WEBVTT - Markets, Cybersecurity, And The Supply Chain 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day, we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.560 --> 0:00:15.600 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.600 --> 0:00:18.479 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:21.400 at Bloomberg dot com slash podcast. All right, we get 0:00:21.400 --> 0:00:24.520 some inflation data tomorrow c p I. The year of 0:00:24.600 --> 0:00:29.200 year consensus is eight point four UM. I don't think 0:00:29.200 --> 0:00:31.120 wages are going up eight point four percent, so that's 0:00:31.120 --> 0:00:33.879 a challenge for many folks out there. Let's check in 0:00:33.920 --> 0:00:40.159 with Robert Rosener, executive director, senior US economist at Morgan Stanley. Robert, 0:00:40.280 --> 0:00:43.760 what are you can? Award winning economists? Award winning economist, 0:00:43.840 --> 0:00:47.320 aren't they all? No, that's the point. He won the 0:00:47.440 --> 0:00:51.000 n A B Outlook Award for the most accurate economic 0:00:51.120 --> 0:00:56.920 forecasts over the past four quarters. So who yeah, So 0:00:57.000 --> 0:00:58.440 he knows what he's talking about. So you we're gonna 0:00:58.440 --> 0:01:01.480 ask about inflation. This sperfect. Let's do it. Robert, thanks 0:01:01.480 --> 0:01:03.200 so much for joining us. Really appreciate you taking the 0:01:03.280 --> 0:01:05.840 time here. What are you going to be looking for tomorrow, Robert, 0:01:05.840 --> 0:01:09.679 and that inflation data. Yeah, well, thanks guys, thanks for 0:01:09.680 --> 0:01:12.440 having me on and you're two nice um. But when 0:01:12.440 --> 0:01:14.880 it comes to the inflation data tomorrow, we're certainly going 0:01:14.920 --> 0:01:17.600 to see a lot of heat. Um. We're looking for 0:01:17.640 --> 0:01:20.360 a high headline inflation reading driven by the upside and 0:01:20.440 --> 0:01:24.000 energy prices as well as food prices, and underneath the surface, 0:01:24.080 --> 0:01:27.120 the core should remain elevated as well. We're seeing a 0:01:27.160 --> 0:01:29.760 little bit of give back in terms of goods inflation. 0:01:29.880 --> 0:01:32.320 Some of the areas that we're leading the high inflation 0:01:32.360 --> 0:01:35.560 prints that we saw last year, areas like used car prices, 0:01:35.600 --> 0:01:38.800 appear that they've pulled back a little bit. But on 0:01:38.840 --> 0:01:40.760 the surfaces side of the picture, where we've seen that 0:01:40.840 --> 0:01:44.240 broadening out of inflationary pressures in recent months, we actually 0:01:44.240 --> 0:01:47.600 look for some acceleration there in things like rents owner's 0:01:47.640 --> 0:01:49.920 equivalent rents as well as some of the COVID sensitive 0:01:49.920 --> 0:01:53.280 categories like air fairs and hotels all look like they're 0:01:53.320 --> 0:01:56.200 set up for high readings. And all of that's important 0:01:56.520 --> 0:01:59.680 as we think about how to read this print, because 0:01:59.840 --> 0:02:01.720 we know the top line is going to be high 0:02:01.800 --> 0:02:04.520 driven by energy prices. The internals are going to tell 0:02:04.560 --> 0:02:06.840 us a lot more about where inflation is likely to 0:02:06.920 --> 0:02:09.120 trend over the month ahead and if we are going 0:02:09.160 --> 0:02:12.960 to see any sequential deceleration. So um, but where do 0:02:13.000 --> 0:02:15.120 you think now it's likely a trend over there. You 0:02:15.160 --> 0:02:16.760 know a lot of people are saying it's going to 0:02:16.880 --> 0:02:21.559 peak with this reading. Our Abigail Doolittle, who is a chartist, disagrees. 0:02:21.840 --> 0:02:25.480 What's your view? Well, that's the key question. You know, 0:02:25.520 --> 0:02:28.400 on a twelve month basis, we do expect that inflation 0:02:28.440 --> 0:02:30.720 is going to peak. We're expecting that this peak reading 0:02:30.800 --> 0:02:33.000 for headline CPI is going to come in at eight 0:02:33.000 --> 0:02:37.119 point six percent, so again that multidecade high, and as 0:02:37.120 --> 0:02:39.600 we make the lap around those tough base effects from 0:02:39.639 --> 0:02:42.680 the spring, we should see inflation coming off of those peaks. 