Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside
Speaker 1: my co host Matt Miller.
Speaker 2: Every business day, we bring you interviews from CEOs, market pros,
Speaker 2: and Bloomberg experts, along with essential market moving news. Find
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Speaker 3: Up next, I want to get straight to our next guest,
Speaker 3: Dana Peterson, chief economist at the Conference Board, who's going
Speaker 3: to join us on zoom and Dana, I have to
Speaker 3: get your thoughts because we are just coming off of
Speaker 3: the data that we get got last week when it
Speaker 3: came to consumer confidence and rising to the highest level
Speaker 3: since early twenty twenty two. How do you square that
Speaker 3: away when a lot of the data say GDP was
Speaker 3: revised higher for the second quarter coming and stronger than expected.
Speaker 3: But then it seems like a lot of people, even
Speaker 3: if you exclude some of the sentiment gauges, still feel
Speaker 3: a bit gloomy, especially when it comes to what is
Speaker 3: ahead for the economy.
Speaker 4: Sure, looking at the consumer confidence measure that the Conference
Speaker 4: Board produces, Yes, it did rise to the highest level
Speaker 4: we've seen in some time. But if you look at
Speaker 4: the series on a graph, it's been moving pretty much
Speaker 4: in the same range, and it's a range that's below
Speaker 4: the peak that we saw last year and also well
Speaker 4: below the pre pandemic twenty nineteen levels. When you look
Speaker 4: at the details, consumers are saying, well, things are okay
Speaker 4: right now, I'm working, I have income, business conditions seem
Speaker 4: to be okay. Looking to the future, they still expect
Speaker 4: that maybe there's something negative around the quarter, maybe there's
Speaker 4: a recession or a soft spot.
Speaker 5: So talk to us then about this US manufacturing activity.
Speaker 5: We just got this ISM data this morning. That's the
Speaker 5: Institute for Supply Management's Manufacturing Gauge, an eighth month of
Speaker 5: contraction here data. How happy is j Powell after seeing
Speaker 5: those numbers or do you not necessarily look at that
Speaker 5: as a huge indicator of the macro picture here?
Speaker 4: Well, factory activity is one important measure and certainly something
Speaker 4: that we look at and include in our leading index.
Speaker 4: And the reason why factory activity so weak is because
Speaker 4: consumers are no longer buying goods and mass. That was
Speaker 4: certainly the conditions during the pandemic where they couldn't go
Speaker 4: out and enjoy services now they can enjoy services. So
Speaker 4: that's why we're seeing services purchasing Managers index indicators rising
Speaker 4: and a lot of spending on services, which we saw
Speaker 4: in last week's PCE report. I know you.
Speaker 3: Also have the Conference Board's Leading Index, which has been
Speaker 3: negative for fourteen consecutive months, and something rare to see
Speaker 3: over the past half century. Typically when you've seen instances
Speaker 3: like that, it's only happened in nineteen seventy four, nineteen eighty,
Speaker 3: in two thousand and eight where you've seen that sort
Speaker 3: of extreme time threshold there, But then the US economy
Speaker 3: was actually already in a recession. What do you think
Speaker 3: this is telling us about the economy?
Speaker 6: Sure?
Speaker 4: What the leading is next tells us is that there's
Speaker 4: probably a recession starting right about now, which is the
Speaker 4: third quarter of the year. And certainly because it's been
Speaker 4: negative for so long, it does suggest that we will
Speaker 4: see a soft spot where we are actually forecasting a recession,
Speaker 4: but a short and shallow one. So the thing is
Speaker 4: that when you look at current conditions, there's still signaling
Speaker 4: that there's no recession. And that's why, and that's because
Speaker 4: four out of the well two out of the four
Speaker 4: indicators are linked to the labor market and incomes, and
Speaker 4: we know the labor market's still doing well with incomes
Speaker 4: arising on a real basis, so that's helping to support consumers.
Speaker 4: But businesses certainly are feeling the pinch, certainly manufacturers because
Speaker 4: there's less demand. And also many businesses are also looking
Speaker 4: ahead of concern that there's something negative around the corner
Speaker 4: and starting and they are definitely pulling back at least
Speaker 4: on investments, if not on labor data.
Speaker 5: I'm really curious about how how you rate the importance
Speaker 5: of cumulative savings when it comes to the inflationary picture.
Speaker 5: Here our Bloomberg economists crunch the numbers on this. They
Speaker 5: show that the lowest forty percent of households in the
Speaker 5: US have negative real excess cash balances. So just some
Speaker 5: evidence there that the concerns about tons of stimulus really
Speaker 5: beefing up these consumer balance sheets may not necessarily have
Speaker 5: the sticking power that we have been talking about it having.
Speaker 5: What is your take on the importance of cumulative savings
Speaker 5: and where those stand right now?
Speaker 4: Well, during the pandemic, yes, you had those big injections
Speaker 4: of stimulus for the lowest income families, they probably spend
Speaker 4: it all, and that's why they have negative savings right now,
Speaker 4: and they're using credit cards to get by, So that's
Speaker 4: what you're seeing there, and that kind of makes sense.
Speaker 4: The thing is that it's really tough for the FED
Speaker 4: to get at spending on services and people not spending
Speaker 4: out of the sexcess savings because it's not something that
Speaker 4: you finance, right, so even if you put something on
Speaker 4: a credit card, your credit card rate doesn't shift around
Speaker 4: with the FED funds rate. So we think an aggregate
Speaker 4: the excess savings that people have, it's pretty much going
Speaker 4: to run out by the fall. And again that's aggregate,
Speaker 4: so that's including people who are across the income distribution,
Speaker 4: so I think, you know, it's really still supporting savings
Speaker 4: as people who are probably in the middle of the
Speaker 4: income distribution who did also receive stimulus checks, but all
Speaker 4: also working and seeing their incomes rise. So really the
Speaker 4: FED needs to see weakening in the labor market of
Speaker 4: companies taking down those job ads so that consumers feel Okay, well,
Speaker 4: I don't have as many options, so maybe I'll just
Speaker 4: sit tight, or maybe I'll pull back on my spending
Speaker 4: and that'll help bring that inflation.
Speaker 3: How does oil play into this, because right now, if
Speaker 3: we're looking at US cred prices treating around seventy dollars
Speaker 3: a barrel, and overnight we did get that news obviously
Speaker 3: with the Saudi's as well as Rush extending those oil
Speaker 3: supply cuts. How much of a fuel do we would
Speaker 3: need to see, no pun intended when it comes to
Speaker 3: oil prices moving higher to then maybe exacerbate what we've
Speaker 3: seen when it comes to the inflation dynamics like we
Speaker 3: saw sale last summer, which obviously oil prices were treating
Speaker 3: much higher when it comes to that, and what it
Speaker 3: can mean for Americans in their pocketbooks.
