Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside my co host Matt Miller.
Every business day, we bring you interviews from CEOs, market pros, and Bloomberg experts, along with essential market moving news. Find the Bloomberg Markets podcast called Apple Podcasts or wherever you listen to podcasts, and at Bloomberg dot com slash podcast.
Up next, I want to get straight to our next guest, Dana Peterson, chief economist at the Conference Board, who's going to join us on zoom and Dana, I have to get your thoughts because we are just coming off of the data that we get got last week when it came to consumer confidence and rising to the highest level since early twenty twenty two. How do you square that away when a lot of the data say GDP was revised higher for the second quarter coming and stronger than expected.
But then it seems like a lot of people, even if you exclude some of the sentiment gauges, still feel a bit gloomy, especially when it comes to what is ahead for the economy.
Sure, looking at the consumer confidence measure that the Conference Board produces, Yes, it did rise to the highest level we've seen in some time. But if you look at the series on a graph, it's been moving pretty much in the same range, and it's a range that's below the peak that we saw last year and also well below the pre pandemic twenty nineteen levels. When you look at the details, consumers are saying, well, things are okay right now, I'm working, I have income, business conditions seem
to be okay. Looking to the future, they still expect that maybe there's something negative around the quarter, maybe there's a recession or a soft spot.
So talk to us then about this US manufacturing activity. We just got this ISM data this morning. That's the Institute for Supply Management's Manufacturing Gauge, an eighth month of contraction here data. How happy is j Powell after seeing those numbers or do you not necessarily look at that as a huge indicator of the macro picture here?
Well, factory activity is one important measure and certainly something that we look at and include in our leading index. And the reason why factory activity so weak is because consumers are no longer buying goods and mass. That was certainly the conditions during the pandemic where they couldn't go out and enjoy services now they can enjoy services. So that's why we're seeing services purchasing Managers index indicators rising and a lot of spending on services, which we saw
in last week's PCE report. I know you.
Also have the Conference Board's Leading Index, which has been negative for fourteen consecutive months, and something rare to see over the past half century. Typically when you've seen instances like that, it's only happened in nineteen seventy four, nineteen eighty, in two thousand and eight where you've seen that sort of extreme time threshold there, But then the US economy was actually already in a recession. What do you think this is telling us about the economy?
Sure?
What the leading is next tells us is that there's probably a recession starting right about now, which is the third quarter of the year. And certainly because it's been negative for so long, it does suggest that we will see a soft spot where we are actually forecasting a recession, but a short and shallow one. So the thing is that when you look at current conditions, there's still signaling
that there's no recession. And that's why, and that's because four out of the well two out of the four indicators are linked to the labor market and incomes, and we know the labor market's still doing well with incomes arising on a real basis, so that's helping to support consumers. But businesses certainly are feeling the pinch, certainly manufacturers because
there's less demand. And also many businesses are also looking ahead of concern that there's something negative around the corner and starting and they are definitely pulling back at least on investments, if not on labor data.
I'm really curious about how how you rate the importance of cumulative savings when it comes to the inflationary picture. Here our Bloomberg economists crunch the numbers on this. They show that the lowest forty percent of households in the US have negative real excess cash balances. So just some evidence there that the concerns about tons of stimulus really beefing up these consumer balance sheets may not necessarily have the sticking power that we have been talking about it having.
What is your take on the importance of cumulative savings and where those stand right now?
Well, during the pandemic, yes, you had those big injections of stimulus for the lowest income families, they probably spend it all, and that's why they have negative savings right now, and they're using credit cards to get by, So that's what you're seeing there, and that kind of makes sense.
The thing is that it's really tough for the FED to get at spending on services and people not spending out of the sexcess savings because it's not something that you finance, right, so even if you put something on a credit card, your credit card rate doesn't shift around with the FED funds rate. So we think an aggregate the excess savings that people have, it's pretty much going
to run out by the fall. And again that's aggregate, so that's including people who are across the income distribution, so I think, you know, it's really still supporting savings as people who are probably in the middle of the income distribution who did also receive stimulus checks, but all
also working and seeing their incomes rise. So really the FED needs to see weakening in the labor market of companies taking down those job ads so that consumers feel Okay, well, I don't have as many options, so maybe I'll just sit tight, or maybe I'll pull back on my spending and that'll help bring that inflation.
