WEBVTT - The Supply Chain, Batteries, And Market Outlook 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.560 --> 0:00:15.600 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.600 --> 0:00:18.479 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:22.960 at Bloomberg dot com slash podcast. Major major rebound in 0:00:23.000 --> 0:00:25.000 these markets. Whenever you think that they're down for a 0:00:25.000 --> 0:00:26.720 little bit here, they just come bouncing back. It's the 0:00:26.760 --> 0:00:30.160 whole by the dip mentality. Let's bring it a professional 0:00:30.200 --> 0:00:32.320 to get a good view of what maybe we can 0:00:32.360 --> 0:00:35.720 think about for the last few trading weeks of one 0:00:35.800 --> 0:00:38.000 more importantly into next year. We do that with Brett Shouty, 0:00:38.080 --> 0:00:42.800 chief investment strategist at Northwestern Mutual Wealth Management Company. So, Brett, 0:00:43.200 --> 0:00:45.720 when we have sell off days and you hear from 0:00:45.800 --> 0:00:49.400 your clients, do you tell them to just steady the 0:00:49.800 --> 0:00:52.720 at the helm and keep looking forward and this is 0:00:52.800 --> 0:00:54.760 market that will continue to move higher. How do you 0:00:54.760 --> 0:00:58.600 think about this market as we head into Yeah, I 0:00:58.840 --> 0:01:00.440 do think the market will continue to push higher in 0:01:00.440 --> 0:01:03.360 two because the economy will continue to push higher. And 0:01:03.360 --> 0:01:05.480 so if you think about the underlying fundamols these economy. 0:01:05.480 --> 0:01:08.040 They still remain strong. Sure, there are some bottlenecks, there 0:01:08.040 --> 0:01:10.560 are some oddities that have happened because of COVID, and 0:01:10.560 --> 0:01:12.880 we can take you through those, But in general, we 0:01:12.959 --> 0:01:17.120 think the economy will lurch back towards whatever normal. Maybe 0:01:18.959 --> 0:01:21.720 if you think about that commentary, some of the oddities 0:01:21.720 --> 0:01:24.560 that have occurred will continue to go back towards where 0:01:24.600 --> 0:01:27.479 they were. So we've had this enormous amount of goods 0:01:27.480 --> 0:01:30.560 demand that has really changed the trend from what it 0:01:30.640 --> 0:01:33.200 was pre COVID. It was more towards the services. That 0:01:33.240 --> 0:01:36.360 has caused the ports to be uh, you know, clogged 0:01:36.480 --> 0:01:39.520 because goods rising in container ships services don't. But we 0:01:39.560 --> 0:01:42.039 think as you move in two you're going to see 0:01:42.040 --> 0:01:45.160 some of those historical trends returned towards normal or what 0:01:45.160 --> 0:01:47.440 it was pre COVID. I think that's going to alleviate 0:01:47.440 --> 0:01:50.040 from the inflation fears. I think the labor market is 0:01:50.040 --> 0:01:52.480 going to heal because the oddities of the labor market 0:01:52.760 --> 0:01:55.800 were caused by pandemic unemployment insurance, which is now we're off. 0:01:56.400 --> 0:01:58.440 And I think as you have those things happen, you're 0:01:58.440 --> 0:02:01.040 going to have a market that moves higher because the 0:02:01.080 --> 0:02:04.720 economy was higher, but with different leadership. Well so those 0:02:04.960 --> 0:02:07.880 which leadership caused audities in the market. Yeah. So I 0:02:08.160 --> 0:02:09.640 think if you think of the past few years and 0:02:09.639 --> 0:02:11.560 some of those oddities, I mean, the stay at home 0:02:11.600 --> 0:02:14.120 trade has been in vogue, I think the world becomes 0:02:14.160 --> 0:02:18.400 more back into public UM. You've had people been up hopes, dreams, 0:02:18.400 --> 0:02:20.840 themes and memes because real rates have been so negative, 0:02:20.880 --> 0:02:23.680 liquidity has been so large. UM liquidity will start to 0:02:23.760 --> 0:02:26.400 drain up that from the system in and I think 0:02:26.440 --> 0:02:29.919 people are going to focus on valuation more rather than games. 