WEBVTT - Eco Data, Black Friday, Venture Capital 0:00:02.640 --> 0:00:05.320 Welcome to the Bloomberg Penl Podcast. I'm Paul swing you. 0:00:05.360 --> 0:00:07.680 Along with my co host Lisa Brahma Waits. Each day 0:00:07.720 --> 0:00:10.240 we bring you the most noteworthy and useful interviews for 0:00:10.280 --> 0:00:12.520 you and your money. Whether at the grocery store or 0:00:12.560 --> 0:00:15.480 the trading floor. Find a Bloomberg Penl podcast on Apple 0:00:15.520 --> 0:00:17.960 podcast or wherever you listen to podcasts, as well as 0:00:17.960 --> 0:00:20.239 at Bloomberg dot com. Today we got a slew of 0:00:20.320 --> 0:00:22.960 better than expected economic data out of the United States, 0:00:22.960 --> 0:00:27.960 including demand for US business equipment unexpectedly increasing in October 0:00:28.000 --> 0:00:30.120 by the most since the start of the year. So 0:00:30.280 --> 0:00:33.000 is it the time pop the champagne? Get ready for 0:00:33.200 --> 0:00:35.919 a tick up across the board next year? At Dan 0:00:36.000 --> 0:00:38.680 North joining US now chief economist at North America at 0:00:38.720 --> 0:00:41.320 youler her mays, Dan, can you give us a sense 0:00:41.360 --> 0:00:46.360 first of all on how positive today's economic data was? Well? 0:00:46.400 --> 0:00:49.040 I think, first of all, good morning and happy almost 0:00:49.040 --> 0:00:53.320 Turkey day to you. Um. Looking at the month to 0:00:53.440 --> 0:00:55.360 month data on a number of things this morning, I 0:00:55.400 --> 0:00:59.080 mean you sighted durable goods, Yeah, it's up for the month, 0:00:59.120 --> 0:01:02.520 but I tended to take a longer term view, and 0:01:02.560 --> 0:01:05.240 if you look at core orders were still negative. Year 0:01:05.319 --> 0:01:08.280 over year negative point eight A year ago that was 0:01:08.319 --> 0:01:11.080 four point one percent, So the downtrend there. And if 0:01:11.080 --> 0:01:14.240 you look at shipments UM, which go into g d P, 0:01:14.600 --> 0:01:17.319 you know it's point four percent year over year, so 0:01:17.400 --> 0:01:21.120 that bodes well poorly for fourth quarter g d P. 0:01:21.400 --> 0:01:24.080 And you know a year ago was four point seven 0:01:24.120 --> 0:01:27.440 percent UM. And you saw a few other things this 0:01:27.520 --> 0:01:31.080 morning that looked kind of positive on the surface, but 0:01:31.240 --> 0:01:34.839 the biggest one to me is the indicator of the consumer. 0:01:34.920 --> 0:01:37.600 You know, the consumer has been sort of holding up 0:01:37.640 --> 0:01:40.919 the economy at least that's the narrative. Well this morning 0:01:40.959 --> 0:01:44.200 you see, uh, for the most recent data in October, 0:01:45.040 --> 0:01:49.240 real consumption was only up point one percent to two 0:01:49.280 --> 0:01:52.240 point three percent the last month of the year over 0:01:52.320 --> 0:01:54.800 year last month that was two point six percent, was 0:01:54.880 --> 0:01:59.120 three point two percent last year UM, and real income 0:01:59.160 --> 0:02:02.800 was down point three So I think that's the most 0:02:02.840 --> 0:02:05.480 important data of the morning, And certainly if you look 0:02:05.560 --> 0:02:10.000 at a longer term trend, to me, it's it's distinctly negative. 0:02:10.600 --> 0:02:14.400 So Dan focusing on the consumer again. The consumers you 0:02:14.440 --> 0:02:17.720 mentioned has been kind of the bulwark of this economy 0:02:18.360 --> 0:02:21.840 over the last several quarters. Are you concerned that the 0:02:21.880 --> 0:02:25.160 consumer may not be able to do its part again 0:02:25.160 --> 0:02:28.799 for the economy. I really am. And and here's again 0:02:28.880 --> 0:02:33.200 as a perfect example, real uh disposable personal income down 0:02:33.280 --> 0:02:37.720 this month. What I see is, let's holiday sales are 0:02:37.720 --> 0:02:39.400 coming up, right. I mean, in a few days we're 0:02:39.400 --> 0:02:42.160 going to get the anecdote reports of how good holiday 0:02:42.160 --> 0:02:44.280 sales are. And I think they're probably going to be 0:02:44.320 --> 0:02:46.680 