1 00:00:00,800 --> 00:00:04,040 Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside 2 00:00:04,040 --> 00:00:06,920 Speaker 1: my co host Matt Miller. Every business day we bring 3 00:00:06,960 --> 00:00:11,520 Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along 4 00:00:11,560 --> 00:00:15,600 Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast 5 00:00:15,600 --> 00:00:18,479 Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and 6 00:00:18,480 --> 00:00:22,960 Speaker 1: at Bloomberg dot com slash podcast. Major major rebound in 7 00:00:23,000 --> 00:00:25,000 Speaker 1: these markets. Whenever you think that they're down for a 8 00:00:25,000 --> 00:00:26,720 Speaker 1: little bit here, they just come bouncing back. It's the 9 00:00:26,760 --> 00:00:30,160 Speaker 1: whole by the dip mentality. Let's bring it a professional 10 00:00:30,200 --> 00:00:32,320 Speaker 1: to get a good view of what maybe we can 11 00:00:32,360 --> 00:00:35,720 Speaker 1: think about for the last few trading weeks of one 12 00:00:35,800 --> 00:00:38,000 Speaker 1: more importantly into next year. We do that with Brett Shouty, 13 00:00:38,080 --> 00:00:42,800 Speaker 1: chief investment strategist at Northwestern Mutual Wealth Management Company. So, Brett, 14 00:00:43,200 --> 00:00:45,720 Speaker 1: when we have sell off days and you hear from 15 00:00:45,800 --> 00:00:49,400 Speaker 1: your clients, do you tell them to just steady the 16 00:00:49,800 --> 00:00:52,720 Speaker 1: at the helm and keep looking forward and this is 17 00:00:52,800 --> 00:00:54,760 Speaker 1: market that will continue to move higher. How do you 18 00:00:54,760 --> 00:00:58,600 Speaker 1: think about this market as we head into Yeah, I 19 00:00:58,840 --> 00:01:00,440 Speaker 1: do think the market will continue to push higher in 20 00:01:00,440 --> 00:01:03,360 Speaker 1: two because the economy will continue to push higher. And 21 00:01:03,360 --> 00:01:05,480 Speaker 1: so if you think about the underlying fundamols these economy. 22 00:01:05,480 --> 00:01:08,040 Speaker 1: They still remain strong. Sure, there are some bottlenecks, there 23 00:01:08,040 --> 00:01:10,560 Speaker 1: are some oddities that have happened because of COVID, and 24 00:01:10,560 --> 00:01:12,880 Speaker 1: we can take you through those, But in general, we 25 00:01:12,959 --> 00:01:17,120 Speaker 1: think the economy will lurch back towards whatever normal. Maybe 26 00:01:18,959 --> 00:01:21,720 Speaker 1: if you think about that commentary, some of the oddities 27 00:01:21,720 --> 00:01:24,560 Speaker 1: that have occurred will continue to go back towards where 28 00:01:24,600 --> 00:01:27,479 Speaker 1: they were. So we've had this enormous amount of goods 29 00:01:27,480 --> 00:01:30,560 Speaker 1: demand that has really changed the trend from what it 30 00:01:30,640 --> 00:01:33,200 Speaker 1: was pre COVID. It was more towards the services. That 31 00:01:33,240 --> 00:01:36,360 Speaker 1: has caused the ports to be uh, you know, clogged 32 00:01:36,480 --> 00:01:39,520 Speaker 1: because goods rising in container ships services don't. But we 33 00:01:39,560 --> 00:01:42,039 Speaker 1: think as you move in two you're going to see 34 00:01:42,040 --> 00:01:45,160 Speaker 1: some of those historical trends returned towards normal or what 35 00:01:45,160 --> 00:01:47,440 Speaker 1: it was pre COVID. I think that's going to alleviate 36 00:01:47,440 --> 00:01:50,040 Speaker 1: from the inflation fears. I think the labor market is 37 00:01:50,040 --> 00:01:52,480 Speaker 1: going to heal because the oddities of the labor market 38 00:01:52,760 --> 00:01:55,800 Speaker 1: were caused by pandemic unemployment insurance, which is now we're off. 39 00:01:56,400 --> 00:01:58,440 Speaker 1: And I think as you have those things happen, you're 40 00:01:58,440 --> 00:02:01,040 Speaker 1: going to have a market that moves higher because the 41 00:02:01,080 --> 00:02:04,720 Speaker 1: economy was higher, but with different leadership. Well so those 42 00:02:04,960 --> 00:02:07,880 Speaker 1: which leadership caused audities in the market. Yeah. So I 43 00:02:08,160 --> 00:02:09,640 Speaker 1: think if you think of the past few years and 44 00:02:09,639 --> 00:02:11,560 Speaker 1: some of those oddities, I mean, the stay at home 45 00:02:11,600 --> 00:02:14,120 Speaker 1: trade has been in vogue, I think the world becomes 46 00:02:14,160 --> 00:02:18,400 Speaker 1: more back into public UM. You've had people been up hopes, dreams, 47 00:02:18,400 --> 00:02:20,840 Speaker 1: themes and memes because real rates have been so negative, 48 00:02:20,880 --> 00:02:23,680 Speaker 1: liquidity has been so large. UM liquidity will start to 49 00:02:23,760 --> 00:02:26,400 Speaker 1: drain up that from the system in and I think 50 00:02:26,440 --> 00:02:29,919 Speaker 1: people are going to focus on valuation more rather than games. 