The US labor market has fully recovered, supporting the travel and shipping industries

As of last month, the U.S. labor market had fully recovered the jobs lost due to the pandemic in the half-term that followed the previous downturn. An impressive 528,000 jobs were added in July, pushing the total up Number of payments over February 2020.

Good news can be bad news in this case, however, the blockbuster jobs report may cause the Federal Reserve to be tighter than planned to slow growth. This could sharply trigger a recession that many market watchers believe we have already entered, with real gross domestic product (GDP) shrinking for two consecutive quarters, inflation at historic highs and a shrinking service sector.

In addition, U.S. yields have been significantly reversed since 2000. On Friday, the yield on the two-year government note closed at 3.24%, the 10-year at 2.83%, a difference of 41 basis points. Every recession in the past several decades has been preceded by an inversion of the productivity curve, so we may be at the end of the business cycle.

It will be interesting to see what Jay Powell and company decide to do at the next Federal Open Market Committee (FOMC) meeting, scheduled for September 20-21.

Americans are cutting back on driving, but lower fuel costs could be a game changer.

Another sign that the economy may be slowing down? Low oil demand combined with falling gas prices. According to Energy Information Administration (EIA) data, Americans will consume less gasoline each day this summer than they did in the winter of 2020, with nearly everyone drinking more at home. Tiger King On Netflix.

Gas prices above $5 a gallon, along with fears of Covid and government-mandated lockdowns, seem to be a major barrier to getting out of your home.

The decline in driving activity is consistent with the results of a recent survey conducted by the American Automobile Association (AAA). The nonprofit found that 88% of Americans are driving less because of higher gas prices. Three-quarters of respondents said they were combining activities into each trip, while 56% said they were cutting back on shopping and dining.

Surprisingly, only 13% of those surveyed said they were driving a more fuel-efficient vehicle in response to rising gas prices. No one or 2% of respondents said they are switching to an electric vehicle (EV).

The EIA will report last week’s gasoline consumption numbers on Wednesday, and with demand jumping back from 2020 levels, I now expect to see gas prices fall for more than 50 straight days, hitting an all-time national average high of $5.02 on June 14.

For many Americans, vacations happen “no matter what.”

Another recent study, this one by McKinsey & Co., shows that many Americans are still planning a vacation this summer “no matter what,” even though inflation remains a major concern. Nearly 70% of respondents said they were taking a trip regardless of inflation, Covid, economic slowdown or other concerns.

That positive sentiment was echoed by Booking Holdings CEO Glenn Fogel, who told CNBC this week that Americans “will continue to travel and will travel more and more in the long term.”

Fogle joins the network to discuss Bond’s impressive second quarter financial report. The online travel agency, which owns popular brands such as Priceline, Kayak and Opentable, recorded more room-night bookings in the three months ended June 20 than in any quarter before the outbreak in 2019. Total revenue was $4.3 billion, nearly double the previous quarter, and net income was $857 million, compared to a net loss in the same quarter last year.

Looking ahead, Fogel expects record revenue in the third quarter, and bookings for the final quarter of the year to be 15 percent ahead of the same period in 2019.

We’re encouraged not only by Booking, but by competitors TripAdvisor and Expedia, whose shares have recovered losses, and some, gas prices retreating from all-time highs on June 14.

Shipping giant Maersk Posts record results

In addition to consumers, lower gas costs are beneficial for industries that use large amounts of petroleum liquid fuel. These include airlines and shipping container companies, with the latter still seeing severe congestion at ports in North America, Europe and China, according to shipping giant AP Moller-Maersk.

The world’s second-largest shipping company is seen as a barometer of the global shipping industry, and if so, Maersk’s second-quarter results should put investors’ minds at ease. The Copenhagen-based company reported record revenue of $21.7 billion and net profit of $8.6 billion in the June quarter, also a quarterly record.

Based on these impressive results, Maersk raises its full-year guidance to $37 billion from EBITDA (earnings before interest, taxes, depreciation and amortization) of $30 billion. It also raised its free cash flow (FCF) estimate to an “above” $24 billion from $19 billion. Maersk’s board of directors is increasing the company’s share buyback program to $3 billion for the years 2022-2025, up from $2.5 billion previously.

Some financial news outlets have drawn attention to the fact that Maersk moved 7.4% less containers in the second quarter compared to the same quarter last year, but as the company itself pointed out, this is due to increased port congestion and not a meaningful slowdown. on demand. According to the Census Bureau, new orders for manufactured durable goods rose to $272.6 billion in June, a 2 percent increase from May. Since June, shipments of manufactured goods have also increased for 13 of the past 14 months.

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