0:02:42.720 --> 0:02:45.160 I think the key question here is what's going on 0:02:45.200 --> 0:02:47.640 with those core internals and how quickly are we going 0:02:47.680 --> 0:02:50.519 to roll off of those peaks and to where our 0:02:50.560 --> 0:02:52.760 forecast would say, yes, we're going to come off of 0:02:52.800 --> 0:02:55.079 those peaks. It's going to be a slow grind off 0:02:55.080 --> 0:02:58.120 of that peak for inflation, though year over year inflation 0:02:58.160 --> 0:03:00.919 is going to remain elevated. It's likely in our forecast 0:03:01.000 --> 0:03:03.600 to remain above seven per cent until we get into 0:03:03.680 --> 0:03:06.680 the second half of the year, so those pressures are 0:03:06.680 --> 0:03:09.440 still going to be there. Um, what we need to 0:03:09.440 --> 0:03:11.560 see is if the core is going to start decelerating 0:03:11.560 --> 0:03:14.320 a material way that can give us more confidence that 0:03:14.360 --> 0:03:18.079 we will see inflation slow further or more materially when 0:03:18.080 --> 0:03:20.880 we're getting into the end of next year early sorry, 0:03:20.960 --> 0:03:23.760 end of this year, early next year. But that evans 0:03:24.040 --> 0:03:26.240 is not there yet, and what we're seeing is that 0:03:26.360 --> 0:03:29.480 a trend is warming that suggests them for their support. 0:03:30.440 --> 0:03:35.120 All right, So, Robert, given that inflationary backdrop, give us 0:03:35.120 --> 0:03:37.480 your assessment of kind of where the FED is right 0:03:37.520 --> 0:03:40.560 now in terms of their actions and kind of how 0:03:40.600 --> 0:03:42.000 you think that might play off for the remainder of 0:03:42.040 --> 0:03:45.800 the year. Yeah. Well, this is clearly a FED that 0:03:45.960 --> 0:03:49.520 is taking inflation much more seriously and has undergone a 0:03:49.640 --> 0:03:52.200 very hawkers shift in recent months as a result, and 0:03:52.240 --> 0:03:56.480 we're expecting the Fed to deliver on more hawk is expectations. 0:03:56.520 --> 0:03:58.840 We're expecting a fifty basis point rate hike from the 0:03:58.880 --> 0:04:01.960 Fed at them May meeting. We're expecting another fifty basis 0:04:02.000 --> 0:04:04.800 point rate hike at the June meeting. All the while 0:04:05.200 --> 0:04:07.880 policymakers have given us an indication that the balance sheet 0:04:07.920 --> 0:04:10.320 runoff is likely to begin. We think that announcement comes 0:04:10.440 --> 0:04:13.560 in May. We just learned in the minutes last week 0:04:13.600 --> 0:04:16.520 that will likely occur at a pace of a billion 0:04:16.560 --> 0:04:19.360 dollars per month. So that's a lot of policy tightening 0:04:19.560 --> 0:04:22.000 coming in the pipeline. And there are a number of 0:04:22.080 --> 0:04:25.119 important things that we learned in the FMC minutes last week, 0:04:25.720 --> 0:04:31.280 particularly around policymakers preferences for tightening policy expeditiously more our 0:04:31.360 --> 0:04:34.279 favoring fifty basis point rate hikes, and coming back to 0:04:34.320 --> 0:04:36.719 the inflation data, that's going to be the key guide. 0:04:37.000 --> 0:04:39.560 We do think it will get to in May and June. 0:04:39.880 --> 0:04:42.840 What does the policy path look like thereafter? It remains 0:04:42.880 --> 0:04:45.720 data dependent, and so if inflation does not pull back materially, 0:04:45.720 --> 0:04:47.760 we should expect the Fed to continue to pursue a 0:04:47.839 --> 0:04:50.120 more hawkish policies down all right, So back to back 0:04:50.160 --> 0:04:53.320 fifty basis point hikes. And for those wondering, there's no 0:04:53.400 --> 0:04:57.000 April meeting for the Fed. They skip it maybe because 0:04:57.000 --> 0:04:59.800 of Easter, I don't know, but their next meeting is May. 0:04:59.800 --> 0:05:02.800 F earth Um Robert talked to me about, you know, 0:05:03.440 --> 0:05:06.359 Paul said, isn't everyone but no, Um, Wall Street is 0:05:06.400 --> 0:05:09.000 one example of a place where everyone doesn't get a trophy. 