S&P 500 Closes at Record High in Tech-Led Advance

Summary

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Bloomberg Businessweek Podcast Summary

Episode: S&P 500 Closes at Record High in Tech-Led Advance
Date: December 23, 2025
Hosts: Carol Massar & Tim Stenovec
Key Guests: Alexandra Semenova (Bloomberg), David Schassler (Vaneck Funds), Travis McCready (JLL), Sid Philipp (Bloomberg Aviation)

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Episode Overview

This episode explores the record-setting close of the S&P 500, reflecting on the forces driving U.S. equities, the optimism of Wall Street forecasts, and the tech sector's outsized role. Guests offer their perspectives on market risks, thematic investment strategies for 2026, trends in life sciences real estate, and the state of the airline industry as it faces record demand amid operational hurdles.

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Key Discussion Points & Insights

1. Wall Street’s Relentless Optimism and the S&P 500 Forecasts

Guest: Alexandra Semenova | [02:39–09:43]

• Record-High Predictions:
  Wall Street strategists predict 11% average gains for U.S. stocks in 2026, with S&P 500 targets ranging from 7,000 (the “lowest” forecast, still bullish) to 8,100 (Oppenheimer), marking an unusually tight consensus.

  "The gap between the lowest and the highest [target] is actually the narrowest that it's been in nearly a decade. So they're bullish and they're clustered."
  — Alexandra Semenova [03:13]

• Contrarian Concerns:
  Such consensus is often seen as a warning: when everyone’s bullish, small negative surprises can sink the market faster than expected.

  "When everyone is on the same side of the boat, there is too much optimism baked into consensus, and it'll take very little to disappoint the market."
  — Alexandra Semenova [03:13]

• Risks Not Priced In:
  Persistent risks—unexpected Fed moves, AI monetization challenges, geopolitical developments—could trigger volatility that is not reflected in current forecasts.

• Role of Forecasts:
  Despite their limited accuracy, year-end targets help communicate sentiment. Retail investors, in particular, pay close attention, though institutional players focus on sector calls and tactical trades.

  "The correlation between what the market does and what strategist targets are is actually zero."
  — Alexandra Semenova [06:57]

• Alternatives and Diversification:
  Given lofty equities, many recommend diversified exposure, including real assets and commodities—“a theme going into 2026.” [07:50]

• Who Got 2025 Right?
  Chris Harvey (Wells Fargo/ex-Oppenheimer) and Mike Wilson (Morgan Stanley) are cited for accurate, consistent calls—valued for their conviction amid widespread flip-flopping.

  "I would look up to someone more, even if he's so far out from the consensus, but if he's stuck to his guns..."
  — Co-host [09:11]

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2. Thematic Investing for 2026: Disruptive Tech & Real Assets

Guest: David Schassler (Vaneck) | [12:46–19:30]

• Long-Term Themes Identified:

  • Disruptive Tech (especially AI & automation): Considered “underhyped” and a powerful engine for future market transformation.
  • Stealth Bull Market in Real Assets: Energy (especially nuclear, proven fossil fuels), and infrastructure outperforming tech in many cases.
  • Financial Accountability: A new era where debt and deficits carry real consequences; assets with embedded scarcity (gold, bitcoin) become more attractive.

• Asset Allocation Outlook:
  Schassler boldly predicts bitcoin as the top-performing asset in 2026, followed by gold and broader real assets, with tech lagging slightly behind.

  "Bitcoin is the instrument that responds best... If you've got bitcoin, which has outperformed in almost every year of its existence and now underperformed by 30% relative to tech stocks last year... it's basically a coiled spring."
  — David Schassler [15:59–17:40]

• Gold vs. Bitcoin:
  Gold is viewed as a more reliable hedge in downturns; both assets are prized for scarcity, but their volatility and investor appeal differ.

  "If the market sells off, I expect gold to be there for me. I expect bitcoin to be a risk asset. The similarity... is that they both have scarcity and that's why they're both beneficiaries of financial excess."
  — David Schassler [17:40]

  Schassler maintains a $5,000+ price target for gold (“well above” for 2026), predicting volatility as a “feature, not a flaw.” [18:55]

• Geographic Opportunities:
  Schassler does not expect European equities to outperform U.S. in 2026, favoring gold and bitcoin for currency hedging. [19:16]

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3. Life Sciences Real Estate: Vacancies, AI, and New Hotspots

Guest: Travis McCready (JLL) | [20:07–27:27]

• Lab Vacancy Surge:
  Over 60 million square feet of U.S. lab space remains vacant after prior overbuilding, creating a “bottom of the cycle” situation but also an opportunity for tenants to secure better deals.

