Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside
Speaker 1: my co host Matt Miller. Every business day we bring
Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
Speaker 1: with essential market moving news. Find the Bloomberg Markets podcast
Speaker 1: called Apple Podcasts or wherever you listen to podcasts, and
Speaker 1: at Bloomberg dot com slash podcast. Danielle di Martino booth,
Speaker 1: let's get right to her. She's a CEO and chief
Speaker 1: strategist for Quill Intelligence, also a former advisor at the
Speaker 1: Federal Reserve Bank of Dallas. So, Danielle, thanks so much
Speaker 1: for taking the time. I guess where I want to
Speaker 1: start with is you know, during the press conference from
Speaker 1: FED Chairman Pal there's obviously questions about potentially a recession
Speaker 1: slowing growth, and he took a pretty aggressive tact and
Speaker 1: pushing back on that narrative. What's your take? What do
Speaker 1: you think he's trying to do well. I think he's
Speaker 1: trying to do his job, which is to use FED
Speaker 1: speak to its fullest and to induce confidence in the
Speaker 1: markets and induced confidence among those who are listening to him,
Speaker 1: to say we've got this under control. We're going to
Speaker 1: be able to to navigate a soft landing. And of
Speaker 1: course today we've heard that from from Governor Waller. We've
Speaker 1: heard the month July in terms of when they're looking
Speaker 1: at starting that balance sheet runoff. That would explain why
Speaker 1: they used the phrase coming months. So clearly they think
Speaker 1: that this spate of inflation that's induced by Russia invading
Speaker 1: Ukraine is going to be short lived and possibly be
Speaker 1: coming off the time we get towards the end of summer.
Speaker 1: Was he doing his job last year, Danielle, Oh gosh, no, heavens, no, no, no, no, no.
Speaker 1: You just saw first time homebuyers decreased. The National Association
Speaker 1: of Realtors at Laurence June said that that a payment
Speaker 1: in February was higher than it was a year earlier.
Speaker 1: At a minimum, you could say, you know what, we'll
Speaker 1: hold off on treasury run off, but we'll go ahead
Speaker 1: and be responsible to homebuyers who cannot buy homes because
Speaker 1: they're too expensive. Will be respond will and let those
Speaker 1: mortgage backs start to run off by themselves before treasuries. So, Daniel,
Speaker 1: what do you take of this new wrinkle. I guess
Speaker 1: it's just from an economic perspective into the equation, which
Speaker 1: is a hot shooting war in Eastern Europe. If I'm
Speaker 1: the Federal Reserve, I've got inflation, I've got slowing growth.
Speaker 1: Now I've got this geopolitical risk at how do you
Speaker 1: think that factors into the Fed's calculus. Well, it should
Speaker 1: obviously be a factor, right, This is a this is
Speaker 1: a new idiosyncrasy that's going to affect confidence. Bank of
Speaker 1: America has a their own proprietary confidence gauge. It fell
Speaker 1: to the lowest in history in the week through March thirteenth.
Speaker 1: So there's clearly a dent being made. And people are
Speaker 1: watching the headlines and they're disturbing. I get that. But
Speaker 1: the primary source of economic new news out of this
Speaker 1: situation is that it's pushing inflation higher. And I think
Speaker 1: that that's a greater offset and that they should look
Speaker 1: at it through that lens. Because of the high starting
Speaker 1: point of gasoline prices rising year over year in Intebrary
Speaker 1: CPI yeah, if it's just filled up on the way
Speaker 1: to work today for well over five dollars a gallon,
Speaker 1: which I guess I should consider myself lucky. Because the
Speaker 1: Germans are hoping for legislation that lowers their gas bills
Speaker 1: to eight dollars a gallon. They feel like that should Well,
Speaker 1: I get concerned when we start throwing around price fixing
Speaker 1: because central bankers all talk to each other, So I
Speaker 1: don't don't want anybody getting any ideas here in the
Speaker 1: United States about price fixing. You can look back and
Speaker 1: google Nixon and price fixing and see how that ended. No,
Speaker 1: agree one percent. The thing is the price is already
Speaker 1: fixed in Germany because like cent of what you pay
Speaker 1: at the pump is taxes, you know, so all they
Speaker 1: need to do is reduce some of that burden. And
Speaker 1: I'm sure we have a similar, uh not nearly as bad,
Speaker 1: but um similar tax burden here. What I was going
Speaker 1: to ask about is um the growth, the slowing growth?