0:05:09.040 --> 0:05:13.320 There's one winner. You are in participation, UM, So talk 0:05:13.360 --> 0:05:16.400 to us about your process. You know what, what do 0:05:16.440 --> 0:05:18.919 you think is different about your process that allows you 0:05:18.960 --> 0:05:25.080 to forecast more accurately. Well, I think it's been continuously 0:05:25.120 --> 0:05:28.200 the case as we moved through UH this recovery and 0:05:28.240 --> 0:05:30.840 as we're moving for this expansion. We really have to 0:05:30.880 --> 0:05:33.640 get into the leads. There's a lot of specific drivers 0:05:33.720 --> 0:05:37.040 moving at the sector level. So for Morgan Stanley research 0:05:37.200 --> 0:05:40.719 about the collaborative process, we get to hear very smart 0:05:40.800 --> 0:05:43.520 things from analysts who are experts in the oil sector 0:05:43.560 --> 0:05:46.320 who know what's going on with cathex, same thing with 0:05:46.360 --> 0:05:49.960 the auto sector and so on. So that collaboration really 0:05:49.960 --> 0:05:52.760 plays a big role in the forecasting process. And then 0:05:52.839 --> 0:05:57.000 also you know, keeping a very close eye on the models. UH, 0:05:57.320 --> 0:06:00.360 there have been a lot of surprises. That is clearly 0:06:00.360 --> 0:06:02.920 what Kapta fed by surprise coming into this year is 0:06:03.040 --> 0:06:06.599 the models would have predicted transitory inflation. We have to 0:06:06.600 --> 0:06:10.360 be constantly questioning what the models are saying and understanding 0:06:10.400 --> 0:06:13.039 what the output means in the context of a very 0:06:13.040 --> 0:06:17.320 fast moving economic backdrop. So this is a real interesting 0:06:17.400 --> 0:06:20.080 point for me. Robert, is Morgan Stanley back in your office. 0:06:20.120 --> 0:06:23.800 Now we are back in the office, and you know, 0:06:23.880 --> 0:06:26.920 talk about collaboration. Nothing like seeing people face to face 0:06:27.040 --> 0:06:30.360 feels really good. That's interesting. So yeah, it's intertionally a 0:06:30.400 --> 0:06:32.800 lot of different companies trying to come to grip soths. 0:06:32.839 --> 0:06:34.480 I always like that, let me get somebody on and see, hey, 0:06:34.480 --> 0:06:36.920 are you guys actually in the office. Are you working remotely? 0:06:36.960 --> 0:06:38.960 And Matt and I are here in your office. Yeah, 0:06:38.960 --> 0:06:41.880 but Robert won the trophy when people were home. The 0:06:41.880 --> 0:06:45.120 only trophy HEAT cares about his Institutional Investor magazine. That 0:06:45.240 --> 0:06:48.360 is the one that South Side really cares about. Not 0:06:48.400 --> 0:06:49.920 as much as in the old days, but still I 0:06:49.920 --> 0:06:53.520 think it's pretty important. Robert Rosener, executive Director, Senior us 0:06:53.560 --> 0:06:57.560 E commers from Morgan Stanley, working from the office, expecting 0:06:57.720 --> 0:07:01.360 fifty basis points rise from Federal Reserve over the next 0:07:01.400 --> 0:07:09.200 two meetings. Tracy mcmillians she's had of a global asset 0:07:09.200 --> 0:07:13.200 allocation strategy Wells Fargo and co graduate of William and 0:07:13.240 --> 0:07:15.280 Mary Rick. Down the road from my University of Richmond, 0:07:15.640 --> 0:07:18.600 UH Spider's nice little rivalry going there. Tracy, We're gonna 0:07:18.640 --> 0:07:21.120 have some CPI data tomorrow. It's going to be an 0:07:21.240 --> 0:07:27.680 ugly read. What's your inflation call? Yeah, so we're definitely 0:07:27.720 --> 0:07:32.080 seeing a perfect storm of inflationary pressures, and you know, 0:07:32.160 --> 0:07:34.400 we do think we're going to see an AID handle 0:07:34.520 --> 0:07:38.440 on this CPI headline number tomorrow. So as you said, 0:07:38.480 --> 0:07:40.640 the numbers are going to be ugly this week. We've 0:07:40.640 --> 0:07:44.840 got CPI, we've got PPI coming out. But inflation we 0:07:45.080 --> 0:07:49.080 think is probably near its high for the cycle. Our 0:07:49.120 --> 0:07:53.520 commodities analysts always says that the cure for high prices 0:07:53.560 --> 0:07:57.960 as high prices, and you know, we don't see things 0:07:58.000 --> 0:08:01.840 like oil spiking higher at this point, but trading in 0:08:01.920 --> 0:08:06.200 a really broad range with some potential