51 00:02:30,400 --> 00:02:32,359 Speaker 1: And I think that means things like small caps which 52 00:02:32,360 --> 00:02:35,640 Speaker 1: are cheap have a good backdrop value stocks and perhaps 53 00:02:35,639 --> 00:02:38,160 Speaker 1: even international stocks do better in twenty twenty two. I 54 00:02:38,200 --> 00:02:41,520 Speaker 1: like that hopes, dreams, themes, and memes and it's not 55 00:02:42,720 --> 00:02:44,440 Speaker 1: I should pause. You could add crypto to that too, 56 00:02:45,760 --> 00:02:48,960 Speaker 1: for sure. For sure crypto goes into that box. So, 57 00:02:49,160 --> 00:02:52,760 Speaker 1: but you think we're getting back to UM a more 58 00:02:52,800 --> 00:02:56,440 Speaker 1: normal market. I wonder what you think about the UM 59 00:02:56,480 --> 00:03:01,600 Speaker 1: active versus passive discussion, because we've had some really big 60 00:03:01,720 --> 00:03:04,440 Speaker 1: voices way in or going to a weigh and I'll 61 00:03:04,440 --> 00:03:07,399 Speaker 1: give you a little tease. Peter Lynch on a Bloomberg 62 00:03:07,480 --> 00:03:12,080 Speaker 1: radio program tonight is saying, Um, he thinks you're losing 63 00:03:12,080 --> 00:03:14,560 Speaker 1: out if you're going all in on passive. He says 64 00:03:14,600 --> 00:03:16,800 Speaker 1: he beat the market forever and he's got a bunch 65 00:03:16,800 --> 00:03:19,520 Speaker 1: of guys that do it. Where do you Where do 66 00:03:19,560 --> 00:03:22,760 Speaker 1: you fall in this discussion? I agree with Peter, and 67 00:03:22,919 --> 00:03:26,160 Speaker 1: I think it's um. I've I've kind of compared this 68 00:03:26,200 --> 00:03:30,120 Speaker 1: time period. There there are many comparisons to other differences. Uh, 69 00:03:30,120 --> 00:03:32,919 Speaker 1: And the debate on active versus passive is also cyclical. 70 00:03:33,360 --> 00:03:36,880 Speaker 1: And so to me, people forget that sometimes active management 71 00:03:37,160 --> 00:03:38,840 Speaker 1: is not about just what you own, but what you 72 00:03:38,880 --> 00:03:41,120 Speaker 1: don't own. And so to me, there are parts of 73 00:03:41,120 --> 00:03:43,920 Speaker 1: the markets that are very odd. The SMPI is as 74 00:03:43,960 --> 00:03:48,080 Speaker 1: concentrated as aspen since and before that's the nifty uh, 75 00:03:48,160 --> 00:03:50,680 Speaker 1: the nifty fifties stocks to the salviaties. I think in 76 00:03:50,680 --> 00:03:54,320 Speaker 1: the future there's gonna be some active management opportunities, just 77 00:03:54,360 --> 00:03:57,760 Speaker 1: some my evaluation perspective, from a popularity perspective, I just 78 00:03:57,800 --> 00:03:59,760 Speaker 1: feel that as you move forward, it's going to look 79 00:03:59,760 --> 00:04:01,400 Speaker 1: a lout. Get did from two thousand to two thousand 80 00:04:01,400 --> 00:04:03,120 Speaker 1: and five six seven, which is actually a good period 81 00:04:03,120 --> 00:04:06,040 Speaker 1: of time for active management. Brent, you got your NBA 82 00:04:06,080 --> 00:04:08,560 Speaker 1: from the University of Chicago. That means you're probably one 83 00:04:08,600 --> 00:04:12,560 Speaker 1: of those numbers geeks. What are some of the inflation numbers? Water? 84 00:04:13,200 --> 00:04:15,880 Speaker 1: I know when I applied to business school, trust me, 85 00:04:15,920 --> 00:04:18,280 Speaker 1: I did not apply the Universe Chicago. I didn't think 86 00:04:18,320 --> 00:04:20,520 Speaker 1: that would be a good fit. But Brett, what are 87 00:04:20,520 --> 00:04:22,560 Speaker 1: some of the inflation data that you're looking at and 88 00:04:22,600 --> 00:04:25,400 Speaker 1: you think the FED is looking at? To me, the 89 00:04:25,440 --> 00:04:27,400 Speaker 1: FED looks at the five year five year forward, So 90 00:04:27,400 --> 00:04:29,720 Speaker 1: so what does the market believe that the inflation will 91 00:04:29,760 --> 00:04:33,400 Speaker 1: be five years from now? And that number has not skyrocketed. Sure, 92 00:04:33,440 --> 00:04:36,040 Speaker 1: it's above where it was in the last time period 93 00:04:36,040 --> 00:04:39,120 Speaker 1: from like fourteen to nineteen, but it's still well belower. 94 00:04:39,160 --> 00:04:41,159 Speaker 1: It wasn't the more normal inflationary periods that we had, 95 00:04:41,640 --> 00:04:43,599 Speaker 1: oh four or five or six or seven through maybe 96 00:04:43,640 --> 00:04:46,160 Speaker 1: other time of eleven. To me, that's one key indicator 97 00:04:46,160 --> 00:04:48,159 Speaker 1: I don't first much we talked about it. The market 98 00:04:48,160 --> 00:04:50,120 Speaker 1: doesn't believe that inflation is going to be an issue. 99 00:04:50,520 --> 00:04:52,119 Speaker 1: The other part of it I mentioned as a shift 100 00:04:52,120 --> 00:04:55,479 Speaker 1: that's spending from services to goods. If you look at 101 00:04:55,480 --> 00:04:58,000 Speaker 1: where inflation has been over the past few months. Keep 102 00:04:58,000 --> 00:05:00,000 Speaker 1: in mind, we've had inflation for a total of stuff 103 00:05:00,000 --> 00:05:02,520 Speaker 1: and months now, UM, so it's awful odd that we're 104 00:05:02,520 --> 00:05:05,120 Speaker 1: calling it permanent. Now. You have seen a fifteen point 105 00:05:05,160 --> 00:05:09,440 Speaker 1: four percent jump in good spending during the pandemic. Services 106 00:05:09,520 --> 00:05:12,479 Speaker 1: has yet to return to its pre COVID levels. If 107 00:05:12,480 --> 00:05:16,160 Speaker 1: I break inflation down into goods inflation versus services inflation, 108 00:05:16,600 --> 00:05:19,760 Speaker 1: you've had goods inflation which from two thousand and nine 109 00:05:19,800 --> 00:05:23,440 Speaker 1: twenty was basically zero. In other words, it didn't inflate. 