Speaker 1: I guess is it the bigger concern. And it looks
Speaker 1: like when you have a Moody shock, which we have had,
Speaker 1: or when you have the fed um starting to raise rates,
Speaker 1: which we have, or when you have yield curves invert,
Speaker 1: which we saw yesterday. Um, these things all tend to
Speaker 1: lead to recessions. Not necessarily you're gonna have a recession
Speaker 1: after that, but you know, all three of them at once.
Speaker 1: Do we have a recession next year. I'm not so sure.
Speaker 1: My good friend Peter Jucchini said this morning that his
Speaker 1: base cases is a recession in two based purely on
Speaker 1: what he seen in the rapidity of the cycle compression.
Speaker 1: We we got accustomed to ten years of expansion, and
Speaker 1: now we're talking about things happening inside of a two
Speaker 1: to three year vacuum. So there's no reason to go
Speaker 1: by the old playbook that suggests that once we see
Speaker 1: yield curves flirting with inversion, that it shouldn't be a
Speaker 1: faster runway between that moment and when we go into
Speaker 1: an actual contraction. And again, this is a byproduct of
Speaker 1: the Fed waiting too long last year to take the
Speaker 1: opportunity of beginning to normalize. Then were you surprised at all,
Speaker 1: at Danielle, that they did not raised by fifty basis
Speaker 1: points this week. I was not surprised at all that
Speaker 1: that did not surprise me in the least. I was
Speaker 1: shocked that they said in coming months about the balance sheet.
Speaker 1: And I'm even more shocked because now that we have
Speaker 1: Waller out on the wires, you know what was what's
Speaker 1: being contemplated among those on the Federal Open Market Committee
Speaker 1: and that right now appears to be July. So I
Speaker 1: was expecting there to there to be an indication that
Speaker 1: the balance sheet run up would start in May. And
Speaker 1: even is it going to be eighty billion dollars a
Speaker 1: month or a hundred billion dollars a month. Lorie Logan
Speaker 1: of the New York Fed Markets Desk and John Williams,
Speaker 1: the President of the New York Fits, they've been fairly
Speaker 1: explicit in terms of where they saw that balance sheet
Speaker 1: run up beginning, at what levels, and how aggressively they
Speaker 1: would they would have it run, which would be more
Speaker 1: aggressively than the last time they attempted this. And yet
Speaker 1: they appeared to be extremely hesitant on this tack. And
Speaker 1: that was what surprised me the most. Okay, Daniel D.
Speaker 1: Martino Booth, we knew we'd get the clean skinny on
Speaker 1: what's going on with our federal reserve. Daniel D. Martino Booth,
Speaker 1: CEO and chief strategist A Quill Intelligence still concerned that
Speaker 1: the photo Reserve is behind the curve here. Yeah, and
Speaker 1: and the risk is that they get a little too
Speaker 1: aggressive to try and catch up, and and that's what
Speaker 1: could push you into It's unlikely they'll do that with
Speaker 1: the balance sheet, right, I mean, remember when they wanted
Speaker 1: to reduce the four trillion dollar balance sheet, which was
Speaker 1: already i poppingly large. Um, just a couple of years later,
Speaker 1: we're looking at nine trillions son nine times nine times
Speaker 1: for those that get the reference. We've got some ECO
Speaker 1: data out. Got the Leading Economic Indicator came out today
Speaker 1: pretty decent. I'm gonna say I'm not you know, I
Speaker 1: think our economy hanging in there, but let's get the details.
Speaker 1: Automan Azoldrum, Senior director of Economic Research at the conference Board.
Speaker 1: Ottoman talked to us about the Leading Economic Indicator data
Speaker 1: that just came out this morning. Yeah, good morning to
Speaker 1: be here. So, yes, the Leading Economic Index came out
Speaker 1: this morning. It increased about zero point three percent in February.
