Americans Prioritizing Disposable Income on Travel

watching data, some strong, some a little bit weaker. And this is why we leaned so much on the c suite Jess when it comes to trying to figure out what comes next. And one of the companies we've been watching, Booking Holdings. They're up nearly thirty percent so far this year. It reported earnings last week, beating on both the top and bottom lines. And among that company's brands, Priceline. So we wanted to get a look at travel trends and demand.

So with us Priceline CEO Brett Keller. He joins us via zoom in Norwalk, Connecticut. By the way, he's been with the company for more than twenty years, so he's seen a few cycles in his lifetime. Hey Brett, so good to have you here with justin myself, how are you and how would you describe the travel environment right now? Thank you, thank you for having me, And things are

actually very good if you're in travel right now. Obviously a very tough you know, twenty twenty and twenty one, twenty twenty two started to show some really nice signs, and for the last couple of quarters, the consumer has really demonstrated that they're prioritizing travel right now. And if you mentioned earlier, you know, we recently came out with our fourth quarter results and it's showing real strength across especially you know, across the US, but really across all

markets around the world. And I'm really excited with spring coming up, Carol and Brett, just because we have daylight savings next weekend, so we'll get that extra hour coming soon. But Brett, I was curious about what does the travel demand look like as we head into spring. Should we expect this strength to continue? I mean, when I think back to the holiday travel, there was a little bit of chaos when you thought about the airlines and some of that in the bookings. But what are you expecting

for spring travel right now? Sure, well, consumers have essentially kind of fallen back into their typical booking patterns, meaning they're traveling on the busiest days of the year, so they're going to pack those spring break weeks, especially families when children have time off from school. Families are really prioritizing travel this year more so than last year, and most of them are heading to beaches and resort destinations.

So if you want to go to one of those destinations, you can expect to find a lot of people traveling. I think the airlines have largely recovered and are operating at a pretty good scale now, but they still have limited capacity, which means planes will be very, very full. There's not really any slack in that industry at this time. Gotta say bright, you know, I get that. You know, if you try to book a flight right now for

business or otherwise, Man, those flights are expensive. We're still kind of, you know, blown away by how expensive it is. Does that continue? Because I'm thinking about the inflationary side of this story. What do you see in terms of costs for flights, for lodging, How is it playing out? Sure?

You know, when we look at forward bookings at the spring break time frame, which is really you know, most of March in April, what we're seeing as flight prices are up about twenty five percent over last year, so very expensive. If you're trying to travel overseas, which a lot of people are now heading out to Europe, you're going to see prices up to forty percent over what you being what you were paying last year. On the

hotel side, not so challenging. Hotel prices are about four or five percent, so a little easier to consume those. But on the if you're trying to fly, you're going to pay a lot of money. So I think you'll see quite a few consumers in the US choosing to drive versus fly, and they'll they'll get to their hotel destination that way. But it's a lot to consume right now,

and consumers so far are inhaling those prices. We haven't seen either the hotel industry or the airlines really pull back on a lot of their price increase, and so as long as demand is there, we can expect those prices to stay rather high. Right any sign that capacity increased capacity comes into the airline industry, I mean, they've gotten so smart at ticking out excess capacity that was

pre pandemic. We saw that in a big way. They're great about charging for everything once you get on a flight, or even on your way to that flight. Is there any signs or any indications that you're hearing that we get an increase in airline capacity. Well, I think there's some early signs. I know all of the airlines would love to build up capacity. What they've been challenged with, of course, is hiring enough pilots and staff and ground

crew to support the oncoming flow of equipment. There's been a number of new orders put in for planes, and so I think over the next couple of years we'll see that start to ease. But you know, getting us through the summer, I think what we have today on the market is pretty much what we're living with, which means a very stressed environment. When it comes to, you know, finding an airline ticket that is reasonably prized to a

great destination. There are still deals to be found. You can still find reasonable locations to travel to, but you might have to be flexible if money is a really tight concern for you right now, Britt, Where exactly are the most affordable deals for spring break, whether it's to the US or maybe even internationally. Sure, you know, if you're if you're looking for a nice, warm beach destination.

Fort Lauderdale always a good option. Myrtle Beach, you know, not the Miami Beach, but provide the same type of experience in some ways, especially for families. Puerto Rico is very popular right now. Obviously Dominican Republic, Romaica. So the Caribbean continues to be a reasonably affordable place to go overseas. You know, if you're trying to travel to the big

cities like London and Paris, you're going to pay. If you are a little bit flexible and want to try something new, you can try something like Lisbon, Athens, Munich, in the Naples, you know, those destinations. You'll pay maybe a touch less on the flight, but you're really going to say when it comes to your hotel and the average price you're going to pay there as well as it's just a little cheaper to travel in some of

those markets, especially in Greece. A beautiful destination and much more reasonable when it comes to the daily expenses for a consumer. Sign me up, We're ready. Hey listen, Brett. What I do wonder too, is the window that you guys see globally, Like, what are you seeing globally in terms of where there's lots of activity travel wise, Is it mostly Is it largely the US? I know here in New York City, as I walk the streets of New York, I'm seeing a lot more international travelers back

on the streets. Yeah. You know, the US recovered first, and that was mostly due to domestic travel. The US borders obviously opened up a little sooner than some of the European boarders, and especially the Asian borders, and so we saw a number of international travelers begin to pour into the US. But Europe came back very strong in twenty twenty two and is now moving at a very

fast pace and catching up to the US. Asia was the longest, they took the longest coming out of COVID to really start to recover, But they are now ramping up very very quickly, and I think in some countries we're seeing demand outpacing twenty nineteen. Because the travel was so constrained for so long, people aren't just desperate to go out and take vacations, visit friends and family and

just see the world. Something else I thought was interesting in a survey that y'all had, was looking at how spring breakers are basically split between going someplace new versus returning to a favorite destination. Why do you think that is? Well, you know, travel is one of those things that if you've had a great experience, you want to repeat it.