110 00:05:23,800 --> 00:05:25,679 Speaker 1: It's up I believe it seven and a half percent 111 00:05:25,680 --> 00:05:28,479 Speaker 1: on the annual basis. If I take goods inflation just 112 00:05:28,520 --> 00:05:30,320 Speaker 1: one more number, because I do love them. If you 113 00:05:30,360 --> 00:05:33,760 Speaker 1: take good inflation apart, and you say durables versus non durables, 114 00:05:34,839 --> 00:05:39,280 Speaker 1: durables are things like furnishings, things like UH air conditioners, 115 00:05:39,360 --> 00:05:44,200 Speaker 1: things like cars. Durable goods inflation from to two thousand 116 00:05:44,240 --> 00:05:49,720 Speaker 1: and twenty deflated. It is up eight point eight percent 117 00:05:49,800 --> 00:05:51,800 Speaker 1: year over a year. Because we've had that shift that 118 00:05:51,839 --> 00:05:55,200 Speaker 1: has really stressed, um, the sports system, has really stressed 119 00:05:55,200 --> 00:05:58,279 Speaker 1: our infrastructure, our supply chains. I think that as that 120 00:05:58,320 --> 00:06:01,359 Speaker 1: alleviates in two you will see good in flesh and 121 00:06:01,400 --> 00:06:04,280 Speaker 1: pull back services maybe a bit more sticky, but I 122 00:06:04,279 --> 00:06:05,880 Speaker 1: think those numbers will start coming down and that will 123 00:06:05,920 --> 00:06:07,400 Speaker 1: give us that the impetus to be able to stick 124 00:06:07,400 --> 00:06:09,480 Speaker 1: around longer than what people imagine. All Right, Brett, thanks 125 00:06:09,520 --> 00:06:11,479 Speaker 1: so much for joining us. Really appreciate it, really appreciate 126 00:06:11,520 --> 00:06:13,279 Speaker 1: the numbers, which is what we expect from an MBA 127 00:06:13,680 --> 00:06:22,040 Speaker 1: from Chicago. Bret Truty, Chief investment strategist, Northwestern Mutual. All right, 128 00:06:22,080 --> 00:06:24,440 Speaker 1: let's talk about the housing market, the real estate housing market, 129 00:06:24,640 --> 00:06:27,120 Speaker 1: Rip Warring, red hot, however you want to phrase it, 130 00:06:27,720 --> 00:06:30,520 Speaker 1: very very hot right now, and Matt knows that firsthand. 131 00:06:30,600 --> 00:06:33,080 Speaker 1: He's just was in the market place. We're joined today 132 00:06:33,080 --> 00:06:36,240 Speaker 1: by Annabelle Fernandez, interim chief financial Officer and treasure of 133 00:06:36,320 --> 00:06:39,120 Speaker 1: dream Finder's Homes. It's a publicly traded company on the 134 00:06:39,200 --> 00:06:42,400 Speaker 1: NSA d f H one public in January of this 135 00:06:42,480 --> 00:06:44,679 Speaker 1: year at thirteen dollars a share of trades today eighteen 136 00:06:44,720 --> 00:06:47,599 Speaker 1: dollars fifteen uh. Since it's got a market cap about 137 00:06:47,600 --> 00:06:52,039 Speaker 1: one point seven billion dollars. So, Annabelle hot market, give 138 00:06:52,120 --> 00:06:55,320 Speaker 1: us your thirty thousand foot view of the residential real 139 00:06:55,400 --> 00:06:59,599 Speaker 1: estate market today. Sure, thanks for having me. First of 140 00:06:59,640 --> 00:07:04,160 Speaker 1: all Um will remain really positive about the outlook. We 141 00:07:04,240 --> 00:07:08,839 Speaker 1: have had strong economic growth in post pandemic and we 142 00:07:08,920 --> 00:07:14,800 Speaker 1: think that will continue into low inventory levels persist, especially 143 00:07:14,840 --> 00:07:16,680 Speaker 1: in the m s a S in which we operate 144 00:07:17,160 --> 00:07:21,040 Speaker 1: in the states of Florida, in Denver, Colorado, in Texas, 145 00:07:21,080 --> 00:07:24,400 Speaker 1: and historically low mortgage rates. Even if the FED is 146 00:07:24,440 --> 00:07:28,559 Speaker 1: prepared to take action and unwind their program, we still 147 00:07:28,600 --> 00:07:32,720 Speaker 1: believe rates are historically low and very compelling. We have 148 00:07:32,840 --> 00:07:36,840 Speaker 1: millennials entering the home buyaneers um and we just have 149 00:07:37,000 --> 00:07:39,160 Speaker 1: observed in the m s a S in which we 150 00:07:39,240 --> 00:07:44,000 Speaker 1: operate a positive demographic pattern with an influx of individuals 151 00:07:44,520 --> 00:07:48,280 Speaker 1: moving into the suburbs post pandemic, and that has also 152 00:07:48,320 --> 00:07:52,800 Speaker 1: benefited certain areas of the market. So we remain relatively 153 00:07:53,040 --> 00:07:56,840 Speaker 1: up cautious, but very optimistic. Well, how much are you building? 154 00:07:56,840 --> 00:08:00,920 Speaker 1: I mean, you're as you point out, you operate in Denver, 155 00:08:01,200 --> 00:08:07,120 Speaker 1: in Orlando, you also build houses in Jacksonville and Austin, Savannah, UM, 156 00:08:07,160 --> 00:08:11,040 Speaker 1: as well as the Carolinas in Virginia. How much are 157 00:08:11,040 --> 00:08:13,280 Speaker 1: you putting up there? Because we know there's huge demand. 158 00:08:14,960 --> 00:08:19,080 Speaker 1: There's definitely very strong demand. In my history in home building, 159 00:08:19,480 --> 00:08:23,520 Speaker 1: I've never seen this um this market where every house 160 00:08:23,600 --> 00:08:26,840 Speaker 1: you put in the house on the floor, you you sell. Uh. 161 00:08:26,920 --> 00:08:29,920 Speaker 1: Normally we are a builder that likes to have speculatory 162 00:08:29,920 --> 00:08:33,360 Speaker 1: inventory on the ground because people need to move into 163 00:08:33,360 --> 00:08:36,240 Speaker 1: a market and buy a house right away, and normally 164 00:08:36,320 --> 00:08:39,040 Speaker 1: we like to keep a certain level of inventory. Well, 165 00:08:39,080 --> 00:08:42,600 Speaker 1: we can't keep up ninety percent of inventory world building 166 00:08:42,760 --> 00:08:47,079 Speaker 1: is already pre sold, so