  "We have, as the saying goes, a lot of wood to chop in order to return to equilibrium from a lab standpoint in the United States."
  — Travis McCready [21:04]

• AI Drives Efficiency:
  Artificial intelligence is making R&D more efficient, reducing demand for traditional wet lab space and increasing need for dry/lab/office setups.

• Reshoring and Biomanufacturing:
  Over $25 billion in new biomanufacturing commitments are as much about favorable policy as meeting growing pharma demand.

  "It's a combination of factors, both policy shifts and more drugs being on the market, that's driving that investment."
  — Travis McCready [22:17]

• Market Leaders & Rising Centers:
  Boston (including Cambridge), San Francisco Bay Area, and San Diego remain dominant U.S. clusters. Emerging markets include Indianapolis, North Carolina, and Philadelphia, driven by pharma manufacturing and innovative healthcare institutions. [23:28]

• Benefit for Occupiers:
  Erosion in top-line rents and longer deal times favor biotech tenants—"now is the time" to occupy space at favorable terms. [26:51]

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4. Airlines: Record Demand Amid Labor & Infrastructure Strains

Guest: Sid Philipp (Bloomberg Aviation) | [30:59–38:18]

• Holiday Travel Surge:
  U.S. airlines are moving nearly 3 million people daily through early January despite average domestic ticket prices reaching $900.

• Air Traffic Controller Shortage:
  Ongoing nationwide shortage, exacerbated by delayed recruitment and retirements; government efforts are underway, but full solutions will take years.

  "It takes a long time, it takes them years to actually be able to be fully independent and actually be managing traffic."
  — Sid Philipp [33:41]

  The problem is global but acute in the U.S. due to outdated systems and rapid retirements.

• Industry Restructuring:
  Consolidation among low-cost carriers remains a theme (Spirit and Frontier in merger talks), reflecting pressure on discount operators as premium airlines attract wealthier customers.

  "The low-cost carriers at the bottom end of the market have... seen their customers really affected... and that's where they've sort of seen a hit to their books."
  — Sid Philipp [37:24]

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Notable Quotes & Memorable Moments

On Market Optimism and Risks

• "Sentiment is usually a contrarian indicator. And in this case, when everyone thinks that nothing can go wrong, it'll take very little to surprise to the downside."
  — Alexandra Semenova [04:29]

On Thematic Investing

• "We're in a world of financial accountability. So if we're going to pay for all the sins of the past... you're going to pay for it with debasement. Why? Because you have no option."
  — David Schassler [14:13–15:43]

On Biotech Real Estate

• "Now is the time. It's a great time to be an occupier."
  — Travis McCready [26:51]

On Air Traffic Control

• "Of the recruits that get into the academy, very few actually make it out into the field because it's just a very demanding job."
  — Sid Philipp [34:45]

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Timestamps for Key Segments

• S&P 500 Market Optimism & Wall Street Forecasts: 02:39–09:43
• Thematic Investing for 2026 (Tech, Real Assets, Scarcity): 12:46–19:30
• Life Sciences Real Estate Trends and AI Impact: 20:07–27:27
• Airline Industry Update (Travel Surge, Labor, Outlook): 30:59–38:18

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Tone Snapshot

The discussion is conversational but data-driven, blending cautious skepticism with bold predictions and keeping a focus on actionable takeaways for investors, business leaders, and consumers.

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For Listeners:

Whether you’re an investor tracking Wall Street’s euphoria, curious about where the next big real estate bargains are, evaluating the future of biotech, or just planning a holiday flight, this episode’s insights will keep you ahead of 2026’s evolving business landscape.

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Transcript

[David Schassler]

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[Podcast Host (possibly Carol Massar or Tim Stanweck)]

History has shown that stock analysts are famously bullish, right? This year is no different. They're forecasting, on average, a roughly 11% gain for U.S. stocks next year. And that's despite things like inflation, like possibly rising unemployment. But guess what? All that optimism is actually putting some market watchers on edge. And Bloomberg's Alexandra Semenova wrote about this for the Bloomberg Terminal, and she joins us here in an interactive broker studio. Alexandra, great to see you. You would think. Okay, look, people are feeling optimistic about next year. That should make market watchers happy. Why are they worried.