Speaker 1: That's reversing the revised decline from January, and overall, the
Speaker 1: Leading Economic Index remains on a moderately rising trajectory, pointing
Speaker 1: to continuing expansion for the US economy. So, after after
Speaker 1: weathering the omicrond wave in the beginning of the year,
Speaker 1: the US economy UM is in fairly good shape in
Speaker 1: the first quarter. But what can you see about UM?
Speaker 1: What's to come? Right? So there are some clouds in
Speaker 1: the horizon UM. And we've been uh, you know, looking
Speaker 1: at what inflation means for household budgets, UH, consumer spending.
Speaker 1: We look at the volatility in stock prices UM and
Speaker 1: one of the negative contributors this month was a building
Speaker 1: permit spell and the housing construction sector is likely to
Speaker 1: be negatively affected, you know, as the Fed continues to
Speaker 1: raise rates for the rest of the year. So you know,
Speaker 1: there are some clouds that will slow growth UM. And
Speaker 1: we've seen that in you know, some of the UH
Speaker 1: growth numbers getting revised for two UM. And unfortunately, on
Speaker 1: top of that, we have the Russian invasion of Ukraine
Speaker 1: that is creating made a major shock for the global economy. UH.
Speaker 1: So it's it could also lower the trajectory and lower
Speaker 1: growth rates further for two It's kind of where I
Speaker 1: wanted to go Outoman. I think some folks are saying, hey,
Speaker 1: when you put these rapid and significant rate increases along
Speaker 1: with a shooting war in Europe, that might be enough
Speaker 1: to push you know, some economies into a recession. Is
Speaker 1: the R word in your vocabulary for the next year
Speaker 1: or two? Uh not yet. So you know, the leading
Speaker 1: economic indey is a gauge of recessions. It's used for
Speaker 1: predicting recessions, and so far it hasn't been signaling anything
Speaker 1: like that. And looking ahead, we have to watch that
Speaker 1: very carefully. But the you know, underlying trend trajectory for
Speaker 1: the US economy has been fairly healthy. UM and um.
Speaker 1: You know, even though revising growth rates down to around
Speaker 1: three percent for UM, we we are still looking at
Speaker 1: pretty robust above average growth rates in terms of what
Speaker 1: the Fed does here. Um. Do you get the idea
Speaker 1: that this is hurting the leading indicators? Uh, it does
Speaker 1: create a potential downward risk for many leading indicators as
Speaker 1: well as for the economy. Of course, that's what we're
Speaker 1: trying to measure here. UM. So as those rates start
Speaker 1: to go up to find inflation, we're going to begin
Speaker 1: to see the impact starting out, you know, spilling over
Speaker 1: into mortgage rates and credit card rates, and those are
Speaker 1: the channels or mechanisms that work to slow the economy
Speaker 1: and attempt to control inflation. So, UM, we will begin
Speaker 1: to see some of that. But compared to the negative
Speaker 1: effect of uncontrolled inflation on consumers purchasing power, it's uh,
Speaker 1: it's not de preferable. All right, olduman, thank you so
Speaker 1: much for joining us and breaking down some of this
Speaker 1: leading economic indicator data. Otoman also Drum, Senior director of
Speaker 1: Economic Research at the Conference Board. All Right, Matt, here
Speaker 1: you go. You go get your bachelor's of Science and
Speaker 1: mechanical engineering from Berkeley, and then you cross the metaphorical
Speaker 1: street and get your pH d in material science and
Speaker 1: engineering from Stanford. Then what do you do? You go
Speaker 1: to Wall Street. That's what our next guested Interesting Play
Speaker 1: Anchor Crawford, Executive vice president portfolio manager, Fred Alger Asset
Speaker 1: Management Anchored. Thanks so much for joining us. You appreciate
Speaker 1: you taking the time. All right, you've got all these
Speaker 1: engineering degrees. How do you apply that stuff to the markets? Actually,
Speaker 1: I don't. Parents are saying, Oh my goodness, I know
Speaker 1: that is actually what they said. But um, you know,
Speaker 1: I think with engineering, all it is is pattern recognition.