How does oil play into this, because right now, if we're looking at US cred prices treating around seventy dollars a barrel, and overnight we did get that news obviously with the Saudi's as well as Rush extending those oil
supply cuts. How much of a fuel do we would need to see, no pun intended when it comes to oil prices moving higher to then maybe exacerbate what we've seen when it comes to the inflation dynamics like we saw sale last summer, which obviously oil prices were treating much higher when it comes to that, and what it can mean for Americans in their pocketbooks.
Sure right now and certainly in the in Friday's a PC inflation report, we saw that actually gasoline prices are falling year on year, and when you go to the pump, they're pretty low right now, prices for gasoline, and in fact, many people are expecting lots of folks are going to
get out in their cars this holiday week. So any increase or rather any decreases in supply, certainly we'll put up a pressure on prices, but that usually takes a few months, and certainly that would not be a positive in terms of the FED helped working to bring down inflation, because certainly the FED cannot control opek so's it's certainly a negative if we do see material increases in prices.
But for the most part right now, gasoline prices definitely are cooling and providing some relief to consumers.
All Right, Dana, In our final couple minutes with you, I want to do what every economist I'm sure just loves doing. Look into your crystal ball for me here for the rest of this week. What do you think is going to be the most important data point that we're going to get in terms of sussing out what the Fed's next moves are going to be. Is it going to be some of this labor market data something else?
Absolutely, it's going to be the labor market data. We'll get ADP and we'll also have the BLS payrolls report. We've seen that the labor market continues to be robust. I think that there are three forces going on here with respect to the labor market. You do have some companies that are letting folks go, but most companies are
either hiring or just sitting tight and hoarding labor. And it's the case that those companies that are hiring, plus the hoarders are outweighing the companies that are letting people go. So we're probably going to continue to see positive readings
on payrolls and a low unemployment rate. But the key thing will be next week when we get the JULT data to see if we're if vacancies are dialing down, which indicates that businesses are definitely feeling concerned about the future and that workers should actually watch out and reduce their spending.
Dana, we only have about thirty seconds left when it comes to the labor market. What jobs do you think are most vulnerable right now?
Well, certainly those jobs associated with the pandemic, Darling. So that's finance, technology, real estate construction on residential, and also transportation and warehousing simply because there's just less demands for goods.
Dana, thank you so much for joining us. It's always a pleasure to get your perspective on the economy and obviously what the conference board is gauging when it comes to your economic indicators. That st Peterson cheap Economists at the conference boarding.
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Madison Mills here with jess Metton on this Monday, the official start of the second half of the year. Not a ton today unless you're an ev maker, of course, driving up markets. But one thing continuing to be a concern is commercial real estate. We've got a great voice on the space here. We've got Todd Henderson, he's co head of Global real Estate for DWS, joining to discuss why he thinks there's less pressure on commercial real estate than the consensus view. Todd, thank you so much for
being on with us on this basically holiday Monday. Really appreciate you coming on. You got a lot of optimism here, not a ton of doom and gloom views from you. What are you seeing in the commercial real estate space that we're missing?
Yeah, sure, I think it's more of a balanced take. Thanks for having me. There has been a bit of a doom lou that has been I think pervasive here over the last couple of months, and I think it followed somewhat the banking trimmer that we have and what's happened, I think is the definition of commercial real estate has been narrowed to office, or said differently, the office woes are painting the rest of the commercial real estate market
with a very broad brush. There is no doubt that there are challenges within the office space, but the rest of the commercial real estate market, which includes industrial buildings, which includes retail, which includes residential, the fundamentals are very strong. In fact, if you look at overall vacancy rates inclusive of office, we're at the lowest levels that we've ever seen.
In addition to that, we're seeing deteriorating construction levels, which the forward supply is always something we watch to determine how we expect markets to perform in the face of normalized demand. So, with strong fundamentals and lowering going for demand or sorry supply, we think that there is a reasonable picture for real estate to perform, much better than much of the doom loop that we have been experiencing in the press recently.
When it comes specifically for commercial real estate, where are the vacancy rates the highest within when you're looking at regions within the United States.
Well, first of all, they're higher in the office sector, and the office sector today, they're as high as they've ever been dating back to the RTC crisis that we saw in the late eighties and early nineties. When you look across the different geographic areas, the higher vacancies are in some of the markets that we're experiencing migration out
outflows prior to the pandemic. But these are markets like San Francisco, these are markets like Chicago, and even some of the Manhattan markets are experiencing very high vacancies.
So then talk to me about what needs to happen to change that, and specifically how much of that calculation needs to come from employers getting their workers back to the office. At least in talking with friends this weekend, Jess, it feels so all over the place like you and I are here every day. Most of our friends are not in that busket that's accurate, right, But some of them are, and some of them are saying, oh, my bosses are starting to track my time in the office.