And a lot of consumers, you know, when they find a favorite hotel or a favorite location, they know they can bank on that head and count on that and if they can get the price that they want, they're going to return to that destination. We see that a lot with Priceline customers, right they come back and repeat and stay many times at the same hotel. And I think that's just you know, when you've had a poor travel experience, it just reminds you how much you love

the good ones. And so I think people are just a little bit of a creature of habit there you're going to return to where you where you feel most comfortable, you know the area, etc. But there's always a mix of people who want to try something new every time they head out. And with the world now really opening up, I think it's much more possible to do that now,

you know. The UN World Tourism Organization came out with a stat that said over nine hundred million tourists traveled in twenty twenty two, that's still only sixty three percent of where we were in twenty nineteen. But this year that number could get as high as ninety five percent, so almost back to a fully worldwide travel recovery. I gotta tell you, I'm one of those people. There's a few places I know, I know, I'm gonna love it, and I go back. Hey, listen, Brett just got about

twenty five seconds here. Lots of geopolitical concerns. Doctor's remind us were still not over COVID completely. What is it that you worry about most when you look at the outlook? And again just about twenty twenty five seconds. You know, I think our primary concern obviously is the longstanding impact of inflation on consumer's wallet. I think that really is the primary concern now. I think consumers are largely over concerns about health as they travel, and it's now really

more about the pocketbook. And you know, that's what we do here at Priceline. We try to help you get a great deal and get you where you want to go. Well, listen, great inside, and so appreciate you spending some time with us on this Friday. Brick Keller, He's chief executive officer at Priceline, joining us via zoom from Norwalk, Connecticut. I'm Carol Masser along with just met and you are listening

in watching Bloomberg Business Week and this Bloomberg Radio. This is Bloomberg Business Week inside from the reporters and editors who bring you America's most trusted business magazine, plus global business finance and tech news. The Bloomberg Business Week Podcast with Carol Masser and Tim Stenebec from Bloomberg Radio. So it was just a year ago we were all, I think, safe to say a bit's done with a news hit that actor Bruce Willis would step away from acting due

to a battle with aphasia. That's a language disorder caused by damage in a specific area of the brain that controls language expression and comprehension. And then last month more news on a specific diagnosis, fronto temporal dementia, something known as FTD. Safe to say it also sent us all googling to understand what this was all about, Jess. So lucky for us we have back with us doctor Ian LUs Beata, clinical Professor of Medicine at NYU Langone Medical Center.

He joins us via zoom in New York City Ian. Good to have you here on this Friday. I do think we're all wondering what the heck this is about, so tell us little bit more about it, and good to have you here with us and on zoom. Absolutely thanks Carol and Jess, thanks for having me. Dementia really

is a problem nationally. At least six million people in the United States have it, and it's estimated that about ten percent of people sixty five and older have signed shore early dementia, and really as much as over thirty percent of people who are over ninety, so it's really common. The causes are not totally clear. Dementia really is a group of diseases that present with similar symptoms, usually brain changes, and they can present with memory issues and personality changes.

Fronto temporal dementia is actually not that common Alzheimer's. Fifty to sixty percent of all dementia is Alzheimer's and frontotemporal really describes where in the brain it is. The frontal lobes are here and the temporal lobes are on the side, and the frontal lobes really help us with personality decision making, an inhibition kind of thinking before speaking or acting, and patients who are frontotemporal dementia, unfortunately over time as a decline,

often have disinhibition. They may speak inappropriately, they may act inappropriately, they may have processing issues with hearing and speaking word finding ability, and that can overlap with other kinds of dementia classic sort of Alzheimer's dementia, but there are other kinds of dementia Louis body dementia, Parkinsons can have a

variant of dementia alcohol use. So it's really a problem, and it becomes a real problem for caretakers because people initially begin to lose thinking function, but physically they're okay, so they may wander, they may think they can still drive or make decisions when they really can't. And sometimes they can be agitated and not really fully understand their decline and not really cooperate. So it really is a nightmare.

I was curious because you were talking about how rare it is for someone to have frontotemporal dementia like Bruce Willists. Do you have a scope of how many Americans or even just globally people are impacted by this. It's a big number and unfortunately growing front to temporal dementia is somewhere about five to six percent of dementia's. Alzheimer's is the classic sort of fifty or sixty percent of dementias,

and then they're a host of other ones. So, of the six million people in the United States and growing with dementia, about five percent of them have fronto temporal and it's not always diagnosed right away. Many people come into the office, I have word finding difficulty. I can't remember where I put my keys. You know, most of those are not significant, but over time that may progress, and doctors need to be more aware of it. Referral

to an urologist is helpful. Sometimes brain imaging is helpful. We'll see, for example, with FTD you'll see a decline in the frontal lobes and temporal lobes. Alzheimer's general brain shrink and some of these are associated with protein deposition, either amoloid or TAW protein, which is why a lot of the company's biogen east Side. Many are looking to kind of slow the amoloid or TAW protein. But how much that really affects the progression is yet to be seen.