[Alexandra Semenova]

Yeah. So it's this hearty annual ritual for Wall street strategists to issue S&P 500 forecasts for the end of the year. And we all know that it's very hard to hit such a spurious level of precision, but it gives us a sense of whether they're bullish or bearish on the market. And if you look at the forecasts for 2026, there's this resounding sense of optimism. The lowest target on Wall street is 7,000, so that itself is already implying a modest gain. Unlike years that we've seen in the past where some were outliers in predicting some sort of loss, there were some bears, some contrarian calls. But this time around, even the lowest target on Wall street is implying a gain. The highest sees the index ending at 8100. That's from Oppenheimer. So the gap between the lowest and. And the highest is actually the narrowest that it's been in nearly a decade. So they're bullish and they're clustered. And there's this sense that when everyone is on the same side of the boat, there is too much optimism baked into consensus, and it'll take very little to disappoint the market. And that's kind of the fear among some investors.

[Podcast Co-host or Interviewer]

I feel like this story, I loved it, by the way, because it was a fantastic story with a lot of nuggets. And you said such lockstep views are generally considered a contrarian signal. Why is that? When some, if you take the other side, you would think, oh, there's consensus, it must be going this way. Indeed.

[Alexandra Semenova]

Right. Well, sentiment is usually a contrarian indicator. And in this case, when everyone thinks that nothing can go wrong, it'll take very little to surprise to the downside. So it won't take a recession. It could take something as much as, you know, a miss on earnings expectations, any kind of little benign announcement from the Fed about them scaling back their expectations for monetary easing. And that is kind of the fear going into next year, when you think about it, there are still so many risks. We don't know whether the next interest rate cut will be despite a lot of investors hoping for another one. We don't know whether the AI story will continue the momentum that we've seen in recent years given some of these circular financing deals. We don't know whether we'll get any more sporadic announcements from the President, obviously, that spurred volatility this year. So any of those little things could be risks to markets. And it seems like Wall street strategists aren't really accounting for them going into next year. But it's understandable because when you look on the, when you look back on the past three years, they have actually erred on being too cautious and that has obviously proven wrong given they underestimated the rally. So this time around they don't want to underestimate, underestimate the market strength.

[Podcast Host (possibly Carol Massar or Tim Stanweck)]

The pendulum has swung and of course there are external shocks. Right. And black swans that we, that we can't foresee. What are they saying is, what are these forecasters saying is going to push the market higher by double digits next year?

[Alexandra Semenova]

So we're still seeing expectations for double digit earnings growth. That has been time and time again that the thing that has made the market so resilient. Corporate America has defied, you know, higher, higher interest rate costs. It has defied tariffs and it's still performed and grown profit. So that is expected to continue next year. The AI story largely is still intact for now, even though there are some concerns about how companies will monetize their investments. For the most part these hyperscalers have been delivering on their earnings. Economic growth is still solid. The labor market, although it is a little bit sluggish, it's still in a good spot. And there's this view that, that will actually make the Fed ease policy. So that is probably going to lift the market higher.

[Podcast Co-host or Interviewer]

As someone who watches this space very, very closely, what do you make of this exercise of having year end targets? Because this whole year you've written, you have this story every year before we to set up the next year, but then during that year you write so many things about either revising upwards or downwards. And sometimes you've written about shops saying no, we just won't put out targets at all because you're just prone to basically putting out something and then it being wrong. So is it still helpful?

[Alexandra Semenova]

It's so funny, it's somewhat of a necessary evil. And actually Ned Davis Research said that you kind of have to have a target to give investors a sense of how bullish you are, the magnitude of gains that you see. But at the same time, Cameron Kreiss actually did an analysis on this. The correlation between what the market does and what strategist targets are is actually zero. There's pretty much you almost never hit that exact number and it feels like it's impossible to do. But at the same time, retail investors specifically are very interested in what these people have to say. Usually when I talk to these strategists, they say that their institutional clients don't care so much. They care about sector views and kind of tactical trade ideas. But retail clients, wealth managers do care how they're thinking about the market.

[Podcast Host (possibly Carol Massar or Tim Stanweck)]

And what are they saying about outside of equities? Because we've seen the run up that commodities have had really across the board. Our forecasts for more bullishness there.

[Alexandra Semenova]

Well, there's been a lot of talk this year about exploring opportunities outside of equities given how lofty valuations are. We've seen the s and P500 return something like 80% since the bull market began at the end of October. October. So you're seeing time and time again that some firms are recommending alternatives, diversify into real assets, commodities. And that's likely to be a theme going into 2026.

[Podcast Co-host or Interviewer]

JP Morgan had in their outlook a 6040 plus.

[Alexandra Semenova]

I liked that.

[Podcast Co-host or Interviewer]

I was like, oh, that's catchy. Very quickly, who got it right this year?