Speaker 1: At the end of the day, what we look for,
Speaker 1: even as investors, is different patterns in the market, different
Speaker 1: patterns and companies and stocks in the numbers. And so
Speaker 1: you really take that learning as an engineer and I'm
Speaker 1: able to apply it to the markets. What are you
Speaker 1: seeing in those markets? Right now. What are the patterns
Speaker 1: you're seeing, because boy, you've got a lot of cross
Speaker 1: currents on there that you have a lot of bricks
Speaker 1: in that wall of worry. Now you get to add
Speaker 1: geopolitical risks. How are you viewing the market right now?
Speaker 1: You know it is the market is actually quite fascinating
Speaker 1: right now in um. You know, we the end of
Speaker 1: COVID and the return of normalism and a return to
Speaker 1: normalization of COVID, at least in the US. We have
Speaker 1: this geopolitical risk that we haven't experienced in three generations. UM.
Speaker 1: We have reverberations of all of these effects on the
Speaker 1: supply chains causing inflation readings that we haven't seen in
Speaker 1: four decades. UM. So there's a lot of different cross currents,
Speaker 1: as you mentioned, in the market right now. However, what
Speaker 1: we're focused on is really understanding what's getting baked in
Speaker 1: and so we are very deep in the numbers for
Speaker 1: each of the businesses that we own, and we we
Speaker 1: probability weight the the effect of our recession for example,
Speaker 1: and UM, well sorry, what was that? What what what's
Speaker 1: your probability of recession? Oh, we don't, we don't. We
Speaker 1: just probability weighted, so we say, if there's a five
Speaker 1: percent probability of a recession, this is where we think
Speaker 1: the bare case will be, or the numbers should go
Speaker 1: to if there's um probability of a recession, and the
Speaker 1: numbers will toggle down right, So we basically can tuggle
Speaker 1: the probability of recession up and down in the numbers.
Speaker 1: And what we found is that really there's some of
Speaker 1: these businesses that we're looking at, especially in the growth sector,
Speaker 1: that have gotten completely sold off over the last three months,
Speaker 1: are trading at free cash flow yields even in a
Speaker 1: more recessionary case, that are quite compelling, especially relative to
Speaker 1: the cash flow yield of the S and P. So
Speaker 1: it is interesting because the market is has very quickly
Speaker 1: baked in a much higher probability of a recessionary case
Speaker 1: scenario because of all these cross currents that we had
Speaker 1: talked about. So, which companies do you think anchor do
Speaker 1: well and even in a recession case, not saying that
Speaker 1: we're having a recession, but if we do, where do
Speaker 1: you want to be? So look, I think I think
Speaker 1: the recession is going to at least in the US
Speaker 1: if if we do have a recession, which I am.
Speaker 1: I am very much on a fense about if we
Speaker 1: see a recession in the US. In part, they because
Speaker 1: the consumer is so incredibly resilient, they have two point
Speaker 1: five trillion dollars of express savings that can be used
Speaker 1: to thwart off the effects of a recession. UM they
Speaker 1: have under leveraged balance sheets still that they can the
Speaker 1: consumer can still lever up. However, if UM, you know,
Speaker 1: there are several very interesting themes in the market right
Speaker 1: now that have duration and have growth aspects that that
Speaker 1: are almost uh not related to the economy and so
Speaker 1: in in big tech, if you look at a company
Speaker 1: like Microsoft, UM you know of that business is they
Speaker 1: have visibility over the next year into the into the revenues,
Speaker 1: and so you know, even in a recessionary case scenario,
Speaker 1: the number is on the on the top and the
Speaker 1: bottom line. I am not going to flex up and
Speaker 1: down all that much, in part because they're really the
Speaker 1: hub of this digital transformation and industrial revolution that we
Speaker 1: are experiencing right now. UM. On the other hand, if
Speaker 1: you look at consumer, we believe that the higher end
Speaker 1: consumer will be also quite resilient and they have a
Speaker 1: great wealth effect that they've experienced from both the market,
Speaker 1: home prices both going up over the last few years,
Speaker 1: and their businesses like Veil Mountain resorts that are trading
Speaker 1: at five and six percent free cash full yields as
Speaker 1: you look out a couple of years, and we think
Speaker 1: that they will be relatively resilient through through UM a
Speaker 1: slowdown in the economy. Anchor energy has had a nice
Speaker 1: run here got oil north of a hundred dollars a
Speaker 1: barrel w T I has that trade played out? Has
Speaker 1: which trade played out? Kind of the energy trade just
Speaker 1: kind of being long energy? You know what? I think?