upside as we 0:08:06.240 --> 0:08:09.200 go into the end of the year, and you know, 0:08:09.240 --> 0:08:13.720 other commodities probably choppy too, so they really impact headline 0:08:13.760 --> 0:08:17.120 inflation um. But we're also seeing you know, at this 0:08:17.200 --> 0:08:21.080 point shut downs in China and by shortages from that 0:08:21.680 --> 0:08:28.280 and all of that we think keeps inflation elevated. But again, 0:08:28.440 --> 0:08:32.160 you know, here in the eight um we're probably towards 0:08:32.200 --> 0:08:35.560 the top for this cycle. How difficult is it to 0:08:35.679 --> 0:08:39.840 factor in geopolitical risk and issues when you're looking at 0:08:39.840 --> 0:08:42.800 these markets, Tracy, because of course, you know, last year 0:08:42.840 --> 0:08:44.760 this time, you wouldn't have known that we're going to 0:08:44.880 --> 0:08:48.800 have this sort of extra crimp in the supply chain, 0:08:49.440 --> 0:08:53.560 extra boost to inflation of Russia invading Ukraine, and for 0:08:53.640 --> 0:08:55.720 all we know, you know, next year we could be 0:08:55.720 --> 0:09:01.679 looking at a bigger problem around China. Yeah, absolutely, And 0:09:01.800 --> 0:09:05.800 you know it's it's really um, these unexpected events that 0:09:05.960 --> 0:09:10.679 happened to market that cause the kind of uh, you know, 0:09:10.760 --> 0:09:15.400 volatility that we tend to see uh in market cycles. 0:09:15.600 --> 0:09:19.560 And you know, this time around, um, we not only 0:09:19.679 --> 0:09:23.480 had COVID kind of ending and instella. Instead of you know, 0:09:23.600 --> 0:09:28.880 celebrating the reopening from COVID, now we are lamenting a 0:09:28.960 --> 0:09:32.880 war in Europe and looking at the market impacts of 0:09:32.920 --> 0:09:38.520 that conflict because exports from Russia and Ukraine have caused 0:09:38.559 --> 0:09:41.520 additional supply shocks in addition to the ones that we 0:09:41.520 --> 0:09:45.079 were already seeing. So we had to you know, increase 0:09:45.200 --> 0:09:48.440 our inflation expectation, we had to pull back on our 0:09:48.440 --> 0:09:54.800 growth numbers, and you know, unfortunately commodities don't really clear quickly. 0:09:55.120 --> 0:09:59.760 And this war is you know adding additional supply talks, 0:10:00.040 --> 0:10:04.400 shocks to commodities, so they all ramp nail to inflation. 0:10:04.720 --> 0:10:08.280 UM has been lengthened, and the Federal Reserve is ramping 0:10:08.360 --> 0:10:12.600 up its policy response. So all of that is something 0:10:12.640 --> 0:10:15.720 that markets have had to recalibrate really and just the 0:10:15.840 --> 0:10:20.800 last three months. So do you expect tracy that this 0:10:20.920 --> 0:10:24.600 Fed Reserve will raise interestrates fifty basis points maybe over 0:10:24.640 --> 0:10:29.239 the next two meetings. Do you think they'll be that aggressive? Yeah, 0:10:29.400 --> 0:10:32.160 we do. We think they're preparing markets for a really 0:10:32.280 --> 0:10:35.600 tough inflation fight. And they told us that they're going 0:10:35.640 --> 0:10:39.120 to do what it takes UM to you know, quell inflation, 0:10:39.440 --> 0:10:42.560 and their frontloading these hikes. So we do think that 0:10:42.600 --> 0:10:46.400 means probably fifty basis points in May, probably another fifty 0:10:46.440 --> 0:10:49.880 basis points in June. And they're also going to be 0:10:49.960 --> 0:10:53.840 implementing quantitative typening. That's another tool in their tool kit. 0:10:53.920 --> 0:10:57.080 They're they're using UM and they're bringing that to the 0:10:57.120 --> 0:11:00.679 four very quickly as well. UM. So a job of 0:11:01.120 --> 0:11:04.360 orchestrating a soft landing is going to be really tough. 0:11:04.480 --> 0:11:09.200 We've only utilized quantitative tightening once before, and it was 0:11:09.240 --> 0:11:13.640 to a much lesser degree. And it ended shortly after 0:11:13.720 --> 0:11:16.880 it started. So you know, the set is now using 0:11:17.440 --> 0:11:22.840 both rate increases and quantitative tightening to get inflation under control, 0:11:23.320 --> 0:11:25.440 and we think that's going to be a headwind market. 