[Alexandra Semenova]

So it's funny, Chris Harvey, who Isabel and I broke the story that he left Wells Fargo to go go to his new firm. He had a target of 7,007 going into this year. And during the trade war, he was one of the only people who didn't capitulate. A lot of strategists were slashing their outlooks. They were downwardly revising and then they ultimately had to U turn and go back to their original targets. And he stuck to his guns. And here we are, we're pretty close to his target. So he's one of the people who got it right. Mike Wilson and Morgan Stanley is also one of them. He had a 6,500 target on the S&P 500 were obviously above that level. But he's also someone who maintained confidence in his call that stocks would recover into the second half of the year. But for the most part, we did see a lot of flip flopping. Ed Yardeni at Yardeni Research said that he's never had to change his target this many times ever in his career.

[Podcast Co-host or Interviewer]

I remember you. We talk sometimes when we collaborate with stories and you would say you would prefer and you would look up to someone more, even if he's so far out from the consensus. But if he's stuck to his guns rather than people who just keep on revising and whenever the market moves, you're just like, oh, okay, let me change my target.

[Alexandra Semenova]

Exactly. It's almost somewhat paradoxical because as a strategist you have to be nimble. You have to be aware of changing economic data and earnings and you have to be willing to change your views, but at the same time, conviction is so important and obviously your credibility kind of diminishes once you're going back and forth.

[Podcast Host (possibly Carol Massar or Tim Stanweck)]

It's all at play. Bloomberg's Alexandra Semenova thanks so much for stopping by. Really interesting, interesting stuff. Great read on the Bloomberg Terminal.

[David Schassler]

Stay with us. More from Bloomberg businessweek Daily Coming up after this. When patients have a disease and the.

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Cause is known, it usually ends up.

[David Schassler]

Needing a specific solution. On the podcast targeting the toughest diseases, we explore the innovative tools, methods, and unique philosophy Vertex Pharmaceuticals is using to search for treatments for some of humanity's most challenging diseases. Subscribe today wherever you listen to podcasts.

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[David Schassler]

So.

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[Podcast Host (possibly Carol Massar or Tim Stanweck)]

The S&P 500 has broken through 6900 in case you missed it. It's been a narrow tech led advance volume though, not so great, right? 35% below the average of the past month ahead of the Christmas holiday. But that's to be expected. So what are the themes in the new year? Where are the opportunities we've brought in? David Schassler. He is here to lend his thoughts. He's head of Multi Asset Solutions at Vaneck Funds. David, great to see you.

[David Schassler]

Thank you so much for having me.

[Podcast Host (possibly Carol Massar or Tim Stanweck)]

So you say that the long game in 2026 has not changed. What is the long game in your view?

[David Schassler]

So we are thematic investors and let's be clear, what does a theme mean? The theme is a structural market driver. If you're a thematic investor, this is a target rich environment. There are a lot of opportunities. So I'm going to start with disruptive technology innovation. Yes, we're talking about AI. Yes, we're talking about AI automation. It's underhyped in regards under hyped. Yes, it is going to drive more transformation, more productivity, more growth and it's going to happen faster than people expect. So that's where we're at. It's underhyped. There's going to be a dislocation between expectations and reality and I'd expect some bumpiness. So it doesn't mean it happens in 2026. A lot of competition there. But that's the first theme. The second theme is there's a stealth bull market in real assets. Real assets are performing extraordinarily well. As great as tech did last year in 2012 and this year as great as tech did in 2025, lots of segments of real assets actually outperformed. Not a lot of people talking about it. The new world doesn't happen without the old world building.

[Podcast Host (possibly Carol Massar or Tim Stanweck)]

So give us some examples of real world assets that you like.

[David Schassler]

Energy, how are you going to build it? Right. So we've been leading into the energy that you have that's actually going to power things now. Fossil fuels, where are we going? What's proven, what's reliable? Nuclear energy. We've made a lot of money with that. So we're leaning into energy. But also the infrastructure build out need to facilitate not only energy transition but infrastructure development to support the technology. So that's the second theme. The third, how are we going to pay for it? We've been perpetually overspending for decades. We're in the period of accountability, financial accountability. Sorry, not sorry. Debt matters. Deficits matter. You can't just spend and spend and spend without repercussions. And now we're at the point where that's the case. Pre2020, you could do whatever you wanted. Print, print, print, no inflation. That's not the world we're in now. We're in a world of financial accountability. So if we're going to pay for all the sins of the past with all that perpetual spending and then start to think about what's on our plate. What's on our plate. You've got reshoring, you've got an infrastructure bill out. You've got a global tech race where losing is existential. And when you frame it that way, when you frame it that way, well, debt and deficits really don't matter as much. Losing is what matters. And how are we going to pay for it? You're going to pay for it with the basement. Why? Because you have no option. That's what happens when you perpetually overspend. So you need to own assets with embedded scarcity. You got to own gold, you've got to own bitcoin. Bitcoin struggled. We think it does really well later part of next year.