pretty good. You know, By the way, I love this 0:02:46.720 --> 0:02:50.800 sort of cynical resignation that everyone who I've spoken to 0:02:50.840 --> 0:02:53.040 this morning has about Black Friday. Way to go with 0:02:53.080 --> 0:02:58.600 the spirit, carry on. You're like, yeah, they're I said, 0:02:58.600 --> 0:03:00.680 they're going to be pretty good. Do we think we've 0:03:00.720 --> 0:03:05.120 got the exuberance of consumer confidence of the stock markets high? So, 0:03:06.040 --> 0:03:08.680 you know, over the past few years it's something like 0:03:09.120 --> 0:03:14.000 four percent holiday sales growth overall, more so on black variety, 0:03:14.040 --> 0:03:17.520 of course. But let's say, you know, the consumer spends 0:03:17.520 --> 0:03:21.360 as much as usual for holiday sales, maybe more because 0:03:21.400 --> 0:03:24.240 of the exuberance. I think that sets us up for 0:03:24.280 --> 0:03:26.480 a little bit of a fall in the first quarter, 0:03:26.639 --> 0:03:30.280 especially since income is trending down, and that's what really 0:03:30.320 --> 0:03:33.560 gives us a concern about a future slowdown. We think 0:03:34.040 --> 0:03:37.040 growth in the first quarter could be flat even Dan, 0:03:37.120 --> 0:03:40.600 you think there could be a US recession in or 0:03:40.600 --> 0:03:46.360 maybe we think there's definitely going to be a sharp slowdown. 0:03:46.400 --> 0:03:49.400 We're looking at something like one point six percent GDP 0:03:49.800 --> 0:03:53.839 for all of you know this past year is two 0:03:53.840 --> 0:03:58.200 point so for sure a significant slowdown, and if this 0:03:58.360 --> 0:04:01.800 trade war picks up, you know, that could really knock 0:04:02.480 --> 0:04:05.520 half or one percentage point off a GDP, And in 0:04:05.520 --> 0:04:11.000 our world, that's a lot, Dan, sound go ahead. I 0:04:11.200 --> 0:04:13.880 was just gonna say, we still do think that there's 0:04:13.960 --> 0:04:18.359 a possibility of recession, but certainly a slow down, no 0:04:18.520 --> 0:04:21.039 question about that. Dan. I'm trying to square what you're 0:04:21.040 --> 0:04:23.760 saying with the consensus right now among at least Wall 0:04:23.760 --> 0:04:27.560 Street analysts which believe that who believe that the US 0:04:27.600 --> 0:04:30.200 equity market is going to do very well, particularly in 0:04:30.240 --> 0:04:32.159 the first quarter or first half of the year, with 0:04:32.240 --> 0:04:35.680 some accelerating growth. Why are they getting it so wrong? 0:04:36.760 --> 0:04:39.200 I wouldn't start they're getting it wrong about the stock market. 0:04:39.600 --> 0:04:43.520 Number one. Two things, you know, we are really involved 0:04:43.600 --> 0:04:46.159 in trade credit and we have to have a more 0:04:46.200 --> 0:04:50.240 realistic approach to what's actually happening to business on the 0:04:50.279 --> 0:04:54.279 front lines, and we're seeing an absolutely distinct deterioration there. 0:04:55.160 --> 0:05:00.320 But the important point is um, the stock market isn't 0:05:00.360 --> 0:05:04.799 necessarily connected to the economy a lot of the time. 0:05:04.880 --> 0:05:07.400 For instance, if you go back and look at the 0:05:07.440 --> 0:05:11.840 past ten recessions, the stock market only gave you some 0:05:11.960 --> 0:05:15.600 kind of warning three times, So it's not at all 0:05:15.760 --> 0:05:18.840 uncommon for them to disconnect. So I can't argue with 0:05:18.960 --> 0:05:22.560 the banks and brokerages who want to sell investments who 0:05:22.560 --> 0:05:24.920 were saying, yes, stock Mark is going to be great. Well, 0:05:24.960 --> 0:05:27.279 it could well be, you know, with low interest rates, 0:05:27.520 --> 0:05:31.480 but it's not a connection to the economy necessarily. Dan North, 0:05:31.480 --> 0:05:34.320 thanks so much for joining us, Dan Northeast, chief economist 0:05:34.440 --> 0:05:37.920 for North America. For Euler Ermez joining us on the 0:05:37.960 --> 0:05:55.840 phone from charm City, Baltimore, Maryland. Appreciate his comments. Time 0:05:55.880 --> 0:05:58.599 to check in with Bloomberg