Warren Buffett warns on US inflation

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London (CNN Business)We’ve all missed live concerts, weekend getaways and long vacations in the sun.

Finally, thanks to coronavirus vaccination campaigns, such activities seem possible again, encouraging investors to pile into travel and entertainment stocks. But a closer look at what many of these companies are saying shows that 2022, and not 2021, may be where most of the action is.
What’s happening: While tourism group TUI (TUIFF) is touting “a strong 2021 holiday season,” the 2.6 million bookings it reported Wednesday for the summer months are 69% lower than they were at a comparable point for 2019.

The company said bookings had actually dropped slightly since its last update, “reflecting customers choosing to defer their booking to future seasons due to the lack of clarity provided by governments on lifting of travel restrictions.” Shares fell more than 2% in Frankfurt.

Carnival (CCL) also said this week that it had cancelled some additional sailings as it planned for a “possible” July restart on select ships departing from Florida and Texas.

“We continue to have constructive discussions with the [Centers for Disease Control and Prevention] but still have many questions that remain unanswered,” said Christine Duffy, president of Carnival Cruise Line.
Events group Live Nation (LYV), meanwhile, said that while it’s about to announce more tours for later this summer, including Dave Matthews Band and Maroon 5, it expects the bigger productions to start later this year and into 2022 “given the longer lead times associated with global arena and stadium tours.”
Big picture: Summer 2021 won’t be a total wash. But it’s not going to be completely normal, either. Does that mean investors got a bit ahead of themselves?
Shares of TUI, which reported a huge loss of roughly $1.8 billion for the first half of its fiscal year, are still up 48% in 2021. Carnival’s stock has climbed more than 19%, while Live Nation is 11.5% higher. The S&P 500 has climbed 10.5%.
Investors may be looking further into the future. Live Nation has said that its concert pipeline is up double digits in 2022 from 2019. Carnival has also reported that cruise bookings are up from pre-pandemic levels in 2022 “despite minimal advertising or marketing.”
That’s great news, and a sign that the economic recovery from a historic shock will only gather steam in the months ahead. But it underscores the dilemma facing Wall Street.
Investor insight: Inflation fears have battered high-growth stocks in recent days, as concerns grow that a red-hot recovery could lead to a spike in prices, forcing central banks to hike interest rates.
In that environment, investors may be inclined to look toward stocks that may be undervalued and could benefit from the recovery. But it’s increasingly clear that requires looking past an uncertain 2021 and into 2022.

Gasoline demand surges after pipeline attack

A growing number of gas stations along the East Coast of the United States are without fuel as anxious drivers aggressively fill up their tanks following a ransomware attack that shut down the Colonial Pipeline, a critical artery for gasoline and other fuels.
As of 12 a.m. ET Wednesday, 16% of gas stations in North Carolina and 10.4% in Georgia didn’t have gasoline, according to outage figures reported by GasBuddy, an app that tracks fuel prices and demand. That was up from 14.7% in North Carolina and 9.4% in Georgia just two hours earlier.
Rising outages are also being reported in Virginia, South Carolina and Florida.
“Panicked buying” is “running stations in the region dry,” Patrick De Haan, head of petroleum analysis at GasBuddy, told CNN Business.
He warned that the “irrational behavior” could prolong supply issues for weeks.
US Energy Secretary Jennifer Granholm pleaded with Americans not to hoard gas as the pipeline attempts to resume operations.
“Let me emphasize that much as there was no cause for say, hoarding toilet paper at the beginning of the pandemic, there should be no cause for hoarding gasoline,” Granholm said during Tuesday’s White House press briefing, adding that the pipeline “should be substantially operational by the end of this week and over the weekend.”
Watch this space: The episode has highlighted the growing threat that cyber criminals pose to the world’s largest corporations and strategic infrastructure, an issue experts say demands urgent attention.
“What will stop this is much higher levels of [cyber]security,” said Peter Yapp, the former deputy director of the UK National Cyber Security Centre. “Instead of putting money into paying people after the event, we should be putting money in ahead of the event and making sure we batten down the hatches.”

Tesla’s problems in China could hurt its stock

Can Tesla (TSLA) maintain its foothold in China, a crucial market for car sales? Investors hope so, but they’re starting to worry.
The latest: Tesla sold fewer than 26,000 cars in China in April, down 27% from March, according to figures released by the China Passenger Car Association. The drop came as Chinese electric vehicle manufacturers such as Nio, Xpeng and Li Auto all reported improved domestic sales.
“It was expected that its April sales would be down sequentially, but not to this extent,” said Dan Ives, a tech analysts at Wedbush Securities. “China is a lynchpin to the Tesla bull story. The sales numbers show that all the issues in April had an impact.”
Remember: Tesla was the target of a protest at China’s largest auto show in Shanghai last month by owners who complained about problems with their cars. Five Chinese regulatory agencies are also questioning the quality of its Shanghai-made Model 3.
There have also been reports that China’s military banned Tesla vehicles from entering its complexes, expressing concerns that onboard cameras could be used for spying — a charge CEO Elon Musk denied.
In this tense environment, Reuters reported Tuesday that Tesla has halted plans to buy land to expand its Shanghai plant into a global export hub due to uncertainty over US-China trade tensions. Tesla did not respond to a request for comment on either its April sales in China or its Shanghai plans.
Investor insight: Investors aren’t panicking, but they are closely monitoring any developments. Tesla’s shares fell nearly 2% on Tuesday and are off again in premarket trading Wednesday.

Up next

Wendy’s (WEN) reports results before US markets open. Bumble and Poshmark follow after the close.

Also today: The latest US Consumer Price Index, a key measure of inflation, posts at 8:30 a.m. ET.
Coming tomorrow: Another look at inflation from the Producer Price Index.
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