0:02:30.400 --> 0:02:32.359 And I think that means things like small caps which 0:02:32.360 --> 0:02:35.640 are cheap have a good backdrop value stocks and perhaps 0:02:35.639 --> 0:02:38.160 even international stocks do better in twenty twenty two. I 0:02:38.200 --> 0:02:41.520 like that hopes, dreams, themes, and memes and it's not 0:02:42.720 --> 0:02:44.440 I should pause. You could add crypto to that too, 0:02:45.760 --> 0:02:48.960 for sure. For sure crypto goes into that box. So, 0:02:49.160 --> 0:02:52.760 but you think we're getting back to UM a more 0:02:52.800 --> 0:02:56.440 normal market. I wonder what you think about the UM 0:02:56.480 --> 0:03:01.600 active versus passive discussion, because we've had some really big 0:03:01.720 --> 0:03:04.440 voices way in or going to a weigh and I'll 0:03:04.440 --> 0:03:07.399 give you a little tease. Peter Lynch on a Bloomberg 0:03:07.480 --> 0:03:12.080 radio program tonight is saying, Um, he thinks you're losing 0:03:12.080 --> 0:03:14.560 out if you're going all in on passive. He says 0:03:14.600 --> 0:03:16.800 he beat the market forever and he's got a bunch 0:03:16.800 --> 0:03:19.520 of guys that do it. Where do you Where do 0:03:19.560 --> 0:03:22.760 you fall in this discussion? I agree with Peter, and 0:03:22.919 --> 0:03:26.160 I think it's um. I've I've kind of compared this 0:03:26.200 --> 0:03:30.120 time period. There there are many comparisons to other differences. Uh, 0:03:30.120 --> 0:03:32.919 And the debate on active versus passive is also cyclical. 0:03:33.360 --> 0:03:36.880 And so to me, people forget that sometimes active management 0:03:37.160 --> 0:03:38.840 is not about just what you own, but what you 0:03:38.880 --> 0:03:41.120 don't own. And so to me, there are parts of 0:03:41.120 --> 0:03:43.920 the markets that are very odd. The SMPI is as 0:03:43.960 --> 0:03:48.080 concentrated as aspen since and before that's the nifty uh, 0:03:48.160 --> 0:03:50.680 the nifty fifties stocks to the salviaties. I think in 0:03:50.680 --> 0:03:54.320 the future there's gonna be some active management opportunities, just 0:03:54.360 --> 0:03:57.760 some my evaluation perspective, from a popularity perspective, I just 0:03:57.800 --> 0:03:59.760 feel that as you move forward, it's going to look 0:03:59.760 --> 0:04:01.400 a lout. Get did from two thousand to two thousand 0:04:01.400 --> 0:04:03.120 and five six seven, which is actually a good period 0:04:03.120 --> 0:04:06.040 of time for active management. Brent, you got your NBA 0:04:06.080 --> 0:04:08.560 from the University of Chicago. That means you're probably one 0:04:08.600 --> 0:04:12.560 of those numbers geeks. What are some of the inflation numbers? Water? 0:04:13.200 --> 0:04:15.880 I know when I applied to business school, trust me, 0:04:15.920 --> 0:04:18.280 I did not apply the Universe Chicago. I didn't think 0:04:18.320 --> 0:04:20.520 that would be a good fit. But Brett, what are 0:04:20.520 --> 0:04:22.560 some of the inflation data that you're looking at and 0:04:22.600 --> 0:04:25.400 you think the FED is looking at? To me, the 0:04:25.440 --> 0:04:27.400 FED looks at the five year five year forward, So 0:04:27.400 --> 0:04:29.720 so what does the market believe that the inflation will 0:04:29.760 --> 0:04:33.400 be five years from now? And that number has not skyrocketed. Sure, 0:04:33.440 --> 0:04:36.040 it's above where it was in the last time period 0:04:36.040 --> 0:04:39.120 from like fourteen to nineteen, but it's still well belower. 0:04:39.160 --> 0:04:41.159 It wasn't the more normal inflationary periods that we had, 0:04:41.640 --> 0:04:43.599 oh four or five or six or seven through maybe 0:04:43.640 --> 0:04:46.160 other time of eleven. To me, that's one key indicator 0:04:46.160 --> 0:04:48.159 I don't first much we talked about it. The market 0:04:48.160 --> 0:04:50.120 doesn't believe that inflation is going to be an issue. 0:04:50.520 --> 0:04:52.119 The other part of it I mentioned as a shift 0:04:52.120 --> 0:04:55.479 that's spending from services to goods. If you look at 0:04:55.480 --> 0:04:58.000 where inflation has been over the past few months. Keep 0:04:58.000 --> 0:05:00.000 in mind, we've had inflation for a total of stuff 0:05:00.000 --> 0:05:02.520 and months now, UM, so it's awful odd that we're 0:05:02.520 --> 0:05:05.120 calling it permanent. Now. You have seen a fifteen point 0:05:05.160 --> 0:05:09.440 four percent jump in good spending during the pandemic. Services 0:05:09.520 --> 0:05:12.479 has yet to return to its pre COVID levels. If 0:05:12.480 --> 0:05:16.160 I break inflation down into goods inflation versus services inflation, 0:05:16.600 --> 0:05:19.760 you've had goods inflation which from two thousand and nine 0:05:19.800 --> 0:05:23.440 twenty was basically zero. In other words, it didn't inflate. 