It's really anoying. So maybe that's a good indicator for you, Todd, tell me what are you thinking.
Yeah, there have been a pretty material change, I think in terms of the leaders, organizations expectations with respect to being back in the office. Most of the news that you read or that's been reported over the last couple of months is more days back in the office. JP Morgan five days for their senior most people. Zuckerberg published a report recently that their engineers have performed more efficiently
and better when in the office. So I think we'll continue to see more in the office, But I don't think that that is going to be the trigger that causes the office market to perform better. The office market historically has been the most highest highly correlated of any of the other sectors to the business cycle. And the business cycle is slowing, and we started into this business cycle with reasonably high can see is already in the office sector. So what we need is a robust economy.
What we need is office using job growth. What we need is probably less supply, in particular the B and C office market, which is very much commodity space. I think about it, if you're commuting an hour and fifteen minutes each way to the office, are you going to be excited about coming to an office that doesn't have the amenity base that you know a high quality office has.
No, You're not.
It's like in the Bloomberg office. We have so many snacks here, right, Maddie.
I love an amenity base. That's what I'm going to start calling my pantrot.
It brings me here.
Yeah, I mean Bloomberg. The Bloomberg facility is a perfect example. Like, you know, it's a it's a very nice building with you know, snacks and drinks and meeting areas and it's a you know, it almost feels like, you know, a public space, but in you know, in in the private environment. So that's the kind of experience that office workers want today. And if you're not delivering it, you're not going to see very robust demand for your buildings.
To Matty's point, what is it going to take for us to get there? What's the catalyst in order to get people back into the office with you look back what happened during the pandemic and now there's obviously this rise of hybrid in the workplace, which obviously people are really enjoying.
Yeah, you know, it's it's interesting though, you know, the the the people that are just starting out in the workforce. Most of those people in our firm, and as I speak to other other firms and leaders and other industries, there. Their junior people want to be in the office. They recognize that they learn more, there's better training, there's osmosis learning that goes on, and the senior folks want everyone in the office for culture continuity. So I think that's
going to bounce back. It's been a little bit stagnant recently. If you look at the occupancy figures the castle card keyse wipes, we've been in and around fifty percent of the pre COVID occupancy levels in terms of swipes. But I suspect we're going to see that through the remainder of the year increase. But again, I don't think that
that is the nirvana. It obviously will help, but what is really going to matter is making sure that we have a robust economy, have office using job growth growing, and that the buildings that are not providing the work environment that tenants want to see. You know, those buildings are going to have to change or those buildings are going to have to be repurposed to something else.
All Right, Really quickly, Todd, in our final minute with you here, talk to me about what this looks like in terms of the impact on cities. I'm always hoping that these buildings in Midtown that our previous offices are going to get turned into apartments so that I can continue to afford to live in New York City. How likely is my dream to come true here?
I think some of the buildings, although unfortunately maybe for you, a smaller percentage of these buildings are convertible. It is it's a challenge. You know, you have to have significant plumbing, you have to have the floor plates lay out appropriately in order to design effective and efficient units. So I think that the conversion to residential is an option, but
again it's not the option for every BI building. It's the option for a much smaller percentage of buildings than those who own them and maybe those who are looking to buy cheaper apartments in the city. I think in terms of longer term, where are we seeing migration, we continue to see migration to the southeast, the south, and the southwest. I think it's keeper cost of living, lower taxes, more business friendly environments, and those are investible themes that I believe are here to stay.
All right, Todd, thank you so much for joining us. That was Todd Henderson, co head of Global real Estate for DWS on commercial real estate.
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Wilson Mills here in the Interactive Broker's studio And you know what, Maddie, especially with what we've been covering the last year, and when it comes to investment managers, it has been so tricky when you think of the amount of losses in the bear market last year, and then you're coming off of a Nasdaq one hundred's best first half to a year ever. And who better to talk to us about positioning than JD Gardner, CIO and founder
of apt Is Capital Advisors. JD give us her take here as far as how are you advising clients to position off the back of what we just saw the last six months.
Hey, guys, thanks thanks so much for having us. Really, we spend a lot of time talking about just where returns come from, so in a nutshell, yield plus growth or multiples expanding, and our advice, and it has been this for some time now, is depending on valuations to expand, to continue to expand is probably not the best way
to position portfolios at the moment. So we really think there's an emphasis that should be had on yield plus growth and that framework should drive the portfolio construction process in today's market.