Opinion. We're joined by opinion 0:05:58.600 --> 0:06:02.120 calumnists retail columnists. Our house actually covers all things retail 0:06:02.160 --> 0:06:04.240 for Bloomberg Opinion. She joins us from the Washington d 0:06:04.279 --> 0:06:07.279 C Bureau. Sarah, thanks so much for joining us. Black 0:06:07.320 --> 0:06:11.120 Friday coming up, Cyber Monday coming up. What is the 0:06:11.200 --> 0:06:15.720 expectation for holiday sales this year? Yeah? So I think 0:06:15.720 --> 0:06:20.120 the expectations are largely upbeat for the season. Overall holiday 0:06:20.120 --> 0:06:22.400 sales are expected to be up about four percent, and 0:06:22.440 --> 0:06:25.159 that's because consumers are feeling pretty good. And you know, 0:06:25.200 --> 0:06:27.880 we saw quite a mixed bag of retail earnings results 0:06:28.120 --> 0:06:31.120 in the last couple of weeks, with some strong performers 0:06:31.120 --> 0:06:34.320 and some weak performers. But I think that just suggests that, uh, 0:06:34.480 --> 0:06:36.520 for for the ones that are executing well and do 0:06:36.640 --> 0:06:39.360 have a good strategy, there are plenty of dollars out 0:06:39.400 --> 0:06:41.839 there to to win and be fought for this season. Sarah, 0:06:41.880 --> 0:06:45.080 let's talk about Black Friday. This is the cliche of 0:06:45.160 --> 0:06:48.000 people lining up at three am to bust through the 0:06:48.120 --> 0:06:52.359 doors and these manufactured televised events, And I'm wondering, is 0:06:52.400 --> 0:06:55.039 that the reality anymore? Or is the vast amount of 0:06:55.040 --> 0:06:59.560 Black Friday shopping online? So it's definitely not the reality 0:06:59.560 --> 0:07:03.839 anymore more, folks are this isn't increasingly digital holiday. There 0:07:03.880 --> 0:07:07.040 will be seven point five billion dollars spent online alone 0:07:07.400 --> 0:07:09.720 on holiday and quotes, we're gonna just put that in 0:07:09.800 --> 0:07:14.720 quotes but carry out. Yes, but we so certainly Black 0:07:14.760 --> 0:07:18.240 Friday is becoming more and more of a digital occasion. However, 0:07:18.600 --> 0:07:21.120 stores still really matter a lot, and there will be 0:07:21.160 --> 0:07:24.480 big crowds in the stores. Uh, both Thanksgiving evening when 0:07:24.480 --> 0:07:27.800 a lot of the retailers kick off their big deals events, 0:07:27.880 --> 0:07:30.320 and and all throughout the weekend. Um. You know, for 0:07:30.320 --> 0:07:34.640 the holiday season, overall, only about of shopping will happen online. Uh. 0:07:34.720 --> 0:07:37.560 The vast majority of it will still happen in stores. Sir, 0:07:37.680 --> 0:07:41.040 What are gen Z folks? How are they shopping? I 0:07:41.080 --> 0:07:42.720 know they do a lot of e commerce, but did 0:07:42.760 --> 0:07:46.440 they what is their store bricks and mortar experience? Are 0:07:46.560 --> 0:07:50.560 actually even going to the malls? So interestingly they are, 0:07:50.640 --> 0:07:52.560 in fact, they shop a lot more like us, older 0:07:52.600 --> 0:07:56.400 than you might imagine. Um. So for purchases like food 0:07:56.400 --> 0:07:59.200 and beverage, they're still doing, you know, something like ninety 0:07:59.440 --> 0:08:02.520 one to their shopping in stores for items like apparel, 0:08:02.560 --> 0:08:06.080 seventy percent of their shopping in stores, and they actually 0:08:06.160 --> 0:08:09.440 say in surveys they liked the experience of being in 0:08:09.440 --> 0:08:12.360 a store. When we talk about this weekend specifically, uh, 0:08:12.400 --> 0:08:15.240 Deloyte did some survey work around this and asked, folks, 0:08:15.360 --> 0:08:17.920 will you be out shopping with family and friends? Gen 0:08:18.000 --> 0:08:21.320 Z was most likely to respond amongst people who were 0:08:21.320 --> 0:08:23.280 going to go to stores this weekend. Gen Z was 0:08:23.320 --> 0:08:24.960 most likely to respond that they were doing it in 0:08:24.960 --> 0:08:26.880 a social way, that they were doing it with family 0:08:26.920 --> 0:08:29.080 and friends. And I think if you've never been out 0:08:29.080 --> 0:08:32.000 on Black Friday before, I've been doing this for seven 0:08:32.080 --> 0:08:34.839 years now as in my capacity as a reporter UM, 0:08:34.920 --> 0:08:37.520 and this is consistent with what you see is that 0:08:37.640 --> 0:08:39.280 there aren't a lot of people out in the stores 0:08:39.320 --> 0:08:41.360 this weekend who are just trying to check off their 0:08:41.400 --> 0:08:44.320 gift list and you know, being very task oriented and 0:08:44.440 --> 0:08:47.320 errand oriented. This is a social event. This is something 0:08:47.320 --> 0:08:48.920 that people like to do with their family and friends. 