But the problem is it's an aging population just and exactly as you say, whatever the numbers are. Now, let's say five percent fronto temporal of the six million people, that number is growing. Well, you know, that's the thing I was thinking about you and is that you know, I've certainly had older family members in my life, you know, that have had dementia, but not everybody who gets old gets dementia. So what is it like you talk about? You know, what's going on that maybe is you know,

brings this all about. But I guess as we all think about it, is there a way to avoid it? Or is it just the luck or not luck of your genes? That's why you're the anchor Carrold's place. Now that's really the key thing, or one of the key things, is how do you prevent it and how do you treat it? So certainly we know overall health makes a difference. Obesity increases many problems diabetes, heart disease, sleep at me,

but it also increases cognitive function. Hypertension needs to be controlled, cholesterol needs to be controlled, so real alcohol needs to be controlled. We now see, unfortunately, we used to think that one drink a day was okay, and now now unfortunately we see the more you drink, the more complications you can have. So really the best advice is to be healthy, keep your blood pressure under control, keep your

cholesterol under control, keep your weight under control. And people who remain active, thinking maybe an argument to work later, don't retire so early. People who are more active physically and mentally seem to have a slower decline. Some of these can run in families, but often it's sporadic, and we don't really know why some people get these proteins in the brain that begin to damage your function, and

why others do not, and why it's increasing. That's also a bit unclear, but certainly there are a few treatable causes like normal pressure hydrocephalous where you can put in a shunt and do some things to kind of slow the decline, and medications really don't reverse it. They just slow the decline. So it is you're asking the right question. We do not know why some people get these abnormal proteins that cause well, let me put it this way,

it's associated with decline. We're not even sure it is forcing the decline because I'm trying to figure out, are you telling me I'm not out of ice cream? Like every day? Is that what you're telling me it sounds like it ian moderation. I think moderation is and really in all areas, and that would be the best thing. And you know, continue to ask smart questions and be engaged with many people social activities, cognitive activities as you do.

Definitely will Is lowers the risk of dementia. The one thing I will say about Bruce willis, like, if you've ever I mean, he was so funny, so bright, so with it, and so it just seems like such an evil thing to have this kind of illness for someone who's so articulate and like I said, so clever. You lose yourself and the family loses their loved one, and it's really horrific. And we need more funding and more

energy to really get to the cause and cure. Well, I wasn't going to ask you what the main challenges were as far as trying to find a cure, but you were just talking about the funding. Is that the main obstacle standing in the way. You know, drug companies obviously have a huge incentive. Many companies I mentioned a few are actively trying to develop a cure or a way to reverse this. Part of the problem is what we think is reversible, like these ambeloid deposits or tab

protein or neurofibroli tangles. You know, when you do brain biopsies in some of the patients you see not only shrinkets, but these abnormal deposits. What's not clear is if you can reduce those, are you really changing the course of the disease? That is yet to be seen. That's the hope that if you can reduce, for example, amoloid protein, and that can occur in other error is. Amoloid can occur in the kidneys and the liver and other places.

But the real thing is if you slow that down or stop that, are you really affecting the endpoint of the disease, and that we don't really know yet. Well, money is needed, Yeah, no, absolutely, And it's interesting, especially when you go back to the Alzheimer's part of it. You see drug companies certainly in the pursuit of figuring out how to treat that or come up with some kind of treatment. The stocks often move on any kind

of indications in a positive way. And thank you so much, great to see you and have you here via zoom. Have a good week at doctor ian Lusbad or Clinical professor of Medicine at NYU Landgoing Medical Center. Joining us via zoom in New York City, listening to the Bloomberg Business Week podcast. Catch us live weekdays from two to five pm Eastern on Bloomberg Radio the Bloomberg Business app band you Doo. You can also listen live to our

flagship New York station Just Say Alexa play Bloomberg ELBM Dierdi. Well, you might say they're mad as hell and they're not going to take it anymore. Female exects. They're exhausted, frustrated and calling it quits. The story in the new issue of Bloomberg BusinessWeek, now out on newsstands, online, up Bloomberg dot com, Slash business Week, and of course on the

Bloomberg terminal. Let's get to exactly what's going on, Bloomberg News Economics reporter Joan al Marte in our Washington DC bureau. She wrote it. She joins us along with the editor Bloomberg Business Week, Joe Webber here in our Bloomberg Interactive Broker studio. Not a good trend, It's not. And the thing that really stood out to me is that, you know, there has been some progress about what female executives, how high they could go, whether it could look like those

numbers were trending in the right way. And then what really stood out to me in this story it was the number of sort of you know, high profile, big names that suddenly are leading. So so break down your reporting, Janelle, and tell us about what you learned as you dug into it. So this is something that is going on and it's not fully captured in government data. And what's what's happening is that a lot of women in senior level positions. We're talking about people who work through the

most intense phase of the pandemic. We're not the group that was laid off initially, you know, we're really trying to keep their staffs together, their families intact, and how to belated told to what happened. The stress and exhaustion caused during this crisis really is causing some of them to bow out. Now, what does that look like? It depends. So for some women they're moving into lower or less

demanding positions. Other others are changing industries. We know there's research that shows that women were than men changed industries during the pandemic. And for other people and for other women in this position, it really means just taking a step back, walking away from their job, leaving it in some cases really lucrative paychecks behind, and saying that it's just not worth it for them. It's not what they need in their lives at this moment or what they