So then, in terms of valuation, how do you suss out whether you need to reallocate or reposition based on how expensive certain equities might become.
I think it's just equities in general. When you look at how friendly valuation expansion has been since really the financial crisis, and you can point to the FED and QE and things like that, like a lot of people will, but I think the last fifteen years or so has really kind of fooled investors into thinking that equity valuations just go up.
And if you look at.
Where we are today versus where we are historically, given the backdrop that what's happened in the interest rate environment the last fifteen sixteen months, what's happening you know at the underlying the fundamental components of these companies, we just think multiples expanding is not in the cards and we do think valuations look rich right now, when.
You're talking about rich valuations, I'm sure Maddie and I have a few ideas of what corners of the market you could be talking about when it comes to big tech and these growth But is that where you think the majority of that is placed, or are there other particular corners of the market that you think look a little too lofty as well.
I think there's definitely pockets that we could point to and say does this make sense or not? And you can probably sense where our stance would be on that. But I think in general there are pockets where there's
valuations that look somewhat attractive. But when you're just getting beta exposure to the market, we're in an environment where unless you're willing to take significant active share risk versus the S and P, because the SMP now, like I know, just heard the market update talking about the Nasdaq talking about the S and P, the S and P still
look at the top five or six names. You're heavily, heavily focused in names that we are dependent on the growth associated with those companies being attractive.
So then, and it's interesting because historically when you see a strong market that leads to strong markets ahead, right, So how do you think about risk when it comes to that? Are you concerned at all about being overbought on some of these expensive names? And your note you mentioned that at least eighty percent of your fund's net assets will be invested in US large caps. Are you concerned at all about going all in on a few a few names.
No.
And here's here's here's kind of our what we tell investors all the time is we think volatility should be used as an asset class or viewed as an asset class, and volatility is something that you can use to mitigate risk or enhance yield.
So we have a whole suite of funds where you know.
Let's say, let's say you get beta plus additional yield, and we think that that that helps alleviate that additional yield helps alleviate the potential risk that you're taking. Because and I'll be the first one to tell you, you know, market could end up plus thirty for the rest of the year. It could go you know, we could lose what gains we've had so far here today, but we could also keep rising. I can't explain markets just seem
to levitate right now soft landing. And I would guess if you pulled your audience and said, hey, what do you think the market's going to do if the Fed funds rate goes from basically zero to five and a half or wherever it is right now in the next fourteen months, I would guess most people would not say markets are going to just continue to truck higher in twenty twenty three.
And so our use.
Of volatility, our view on volatility, I think, is what allows us to continue to take that equity risk and not make any major bets about some bearish sentiment, Like we still want to own stocks because we think long term they're how you compound wealth.
That's interesting because we did an M Live survey at the start of the year. I did a story with Liz McCormick over on the Bonds team, and when we pulled on M Live, most respondents thought that the US stock market we were talking about, the S and P five hundred would retest those October lows, so they didn't necessarily see at the time a bull market coming. But I'm sure JD, especially when it comes to a lot of the sentiment indicators that we've been talking about. When
they're at such different extremes. I know the AEII survey recently has begun to turn higher the last three weeks or so. Obviously not the same string of pessimism that we would have seen over the past fifteen months before that. But do you think that there's a risk here for individual investors if they remain too bearish?
Yeah, I think there's definitely a risk.
And if you look at how like I point to the vis twenty twenty three so far has been a year where there's been very little volatility, and you've seen the VIX go from what it was to where it is today, which is significantly lower. So I think you never want to fight that. That's kind of what I was saying I alluded to earlier. The only way if you want to take a bearish view your potential, your opportunity costs could be could be pretty damaging to long
term compounded returns. And so that that's kind of where you know, we want to mitigate risks. Specifically with our enhanced Yield suite. We want to enhance the yield associated with owning beta and we think that gives you kind of more comfort in owning equities, even if you aren't convicted that valuations are cheap.
Final thirty seconds here, JD, what is the single biggest thing that you are going to look to for the second half of the year to indicate where this market is going to end up?
I think that that's a tough question on the.
Spot, give me your your entire thesis on the market and how we can make money by following let.
Me let me shake my magic eight ball. Hold on two seconds. I think the big thing is right now, what we're spending a lot of time in the office talking through is kind of what the FED say in verse market market expectations. All of that points to kind of how we started the conversation, which is, I really do think yield is going to be an incredibly important driver of returns at the portfolio level. And that doesn't mean go own some high yield bonds or something like that.
I think there's different.