0:08:48.920 --> 0:08:51.760 Are sort of a sport or ritual. I'm wondering about 0:08:51.800 --> 0:08:55.000 this data that we got out today. UM. Retailers were choice. 0:08:55.080 --> 0:08:57.000 This is on the Bloomberg terminal. There's never been a 0:08:57.000 --> 0:08:59.880 better time to buy heading into a Black Friday, and 0:09:00.000 --> 0:09:03.640 this was a look at buying conditions in the US 0:09:03.760 --> 0:09:08.640 advancing to the highest ever levels. Does that foretell something 0:09:08.679 --> 0:09:11.240 in your mind? And and sort of where they may 0:09:11.280 --> 0:09:15.080 be shopping too, you know, I think that in terms 0:09:15.080 --> 0:09:16.800 of where they're going to be shopping this year, I 0:09:16.840 --> 0:09:19.160 think the winners are going to be the retailers that 0:09:19.200 --> 0:09:22.120 have done the best job of kind of integrating their 0:09:22.160 --> 0:09:25.240 online and in store experiences. I think Walmart, Target in 0:09:25.280 --> 0:09:28.240 Best Buy are clear examples of that, where it's easy 0:09:28.280 --> 0:09:31.040 to ping pong back and forth between their websites and 0:09:31.160 --> 0:09:33.600 between their stores to place an order online and pick 0:09:33.640 --> 0:09:35.240 it up in the store, or to browse in the 0:09:35.280 --> 0:09:38.080 store and go and buy online later. I think those 0:09:38.160 --> 0:09:40.160 kinds of factors are what's going to be shaping people's 0:09:40.160 --> 0:09:43.560 purchasing decisions most and of course where the discounts are. 0:09:43.800 --> 0:09:47.040 There's no doubt that this is a very deals oriented weekend, UH, 0:09:47.080 --> 0:09:49.240 and that that is shaping a lot of the decision 0:09:49.280 --> 0:09:52.040 making about where dollars gets spend. Sir, with all the 0:09:52.120 --> 0:09:54.520 changes in consumer spending, e commerce and so on, just 0:09:54.559 --> 0:09:57.079 give us a sense of how important still is this 0:09:57.160 --> 0:10:00.760 how they shopping period for retailers, the all shopping period 0:10:00.840 --> 0:10:04.400 is critically important. UM. It's more important for some retailers 0:10:04.400 --> 0:10:07.520 than others. So toy stores, jewelry stores, for example, h 0:10:07.640 --> 0:10:11.000 they do draw a more disproportionate share of their sales 0:10:11.280 --> 0:10:15.040 during the holiday season than say a bookstore. UM. So 0:10:15.160 --> 0:10:18.120 it varies by retailer, but this is a really important 0:10:18.120 --> 0:10:20.920 time of year, not only for the actual dollars that 0:10:20.960 --> 0:10:22.760 are pulled in, but just because it's a chance to 0:10:22.800 --> 0:10:25.400 make an impression with a consumer that you know, in 0:10:25.400 --> 0:10:27.360 the case of an apparel store, you might only see 0:10:27.400 --> 0:10:29.800 two or three times a year, right, And so if 0:10:29.840 --> 0:10:32.360 you're not showing them when they come into your store 0:10:32.480 --> 0:10:35.400 or pull up your website that you have good merchandise, 0:10:35.400 --> 0:10:37.880 that you have good pricing, that you're sort of aspirational 0:10:37.880 --> 0:10:40.680 and inspirational, that kind of sets a tone that will 0:10:40.679 --> 0:10:42.680 stick with that consumer for the rest of the year. 0:10:42.800 --> 0:10:46.120 So it's a very important, uh, several weeks for the 0:10:46.120 --> 0:10:48.880 retail industry. Sarah how Zac, thank you so much for 0:10:49.040 --> 0:10:52.440 being with Sarah. How's that covers all things retail for 0:10:52.640 --> 0:11:12.440 Bloomberg Opinion Up, Well, it is the day before Thanksgiving. 