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: on Apple Podcasts or wherever you listen to podcasts, and
Speaker 1: at Bloomberg dot com slash podcast. Let's talk about this
Speaker 1: wall of worry. We've got interest rates rising, we've got inflation,
Speaker 1: we've got the economy that is slowing. What is a
Speaker 1: money manager to do? What is a portfolio manager to do?
Speaker 1: Let's check in with Tom Mantion, He's managing director for
Speaker 1: UBS Wealth Management. Tom, what are you telling your clients
Speaker 1: here given some of those challenges, those headwinds, including geopolitical
Speaker 1: issues that are facing investors these days, other than going
Speaker 1: to get a steak at Keen's. Yeah, absolutely so. Um, Look,
Speaker 1: the markets probably overreacting to two tensions in in Russian Ukraine.
Speaker 1: It's apt to do that. I think you need to
Speaker 1: look past this where we're gonna be in two years,
Speaker 1: five years, seven years. Um. If people need to do
Speaker 1: something and feel like they have to take action, I'm
Speaker 1: not sure safe Haven treasuries are the place to be
Speaker 1: right now on the front end of the FED tightening cycle.
Speaker 1: So maybe commodity exposure energy might be a better way
Speaker 1: to hedge anybody's fears of escalating tensions in Russia. I
Speaker 1: wonder about your thoughts on energy, because you know, this
Speaker 1: run up hasn't been entirely driven by Russia Ukraine. We
Speaker 1: were already on the way up. And um, you know,
Speaker 1: assuming that Putin just takes a couple of states and
Speaker 1: people get kind of angry but do nothing about it,
Speaker 1: what happens after everything calms down? Is there still support
Speaker 1: for oil at nine dollars a barrel? Well, clearly the
Speaker 1: global economy is growing, and as the pandemic receives and
Speaker 1: things open up and people start moving around again, Yeah,
Speaker 1: there's gonna be more demand for for energy, so there
Speaker 1: could be support for a higher price of oil for
Speaker 1: for longer. I think the risk here is that that
Speaker 1: you know, you get to a hundred and fifty barrel
Speaker 1: oil and that that will take a chunk out of
Speaker 1: global demand. So, um, that is the tail risk in
Speaker 1: this scenario. I would say, Tom, what's the biggest question?
Speaker 1: They're the most common question, the most common concern you
Speaker 1: hear from your clients. I think I think you know,
Speaker 1: before the Ukraine, Russia, it's the FED, and the said
Speaker 1: has been been a hundred percent the top of everybody's mind.
Speaker 1: What are they gonna do as a fifty basis points
Speaker 1: is if four hikes is six hykes, is it more
Speaker 1: than six hykes? I think the market is probably overreacted
Speaker 1: to that as well. I think, Um, you know, the
Speaker 1: set has consistently been slow and steady, and I would
Speaker 1: not anticipate anything different than that. So I would expect
Speaker 1: basis point hike in March, and that's what we've been
Speaker 1: telling our our clients, and I think that it will
Speaker 1: continue slow and steady from there. You know, we're continually
Speaker 1: continuously hearing um worries about earnings and analysts kind of
Speaker 1: downgrading their outlook. UM. The quants over at JP Morgan say, um,
Speaker 1: you know this glut of earnings gloom signals trouble for
Speaker 1: the markets. At the same time, JP Morgan's UH chief
Speaker 1: their strategists, Mislav Matchka, says, UM, stock pessimism is in vogue,
Speaker 1: but it's wrong. How do you how do you look
Speaker 1: at US earnings? The US corporate picture and how that's
Speaker 1: going to affect stocks. I think we're I think we're
Speaker 1: still in a in a growth mode for for US
Speaker 1: corporate earnings for sure. Um, you had to report this morning,
Speaker 1: it was quite good. Um. I think the US economy
Speaker 1: continues to show strengths in the stace of of inflationary pressures,
Speaker 1: and quite frankly, I think you know, inflation will begin
Speaker 1: to subside, you know, for a host of reasons. Right,
Speaker 1: cons get easier. Uh, that's just maths. But but more
Speaker 1: importantly is people spend on services and not goods. That'll
Speaker 1: that'll help um, some of that inflation data as well.
