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 00:00:11,520 --> 00:00:15,600 Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast 5 00:00:15,600 --> 00:00:18,439 Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and 6 00:00:18,480 --> 00:00:21,759 Speaker 1: at Bloomberg dot com slash podcast. All right, Matt, you 7 00:00:21,800 --> 00:00:25,960 Speaker 1: go you get your undergraduate degree in English from Trinity College, 8 00:00:25,960 --> 00:00:28,600 Speaker 1: which is just a phenomenal school. Oh my god. The 9 00:00:28,640 --> 00:00:32,480 Speaker 1: squash team is insane, insane and legendary squash team. Yeah, 10 00:00:32,479 --> 00:00:34,720 Speaker 1: in Hertford, Connecticut. And then you go get a master's 11 00:00:34,720 --> 00:00:36,680 Speaker 1: in English from the Universe Chicago, which I didn't even 12 00:00:36,680 --> 00:00:39,400 Speaker 1: know the University of Chicago offered a master's in English. 13 00:00:39,520 --> 00:00:41,560 Speaker 1: I just think numbers when I think of Univerity of Chicago. 14 00:00:41,880 --> 00:00:43,880 Speaker 1: So you get all that going, what do you do? 15 00:00:44,000 --> 00:00:47,040 Speaker 1: You go into the private credit business? How does that work? 16 00:00:47,120 --> 00:00:49,040 Speaker 1: I mean, well that's what I If you're gonna go 17 00:00:49,159 --> 00:00:52,080 Speaker 1: to Wall Street, I think you're gonna do English major 18 00:00:52,120 --> 00:00:55,160 Speaker 1: in the classics or history. I just don't see it. 19 00:00:55,160 --> 00:00:57,240 Speaker 1: But Randy Schwimmer did it. He's co head of senior 20 00:00:57,320 --> 00:01:01,320 Speaker 1: lending and Senior managing Director Churchill as management. Randy, You've 21 00:01:01,320 --> 00:01:04,720 Speaker 1: had a odd career path, but we'll take you as 22 00:01:04,720 --> 00:01:08,280 Speaker 1: an expert on this private credit business. I love the 23 00:01:08,280 --> 00:01:11,640 Speaker 1: private private credit business. I think I can get yield there. 24 00:01:12,120 --> 00:01:14,000 Speaker 1: Just give us an overview of kind of what the 25 00:01:14,040 --> 00:01:17,039 Speaker 1: private credit market is like today, because boy, it's been 26 00:01:17,160 --> 00:01:20,920 Speaker 1: ugly everywhere else in the capital markets it has been. 27 00:01:20,920 --> 00:01:22,600 Speaker 1: But you know, listening to you guys talk, I had 28 00:01:22,640 --> 00:01:25,160 Speaker 1: to do some push ups in my office just exactly 29 00:01:25,319 --> 00:01:28,000 Speaker 1: that's he's shaming us. All. Yeah, but I did on 30 00:01:28,120 --> 00:01:29,600 Speaker 1: my oak mail this more and so I'm good to go. 31 00:01:29,920 --> 00:01:32,640 Speaker 1: But you know, feeling energized actually about where we are. 32 00:01:32,920 --> 00:01:36,280 Speaker 1: Although you know, it's interesting. There's no much more fun 33 00:01:36,360 --> 00:01:39,720 Speaker 1: for capital markets and investor guy to be looking at 34 00:01:39,760 --> 00:01:42,040 Speaker 1: an inflection in the market right because the things are 35 00:01:42,040 --> 00:01:45,960 Speaker 1: going along smoothly. It's like being a weather person meteorologist 36 00:01:46,040 --> 00:01:48,360 Speaker 1: in San Diego. Okay, it's Sunday today, Sunday to Marrow, 37 00:01:48,360 --> 00:01:50,600 Speaker 1: it's gonna be Sunday next week all week, you know. 38 00:01:50,680 --> 00:01:53,600 Speaker 1: Whereas you know New England, it's a little more changeable. 