0:05:23.800 --> 0:05:25.679 It's up I believe it seven and a half percent 0:05:25.680 --> 0:05:28.479 on the annual basis. If I take goods inflation just 0:05:28.520 --> 0:05:30.320 one more number, because I do love them. If you 0:05:30.360 --> 0:05:33.760 take good inflation apart, and you say durables versus non durables, 0:05:34.839 --> 0:05:39.280 durables are things like furnishings, things like UH air conditioners, 0:05:39.360 --> 0:05:44.200 things like cars. Durable goods inflation from to two thousand 0:05:44.240 --> 0:05:49.720 and twenty deflated. It is up eight point eight percent 0:05:49.800 --> 0:05:51.800 year over a year. Because we've had that shift that 0:05:51.839 --> 0:05:55.200 has really stressed, um, the sports system, has really stressed 0:05:55.200 --> 0:05:58.279 our infrastructure, our supply chains. I think that as that 0:05:58.320 --> 0:06:01.359 alleviates in two you will see good in flesh and 0:06:01.400 --> 0:06:04.280 pull back services maybe a bit more sticky, but I 0:06:04.279 --> 0:06:05.880 think those numbers will start coming down and that will 0:06:05.920 --> 0:06:07.400 give us that the impetus to be able to stick 0:06:07.400 --> 0:06:09.480 around longer than what people imagine. All Right, Brett, thanks 0:06:09.520 --> 0:06:11.479 so much for joining us. Really appreciate it, really appreciate 0:06:11.520 --> 0:06:13.279 the numbers, which is what we expect from an MBA 0:06:13.680 --> 0:06:22.040 from Chicago. Bret Truty, Chief investment strategist, Northwestern Mutual. All right, 0:06:22.080 --> 0:06:24.440 let's talk about the housing market, the real estate housing market, 0:06:24.640 --> 0:06:27.120 Rip Warring, red hot, however you want to phrase it, 0:06:27.720 --> 0:06:30.520 very very hot right now, and Matt knows that firsthand. 0:06:30.600 --> 0:06:33.080 He's just was in the market place. We're joined today 0:06:33.080 --> 0:06:36.240 by Annabelle Fernandez, interim chief financial Officer and treasure of 0:06:36.320 --> 0:06:39.120 dream Finder's Homes. It's a publicly traded company on the 0:06:39.200 --> 0:06:42.400 NSA d f H one public in January of this 0:06:42.480 --> 0:06:44.679 year at thirteen dollars a share of trades today eighteen 0:06:44.720 --> 0:06:47.599 dollars fifteen uh. Since it's got a market cap about 0:06:47.600 --> 0:06:52.039 one point seven billion dollars. So, Annabelle hot market, give 0:06:52.120 --> 0:06:55.320 us your thirty thousand foot view of the residential real 0:06:55.400 --> 0:06:59.599 estate market today. Sure, thanks for having me. First of 0:06:59.640 --> 0:07:04.160 all Um will remain really positive about the outlook. We 0:07:04.240 --> 0:07:08.839 have had strong economic growth in post pandemic and we 0:07:08.920 --> 0:07:14.800 think that will continue into low inventory levels persist, especially 0:07:14.840 --> 0:07:16.680 in the m s a S in which we operate 0:07:17.160 --> 0:07:21.040 in the states of Florida, in Denver, Colorado, in Texas, 0:07:21.080 --> 0:07:24.400 and historically low mortgage rates. Even if the FED is 0:07:24.440 --> 0:07:28.559 prepared to take action and unwind their program, we still 0:07:28.600 --> 0:07:32.720 believe rates are historically low and very compelling. We have 0:07:32.840 --> 0:07:36.840 millennials entering the home buyaneers um and we just have 0:07:37.000 --> 0:07:39.160 observed in the m s a S in which we 0:07:39.240 --> 0:07:44.000 operate a positive demographic pattern with an influx of individuals 0:07:44.520 --> 0:07:48.280 moving into the suburbs post pandemic, and that has also 0:07:48.320 --> 0:07:52.800 benefited certain areas of the market. So we remain relatively 0:07:53.040 --> 0:07:56.840 up cautious, but very optimistic. Well, how much are you building? 