Ways, specifically in the ETHF space, where you know, we're trying to pioneer ways where you can enhance yield in a very simple and liquid wrapper that's fully transparent and allows you to own beta instead of owning some factor or some tilt the portfolios that could create risk.
Thank you so much, JD. It's been a pleasure getting your insight on this, a more optimistic view when it comes to investment managers. But JD. Gardner, CIO and founder of Aptis Capital Advisors, thank you so much for joining us on zoom and Maddie. I mean, looking at these markets we're talking about discretion there is still up over
one percent in the S and P five hundred. Real estate also up one percent, but then you have healthcare down about one percent, so kind of keeping those gains in check for the S and P five hundred.
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We're going to switch gears a little bit to the geopolitics, Jess, because that Russian war on Ukraine continues, almost hitting a year and a half now of that war continuing. Just to go through some news there to Ukraine's deputy defense minister reporting heavy fighting as Kiev's troops are advancing towards Bach move Meanwhile, Russia is saying it thwarted a Ukrainian
assassination attempt on the Russian backed head of crime. HA lots of news to talk about this morning, and all of that, of course following that Wagner Group news from last weekend. And we've got one of the foremost experts globally, I think, on Putin joining us to talk about this. Angela Stent, senior fellow at the Brookings Institute, also author of Putin's World, Russia against the West and with the rest.
She joins us on zoom. Angela, great to speak with you, as always in terms of the totality of the news that we're getting out of Russia, out of Ukraine right now, and the picture pains for you regarding Putin's power, Where do you think his power stands right now? How dented is it following some of the bad news that he's gotten over the course of the last eight days.
So Putin seems to have bounced back. I mean Saturday, when all these events were occurring on June twenty fourth, he was very angry, he seemed insecure. He kind of disappeared from view. But he's now done a lot of public events. He's, as I said, he's bounced back. He's made speeches. And we do know now that the Russian
state is taking over Wagner's assets. They've raided the Wagner offices in Saint Petersburg, They've taken down the logo, you know, from the building where Vagner is, and they are slowly and I think systematically, trying to figure out how they're going to take these assets over, who is going to
run them. And of course it's not only what Vagner has in Russia and Ukraine, but in Africa's Central African public, Mali, in Sudan and Libya, in all these places where Vaden was such an important outpost, really arm of the Russian state. So for the moment, Putin looks as if he is in charge. But I think there's so many questions still surrounding what happened last week and who was behind what that. I will still have to wait and see how this plays out.
In the week of these insurrection attempts just over a week ago that threatened to steal Putin's grip on power. How has that impacted Ukraine's counter offensive with Russia.
Well, it doesn't seem to have had that much of an impact. I mean, the counter offensive continues, it's very difficult. The Russians have very strong defenses, They've been billing them for months, and the Ukrainians are inching forward. They're taking small amounts of territory. As you said, they are trying to retake what's left of bunt Moot, which is really a destroyed town. But these gains come a significant loss
of human life. So what the Ukrainians have said is that the real counter offensive hasn't begun yet, inasmuch as they have more troops and more weapons that they can put into this, and this may happen in a few weeks. But what they've said is we're not going to tell you when it's going to happen, and you'll see, you'll find out when we're actually doing it.
Angela, If Putin was already able to bounce back just a little over a week after the Wagner groups moves here, what is it that could finally kind of put a dent in some of his power, both in Russia and then in this war effort in Ukraine. What do you think is something that could be a catalyst for that.
Well, there could still be questions about his hold on the reins of power. There are obviously questions swallowing around about how much of the regular military actually supported some of the things that Pregorsian was doing and supported his criticism of the way that the war was being waged. We know that at least one general, sorovikn apparently supported him, and he's now disappeared, so there may be other questioning going on, and I think people will be waiting to
see how the campaign in Ukraine goes. Can the Russian armed forces continue fighting back about the Ukrainians without the Wagner forces, And we don't know how many of the Vagner forces have joined the regular forces. They were supposed to have done so by July one, We're not sure about that, so I think that's one certainly of the indications.
The other thing would be if you could really see complaining and unrest among the elites that support Putin, but we really haven't seen that because I think once they understood the mutiny was over, they need Putin to stay in power to protect our assets and their way of life.
They may have lost the ability to travel to Europe and visit their homes and banks bank accounts because all of the sanctions that we've levied on them, but still they want to keep what they have in Russia and continue to lead the life that they're able still to do, and for that they don't want Putin to go. Pregausion would not have been a good alternative for them. So I think again, if you saw more overt unrest among the elites surrounding him, then you'd really have to question
what's going on. But we haven't seen that since the mutiny was over.