Speaker 1: So you know, I'm I'm kind of unconcerned. So I'm
Speaker 1: on the I'm on the strategist side. I think I'm
Speaker 1: constructive of bullish on US equities through the year. So
Speaker 1: I would I would tell people, you know, take advantage
Speaker 1: of of things you like here at this market right
Speaker 1: now and possibly get some capital at work. Yeah, it's interesting,
Speaker 1: you know, the Federal Reserve. We're looking at the w
Speaker 1: I r P function on the Bloomberg terminals suggesting that
Speaker 1: the market's discounting seven rate hikes in County. Is that
Speaker 1: really bring to the for the risk that this fed
Speaker 1: overreacts and maybe does push this economy into recession or
Speaker 1: at least you know reset. I think it's probably more
Speaker 1: indicative of the market overreacting to the said than the
Speaker 1: other way around. Uh, you know it would It would
Speaker 1: totally surprised me if we saw seven hikes um uh
Speaker 1: in two Uh that that seems a little aggressive, especially
Speaker 1: given the backdrop. Right. Um, you know that if if
Speaker 1: we do get escalating tensions of oil prices, do get
Speaker 1: over a hundred bucks at barrel, that's gonna cool demand.
Speaker 1: It's gonna cool inflation. It's gonna cool demand for goods
Speaker 1: and services. So yeah, I would go, I would I
Speaker 1: would play the flip side of that coin for sure.
Speaker 1: All Right, definitely over reacted here. Interesting. All right, We'll
Speaker 1: see how this plays out. Tom, Thanks much for joining us. Uh.
Speaker 1: I really appreciate getting your thoughts. Tom Manton, Managing director
Speaker 1: for UBS Wealth Management, based up in Stanford, Connecticut. Let's
Speaker 1: get to our next get straight away. R J. Gallo,
Speaker 1: He's no stranger here, senior portfolio manager at Federator Herme's
Speaker 1: r J. What are you telling your fixed income portfolio
Speaker 1: managers at Federator Hermes. Today we're still staying short. Um,
Speaker 1: the Russia Ukraine developments have unfolded in a manner that
Speaker 1: you can't say it's too surprising, but um, it's it's
Speaker 1: hard to argue that it's over. I think the key
Speaker 1: right now is further escalation in Russia Ukraine grabs the
Speaker 1: markets by the collar and pulls them away from the
Speaker 1: inflation movie that we've been watching for obsessively for a
Speaker 1: while now. But once we get past the most dramatic
Speaker 1: parts of Russia Ukraine, we still have to focus on inflation.
Speaker 1: Uh seven percent is too high. If there are many
Speaker 1: paths that the Ukraine Russia situation can follow, but many
Speaker 1: of them involved aggravating the inflation problem. So inflation is
Speaker 1: still a major issue. As a result, on net we
Speaker 1: have we're a little less short than we worst day
Speaker 1: two weeks ago, but we still are maturely short in
Speaker 1: our duration call across the fixed and confranchise of Federated Herms.
Speaker 1: So where do you go to hide from Ation's what's
Speaker 1: the safest place? Brond managers hate inflation right and arose
Speaker 1: the the value of your fixed coupon. Certainly, consumers are
Speaker 1: worried about it. Ha's become a political issue. Within a
Speaker 1: fixed income portfolio. The ways to play defense floating rate,
Speaker 1: take credit risk, reduced duration. UH. Last year we were
Speaker 1: heavily overweight TIPS and our total return bond fund that
Speaker 1: was a huge wind. Tips this year haven't been quite
Speaker 1: as strong because it was basically pricing in the inflation surprise.
Speaker 1: You want to get in before the inflation surprises in
Speaker 1: the price. And then the feed had to react by
Speaker 1: their massively hawk ish one eighty, which drives really yields
Speaker 1: up and is now depressing TIPS returns on a year
Speaker 1: today basis the Tips, the Bloomberg Tips index is down
Speaker 1: about three and a half percent. We have a Bloomberg
Speaker 1: Tips index. Yeah, wow, yeah for sure. Why not? Why
Speaker 1: you t t R you you if you have a
Speaker 1: terminal in front of you, all right, So it's interesting
Speaker 1: here are j You know. One of the concerns I
Speaker 1: have is that the FED is going to blow this,
Speaker 1: that they're gonna be too aggressive. Maybe do fifty basis
Speaker 1: points in March and then do maybe total seven or
Speaker 1: so I think the market that could be a problem
Speaker 1: for the market. Are you concerned about the Fed maybe
Speaker 1: overstepping their bounds. Um, I'm concerned that it could happen,
Speaker 1: but I do think I'm often almost a little surprised
Speaker 1: if you talk about this in the markets so that much.