0:07:56.840 --> 0:08:00.920 I mean, you're as you point out, you operate in Denver, 0:08:01.200 --> 0:08:07.120 in Orlando, you also build houses in Jacksonville and Austin, Savannah, UM, 0:08:07.160 --> 0:08:11.040 as well as the Carolinas in Virginia. How much are 0:08:11.040 --> 0:08:13.280 you putting up there? Because we know there's huge demand. 0:08:14.960 --> 0:08:19.080 There's definitely very strong demand. In my history in home building, 0:08:19.480 --> 0:08:23.520 I've never seen this um this market where every house 0:08:23.600 --> 0:08:26.840 you put in the house on the floor, you you sell. Uh. 0:08:26.920 --> 0:08:29.920 Normally we are a builder that likes to have speculatory 0:08:29.920 --> 0:08:33.360 inventory on the ground because people need to move into 0:08:33.360 --> 0:08:36.240 a market and buy a house right away, and normally 0:08:36.320 --> 0:08:39.040 we like to keep a certain level of inventory. Well, 0:08:39.080 --> 0:08:42.600 we can't keep up ninety percent of inventory world building 0:08:42.760 --> 0:08:47.079 is already pre sold, so it's unprecedented and more excited 0:08:47.120 --> 0:08:49.280 to see what it gets to in the next year. 0:08:49.320 --> 0:08:52.679 And just definitely working through our backlob to deliver the 0:08:52.760 --> 0:08:55.680 homes as quickly as we can for our customers. And 0:08:55.720 --> 0:08:57.679 about one of the things we've heard about kind of 0:08:57.679 --> 0:09:01.160 the new home construction business is the industry is just 0:09:01.200 --> 0:09:05.040 not building enough new buyer home, first time buyer homes 0:09:05.040 --> 0:09:07.720 they're buying, they're they're building kind of the McMansion because 0:09:07.920 --> 0:09:11.720 obviously higher price, higher margin for the builder. Where in 0:09:11.720 --> 0:09:14.520 the marketplace are you uh, in terms of the types 0:09:14.520 --> 0:09:18.560 of homes you build, Uh, that's a great question. We 0:09:18.640 --> 0:09:21.520 are focused on the entry level and first time move 0:09:21.640 --> 0:09:24.840 up market segments. We were build in the active adult 0:09:24.880 --> 0:09:28.360 sector and second time move up, but of what we 0:09:28.440 --> 0:09:30.880 do is entry level and first time move up so 0:09:31.000 --> 0:09:35.480 those millennials and affordability is a concern. Mortgage rates are 0:09:35.520 --> 0:09:40.000 a concern, of course. Told the affordability component and building 0:09:40.120 --> 0:09:44.880 an efficient home that can just um serve that piece 0:09:44.920 --> 0:09:48.120 of the market is our main focus. Paul is a 0:09:48.200 --> 0:09:54.400 very active adult. That is exactly market Jacksonville, Paul, I'm 0:09:54.400 --> 0:09:58.200 thinking about it. My question is um stealing heights. I 0:09:58.240 --> 0:10:01.319 can't stand in new builds how low the ceilings are. 0:10:01.440 --> 0:10:03.120 You know. That's why I always when I'm looking in 0:10:03.160 --> 0:10:04.960 New York, I want to find a pre war building. 0:10:05.200 --> 0:10:07.160 Can I choose my ceiling height? If I go to 0:10:07.360 --> 0:10:11.160 dream Finders, you can. You can. We have the sign 0:10:11.200 --> 0:10:13.280 no level homes where you can choose that, and you 0:10:13.360 --> 0:10:17.559 have ten eleven food ceilings. So yes, absolutely, depending on 0:10:17.559 --> 0:10:20.720 on the right neighborhood, the right product, we can accommodate 0:10:20.760 --> 0:10:23.760 for that. Because Matt is about I don't know six 0:10:23.840 --> 0:10:25.800 four or something like that. Anyway, I would go to Denver. 0:10:26.080 --> 0:10:28.760 I like Denver. Yeah, asolutely be my choice of the 0:10:28.840 --> 0:10:31.880 dream Finders areas all right. And about Fernandez, thank you 0:10:31.960 --> 0:10:34.840 so much for joining us, really appreciate And about Fernandez, 0:10:34.880 --> 0:10:38.800 she's interim chief financial officer and treasurer for Dream Finders 0:10:38.840 --> 0:10:42.439 Home d f H is the symbol for that building 0:10:42.480 --> 0:10:45.240 new homes. And again and trying to hear that focus 0:10:45.280 --> 0:10:47.920 on some entry level housing. So yeah, yeah, but but 0:10:48.000 --> 0:10:50.120 not in the Tri State area. Now why would you? 0:10:50.200 --> 0:10:52.280 I mean, the castes is too high. So I think 0:10:52.320 --> 