Last week was negative for global equities with the MSCI World Index down 4.2% as financial conditions continue to tighten. But in the middle of the sea of red, our travel basket was the best performing basket down only 2%. This is quite odd given the galloping prices on energy and food which are pulling income out of households and thus the expectation is that consumers will dial down on their discretionary spending which includes traveling.

If take a look at the travel basket we see that some of the strong performers last week were the cruise liners such as Royal Caribbean and Carnival up 5% and 1.5% respectively. The moves were not driven by any news so one potential driver could be lower prices on oil, gasoline, and diesel in the US as the country continues to release oil from its strategic reserves at a steady pace. As we highlighted in on Earnings Watch update on Friday, Carnival reports FY22 Q3 earnings (ending 31 August) on Friday this week with analysts expecting 800% revenue growth y/y and a return to profitability with $734mn in EBITDA expected. But as the normalized price chart below shows, the cruise line industry is deep under water compared to the period before the pandemic.

“The merge” fails to bolster crypto sentiment

As we wrote last week in our crypto update, the second largest cryptocurrency Ethereum successfully merged from proof-of-work to proof-of-stake which is technological implementation aimed to reduce energy usage and making the network more scalable. One would think that this event would bolster the outlook for the crypto industry but that turned out not to be the case. Our Bitcoin centric theme basket was the worst performing basket last week and even ETH, the naïve currency of the Ethereum network, was weak and is continuing down today against the USD trading just above the 1,300 level.