0:11:25.960 --> 0:11:31.600 So where do you hide? Yeah, yeah, yeah, it's so 0:11:31.960 --> 0:11:37.160 really investors are are asking that question, and you know, 0:11:37.240 --> 0:11:41.560 looking across different outset classes, we're seeing a fairly steady 0:11:41.880 --> 0:11:46.080 move out of equities, but not a run for the adfits. 0:11:46.200 --> 0:11:50.120 And we're not suggesting running for the exits and equities, um. 0:11:50.200 --> 0:11:55.360 We are suggesting moving back towards neutral strategic allocations. So 0:11:55.480 --> 0:11:58.920 that means holding some equities but not being over risked. 0:11:59.400 --> 0:12:03.120 It means being diversified inequities and moving away from higher 0:12:03.200 --> 0:12:07.320 beta equities like emerging markets and small caps and adding 0:12:07.440 --> 0:12:11.559 to UH fixed income from maybe you know, the higher 0:12:11.600 --> 0:12:15.120 beta equities. And for there we would say, look at 0:12:15.160 --> 0:12:18.200 the intermediate part of the curve. With ten years at 0:12:18.640 --> 0:12:22.240 two point seven percent, that's starting to look more attractive, 0:12:22.320 --> 0:12:24.640 certainly more so than we've seen in a couple of years. 0:12:25.200 --> 0:12:28.520 All Right, Tracy, great stuff, as always, Tracy McMillian, head 0:12:28.520 --> 0:12:32.000 of Global asset Allocation Strategy for Wells Fargo. I think 0:12:32.280 --> 0:12:36.920 Tracy's based in Winston Salem, the home of wake Forest University. UM, 0:12:37.040 --> 0:12:39.680 part of all those great colleges down in the great 0:12:39.720 --> 0:12:41.839 state of North Carolina. So we have U n C. 0:12:42.080 --> 0:12:45.319 We have a little place called Duke, NC State, you 0:12:45.440 --> 0:12:49.079 got Wake Forest, you got basically the Atlantic Coast Conference, 0:12:49.120 --> 0:12:52.040 basically all located within an hour of each other. But 0:12:52.040 --> 0:12:54.120 you've got to go to the Midwest to find a 0:12:54.160 --> 0:13:00.720 basketball champion. Will please? All right, Let's bring in a 0:13:00.720 --> 0:13:03.079 professional here because we want to talk cyber security here. 0:13:03.600 --> 0:13:07.320 Bob Kulaski, Senior VP for Exeter. Bob, we have a 0:13:07.360 --> 0:13:12.760 hot war in Ukraine. I think about cyber aspects to that. 0:13:12.960 --> 0:13:15.320 What have you noticed in terms of maybe some of 0:13:15.320 --> 0:13:18.240 the activity over there and what risk it may pose 0:13:18.320 --> 0:13:23.000 to some Western countries? Sure? Great to be with you, UM, 0:13:23.040 --> 0:13:24.640 I mean I think the first thing I would take 0:13:24.679 --> 0:13:28.720 away is cyber that fully integrated into a war plan here. 0:13:29.000 --> 0:13:32.920 And for Russia, UM, we've seen their attacks not be 0:13:33.040 --> 0:13:36.400 cyber specifics as much as cyber being part of their 0:13:36.480 --> 0:13:40.800 overall campaign too. You know, you legitimately go after Ukraine 0:13:41.000 --> 0:13:43.520 and the Ukrainian people, and so that means their attacks 0:13:43.520 --> 0:13:48.120 have been somewhat strategic just going after communications infrastructure, um 0:13:48.120 --> 0:13:52.120 which is intentional to hurt the Ukrainian military commander control 0:13:52.520 --> 0:13:56.480 things like that, as well as things against the electric 0:13:56.520 --> 0:14:02.040 gride in the financial sector, which just cause more inconvenient 0:14:02.440 --> 0:14:06.680 for you know, the people, and you know, to help 0:14:06.760 --> 0:14:09.040 the Russians achieve their war rings. And then you throw 0:14:09.080 --> 0:14:11.839 that in with some disinformation and using cyber to get 0:14:11.920 --> 0:14:17.640 access to credentials for Ukrainian military leaders, people involved in 0:14:18.040 --> 0:14:21.600 creating military and um post i legitimate things on social 0:14:21.640 --> 0:14:25.160 media sites. So it's an attack on credential spear fishy 0:14:25.240 --> 0:14:29.520 to then get access to so confusion. So you know, 0:14:29.680 --> 0:14:33.160 unfortunately the cyber's part of an overall hybrid effort the 0:14:33.200 --> 0:14:36.920 Russian government. But Bob, what can we do in terms 0:14:36.920 --> 0:14:40.400 of retaliatory attacks? Does the US engage in that sort 0:14:40.440 --> 0:14:45.160 of um, I guess warfare? Do we engage in cyber warfare? 