0:11:12.480 --> 0:11:15.400 People are gearing up for family and friends and food 0:11:15.440 --> 0:11:18.640 and also for a lot of us shopping on maybe 0:11:18.640 --> 0:11:22.160 even tomorrow evening heading into Black Friday and Cyber Monday. 0:11:22.320 --> 0:11:25.200 To get a preview, we welcome Mark Hamrick, senior economic 0:11:25.200 --> 0:11:27.000 analyst at bank rate dot Com, joining us on the 0:11:27.040 --> 0:11:28.839 phone from Washington, d C. Mark, Thanks so much for 0:11:28.960 --> 0:11:31.520 joining us. I love to get your thoughts on how 0:11:31.600 --> 0:11:34.319 you think this holiday shopping, Stevens is going to kick 0:11:34.360 --> 0:11:38.800 off on it's called Friday. Sure, good to be with you, 0:11:38.880 --> 0:11:41.760 Paul and Lisa. Well, I'm sure it'll start off with 0:11:41.800 --> 0:11:46.760 a bang. Obviously, through this shopping period, which truly begins 0:11:46.800 --> 0:11:51.600 before November one, Americans indicated they would start their holiday 0:11:51.640 --> 0:11:54.640 shopping in that time. Hold on a second, when is 0:11:54.640 --> 0:11:57.880 it just shopping? I mean, if you're starting before November one, 0:11:57.920 --> 0:11:59.880 can we just call it shopping or is it this 0:12:00.000 --> 0:12:02.200 typically for the holidays? So I think it's an intention 0:12:02.240 --> 0:12:04.360 to buy holiday gifts. And I think from a consumer 0:12:04.440 --> 0:12:08.000 standpoint that's quite wise because we know that this industry 0:12:08.080 --> 0:12:12.319 is promotional almost all the time anymore because it's so competitive. 0:12:12.360 --> 0:12:14.920 And from a bank RT perspective, I also like the 0:12:14.960 --> 0:12:17.200 idea of not sort of taking the hit to the 0:12:17.679 --> 0:12:20.720 either the bank account or the credit cards, um, you know, 0:12:21.000 --> 0:12:23.480 uh late in the year, if if you have the 0:12:23.480 --> 0:12:26.400 ability to spread out those purchases. So to ask your 0:12:26.480 --> 0:12:29.640 question from a bank reat data perspective, we did ask Americans, 0:12:29.679 --> 0:12:32.800 by the way, and just published this survey this week 0:12:33.240 --> 0:12:35.480 whether they intend to spend more or less or about 0:12:35.520 --> 0:12:38.600 the same, and of Americans said they intend to spend 0:12:38.640 --> 0:12:42.240 about the same as last year, only said they'd spend more, 0:12:43.280 --> 0:12:46.040 said they'd spend less. We know the Yeah, So how 0:12:46.040 --> 0:12:48.000 does this cohere with the idea that this is the 0:12:48.000 --> 0:12:50.520 best time ever for consumers and that they're more confident 0:12:50.559 --> 0:12:55.240 than ever heading into Black Friday? Um, I, you know, 0:12:55.280 --> 0:12:58.360 I guess the question best time for consumers? I I'd 0:12:58.360 --> 0:13:00.160 want to play that out a little bit and and 0:13:00.240 --> 0:13:04.080 have an idea about how that works exactly. But there's 0:13:04.360 --> 0:13:08.280 plenty of competition out there, and between online and brick 0:13:08.320 --> 0:13:11.840 and mortar, you certainly can uh pick and choose, and 0:13:12.040 --> 0:13:15.839 particularly in the apparel world, where it feels like that 0:13:15.960 --> 0:13:18.559 is sort of yesterday's news in the sense of things 0:13:18.600 --> 0:13:22.199 to have. So um, you know, I think also consumers 0:13:22.280 --> 0:13:24.800 are always consuming, right, and so the question is, you know, 0:13:24.840 --> 0:13:26.599 I think for a lot of people who are you 0:13:26.679 --> 0:13:30.079 might call them well qualified consumers, what do they need? 0:13:30.280 --> 0:13:32.640 And for many the answer is not much? And I 0:13:32.640 --> 0:13:35.720 think that's one of the reasons why purchase of experiences 0:13:35.760 --> 0:13:37.720 has become more of a thing, because you can always 0:13:37.760 --> 0:13:40.640 have more experiences, but we don't necessarily need another sweater. 