Speaker 4: Sure right now and certainly in the in Friday's a
Speaker 4: PC inflation report, we saw that actually gasoline prices are
Speaker 4: falling year on year, and when you go to the pump,
Speaker 4: they're pretty low right now, prices for gasoline, and in fact,
Speaker 4: many people are expecting lots of folks are going to
Speaker 4: get out in their cars this holiday week. So any
Speaker 4: increase or rather any decreases in supply, certainly we'll put
Speaker 4: up a pressure on prices, but that usually takes a
Speaker 4: few months, and certainly that would not be a positive
Speaker 4: in terms of the FED helped working to bring down inflation,
Speaker 4: because certainly the FED cannot control opek so's it's certainly
Speaker 4: a negative if we do see material increases in prices.
Speaker 4: But for the most part right now, gasoline prices definitely
Speaker 4: are cooling and providing some relief to consumers.
Speaker 5: All Right, Dana, In our final couple minutes with you,
Speaker 5: I want to do what every economist I'm sure just
Speaker 5: loves doing. Look into your crystal ball for me here
Speaker 5: for the rest of this week. What do you think
Speaker 5: is going to be the most important data point that
Speaker 5: we're going to get in terms of sussing out what
Speaker 5: the Fed's next moves are going to be. Is it
Speaker 5: going to be some of this labor market data something else?
Speaker 4: Absolutely, it's going to be the labor market data. We'll
Speaker 4: get ADP and we'll also have the BLS payrolls report.
Speaker 4: We've seen that the labor market continues to be robust.
Speaker 4: I think that there are three forces going on here
Speaker 4: with respect to the labor market. You do have some
Speaker 4: companies that are letting folks go, but most companies are
Speaker 4: either hiring or just sitting tight and hoarding labor. And
Speaker 4: it's the case that those companies that are hiring, plus
Speaker 4: the hoarders are outweighing the companies that are letting people go.
Speaker 4: So we're probably going to continue to see positive readings
Speaker 4: on payrolls and a low unemployment rate. But the key
Speaker 4: thing will be next week when we get the JULT
Speaker 4: data to see if we're if vacancies are dialing down,
Speaker 4: which indicates that businesses are definitely feeling concerned about the
Speaker 4: future and that workers should actually watch out and reduce
Speaker 4: their spending.
Speaker 3: Dana, we only have about thirty seconds left when it
Speaker 3: comes to the labor market. What jobs do you think
Speaker 3: are most vulnerable right now?
Speaker 4: Well, certainly those jobs associated with the pandemic, Darling. So
Speaker 4: that's finance, technology, real estate construction on residential, and also
Speaker 4: transportation and warehousing simply because there's just less demands for goods.
Speaker 3: Dana, thank you so much for joining us. It's always
Speaker 3: a pleasure to get your perspective on the economy and
Speaker 3: obviously what the conference board is gauging when it comes
Speaker 3: to your economic indicators. That st Peterson cheap Economists at
Speaker 3: the conference boarding.
Speaker 1: You're listening to the dam Can't Live program Bloomberg Markets
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Speaker 5: Madison Mills here with jess Metton on this Monday, the
Speaker 5: official start of the second half of the year. Not
Speaker 5: a ton today unless you're an ev maker, of course,
Speaker 5: driving up markets. But one thing continuing to be a
Speaker 5: concern is commercial real estate. We've got a great voice
Speaker 5: on the space here. We've got Todd Henderson, he's co
Speaker 5: head of Global real Estate for DWS, joining to discuss
Speaker 5: why he thinks there's less pressure on commercial real estate
Speaker 5: than the consensus view. Todd, thank you so much for
Speaker 5: being on with us on this basically holiday Monday. Really
Speaker 5: appreciate you coming on. You got a lot of optimism here,
Speaker 5: not a ton of doom and gloom views from you.
Speaker 5: What are you seeing in the commercial real estate space
Speaker 5: that we're missing?
Speaker 7: Yeah, sure, I think it's more of a balanced take.
Speaker 7: Thanks for having me. There has been a bit of
Speaker 7: a doom lou that has been I think pervasive here
Speaker 7: over the last couple of months, and I think it
Speaker 7: followed somewhat the banking trimmer that we have and what's happened,
Speaker 7: I think is the definition of commercial real estate has
Speaker 7: been narrowed to office, or said differently, the office woes
Speaker 7: are painting the rest of the commercial real estate market
Speaker 7: with a very broad brush. There is no doubt that
Speaker 7: there are challenges within the office space, but the rest
Speaker 7: of the commercial real estate market, which includes industrial buildings,
Speaker 7: which includes retail, which includes residential, the fundamentals are very strong.
Speaker 7: In fact, if you look at overall vacancy rates inclusive
Speaker 7: of office, we're at the lowest levels that we've ever seen.
Speaker 7: In addition to that, we're seeing deteriorating construction levels, which
Speaker 7: the forward supply is always something we watch to determine
Speaker 7: how we expect markets to perform in the face of
Speaker 7: normalized demand. So, with strong fundamentals and lowering going for
Speaker 7: demand or sorry supply, we think that there is a
Speaker 7: reasonable picture for real estate to perform, much better than
Speaker 7: much of the doom loop that we have been experiencing
Speaker 7: in the press recently.
Speaker 3: When it comes specifically for commercial real estate, where are
Speaker 3: the vacancy rates the highest within when you're looking at
Speaker 3: regions within the United States.
Speaker 7: Well, first of all, they're higher in the office sector,
Speaker 7: and the office sector today, they're as high as they've
Speaker 7: ever been dating back to the RTC crisis that we
Speaker 7: saw in the late eighties and early nineties. When you
Speaker 7: look across the different geographic areas, the higher vacancies are
Speaker 7: in some of the markets that we're experiencing migration out
Speaker 7: outflows prior to the pandemic. But these are markets like
Speaker 7: San Francisco, these are markets like Chicago, and even some
Speaker 7: of the Manhattan markets are experiencing very high vacancies.
Speaker 5: So then talk to me about what needs to happen
Speaker 5: to change that, and specifically how much of that calculation
Speaker 5: needs to come from employers getting their workers back to
Speaker 5: the office. At least in talking with friends this weekend, Jess,
Speaker 5: it feels so all over the place like you and
Speaker 5: I are here every day. Most of our friends are
Speaker 5: not in that busket that's accurate, right, But some of
Speaker 5: them are, and some of them are saying, oh, my
Speaker 5: bosses are starting to track my time in the office.
Speaker 5: It's really anoying. So maybe that's a good indicator for you, Todd,
Speaker 5: tell me what are you thinking.