Speaker 1: I think we're not going back to energy and stock
Speaker 1: prices where they were at thirty dollars of barrel um
Speaker 1: in part because of like people are realizing that the
Speaker 1: there's this very strategic aspect to oil and UM. But
Speaker 1: has it played out? I think I think it has
Speaker 1: and in part the global economies will start to slow
Speaker 1: UM and demand for for oil will will decline and
Speaker 1: so UM. You know, I do I do think that
Speaker 1: it has mostly played out. That said, I do think
Speaker 1: that oil stays higher for longer UM and maybe not
Speaker 1: at one forty where it got to at its peak,
Speaker 1: but could it could it stay at eighty bucks for
Speaker 1: a long time it could. All right, uncle, thank you
Speaker 1: so much for joining us. Really appreciate you taking the time.
Speaker 1: And Court Crawford, e v P and portfolio manager for
Speaker 1: Fred Alger Management. Let's talk space. Let's talk satellites. I
Speaker 1: mean you can see basically what the satellites we have
Speaker 1: in the air these days. You can see just about anything.
Speaker 1: You can get a picture of just about anything. Peter Platts,
Speaker 1: or CEO of Spire, joins us. Spire is a publicly
Speaker 1: traded company went public via a spack it looks like
Speaker 1: back in UM. Yeah, they offered twenty three million is
Speaker 1: at ten dollars via my good friends of credits. Sweet.
Speaker 1: All right, Peter, talk to us about Spire. Give us
Speaker 1: the thirty second elevator pitch. What inspire? What are you
Speaker 1: guys up to these days? Absolutely appitude. We are a
Speaker 1: data and analytics company and we're leveraging space to solve
Speaker 1: business and e s G challenges for companies, countries and
Speaker 1: communities all across the world. We are We designed and
Speaker 1: launched and owned and operate the world's largest radio frequency
Speaker 1: based UM satellite constellation to observe the Earth. You know,
Speaker 1: we track some seventeen trillion dollars of global trade, the
Speaker 1: two trillion dollar aviation industry, and the weather all across
Speaker 1: the globe, which you also predict up to ten days out. Um.
Speaker 1: And as you as well know that whether it is
Speaker 1: impacting you know, at least twenty five trillion of global
Speaker 1: GDP in with climate change that is just getting more extreme,
Speaker 1: you know, almost every single week. I want to say, um,
Speaker 1: we serve do you watch this war? Yes, we do, UM.
Speaker 1: And you know it is with data and insights from
Speaker 1: space that the truth and transparency can be shed on
Speaker 1: on such a global conflict. And I think we have
Speaker 1: been witnessing this really firsthand um as it relates to
Speaker 1: the situation in the Ukraine right now, UM, with with
Speaker 1: commercial companies like a spire really bringing that data and
Speaker 1: transparency to the world. UM. You know, our data has
Speaker 1: been used by humanitarian efforts, you know, by the media
Speaker 1: to bring that that knowledge and transparency as well as
Speaker 1: some other areas as I'm sure you can you can
Speaker 1: probably imagine and really being able to participate, um, helping
Speaker 1: people and humanity in you know, this particular situation as
Speaker 1: a European is uh, like I'm I'm from Austria is
Speaker 1: something that is very very meaningful to me personally, so Peter.
Speaker 1: The supply chain, global supply chains, but a big, big
Speaker 1: issue for the world's economies. It's a global story. People
Speaker 1: are always trying to figure out where are the ships,
Speaker 1: where the trucks, where the trains? Um, how have you
Speaker 1: kind of taken a look at that side of the business.
