The Currency of Life

I recently read that travel is the currency of life which is an interesting way to think about it and my natural next thought is, are we spending it wisely? I'll let you noodle on that thought, while I share that post-pandemic this is a thought that most are wrestling with, and as a result, we continue to see record travel.?60%?of consumers said they plan to travel either internationally or domestically between June and August (data fielded in May). This stat is from a soon-to-be-published report and has me blown away.

While American Express earnings sit somewhere in the middle on my very sophisticated Good to Great scale for earnings?assessment, the earnings confirm what we've been talking about for months. The consumer continues?to spend and the want to travel is extremely high and there isn't a near-term end in sight to this trend. Three exhibits from Amex's earnings to confirm?this premise:

1.?It's incredible to see that Amex grew 15%-17% and expects double-digit growth to continue 2024+

2.?Spend is higher across the board, however, T&E is getting outsized spend:

3.?Millennials and GenZ spend is staying very high and this is why we've been talking a lot about Gen Z in this space. Amex has been doing remarkably well within this segment.?(I've written a fair amount on Gen Z.?From Hype to Hope?is a good place to start).

Amex spent $1.4B in marketing in Q2 vs. $1.5B YAG (a 6% decline). And they ended up booking 3 million proprietary new cards in this period. We also know from Delta's earnings that the Delta portfolio has been doing exceptionally and Amex just renewed the Hilton cobrand partnership for 10 years. 5-7 years is a standard cobrand agreement, so 10 is unusually long and speaks to the successes both parties must be seeing/anticipate.

I look at Amex's earnings and think these seem the "best ever", but I do take the market's reaction to earnings into consideration and thus rank the big "bank" earnings I monitor so far as:

Great:?JPM, BAC

Very Good:?AXP

Good:?C, COF, WFC

Emily's report on the?Travel Card Landscape?is a must-read.

As we digest the news that Amex booked 3 million proprietary cards in Q2 and BofA added 1.2 million card accounts in the same period, Amr's?Application Behavior Report?is consistently one of our top read reports each quarter (more than 10 quarters in a row).

My favorite takeaway from this report each quarter is to understand who is winning (booking accounts) through which channel:

The above graph is excellent but I get lost in all the numbers and thus I put together the below grid in order to internalize which channel(s) are working for each issuer.

A question I get asked a lot: after consistent credit card applications quarter over quarter, how long will this trend continue? I point to Slide 14 in the report as evidence: While a little bit of slowing is to be expected, we continue to see a significant proportion of consumers apply for new cards, and with GenZ reaching the life stage where they need/can get credit, this trend will not slow down drastically.

Speaking of Gen Zs (again), two additional pieces of content that are worthwhile to check out:

1. Stefanie Kundakjian 's?Marketing to Hispanic Gen Zs?highlights some very notable, yet nuanced differences among this population when compared to the overall Gen Z segment.

2. Amex has been having success with GenZs (along with Millennials). And if rumors of Apple Card moving to Amex are to be believed this trend may be about to get turbocharged. Lierin Melvin (Ehmke) has an amazing presentation on What's the Future of Apple in Financial?Services in partnership with our friends at The Financial Brand and if you didn't attend the session, you can view the full report?here.

As ever - Anuj