Speaker 7: Yeah, there have been a pretty material change, I think
Speaker 7: in terms of the leaders, organizations expectations with respect to
Speaker 7: being back in the office. Most of the news that
Speaker 7: you read or that's been reported over the last couple
Speaker 7: of months is more days back in the office. JP
Speaker 7: Morgan five days for their senior most people. Zuckerberg published
Speaker 7: a report recently that their engineers have performed more efficiently
Speaker 7: and better when in the office. So I think we'll
Speaker 7: continue to see more in the office, But I don't
Speaker 7: think that that is going to be the trigger that
Speaker 7: causes the office market to perform better. The office market
Speaker 7: historically has been the most highest highly correlated of any
Speaker 7: of the other sectors to the business cycle. And the
Speaker 7: business cycle is slowing, and we started into this business
Speaker 7: cycle with reasonably high can see is already in the
Speaker 7: office sector. So what we need is a robust economy.
Speaker 7: What we need is office using job growth. What we
Speaker 7: need is probably less supply, in particular the B and
Speaker 7: C office market, which is very much commodity space. I
Speaker 7: think about it, if you're commuting an hour and fifteen
Speaker 7: minutes each way to the office, are you going to
Speaker 7: be excited about coming to an office that doesn't have
Speaker 7: the amenity base that you know a high quality office has.
Speaker 8: No, You're not.
Speaker 3: It's like in the Bloomberg office. We have so many
Speaker 3: snacks here, right, Maddie.
Speaker 5: I love an amenity base. That's what I'm going to
Speaker 5: start calling my pantrot.
Speaker 3: It brings me here.
Speaker 7: Yeah, I mean Bloomberg. The Bloomberg facility is a perfect example. Like,
Speaker 7: you know, it's a it's a very nice building with
Speaker 7: you know, snacks and drinks and meeting areas and it's
Speaker 7: a you know, it almost feels like, you know, a
Speaker 7: public space, but in you know, in in the private environment.
Speaker 7: So that's the kind of experience that office workers want today.
Speaker 7: And if you're not delivering it, you're not going to
Speaker 7: see very robust demand for your buildings.
Speaker 3: To Matty's point, what is it going to take for
Speaker 3: us to get there? What's the catalyst in order to
Speaker 3: get people back into the office with you look back
Speaker 3: what happened during the pandemic and now there's obviously this
Speaker 3: rise of hybrid in the workplace, which obviously people are
Speaker 3: really enjoying.
Speaker 7: Yeah, you know, it's it's interesting though, you know, the
Speaker 7: the the people that are just starting out in the workforce.
Speaker 7: Most of those people in our firm, and as I
Speaker 7: speak to other other firms and leaders and other industries, there.
Speaker 7: Their junior people want to be in the office. They
Speaker 7: recognize that they learn more, there's better training, there's osmosis
Speaker 7: learning that goes on, and the senior folks want everyone
Speaker 7: in the office for culture continuity. So I think that's
Speaker 7: going to bounce back. It's been a little bit stagnant recently.
Speaker 7: If you look at the occupancy figures the castle card
Speaker 7: keyse wipes, we've been in and around fifty percent of
Speaker 7: the pre COVID occupancy levels in terms of swipes. But
Speaker 7: I suspect we're going to see that through the remainder
Speaker 7: of the year increase. But again, I don't think that
Speaker 7: that is the nirvana. It obviously will help, but what
Speaker 7: is really going to matter is making sure that we
Speaker 7: have a robust economy, have office using job growth growing,
Speaker 7: and that the buildings that are not providing the work
Speaker 7: environment that tenants want to see. You know, those buildings
Speaker 7: are going to have to change or those buildings are
Speaker 7: going to have to be repurposed to something else.
Speaker 5: All Right, Really quickly, Todd, in our final minute with
Speaker 5: you here, talk to me about what this looks like
Speaker 5: in terms of the impact on cities. I'm always hoping
Speaker 5: that these buildings in Midtown that our previous offices are
Speaker 5: going to get turned into apartments so that I can
Speaker 5: continue to afford to live in New York City. How
Speaker 5: likely is my dream to come true here?
Speaker 7: I think some of the buildings, although unfortunately maybe for you,
Speaker 7: a smaller percentage of these buildings are convertible. It is
Speaker 7: it's a challenge. You know, you have to have significant plumbing,
Speaker 7: you have to have the floor plates lay out appropriately
Speaker 7: in order to design effective and efficient units. So I
Speaker 7: think that the conversion to residential is an option, but
Speaker 7: again it's not the option for every BI building. It's
Speaker 7: the option for a much smaller percentage of buildings than
Speaker 7: those who own them and maybe those who are looking
Speaker 7: to buy cheaper apartments in the city. I think in
Speaker 7: terms of longer term, where are we seeing migration, we
Speaker 7: continue to see migration to the southeast, the south, and
Speaker 7: the southwest. I think it's keeper cost of living, lower taxes,
Speaker 7: more business friendly environments, and those are investible themes that
Speaker 7: I believe are here to stay.
Speaker 5: All right, Todd, thank you so much for joining us.
Speaker 5: That was Todd Henderson, co head of Global real Estate
Speaker 5: for DWS on commercial real estate.
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Speaker 3: Wilson Mills here in the Interactive Broker's studio And you
Speaker 3: know what, Maddie, especially with what we've been covering the
Speaker 3: last year, and when it comes to investment managers, it
Speaker 3: has been so tricky when you think of the amount
Speaker 3: of losses in the bear market last year, and then
Speaker 3: you're coming off of a Nasdaq one hundred's best first
Speaker 3: half to a year ever. And who better to talk
Speaker 3: to us about positioning than JD Gardner, CIO and founder
Speaker 3: of apt Is Capital Advisors. JD give us her take
Speaker 3: here as far as how are you advising clients to
Speaker 3: position off the back of what we just saw the
Speaker 3: last six months.
Speaker 9: Hey, guys, thanks thanks so much for having us. Really,
Speaker 9: we spend a lot of time talking about just where
Speaker 9: returns come from, so in a nutshell, yield plus growth
Speaker 9: or multiples expanding, and our advice, and it has been
Speaker 9: this for some time now, is depending on valuations to expand,
Speaker 9: to continue to expand is probably not the best way
Speaker 9: to position portfolios at the moment. So we really think
Speaker 9: there's an emphasis that should be had on yield plus
Speaker 9: growth and that framework should drive the portfolio construction process
Speaker 9: in today's market.
Speaker 5: So then, in terms of valuation, how do you suss
Speaker 5: out whether you need to reallocate or reposition based on
Speaker 5: how expensive certain equities might become.
Speaker 9: I think it's just equities in general. When you look
Speaker 9: at how friendly valuation expansion has been since really the
Speaker 9: financial crisis, and you can point to the FED and
Speaker 9: QE and things like that, like a lot of people will,
Speaker 9: but I think the last fifteen years or so has
Speaker 9: really kind of fooled investors into thinking that equity valuations
Speaker 9: just go up.