0:13:41.280 --> 0:13:44.319 So Mark, give us a sense of from your survey work. 0:13:44.559 --> 0:13:46.840 Are people gonna spend money they have. Are they going 0:13:46.880 --> 0:13:49.839 to rack up some debt here going into the holiday season. Yeah, 0:13:49.880 --> 0:13:52.400 And of course that's one of our key concerns, right, 0:13:52.440 --> 0:13:54.280 and I think it should be our concern as a 0:13:54.320 --> 0:13:57.320 society or as a nation as well. And so I 0:13:57.360 --> 0:14:01.480 suppose the good news here is that a slight majority 0:14:01.520 --> 0:14:04.679 fifty said that they're going to spend money that they 0:14:04.720 --> 0:14:09.240 already have. And then of those who gave us an answer, 0:14:09.240 --> 0:14:11.880 in other words, if they had an idea about where 0:14:11.920 --> 0:14:16.280 they would use their financial resources, said they'd use some 0:14:16.400 --> 0:14:21.440 combination of credit. In that mix, only about six indicated 0:14:21.480 --> 0:14:25.280 that they would use either most or all with credits 0:14:25.360 --> 0:14:28.000 only six percent, or go leaning heavily on the plastic 0:14:28.200 --> 0:14:30.520 you know, which raises a question in my mind. We've 0:14:30.520 --> 0:14:33.280 heard about the strength of the consumer powering the economic 0:14:33.360 --> 0:14:36.920 recovery in the United States over the past five ten years. 0:14:37.480 --> 0:14:40.560 I'm trying to understand how much this has been done 0:14:40.760 --> 0:14:43.960 on credit and how much further it has to go, 0:14:44.600 --> 0:14:46.640 given the fact that rates are still low, but that 0:14:46.680 --> 0:14:48.920 we are starting to see delinquencies chack up a bit, 0:14:49.480 --> 0:14:52.440 at least in credit cards and auto loans. Well, rates 0:14:52.440 --> 0:14:55.120 are low from a credit card perspective, right. Uh. You know, 0:14:55.160 --> 0:14:57.320 we survey this all the time, and the average rate 0:14:57.400 --> 0:15:00.720 for consumer credit card is cent. Of course, you don't 0:15:00.720 --> 0:15:03.000 need to take that eighteen percent hit if you're paying 0:15:03.000 --> 0:15:05.360 the balance off within the month and then store cards 0:15:05.360 --> 0:15:08.400 are above twenty UM. So you know, I love the 0:15:08.480 --> 0:15:12.000 use of reward oriented credit cards personally, but I loathe 0:15:12.080 --> 0:15:15.560 the idea of allowing those balances to go beyond thirty days. 0:15:15.600 --> 0:15:17.920 But to your question, I think it has as far 0:15:17.960 --> 0:15:20.440 to go as the economic expansion has far to go, 0:15:20.560 --> 0:15:23.360 and as long as we can have actual gains and 0:15:23.440 --> 0:15:26.239 income or wages that is above the rate of inflation 0:15:26.320 --> 0:15:28.360 and so um. You know, I think that is sort 0:15:28.400 --> 0:15:30.880 of the conundrum to use an Allen Green Spanish word, 0:15:31.520 --> 0:15:33.320 uh that you know, while the FED is sort of 0:15:33.320 --> 0:15:37.000 fighting to get inflation up to its would be target, uh, 0:15:37.040 --> 0:15:38.840 you know, a lot of consumers are sort of saying, hey, 0:15:38.840 --> 0:15:41.360 wait a minute, what about education? What about healthcare? Those 0:15:41.360 --> 0:15:44.000 should matter more, shouldn't they because those have the outsize 0:15:44.040 --> 0:15:46.880 impacts on our on our finances, and they do matter 0:15:46.920 --> 0:15:49.600 a lot. Right, So what are we hearing and or 0:15:49.680 --> 0:15:51.080 what are you seeing out there as it relates to 0:15:51.160 --> 0:15:55.120 gen Z about how they're buying stuff out there. Are 0:15:55.160 --> 0:15:58.960 they still buying stuff? Are they just more into experiences? Yeah, 0:15:58.960 --> 0:16:01.040 this is a great question, and I'm glad you asked 0:16:01.040 --> 0:16:04.080 it because I think this may be one of the 0:16:04.600 --> 0:16:07.360 one of the things that is going to be most 0:16:07.400 --> 0:16:10.160 fascinating in the period to come. And So for those 0:16:10.160 --> 0:16:14.440 who aren't all into the cohort categories here, we're talking 0:16:14.440 --> 0:16:17.280 about those who are age eighteen to twenty two. And 