Speaker 1: If you desktop your macroeconomics from grad school, Um, you
Speaker 1: know years ago. For a lot of people, maybe more.
Speaker 1: The role of expectations is fundamental. Uh, And the Fed
Speaker 1: now has to talk tough. They need to fuel expectations
Speaker 1: that they will maybe go too far. Why because that
Speaker 1: helps them from not having to go too far. If
Speaker 1: people are concerned that the Fed is going to tighten
Speaker 1: seven times and slow the economy and slow stocks, what
Speaker 1: happens financial conditions tighten. That's what the FED wants. It
Speaker 1: could actually reduce the terminal FED funds rate. If the
Speaker 1: markets believe the Fed is going to be tough on inflation,
Speaker 1: it is in that's their objective. Now, you don't hear
Speaker 1: Powell talking about it because he's not like he's only
Speaker 1: a ben burnankie. He's not a macroeconomist who's all about
Speaker 1: shaping expectations. But that's the script they're following. Now is
Speaker 1: the time to talk tough on inflation. Even Neil Kashkari
Speaker 1: is somewhat become more hawkish than he was, all right,
Speaker 1: I mean, how could you not. There's no other direction
Speaker 1: for him to go. Let's face it, that's right now.
Speaker 1: I'd argued today I was talking to our ahead of
Speaker 1: risk management. I said, the FED is not hawk is
Speaker 1: The FED is a hawk and they're they're talking like
Speaker 1: a hawk and they're hunting inflation and that serves their objective.
Speaker 1: It actually could reduce the level to which they have
Speaker 1: to hike rates if they weren't talking tough. Yeah. I
Speaker 1: don't know what the FED can do though. I think
Speaker 1: it's a supply chain issue primarily. But we'll see. R. J. Gallows,
Speaker 1: Senior portfolio manager for Federated Herme's you never see a
Speaker 1: mission undergrad. He's got an MP from Princeton. He's had
Speaker 1: a couple of economics. They're pretty good. They're pretty good schools.
Speaker 1: Matt and I love talking about the global supply chain
Speaker 1: challenges out there, from the ship stuck at sea to
Speaker 1: the ports overloaded and how it impacts different industries. Statement
Speaker 1: take a view of that from the world of the
Speaker 1: fashion industry, and we could do that with ronand Samuel
Speaker 1: CEO of corn It Digital is a publicly traded company
Speaker 1: on the NASTAC k r NT is a symbol Ronan.
Speaker 1: Thanks so much for joining us here. Just let's just
Speaker 1: start out and just refresh our memory. What do you
Speaker 1: guys do at Corner Digital. Yeah, first of all, it's
Speaker 1: great to be here with all of you. And what
Speaker 1: is Corny Digital is doing is actually comes forming the
Speaker 1: textile industry and the fashion industry to on demand, sustainable
Speaker 1: production and changing totally the supply chain of this industry. So, um,
Speaker 1: how are you doing that right now? As we run
Speaker 1: into these incredible supply chain walls and chip shortages. How
Speaker 1: much more difficult is it? So? As you know, um,
Speaker 1: the supply chain is broken, and specifically the supply chain
Speaker 1: for the fashion industries, who is totally broken. The industry
Speaker 1: used to produce in large quantities in China, in Bangladesh,
Speaker 1: shipping it overseas UH and planning everything eighteen months in entrance, um,
Speaker 1: and trying to focus what the consumer and people will
Speaker 1: consume in eighteen months from now, which is impossible in
Speaker 1: today worlds where everything is moving digital and the consumer
Speaker 1: would like to get things on demand and the generations
Speaker 1: that would like to be unique, it's almost impossible to focus,
Speaker 1: and what we see today is at thirty percent of
Speaker 1: the everything that being produced is actually being thrown away.
Speaker 1: This industry is the second most polluted industry and one
Speaker 1: of the main reasons over productions are being made in
Speaker 1: China and by Gladesh. What Comte is driving is the
Speaker 1: fully different supply chain. Actually, what we are enabling is
Speaker 1: the consumers to order what they want in e commerce
Speaker 1: in any marketplace, um any products they would like. The
Speaker 1: products exists, virtually does not exist, was not produced yet,
Speaker 1: and only one the consumer order the product. Only then
Speaker 1: it goes to production and being delivered to the consumer
Speaker 1: within forty eight hours to his house. So this is
Speaker 1: the entire system is actually creating the new operating system
Speaker 1: for the fashion industry. For the text that is so Ronnan.