it's unprecedented and more excited 167 00:08:47,120 --> 00:08:49,280 Speaker 1: to see what it gets to in the next year. 168 00:08:49,320 --> 00:08:52,679 Speaker 1: And just definitely working through our backlob to deliver the 169 00:08:52,760 --> 00:08:55,680 Speaker 1: homes as quickly as we can for our customers. And 170 00:08:55,720 --> 00:08:57,679 Speaker 1: about one of the things we've heard about kind of 171 00:08:57,679 --> 00:09:01,160 Speaker 1: the new home construction business is the industry is just 172 00:09:01,200 --> 00:09:05,040 Speaker 1: not building enough new buyer home, first time buyer homes 173 00:09:05,040 --> 00:09:07,720 Speaker 1: they're buying, they're they're building kind of the McMansion because 174 00:09:07,920 --> 00:09:11,720 Speaker 1: obviously higher price, higher margin for the builder. Where in 175 00:09:11,720 --> 00:09:14,520 Speaker 1: the marketplace are you uh, in terms of the types 176 00:09:14,520 --> 00:09:18,560 Speaker 1: of homes you build, Uh, that's a great question. We 177 00:09:18,640 --> 00:09:21,520 Speaker 1: are focused on the entry level and first time move 178 00:09:21,640 --> 00:09:24,840 Speaker 1: up market segments. We were build in the active adult 179 00:09:24,880 --> 00:09:28,360 Speaker 1: sector and second time move up, but of what we 180 00:09:28,440 --> 00:09:30,880 Speaker 1: do is entry level and first time move up so 181 00:09:31,000 --> 00:09:35,480 Speaker 1: those millennials and affordability is a concern. Mortgage rates are 182 00:09:35,520 --> 00:09:40,000 Speaker 1: a concern, of course. Told the affordability component and building 183 00:09:40,120 --> 00:09:44,880 Speaker 1: an efficient home that can just um serve that piece 184 00:09:44,920 --> 00:09:48,120 Speaker 1: of the market is our main focus. Paul is a 185 00:09:48,200 --> 00:09:54,400 Speaker 1: very active adult. That is exactly market Jacksonville, Paul, I'm 186 00:09:54,400 --> 00:09:58,200 Speaker 1: thinking about it. My question is um stealing heights. I 187 00:09:58,240 --> 00:10:01,319 Speaker 1: can't stand in new builds how low the ceilings are. 188 00:10:01,440 --> 00:10:03,120 Speaker 1: You know. That's why I always when I'm looking in 189 00:10:03,160 --> 00:10:04,960 Speaker 1: New York, I want to find a pre war building. 190 00:10:05,200 --> 00:10:07,160 Speaker 1: Can I choose my ceiling height? If I go to 191 00:10:07,360 --> 00:10:11,160 Speaker 1: dream Finders, you can. You can. We have the sign 192 00:10:11,200 --> 00:10:13,280 Speaker 1: no level homes where you can choose that, and you 193 00:10:13,360 --> 00:10:17,559 Speaker 1: have ten eleven food ceilings. So yes, absolutely, depending on 194 00:10:17,559 --> 00:10:20,720 Speaker 1: on the right neighborhood, the right product, we can accommodate 195 00:10:20,760 --> 00:10:23,760 Speaker 1: for that. Because Matt is about I don't know six 196 00:10:23,840 --> 00:10:25,800 Speaker 1: four or something like that. Anyway, I would go to Denver. 197 00:10:26,080 --> 00:10:28,760 Speaker 1: I like Denver. Yeah, asolutely be my choice of the 198 00:10:28,840 --> 00:10:31,880 Speaker 1: dream Finders areas all right. And about Fernandez, thank you 199 00:10:31,960 --> 00:10:34,840 Speaker 1: so much for joining us, really appreciate And about Fernandez, 200 00:10:34,880 --> 00:10:38,800 Speaker 1: she's interim chief financial officer and treasurer for Dream Finders 201 00:10:38,840 --> 00:10:42,439 Speaker 1: Home d f H is the symbol for that building 202 00:10:42,480 --> 00:10:45,240 Speaker 1: new homes. And again and trying to hear that focus 203 00:10:45,280 --> 00:10:47,920 Speaker 1: on some entry level housing. So yeah, yeah, but but 204 00:10:48,000 --> 00:10:50,120 Speaker 1: not in the Tri State area. Now why would you? 205 00:10:50,200 --> 00:10:52,280 Speaker 1: I mean, the castes is too high. So I think 206 00:10:52,320 --> 00:10:57,400 Speaker 1: they've got a pretty good strategy there. Pivot a little 207 00:10:57,440 --> 00:11:00,800 Speaker 1: bit right here. Let's talk about the electric vehicle business, 208 00:11:00,840 --> 00:11:04,800 Speaker 1: the renewable business, the clean energy business. All that is 209 00:11:05,080 --> 00:11:09,480 Speaker 1: really dependent in part on good battery performance. Tom Jensen, 210 00:11:09,559 --> 00:11:13,120 Speaker 1: CEO and co founder of Friar Battery is an n 211 00:11:13,320 --> 00:11:17,199 Speaker 1: y s e UH listed stock. F r e Y 212 00:11:17,360 --> 00:11:20,520 Speaker 1: is the symbol to Norway based developer of clean batteries 213 00:11:20,520 --> 00:11:23,720 Speaker 1: for energy storage market EVS and the marine industry, when 214 00:11:23,720 --> 00:11:27,960 Speaker 1: public this past winter through Spack transaction with Alosa Energy. Tom, 215 00:11:28,000 --> 00:11:29,920 Speaker 1: thanks so much for joining us here. Give us a 216 00:11:29,960 --> 00:11:33,600 Speaker 1: sense of what your company does, what is your focus, 217 00:11:34,160 --> 00:11:39,000 Speaker 1: what are you guys up to? So well, thank you 218 00:11:39,040 --> 00:11:42,760 Speaker 1: for that. And and so we are developing um world 219 00:11:42,840 --> 00:11:48,120 Speaker 1: leading clean battery solutions for all market verticals. So we're 220 00:11:48,120 --> 00:11:52,400 Speaker 1: going to build initial capacity in the Norwegian UH or 221 00:11:52,440 --> 00:11:56,959 Speaker 1: in Norway, leveraging Norway's surplus renewable energy which is also 222 00:11:57,120 --> 00:12:01,360 Speaker 1: more cost effective than than most energy sources globally, and 223 00:12:01,440 --> 00:12:05,440 Speaker 1: in our opinion, batteries form, as you pointed out, the 224 00:12:05,440 --> 00:12:08,680 Speaker 1: most important catalyst for the energy transistion. It's kind of 225 00:12:08,720 --> 00:12:11,920 Speaker 1: obvious to the carbonized transportation through electric vehicles, but it's 226 00:12:11,960 --> 00:12:17,680 Speaker 1: equally important as a catalyst for de carbonizing energy systems globally. 