’s a Bummer
Of a Summer
After surging in late fall on encouraging Covid vaccine
news, many travel and leisure stocks in recent months
have taken a trip to the land of negative returns.
Travel-related stocks—from casino operators such as
MGM Resorts International (ticker: MGM), to hotel
chains like Marriott International (MAR), to cruise
operators like Royal Caribbean Group (RCL)—have all
lagged behind the market since the end of February.
Avis Budget Group (CAR) is down some 25% from its
highs in mid-June, despite a shortage of rental cars.
One concern weighing on these stocks: the fast-
spreading Delta coronavirus variant, another reminder
that the battle against Covid-19 isn’t over.
Still, Chris Woronka, a leisure and hotel analyst at
Deutsche Bank, and others point to a host of potential
factors, among them the notion that many of these
stocks got ahead of themselves and became too pricey.
Royal Caribbean’s Celebrity Edge embarked from
Fort Lauderdale, Fla., on June 26, the first departure
from a U.S. port among the three big cruise operators
since the pandemic sidelined cruising in March
- There were no reported Covid incidents during
that cruise or several subsequent voyages for the com-
pany, but its stock is down about 10% since June 25.
Another potential worry for travel and leisure stocks:
There is “this realization that this is as good as it gets,”
as Woronka puts it. “My No. 1 question for next year is,
Are people still going to be willing to pay $250 a day for
a rental car and $500 a night for a hotel,” as they are in
certain markets?—Lawrence C. Strauss
NO VACATION FOR TRAVEL STOCKS
Jitters Come and Go
Oil prices soared and stocks opened
mixed. Minutes from the last Federal
Reserve policy meeting showed a split
over inflation. Treasury yields slid
and jitters returned. Thursday was
bad: Junk-bond yields fell below infla-
tion, and Covid variants, higher job-
less claims, and growth fears sank
stocks, which rallied on Friday. On the
short week, the Dow industrials rose
0.2%, to 34,870.16; the S&P 500
gained 0.4%, to 4369.55; and the Nas-
daq Composite rose 0.4%, to 14,701.92.
Pfizer’s Booster
Pfizer said it would seek approval of a
booster for its Covid vaccine to combat
variants, and would begin trials of a
new vaccine in August. Pfizer shares
rose, then fell after health officials
played down the need for a booster.
ChinaReelsinTech
Chinese regulators broadened inqui-
ries into tech companies in what looks
like a growing crackdown on U.S. list-
ings (see story, page 10).
Tensions in the Gulf
Oil prices rose to highs last seen in 2018
after a meeting between the United
Arab Emirates and Saudi Arabia was
canceled. With economies growing, the
broader OPEC+ has been moving to
boost production, but not as fast as
U.A.E. wants. The U.A.E. has recently
sparred with Saudi Arabia, pulling out
of Yemen, signing a peace deal with
Israel, and squabbling over Qatar.
An Antitrust Rethink
President Biden signed an executive
order of 72 initiatives to restore compe-
tition in the U.S. economy, focusing on
tech and pharma, but also including
hearing aids and net neutrality. Mean-
while, 36 states and D.C. sued Google
over its mobile app store. And former
President Trump sued social media
giants over “censorship.”
The End of JEDI
The Defense Department killed the $
billion cloud-computing contract,
JEDI, that was mired in a suit brought
by Amazon.com , which cried foul
after losing the deal to Microsoft .Am-
azon argued that Trump had pushed the
deal to Microsoft because of his unhappi-
nessatAmazon’sthen-CEOJeffBezos.
More Ransomware
A ransomware attack orchestrated by a
Russian-language gang, REvil, hit thou-
sands of companies in 30 countries, in-
cluding the U.S. A second attack, on a
contractor working with the Republican
National Committee, appeared to come
from Russian security forces.
Annals of Deal Making
A group of infrastructure investors of-
fered $17 billion (U.S.) to buy the Sydney
airport...Investors led by Fortress, a unit
of SoftBank Group , reached a 6.3 billion
pound sterling ($8.7 billion) deal to buy
U.K. grocer Wm Morrison. The company
had rebuffed an offer from Clayton Dubi-
lier & Rice...A SPAC headed by former
Barclays chief Bob Diamond agreed to
merge with digital-currency company
Circle, at a $4.5 billion enterprise value.
$28 B
Amount of individual stocks and
ETFs bought by Americans in
June, highest level since 2014.
1.1%
Performance of MSCI China in
the first half, trailing the global
benchmark by 11%, and worst
first half since 2013.
$8.4 K
Average global price to ship a
container, up fourfold in a year,
53.5% since early May.
231
The number of deals the Com-
mittee on Foreign Investment in
the U.S. is reviewing in 2021,
near the all-time high in 2017.
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THE NUMBERS
SHE SAID
“I think one of the
biggest risks to our
global growth going
forward is that we
prematurely declare
victory on Covid.
We are not through
the pandemic,
we are getting through
the pandemic.”
San Francisco Fed chief Mary Daly
Illustration by Elias Stein; David Paul Morris/Bloomberg
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