0:10:57.400 they've got a pretty good strategy there. Pivot a little 0:10:57.440 --> 0:11:00.800 bit right here. Let's talk about the electric vehicle business, 0:11:00.840 --> 0:11:04.800 the renewable business, the clean energy business. All that is 0:11:05.080 --> 0:11:09.480 really dependent in part on good battery performance. Tom Jensen, 0:11:09.559 --> 0:11:13.120 CEO and co founder of Friar Battery is an n 0:11:13.320 --> 0:11:17.199 y s e UH listed stock. F r e Y 0:11:17.360 --> 0:11:20.520 is the symbol to Norway based developer of clean batteries 0:11:20.520 --> 0:11:23.720 for energy storage market EVS and the marine industry, when 0:11:23.720 --> 0:11:27.960 public this past winter through Spack transaction with Alosa Energy. Tom, 0:11:28.000 --> 0:11:29.920 thanks so much for joining us here. Give us a 0:11:29.960 --> 0:11:33.600 sense of what your company does, what is your focus, 0:11:34.160 --> 0:11:39.000 what are you guys up to? So well, thank you 0:11:39.040 --> 0:11:42.760 for that. And and so we are developing um world 0:11:42.840 --> 0:11:48.120 leading clean battery solutions for all market verticals. So we're 0:11:48.120 --> 0:11:52.400 going to build initial capacity in the Norwegian UH or 0:11:52.440 --> 0:11:56.959 in Norway, leveraging Norway's surplus renewable energy which is also 0:11:57.120 --> 0:12:01.360 more cost effective than than most energy sources globally, and 0:12:01.440 --> 0:12:05.440 in our opinion, batteries form, as you pointed out, the 0:12:05.440 --> 0:12:08.680 most important catalyst for the energy transistion. It's kind of 0:12:08.720 --> 0:12:11.920 obvious to the carbonized transportation through electric vehicles, but it's 0:12:11.960 --> 0:12:17.680 equally important as a catalyst for de carbonizing energy systems globally. 0:12:17.880 --> 0:12:20.319 So we're going to give batteries using an American technology. 0:12:20.440 --> 0:12:23.480 So we licensed in twenty four end Technologies, which we 0:12:23.520 --> 0:12:27.440 believe it's next generation listing mind battery technology that offers 0:12:27.480 --> 0:12:31.920 step changing performance, step changing costs, and also has potential 0:12:32.000 --> 0:12:37.520 to dramatically improve further moving forward by building larger and 0:12:37.559 --> 0:12:41.800 thicker essentially electrodes into the batteries. So if you look 0:12:41.800 --> 0:12:45.199 at the international energy agencies predictions of staying sort of 0:12:45.280 --> 0:12:48.120 roughly within the Paris Agreement and one and a half 0:12:48.120 --> 0:12:53.000 degree uh sort of addition, batteries are included, so to speak, 0:12:53.000 --> 0:12:55.160 in half of the investment needing to go into the 0:12:55.240 --> 0:12:57.240 energy transisition. So we're very happy to be in New 0:12:57.320 --> 0:13:00.680 York today participating in an event on the New Stock Exchange, 0:13:00.679 --> 0:13:03.240 and I'm going back there together with His Royal Highness 0:13:03.240 --> 0:13:06.800 the Crown Prince of Norway basically talk about how to 0:13:06.840 --> 0:13:10.400 finance the energy transition. So for US, batteries is part 0:13:10.400 --> 0:13:12.800 of the future. We think the decade we're in is 0:13:12.800 --> 0:13:15.079 going to be the decade of the battery. This is 0:13:15.320 --> 0:13:19.640 a solution that is here today. It's commercially available, the 0:13:19.720 --> 0:13:24.480 cost points are already competitive with the alternatives, and anybody 0:13:24.640 --> 0:13:27.679 that will be you know, produced, will be sold and 0:13:27.760 --> 0:13:30.240 demand is going through the roof, and then you're going 0:13:30.280 --> 0:13:34.600 to go down there with hawk on correct. So His 0:13:34.679 --> 0:13:39.240 Royal Highness, the Crown Prince is a very good um 0:13:39.280 --> 0:13:43.679 sort of custodian of Norwegian interests, so he he participates 0:13:43.679 --> 0:13:47.520 in in promoting Norwegian interests abroad and Norway obviously has 0:13:48.880 --> 0:13:53.240 deep interests and relations with the United States and therefore 0:13:53.320 --> 0:13:56.680 sort of collaborating around the energy transition and US actually 0:13:56.679 --> 0:13:59.959 taking a US technology to scale in