need for their families. Okay, so there's some big name companies that are trying to help solve this problem because of how acute it's become. What are they doing so? Good point there, Joel, So what's going on is that we're seeing companies take some action. You know, these departures are not good for them, not good for the efforts

that have been made to diversify corporate leadership. And it's interesting to see companies like Amazon and Goldman Sachs either invest in or relaunch or expand programs that are called returnships. And what these initiatives do is it gives people who have left workforce there a lot of them are targeted at women. It gives them a way to come back to work in a mid level position as opposed to having to start all over. And it's just one way to retain or recruit, for example, more women who might

have left for whatever reason. You know, just how costly is this when you think of the progress that had been made in recent decades. How much does this undo that? So I think that's the big concern. Right, We have seen some progress, So I don't want to discount that we are seeing some growth in terms of the share of women in inn CEO positions, for example. But if you look at maybe the national level from the beer of labor statistics, that's pretty much flattened out over the

past few years. There's a lot of different ways to

look at this. Again, the data is not great, but I think what you're getting at just is that there is a cost here if they don't find a way to address this, if they don't find a way to make workplace is more inclusive, to allow women to more confidently feel like they can balance all of the things in there, you know, in their personal and in professional lives, that it doesn't bode well for the pipeline that is feeds into these sort of C suite you know, of

course CEO level positions. And I think another thing to note is that, um, well you know, I think you're you're you're hitting on that right there. Well, it's interesting too, And I think about like if we hadn't got through the pandemic, and we all got and I've got a glimpse of you know, we all wish that hadn't happened.

But it's like, wait, I don't have to commute, I get two or three or four hours left, you know, extra in my day, and I see my family and I really do like them and I'd like to spend more time with them. I mean, this concept of balance is it really here to stay where companies are like, yeah, get it, so take a day, take a half a day, leave early. Is that realistic? Is that likely to happen? Or is it that women are still doing the bulk of things at home when it comes to the family

and that makes it tricky so when companies. So McKenzie and Lenin did some research on this, and what they found was that stress and exhaustion were cited for highly for some of the reasons why women were making these changes. And I think it shows exactly what you were talking about there that women in senior level positions are still taking on much more of the work at home when

compared to men at the same level. And what I was going to say earlier is that a lot of women also take on extra work around the office to help that diversity, to make sure that you know, women, women of color, other underrepresented groups are getting the resources that they need, you know, the advancement that they deserve,

and that kind of work. Even though it pays off, it may not always be something that's included in their compensation, for example, So it can also lead to burn out because it's it's extra effort and it may not always be rewarded. I just want to say something about the data because that is also an interesting element here, and as you wrote, the government track data leaves a little bit to be desired. So what do we have and what do we not have here if we're going to

actually like attempt to wrestle with this challenge. So we have some private sector groups that are taking a look at this and as well at the government level. So at the government level, if you look at the beer of labor statistics and the share of women that are in management positions that's actually ticked down a little bit

over the past year. And then the share of women who hold you know, all CEOs or rather all of the CEO positions that are held by women, that's really held flat since twenty twenty, so that can be worrisome.

And then you have research and surveys from groups like Lenin and McKinsey and for example, well they found that for every two for every woman at the senior level who gets promoted, two are leaving the company ouch and that women are leaving their companies at higher levels than man So that kind of stuff does show that women

are making changes. And it doesn't always mean that they're leaving their workforce, but it can mean that they're moving on to another employer which might not be good for your pipeline, or that they're moving to a less demanding position for the time being. Interesting story. I love this idea of returnships like that is certainly a new concept I hadn't heard, so I'm so glad you were able to shed some light on what's going on in that

as well. Bloomberg News Economics to putter Janelle Marte. She's in our Washington, DC bureau and our thanks to the editor Bloomberg Business Week, Joel Webber here in studio. This is in the new issue at Bloomberg Business Week, on newstands, online and on the Bloomberg check it out. You're listening to the Bloomberg Business Week podcast. Catch us live weekdays from two to five pm Easter on Bloomberg Radio. The

Bloomberg Business A band you do. You can also listen live to our flagship New York station, Just Say Alexa play Bloomberg e Love and Dirty, riding a few freeways, I bet in a pint And around the La area and around California is Ross Gerber. And you might recall it was just one week ago after the close, or I think or just around the close, Ross Gerber, vocal Tesla shareholder, the news came out that he would drop

his bid for a board seat at Tesla. And just this week he was in Austin at the Tesla Investor Day on Wednesday. So we've got a million questions for him. He is a Tesla investor, car owner, fan, sometime critic or at least concerned about where the company's going. He is CEO at Gerber Kawasaki Wealth Management, joining SVA Zoom from Santa Monica, California. Ross, how are you. I'm good.

I'm a little tired, to be honest. It was quite a quite a week and it's always graping with the Tesla community because you know, Tesla's one thing, and then the community of people around Tesla is phenomenal. So it was really fun. A couple of days. We'll take us there,

bur eisen Ears, snows and toes. At that Tesla event, what you saw, what the mood was, what was being talked about, and you know what you actually got from maybe Tesla executives leading up to it, because my understanding is you were gonna have some conversations, right, Well, it turned out to be very difficult because there were about three hundred analysts there and all the executives you know, were there, but it was a little bit of a mob scene so to really have like sort of a

real conversation. So it's kind of like I'll send you more information. You know. It's like it was quite an event.