Speaker 10: And if you look at.
Speaker 9: Where we are today versus where we are historically, given
Speaker 9: the backdrop that what's happened in the interest rate environment
Speaker 9: the last fifteen sixteen months, what's happening you know at
Speaker 9: the underlying the fundamental components of these companies, we just
Speaker 9: think multiples expanding is not in the cards and we
Speaker 9: do think valuations look rich right now, when.
Speaker 3: You're talking about rich valuations, I'm sure Maddie and I
Speaker 3: have a few ideas of what corners of the market
Speaker 3: you could be talking about when it comes to big
Speaker 3: tech and these growth But is that where you think
Speaker 3: the majority of that is placed, or are there other
Speaker 3: particular corners of the market that you think look a
Speaker 3: little too lofty as well.
Speaker 9: I think there's definitely pockets that we could point to
Speaker 9: and say does this make sense or not? And you
Speaker 9: can probably sense where our stance would be on that.
Speaker 9: But I think in general there are pockets where there's
Speaker 9: valuations that look somewhat attractive. But when you're just getting
Speaker 9: beta exposure to the market, we're in an environment where
Speaker 9: unless you're willing to take significant active share risk versus
Speaker 9: the S and P, because the SMP now, like I know,
Speaker 9: just heard the market update talking about the Nasdaq talking
Speaker 9: about the S and P, the S and P still
Speaker 9: look at the top five or six names. You're heavily,
Speaker 9: heavily focused in names that we are dependent on the
Speaker 9: growth associated with those companies being attractive.
Speaker 5: So then, and it's interesting because historically when you see
Speaker 5: a strong market that leads to strong markets ahead, right,
Speaker 5: So how do you think about risk when it comes
Speaker 5: to that? Are you concerned at all about being overbought
Speaker 5: on some of these expensive names? And your note you
Speaker 5: mentioned that at least eighty percent of your fund's net
Speaker 5: assets will be invested in US large caps. Are you
Speaker 5: concerned at all about going all in on a few
Speaker 5: a few names.
Speaker 8: No.
Speaker 9: And here's here's here's kind of our what we tell
Speaker 9: investors all the time is we think volatility should be
Speaker 9: used as an asset class or viewed as an asset class,
Speaker 9: and volatility is something that you can use to mitigate
Speaker 9: risk or enhance yield.
Speaker 10: So we have a whole suite of funds where you know.
Speaker 9: Let's say, let's say you get beta plus additional yield,
Speaker 9: and we think that that that helps alleviate that additional
Speaker 9: yield helps alleviate the potential risk that you're taking. Because
Speaker 9: and I'll be the first one to tell you, you know,
Speaker 9: market could end up plus thirty for the rest of
Speaker 9: the year. It could go you know, we could lose
Speaker 9: what gains we've had so far here today, but we
Speaker 9: could also keep rising. I can't explain markets just seem
Speaker 9: to levitate right now soft landing. And I would guess
Speaker 9: if you pulled your audience and said, hey, what do
Speaker 9: you think the market's going to do if the Fed
Speaker 9: funds rate goes from basically zero to five and a
Speaker 9: half or wherever it is right now in the next
Speaker 9: fourteen months, I would guess most people would not say
Speaker 9: markets are going to just continue to truck higher in
Speaker 9: twenty twenty three.
Speaker 10: And so our use.
Speaker 9: Of volatility, our view on volatility, I think, is what
Speaker 9: allows us to continue to take that equity risk and
Speaker 9: not make any major bets about some bearish sentiment, Like
Speaker 9: we still want to own stocks because we think long
Speaker 9: term they're how you compound wealth.
Speaker 3: That's interesting because we did an M Live survey at
Speaker 3: the start of the year. I did a story with
Speaker 3: Liz McCormick over on the Bonds team, and when we
Speaker 3: pulled on M Live, most respondents thought that the US
Speaker 3: stock market we were talking about, the S and P
Speaker 3: five hundred would retest those October lows, so they didn't
Speaker 3: necessarily see at the time a bull market coming. But
Speaker 3: I'm sure JD, especially when it comes to a lot
Speaker 3: of the sentiment indicators that we've been talking about. When
Speaker 3: they're at such different extremes. I know the AEII survey
Speaker 3: recently has begun to turn higher the last three weeks
Speaker 3: or so. Obviously not the same string of pessimism that
Speaker 3: we would have seen over the past fifteen months before that.
Speaker 3: But do you think that there's a risk here for
Speaker 3: individual investors if they remain too bearish?
Speaker 10: Yeah, I think there's definitely a risk.
Speaker 9: And if you look at how like I point to
Speaker 9: the vis twenty twenty three so far has been a
Speaker 9: year where there's been very little volatility, and you've seen
Speaker 9: the VIX go from what it was to where it
Speaker 9: is today, which is significantly lower. So I think you
Speaker 9: never want to fight that. That's kind of what I
Speaker 9: was saying I alluded to earlier. The only way if
Speaker 9: you want to take a bearish view your potential, your
Speaker 9: opportunity costs could be could be pretty damaging to long
Speaker 9: term compounded returns. And so that that's kind of where
Speaker 9: you know, we want to mitigate risks. Specifically with our
Speaker 9: enhanced Yield suite. We want to enhance the yield associated
Speaker 9: with owning beta and we think that gives you kind
Speaker 9: of more comfort in owning equities, even if you aren't
Speaker 9: convicted that valuations are cheap.
Speaker 5: Final thirty seconds here, JD, what is the single biggest
Speaker 5: thing that you are going to look to for the
Speaker 5: second half of the year to indicate where this market
Speaker 5: is going to end up?
Speaker 10: I think that that's a tough question on the.
Speaker 5: Spot, give me your your entire thesis on the market
Speaker 5: and how we can make money by following let.
Speaker 9: Me let me shake my magic eight ball. Hold on
Speaker 9: two seconds. I think the big thing is right now,
Speaker 9: what we're spending a lot of time in the office
Speaker 9: talking through is kind of what the FED say in
Speaker 9: verse market market expectations. All of that points to kind
Speaker 9: of how we started the conversation, which is, I really
Speaker 9: do think yield is going to be an incredibly important
Speaker 9: driver of returns at the portfolio level. And that doesn't
Speaker 9: mean go own some high yield bonds or something like that.
Speaker 10: I think there's different.
Speaker 9: Ways, specifically in the ETHF space, where you know, we're
Speaker 9: trying to pioneer ways where you can enhance yield in
Speaker 9: a very simple and liquid wrapper that's fully transparent and
Speaker 9: allows you to own beta instead of owning some factor
Speaker 9: or some tilt the portfolios that could create risk.