227 00:12:17,880 --> 00:12:20,319 Speaker 1: So we're going to give batteries using an American technology. 228 00:12:20,440 --> 00:12:23,480 Speaker 1: So we licensed in twenty four end Technologies, which we 229 00:12:23,520 --> 00:12:27,440 Speaker 1: believe it's next generation listing mind battery technology that offers 230 00:12:27,480 --> 00:12:31,920 Speaker 1: step changing performance, step changing costs, and also has potential 231 00:12:32,000 --> 00:12:37,520 Speaker 1: to dramatically improve further moving forward by building larger and 232 00:12:37,559 --> 00:12:41,800 Speaker 1: thicker essentially electrodes into the batteries. So if you look 233 00:12:41,800 --> 00:12:45,199 Speaker 1: at the international energy agencies predictions of staying sort of 234 00:12:45,280 --> 00:12:48,120 Speaker 1: roughly within the Paris Agreement and one and a half 235 00:12:48,120 --> 00:12:53,000 Speaker 1: degree uh sort of addition, batteries are included, so to speak, 236 00:12:53,000 --> 00:12:55,160 Speaker 1: in half of the investment needing to go into the 237 00:12:55,240 --> 00:12:57,240 Speaker 1: energy transisition. So we're very happy to be in New 238 00:12:57,320 --> 00:13:00,680 Speaker 1: York today participating in an event on the New Stock Exchange, 239 00:13:00,679 --> 00:13:03,240 Speaker 1: and I'm going back there together with His Royal Highness 240 00:13:03,240 --> 00:13:06,800 Speaker 1: the Crown Prince of Norway basically talk about how to 241 00:13:06,840 --> 00:13:10,400 Speaker 1: finance the energy transition. So for US, batteries is part 242 00:13:10,400 --> 00:13:12,800 Speaker 1: of the future. We think the decade we're in is 243 00:13:12,800 --> 00:13:15,079 Speaker 1: going to be the decade of the battery. This is 244 00:13:15,320 --> 00:13:19,640 Speaker 1: a solution that is here today. It's commercially available, the 245 00:13:19,720 --> 00:13:24,480 Speaker 1: cost points are already competitive with the alternatives, and anybody 246 00:13:24,640 --> 00:13:27,679 Speaker 1: that will be you know, produced, will be sold and 247 00:13:27,760 --> 00:13:30,240 Speaker 1: demand is going through the roof, and then you're going 248 00:13:30,280 --> 00:13:34,600 Speaker 1: to go down there with hawk on correct. So His 249 00:13:34,679 --> 00:13:39,240 Speaker 1: Royal Highness, the Crown Prince is a very good um 250 00:13:39,280 --> 00:13:43,679 Speaker 1: sort of custodian of Norwegian interests, so he he participates 251 00:13:43,679 --> 00:13:47,520 Speaker 1: in in promoting Norwegian interests abroad and Norway obviously has 252 00:13:48,880 --> 00:13:53,240 Speaker 1: deep interests and relations with the United States and therefore 253 00:13:53,320 --> 00:13:56,680 Speaker 1: sort of collaborating around the energy transition and US actually 254 00:13:56,679 --> 00:13:59,959 Speaker 1: taking a US technology to scale in Norway, but also 255 00:14:00,080 --> 00:14:02,559 Speaker 1: coming back to the US through our partnership with Coke 256 00:14:02,600 --> 00:14:06,600 Speaker 1: strategic platforms and developing clean battery solutions also in the 257 00:14:06,640 --> 00:14:11,440 Speaker 1: American market is something that we are now actively pursuing 258 00:14:11,480 --> 00:14:13,840 Speaker 1: together with COPE. So so we're super excited about the 259 00:14:13,840 --> 00:14:18,400 Speaker 1: partnership opportunity that we have developing the blueprint in Norway 260 00:14:18,559 --> 00:14:23,560 Speaker 1: and then replicating that rapidly here in the US to 261 00:14:23,640 --> 00:14:26,280 Speaker 1: sort of be a relevant participant in the energy transition. 262 00:14:26,320 --> 00:14:30,640 Speaker 1: It's very cool. So you get basically the the genius 263 00:14:30,800 --> 00:14:33,480 Speaker 1: from m I T, you bring it to Norway where 264 00:14:33,480 --> 00:14:35,360 Speaker 1: they have to know how to put these things together, 265 00:14:35,960 --> 00:14:39,880 Speaker 1: and then you build out or solid state or lithium 266 00:14:39,920 --> 00:14:43,360 Speaker 1: ion batteries. What what what is the actual battery technology 267 00:14:43,400 --> 00:14:48,080 Speaker 1: that you're focused on. So so twenty f M Technologies 268 00:14:48,120 --> 00:14:49,920 Speaker 1: and m I T spin off, as you pointed out, 269 00:14:50,560 --> 00:14:53,200 Speaker 1: a very clever sort of solution. They've developed something they 270 00:14:53,280 --> 00:14:57,400 Speaker 1: labeled the semi solid platform, and that's really not sort 271 00:14:57,400 --> 00:15:00,360 Speaker 1: of a pun on solid state batteries. It's war to 272 00:15:00,440 --> 00:15:03,920 Speaker 1: do with the structure of the battery themselves. So they 273 00:15:03,960 --> 00:15:07,440 Speaker 1: are instead of these slurry like mix that you use 274 00:15:07,600 --> 00:15:10,640 Speaker 1: to to create conventional batteries which you coat onto the 275 00:15:11,120 --> 00:15:15,000 