Speaker 1: You know, for pretty much anywhere around the world, you
Speaker 1: look at a piece of clothing and you look at
Speaker 1: the tag and it is made in China. And for
Speaker 1: a lot of industries, you know, we've heard about the
Speaker 1: move to kind of onshore some production. Is that also
Speaker 1: an issue for the fashion industry If I look at
Speaker 1: the tagle actually made in the USA or made in
Speaker 1: Italy more going forward, do you think, yeah, it's actually
Speaker 1: what we see today is a move to on show
Speaker 1: and new show production. We see massively brands. Fashion brands
Speaker 1: cannot any more trust the supply chains are being produced
Speaker 1: in China, uh, and they're moving on shore. We see
Speaker 1: production moving into US definitely with the trends of selling
Speaker 1: through the e commerce, through the Yeah, digital commerce, Um,
Speaker 1: you have to change the supply chain, um. And digital
Speaker 1: commerce enabled the brand actually to provide endless amount of products,
Speaker 1: endless amount of design which you don't need to carry,
Speaker 1: they don't need to produce it in advance, and and
Speaker 1: by that enabling the consume to choose what they want
Speaker 1: when they want, and to produce exactly what the consumer
Speaker 1: needs without waste because being produced after the consumer place
Speaker 1: to order. Running, you're not just running cornet, I mean um,
Speaker 1: in terms of your your knowledge base, you also got
Speaker 1: your NBA Northwestern. Paul tells me it's one of the
Speaker 1: best business fouls in the world. And I just wonder
Speaker 1: about the considering the current news the headlines of Russia
Speaker 1: and Ukraine. UM, we know that the economy in that
Speaker 1: part of the world is incredibly poor. Are they active
Speaker 1: in the global supply chain? Does that you know I'm
Speaker 1: not asking if your specific business now has needs there,
Speaker 1: but how much of a wrench does that throw into
Speaker 1: manufacturing globally? So Russia is a big capital professhion um,
Speaker 1: but it's mainly for the local market. Um. So I
Speaker 1: do not foresee impact on the global fashion world due
Speaker 1: to this uh potential world that happening right now for
Speaker 1: but definitely going to be an impact for the local
Speaker 1: market in Russia. And Rade, Yeah, I figured, um, you know,
Speaker 1: there probably wasn't a huge impact on the global supply chain.
Speaker 1: But I thought, if we're going to ask anybody'll be
Speaker 1: let me ask this guy who went to the Kellogg
Speaker 1: School of Business, Absolutely Ronan, what what aircraft did you
Speaker 1: fly in the Israeli Air Force? Um My flew Apache helicopter.
Speaker 1: That could be that just gives them that your man
Speaker 1: card is automatically been gold plated. That is incredible. Um alright,
Speaker 1: So just getting back too quickly, Um, the business and
Speaker 1: the demand I wonder about from corn it Um, what
Speaker 1: kind of demand growth are you seeing as we come
Speaker 1: out of this pandemic? Yeah, so we just finish twenty
Speaker 1: one was the recording for us. Of course, we finished
Speaker 1: the year with more than sixty. Growth over years to
Speaker 1: four was very strong. Usually the peak season is in
Speaker 1: Q four where we saw many new customers entering and
Speaker 1: also our existing customers, some big brands of very fast.
Speaker 1: All right, and thank you so much for joining us.
Speaker 1: Running Samuel CEO of Corner Digital, talking about the apparel space.
Speaker 1: All right, let's switch the page here, talk a little
Speaker 1: bit of satellites. Uh. You know, I've been reading stories
Speaker 1: that there's a lot of satellites in the sky and
Speaker 1: the risk as they start crashing into each other. I'm
Speaker 1: not sure if that's a big issue, but let's talk
Speaker 1: satellites with Emiliano car Damon, CEO and founder of State Logic.
Speaker 1: That is a nastact traded stock s A t L.
Speaker 1: I think it was spack situation earlier in the year. Uh, Ameliana,
Speaker 1: thanks so much for joining us here. Love for it
Speaker 1: to take. Just give us a quick overview of satill Logic.