0:14:45.240 --> 0:14:49.400 Will we hit back that way? So, I mean, when 0:14:49.440 --> 0:14:52.120 you put in the contents of warfare, you know, we're 0:14:52.200 --> 0:14:57.120 still largely following our own strategic participation in conflicts, so 0:14:57.400 --> 0:15:03.160 you're not going to see US actively attacking. It's committing 0:15:03.200 --> 0:15:06.480 an offensive cyber operations that would be thought of as warfare. 0:15:06.840 --> 0:15:10.960 But do we have a setup like that we have 0:15:11.000 --> 0:15:14.680 ability to cause harm in Russia and particularly to cause 0:15:14.760 --> 0:15:19.479 harm and introduce friction into the operation to cyber operational 0:15:19.520 --> 0:15:24.480 system of parts of the Russian government. And uh, you know, 0:15:25.640 --> 0:15:29.240 obviously the administration is somewhat the circumspect of when that's used. 0:15:29.640 --> 0:15:32.720 You know that that authority has been given to the 0:15:32.720 --> 0:15:36.160 Secretary Defense and been been to cyber calm to go 0:15:36.320 --> 0:15:40.880 offensive if it's part of our overall strategic efforts. So 0:15:40.920 --> 0:15:45.240 who Bob, who who kind of runs our cyber I 0:15:45.240 --> 0:15:48.280 guess security issues from a military perspective is that part 0:15:48.320 --> 0:15:50.360 of the Department of Defense is at the n s A. 0:15:50.520 --> 0:15:54.360 Where does it really lie that responsibility? So, you know, 0:15:55.280 --> 0:15:58.600 the administration under the Trump administration gave authorities to the 0:15:58.640 --> 0:16:01.400 Secretary of Defense, which in the operational command is the 0:16:01.440 --> 0:16:04.520 cyber Command, which is a link with the National Security Agency. 0:16:05.080 --> 0:16:07.840 And actually the White House right now is undertaking a 0:16:07.920 --> 0:16:11.160 policy review about you know, what authorities should lie with 0:16:11.200 --> 0:16:13.840 the Secretary of Defense and where the where the White 0:16:13.840 --> 0:16:16.480 House its health the National Security Council should be um 0:16:16.520 --> 0:16:19.120 involved in making off at the cyber decisions. And you 0:16:19.160 --> 0:16:21.400 know that's the question that the show she's going to 0:16:21.480 --> 0:16:24.320 be looking at is Yeah, are you giving too many 0:16:24.320 --> 0:16:27.000 authorities to the commission closer to the command and you 0:16:27.040 --> 0:16:31.240 know that a personal argument that happens in military operations. Interesting. Interesting, 0:16:31.240 --> 0:16:33.160 all right, Bob Colaski, thanks so much for joining us. 0:16:33.160 --> 0:16:36.760 Bob Carloski, Senior VP for Exeter. I'm talking about cybersecurity 0:16:36.760 --> 0:16:38.840 in a time of you know, a hot war in 0:16:39.040 --> 0:16:43.320 your has to raise um, you know, the awareness presumably 0:16:43.320 --> 0:16:49.800 of Western countries. All right, let's talk about supply chains. 0:16:49.800 --> 0:16:52.840 I'm gonna talk about supply chains as it relates to food. 0:16:52.880 --> 0:16:55.920 We're definitely seeing issues there that includes the in the 0:16:56.040 --> 0:16:58.720 seafood business. Our next guest is doing something about it, 0:16:58.720 --> 0:17:02.080 Sylvia Wolf exactly of director, president and CEO of Aqua 0:17:02.160 --> 0:17:06.080 Bounty Technologies. It's kind of like a it's a public 0:17:06.200 --> 0:17:07.960 trade of stock on and now that kind of a 0:17:08.000 --> 0:17:10.200 biotechnology company. So if you thanks so much for joining 0:17:10.240 --> 0:17:11.920 us here. What if you could just start us off 0:17:11.960 --> 0:17:15.919 by just describing what Aqua Bounties is and kind of 0:17:15.920 --> 0:17:19.240 what what what what your strategy is? Thanks for having 0:17:19.280 --> 0:17:24.000 me absolutely. Aquabunty Technologies has two facets to our business. 