Temple 8 Research
AI Buildout, Macro & Energy Infrastructure Research
Royal Caribbean is positioned to decline into the credit stress and economic slowdown expected heading into 2027. It belongs to a basket of high-octane shorts, mostly non-AI names, across consumer discretionary, consumer spending, unsecured credit and private credit, to be detailed in several write-ups toward year end. x.com
MGM Resorts' debt and operating leverage make its low free-cash-flow yield risky. A recession would make the situation very bad even if conditions otherwise look fine, and Diller is following the Liberty levered-buyback model. x.com x.com x.com
Carnival's recent resilience looks vulnerable because it is the one cruise operator that does not systematically hedge fuel costs. Almost all consumer cyclicals have rolled over, consumer sentiment is weak and a virus outbreak is possible, suggesting demand 6-12 months out could be weak. x.com
Cruise demand remains strong despite recession concerns. Royal Caribbean beat Q3 EPS expectations at $6.57 versus $6.38, grew revenue 9%, raised guidance and reported surging 2027 bookings; Viking and Carnival are also named in the cruise-operator view. x.com
US consumer discretionary stocks may bounce, but a likely economic downturn next year means any rally is unlikely to last. Given the issues facing the consumer and where the economy is in the cycle, the consumer is not where the focus should be, though there is no specific downside target. x.com x.com
Hantavirus headlines are being pattern-matched to 2020, and markets react to perception before confirmed reality, so fear alone can shift attention, behavior and capital flows. Whether a lockdown happens matters less than whether the headlines dominate for 60-90 days. That puts Delta, United, American Airlines, Carnival, Royal Caribbean, Norwegian Cruise Line, Marriott, Hilton, Las Vegas Sands and Wynn on the bearish side, while automation and AI infrastructure trends accelerate. x.com
Royal Caribbean's drop after Carnival reported 30% higher fuel costs is an algo-driven opportunity, because Royal Caribbean is far better protected. Carnival is the only US cruise line that does not hedge fuel, while Royal Caribbean is 59% hedged for the rest of 2026 at below-market rates. A 10% rise in oil is a 1.1% headwind to Royal Caribbean's 2026 EPS versus 4.2% for Carnival. x.com
Royal Caribbean's latest move looks like diworsification of the already difficult cruise industry, because owning travel assets is a bad model. Booking and royalty-style franchisers such as Marriott and Hilton, which avoid owning those assets, are the better way to play travel. x.com
US consumer cyclicals and broad market breadth look set to gain as Q2 bank results refute the K-shaped consumer doom thesis. Card spending rose 9% to 12% at JPMorgan, Bank of America, Citi and Wells Fargo while credit quality improved: JPMorgan's card net charge-off rate fell to 3.34% from 3.47% and it cut full-year guidance, and Wells Fargo's credit-loss provision fell 9%. With rate tailwinds and falling gas, retail, transports, regional banks and equal-weight stocks signal a cyclical rotation. … Show more
Credit Acceptance faces pressure because subprime car buyers are running out of money. Its EPS growth has come largely from buybacks, with operating cash flow flat over five years, per another investor's review, and lending businesses like this are very hard to analyze. x.com
Consumer discretionary and staples stocks such as Uber, Netflix, Nike and Lululemon may see massive downside into November as pension funds sell them to buy the OpenAI and Anthropic IPOs. The AI bankers driving those deals also help manage the pensions, so as the selling and repositioning play out, the wind-down could get bad. x.com