Do we have a sense of what the timetable could be for how long this could continue or is this something that's going to turn out to be an endless war.
So Putin, I think, certainly before last week, thought that Russia could outlast the West. We have elections coming up, I don't have to tell you in the US, and we have some Republicans and candidates who are against supporting Ukraine, and then they're looking at Europe, and then also movements and groups in Europe who say that we should be forcing the Ukrainians to the negotiating table. So I think he believed that, and I think he still believes maybe
he can outlast the West. But we did see a show of Western unity last week, So unfortunately, this war could go on for a long time. It also depends on how much the US and its allies, But primarily the US is willing to furnish the Ukrainians in sophisticated weaponry, and they're things like attackers missiles, which the Ukrainians are really asking for and which the US has so fond not given them F sixteen fighter aircraft that they want because their air defenses are not as strong as they
could be. So if they got more weaponry from the US, then this might be able to be over earlier, but that's also been a very slow process.
Well, Angela, how concerned are you that the upcoming elections in the US are going to make that even harder for US officials to properly get funding for Ukrainian counter offenses and weaponry as well.
I think it's going to be more difficult. I think you'll see that this year twenty twenty three was probably the peak year of assistance for Ukraine. We'll see the debates in the fall as the election campaigns unfold. The people have to figure out what they're going to do with the National Defense Authorization Act, which is where they would be assigning all the money and other things for Ukraine.
But I think it's going to be more difficult because you have a split among the Republican candidates about their views on Ukraine. And obviously, if Donald Trump is the candidate, that's going to be a very different situation next year than we have this year.
Angela, we only have about a minute left here. What are your sort of final thoughts when it comes to this and what we should be keeping an eye on moving forward.
Well, I think we have to keep an eye on the whereabouts of mister progosion. We don't know where he is. He may be in vl Risk, but we don't know that. We only have audio recordings from him. We have to keep our eyes on what happened to if we ever find out General Suovykin who has disappeared, we'll see how many people disappear or are no longer there. And then I think we need to see how successful the Russian state is in taking over the Wagner assets and controlling
this kind of monstrosity. Really, they've got to have of control and that the Kreminins thought that it could control earlier on.
All right, Angela, thank you so much as always for joining us. It's really so important that we have you as a source to get some of these insights on what's going on on the ground with that war in Ukraine and what's going on with Putin moving forward as well. That was Angela Stent, Senior Fellow at the Brookings Institute, also author of Putin's World, Russia against the West and with the rest.
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What better way to especially when we're getting ready for the fourth July holiday thinking about summer travel. I was just looking at some stats over the weekend. If you looked at more than two million passengers were on Friday, so kind of rivaling some of these numbers that we would have seen in Thanksgiving of twenty nineteen. So that was before the pandemic. When you think about that, that's crazy,
I know. So we're getting back, like we're so back, We're so we are, and who better to chat with us when it comes to the travel season, especially during the summer months. Than David Carr, Senior insights manager, was similar Web David, please talk to us about what your travel outlook is, because it seems like when you think about the consumer, they're definitely out there traveling right now.
Yeah, that's true. Well, it's interesting. I mean I look at things through the lens of web traffic is a proxy for demand, and we're actually seeing things soften up a little bit. I think if you were in a crowd at airport dealing with your canceled flight, you probably didn't feel like things were off at all. And it's not that demand has collapse. It's just not growing in the crazy way that it was a year ago or
two years ago coming out of the pandemic. So we do seem to be a little bit past that that revenge travel just got to get out there.
Interesting, So softening up a bit where exactly I mean, is this where you're seeing just in general for flights and things like that.
Yeah, flights, I mean, I actually did an analysis of just the top one hundred travel websites that we consider transactional websites where you can buy a ticket, you can buy some sort of a booking and it's been off a little bit. I think it's almost unchanged from last year as of June, as of preliminary stats for June. And you know, the big standout has been cruises. Though cruises are are still crazy growing, you know, some more
than others. I mean, you know, Carnival itself, the Carnival brand isn't doing quite as strongly as it's some of its sub brands. Princess is doing better, same thing with Royal Caribbean and Celebrity. Celebrity is the one that is growing the fastest right now, Version is growing fastest. And I hope I'm not babbling too much, but we do definitely see a trend towards a low cost travel options winning out. So if I look at airlines, they tend to be about the same or maybe down a little
bit from this time last year. But Frontier Airlines is going great. And if I look at the cruises MSc, which is a relatively budget cruise line, they're the strongest of that set. Even though you know, across the board, I did see the cruises we rot.