0:17:24.040 --> 0:17:27.560 The first is we are the first genetically engineered animal 0:17:27.600 --> 0:17:30.280 that was approved for food use, and it's our genetically 0:17:30.320 --> 0:17:33.919 engineered salmon. And so the two components to our business 0:17:34.040 --> 0:17:37.440 are the fact that we actually farm in a land based, 0:17:37.560 --> 0:17:42.760 recirculating aquaculture system, which means we are under roof bio secure. 0:17:43.240 --> 0:17:45.080 And then the other part of our business that we 0:17:45.160 --> 0:17:48.280 think is unique is the fact that we have a 0:17:48.320 --> 0:17:52.479 significant expertise in biotechnology. And what I mean by that 0:17:52.640 --> 0:17:57.320 is selective breeding, gene editing, genetic engineering, as well as 0:17:57.320 --> 0:18:00.960 thinking about fish health and nutrition. So that's what we do. 0:18:01.880 --> 0:18:04.399 So I was about to say I love salmon, but 0:18:04.440 --> 0:18:07.040 then I realized that everyone loves I don't love salmon. 0:18:07.119 --> 0:18:09.320 I'm really yeah, no salmon here. I see, I'm not. 0:18:09.359 --> 0:18:12.000 I'm not even a fish guy, but I love salmon. 0:18:12.040 --> 0:18:15.879 And I always wonder about, um, you know, should I 0:18:15.920 --> 0:18:18.960 buy the farm stuff? Should I go? I feel like 0:18:19.000 --> 0:18:23.880 I'm splurging if I go for a freshwater uh salmon um? 0:18:24.080 --> 0:18:27.359 Is it as good? Sylvia? I know you're biased, but 0:18:27.359 --> 0:18:29.959 I'm gonna go and eat your product, and then I'm 0:18:29.960 --> 0:18:32.600 gonna come back and give my verdict. Is it does 0:18:32.640 --> 0:18:36.679 it taste as good as the wild stuff? It tastes. 0:18:36.920 --> 0:18:39.760 It depends on what how you define good. And what 0:18:39.840 --> 0:18:43.240 I mean by that is we have a slightly milder 0:18:43.359 --> 0:18:46.520 flavor than a wild caught salmon, which is what you're describing. 0:18:46.800 --> 0:18:48.840 But the majority of the salmon that we eat in 0:18:48.880 --> 0:18:53.159 this country is quite frankly um farms. You know of 0:18:53.160 --> 0:18:56.520 the salmon that's available in the US as farm salmon, 0:18:56.600 --> 0:19:00.240 and it's all imported until we build farm is like 0:19:00.280 --> 0:19:03.879 the one that we're currently operating in Indiana are constructing 0:19:03.880 --> 0:19:08.760 in Ohio. Your choices are imports, and so wild cod 0:19:08.880 --> 0:19:11.480 is seasonal. You know, there are quotas involved, but it's 0:19:11.560 --> 0:19:14.560 it does taste slightly different than a farm variety. I mean, 0:19:14.600 --> 0:19:16.960 I think I probably, now that I think about it, 0:19:16.960 --> 0:19:20.720 I tend to eat farmed salmon from Scotland. Farmed in 0:19:20.720 --> 0:19:24.000 in Scotland. If I'm Glenlocks, I think is what it's called. 0:19:24.359 --> 0:19:27.200 But I would much prefer to eat a salmon from 0:19:27.200 --> 0:19:30.520 the Great State of Ohio. Everything tastes better when it 0:19:30.560 --> 0:19:33.280 comes from Ohio. What do you feed them? Do you 0:19:33.280 --> 0:19:37.679 feed them corn? We feed them a very strict diet 0:19:37.800 --> 0:19:41.880 that's been constructed for their life stage, and we buy 0:19:41.880 --> 0:19:45.520 our feet, our salmon feed from the largest feed producers 0:19:45.520 --> 0:19:48.439 in the world, and they feed all farm salmon, but 0:19:48.760 --> 0:19:52.120 they've constructed a feed that is specific to the environment 0:19:52.160 --> 0:19:54.720 where we raise our salmon, which is under as I said, 0:19:54.760 --> 0:19:58.560 and there's a big tank farm um. And so you 0:19:58.560 --> 0:20:01.600 know salmon are curnivorous, so there's fish meal, fish oil, 0:20:02.040 --> 0:20:05.240 and a lot of protein which typically comes from soy 0:20:05.359 --> 0:20:10.320 in their feed formulation. So we've seen inflation, uh, Sylvia 0:20:10.440 --> 0:20:13.639 all over this economy. How has it affected your business? 0:20:14.720 --> 0:20:19.280 You know it's affected us because obviously feed prices are rising. Um, 0:20:19.359 --> 0:20:22.880 we've all seen what happened with agricultural commodities, soy being 0:20:23.440 --> 0:20:26.680 no different than any other agricultural commodity. So we've seen 0:20:26.720 --> 0:20:30.159 increases in feed pricing. But the I think one of 0:20:30.200 --> 0:20:33.520 the benefits of the way that we farm is we 0:20:33.600 --> 0:20:36.480 are not subject to a lot of the variability that 0:20:36.800 --> 0:20:42.200 say netpen farmers are subject to because we farm near consumption. 