Chris, Amazon, Last Year discussed on Capital Ideas Investing Podcast


He was an analyst. Chris covered us telecom an auto so cars and phones. He holds a bachelors degree in economics. In international relations from brown university lisa thompson is also an equity portfolio manager with new world fund among other strategies. She has thirty two years of investment experience with capital for twenty six and in her career as an analyst lisa covered emerging markets companies everywhere from latin america to emerging europe asia and africa to say that lisa has traveled. The world would be greatly understated. She holds a bachelor's degree in math from the university of pennsylvania and we have a second u. penn graduate In top salad men. Todd is an equity investment analysts. Who covers us and european aerospace airlines and us cruise line. So this is a guy who's been in the eye of the storm for the past year. He has twelve years of investment experience. Been with capital for eight. He got his mba at harvard. And again a bachelor's degree in economics from penn so christly so todd thanks for joining us. Great to have you with us. And i do want to go ahead and jump right in and kick us off chris. I might start with you and just ask you to lead off with your outlook for the us. Economy and markets. You know in your view. Are we indeed headed for a roaring twenty style recovery. And if so how long. They expect that to last thanks. Well i think it's useful. Maybe just to describe the experience last year we all lived through it but it's worth reflecting on most recessions that we have you know in this country and other countries around the world tend to be triggered by sort of a gradual process where the economy overheats the fed raises rates and we tip into recession and then account the economy slows down the fed cuts rates and we gradually recover As we all experienced last year was nothing like that Last year we had a a pandemic and in that pandemic some combination of people's preferences people didn't wanna go out government. Policies and health concerns led to a sudden stop and the economy and that was a totally different pattern of recession than we've seen before really kind of modern economic history and during that period of time there were some really strange patterns that don't you don't typically see in a recession for instance government policies in the us in particular but also other countries around the world were very supportive during the depths of the recession and so normally in a recession. You see incomes go down. Dramatically actually in this case incomes went up in many cases and the savings rate went up dramatically because people didn't have a place to spend that income This led to a huge boom in business for a number of companies that benefited from people being home and sorta locked up in their houses. So whether it was amazon delivering. Good your house peleton Allowing you to exercise at home zoom allowing us to do things like this as we are continuing to. These are all companies that benefited massively during the downturn and benefited in a way that i think permanently accelerated their business models. Now we're on the other side of it we have vaccines. Things are opening up and some of the things that you weren't able to do during the pandemic are now available for instance. It didn't really matter how much you wanted to go on a cruise. You know march april last year. They just weren't available It didn't really matter if where you wanted to go on your vacation. You had a pretty limited number of options and you certainly couldn't fly to europe. For instance now things are beginning to all the signs are that people really have a huge levels. Pent up demand to get out. And so there's there's a number of interesting data points here you know if you look at Bookings for cruise lines one of we met with one of the companies recently. They talked about how they're Bookings are already back to two thousand nineteen levels with pricing. that's actually above two thousand nineteen levels. Despite the fact that they're not able to cruise yet restaurant reservations. Show that in the states that have opened early were already back to pre pandemic levels of demand despite the fact that not everyone's vaccinated hotel occupancy has rebounded from low of around twenty percent of april and last year to the mid fifties. Not quite to where it was pre pandemic but pretty close. An airline demand is clearly recovering more rapidly than anyone expected in china which is one of the early countries sort of going in and coming out domestic airline traffic which is affected by the travel restrictions that remain in place is only six percent below pre pandemic levels. So as we go forward. I think it's pretty clear that there's a huge level pent up demand to do some of the things that people been unable to do during the lockdown period. And so i think what you're going to see is continuation of the trends. That are already in place. As cruising opens up people will cruise and people will probably cruise for several years and they'll be backlogged. Hotel occupancy will increase oil demand which was crushed by the lack travel And particularly the lack of airline demand is recovering and will likely recover for on a basis at the same time. I also think that many companies that benefited during the lockdown. We'll continue to benefit. They won't grow as rapidly this year next year as they did last year. But people aren't gonna cancel their netflix subscription. Just because things have opened up and they have a vaccine. People aren't returning their peleton's Just because things have opened up And anyways people's habits have changed and sort of a permanent way food delivery instances taken off and we've also learned to consume a little bit differently and probably will continue to so i think we've got a multi-year recovery In many of the industries that were hit hardest. and we've also permanently accelerated change To the benefit of some of the companies. That are really sort of going to where the economy will be over the next five or ten years. That's a great start. Chris and just to pick up on a couple of things taken. Good notes there Very different pattern. This time you know in in in some ways incomes weren't down but actually up and savings rates were so a lot of consumers have that cash in their pockets that's ready to be spent Into your point. Lots of pent up demand out there. Whether that's cruise lines and i know titled talk about that restaurants hotels airlines But also some of the beneficiaries of this will continue to do Potentially okay i mean. We're not going to cancel netflix's we're not gonna return our peleton's But some habit changes will indeed be permanent. Lisa let's bring you into the conversation. Maybe we expand our view to look more globally. You're global ambassador so similar question you know outside the us. How are you feeling about. International and emerging markets in light of this global economic recovery that. We're seeing. yeah. I feel i feel good. Thanks for asking. I'm being thank similar to some of the trends we've seen already manifested in the. Us and places like china already reopened to see some of the same trends appear in other markets luck. The reopening is just starting to happen in most countries outside of the us and china. And.

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