0:16:17.320 --> 0:16:20.920 of course millennials are perhaps the most talked about UM 0:16:21.040 --> 0:16:24.520 and to some degree take the most heat in print, 0:16:24.560 --> 0:16:29.720 etcetera via views of the words latte and avocado toast, 0:16:30.240 --> 0:16:32.480 and I get a little tired of that. But but 0:16:32.560 --> 0:16:35.000 the real reality is that the gen Z folks are 0:16:35.000 --> 0:16:38.040 really looking to be shaking things up with respect to 0:16:38.800 --> 0:16:42.680 UH for example, looking to buy uh, you know, gently 0:16:42.800 --> 0:16:46.720 used clothing for example. And when we ask people who 0:16:46.800 --> 0:16:49.400 is focused on saving as a reason why they're not 0:16:49.480 --> 0:16:53.120 spending more gen Z again, those eighteen to twenty two 0:16:53.200 --> 0:16:55.520 popped up by far at the top of the list. 0:16:55.560 --> 0:16:59.160 That was so, you know, these are the people who 0:16:59.240 --> 0:17:02.240 truly have been digital only all their lives. Some of 0:17:02.280 --> 0:17:04.640 the millennials were a bit of a mix between analog 0:17:04.720 --> 0:17:07.479 and digital. And I think that there's a back uh 0:17:08.080 --> 0:17:10.240 lash to that, just the same as in some ways 0:17:10.240 --> 0:17:13.679 the rest of society is having a backlash attack. Um. 0:17:13.680 --> 0:17:17.320 You know, tech is has become the punching bag that 0:17:17.359 --> 0:17:20.680 the bankers were ten years ago. Uh and and so, 0:17:21.040 --> 0:17:24.040 and I think that there are some valid reasons for that, right, 0:17:25.080 --> 0:17:27.640 the fact that people can be bullied in that space, 0:17:27.720 --> 0:17:31.040 and they also want to have touch points. Sure, and 0:17:31.240 --> 0:17:35.040 there is now a shift towards some more social affairs 0:17:35.080 --> 0:17:37.560 in addition to a big tech. Mark Cameric, thank you 0:17:37.600 --> 0:17:39.440 so much for being with us. Mark Camerck is a 0:17:39.440 --> 0:17:43.760 senior economic analyst with Banquet dot Com, joining us from Washington, 0:17:44.119 --> 0:18:00.600 d C. The years of the unit corn of given 0:18:00.640 --> 0:18:03.800 way to a year of skepticism with some high profile 0:18:04.240 --> 0:18:07.560 misses when it comes to we Work and other darlings 0:18:07.560 --> 0:18:11.160 of the venture capital space. But this doesn't really paint 0:18:11.200 --> 0:18:13.480 the whole picture. Joining us now, Matt Miller, chief executive 0:18:13.520 --> 0:18:17.080 officer of and broker, joining us from San Francisco. Matt, 0:18:17.200 --> 0:18:21.359 you've been surveying the venture capital space, but not just 0:18:21.840 --> 0:18:25.119 the mega deals or the mega companies within the sector. 0:18:25.200 --> 0:18:28.879 Can you give us a sense of what you're looking at. Yeah, sure, 0:18:28.920 --> 0:18:32.120 thank you. We work with thousands of venture back companies. 0:18:32.359 --> 0:18:36.280 Our company build an online platform for insurance, and venture 0:18:36.280 --> 0:18:39.359 back companies are one of our main customer segments. So 0:18:39.440 --> 0:18:42.600 we get data from thousands of back companies, both small 0:18:42.680 --> 0:18:44.879 ones and large ones, and a few days ago we 0:18:44.920 --> 0:18:47.040 publish a report with our findings on all of the 0:18:47.119 --> 0:18:49.880 data from twenty nineteen that we see across the entire 0:18:49.960 --> 0:18:52.880 venture industry. So what are some of the key takeaways 0:18:53.000 --> 0:18:57.600 from your report, Because, again, as Lisa suggested, the VC community, uh, 0:18:57.640 --> 0:19:00.280 Silicon Valley broadly defined, has taken some lump here in 0:19:00.320 --> 0:19:03.480 the public market. Look, I mean, I think when you 0:19:03.480 --> 0:19:05.520 look at the numbers, there's a lot of talk about 0:19:05.640 --> 0:19:08.720 funding slowdown or were expecting one, but you don't really 0:19:08.720 --> 0:19:10.359 see it yet. I think what we see as funding 0:19:10.400 --> 0:19:14.359 activity is still quite strong, particularly in early in middle 0:19:14.400 --> 0:19:17.600 stage investments, and