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“Competitive golf is played mainly on a five-and-a-half-inch course… the space between your ears.” – Bobby Jones
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
As hard as the bears have been working to push futures lower overnight and this morning, the luck of the Irish won’t quit and has pushed futures on the S&P 500 and the Dow into the green. The Nasdaq isn’t quite there, but it is well off its overnight lows. Treasuries are modestly higher, pushing yields slightly lower, while crude oil rebounds more than 2% to $95 per barrel. Gold prices are fractionally higher, and Bitcoin is basically flat.
It’s a quiet day for economic data today, with Pending Home Sales and Leading Indicators the only two reports on the calendar, and both will be released at 10 AM.
In international markets, Asian stocks were mixed overnight, while Europe is mostly higher, with the STOXX 600 up 0.5%. Those gains come despite ZEW Economic Sentiment Indices coming in significantly weaker than expected, as concerns over the war in Iran weigh on sentiment.
Can it get any worse for airline stocks? After already dealing with the government shutdown where TSA agents aren’t getting paid, the war with Iran has caused jet fuel prices to double and raised the threats of terrorism, which, at the margin, causes travel plans to decline. Since its peak in early February, the US Global Jets ETF (JETS) has plunged more than 20%, effectively erasing the gains from late last year after it broke out of a multi-month trading range. At $24.58, the ETF closed yesterday right near support at the low end of that prior range.
With all the headwinds facing the sector, it’s not looking like the Q1 earnings season is a period that airlines are looking forward to. Despite that backdrop, it was surprising to see comments from Delta CEO Ed Bastian this morning where he said that despite the negative impact of rising energy prices on company margins, the weakness has been completely offset by exceptionally strong demand. In his interview on CNBC, Bastian noted that “We’ve seen eight of the top 10 sales days in our history this quarter, and five of those just within the last two weeks, within just the last week of March”. With demand like that, we can only imagine what the company’s quarterly results would have looked like had there not been a war!
Looking at the airline stocks from a longer-term perspective, the timing of the Iran war couldn’t have been worse. At its recent peak in February, the JETS ETF traded above $31 and was within a dollar of its pre-Covid highs. It’s been a long slog for the sector, but after more than six years, it’s almost back to even.