But I think what most people didn't get by just watching the presentation was I was able to tour the factory before the presentation, so there was a lot of things I was able to see that when they started talking about it was sort of like putting in context the things that I had seen and what I saw in Austin was phenomenal, you know, like they have grown that factory so much from when I was there a year ago for the opening and there was nothing going on,

and so Tesla's really just in a lot of ways at the beginning of their next stage age. And what I really got out of the event was that the moat around Tesla's business is as deep as it's ever been. I really thought, wait, wait, wait, where's the ros gerber who wanted a board seat and was worried about distraction with Elon Musk bring them back here? You were not all a little disappointed that there wasn't an unvailing of

a new vehicle. No, I wasn't disappointed at all, because that's a vehicle unveiling event and that's much more like a party. But it's really about but goat wait wait wait, wait, wait wait wait wait. Because I know our audience wants to know this, and you've been so generous with your time over the years talking Tesla, why did you drop your run for a board seat? Well it was a couple of reasons, but so really what it came down

to is I love Tesla as a company. I'm an investor in the company, but I'm also a climate activist and I think it's a critically important company to solving climate and making a better world for for my children and all of us. So you know, it's it's really important for me to see them be successful, irrelevant financial side of it, and what Elon's doing is really at Twitter has really i think changed a focus in his in a lot of ways away from these critically important

issues that Tesla faces. So that hasn't changed in my opinion. Just as much as I still love Tesla, I still have these issues with Elon, but I think, you know, said drop your pursuit because the board wasn't really going to get me anywhere, to be honest. So what I realized is that I don't want to get into this battle with Elon and board members where I'm spending all this time just fighting with them, because the truth is, even if I made it on the board, none of

those board members were going to support me anyways. They all have their own agenda. And so what I realized when I started the board bid to when I dropped the board bid, which was a couple of weeks, was that everybody on the board spent the entire time in court for Elon, that he had all these cases, and I'm like, if I go onto the board, I'm going to end up in court defending cases all the time, Like, that's not what I'm trying to do. What I'm trying

to do is make Tesla a better company. And it really just became obvious to me that I could do that without being on the board, and in fact, being on the board would be would actually not get those things done. So I realized I had made my point. The company heard me, and I think a lot of what they were showing us an investor day was trying to show the depth of the company, and that's been one of my criticism is the secession planning. And what we learned was that Tom Shoe, for example, has taken

over his global production. I thought that was great news. He's a really competent executive. I think the team they're super sharp. But I'm still very concerned because Elon is the driver of all things great at Tesla, and you know, the biggest risk is if something happens to Elon and his distractions. Was this more to show that Tesla has a deep bench while Elon does get distracted with other

ventures that he's doing. Whether obviously last year there was everything going on with Twitter, but was this war of a show for investors to kind of prove that if he does get distracted, there are other people there. Yeah, and I think, you know, he wanted to show the competency and the projects that these people were working on. But I think what was you know, what wasn't shown there that was still the problem is that Elan is still driving all the critical decisions being made by these teams,

and so he still is critically important to Tesla. In fact, he didn't prove to me at all that he's not critically important to Tesla. And in fact, what I learned being there is that they have three incredible challenges ahead of them over the next year, which include getting full self driving to actually work, and getting forty six eighty cells to actually work, and getting the cyber truck to actually work. And so you know, I saw the cyber truck. I was touching the cyber truck. I'm like, this is

the coolest truck ever. But we gotta make trucks. And so this is my concern. I think that risk is very real for Tesla, which is execution risk? Interesting? Okay, So well, so if you were sitting so you have had no conversations with Elon directly recently. No, No, if you could sit down with him, what would you say, or you ask, well, this is what so? This is what I learned also this week is that I have a fundamental disagreement philosophically with the way Elon sees the

value of advertising. And I find it ironic that he owns a social media company where he pitches advertising to lots of people and then doesn't believe in it himself at all, you know, and like, so I was basically like, look, I'm going to put together a proposal and explain to you how advertising creates demand and allows you not to have to lower prices of vehicles per se to stimulate demand. And they fundamentally just believe in the economics of if

I lower price, I'll have more customers. And he said it several times. If I keep lowering the price, there's an unlimited demand. And that's true because if you give away cars, everybody will get a Tesla. Right. So the idea of a premium product like LBMH is a company

I follow very closely, and they sell premium products. And when we buy a premium alcohol, it's really the same Baca great, good, look at Apple, right, I mean, you pay, yeah a lot for Apple products and they don't put in from sale, right an Apple never has to put things on sale. And Apple has low end phones that you don't really like, see like they'll sell refurbished phones. But I was just saying this because I really want

