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U.S. global Jets ETF faces headwinds amid virus surge

Yahoo Finance’s Kristin Myers and ETF Trends CEO Tom Lydon discuss how the coronavirus is weighing on the airline industry.

Video Transcript

KRISTIN MYERS: Time now for our ETF Report, brought to you by Invesco. Now with the holiday season coming up, let's talk travel and online retail with Tom Lydon, ETF Trends' CEO. Tom, great to have you join us again. I want to start with travel. So we've been talking a lot about stimulus right now-- non-existent, unlikely to happen in the next week, two weeks as many were hoping that we would have some sort aid deal before the election.

We're now seeing these lockdowns in Europe, surges here in the United States. So I mean, what is the outlook for airlines going forward? It seems a little bit bleak to me.

TOM LYDON: It is weak. And you know, we're obviously concerned. However, the big thing, Kris, in this, airlines aren't going to go away. And unfortunately, as we get into the holiday season and COVID numbers increase, more people are going to be concerned about flying.

But I've got to say, I flew for the first time this last weekend. It was on Delta, I felt very safe, very clean. Everybody was wearing masks. So even going into it, I think it's not going to be as dire as we saw back in March and April. So we're all taking precautions, and that's really key and critical.

The key question though is can the airlines hang on? And independently, when you look at some of the major airlines, they do have enough cash on hand, but they're all saying, at some point in time, they're going to call uncle, and the government may have to step in.

We were all hoping, I think, that there would be some type of stimulus for the airlines and especially for the tens of thousands of employees. But we haven't seen it so far, and there's no indication that we're going to see it anytime soon. There is an ETF around it. JETS-- J-E-T-S by Us Global for full disclosure, I am on the board of the parent company there. So I know a lot about this.

I'm not involved in the management at all, but it is a way to invest in the airlines if you feel eventually they're going to come back. This ETF is down about 47% so far this year. And at the beginning of the year, at only $50 million in it, but now it's approaching $2 billion as many Americans are thinking that, yes, eventually it will come back.

KRISTIN MYERS: And I should mention, Tom, looking over at some of those major airlines right now, we have United and Delta down over 4% right now with American down 1 and 1/10 of a percentage point right now. So I hear what you are saying, you know, that you felt safe flying. But how long can airlines hold on?

Well, Southwest just announcing the other day that they are going to be starting to book that middle seat again. Delta, of course, famously said that they are not going to be booking that middle seat to be giving passengers a little bit more space. Do you think that is going to be changing anytime soon?

And do you think that there is going to be a reaction on the other end from the passengers and those customers that are saying, listen, you know, what? Flying right now is not a risk that I want to take. Especially, as I mentioned, we are seeing these surges all across the world right now.

TOM LYDON: Yeah, it's going to come down to a personal choice. And I think, as we all look at it, and we see the numbers start to pick up, and if it really starts to kick in, we're all going to have to make personal decisions. We're all suffering through this. We all have loved ones that are in other cities that we'd love to see over the holidays. But as you point out, we may have to make those tough decisions.

At the same time, the airlines are doing all they can. And you know, I think about the people that are on those planes every day, and they're really doing a good job. But again, you see the numbers, there's not that many cases that have been tied specifically to airline travel.

That's something that we're going to continue to keep an eye on. In the meantime, the airlines themselves have been doing really a fantastic job. And most importantly, we're not going to be a country that, at one point in time, doesn't have airlines anymore.

KRISTIN MYERS: Right. Tom, I want to switch to online retail. I have about a minute left with you. Again, still no stimulus, which of course, would boost the consumer pockets. And we've seen largely that boost to unemployment go away. Wondering, however, if the outlook there is a little bit more positive, what you might be expecting over the next couple of months as holiday season is underway.

TOM LYDON: Yeah, it's been a crazy period of time for online. So when you think about it, how much more are you doing online versus going to the big box retailers? And it's crazy when you think about retail sales last year being only 15% online, where now the numbers are expected to be in the third quarter almost 33%-- so a huge jump.

Going into the holiday season, I think we can see those numbers go up even more. And the amplify online retail ETF ticker IBUY, I-B-U-Y is a great way to participate in companies like Amazon, and Etsy, eBay, Overstock, Grubhub, where people are ordering food delivered. EBay, for example, there's a lot more activity as people are now diving into collectibles as they have more time to be shopping. So I think this is an area that's one of those rosy areas in the marketplace, even though we're concerned about COVID numbers increasing.

KRISTIN MYERS: All right. Well, sadly, we have no more time, so we're going to have to just chat with you again in the future. Tom Lydon ETF Trends CEO Thanks so much for joining us today.