Speaker 1: aluminium and corporate foil, twenty four M essentially creates a 276 00:15:15,080 --> 00:15:17,920 Speaker 1: thicker slurry, almost like a clay like structure for the 277 00:15:17,960 --> 00:15:22,440 Speaker 1: electrodes which are casting onto the current collectors and hence 278 00:15:22,520 --> 00:15:26,520 Speaker 1: the semi solid connotation. So this is a production process 279 00:15:26,560 --> 00:15:30,280 Speaker 1: and a battery designed that is dramatically better in terms 280 00:15:30,280 --> 00:15:32,840 Speaker 1: of cost performance and also can allow you to put 281 00:15:32,880 --> 00:15:37,880 Speaker 1: more energy carrying material into the same volumetric unit of 282 00:15:38,000 --> 00:15:40,880 Speaker 1: final products. As a number of sort of technical sort 283 00:15:40,880 --> 00:15:44,240 Speaker 1: of jargons here, But the point is ultimately, if we 284 00:15:44,320 --> 00:15:48,760 Speaker 1: want to have batteries move into all the vehicles and 285 00:15:48,800 --> 00:15:52,480 Speaker 1: all the stationary storage applications and sort of storing sunlight 286 00:15:52,560 --> 00:15:54,120 Speaker 1: and wind and all the rest of it, we need 287 00:15:54,200 --> 00:15:57,520 Speaker 1: to put more energy carrying material into smaller and smaller 288 00:15:57,560 --> 00:16:01,400 Speaker 1: compartments and basically drive up energy density and reduce costs. 289 00:16:01,440 --> 00:16:04,520 Speaker 1: And that is what provides the promise of It's a 290 00:16:04,600 --> 00:16:11,480 Speaker 1: dramatically simplified production process, significantly reducing capital expenditure, significantly reducing footprint, 291 00:16:11,880 --> 00:16:17,000 Speaker 1: lowering the energy bill, dramatically lowering number of employees required, 292 00:16:17,400 --> 00:16:22,480 Speaker 1: and more importantly allowing for further optimization while staying in 293 00:16:22,520 --> 00:16:26,520 Speaker 1: the same raw material supply chain as conventionally in mind 294 00:16:26,520 --> 00:16:30,800 Speaker 1: batteries had. So for us, this is next generation happening now, 295 00:16:31,280 --> 00:16:33,400 Speaker 1: and the only sort of focus we have is how 296 00:16:33,480 --> 00:16:36,840 Speaker 1: fast can we build how much capacity? And the demand 297 00:16:36,960 --> 00:16:41,440 Speaker 1: is as I said, it's it's skyrocketing, as everyone is 298 00:16:41,440 --> 00:16:45,600 Speaker 1: now jumping onto the energy transition energy transition. Absolutely. Tom Jensen, 299 00:16:45,640 --> 00:16:47,800 Speaker 1: thank you so much for joining us. Really appreciate it. 300 00:16:47,840 --> 00:16:51,280 Speaker 1: Tom Jensen, he's the CEO and co founder of Friar Battery. 301 00:16:51,320 --> 00:16:54,120 Speaker 1: It's an n y S listed stock. F r e 302 00:16:54,400 --> 00:16:57,400 Speaker 1: Y is the symbol one is. Tom was mentioning um. 303 00:16:57,440 --> 00:17:00,440 Speaker 1: You know, as you move towards this renewable energy UH 304 00:17:00,840 --> 00:17:04,200 Speaker 1: usages and applications, one of the key key drivers here 305 00:17:04,400 --> 00:17:08,119 Speaker 1: is the quality UH and performance of the batteries, and 306 00:17:08,160 --> 00:17:14,200 Speaker 1: that's where Friar Battery looks to make its mark. And Matt, 307 00:17:14,280 --> 00:17:18,840 Speaker 1: let's continue our discussion of battery technology because as we 308 00:17:18,880 --> 00:17:22,840 Speaker 1: think about the electrification of many industries, most notably the 309 00:17:22,880 --> 00:17:29,000 Speaker 1: auto industry, it's coming down in large part to battery technology. Permit, president, 310 00:17:29,160 --> 00:17:32,840 Speaker 1: CEO and co founder of Transform, UH joins us. Permit, 311 00:17:32,880 --> 00:17:35,400 Speaker 1: thanks so much for joining us here. You know, Matt 312 00:17:35,480 --> 00:17:39,000 Speaker 1: in particular is fascinated with electric vehicles and then the 313 00:17:39,080 --> 00:17:43,560 Speaker 1: evolution of the auto business towards e VS. Talk to 314 00:17:43,600 --> 00:17:46,880 Speaker 1: us about your company, Transform and kind of how you're 315 00:17:46,960 --> 00:17:52,000 Speaker 1: thinking about battery technology. Thanks so much, and it's a 316 00:17:52,040 --> 00:17:55,359 Speaker 1: pleasure to be here, so Transform t g A n 317 00:17:55,880 --> 00:18:00,760 Speaker 1: We are a pioneer and leading provider of galier nitride 318 00:18:00,840 --> 00:18:05,800 Speaker 1: semicon power devices which are now widely used in power conversion. 319 00:18:06,200 --> 00:18:09,320 Speaker 1: And mind you, gallium nitride has been around for LEDs 320 00:18:09,400 --> 00:18:13,080 Speaker 1: for lighting RF transistors for more than two decades. Now 321 00:18:13,160 --> 00:18:15,800 Speaker 1: it's making its way into power conversion, which will be 322 00:18:15,880 --> 00:18:19,960 Speaker 1: its biggest application and market YETS and particularly with high 323 00:18:20,040 --> 00:18:24,560 Speaker 1: growing applications like five G and electric vehicles, with the 324 00:18:24,600 --> 00:18:29,199 Speaker 1: demonstrated capability to completely disrupt power conversion and displace the 325 00:18:29,280 --> 00:18:33,679 Speaker 1: traditional silicon device technology. And and what does gallium nitride 326 00:18:33,680 --> 00:18:35,719 Speaker 1: do and what is power conversion and how is it 327 00:18:35,760 --> 00:18:38,880 Speaker 1: related to the EVS