Tesla to be more like Apple. That whether you're wealthy or whether you're not wealthy, if you both have an iPhone and you pull it out, wealthy people don't feel like, oh, everybody has an iPhone, I need a better phone, you know, Like they don't think that because they appeal to all the markets through their marketing, and so everybody who owns an iPhone feels good about it. And I think that's the risk that Tesla becomes too much like Toyota and

then they lose the high end business. I wanted to point out how select Tesla's supercharger stations in the US are now open to non Tesla evs, and our equities reporter Estra Day has done a great job covering all of this and something I wanted to ask because I know you had been tweeting about how you thought this could potentially be a great business idea, but it is a low Morgin business. So what is it about that

that you think would actually benefit for Tesla. Well, I think charging can actually be a profitable business if you do it renewably. And I asked Elon about this months ago and they said that they have about a ten percent margin on charging, so they do make money on charging, and I think they're very good at it, and with their battery and solar systems, I think they can deploy

charging profitably. But but I think it's also the ancillary benefit of having the charging network and the power that that has, of having the best and most reliable global charging network, you know, it's really like forward owning all the gas stations. Like, boy, that's good idea, you know. But I think opening it up to other EV companies at first I was like, oh, this super helps their competitors, which it does, but the competitors are still having trouble

making cars, so Tesla's like still so far ahead. So honestly, I think it's one of the best things for EV adoption in the world. Biden created this plan where he gave companies incentives to open up their networks. They're opening up they're charging networked like Tesla, and that will increase EVY adoption greatly. So I think over time that's a huge win from Tesla, but it's also a huge win

for the industry. Hey, ross two quick questions. First of all, Tesla shares they kind of tanked following that Investor Day meeting. H A lot of people were just disappointed. Were you buying on that decline? Well? No, unfortunately, you know, because of the rules. I actually every time I'm on a show, I'm not allowed to do anything with the stocks that I talk about. You know, So we had so I wasn't able to buy yesterday. Uh you know, were you But if you add where you have if you could have,

well I buy Tesla. You know, every time it goes down, you know, and and you know, once again, we're long term investors and every client has a different situation somewhere. Our clients have too much Tesla, you know, right, Well, maybe have too much in fact, some are crazy. And but I think the idea is when you look at all the stocks you could buy, Tesla is still one of the most exciting and consequential companies in the world, and it's like, why wouldn't you want to own this

in your portfolio? Now? I do think it's properly valued here in around two hundred dollars a share, right. I think the sell the news things happens all the time with Tesla. Every event they've done, it's like it sells off the next day. At rallybacks today it's like, whatever, all right, we gotta run, Ross, Gerbert, thank you so much. President and Chief executive Officer Gerbert Cowsake Wealth and Investment Management via Zoom from Santa Monica, California. Tesla has been

on quite a run. As Ross mentioned, it's up sixty one so far in twenty twenty three. This is Bloomberg business Week Inside from the reporters and editors who bring you America's most trusted business magazine, plus global business, finance and tech news. The Bloomberg Business Week Podcast with Carol Messer and Tim Stenebec from Bloomberg Radio. Bitcoin dropping to its lowest level about two weeks part of a wider retreat in crypto markets as investors digest the unraveling of

a key industry payments network. You know, we've been talking about it here at Bloomberg Silvergate Capital. Well, the calls for greater cryptoregulation they do continue addressing that. Yesterday, Gary Gainsler, he's chairman of the SEC, he showed up and spoke at the Bloomberg Market Structure conference. He also spoke with our Bloomberg Technology TV team. Check it out. There's nothing

incompatible crypto and our securities laws. Our securities laws were brought about to protect the investing public against fraud and schemes and manipulation, and it was through this idea of full, fair and truthful disclosure. All right. That was Gary Gainsler, chairman of the SEC, speaking Eddie Bloomberg event. There's a lot going on in the world of crypto. I want to get right to it and jump into it with our guests. Back with us is Marco Santori. He's chief

legal officer at Kraken. He joins us on zoo. Marco, it's great to have you here with us. It does feel like every day we walk in our every overnight there's some news when it comes to a crypto and another crack if you will, and you guys alone, you know, as the world in the industry of crypto kind of evolves. You made a deal to pay about thirty million to settle sec allegations that you broke the agency's rules with its crypto asset staking products and will discontinue them in

the US as part of the deal. Just big broad thoughts right now, Marco on, how do you characterize the carnage and the fallout that we've seen in the past six months, twelve months when it comes to crypto, Yeah, thank you, thank you for having me. If i'd characterize it in one way, I would say it is a blast from the past. Twenty twenty three harkens back to

twenty thirteen in all of the wrong ways. We've got an unclear regulatory environment, regulators who are more interested in racking up settlement wins and settlement dollars and then getting clear rules of the road to the industry, and got banking that favors incumbents over innovators. It is a tough time. It is a tough time in crypto, and every week seems to bring new new news, just a drum beat of strange, unanticipated left turns, just like silver Gate Capital

this week. When you're seeing the movement there as far as that exposure, obviously, when it's just the weights linked to the dramatic decline and the collapse over FTX, and obviously the correlation there when it comes to those cryptocurrencies. I mean, do you expect to see this type of fallout continue to happen to other companies that are exposed towards that. I think we're really seeing the tal end. Just to be upfront with it, I really see we

are seeing. I really believe we are seeing the tail end. Twenty twenty one and some of twenty twenty two brought some pretty irrational exuberance and some pretty irrational loosening of lending standards. I think that much is indisputable. You have Luna Tera, you have FTX, all of these interrelated lending efforts that just took too much risk, too quickly, And turns out some of the banks may have done the

same thing too. I don't have any insight information there to share, but that's certainly what it what it looks like out there. Why did you guys choose to settle UM while other firms are really fighting the SEC on this? And do you expect other firms are going to have to follow suit and shutting down their own US staking operations? But first up, why did you guys settle? Yeah? I'm limited in how much I can speak about that the settlement obligates us to neither admit nor deny, and that's

that's what I'll do today. I'll neither admit nor deny, but I can speak to the issues that all of us in the industry are facing. We have a regulator who says he has all the tools he needs to regulate crypto, and it's it's it's clear to it's clear as day that the SEC has all the tools they

