Tokenomics
"We haven’t even started the game yet...on token optimization."
Summary: The economy is strong, and consumers remain resilient. Fundamentally, employment is high, and that is supporting consumption. Enterprises are starting to spend so much on AI that it’s becoming part of the general OpEx budget rather than just IT. Is the ROI clear?
Editor’s Note: We have reserved the sections after Macro for our premium subscribers. If you’re not a premium subscriber already, please consider subscribing.
Macro
The economy is strong
“...if you just look at the nominal growth in the economy, particularly in the United States, it’s exceptionally strong. We’ve obviously got a business investment and capital spending cycle that is extraordinary. We were just talking before we went on stage about how long that will last. We can all have our views, but it is an extraordinary cycle, and I think it has a fair bit of running room in front of it. You can see in Q1, S&P 500 earnings grew 26%. That’s against a typical quarterly growth rate of 8% or 9%, so we’re growing kind of 3x the typical rate.” - Goldman Sachs (GS 0.00%↑) COO John Waldron
“So each year, consumers will move about $4.5 trillion to $5 trillion from their Bank of America checking accounts out into the economy. And that’s moving at 5% for this month so far, the first 20 days over last year. And April moved likewise. In the first quarter moved likewise, which is consistent with a strong underlying economy.” - Bank of America (BAC 0.00%↑) CEO Brian Moynihan
“...encouraged for a while now by the broad resiliency that we’ve seen in the economy and housing market. If we tally some of the economic factors and some of the housing market indicators, headline unemployment remains low. Consumers are still spending. Businesses are continuing to make significant investments. We just saw record corporate earnings in Q1. The equity market continues to set new highs.” - NMI (NMIH 0.00%↑) CEO Adam Pollitzer
“I think as we look at the environment, consumers, even with everything going on, are still operating from a healthy position.” - Deckers Outdoor (DECK 0.00%↑) CFO Steve Fasching
Consumers remain resilient
“...growth in consumer spending has continued into May, the first 2 weeks as well, where we saw stable to slightly better consumer spending. So that’s fundamentally the good news and the trend that we’re seeing.” - Mastercard (MA 0.00%↑) CEO Michael Miebach
“There’s certainly a lot of things happening around the world that people are looking at in the future and wondering what’s going to happen. But if you actually look at the facts and you look at the data, especially as it relates to our network, there’s an enormous amount of resiliency in consumer spending, and that continues today.” - Visa (V 0.00%↑) CEO Ryan McInerney
“I would say the consumer is extraordinarily resilient. We’re all sitting there, here on pins and needles, trying to figure out what’s going to happen on the forward. Right now, I don’t see any reason to believe the consumer isn’t continuing to spend. The labor market is actually quite resilient.” - Goldman Sachs (GS 0.00%↑) COO John Waldron
“...our consumer has been remarkably resilient....quite remarkable, as I said, how the consumer has been pretty darn resilient to all of that.” - The Home Depot (HD 0.00%↑) CEO Edward Decker
“When we look at quarter-to-date in the second quarter, we’re slightly ahead of where we were in the first quarter...so we’re seeing a healthy consumer. We’re seeing a resilient consumer, and that’s been really consistent.” - American Express (AXP 0.00%↑) CEO Stephen Squeri
“Consumer continues to show incredible resilience despite the consumer sentiment and some of the inflationary pressures.” - Analog Devices (ADI 0.00%↑) CFO Richard Puccio
There has been some shift in spending mix from discretionary to non-discretionary
“We see that coming through in consumers adjusting to higher prices driven by energy, elevated energy prices. They’re adjusting between discretionary and nondiscretionary spending. That’s good. As long as it’s on cards, that’s great for us, which is a good chunk of the consumer spending” - Mastercard (MA 0.00%↑) CEO Michael Miebach
But even lower-income consumers remain resilient
“And there’s no question the low-income consumer is under pressure. I mean, just gone through 3 or 4 years of higher inflation generally. Think about food, health care, housing, utilities, look at all those things over the last number of years, and you will see them indexing higher, markedly higher. And now, on top of that, is coming this much higher gas price. But the critical thing, and this is really the message I want to give you, is that when we look at Dollar Tree, when I take apart the data from this past quarter and we look at our store base by income demographic, all of our cohorts are comping positive in this past quarter” - Dollar Tree (DLTR 0.00%↑) CFO Stewart Glendinning
“In the first quarter, stores in trade areas with lower median household income had comp growth that was clearly above the chain. And that said, stores in higher-income areas still achieved mid-single-digit comp growth. But the key takeaway from that data for me is that we continue to see resilience among lower-income shoppers despite higher gas prices, despite inflation creeping up.” - Burlington Stores (BURL 0.00%↑) CEO Michael O’Sullivan
Consumer credit is also fine
“And when they’re employed and earning money, they’re in a pretty good financial position. Consumer credit quality is great. Consumer availability of credit is great. And for us, a prime lender, the house -- the loan-to-value in our portfolio is 50% on the mortgage loans and home equity loans, and combined loan to value in a similar number.” - Bank of America (BAC 0.00%↑) CEO Brian Moynihan
Frankly, consumers are employed
“And so people say, well, what’s happening in gas spending, gas spending is up. But that’s -- the other spending is up. What’s happening with travel? So airline spending is up, but the number of charges is up, which means there are more tickets bought even though the price is driving it higher. So -- and restaurants are up. And so people are spending money, and that’s because, frankly, they’re employed...The customers have got to -- the consumer lives their life and does their things. And they’re not -- the real impact on -- if you look across the 30 years of this data, is when unemployment starts moving. And so if you watch new claims or something like that, and they start moving against, they’re very low 200s, some thousand, they haven’t moved much. continuing claims, 1.7 or something haven’t moved much.” - Bank of America (BAC 0.00%↑) CEO Brian Moynihan
Are we overly exuberant?
“There’s a lot of exuberance out there. Yeah, right now it’s good. It wasn’t in 1972, 1986, 2000, or 2007. That doesn’t give me comfort. I look at it. Yeah, it’s exuberance. Of course, it feels good. It feels good for all of us. There’s a huge amount of stimulus.” - JPMorgan Chase (JPM 0.00%↑) CEO Jamie Dimon