Norway, but also 0:14:00.080 --> 0:14:02.559 coming back to the US through our partnership with Coke 0:14:02.600 --> 0:14:06.600 strategic platforms and developing clean battery solutions also in the 0:14:06.640 --> 0:14:11.440 American market is something that we are now actively pursuing 0:14:11.480 --> 0:14:13.840 together with COPE. So so we're super excited about the 0:14:13.840 --> 0:14:18.400 partnership opportunity that we have developing the blueprint in Norway 0:14:18.559 --> 0:14:23.560 and then replicating that rapidly here in the US to 0:14:23.640 --> 0:14:26.280 sort of be a relevant participant in the energy transition. 0:14:26.320 --> 0:14:30.640 It's very cool. So you get basically the the genius 0:14:30.800 --> 0:14:33.480 from m I T, you bring it to Norway where 0:14:33.480 --> 0:14:35.360 they have to know how to put these things together, 0:14:35.960 --> 0:14:39.880 and then you build out or solid state or lithium 0:14:39.920 --> 0:14:43.360 ion batteries. What what what is the actual battery technology 0:14:43.400 --> 0:14:48.080 that you're focused on. So so twenty f M Technologies 0:14:48.120 --> 0:14:49.920 and m I T spin off, as you pointed out, 0:14:50.560 --> 0:14:53.200 a very clever sort of solution. They've developed something they 0:14:53.280 --> 0:14:57.400 labeled the semi solid platform, and that's really not sort 0:14:57.400 --> 0:15:00.360 of a pun on solid state batteries. It's war to 0:15:00.440 --> 0:15:03.920 do with the structure of the battery themselves. So they 0:15:03.960 --> 0:15:07.440 are instead of these slurry like mix that you use 0:15:07.600 --> 0:15:10.640 to to create conventional batteries which you coat onto the 0:15:11.120 --> 0:15:15.000 aluminium and corporate foil, twenty four M essentially creates a 0:15:15.080 --> 0:15:17.920 thicker slurry, almost like a clay like structure for the 0:15:17.960 --> 0:15:22.440 electrodes which are casting onto the current collectors and hence 0:15:22.520 --> 0:15:26.520 the semi solid connotation. So this is a production process 0:15:26.560 --> 0:15:30.280 and a battery designed that is dramatically better in terms 0:15:30.280 --> 0:15:32.840 of cost performance and also can allow you to put 0:15:32.880 --> 0:15:37.880 more energy carrying material into the same volumetric unit of 0:15:38.000 --> 0:15:40.880 final products. As a number of sort of technical sort 0:15:40.880 --> 0:15:44.240 of jargons here, But the point is ultimately, if we 0:15:44.320 --> 0:15:48.760 want to have batteries move into all the vehicles and 0:15:48.800 --> 0:15:52.480 all the stationary storage applications and sort of storing sunlight 0:15:52.560 --> 0:15:54.120 and wind and all the rest of it, we need 0:15:54.200 --> 0:15:57.520 to put more energy carrying material into smaller and smaller 0:15:57.560 --> 0:16:01.400 compartments and basically drive up energy density and reduce costs. 0:16:01.440 --> 0:16:04.520 And that is what provides the promise of It's a 0:16:04.600 --> 0:16:11.480 dramatically simplified production process, significantly reducing capital expenditure, significantly reducing footprint, 0:16:11.880 --> 0:16:17.000 lowering the energy bill, dramatically lowering number of employees required, 0:16:17.400 --> 0:16:22.480 and more importantly allowing for further optimization while staying in 0:16:22.520 --> 0:16:26.520 the same raw material supply chain as conventionally in mind 0:16:26.520 --> 0:16:30.800 batteries had. So for us, this is next generation happening now, 0:16:31.280 --> 0:16:33.400 and the only sort of focus we have is how 0:16:33.480 --> 0:16:36.840 fast can we build how much capacity? And the demand 0:16:36.960 --> 0:16:41.440 is as I said, it's it's skyrocketing, as everyone is 0:16:41.440 --> 0:16:45.600 now jumping onto the energy transition energy transition. Absolutely. Tom Jensen, 0:16:45.640 --> 0:16:47.800 thank you so much for joining us. Really appreciate it. 0:16:47.840 --> 0:16:51.280 Tom Jensen, he's the CEO and co founder of Friar Battery. 