need to rack up settlements. But when industry participants go into the SEC, as we've been welcome to do, as the Chairman has welcomed us to do and told us that his door is open, when we try to do that, it is also clear as day that they do not have the tools to actually create and support fair and efficient markets or to drive capital, to try to drive capital formation. Those are the Those are two of the SEC's mandates that they are very clearly ill equipped to

do today without some action from Congress. When when we go into the SEC, when other industry participants go into the SEC to come in and register, as the Chairman is set on many cases, it's just a form on our website. It turns out that's not true. That is, it is not just a form on. Is that why you guys haven't done it, and why why we haven't registered to comply with the US rules? It is. It is utterly opaque to us and every other participant in

the ecosystem how we could do that. When we've gone in and asked what are your expectations as a regulator, they said, you've figured it out. That's your problem. And that is a scathing thing to hear from your regulator, from your government, particularly when you're working like I am on behalf of innovators who are trying to create jobs and trying to create efficiencies in the financial system. It is plain as day that there is no path for registration.

There is no interest in creating a commercially viable path that will keep customers and Americans on American soil using American regulated platforms. It just doesn't exist today. Something I was curious about is whether or not you're considering limiting the tokens that you allow US customers to trade, just given what's happening with the regulatory crackdown. We do limit the tokens the customers trade, and we will continue to limit.

We have throughout our existence as a company for over eleven years, Kraken has had a has had a robust set of policies and procedures in place by which we evaluate new tokens. Both from a business perspective, are these tokens worth? It? Is the juice worth the squeeze? Should we be listing this particular asset? But also from a legal perspective, are these things the kinds of things that

we can list under existing law? If I told you that was a clear and easy thing to do over the last well now over a decade, I'd be lying to you it has not been clear and easy. But we do. We take great care in doing the best that we can to figure out under existing law what tokens are and are not securities, and we do not list the ones that are security. I'm a little confused because I am sure that you guys are as you said.

You have these conversations with regulators and so on and so forth, and you're saying just even to register it's not opaque. It's not easy. I mean, what is it that specifically missing? Is it just them spelling it out? What is it that's missing? What's the tools that are missing right now? In order for the SEC to effectively regulate this industry. Yeah, we haven't gone to them and

ask them to do our legal work for us. To be clear, we have gone to them and ask them, what is your what are your expectations around what we ought to disclose? You say disclosure is a cornerstone of American financial regulation. What are your expectations? What should we be disclosing about, say a staking product? What should we be disclosing about a new token that we would list. What is our obligation to disclose versus the project behind

the token is? What is their obligations to disclose? If we were going to register a product like say Staking, What does registration of a product really mean in the context of the securities laws as they exist to do? Marcer, do you think that that folks forgive me for interrupting ghosts were just running a dime? But do you think that the folks in Washington and even the SEC chair that they don't totally understand it. It's clear to me that the SEC does not have the tools that they

need to regulate this correctly. Unfortunately, that's yes, right, that they don't understand it. I think I think the staff at the SEC has done a remarkable job over the year, is not just coming up to speed, but now being on the van guard of understanding those things. So actually, it's a no, it's a no. These are these are smart people. These are smart people who simply do not have the tools from Congress that they need. I mean, how long do you think it'll take to actually have

those tools? It has been a long time. Right. Meanwhile, we have we have Finsen who not only administers civil jurisdiction, but can impose criminal penalties for breaches of the money services laws right for sanctions laws. They release guidance years ago. They were able to do it, even with so much more at stake. It's it's it is baffling to me, and it should be baffling to anybody following along. Why we haven't gotten at minimum clear guidance from the regulators,

even if Washington, even if Congress hasn't acted yet. Marco really knew me and the rest of America. I hope it happens soon, Marco. Really, it's there's so much going on with this twenty seconds. Are you worried about the sustainability of your own business because of kind of the backdrop that we've seen in just very quickly. It's it's shades of worry in crypto. It always has been. That's what risk means. I, for one, have been at this since twenty twelve. As a lawyer. I've been advising clients

for over a decade. I don't yet have the gray hairs to show it, thank God, but I'm getting there. Believe me. Every day I wake up and I count my blessings that we still have the opportunity to innovate and to do it here in the US. Well, listen, we certainly appreciate your time with all that's going on, so thank you so much for coming back. Marco Sentauri. He's chief legal officer. Kraken joining us via zoom on this Friday. You're listening to the Bloomberg Business Week podcast.

Catch us live weekdays from two to five pm Eastern on Bloomberg Radio, The Bloomberg Business a band you Doo. You can also listen live to our flagship New York station, Just Say Alexa play Bloomberg. You love him dirty a journal now, But you let me drive? No, no, no no, who's going to drive home? Honey? Please? I'll do the riding gravels. I want to drive. It's good question Drives. This is the Drive to the Clothes down con Timu

than Well, Brier up, Jo down on Bloomberg Radio. All right, everybody, just about seventeen minutes left in today's trading session, getting ready to trap up the day, wrap up the day and the week, and you've got a rally underway when it comes to the equity trade. I'm looking at the major industry groups in the S and P five hundred. There are eleven of them. They're all up on the day, Carol Master, along with Jess Manton. So let's get to it.