0:20:42.240 --> 0:20:45.359 So we don't have the inflation with air freight. So 0:20:45.440 --> 0:20:48.800 you're salmon, for example, from salmon is air freighted into 0:20:48.840 --> 0:20:51.480 the country, and we know that there's now limited capacity, 0:20:51.560 --> 0:20:55.080 fuel prices are increasing, etcetera. So UM, the way that 0:20:55.119 --> 0:20:58.119 we farm allows us to control those costs and actually 0:20:58.160 --> 0:21:01.639 produce close to consumption. So where we've seen inflation is 0:21:01.680 --> 0:21:06.600 primarily in feed. UM we're talking to Sylvia Wolf, I'll 0:21:06.640 --> 0:21:08.960 just bring anyone up to speed. Is just tuning in 0:21:08.960 --> 0:21:13.240 from Aqua Bounty technologies. They have genetically engineered salmon that 0:21:13.240 --> 0:21:16.200 they're going to be growing in Ohio and some other state. 0:21:16.680 --> 0:21:24.160 UM and you have tremendous experience in this UM industry. 0:21:24.280 --> 0:21:27.080 You've been at Sarah Lee and Pillsbury, You've been at 0:21:27.520 --> 0:21:31.280 UM Tyson Foods and a number of for example, the 0:21:31.359 --> 0:21:37.959 National Fisheries Institute where you're UH committee member. UM is 0:21:38.040 --> 0:21:42.640 this is Aqua Bounty like a big E. S G move. 0:21:42.880 --> 0:21:45.119 Are you doing kind of the right thing for the 0:21:45.160 --> 0:21:50.000 climate for the world at Aqua Bounty? We believe so, 0:21:50.400 --> 0:21:54.240 and and we think about it from two perspectives. Salmon 0:21:54.359 --> 0:21:58.960 is a very healthy, nutritious protein and providing that and 0:21:59.560 --> 0:22:03.200 to a road are part of our population and actually 0:22:03.240 --> 0:22:05.840 looking to feed the world globally, We're gonna need new 0:22:05.840 --> 0:22:09.480 protein sources. So we think that feeding the world is 0:22:09.560 --> 0:22:12.480 definitely something that we want to do, but we want 0:22:12.480 --> 0:22:14.960 to do it in a safe, secure, and sustainable way. 0:22:15.359 --> 0:22:17.520 So if you think about the way we farm, there's 0:22:17.560 --> 0:22:21.560 two aspects to our fish and the way that we farm. First, 0:22:21.880 --> 0:22:26.040 we recirculate the water um, so we think that we 0:22:26.160 --> 0:22:28.480 use you know, we're judicious about our use of a 0:22:28.600 --> 0:22:32.320 natural resource. And then our fish, the benefit of the 0:22:32.320 --> 0:22:36.359 genetic engineering is twofold. The first is that they grow 0:22:36.480 --> 0:22:39.000 faster than a conventional salm, and so we're able to 0:22:39.040 --> 0:22:42.880 put more throughput through the farm um with that, so 0:22:42.960 --> 0:22:46.159 for less resources in the same capital investment. But just 0:22:46.280 --> 0:22:50.439 as importantly, our fish are actually incredibly efficient in the 0:22:50.440 --> 0:22:53.520 way that they turn feed into biomass, so they actually 0:22:53.600 --> 0:22:56.280 require less than a pound of feed to put on 0:22:56.320 --> 0:22:59.719 a pound of weight. And that's another way of looking 0:22:59.800 --> 0:23:02.960 at how we use our natural resources. So we think 0:23:02.960 --> 0:23:06.160 that we're positioned very well for what's going on around 0:23:06.200 --> 0:23:09.119 me right now. And I was just thinking of over fishing, 0:23:09.160 --> 0:23:10.960 which is one of the biggest problems. I was throwing 0:23:10.960 --> 0:23:15.280 you an alley oop, you know, dunk it, Yes, okay, 0:23:15.359 --> 0:23:18.440 So we again you know, takes the pressure off the oceans, 0:23:18.920 --> 0:23:22.320 um net pen farming, you know, there's environmental impact with that. 0:23:22.680 --> 0:23:26.359 And then when you think about wild salmon, that's really 0:23:26.359 --> 0:23:30.240 about quotas and protecting wild coop populations and so land 0:23:30.240 --> 0:23:33.240 based farming we believe is going to be a significant 0:23:33.320 --> 0:23:37.040