0:16:51.320 --> 0:16:54.120 It's an n y S listed stock. F r e 0:16:54.400 --> 0:16:57.400 Y is the symbol one is. Tom was mentioning um. 0:16:57.440 --> 0:17:00.440 You know, as you move towards this renewable energy UH 0:17:00.840 --> 0:17:04.200 usages and applications, one of the key key drivers here 0:17:04.400 --> 0:17:08.119 is the quality UH and performance of the batteries, and 0:17:08.160 --> 0:17:14.200 that's where Friar Battery looks to make its mark. And Matt, 0:17:14.280 --> 0:17:18.840 let's continue our discussion of battery technology because as we 0:17:18.880 --> 0:17:22.840 think about the electrification of many industries, most notably the 0:17:22.880 --> 0:17:29.000 auto industry, it's coming down in large part to battery technology. Permit, president, 0:17:29.160 --> 0:17:32.840 CEO and co founder of Transform, UH joins us. Permit, 0:17:32.880 --> 0:17:35.400 thanks so much for joining us here. You know, Matt 0:17:35.480 --> 0:17:39.000 in particular is fascinated with electric vehicles and then the 0:17:39.080 --> 0:17:43.560 evolution of the auto business towards e VS. Talk to 0:17:43.600 --> 0:17:46.880 us about your company, Transform and kind of how you're 0:17:46.960 --> 0:17:52.000 thinking about battery technology. Thanks so much, and it's a 0:17:52.040 --> 0:17:55.359 pleasure to be here, so Transform t g A n 0:17:55.880 --> 0:18:00.760 We are a pioneer and leading provider of galier nitride 0:18:00.840 --> 0:18:05.800 semicon power devices which are now widely used in power conversion. 0:18:06.200 --> 0:18:09.320 And mind you, gallium nitride has been around for LEDs 0:18:09.400 --> 0:18:13.080 for lighting RF transistors for more than two decades. Now 0:18:13.160 --> 0:18:15.800 it's making its way into power conversion, which will be 0:18:15.880 --> 0:18:19.960 its biggest application and market YETS and particularly with high 0:18:20.040 --> 0:18:24.560 growing applications like five G and electric vehicles, with the 0:18:24.600 --> 0:18:29.199 demonstrated capability to completely disrupt power conversion and displace the 0:18:29.280 --> 0:18:33.679 traditional silicon device technology. And and what does gallium nitride 0:18:33.680 --> 0:18:35.719 do and what is power conversion and how is it 0:18:35.760 --> 0:18:38.880 related to the EVS Right, So, whether you're charging your 0:18:38.920 --> 0:18:42.560 phone or an EVY battery, charging or driving an electric 0:18:42.640 --> 0:18:46.639 vehicle motor, or powering even your cryptomning or data center 0:18:46.840 --> 0:18:51.280 power supplies. Across this gamut of application, there is electrical 0:18:51.400 --> 0:18:55.040 energy conversion going on, which is inherently lossy and it 0:18:55.160 --> 0:19:00.600 wastes electricity. Gallium nitride offers superior efficiency, which is low 0:19:00.720 --> 0:19:04.960 energy wasted farm factor, being compact, lightweight, better than any 0:19:04.960 --> 0:19:07.520 other power conversion semi co and tectra material today and 0:19:07.520 --> 0:19:09.879 Transform tries to do it in the best possible manner. 0:19:10.160 --> 0:19:13.600 What do you do with magneti Morelli. That's a brand 0:19:13.600 --> 0:19:15.520 I've been using for twenty years on all my do 0:19:15.640 --> 0:19:22.360 Cardi motorcycles. Excellent, excellent. So Morelli now Magnetio Morelli is Morelli. 0:19:22.400 --> 0:19:25.359 It's an integration of two large companies. Calconic Cancer in 0:19:25.400 --> 0:19:29.440 Morelli's Magnetio Morelli. So it's a Morelli is an investor 0:19:29.600 --> 0:19:32.199 in Transform and a long term partner for us in 0:19:32.320 --> 0:19:36.639 electric vehicles, the application of gallium nitrate product in electric vehicles, 0:19:36.680 --> 0:19:39.240 and they see their vision is matched with our vision. 0:19:39.320 --> 0:19:42.320 Morelli is also for our for our purpose. Morelli is 0:19:42.400 --> 0:19:45.080 also a provider, one of the leading O E M 0:19:45.119 --> 0:19:48.639 providers to top tier auto manufacturers. So we work with 0:19:48.680 --> 0:19:51.560 them on a long term roadmap for insertion of gallium 0:19:51.640 --> 0:19:56.560 nitrate into electric vehicles, inverters, chargers for electric vehicles, making 0:19:56.600 --> 0:20:00.440 them more efficient, improving the range of electric vehicles using 0:20:00.480 --> 0:20:04.000 the battery more efficiently and improving the charging time of 0:20:04.040 --> 0:20:07.080 the batteries and