June 2023 Issue
This edition of Pursuit Perspectives highlights Pursuit News to Use, relevant news intelligence to advance corporate reputation.
Aligned with our areas of focus, this curation focuses on drivers of market activity pertinent to capital markets, real estate, media and general business sectors.
We welcome your feedback on topics of interest and questions regarding how News to Use is applicable to your organization.
Capital Markets
Consumers remain one of the few bright spots in a U.S. economy that continues to flirt with challenges. The Fed decision to ease up on rate hikes sent a quiver of optimism through capital markets, but more hikes are expected in the second half of the year. Despite murmurs of re-intervention, IPO markets are making a welcome comeback with several high profile consumer-oriented offerings.
Cava Group, which owns Mediterranean fast-casual restaurant chain Cava as well as Zoe’s Kitchen, had a strong public listing in June. More restaurant-oriented IPOs are expected including Fogo de Chao and Gen Restaurant Group, a Korean barbecue chain. Surf Air, an airline subscription company, and Kenvue, Johnson and Johnson’s consumer spin-off, also had strong public openings. This year’s 44 IPOs valued at $7.3 billion is on track to top last year’s $7.7 billion total.
In international markets, U.S. Secretary of State Antony Blinken’s much awaited trip to Beijing eased bilateral tensions. That may be good news for U.S. businesses still seeking to operate in China, as well as Chinese companies pursuing U.S. listings. Shopping apps continue to be a winner for Chinese companies, including Shein, which has made significant inroads into global shopping. Their highly discounted daily items, think access to wholesale prices through an online retail experience, is challenging both brick-and-mortar and established digital commerce companies.
Real Estate
The strength of the consumer is also evident in the U.S. housing market, where, according to one study, homes are significantly overvalued. According to Sean Dobson, founder and CEO of property powerhouse Amherst, current prices remain well above their fundamental value, a trend that started in 2019. The imbalance, with prices overvalued by approximately 43%, is expected to last at least through 2025 as the gap begins to narrow.
Media
Competition and innovation in the media space continues, though which models will ultimately prevail remains to be seen. Consumers are becoming more selective about which ad-free services they’re willing to buy on a regular basis. Turns out there is a limit. They show a willingness to tolerate ads on some services, but not others.
Amazon is expanding its advertising-supported alternatives, this time with its Prime Video streaming service in an attempt to increase its entertainment revenue. Netflix, on the other hand, is increasing its live-streaming sports offerings through a celebrity golf tournament. The event will feature stars from its Formula One series “Drive to Survive” and golf program “Full Swing”.
And the way people experience the rapidly expanding media world may be changing soon as Apple unveiled its mixed-reality headset, the Vision Pro. Though there were audible gasps at the price, $3,499, revealed at its developer conference debut, the ski goggle-like immersive computing tech advertised impressive resolution and an expansive viewing range for movies, streaming, and interacting with other forms of content. While still out of reach for the mass-consumer market, an entirely new viewing platform is in the offing.
General Business
While consumer spending continues to impress, the workplace for new employees remains a challenge. New graduates entering the workforce after Covid are ill prepared for the professional office environment. Employers are responding with training on everything from small talk to presentation skills. And even though they value work life balance, they consistently work longer hours than they need to.
That poses a challenge for managers who are already dealing with the hybrid work model of home and office. There appears to be no end to the work-from-home trend as occupancy rates for commercial real estate have not rebounded. More companies are allowing workers to stay home and with unemployment low, employees have significant leverage. What are workers doing with their time, however, remains an issue. They now spend 40% of the week, a full two days, on email and meetings.
Adding to the complexities of a market and corporate culture in transition, some companies have overhired and offered inflated salaries. Now that some belt tightening is underway, layoffs are happening again as companies seek to squeeze out every bit of efficiency they can. And while some employees struggle, executives are pocketing gains from special tax deferred savings plans.