Speaker 3: Thank you so much, JD. It's been a pleasure getting
Speaker 3: your insight on this, a more optimistic view when it
Speaker 3: comes to investment managers. But JD. Gardner, CIO and founder
Speaker 3: of Aptis Capital Advisors, thank you so much for joining
Speaker 3: us on zoom and Maddie. I mean, looking at these
Speaker 3: markets we're talking about discretion there is still up over
Speaker 3: one percent in the S and P five hundred. Real
Speaker 3: estate also up one percent, but then you have healthcare
Speaker 3: down about one percent, so kind of keeping those gains
Speaker 3: in check for the S and P five hundred.
Speaker 1: You're listening to the Tin Can't Live program Bloomberg Markets
Speaker 1: weekdays at ten am Eastern on Bloomberg dot Com, the
Speaker 1: iHeartRadio app, and the Bloomberg miss or listen on demand
Speaker 1: wherever you get your podcast.
Speaker 5: We're going to switch gears a little bit to the geopolitics, Jess,
Speaker 5: because that Russian war on Ukraine continues, almost hitting a
Speaker 5: year and a half now of that war continuing. Just
Speaker 5: to go through some news there to Ukraine's deputy defense
Speaker 5: minister reporting heavy fighting as Kiev's troops are advancing towards
Speaker 5: Bach move Meanwhile, Russia is saying it thwarted a Ukrainian
Speaker 5: assassination attempt on the Russian backed head of crime. HA
Speaker 5: lots of news to talk about this morning, and all
Speaker 5: of that, of course following that Wagner Group news from
Speaker 5: last weekend. And we've got one of the foremost experts globally,
Speaker 5: I think, on Putin joining us to talk about this.
Speaker 5: Angela Stent, senior fellow at the Brookings Institute, also author
Speaker 5: of Putin's World, Russia against the West and with the rest.
Speaker 5: She joins us on zoom. Angela, great to speak with you,
Speaker 5: as always in terms of the totality of the news
Speaker 5: that we're getting out of Russia, out of Ukraine right now,
Speaker 5: and the picture pains for you regarding Putin's power, Where
Speaker 5: do you think his power stands right now? How dented
Speaker 5: is it following some of the bad news that he's
Speaker 5: gotten over the course of the last eight days.
Speaker 6: So Putin seems to have bounced back. I mean Saturday,
Speaker 6: when all these events were occurring on June twenty fourth,
Speaker 6: he was very angry, he seemed insecure. He kind of
Speaker 6: disappeared from view. But he's now done a lot of
Speaker 6: public events. He's, as I said, he's bounced back. He's
Speaker 6: made speeches. And we do know now that the Russian
Speaker 6: state is taking over Wagner's assets. They've raided the Wagner
Speaker 6: offices in Saint Petersburg, They've taken down the logo, you know,
Speaker 6: from the building where Vagner is, and they are slowly
Speaker 6: and I think systematically, trying to figure out how they're
Speaker 6: going to take these assets over, who is going to
Speaker 6: run them. And of course it's not only what Vagner
Speaker 6: has in Russia and Ukraine, but in Africa's Central African public, Mali,
Speaker 6: in Sudan and Libya, in all these places where Vaden
Speaker 6: was such an important outpost, really arm of the Russian state.
Speaker 6: So for the moment, Putin looks as if he is
Speaker 6: in charge. But I think there's so many questions still
Speaker 6: surrounding what happened last week and who was behind what that.
Speaker 6: I will still have to wait and see how this
Speaker 6: plays out.
Speaker 3: In the week of these insurrection attempts just over a
Speaker 3: week ago that threatened to steal Putin's grip on power.
Speaker 3: How has that impacted Ukraine's counter offensive with Russia.
Speaker 6: Well, it doesn't seem to have had that much of
Speaker 6: an impact. I mean, the counter offensive continues, it's very difficult.
Speaker 6: The Russians have very strong defenses, They've been billing them
Speaker 6: for months, and the Ukrainians are inching forward. They're taking
Speaker 6: small amounts of territory. As you said, they are trying
Speaker 6: to retake what's left of bunt Moot, which is really
Speaker 6: a destroyed town. But these gains come a significant loss
Speaker 6: of human life. So what the Ukrainians have said is
Speaker 6: that the real counter offensive hasn't begun yet, inasmuch as
Speaker 6: they have more troops and more weapons that they can
Speaker 6: put into this, and this may happen in a few weeks.
Speaker 6: But what they've said is we're not going to tell
Speaker 6: you when it's going to happen, and you'll see, you'll
Speaker 6: find out when we're actually doing it.
Speaker 5: Angela, If Putin was already able to bounce back just
Speaker 5: a little over a week after the Wagner groups moves here,
Speaker 5: what is it that could finally kind of put a
Speaker 5: dent in some of his power, both in Russia and
Speaker 5: then in this war effort in Ukraine. What do you
Speaker 5: think is something that could be a catalyst for that.
Speaker 6: Well, there could still be questions about his hold on
Speaker 6: the reins of power. There are obviously questions swallowing around
Speaker 6: about how much of the regular military actually supported some
Speaker 6: of the things that Pregorsian was doing and supported his
Speaker 6: criticism of the way that the war was being waged.
Speaker 6: We know that at least one general, sorovikn apparently supported him,
Speaker 6: and he's now disappeared, so there may be other questioning
Speaker 6: going on, and I think people will be waiting to
Speaker 6: see how the campaign in Ukraine goes. Can the Russian
Speaker 6: armed forces continue fighting back about the Ukrainians without the
Speaker 6: Wagner forces, And we don't know how many of the
Speaker 6: Vagner forces have joined the regular forces. They were supposed
Speaker 6: to have done so by July one, We're not sure
Speaker 6: about that, so I think that's one certainly of the indications.
Speaker 6: The other thing would be if you could really see
Speaker 6: complaining and unrest among the elites that support Putin, but
Speaker 6: we really haven't seen that because I think once they
Speaker 6: understood the mutiny was over, they need Putin to stay
Speaker 6: in power to protect our assets and their way of life.
Speaker 6: They may have lost the ability to travel to Europe
Speaker 6: and visit their homes and banks bank accounts because all
Speaker 6: of the sanctions that we've levied on them, but still
Speaker 6: they want to keep what they have in Russia and
Speaker 6: continue to lead the life that they're able still to do,
Speaker 6: and for that they don't want Putin to go. Pregausion
Speaker 6: would not have been a good alternative for them. So
Speaker 6: I think again, if you saw more overt unrest among
Speaker 6: the elites surrounding him, then you'd really have to question
Speaker 6: what's going on. But we haven't seen that since the
Speaker 6: mutiny was over.
Speaker 3: Do we have a sense of what the timetable could
Speaker 3: be for how long this could continue or is this
Speaker 3: something that's going to turn out to be an endless war.
