Motley Fool Money
Travel Is Still Flying High
Thu Jul 13 2023Description
The episode covers Delta's strong earnings and travel trends, PepsiCo's earnings and sustainability efforts, investment insights from Howard Marks, and recognizing patterns in macro investing.
Insights
Delta's revenue growth
Delta reported strong earnings with revenue up around 19% year over year. The growth is largely due to the comparison to last year's challenging quarters.
Corporate travel recovery
Corporate travel is growing but not yet at pre-pandemic levels, and it may not fully return until after next year. Flexible travel schedules and hybrid work arrangements contribute to the increase in corporate travel.
PepsiCo's sustainability efforts
PepsiCo focuses on ESG initiatives like reducing water usage and sugar/sodium content. However, single-use plastic remains an issue for the company's sustainability efforts.
Investment insights from Howard Marks
Howard Marks emphasizes the importance of understanding investor psychology and recognizing the cycle you're in. He encourages long-term investing and pattern recognition for successful investing.
Recognizing patterns in macro investing
The speaker believes that he has learned to recognize patterns and wants others to learn from him. Macro investing is challenging because it requires understanding multiple nesting cycles.
Chapters
- Delta's Strong Earnings and Travel Trends
- PepsiCo's Earnings and Sustainability Efforts
- Investment Insights from Howard Marks
- Recognizing Patterns in Macro Investing
Delta's Strong Earnings and Travel Trends
00:05 - 07:40
- Delta reported strong earnings with revenue up around 19% year over year.
- The growth is largely due to the comparison to last year's challenging quarters.
- International travel for Delta was up 61% year over year, while domestic travel only grew by about 8%.
- Corporate travel is growing but not yet at pre-pandemic levels, and it may not fully return until after next year.
- Flexible travel schedules and hybrid work arrangements contribute to the increase in corporate travel.
- Conventions are starting to come back, which is positive for the airline industry.
- Delta aims to retire over $4 billion in debt this year and has brought back its dividend.
- Shareholders want all seats filled on flights, so additional flights may not be a priority for Delta.
- Debt reduction is important for airlines as they need to prepare for future downturns or disruptions in air travel.
PepsiCo's Earnings and Sustainability Efforts
07:21 - 15:21
- PepsiCo's earnings show double-digit revenue growth for 7 consecutive quarters.
- Volume for beverages and Quaker Oats was down, but Frito-Lay saw a 1% increase.
- Price increases contributed to inflation numbers, but overall cash acquisition is up.
- Investing in food can protect against inflation, and PepsiCo has strong brand power.
- PepsiCo focuses on ESG initiatives like reducing water usage and sugar/sodium content.
- However, single-use plastic remains an issue for the company's sustainability efforts.
- Some companies talk about environmental concerns without changing their business practices.
- Doritos is introducing bizarre flavors and snacks to stay relevant and generate headlines.
Investment Insights from Howard Marks
14:59 - 21:29
- When Howard Marks drops a new memo, the investment world listens up.
- Marks is revisiting five major macro calls he's made over the course of his investing career.
- He emphasizes the importance of understanding investor psychology and recognizing the cycle you're in.
- Investor sentiment is currently optimistic, but cycles stem from excesses and corrections.
- Marks highlights that it's worse to sell at the bottom than buy at the top.
- He encourages long-term investing and pattern recognition for successful investing.
- The memo serves as both investment insight and marketing material for Oaktree.
Recognizing Patterns in Macro Investing
21:14 - 24:52
- The speaker believes that he has learned to recognize patterns and wants others to learn from him.
- One of the calls the speaker made recently was not mentioned in the podcast, but he defends it in his writing.
- The speaker was right about the Fed not being able to switch over, but may be wrong about everyone becoming savers and avoiding risky investments.
- Changes like a sea change take time to go into effect, and it's difficult to predict how long this cycle will last.
- Macro investing is challenging because it requires understanding multiple nesting cycles.
- Cyclicality can impact individual businesses, as seen with meta and Netflix's stock performance.
- Market timing is done with hesitancy at Motley Fool.