Dark days for Sun Valley

The annual technology and media symposium that Allen & Co. hosts at the Sun Valley Resort has been described as a “billionaire summer camp.” This year, it might feel a bit like a week at Easter Lake, the fictional summer camp repeatedly tormented by a masked hockey serial killer named Jason.

The market hurt a lot of those on the guest list. Shares of Tim Cook’s Apple have fallen 28.5% since the dawn of 2021. Bob Chapek chairs Disney, whose shares have fallen just under 40% since the start of the year. Facebook’s Mark Zuckerberg carries the burden of Meta shares down 52.48%. Spotify co-founder and CEO Daniel Ek has seen his company’s shares plunge 60% since the start of the year. The leader of the biggest losers club, however, is likely Netflix’s Reed Hastings, who oversaw a 71% crash in his company’s stock this year.

The Sun Valley Resort is seen prior to the Allen & Company Sun Valley Conference on July 5, 2021 in Sun Valley, Idaho. (Kevin Dietsch/Getty Images)

When Herb Allen started hosting these conferences 39 years ago, the goal was to round up his client list of Hollywood moguls and media bigwigs in hopes the meeting would spur deals. Over the years, it has grown to include tech and digital media giants. A handful of media and entertainment celebrities are also invited – like Tom Friedman of the New York Times and CNN’s Anderson Cooper.

In all likelihood, there won’t be many deals made at this year’s shindig. For one thing, the primary currency for many of these businesses is their own capital, which is worth less and less with each passing day. On the other hand, the impending recession has made the future unusually uncertain and risky for almost all players. Finally, many of these companies are likely to be cheaper next year. So what’s the rush?

Left to right: Bob Iger, Chairman and CEO of The Walt Disney Company; Dick Costolo, former CEO of Twitter; Lachlan Murdoch, co-chairman of Twenty-First Century Fox; Sundar Pichai, CEO of Google; and AT&T Chief Executive Randall Stephenson mingle during the Allen & Company Sun Valley Annual Conference, July 13, 2018, in Sun Valley, Idaho. (Drew Angerer/Getty Images)

One topic that is likely to get a lot of attention is the upcoming ad drought. Many of America’s biggest companies probably aren’t keen on spending big bucks on advertising at a time when they’re facing huge cost inflation, shortages of products like cars and trucks, and shortages labor. Who wants to pay to peddle goods you don’t have or can’t profitably sell? Even sectors that appear to be growing, such as leisure and restaurants, are already easing advertising spending, according to analysts at Bank of America.

This will be particularly alarming for Netflix and other streaming companies that may have considered selling ads to boost subscription revenue.

Recession: not inevitable or already here?

President Joe Biden was finally allowed to end his record streak of over 100 days without any print or broadcast interviews by participating in a 30-minute Oval Office interview with Associated Press reporters. One of his main assertions during the interview was that a recession isn’t inevitable, which just seems to confirm that they’re not letting Biden out much.

A recent survey conducted by the FinancialTimes and the University of Chicago Booth School of Business’s Initiative on Global Markets found that 68% of economists say the economy will enter a recession next year. Another two percent think we will be in a recession this year. And another 9% say we will be in a recession in the first half of 2024. This may not demonstrate that a recession is inevitable, but it is certainly the consensus among experts.

The public, on the other hand, thinks we are already in a recession. A survey conducted by the Economist and YouGov found that 55% of Americans think we’re already in a recession. Only 22% say we are not in a recession. The remaining 23% say they are not sure. Fifty-six percent of those who say we are not in a recession now say we are likely to be in the next 12 months.

These polls were both conducted before the Fed announced on Wednesday that it was raising interest rates by 75 basis points. They also happened before shrinking retail sales, plummeting housing starts, soaring inflation and collapsing consumer sentiment reports brought the Atlanta Fed’s GDPNOW figure down to zero. It is safe to assume that in the next round of polls, the number of people saying we are already in a recession or heading into a recession will be significantly higher.

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