Speaker 6: So Putin, I think, certainly before last week, thought that
Speaker 6: Russia could outlast the West. We have elections coming up,
Speaker 6: I don't have to tell you in the US, and
Speaker 6: we have some Republicans and candidates who are against supporting Ukraine,
Speaker 6: and then they're looking at Europe, and then also movements
Speaker 6: and groups in Europe who say that we should be
Speaker 6: forcing the Ukrainians to the negotiating table. So I think
Speaker 6: he believed that, and I think he still believes maybe
Speaker 6: he can outlast the West. But we did see a
Speaker 6: show of Western unity last week, So unfortunately, this war
Speaker 6: could go on for a long time. It also depends
Speaker 6: on how much the US and its allies, But primarily
Speaker 6: the US is willing to furnish the Ukrainians in sophisticated weaponry,
Speaker 6: and they're things like attackers missiles, which the Ukrainians are
Speaker 6: really asking for and which the US has so fond
Speaker 6: not given them F sixteen fighter aircraft that they want
Speaker 6: because their air defenses are not as strong as they
Speaker 6: could be. So if they got more weaponry from the US,
Speaker 6: then this might be able to be over earlier, but
Speaker 6: that's also been a very slow process.
Speaker 5: Well, Angela, how concerned are you that the upcoming elections
Speaker 5: in the US are going to make that even harder
Speaker 5: for US officials to properly get funding for Ukrainian counter
Speaker 5: offenses and weaponry as well.
Speaker 6: I think it's going to be more difficult. I think
Speaker 6: you'll see that this year twenty twenty three was probably
Speaker 6: the peak year of assistance for Ukraine. We'll see the
Speaker 6: debates in the fall as the election campaigns unfold. The
Speaker 6: people have to figure out what they're going to do
Speaker 6: with the National Defense Authorization Act, which is where they
Speaker 6: would be assigning all the money and other things for Ukraine.
Speaker 6: But I think it's going to be more difficult because
Speaker 6: you have a split among the Republican candidates about their
Speaker 6: views on Ukraine. And obviously, if Donald Trump is the candidate,
Speaker 6: that's going to be a very different situation next year
Speaker 6: than we have this year.
Speaker 3: Angela, we only have about a minute left here. What
Speaker 3: are your sort of final thoughts when it comes to
Speaker 3: this and what we should be keeping an eye on
Speaker 3: moving forward.
Speaker 6: Well, I think we have to keep an eye on
Speaker 6: the whereabouts of mister progosion. We don't know where he is.
Speaker 6: He may be in vl Risk, but we don't know that.
Speaker 6: We only have audio recordings from him. We have to
Speaker 6: keep our eyes on what happened to if we ever
Speaker 6: find out General Suovykin who has disappeared, we'll see how
Speaker 6: many people disappear or are no longer there. And then
Speaker 6: I think we need to see how successful the Russian
Speaker 6: state is in taking over the Wagner assets and controlling
Speaker 6: this kind of monstrosity. Really, they've got to have of
Speaker 6: control and that the Kreminins thought that it could control
Speaker 6: earlier on.
Speaker 5: All right, Angela, thank you so much as always for
Speaker 5: joining us. It's really so important that we have you
Speaker 5: as a source to get some of these insights on
Speaker 5: what's going on on the ground with that war in
Speaker 5: Ukraine and what's going on with Putin moving forward as well.
Speaker 5: That was Angela Stent, Senior Fellow at the Brookings Institute,
Speaker 5: also author of Putin's World, Russia against the West and
Speaker 5: with the rest.
Speaker 1: You're listening to the tape Cansur Live program Bloomberg Markets
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Speaker 8: The Bloomberg Business App.
Speaker 1: You can also listen live on Amazon Alexa from our
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Speaker 1: thirty Maddie.
Speaker 3: What better way to especially when we're getting ready for
Speaker 3: the fourth July holiday thinking about summer travel. I was
Speaker 3: just looking at some stats over the weekend. If you
Speaker 3: looked at more than two million passengers were on Friday,
Speaker 3: so kind of rivaling some of these numbers that we
Speaker 3: would have seen in Thanksgiving of twenty nineteen. So that
Speaker 3: was before the pandemic. When you think about that, that's crazy,
Speaker 3: I know. So we're getting back, like we're so back,
Speaker 3: We're so we are, and who better to chat with
Speaker 3: us when it comes to the travel season, especially during
Speaker 3: the summer months. Than David Carr, Senior insights manager, was
Speaker 3: similar Web David, please talk to us about what your
Speaker 3: travel outlook is, because it seems like when you think
Speaker 3: about the consumer, they're definitely out there traveling right now.
Speaker 11: Yeah, that's true. Well, it's interesting. I mean I look
Speaker 11: at things through the lens of web traffic is a
Speaker 11: proxy for demand, and we're actually seeing things soften up
Speaker 11: a little bit. I think if you were in a
Speaker 11: crowd at airport dealing with your canceled flight, you probably
Speaker 11: didn't feel like things were off at all. And it's
Speaker 11: not that demand has collapse. It's just not growing in
Speaker 11: the crazy way that it was a year ago or
Speaker 11: two years ago coming out of the pandemic. So we
Speaker 11: do seem to be a little bit past that that
Speaker 11: revenge travel just got to get out there.
Speaker 3: Interesting, So softening up a bit where exactly I mean,
Speaker 3: is this where you're seeing just in general for flights
Speaker 3: and things like that.
Speaker 11: Yeah, flights, I mean, I actually did an analysis of
Speaker 11: just the top one hundred travel websites that we consider
Speaker 11: transactional websites where you can buy a ticket, you can
Speaker 11: buy some sort of a booking and it's been off
Speaker 11: a little bit. I think it's almost unchanged from last
Speaker 11: year as of June, as of preliminary stats for June.
Speaker 11: And you know, the big standout has been cruises. Though
Speaker 11: cruises are are still crazy growing, you know, some more
Speaker 11: than others. I mean, you know, Carnival itself, the Carnival
Speaker 11: brand isn't doing quite as strongly as it's some of
Speaker 11: its sub brands. Princess is doing better, same thing with
Speaker 11: Royal Caribbean and Celebrity. Celebrity is the one that is
Speaker 11: growing the fastest right now, Version is growing fastest. And
Speaker 11: I hope I'm not babbling too much, but we do
Speaker 11: definitely see a trend towards a low cost travel options
Speaker 11: winning out. So if I look at airlines, they tend
Speaker 11: to be about the same or maybe down a little
Speaker 11: bit from this time last year. But Frontier Airlines is
Speaker 11: going great. And if I look at the cruises MSc,
Speaker 11: which is a relatively budget cruise line, they're the strongest
Speaker 11: of that set. Even though you know, across the board,
Speaker 11: I did see the cruises we rot.