What's so interesting that I always think about our Bloomberg intelligence airlines. Analysts always talk about how important business travel is for these airlines because when it's going on the company card, maybe you're getting first class travel, whereas if it's you, maybe you're going Spirit airlines for your own pocketbook. There, talk to me about how the data looks on your end when it comes to business travel. Are you seeing any big changes on that front this year?
Yeah?
I mean the most direct way I can track that is by looking at traffic to say AMX travel so a business travel portal, and that's that and concurs maybe twelve thirteen percent from what it was last year, So there is some interest in getting back out there to travel again.
When you're talking about a little bit of softness earlier, what do you think that tells us about the American consumer right now?
Well, I'm not an economist, but I think consumer confidence is the is the phrase that comes to mind. Not that people are doing horribly, but they just they just aren't quite sure how they're going to be doing next month, and so there may be a little bit less inclined to make a big travel purchase. They still want their vacation, but they might be more inclined to shop for deals.
Is that part of why we're seeing such a boom in the cruise industry. Is it viewed as a deal or is it just that you know, the world's reopened, so why not go on a cruise? Like, what do we know about the thinking behind the cruiser?
I mean, I've read elsewhere that that cruising has started to attract a younger, younger demographic, and it still does well with old folks like Mayer.
Really David has.
Gotten a little bit younger. And yeah, and I think it is seen as a bargain as seen as the package. Now the activity that I'm seeing right now, typically cruises are booked more in the March April time frame. They
talk about wave season when everybody is behind their cruises. So, you know, but I think, you know, we saw strength then in demand, but we're the fact that we're still seeing it now means that some people are are either booking a last minute a cruise, you know, they still find that attractive, or maybe they're booking something that is for the fall or for next year. And that's all good for the cruise lines.
What about when it comes to hotel websites, what are you seeing there? Is there a difference between particular high end types of hotels, maybe resorts versus maybe some cheaper bookings.
Well, hotels in general, we're doing fairly well. I did notice that some of the all inclusive resorts were actually seeing some decline or stagnation in demand. So Sandals, Beaches, club Medose, those types of types of places. So you know, again, you know that has some of the same fixed price appeal as the cruise does, but maybe people think of it as flurging and so they're a little bit less less likely to pull the trigger on that.
Yeah, some of those resorts. I was looking back in May to take a trip for my birthday, and like you were talking about Club Med, I wasn't thinking about staying there, but I saw it on Expedia and it was probably five six thousand dollars to stay for just a couple of days. I was like, no, thanks, No, I was like.
What did you end up doing again? For the travel job?
I went to Aruba. Yes, it was great, A had good time and just a hotel. I stayed at Renaissance. It's nice, okay there before I've been to a couple of times, but they have a flamingo island there, so it's a lot of fun takes.
So you have to go interesting that you did not consider an Airbnb. It sounds like.
I wanted to go to the Flamingo Island in order to get it. That's the private island at So that's that's the reason that got me hooked onto it. You can buy a day pass, but it's more complicated.
Right right, Okay, Well that that makes sense as a reason. David. I know that you don't necessarily look at this data, but you're you're a travel guy. You can go on this journey with us here to what extent are you seeing declines in Airbnb interest and consumers looking more towards hotels and other you know, long term stays perhaps outside of Airbnb rentals.
I did see that that that was I guess both both Airbnb and Verbo. Yeah, despite I see a lot of advertising from Verbo currently, but but they they're trending downward year over year. So the more traditional hotel brands are actually doing a little bit better than those guys, which is interesting.
All right, David Carr, we only have about a minute left, But any sort of parting thoughts for the summer travel season for our listeners.
I mean, I thought of mentioning that that I am a cruiser, I have to live in driving distance of three cruise ports in South Florida.
Oh wow.
It's part of the appeal of cruising might be that you don't necessarily have to get on an airplane to go on a cruise. And if it was over this past week, I think I would be happy to be getting out a cruise rather than flying some places.
So great. Well, we are so pleased that we were able to get your insight on all things travel for this summer. That's David Carr, senior insights manager with Similar Web, joining us on Zoom.
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We're going to have a great talk with marlee's Van Romberg, editor and chief at crunch Base. She's joining us on Zoom from San Francisco to talk all things tech. And an outlook from crunch Base for the second half of the year. Marlee's thanks so much for getting on a call with us on this half holiday. Here you have a report that your organization did on the outlook for twenty twenty three that I found so interesting. One of the results saying that companies only have six months of
runway left in the bank. That's according to almost a third of your company respondents. There. What are the the other big standout data points for you when it comes to that mid year report from crunch Base.