[Podcast Host (possibly Carol Massar or Tim Stanweck)]

So are we going to have another, another year where we see gold rally right along with stocks?

[David Schassler]

This, I will be bold enough to frame it out. Give me a little bit of flexibility. So if we meet next year, give me a little bit of flexibility on this because I'm going to be very, very specific.

[Podcast Host (possibly Carol Massar or Tim Stanweck)]

Okay, we like that.

[David Schassler]

I think bitcoin's a top performing asset. Next year I'll frame out why. Think gold does well. Think real assets, broad based real assets. How do you actually build it? How do you power? It does better than gold, but gold does well. Technology stocks a bit behind that. All four of those do well. That's, that's how I frame that out. Here's the thing, right? Why will bitcoin do so well in the later part of the year? We're not saying we're in a bad liquidity environment, but we're saying the liquidity environment is going to get a lot better. You're going to have a new Fed chair coming into office. Check that box. You've got a large portion of the public that's not participating. You've got a narrow growth market. You've Got declining employment conditions. It's setting the backdrop for easing financial conditions. Bitcoin is the instrument that responds best to that. There's an emotional element to it and there's liquidity element to it. If you're nervous, you're not going to lean into that. But if you get more exuberant and more confident, you're going to. If you've got bitcoin, which has outperformed in almost every year of its existence and now underperformed by 30% relative to tech stocks last year, 75% relative to gold last year, it's basically a coiled spring. We think it outperforms next year.

[Podcast Co-host or Interviewer]

So you oversee model portfolios in Vaneck. How do you think of bitcoin and gold when you put them in your model portfolios? Do you think they complement each other or do you think they're an easy. Either or, because you say that bitcoin will gain next year, will be the top performing asset. What is bitcoin like to you? Because I feel like it still needs to mature. Some say it's like a risk asset, some. But the premise of bitcoin is not to be like a risk asset. It's to be a hedge against inflation.

[David Schassler]

It's definitely undergone an identity crisis over time. It's matured over time. It's. It's a. It's a teenager now. And as it's continued to mature, it's starting to act more mature, its volatility profile is more muted, the swings are less extreme, and it's starting to kind of set in its saddle in regards to what it is. And I think you could more correctly frame it and allocate to it. So we own gold and bitcoin on a lot more gold than we do bitcoin. If the market sells off, I expect gold to be there for me. I expect bitcoin to be a risk asset. The similarity, the core similarity, is that they both have scarcity and that's why they're both beneficiaries of financial excess. However, when they perform and how they perform are very, very different. Given the structural underperformance of bitcoin over the last 12, 18 months, we think it's set up for outperformance next year. Gold, we think, still does great, but it's going to breathe a little bit. It's going to be volatile. It's not going to be a straight line. This way, the supply of gold, static, incremental investment demand. Given how small gold is relative to stocks and bonds, gold will become unhinged. It will become more volatile. People are going to be surprised how volatile it gets. That's the opportunity. It's a feature, it's not a flaw.

[Podcast Co-host or Interviewer]

And you have a 5,000 price target for gold, too.

[Podcast Host (possibly Carol Massar or Tim Stanweck)]

What was that?

[Podcast Co-host or Interviewer]

He has a 5,000 price target for gold.

[David Schassler]

Yes, we came out with that. We came out with that when gold was below $3,000. So I think it was around 2,800. We said gold would go to $5,000, thought it would happen by the end of this year. Missed that mark. We think it goes well above $5,000.

[Podcast Host (possibly Carol Massar or Tim Stanweck)]

In 2026 and just in about 20 seconds. What about Europe? Are they going to outperform us as much as they did this year?

[David Schassler]

No. If you want to hedge, first off, you go where the growth is, invest where the growth is. If you want to hedge the dollar, go to gold, go to Bitcoin. So extract the currency, move out of European equities and the picture looks different.

[Podcast Host (possibly Carol Massar or Tim Stanweck)]

All right, David Schassler, he is head of Multi Asset Solutions at Vaneck Funds. Thank you for your predictions, some of them bold.

[David Schassler]

Stay with us. More from Bloomberg businessweek Daily coming up after this.

