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Americans May Stay (Close To) Home By Charles Payne

Another unsolved plane disaster couldn't have happened at a worse time for the global economy and travel industry. (The rampant speculation of terrorism as a cause is the element that makes the crash of EgyptAir MS804 even more foreboding.) There will surely be economic and political ramifications. For the former, the fact this occurred in Egyptian airspace recalls the scene of horrific incidences in the recent past, including the downing of a Russian plane flight out of Sharm el-Sheikh that killed 224 people in October 2015.

Tourism in our country dipped a little immediately thereafter, but it picked up in January; however, it now could be a question mark.

Behavioral Changes

After 9-11, exports of American travel (otherwise known as tourism) took a steep dive. Overall, it also experienced compelling internal changes as well.

It took three years before American tourists got back to post 9-11 levels, but the growth has been staying local as non-North American travel hasn't grown at the same pace of total tourism.

US Tourism Trends

Total

Overseas

Mexico

Canada

2000

60.9

26.9

18.8

15.2

2001

58.0

25.2

17.2

15.6

2002

58.1

23.4

18.5

16.2

2003

56.2

24.5

17.6

14.2

2004

61.8

27.4

19.4

15.1

Costa Rica, Anyone?

US Tourism Trends

Jamaica

Bahamas

Costa Rica

2002

983,000

796,000

398,000

2003

1,490,000

1,400,000

489,000

In 2004, Americans shifted back to favorite European haunts:

  • Ireland +31%
  • Italy +17%
  • UK +14%

More recently, American tourists have flooded the world, including a monstrous surge to record levels last year where almost 74 million American tourists spent $132 billion dollars.

US Tourism Trends

Total

Overseas

Mexico

Canada

2013

61.6

29.0

20.5

12.0

2014

68.2

30.8

25.9

11.5

2015

73.5

32.8

28.2

12.5

Egypt's Death Knell

While American tourists have gotten back out there, they aren't going to Egypt; then again, neither are other tourists. Tourism bounced back after the Arab Spring, but it didn't get back to prior levels.

However, if there was a chance for Egypt to get back to its 2010 level or reach its goal of 1,700,000 visitors by 2020, take a look (chart) at the free-fall after the Russian plane was downed.

Tourism is a major part of Egypt's economy, which is fragile and teetering just as the government has been. ISIS sees the country as a would-be crown jewel in its ambition to create a caliphate. They took major steps toward that goal when MS804 vanished off the radar over the Mediterranean.

Today's Session

I'm looking at mixed-signals from earnings, and I am still perplexed by the Fed and its newfound determination to raise rates. When I hear them talk about validating their individual models, I fear its more ego than arithmetic at work.

Retailers keep missing:

  • Footlocker (NYSE:FL)
  • Hibbett (NASDAQ:HIBB)
  • Shoe Carnival (NASDAQ:SCVL)
  • Ross Stores (NASDAQ:ROST)

Deere (NYSE:DE) beat the street, but everything was lower from top line growth to operating margins

  • Revenue $7.87 billion -4%
  • Op Margins: Agriculture 10.7 from 11.1
  • Op Margins: Construction 5.4 from 11.6

The bright spot in earnings is Applied Materials (NASDAQ:AMAT), a company that's underperformed for more than a decade.

There are half dozen names I'm so eager to feature, but I just can't force the issue with the bias to the downside and a self-destructive Fed lurking in the wings. On that note, we will add positions next week on weakness. Someone said something about buying low once.