so I think that we also see 0:19:17.600 --> 0:19:20.160 companies that are still able actually to raise pretty sizeable 0:19:20.160 --> 0:19:24.120 amounts of money despite having relatively small or even being 0:19:24.160 --> 0:19:27.280 pre revenue. So I think from a deal activity standpoint, 0:19:27.320 --> 0:19:29.440 at least right now, you still see investors trying to 0:19:29.480 --> 0:19:32.400 lean in and get deals done. How about the actual companies, 0:19:32.560 --> 0:19:36.280 how are they doing. I think, you know, obviously it 0:19:36.560 --> 0:19:39.000 varies across the span. I mean, there are companies that 0:19:39.000 --> 0:19:41.720 are doing quite well, companies that are potentially slowing down 0:19:41.760 --> 0:19:44.920 and starting to hordcasts. I think one interesting tech trend 0:19:44.960 --> 0:19:46.439 we see when we look at the data is that 0:19:46.800 --> 0:19:50.800 companies in California certainly are hiring fewer people relativity the 0:19:50.840 --> 0:19:53.120 amount of funding that they're raised than companies and other 0:19:53.160 --> 0:19:55.560 parts of the country. I think obviously a part of 0:19:55.560 --> 0:19:57.000 that is just due to the cost of hiring here, 0:19:57.080 --> 0:19:58.439 but I think a part of it could also be 0:19:58.600 --> 0:20:01.960 companies that are trying to preserved capital. What are the 0:20:02.000 --> 0:20:07.600 sectors right now that vcs are allocating maybe more money 0:20:07.640 --> 0:20:10.400 than maybe we've seen in the past. Yeah, I think 0:20:10.560 --> 0:20:13.120 certainly one of the things that we see is fintech 0:20:13.200 --> 0:20:16.320 continuing to be particularly strong um both in terms of 0:20:16.359 --> 0:20:19.440 average size of deals and overall deal flow UM. So 0:20:19.520 --> 0:20:22.679 I think that's an area where both just judging from 0:20:22.680 --> 0:20:25.120 the investor sentiment that we connect with but also looking 0:20:25.119 --> 0:20:26.840 at the numbers, that I think we should expect to 0:20:26.840 --> 0:20:31.040 see uh pretty wide and continued pattern of growth for 0:20:31.160 --> 0:20:33.920 fintech companies. But also I think we start to see 0:20:34.119 --> 0:20:38.240 UM still still some decent traction and consumer goods and 0:20:38.320 --> 0:20:41.760 consumer hardware and so companies that have had a couple 0:20:41.760 --> 0:20:43.280 of big accepts in the space, and I think there's 0:20:43.320 --> 0:20:45.719 investors that are still leaning in. Can you give us 0:20:45.720 --> 0:20:48.960 a sense of the investments made by the venture capital 0:20:49.000 --> 0:20:51.719 community and sort of the trend line of them. Are 0:20:51.760 --> 0:20:54.399 they increasing, are they decreasing? Are they tending to shift 0:20:54.480 --> 0:20:58.000 more towards the higher bigger companies, are the smaller ones? 0:20:58.119 --> 0:21:00.920 What are you seeing? Yeah? Um, I think we see 0:21:01.320 --> 0:21:03.439 in general it depends a little bit on the sector, 0:21:03.520 --> 0:21:07.280 but overall continent UH pattern of growth. If you look 0:21:07.280 --> 0:21:10.240 at the deal volume of total funding, I think you 0:21:10.240 --> 0:21:13.280 know you do see a lot of still large growth 0:21:13.280 --> 0:21:16.640 deals coming into relatively small number of startups that are 0:21:16.760 --> 0:21:19.439 those that have the most traction momentum. But when you 0:21:19.880 --> 0:21:22.240 broaden the aperture and look across the entire spectrum, I 0:21:22.280 --> 0:21:26.800 think you continue to see UH a reasonably strong amount 0:21:26.800 --> 0:21:28.639 of activity, and not just in the usual places of 0:21:28.680 --> 0:21:31.040 California and New York, but I think small venture deals 0:21:31.080 --> 0:21:33.560 are getting done increasingly across the entire country. I think 0:21:33.560 --> 0:21:36.440 one thing we definitely see is that as companies start 0:21:36.520 --> 0:21:39.800 to branch out. Even though San Francisco is still the 0:21:39.800 --> 0:21:42.120 bulk of where we see most funding activity, there are 0:21:42.200 --> 0:21:45.320