cruises 5 Things You Need to Know to Start Your Day - btbirkett@gmail.com - Gmail

5 Things You Need to Know to Start Your Day - btbirkett@gmail.com - Gmail

And finally, here’s what Joe’s interested in this morning

The last year-and-a-half has been brutal for the tech industry in a way that it hasn't seen in over 20 years. But as we've said about a million times, there's a disconnect between the headlines you see about layoffs at this or that FANG or startup, and what's happening at the macro level.

What defines this economic expansion is that it's bottom up, not trickle down. It's consumer strength, particularly in the middle and lower levels that keeps it going.

And so the question is, does the recent implosion of the tech industry's favorite bank (SVB) change this dynamic at all? We know it's changed the rate outlook, but other than that, does it have any effect on the overall trajectory?

Yesterday Samuel Rines at Corbu (who we recently had on the podcast) came out with a new note and says nothing has changed. Middle America is still booming. Companies are still finding themselves capable of pushing prices higher and higher. There's still plenty of heat.

Here's Rines:

"While it is popular to make broad statements about the death of the consumer, justifying it against what companies are saying is problematic. Carnival is not the most expensive cruise line, and this is not a signal of the `luxury consumer.’ It is a signal of Middle American spending. Middle America does not care about SVB or SI or FRC. Middle America sees higher wages and job postings everywhere. Which leads to a confidence in being able to book that cruise."

In fact, on Carnival's earnings call on Monday, the company's CFO David Bernstein said that as of right now, the recent "volatility out there... has not shown up in our business."

And to Rines' point about higher wages and job postings everywhere. Yesterday we got the latest Consumer Confidence report from the Conference Board, and it showed the public perceptions about the strength of the labor market are still at levels higher than their pre-pandemic peak.

It's just one company (Carnival) and one data point within the Consumer Confidence survey. But still. It may end up being that SVB's collapse is part of the old story (tech industry, not really connected to economic momentum) rather than the start of a new story (banking stress leading to broader economic stress).