Speaker 5: What's so interesting that I always think about our Bloomberg
Speaker 5: intelligence airlines. Analysts always talk about how important business travel
Speaker 5: is for these airlines because when it's going on the
Speaker 5: company card, maybe you're getting first class travel, whereas if
Speaker 5: it's you, maybe you're going Spirit airlines for your own pocketbook. There,
Speaker 5: talk to me about how the data looks on your
Speaker 5: end when it comes to business travel. Are you seeing
Speaker 5: any big changes on that front this year?
Speaker 8: Yeah?
Speaker 11: I mean the most direct way I can track that
Speaker 11: is by looking at traffic to say AMX travel so
Speaker 11: a business travel portal, and that's that and concurs maybe
Speaker 11: twelve thirteen percent from what it was last year, So
Speaker 11: there is some interest in getting back out there to
Speaker 11: travel again.
Speaker 3: When you're talking about a little bit of softness earlier,
Speaker 3: what do you think that tells us about the American
Speaker 3: consumer right now?
Speaker 11: Well, I'm not an economist, but I think consumer confidence
Speaker 11: is the is the phrase that comes to mind. Not
Speaker 11: that people are doing horribly, but they just they just
Speaker 11: aren't quite sure how they're going to be doing next month,
Speaker 11: and so there may be a little bit less inclined
Speaker 11: to make a big travel purchase. They still want their vacation,
Speaker 11: but they might be more inclined to shop for deals.
Speaker 5: Is that part of why we're seeing such a boom
Speaker 5: in the cruise industry. Is it viewed as a deal
Speaker 5: or is it just that you know, the world's reopened,
Speaker 5: so why not go on a cruise? Like, what do
Speaker 5: we know about the thinking behind the cruiser?
Speaker 11: I mean, I've read elsewhere that that cruising has started
Speaker 11: to attract a younger, younger demographic, and it still does
Speaker 11: well with old folks like Mayer.
Speaker 3: Really David has.
Speaker 11: Gotten a little bit younger. And yeah, and I think
Speaker 11: it is seen as a bargain as seen as the package.
Speaker 11: Now the activity that I'm seeing right now, typically cruises
Speaker 11: are booked more in the March April time frame. They
Speaker 11: talk about wave season when everybody is behind their cruises. So,
Speaker 11: you know, but I think, you know, we saw strength
Speaker 11: then in demand, but we're the fact that we're still
Speaker 11: seeing it now means that some people are are either
Speaker 11: booking a last minute a cruise, you know, they still
Speaker 11: find that attractive, or maybe they're booking something that is
Speaker 11: for the fall or for next year. And that's all
Speaker 11: good for the cruise lines.
Speaker 3: What about when it comes to hotel websites, what are
Speaker 3: you seeing there? Is there a difference between particular high
Speaker 3: end types of hotels, maybe resorts versus maybe some cheaper bookings.
Speaker 11: Well, hotels in general, we're doing fairly well. I did
Speaker 11: notice that some of the all inclusive resorts were actually
Speaker 11: seeing some decline or stagnation in demand. So Sandals, Beaches,
Speaker 11: club Medose, those types of types of places. So you know, again,
Speaker 11: you know that has some of the same fixed price
Speaker 11: appeal as the cruise does, but maybe people think of
Speaker 11: it as flurging and so they're a little bit less
Speaker 11: less likely to pull the trigger on that.
Speaker 3: Yeah, some of those resorts. I was looking back in
Speaker 3: May to take a trip for my birthday, and like
Speaker 3: you were talking about Club Med, I wasn't thinking about
Speaker 3: staying there, but I saw it on Expedia and it
Speaker 3: was probably five six thousand dollars to stay for just
Speaker 3: a couple of days. I was like, no, thanks, No,
Speaker 3: I was like.
Speaker 5: What did you end up doing again? For the travel job?
Speaker 3: I went to Aruba. Yes, it was great, A had
Speaker 3: good time and just a hotel. I stayed at Renaissance.
Speaker 3: It's nice, okay there before I've been to a couple
Speaker 3: of times, but they have a flamingo island there, so
Speaker 3: it's a lot of fun takes.
Speaker 5: So you have to go interesting that you did not
Speaker 5: consider an Airbnb. It sounds like.
Speaker 3: I wanted to go to the Flamingo Island in order
Speaker 3: to get it. That's the private island at So that's
Speaker 3: that's the reason that got me hooked onto it. You
Speaker 3: can buy a day pass, but it's more complicated.
Speaker 5: Right right, Okay, Well that that makes sense as a reason. David.
Speaker 5: I know that you don't necessarily look at this data,
Speaker 5: but you're you're a travel guy. You can go on
Speaker 5: this journey with us here to what extent are you
Speaker 5: seeing declines in Airbnb interest and consumers looking more towards
Speaker 5: hotels and other you know, long term stays perhaps outside
Speaker 5: of Airbnb rentals.
Speaker 11: I did see that that that was I guess both
Speaker 11: both Airbnb and Verbo. Yeah, despite I see a lot
Speaker 11: of advertising from Verbo currently, but but they they're trending
Speaker 11: downward year over year. So the more traditional hotel brands
Speaker 11: are actually doing a little bit better than those guys,
Speaker 11: which is interesting.
Speaker 3: All right, David Carr, we only have about a minute left,
Speaker 3: But any sort of parting thoughts for the summer travel
Speaker 3: season for our listeners.
Speaker 11: I mean, I thought of mentioning that that I am
Speaker 11: a cruiser, I have to live in driving distance of
Speaker 11: three cruise ports in South Florida.
Speaker 6: Oh wow.
Speaker 11: It's part of the appeal of cruising might be that
Speaker 11: you don't necessarily have to get on an airplane to
Speaker 11: go on a cruise. And if it was over this
Speaker 11: past week, I think I would be happy to be
Speaker 11: getting out a cruise rather than flying some places.
Speaker 3: So great. Well, we are so pleased that we were
Speaker 3: able to get your insight on all things travel for
Speaker 3: this summer. That's David Carr, senior insights manager with Similar Web,
Speaker 3: joining us on Zoom.
Speaker 1: You're listening to the tape cats are live program Bloomberg
Speaker 1: Markets weekdays at ten am Eastern on Bloomberg Radio, the
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Speaker 1: You can also listen live on Amazon Alexa from our
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Speaker 5: But Jess Wild markets are still open.
Speaker 8: Here.
Speaker 5: We're going to have a great talk with marlee's Van Romberg,
Speaker 5: editor and chief at crunch Base. She's joining us on
Speaker 5: Zoom from San Francisco to talk all things tech. And
Speaker 5: an outlook from crunch Base for the second half of
Speaker 5: the year. Marlee's thanks so much for getting on a
Speaker 5: call with us on this half holiday. Here you have
Speaker 5: a report that your organization did on the outlook for
Speaker 5: twenty twenty three that I found so interesting. One of
Speaker 5: the results saying that companies only have six months of
Speaker 5: runway left in the bank. That's according to almost a
Speaker 5: third of your company respondents. There. What are the the
Speaker 5: other big standout data points for you when it comes
Speaker 5: to that mid year report from crunch Base.