Right, So, whether you're charging your 328 00:18:38,920 --> 00:18:42,560 Speaker 1: phone or an EVY battery, charging or driving an electric 329 00:18:42,640 --> 00:18:46,639 Speaker 1: vehicle motor, or powering even your cryptomning or data center 330 00:18:46,840 --> 00:18:51,280 Speaker 1: power supplies. Across this gamut of application, there is electrical 331 00:18:51,400 --> 00:18:55,040 Speaker 1: energy conversion going on, which is inherently lossy and it 332 00:18:55,160 --> 00:19:00,600 Speaker 1: wastes electricity. Gallium nitride offers superior efficiency, which is low 333 00:19:00,720 --> 00:19:04,960 Speaker 1: energy wasted farm factor, being compact, lightweight, better than any 334 00:19:04,960 --> 00:19:07,520 Speaker 1: other power conversion semi co and tectra material today and 335 00:19:07,520 --> 00:19:09,879 Speaker 1: Transform tries to do it in the best possible manner. 336 00:19:10,160 --> 00:19:13,600 Speaker 1: What do you do with magneti Morelli. That's a brand 337 00:19:13,600 --> 00:19:15,520 Speaker 1: I've been using for twenty years on all my do 338 00:19:15,640 --> 00:19:22,360 Speaker 1: Cardi motorcycles. Excellent, excellent. So Morelli now Magnetio Morelli is Morelli. 339 00:19:22,400 --> 00:19:25,359 Speaker 1: It's an integration of two large companies. Calconic Cancer in 340 00:19:25,400 --> 00:19:29,440 Speaker 1: Morelli's Magnetio Morelli. So it's a Morelli is an investor 341 00:19:29,600 --> 00:19:32,199 Speaker 1: in Transform and a long term partner for us in 342 00:19:32,320 --> 00:19:36,639 Speaker 1: electric vehicles, the application of gallium nitrate product in electric vehicles, 343 00:19:36,680 --> 00:19:39,240 Speaker 1: and they see their vision is matched with our vision. 344 00:19:39,320 --> 00:19:42,320 Speaker 1: Morelli is also for our for our purpose. Morelli is 345 00:19:42,400 --> 00:19:45,080 Speaker 1: also a provider, one of the leading O E M 346 00:19:45,119 --> 00:19:48,639 Speaker 1: providers to top tier auto manufacturers. So we work with 347 00:19:48,680 --> 00:19:51,560 Speaker 1: them on a long term roadmap for insertion of gallium 348 00:19:51,640 --> 00:19:56,560 Speaker 1: nitrate into electric vehicles, inverters, chargers for electric vehicles, making 349 00:19:56,600 --> 00:20:00,440 Speaker 1: them more efficient, improving the range of electric vehicles using 350 00:20:00,480 --> 00:20:04,000 Speaker 1: the battery more efficiently and improving the charging time of 351 00:20:04,040 --> 00:20:07,080 Speaker 1: the batteries and in general making all the power electronics 352 00:20:07,280 --> 00:20:10,879 Speaker 1: compact and lightweight. Well. Your company, Transform is a public 353 00:20:10,880 --> 00:20:14,719 Speaker 1: company t g A N is the symbol that kind 354 00:20:14,720 --> 00:20:18,720 Speaker 1: of market cap about three nine million dollars a year 355 00:20:18,800 --> 00:20:21,600 Speaker 1: to date. So we talked to us about kind of 356 00:20:21,800 --> 00:20:25,280 Speaker 1: where what are the key growth drivers for your company 357 00:20:25,320 --> 00:20:29,920 Speaker 1: over the next couple of years. Yes, no, that's accurate, 358 00:20:30,000 --> 00:20:32,760 Speaker 1: Thank you. So for Transform, p g A and right 359 00:20:32,880 --> 00:20:36,280 Speaker 1: the gallium nitrate power itself. GAN is emerging to be 360 00:20:36,320 --> 00:20:39,800 Speaker 1: a very large market opportunity in the world of power conversion. 361 00:20:40,160 --> 00:20:43,199 Speaker 1: More than three billion dollars of gan cam as we 362 00:20:43,280 --> 00:20:46,520 Speaker 1: call it in the near to mid term three time 363 00:20:46,520 --> 00:20:49,359 Speaker 1: frame and more than a ten billion available total market 364 00:20:49,359 --> 00:20:51,719 Speaker 1: GANTAM by the end of the decade, with a very 365 00:20:51,800 --> 00:20:54,520 Speaker 1: strong cager more than double that of the general power 366 00:20:54,560 --> 00:20:57,480 Speaker 1: symblic conductor market, which itself is very healthy. So we 367 00:20:57,640 --> 00:21:01,600 Speaker 1: see gallium nitrate power growth. Our focuses on execution over 368 00:21:01,640 --> 00:21:04,520 Speaker 1: the next several years, just like you know in the 369 00:21:04,640 --> 00:21:09,520 Speaker 1: two thousand decades. Again, LED had a hypergrowth for five, ten, 370 00:21:09,640 --> 00:21:13,560 Speaker 1: fifteen years and all of the companies and Transform is 371 00:21:13,560 --> 00:21:17,200 Speaker 1: one of the pioneers with strong technology, intellectual property products 372 00:21:17,240 --> 00:21:21,120 Speaker 1: manufacturing will enjoy market groups for a long time. For us, 373 00:21:21,160 --> 00:21:23,880 Speaker 1: our goal is to build a multi hundred million dollar 374 00:21:23,960 --> 00:21:26,760 Speaker 1: business over the next few years and Transform and make 375 00:21:26,880 --> 00:21:31,159 Speaker 1: gallium nitride a standard for power conversion. I'm looking at 376 00:21:31,200 --> 00:21:37,160 Speaker 1: the at the SUPERGAN technology products on your website. Amazing 377 00:21:37,240 --> 00:21:40,720 Speaker 1: that they can work for twenty billion field hours or 378 00:21:40,760 --> 00:21:44,439 Speaker 1: more than that and only have it looks like I 379 00:21:44,440 --> 00:21:48,679 Speaker 1: guess zero point four failures per billion hours. So this 380 00:21:48,720 --> 00:21:51,840 Speaker 1: is an incredible technology. How hard is it to get? Right? Now? 381 