[Travis McCready]

This is the Bloomberg Business Week Daily podcast. Listen live each weekday starting at 2pm Eastern on Apple CarPlay and Android Auto.

[David Schassler]

With the Bloomberg Business app.

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[David Schassler]

Play Bloomberg 11:30.

[Podcast Host (possibly Carol Massar or Tim Stanweck)]

Artificial intelligence. We keep talking about it. We talk about how it touches almost every part of our lives. Well, guess what, it's also changing the way life sciences companies use real estate. And guess what, it's coming at a time when more than 60 million square feet of lab space is sitting vacant, vacant on US markets. Those are just some of the findings in JLL's 2025 Lifestyle Sciences Real estate perspective and cluster analysis. I know that's a mouthful, but Travis McCready, he is head of industries and leading advisory at JLL and he joins us now remotely. Travis, thanks so much for being with us. I found this report to be really fascinating. I love this kind of stuff and I really love, love real estate. So this is sort of a different way into real estate. Look, there was a lot of overbuilding in the life science real estate industry. This we know. How does this set up landlords, tenants and also those looking for to invest in this area? How does that set us up for 2026?

[Travis McCready]

Indeed, it's a the asymmetry between demand and supply right now and the effect of overbuilding, building way too much too soon in the life Sciences really puts us at the bottom of a cycle heading into 2026. And that's the good news. As you mentioned, artificial intelligence is changing the way that we engage in research and development, hopefully making it more efficient, making it more efficacious. So on the horizon will be an uptick in entrepreneurship and hopefully an uptick in demand. But right now, heading into 2026, make no mistake, with 60 million square feet of vacancies that we need to digest across the United States, we have, as the saying goes, we have a lot of wood to chop in order to return to equilibrium from a lab standpoint in the United States.

[Podcast Co-host or Interviewer]

So we've seen more than $25 billion in new US biomanuring commitments announced. Is this the start of a sustained reshoring cycle or is this more a tactical response to the current policy that the pressures we're seeing?

[Travis McCready]

I think it's a little bit of both those investments. That $25 billion worth of investment is both a reflection of policy change making it more favorable to engage in pharmaceutical manufacturing on U.S. soil, U.S. and Puerto Rico, but it's also a function of the fact that we have more drugs that actually need to be manufactured. There's been an increase in pharma MNA activity. There's a, there's certainly going to be an increase in 2026 in revenues, about an 18 increase in revenues from the top 10 drugs alone sold in the United States. So it's a combination of factors, both policy shifts and more drugs being on the market. That's driving, that's driving that investment.

[Podcast Host (possibly Carol Massar or Tim Stanweck)]

And Travis, I know Boston for sure, but also San Francisco, the Bay Area, San Diego, they're big markets for the biosciences, for life science, real estate. You think they're going to hold on to those positions in the new year? Where are some other opportunities or other markets that may be catching up?

[Travis McCready]

Yeah, those two markets are and will continue to be the leading life sciences markets in North America. The greater Boston area inclusive of Cambridge and Boston, as well as the, as the Bay Area. That's the major two rounding out the third, however, is San Diego. We've seen an enormous amount of activity over the past decade in terms of output and real estate in the Southern California San Diego area. So that's the trilogy, the trinity of markets in, in the life sciences. After that, there are just a, there's a great number, about a dozen of exciting markets across the US on both coasts and a couple in, in the Midwest as well. One, I point out is Indianapolis, a great market right now for pharmaceutical manufacturing as well as animal and veterinary types of life sciences activity. North Carolina, which is perhaps our most vibrant pharma manufacturing state in the United States, as well as Philadelphia. Some really interesting things happening with massive urban reclamations in and around the Philadelphia area that are being backfilled with life sciences activity driven by Children's Hospital and UPenn. So there are lots of markets to watch. But in terms of what's going to drive the amount of American activity in terms of volume, Boston, San Diego and San Francisco.

[Podcast Co-host or Interviewer]

And we know funding is tighter and investors are demanding more capital efficiency, but what does doing more with less space actually look like, for instance, inside a biotech facility?

[Travis McCready]

Yeah, a lot of the efficiency metrics that are being pushed by biotechs right now will shift the amount of wet lab space, the space where science is actually conducted, as well as increasing the amount of dry lab space. In order to densify real estate environments. The actual science increasingly can be pushed and outsourced to contract research or contract development manufacturing organizations. So that can densify the amount of lab space that you actually need. And then again, there's always artificial intelligence. Every amount of the R and D cycle right now is being activated by AI. And in order to deploy AI within that setting, you need dry labs space, office space. So you can actually densify your footprint quite a bit for a biopharma looking to conserve capital just by deploying those strategies, outsourcing artificial intelligence and densifying your space.