Speaker 1: What were you guys up to? Thanks for having great
Speaker 1: to be here. So we are. We're a satellite company.
Speaker 1: As you say, we build high resolutions imaging satellite or
Speaker 1: satellites basically take very detailed pictures often happening on Earth.
Speaker 1: We have a seven team around the planet. Today. We
Speaker 1: have the ability to image any point on the planet
Speaker 1: four times per day today and we're launching over two
Speaker 1: hundred satellite in the next few years to remap. It
Speaker 1: will give us the ability to remap the entire surface
Speaker 1: of the planet, every spur of the surface of Earth,
Speaker 1: every single day, so that we can deliver this data
Speaker 1: to prove decision making for governments and for every corporation
Speaker 1: or financial institutions and so on. What what's the story
Speaker 1: with the price? Because I see the stock up at
Speaker 1: twelve thirty three in the middle of January. Now you're
Speaker 1: down at five seventy nine. What happened there? Well, the
Speaker 1: market in general, I think have a lot of other
Speaker 1: visually where you know, we we came out, we started
Speaker 1: listening and bespact earlier this year after announcing the transaction
Speaker 1: with Liberty Strategic Capital to fully fund or business and uh,
Speaker 1: you know, more than looking at the day to day
Speaker 1: at the stock, they were looking down and going to execute.
Speaker 1: But we think, you know, the current prize the stock
Speaker 1: is significantly under that needs to We recently announced the
Speaker 1: UH stop UH repurchase program because we just think the
Speaker 1: you know, in time, Boue that's what we fund about representatility.
Speaker 1: But by the way, in terms of um what clients
Speaker 1: do with your data? Um who who? Who wants these
Speaker 1: pictures and what are they using them for? Today? The
Speaker 1: largest customers are governments around the world, so the US
Speaker 1: government and U S allies around the world that wants
Speaker 1: to see what's happening so defense and intelligence purposes. He
Speaker 1: received today on the East situation in Ukraine. Um or
Speaker 1: customers will use the data to see what's happening there
Speaker 1: every single day, several times per day. How close can
Speaker 1: you get? Is this like uh like adjacent Bourne situation
Speaker 1: where like the n s A can can watch me
Speaker 1: passing someone. Uh, you know the MicroTape in Washington Square Park. No,
Speaker 1: let's still on the movies, right. We get to around
Speaker 1: seventy cents of residues, which means, you know, each pixel
Speaker 1: in our image is around seventies tent years or you know,
Speaker 1: uh to see on the side. That basically means we
Speaker 1: can see small vehicles, we can see large vehicles, we
Speaker 1: can see movements, we can see the individual trees in
Speaker 1: a plentation for example, we can see dividual buildings or
Speaker 1: that sort of things. Like it doesn't get to the
Speaker 1: point where you can see, you know, read the license
Speaker 1: plate on a car. So Emiliana, I guess you know.
Speaker 1: Over the last couple of weeks, as we watched the newscast,
Speaker 1: we're seeing a lot of satellite imagery of military installations
Speaker 1: in Ukraine on the board and all that type of stuff.
Speaker 1: Is that something? Is that a part of the market,
Speaker 1: the military application that your company looks at. That has
Speaker 1: been the market for observation up until now, and we
Speaker 1: are changing that way because our satellites have a hundred
Speaker 1: times better unit economics. We can build a satellite or
Speaker 1: less than a million dollars, we can put them in
Speaker 1: more of it and they get to collect data continuously
Speaker 1: in the very entire resolution. Because of this hundred times
Speaker 1: that are un economics that when any other satellite company have.
Speaker 1: We are now in a position to change this and
Speaker 1: make it so that everybody can afford it. So every
Speaker 1: financial institution and insurance company, every agricultural company, we can
Speaker 1: all start affording now to get the state and that
Speaker 1: up until now only government. Right, So, if you're a
Speaker 1: small farmer and you want to see, you know, what's
Speaker 1: happening in your fields or what's happened with your supplied
Speaker 1: Now you can afford that you know the same way
Speaker 1: that he has gone on things, go and look at
Speaker 1: what's happening on the other side of all right, that's
Speaker 1: really interesting stuff at Miliano Cardamon, the EO and founder
Speaker 1: of a Sata Logic fascinating story company, just came public
Speaker 1: VS back. Thanks for listening to the Bloomberg 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 three. 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.