Nice, good morning, Thank you for having me so. Yes, we actually just published We do a quarterly reader survey, so these are mostly obviously people in tech and venture capital who are taking that survey and sort of telling us what they're thinking. And some of the things that we've been tracking since the beginning of the year is, as you mentioned, runway, that's a big hot topic right now is how much money do startups have before they
start running out of cash? And what I thought was really interesting this time around was, as you mentioned, about a third of respondents who answered that question said that they actually have less than six months of runway, which is definitely you know, sort of red alarm status for your company, particularly given that venture funding is very difficult to come by, so you know, that's that's really an
emergency situation for those companies. What was also interesting is that it seems to be kind of a barbell about the same percentage who answered the question said they have more than twenty four months of runway. So it seems like there's almost these two classes of companies that are emerging right now. Those that are doing pretty well on managing their cash and can probably you know, kind of survive the current environment if nothing else big kind of
comes along. And then there are those that are really in a difficult situation right now. And I think that might be where we start to see more mergers and acquisitions. It's something we've sort of been anticipating in the startup world for a while and haven't quite seen that come along. But there were actually quite a few larger deals announced last week, including the Big Data Bricks purchase of another venture back startup, So you know, we might start to see some of those trends emerge.
Now, what's been the catalyst for why there's been a divergence between those that are still doing well and then you have on the opposite side of that, those that are struggling to get that funding.
You know, I think I think there are a lot of factors at play. In general, funding is hard to come by for all companies right now, with you know, some obvious exceptions like AI. Investors are very very interested in what's going on there.
You know.
I think when money was easy to come by, a lot of startups did over higher, and that's why we're seeing a lot of layoffs in the sector right now, as you know, some of those corrections are being made. I think, you know, some companies were really kind of trying to grab as much market share as they could when when things were hot, and as the market slowing down now, you know, maybe didn't manage the cash they had as well as they could have.
How much of this could be repercussions to what happened with SVB and some of these other banks that we saw earlier in the spring.
Yeah, I think we you know, really can't overstate the impact that the collapse of the SDB had on this sector. You know, partly it was really an impact to the confidence in venture backed startups, but you know, it's also just SVB was by far the largest source of venture debt for a lot of startups, So that's something that's become even harder to come by and for a lot
of companies. As venture funding became more difficult, venture debt was was sort of a plan B, so that's become more difficult as well.
Well.
Even though that space has been a challenge, AI is certainly alive and well here when it comes to funding for these AI firms, what are you hearing people look at and question when sussing out which firms to invest in. I think about the difference between the guests that we have on who talk about betting on a C three AI versus you know, a quall Comb or an Intel some of these names that are AI adjacent but a little bit more stable. What are you hearing when it comes to that decision making.
Yeah, you know, obviously there's a lot of interest and hype kind of around generative AI, but what we're also seeing is investors are really interested in more of those kind of infrastructure companies that are going to be powering a lot of what's going on in AI and that are sort of you know, adjacent or tangential to the core AI companies. There's a lot of interest in that.
I think one investor who spoke with us kind of you know, described it as looking for the nuts and bolts that are going to be powering the AI revolution. There's a lot of money going into that as well, you know. I think, as with anything startup or venture capital, we are also seeing a lot of companies that are sort of just grabbing the AI label and sort of trying to affiliate themselves with that. And I think with time we'll sort of see a bit of a sorting there of what's real and what's not.
We only have about a minute left, but what's next that you're keeping your focus on on your radar as far as what the trajectory could be. When we're talking about these companies that are going through a investment or these seed funding rounds, you know, I think seed funding at the beginning of this venture downturn had held out fairly well, and that's not surprising. It was really the
late stage startups that were the most impacted. But we are starting to see that downturn trickle down through to the earliest stages and that's, frankly, that's worrisome because that's you know, the next class of companies that are going to be unicorns, you know, five ten years down the road, and so I think we will see this decline really kind of extend for quite some time, with exceptions around some of these sectors that really get a lot of funding,
But right now we're seeing venture funding down across all stages of funding.
All right, MARLEEZ, thank you so much for joining us to talk about your outlook and some of the picture when it comes to funding for startups in San Francisco and more broadly in the tech space. Really appreciate it. That was Marlee's Van Romberg. She is editor in chief of.
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