Speaker 1: So supply chain is a is a very very nice
Speaker 1: industry for us UM from a customer perspective. UM we
Speaker 1: track all of the world ships, where they are, where
Speaker 1: they're going, what they're doing, how fast they are, where
Speaker 1: they will arrive, why they will arrive, as well as
Speaker 1: the planes. And then as you imagine, once you are
Speaker 1: on land and transportation happens in trucks, then whether it
Speaker 1: has a massive impact on on potential disruptions there and
Speaker 1: so everything from uh you know, the blocking of the
Speaker 1: Suez Canal and the and the ripple effects all across
Speaker 1: the world on the ports um to you know, just
Speaker 1: today we put out a little story about the shutting
Speaker 1: down of of Shenzen. You know, we have been able
Speaker 1: to to monitor those activities and then help our customers,
Speaker 1: uh preempt them and know what to do based on
Speaker 1: what is happening and how they can get a bit
Speaker 1: of a leg up in their own supply chain management,
Speaker 1: and then their understanding of what is happening to their
Speaker 1: own supply chain based on the data and analytics that
Speaker 1: we can provide them. In terms of UM, your company,
Speaker 1: your stock has come down pretty substantially over the last
Speaker 1: I guess six months. What's going on there? You know, honestly,
Speaker 1: if if if I could predict the understand the market
Speaker 1: with great certainty, I'll probably spent more time in Vegas
Speaker 1: and rather than helping our customers. But I think I
Speaker 1: think there's there's probably a number of elements. You know.
Speaker 1: One of them is certainly that we are in a
Speaker 1: in a very very risk off environment. I spent I
Speaker 1: spent ten years and LASS so there's a quantitative investment
Speaker 1: manager UMH in longer term trading. And certainly when you
Speaker 1: have situations like uh a geopolitical crisis in Europe, when
Speaker 1: you have a situation like a pandemic UM but then
Speaker 1: at risk of indust rates rising, UM, you know, you
Speaker 1: have a you have a very risk off environment that
Speaker 1: has been you know, very negative for high growth companies UM.
Speaker 1: I think additionally you know, the the products that we
Speaker 1: have serve industries that are vast and large, but they're
Speaker 1: not you know, top of mind for people. I mean
Speaker 1: you started off by talking about the pictures that you
Speaker 1: can get from satellites, but the data that we do
Speaker 1: that cover, for example, you know, four hundred billion dollar
Speaker 1: fishing industry, that's just not as much top of mind,
Speaker 1: and I think I need to do a better job
Speaker 1: in bringing that to life with people. Well, and what's
Speaker 1: the growth outlook, I mean, what kind of revenues are
Speaker 1: you expecting, say this year, and and what the margins
Speaker 1: look like. Yes, so we you know, we had a
Speaker 1: very very strong finish to the year. We exceeded guidance
Speaker 1: both on the UH hop line and bottom line elements
Speaker 1: a region, the very top of it UM fourth quote
Speaker 1: of revenue was fifteen million, up a hundred and six
Speaker 1: percent year of a year UM. We reached seventy one
Speaker 1: million almost of annually recurring revenue, which was in ninety
Speaker 1: six percent year of a year increase. UM guidance for
Speaker 1: this year on the revenue side is eighty five to
Speaker 1: ninety million of revenue, which is a year of a
Speaker 1: year growth rate of over a hundred percent at the midpoint,
Speaker 1: so growth is really really phenomenal. Um, we see the
Speaker 1: demand in every single one off our segments. We see
Speaker 1: it in the h the maritime, the aviation, the weather,
Speaker 1: as well as the space services segment, and we continue
Speaker 1: to drive, you know, very very aggressively to profitability despite
Speaker 1: that high growth rate. He Peter, thanks so much for
Speaker 1: joining us. Really interesting company. Peter Platts or CEO of
Speaker 1: Spire again that trades on the New York Sock Exchange
Speaker 1: sp i R. Thanks for listening to the bloom Markets podcast.
Speaker 1: You can subscribe and listen to interviews with Apple Podcasts
Speaker 1: or whatever podcast platform you prefer. I'm Matt Miller. I'm
Speaker 1: on Twitter at Matt Miller and on Fall Sweeney I'm
Speaker 1: on Twitter at pt Sweeney. Before the podcast. You can
Speaker 1: always catch us worldwide at Bloomberg Radio.