Let's get to the Drive to the Clothes with Jeff Crumpelman, his chief Investments Drovegist, head of Equities at Mariner Wealth Advisors. He is here in our Bloomberg Interactive Broker's studio app bloom Headquarters. Good to have you back with us. We've got a rally underway. January was good for stocks, February not so good. And now it looks like we're seeing some enthusiasm here in the early days of March. How

would you describe this equity environment right now? So you know our message has been hold your ground through this, and I tend to have a positive view. We think through the end of the year that we're going to be forty five hundred ish or above. So that's yeah. People when they hear they just think, oh wow. On

radio Jess's eyes just open, like Mike Frying. I think of say Bank of America or even Sevita over there with their praise target of around four thousand, or if you think of Mike Wilson's of the World or Work in Stanley with around thirty nine hundred. It's interesting to hear actually above those levels. Yeah, and that's not to say that it's right away. So did you think that

last year's ground We did. As we moved through the year, we felt now our message was last year, if you've had three consecutive years of twenty six percent annual compound and rate or return and your allocation has gone from sixty percent equities to more than seventy as a result of that, and you haven't rebalanced, please go back to normal. Please cut back to normal. And oh, by the way,

passive management probably is not the place to be. We embrace passive management in all times, but I would deemphasize it and focus on active and our internal active strategies really added value last year. So what we see this year is fundamentals that are elusively. They're positive, they're you know, a lot of the folks that have been cheering for recession, it just keeps getting pushed back. So the fundamentals are pretty good, and we've got the PMI data out this

week that was surprisingly strong. And then you have valuation that I think is reasonable, it's uh, you know, not overly stretched. A lot of people might say, what are you talking about? Right, That's what I was going to asking, because you do get a lot of people will push back on the valuations. You cannot make decisions on equid

market based upon valuation valuation. As long as the fundamentals are solid and you have the technical sentiment either contrainly negative which means more cash can come in, or you're kind of at neutral levels. Hey, you can have slightly expensive pees to significantly expensive pees, particularly when the WALLA Warrior items are showing improvement, like inflation significantly coming in significantly.

Now the headlines say, oh, we're at decade highs, We're at six and a half percent headline, Jeff, what are you talking about? Well, we were at nine several months ago, but we are still at decade highs. Hey, if you check the data doesn't matter if you go if you got the market cares about training again, well really it really don't think so, No, I don't think so. I

think we had one data point. We had really warm weather and oh boy, did anyone really check out the facts of how it's calculated, and maybe the CPI went from reuting. Okay, okay, So the reason you got that tick up was partially as a result of that month over month, year over year, we still came down rents. If you look at rents, you're actually getting some disinflation on new rents. So does it okay? Because we want

to talk ahead, I know you want to talk. Well, I'm just going to save these between producer prices and consumer prices actually turned positive for the first time whenever we got the December data batch. That typically when I talked to portfolio managers, sometimes they look toward producer prices as glimmers of hope before it starts filtering into consumer prices.

Is that something that you watch closely as well? We watch overall trend and you've gotten one month, we are not going to get perfectly How much of a trend of change would you need to see in order to force the FED to change course? Not necessarily do potentially another twenty five basis point high, but to move back toward fifty. How many sam of Hodder data do you think we would need to see? Like a quarter's worth

is two months enough? What do you think? Especially? I love, I respect Larry Summers, but I think he's made a number of statements that have not come to do you think the FED should be done? Then? We think that the FED will hike to five and a quarter to five and a half. We'll probably get twenty five basis points in the lane fed. Uh you know, Bostick just

came out and said, you know, probably twenty five. And we think that based and built into our base case for forty five hundred is a couple more FED hikes. And here's what I see. I just a couple more, a couple more. Okay, but hey, you know what we've called the mary everyone's crabby and we're are FED funds we're five percent? Do you know what average FED funds is over the mark of time through history? Five? So when I hear unprecedented. I'll tell you what's unprecedented was zero.

The other thing it was unprecedented, and we've talked about that a lot here on air. Okay, So that at the low rate, the negative like that was the unusual thing, folks. This is more normal. So we're running a three percent annualized pace. If you take the last quarter, we're down to three. And I'm not bold enough to say this.

There's a lot of peers that I talk to, smart people that say, you know, Jeff, what we're going to be talking about and the thing to worry about at the end of the year is deflation disinflation, And when those headlines hit, people are going to start worrying about recession and oh my gosh, and we'll have them maybe a moment then not inflation. I think we're coming down significantly. Supply chain bottlenecks are solving themselves. And if you go in and you talk to anybody, fifty percent of us

or in a new job, think about you. When you're in a new job, you don't even know where the water cooler is, right, So you can get a tremendous increase in productivity over the next twelve months. That's been missing and absent. It's been a wall, and in fact, we finally had an uptick in Q four. If you get productivity rising, you can raise unit labor costs, okay. You can have wages increase without increasing, and you can put through some increase book without it hitting the margin.

And if you get that, yeah, then we're talking a different ballgame. All right. I'm a little mad at you because there are a bunch of names I wanted to talk about, but because I like you, we're gonna give you a pass. Just come back soon, okay, all right, Jef Crumpleman over at Mariner Wealth Advisors, here in studio. This is the Bloomberg Business Week podcast, available on Apple, Spotify,

and anywhere else you get your podcast. Listen live each weekday starting at two pm Eastern on Bloomberg dot com, the iHeartRadio app, tune In, and the Bloomberg Business App. You can also watch us live every weekday on YouTube and always on the Bloomberg terminal.