00:21:51,880 --> 00:21:54,000 Speaker 1: We all hear so much about the semi conductor shortage, 382 00:21:54,000 --> 00:21:56,520 Speaker 1: We talk about it on this program a lot. How 383 00:21:56,520 --> 00:21:59,879 Speaker 1: difficult are you? How much difficulty are you having in 384 00:22:00,040 --> 00:22:04,240 Speaker 1: killing orders? You just hit about the two important points 385 00:22:04,320 --> 00:22:07,680 Speaker 1: for Transform. First, you recognize the reliability on quality, which 386 00:22:07,720 --> 00:22:10,840 Speaker 1: is paramount. So we have now been supplying gallium nitr 387 00:22:10,960 --> 00:22:13,600 Speaker 1: in the field and statistically we have that fit rate 388 00:22:13,720 --> 00:22:17,000 Speaker 1: zero point four per billion hours of operation with significant 389 00:22:17,000 --> 00:22:19,840 Speaker 1: amount of penetration in the field. Quality and relablity is 390 00:22:19,880 --> 00:22:24,520 Speaker 1: paramount for any semiconductors technology, and we have shown that 391 00:22:24,640 --> 00:22:27,399 Speaker 1: gallium nitride can be no different than silicon which is 392 00:22:27,400 --> 00:22:31,080 Speaker 1: widely used long term in quality and reliability. Now, that's 393 00:22:31,119 --> 00:22:34,280 Speaker 1: one of the key advantages and strength of Transform. Our 394 00:22:34,359 --> 00:22:37,280 Speaker 1: p plus our quality and relability. Now other one of 395 00:22:37,320 --> 00:22:39,239 Speaker 1: the other strength of Transform is also that we are 396 00:22:39,320 --> 00:22:43,240 Speaker 1: vertically integrated. I call it our asset light vertically integrated model, 397 00:22:43,400 --> 00:22:46,320 Speaker 1: where we make the most important part of the gallium nitride, 398 00:22:46,320 --> 00:22:49,479 Speaker 1: the gallium nitrate wavefors themselves. We hundred percent make it 399 00:22:50,480 --> 00:22:53,040 Speaker 1: our stuff and part of our strong part of our 400 00:22:53,040 --> 00:22:55,880 Speaker 1: manufacturing is right here in Galata, California, where we are 401 00:22:56,119 --> 00:22:59,480 Speaker 1: headquarters for the gallium nitride, the main gallium nitride material. 402 00:22:59,800 --> 00:23:02,600 Speaker 1: So we do control our own destiny in that sense 403 00:23:02,680 --> 00:23:05,399 Speaker 1: making the galium nitride material, which is an advantage for 404 00:23:05,520 --> 00:23:09,639 Speaker 1: transforming these times of troubled supply chains. We are also 405 00:23:09,680 --> 00:23:12,200 Speaker 1: that said, we are also in the general semi conductor industry, 406 00:23:12,240 --> 00:23:16,040 Speaker 1: so we do rely on standard components, packages, etcetera for 407 00:23:16,280 --> 00:23:19,600 Speaker 1: and supply chain, just like a standard semi conductor industry. 408 00:23:19,640 --> 00:23:22,480 Speaker 1: So we have to grapple with that and manage carefully 409 00:23:22,520 --> 00:23:27,600 Speaker 1: and plan ahead. What sorry, what's what's it look like 410 00:23:27,720 --> 00:23:29,119 Speaker 1: right now? I mean, I get that you have to 411 00:23:29,160 --> 00:23:32,120 Speaker 1: do a lot of your own work in house if 412 00:23:32,160 --> 00:23:34,600 Speaker 1: you have if you want to make a million parts 413 00:23:34,600 --> 00:23:37,240 Speaker 1: with less than one defect per million, you've got to 414 00:23:37,280 --> 00:23:40,480 Speaker 1: oversee that yourself. But you still count on others um 415 00:23:40,480 --> 00:23:43,200 Speaker 1: for components that get shipped in. So what what's the 416 00:23:43,280 --> 00:23:45,919 Speaker 1: lag time right now? How hard has the pandemic been 417 00:23:46,000 --> 00:23:48,720 Speaker 1: for you? Yeah? Absolutely, the panto I think not has 418 00:23:48,760 --> 00:23:51,440 Speaker 1: been easy, but thanks to our phenomenal worldwide team right 419 00:23:51,440 --> 00:23:54,320 Speaker 1: our manufacturing operations. Yes, there have been some delays, but 420 00:23:54,400 --> 00:23:57,040 Speaker 1: we were Actually we are very fortunate and blessed and 421 00:23:57,119 --> 00:24:00,000 Speaker 1: thanks to the hard work of our team, our manufacturing 422 00:24:00,040 --> 00:24:03,159 Speaker 1: operations worldwide here in California. We have operations in Japan, 423 00:24:03,280 --> 00:24:06,320 Speaker 1: some operations in Asia. None of them have been down 424 00:24:06,440 --> 00:24:09,359 Speaker 1: in the pandemic. So we make our own gallium night 425 00:24:09,480 --> 00:24:12,679 Speaker 1: ride lead times. We have to plan in advance. That 426 00:24:12,840 --> 00:24:14,919 Speaker 1: is very important for us, but our team has been 427 00:24:14,960 --> 00:24:17,080 Speaker 1: managed to deal with it. Hey, Permit, thank you so 428 00:24:17,160 --> 00:24:21,240 Speaker 1: much for joining us. Really appreciate it. Permit Permit Parik, President, 429 00:24:21,400 --> 00:24:26,040 Speaker 1: CEO and co found of Transform. Thanks for listening to 430 00:24:26,040 --> 00:24:29,560 Speaker 1: the Bloomberg Markets podcast. You can subscribe and listen to 431 00:24:29,600 --> 00:24:33,760 Speaker 1: interviews of Apple Podcasts or whatever podcast platform you prefer. 432 00:24:34,160 --> 00:24:38,720 Speaker 1: I'm Matt Miller. I'm on Twitter at Matt Miller. Yet 433 00:24:38,920 --> 00:24:42,000 Speaker 1: Fall Sweeney I'm on Twitter at pt Sweeney. Before the podcast, 434 00:24:42,040 --> 00:24:44,520 Speaker 1: you can always catch us worldwide at Bloomberg Radio.