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Here comes the travel boom

·Anchor, Editor-at-Large
·5 min read
In this article:
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This article first appeared in the Morning Brief. Get the Morning Brief sent directly to your inbox every Monday to Friday by 6:30 a.m. ET. Subscribe

Monday, November 8, 2021

Pandemic travel ban eases in US

Macy's Herald Square gives a hearty welcome back to its international friends. 

Today, the U.S. lifts a pandemic travel ban on international visitors from 33 countries. The ban has lasted 19 months, and was first implemented by the Trump administration. International travelers will be required to show proof of vaccination and a recent negative test for COVID-19. 

Yahoo Finance's Adam Shapiro has more here on the ban ending.

As I have highlighted a few times on these digital pages in the lead-up to today, this is a major positive tailwind to numerous companies. For retailers that operate large flagship stores in key cities such as New York City, the likely influx of travelers for the holidays is huge. Tourists have long been some of U.S. retail's best customers, and this will be no exception to that historic rule. 

Hotels and Airbnb are gearing up for a surge in visitors.

"Within one week of that announcement [Biden administration saying it would end the ban], we saw a 44% spike in nights booked for stays, crossing borders coming into United States on Airbnb for stays Nov. 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," Airbnb co-founder and CEO Brian Chesky told analysts on a conference call last week. 

I am talking with the CEOs of Hyatt and Marriott today on Yahoo Finance Live, and I suspect they will echo Chesky's bullish commentary on pent-up demand.

Lyft and Uber will see a big bump in business from the increased traffic at airports (and obviously, this is good for the airlines). 

Hell, toss in liquor makers like Diageo that hawk alcohol in the airports. I am sure I am missing 97 more companies that will benefit.

The economic impact may also prove noticeable, Goldman Sachs said.

"Based on the partial recovery in arrivals to the U.S. from a few countries not subject to restrictions, we estimate that the end of the travel ban will restore another 10-15% of the pre-pandemic spending by tourists and other nonresidents by the end of 2022Q1, which would add about 0.2 percentage points to GDP growth in 2021Q4 and 2022Q1. If most of the remaining gap in tourist spending then closes by the end of 2023, the remaining rebound would boost quarterly annualized growth by another 0.1 percentage points in each quarter from 2022Q2 through 2023Q4," said Goldman Sachs chief economist Jan Hatzius in a research note to clients. 

So hello to our overseas friends, it has been a while. But expect not to find what you want at Macy's Herald Square due to supply chain bottlenecks.

Odds and ends

AMD: So much focus has been on the insane move higher (17% in the past five sessions) in Nvidia shares in recent weeks (my co-anchor Julie Hyman has been telling me all about Nvidia's omniverse, her excitement has me excited and clearly investors agree), I think the juggernaut story that is Advanced Micro Devices has gotten lost in the sauce. The stock is "only" up 49% year-to-date, powered higher recently by a strong third quarter earnings report that showed further market share gains in servers. The company will host a key event today that many expect will showcase powerful new chips. Don't expect AMD to disappoint at the virtual gathering, not with CEO Dr. Lisa Su running point. 

$147.2 billion. That is the amount of cash Warren Buffett's Berkshire Hathaway ended the third quarter with even as the Oracle of Omaha spent $7.6 billion to buy back stock. Buffett is showing yet again he is unlikely to move off his strict guidelines for making acquisitions just to please those seeking headlines. Good for you Warren, stay true to oneself. 

S&P 500: It has been an amazing year for investing, and we aren't talking about the millions of new retail investors now involved in the market (though that has in fact been amazing). Here is how Goldman Sachs chief U.S. equity strategist David Kostin kicked off his morning note yesterday. "Following a 25% year to date return, the [S&P 500] index trades at our year-end target of 4,700. Our year-end 2022 target remains 4,900 (+4%). The index has made a new high on 30% of trading days year to date, trailing only 1995 (31%) as the highest annual rate on record." Some perspective to start the trading week.

Nextdoor IPO: Investors have been quick to gobble up easy to understand, growing companies that have gone public recently. Some examples include Dutch Bros (coffee chain), ON Holdings and Allbirds (sneaker makers), and Warby Parker (eyeglass maker). On the other hand, companies that are complicated and not growing such as IBM spinoff Kyndryl (see our interview with the company's first CEO) have been hit right out of the gate. Today, social media platform Nextdoor will debut on the public markets after completing a SPAC combination that valued the business at $4.3 billion. The company — which is akin to Facebook on a local (neighborhood) level — is unprofitable and will unlikely make money in 2022. BUT, the company's sales and users are growing, and the business is easy to understand. The board is impressive, and includes tech VC heavyweight Bill Gurley. Former Square CFO (and current Walmart board member) Sarah Friar is the CEO of Nextdoor (she will be on Yahoo Finance Live this morning). I would not be surprised if investors embrace the company out of the gate, especially after an upbeat (and extensive) presentation in September.

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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