[Podcast Host (possibly Carol Massar or Tim Stanweck)]

Yeah, in about 30 seconds. Travis, just want to talk about rent for a moment because we know that rent has just been off the charts for when it comes to to residential for so many folks. But for biotech companies, could the oversupply situation actually be an opportunity to maybe get a better deal?

[Travis McCready]

There's certainly better deals in the offing. We've seen in all markets an erosion of top line rents, particularly for class A space. And we've also seen an increase in deal time and that's largely as a result of the fact that there's more inventory for tenants to be able to cycle through. They have more choice and they can push stronger, better deals both in terms of top line, top line rent, free rent and as well as length of lease. So you're absolutely right. Now is the time. It's a great time to be an occupier.

[Podcast Host (possibly Carol Massar or Tim Stanweck)]

Yep. They might just be throwing some incentives your way. Travis McCready, head of industries and leading advisory over at JLL.

[David Schassler]

Stay with us. More from Bloomberg Businessweek Daily Coming up after this.

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You're listening to the Bloomberg Businessweek Daily Podcast. Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg business app or watch us live on YouTube.

[Podcast Host (possibly Carol Massar or Tim Stanweck)]

The airline industry, boy, oh boy, has it had its share of challenges this year. That shortage of air traffic controllers, we know, an ongoing issue, but also the historic government shutdown down. It forced the airlines to drastically cut their schedules basically overnight. But through it all, demand is there. We continue to fly in this country and over the holidays, it's just more of the same record high travel. And that's despite higher ticket prices. The average round trip. Now get this, 900 for a domestic flight.

[Podcast Co-host or Interviewer]

I can't even believe that.

[Podcast Host (possibly Carol Massar or Tim Stanweck)]

What are you talking about? Bloomberg News chief correspondent for global aviation Sid Phillip is here in studio to talk about this and the, and the outlook for global aviation. Sid, great to see you. Like, great. We're seeing you before your trip tomorrow because you're traveling.

[Sid Philipp]

Exactly. Hopefully it goes well.

[Podcast Host (possibly Carol Massar or Tim Stanweck)]

You're flying to London.

[Sid Philipp]

I am flying to London.

[Podcast Co-host or Interviewer]

That's brave.

[Podcast Host (possibly Carol Massar or Tim Stanweck)]

Okay.

[Sid Philipp]

It is pretty brave. It's also a sort of test to see how bad things could be.

[Podcast Host (possibly Carol Massar or Tim Stanweck)]

There you go. Story out of this.

[Sid Philipp]

Exactly.

[Podcast Host (possibly Carol Massar or Tim Stanweck)]

So under 3, just under 3 million people are being moved by the airlines per day now through January 5th.

[Sid Philipp]

Exactly. So the number that we've got from Airlines for America says that about 2.9 million people will travel average from the, from during the Christmas rush until sort of the first week of January. And the busiest days of travel would have been yesterday and the 28th. And that's when people sort of go on holiday and come back. And so that's why those are the busiest days. And we will see some days when there isn't that much travel. Tomorrow and day after should be the days with the least amount of travel. So hopefully things go well for me.

[Podcast Co-host or Interviewer]

Yeah. Because everyone wants to be home already by Christmas. And New York and New Jersey airports are expecting a record 5.7 million travelers from December 22 to January 4. Are those two the busiest airports in.

[Sid Philipp]

Terms of international travel? Yes, those are tend to be the, the busiest in terms of domestic airport. We have Atlanta, we've got other airports, Dallas, Fort Worth. And so there are many airports in the US that are seeing a massive sort of surge in demand we're seeing, seeing people across the country looking to fly. And that's also been because this year has been sort of all about various ebbs and flows for the airline industry. And so people are sort of now getting out there and getting on planes, going to see family, going to go on vacation and sort of just buckling down on paying those prices, if at all.

[Podcast Host (possibly Carol Massar or Tim Stanweck)]

I'm wondering if you have any insight into whether or not things are going to improve when it comes to the air traffic controllers. Because we've seen, I mean, not only is it an inconvenience, it's a safety issue. Is there reason to believe that's going to change in the new year?

[Sid Philipp]

The air traffic controller system has been sort of under fire for a while. I mean, not just during the shutdown, but even before. Before it, when we had those sort of shortages that Newark Airport had and this, those sort of massive issues.

[Podcast Host (possibly Carol Massar or Tim Stanweck)]

Very close calls.