in general making all the power electronics 0:20:07.280 --> 0:20:10.879 compact and lightweight. Well. Your company, Transform is a public 0:20:10.880 --> 0:20:14.719 company t g A N is the symbol that kind 0:20:14.720 --> 0:20:18.720 of market cap about three nine million dollars a year 0:20:18.800 --> 0:20:21.600 to date. So we talked to us about kind of 0:20:21.800 --> 0:20:25.280 where what are the key growth drivers for your company 0:20:25.320 --> 0:20:29.920 over the next couple of years. Yes, no, that's accurate, 0:20:30.000 --> 0:20:32.760 Thank you. So for Transform, p g A and right 0:20:32.880 --> 0:20:36.280 the gallium nitrate power itself. GAN is emerging to be 0:20:36.320 --> 0:20:39.800 a very large market opportunity in the world of power conversion. 0:20:40.160 --> 0:20:43.199 More than three billion dollars of gan cam as we 0:20:43.280 --> 0:20:46.520 call it in the near to mid term three time 0:20:46.520 --> 0:20:49.359 frame and more than a ten billion available total market 0:20:49.359 --> 0:20:51.719 GANTAM by the end of the decade, with a very 0:20:51.800 --> 0:20:54.520 strong cager more than double that of the general power 0:20:54.560 --> 0:20:57.480 symblic conductor market, which itself is very healthy. So we 0:20:57.640 --> 0:21:01.600 see gallium nitrate power growth. Our focuses on execution over 0:21:01.640 --> 0:21:04.520 the next several years, just like you know in the 0:21:04.640 --> 0:21:09.520 two thousand decades. Again, LED had a hypergrowth for five, ten, 0:21:09.640 --> 0:21:13.560 fifteen years and all of the companies and Transform is 0:21:13.560 --> 0:21:17.200 one of the pioneers with strong technology, intellectual property products 0:21:17.240 --> 0:21:21.120 manufacturing will enjoy market groups for a long time. For us, 0:21:21.160 --> 0:21:23.880 our goal is to build a multi hundred million dollar 0:21:23.960 --> 0:21:26.760 business over the next few years and Transform and make 0:21:26.880 --> 0:21:31.159 gallium nitride a standard for power conversion. I'm looking at 0:21:31.200 --> 0:21:37.160 the at the SUPERGAN technology products on your website. Amazing 0:21:37.240 --> 0:21:40.720 that they can work for twenty billion field hours or 0:21:40.760 --> 0:21:44.439 more than that and only have it looks like I 0:21:44.440 --> 0:21:48.679 guess zero point four failures per billion hours. So this 0:21:48.720 --> 0:21:51.840 is an incredible technology. How hard is it to get? Right? Now? 0:21:51.880 --> 0:21:54.000 We all hear so much about the semi conductor shortage, 0:21:54.000 --> 0:21:56.520 We talk about it on this program a lot. How 0:21:56.520 --> 0:21:59.879 difficult are you? How much difficulty are you having in 0:22:00.040 --> 0:22:04.240 killing orders? You just hit about the two important points 0:22:04.320 --> 0:22:07.680 for Transform. First, you recognize the reliability on quality, which 0:22:07.720 --> 0:22:10.840 is paramount. So we have now been supplying gallium nitr 0:22:10.960 --> 0:22:13.600 in the field and statistically we have that fit rate 0:22:13.720 --> 0:22:17.000 zero point four per billion hours of operation with significant 0:22:17.000 --> 0:22:19.840 amount of penetration in the field. Quality and relablity is 0:22:19.880 --> 0:22:24.520 paramount for any semiconductors technology, and we have shown that 0:22:24.640 --> 0:22:27.399 gallium nitride can be no different than silicon which is 0:22:27.400 --> 0:22:31.080 widely used long term in quality and reliability. Now, that's 0:22:31.119 --> 0:22:34.280 one of the key advantages and strength of Transform. Our 0:22:34.359 --> 0:22:37.280 p plus our quality and relability. Now other one of 0:22:37.320 --> 0:22:39.239 the other strength of Transform is also that we are 0:22:39.320 --> 0:22:43.240 vertically integrated. I call it our asset light vertically integrated model, 0:22:43.400 --> 0:22:46.320 where we make the most important part of the gallium nitride, 0:22:46.320 --> 0:22:49.479 the gallium nitrate wavefors themselves. We hundred percent make it 0:22:50.480 --> 0:22:53.040 our stuff and part of our strong part of our 0:22:53.040 --> 0:22:55.880 manufacturing is right here in Galata, California, where we are 0:22:56.119 --> 0:22:59.480