Speaker 12: Nice, good morning, Thank you for having me so. Yes,
Speaker 12: we actually just published We do a quarterly reader survey,
Speaker 12: so these are mostly obviously people in tech and venture
Speaker 12: capital who are taking that survey and sort of telling
Speaker 12: us what they're thinking. And some of the things that
Speaker 12: we've been tracking since the beginning of the year is,
Speaker 12: as you mentioned, runway, that's a big hot topic right
Speaker 12: now is how much money do startups have before they
Speaker 12: start running out of cash? And what I thought was
Speaker 12: really interesting this time around was, as you mentioned, about
Speaker 12: a third of respondents who answered that question said that
Speaker 12: they actually have less than six months of runway, which
Speaker 12: is definitely you know, sort of red alarm status for
Speaker 12: your company, particularly given that venture funding is very difficult
Speaker 12: to come by, so you know, that's that's really an
Speaker 12: emergency situation for those companies. What was also interesting is
Speaker 12: that it seems to be kind of a barbell about
Speaker 12: the same percentage who answered the question said they have
Speaker 12: more than twenty four months of runway. So it seems
Speaker 12: like there's almost these two classes of companies that are
Speaker 12: emerging right now. Those that are doing pretty well on
Speaker 12: managing their cash and can probably you know, kind of
Speaker 12: survive the current environment if nothing else big kind of
Speaker 12: comes along. And then there are those that are really
Speaker 12: in a difficult situation right now. And I think that
Speaker 12: might be where we start to see more mergers and acquisitions.
Speaker 12: It's something we've sort of been anticipating in the startup
Speaker 12: world for a while and haven't quite seen that come along.
Speaker 12: But there were actually quite a few larger deals announced
Speaker 12: last week, including the Big Data Bricks purchase of another
Speaker 12: venture back startup, So you know, we might start to
Speaker 12: see some of those trends emerge.
Speaker 3: Now, what's been the catalyst for why there's been a
Speaker 3: divergence between those that are still doing well and then
Speaker 3: you have on the opposite side of that, those that
Speaker 3: are struggling to get that funding.
Speaker 12: You know, I think I think there are a lot
Speaker 12: of factors at play. In general, funding is hard to
Speaker 12: come by for all companies right now, with you know,
Speaker 12: some obvious exceptions like AI. Investors are very very interested
Speaker 12: in what's going on there.
Speaker 8: You know.
Speaker 12: I think when money was easy to come by, a
Speaker 12: lot of startups did over higher, and that's why we're
Speaker 12: seeing a lot of layoffs in the sector right now,
Speaker 12: as you know, some of those corrections are being made.
Speaker 12: I think, you know, some companies were really kind of
Speaker 12: trying to grab as much market share as they could
Speaker 12: when when things were hot, and as the market slowing
Speaker 12: down now, you know, maybe didn't manage the cash they
Speaker 12: had as well as they could have.
Speaker 3: How much of this could be repercussions to what happened
Speaker 3: with SVB and some of these other banks that we
Speaker 3: saw earlier in the spring.
Speaker 12: Yeah, I think we you know, really can't overstate the
Speaker 12: impact that the collapse of the SDB had on this sector.
Speaker 12: You know, partly it was really an impact to the
Speaker 12: confidence in venture backed startups, but you know, it's also
Speaker 12: just SVB was by far the largest source of venture
Speaker 12: debt for a lot of startups, So that's something that's
Speaker 12: become even harder to come by and for a lot
Speaker 12: of companies. As venture funding became more difficult, venture debt
Speaker 12: was was sort of a plan B, so that's become
Speaker 12: more difficult as well.
Speaker 11: Well.
Speaker 5: Even though that space has been a challenge, AI is
Speaker 5: certainly alive and well here when it comes to funding
Speaker 5: for these AI firms, what are you hearing people look
Speaker 5: at and question when sussing out which firms to invest in.
Speaker 5: I think about the difference between the guests that we
Speaker 5: have on who talk about betting on a C three
Speaker 5: AI versus you know, a quall Comb or an Intel
Speaker 5: some of these names that are AI adjacent but a
Speaker 5: little bit more stable. What are you hearing when it
Speaker 5: comes to that decision making.
Speaker 12: Yeah, you know, obviously there's a lot of interest and
Speaker 12: hype kind of around generative AI, but what we're also
Speaker 12: seeing is investors are really interested in more of those
Speaker 12: kind of infrastructure companies that are going to be powering
Speaker 12: a lot of what's going on in AI and that
Speaker 12: are sort of you know, adjacent or tangential to the
Speaker 12: core AI companies. There's a lot of interest in that.
Speaker 12: I think one investor who spoke with us kind of
Speaker 12: you know, described it as looking for the nuts and
Speaker 12: bolts that are going to be powering the AI revolution.
Speaker 12: There's a lot of money going into that as well,
Speaker 12: you know. I think, as with anything startup or venture capital,
Speaker 12: we are also seeing a lot of companies that are
Speaker 12: sort of just grabbing the AI label and sort of
Speaker 12: trying to affiliate themselves with that. And I think with
Speaker 12: time we'll sort of see a bit of a sorting
Speaker 12: there of what's real and what's not.
Speaker 3: We only have about a minute left, but what's next
Speaker 3: that you're keeping your focus on on your radar as
Speaker 3: far as what the trajectory could be. When we're talking
Speaker 3: about these companies that are going through a investment or
Speaker 3: these seed funding rounds, you know, I think seed funding
Speaker 3: at the beginning of this venture downturn had held out
Speaker 3: fairly well, and that's not surprising. It was really the
Speaker 3: late stage startups that were the most impacted. But we
Speaker 3: are starting to see that downturn trickle down through to
Speaker 3: the earliest stages and that's, frankly, that's worrisome because that's
Speaker 3: you know, the next class of companies that are going
Speaker 3: to be unicorns, you know, five ten years down the road,
Speaker 3: and so I think we will see this decline really
Speaker 3: kind of extend for quite some time, with exceptions around
Speaker 3: some of these sectors that really get a lot of funding,
Speaker 3: But right now we're seeing venture funding down across all
Speaker 3: stages of funding.
Speaker 5: All right, MARLEEZ, thank you so much for joining us
Speaker 5: to talk about your outlook and some of the picture
Speaker 5: when it comes to funding for startups in San Francisco
Speaker 5: and more broadly in the tech space. Really appreciate it.
Speaker 5: That was Marlee's Van Romberg. She is editor in chief of.
Speaker 2: Thanks for listening to the Bloomberg Markets podcasts. You can
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Speaker 2: at Matt Miller nineteen seventy three.
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