Economics is simplified as a tale of two worlds. Carvana ( CVNA ), a used car service, sold off sharply
after Ally Financial ( ALLY ) released results. Ally’s results are a concern for car sales.
Ally reported that auto loan applications fell by 200,000 in the second quarter. Auto originations fell by $1 billion. IN
Also, Ally received higher provisions due to increased lending in the auto finance market.
Investors should prepare for higher car down payments up front. The weakness in auto sales could worsen for
firms such as Ford (F) and General Motors (GM). Toyota (TM) sells quality vehicles. The Japanese firm can
face sales limited only by supply.
In the cruise ship market, Carnival (CCL) has positive potential. She may have increased debt that was due
raise to survive. However, the company is posting strong revenue growth. In the third quarter, carnival
revenue rose 688% to $4.31 billion.
Carnival expects to potentially report higher adjusted EBITDA in the fourth quarter. In 2023, it will
increase advertising spending. This will drive bookings and increase occupancy levels. They are waiting for the carnival
achieving occupancy levels that match historical levels next year.
The Risks
Carnival relaxed Covid protocols in August. If health regulators decide to get tougher again, it could slow down
backup volumes.