[Sid Philipp]

Exactly right. And so we've seen that, we've seen it from this sort of the middle of the year. The government has been talking about increasing funding for air traffic controllers. And the government has said that they've hired more recruits and trainees into the academy. They're also sort of getting those recruits across the line and into air traffic control stations. But it takes a long time, it takes them years to actually be able to be fully independent and actually be managing traffic. And so it's not really a sort of quick fix solution for anything. It has to be a very long process to actually hire those controllers, train them up and make sure that they're fully capable of handling traffic into and out of those airports.

[Podcast Co-host or Interviewer]

I know there must be many reasons, a myriad. But why did we even see shortages to begin with? I just feel like it's, it's a cool job, it must be a well paying job. It's like you're serving the country.

[Sid Philipp]

It's a very stressful job. So it's a well paid job, but it's very, very stressful. I mean, one of the controllers we talked to previously for a story said that it's sort of, you have to have the ability to think in three dimensions. So essentially. Yeah, exactly. And so you're making quick decisions. You're telling, you're communicating with multiple aircraft at multiple times. So there's, you got to be able to work really fast, think in three dimensions because you're not just dealing with things sort of vertically and horizontally, but you're also stacking things up and sort of. So that makes things much more complicated. And so it's a very complicated job and it's not really for everybody and many people crack under the stress of the job. So of the recruits that get into the academy, very few actually make it out into the field because it's just a very demanding job and you want.

[Podcast Co-host or Interviewer]

To make sure that the people you put out there.

[Sid Philipp]

Exactly.

[Podcast Co-host or Interviewer]

Super qualified because lives are at risk.

[Sid Philipp]

And then being able to do those jobs day in, day out and not just sort of. It's not a one off thing. You got to do it. Yeah. You got to be doing it multiple days, multiple times.

[Podcast Host (possibly Carol Massar or Tim Stanweck)]

It takes a special person to be able to do that.

[Podcast Co-host or Interviewer]

Exactly, yes. Is this a US specific thing? I'm wondering if other parts of the world also see it.

[Sid Philipp]

It is an issue across the world, I mean, because you obviously need, as generations of. Of air traffic controllers retire, you need to make sure there's a pipeline of newer controllers taking those jobs. And so it is an issue. I mean, it came up in the US much harder because, I mean, of various reasons that sort of led to a lot of controllers retiring as well as the fact that there wasn't sufficient recruitment years ago. And so that sort of coincided to create the shortage. But the government has talked about both modernizing the air traffic control system because, I mean, at the same time as the shortage of controllers is also very antiquated equipment in those air traffic controller systems. Yeah. And so that's something as well that they need to sort of tackle at the same time. So Congress has given Sean Duffy, the Transportation Secretary, the first tranche of that funding that he's seeking in order to modernize the airspace. And there are sort of upgrades in terms of upgrading from copper wire to fiber and sort of increasing, increasing new systems, especially since some of the systems that they previously had are sort of long out of date and need to be replaced.

[Podcast Co-host or Interviewer]

I was going to say AI still can't take it.

[Podcast Host (possibly Carol Massar or Tim Stanweck)]

AI, don't. Please don't. Do not hand that over to AI. Not if I'm in the plane. Thank you so much. I do want to zoom out for a minute and just look at the industry overall next year. I'm imagining consolidation is still going to be a theme. If I read this right, Spirit and Frontier talking again about a possible merger. I think that's the fourth time we'll see if, you know, the fourth time's a charm. But do you think we're going to see more consolidation and will it be in the discount carrier space?

[Sid Philipp]

So the discount carriers have been struggling. So Delta and United sort of made their strategy in targeting premium travelers coming out of the pandemic. And they've done really well on that strategy. So a lot of people had money to spend and they were willing to pay more for a better travel experience. The premium, this sort of the low cost carriers at the bottom end of the market have also seen their customers really affected because I mean, we keep talking about the K shaped recovery in the economy and so the customers at the bottom end are the ones sort of holding off on travel decisions, holding off and going on those extra holidays. And that's where the low cost carriers play in and that's where they've sort of seen a hit to the, to their books and balance sheet. I mean, so spirits in its second bankruptcy, in its second chapter 11 bankruptcy. And so in order for it to survive, I mean it is looking at possibilities and we reported that they are in discussion with Frontier and that will sort of give them more scale and be able to better compete against the other airlines.

[Podcast Host (possibly Carol Massar or Tim Stanweck)]

All right, Bloomberg Sid Philipp, our chief correspondent for Global Aviation.

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