39 00:01:53,640 --> 00:01:55,960 Speaker 1: Sometimes he's raining sometimes and this is what's going on 40 00:01:56,040 --> 00:01:58,800 Speaker 1: kind of right now. Is there a lot of moving 41 00:01:58,840 --> 00:02:00,400 Speaker 1: parts where at the end of a war to your 42 00:02:00,440 --> 00:02:03,520 Speaker 1: cycle where interest rates fell fell fell, you know that's 43 00:02:03,600 --> 00:02:05,560 Speaker 1: over and we're in a new cycle, you know where 44 00:02:05,600 --> 00:02:08,320 Speaker 1: rates are lifting off. We're calling it the Great Unwind. 45 00:02:08,440 --> 00:02:11,400 Speaker 1: So the FEDS on winding its balance sheet, and the 46 00:02:11,520 --> 00:02:15,480 Speaker 1: concern now is inflation, right, and so the Fed has 47 00:02:15,560 --> 00:02:19,360 Speaker 1: to be frustrated because they're wondering, Okay, everybody, what about 48 00:02:19,440 --> 00:02:22,560 Speaker 1: this we're raising rates until inflation is dead message? Have 49 00:02:22,680 --> 00:02:25,520 Speaker 1: you not been getting? Turns out it was the we're 50 00:02:25,560 --> 00:02:28,360 Speaker 1: raising rates until inflation is dead message they weren't getting. Well, 51 00:02:28,360 --> 00:02:30,120 Speaker 1: it feels like they're getting it now, and the market 52 00:02:30,200 --> 00:02:33,600 Speaker 1: is very cautious. Private credit, i would say, is somewhere 53 00:02:33,639 --> 00:02:38,560 Speaker 1: between cautious, um and constructive depending on what's going on. 54 00:02:39,400 --> 00:02:43,839 Speaker 1: Our portfolio, interestingly, which is comprised of almost three hundred 55 00:02:44,480 --> 00:02:49,960 Speaker 1: private equity backed companies and all sorts of sectors, mostly defensive, healthcare, 56 00:02:50,040 --> 00:02:54,480 Speaker 1: business services, technology, that portfolio is actually doing pretty well. 57 00:02:54,600 --> 00:02:58,200 Speaker 1: Revenues are generally up, cash closer are also up. Now 58 00:02:58,200 --> 00:03:01,840 Speaker 1: there are obviously, see situations where companies are struggling with 59 00:03:01,880 --> 00:03:04,920 Speaker 1: supply chain issues. You mentioned labor costs before we started, 60 00:03:04,919 --> 00:03:08,600 Speaker 1: you know, labor costs and labor availability is certainly an issue. 61 00:03:09,040 --> 00:03:12,280 Speaker 1: But in the right sectors, and particularly with private equity 62 00:03:12,320 --> 00:03:15,680 Speaker 1: sponsors who have raised long term capital with decades of 63 00:03:15,720 --> 00:03:19,440 Speaker 1: experience around those sectors, and they have conviction with these 64 00:03:19,480 --> 00:03:23,200 Speaker 1: businesses based not only in their decades, you know, going 65 00:03:23,200 --> 00:03:26,680 Speaker 1: through cycles, but also in the recent experience going through COVID, 66 00:03:27,120 --> 00:03:28,840 Speaker 1: And so they're coming out of COVID and looking at 67 00:03:28,840 --> 00:03:31,600 Speaker 1: this new opportunity in the market and saying, you know, 68 00:03:31,680 --> 00:03:34,960 Speaker 1: we think we have found companies that will continue to 69 00:03:35,000 --> 00:03:40,960 Speaker 1: do well, less consumer facing, lower cap acts, and higher 70 00:03:40,960 --> 00:03:45,960 Speaker 1: cash free cash flow uh generation, and those businesses we 71 00:03:46,000 --> 00:03:48,360 Speaker 1: think we're going to do really well. We're partnering with 72 00:03:48,440 --> 00:03:52,200 Speaker 1: them up and down the capital structure, senior debt, junior capital, 73 00:03:52,280 --> 00:03:56,160 Speaker 1: equity co investing, and and have found that all of 74 00:03:56,160 --> 00:03:58,600 Speaker 1: a sudden over the last you know, year or two, 75 00:03:59,080 --> 00:04:02,480 Speaker 1: that opportunity is actually expanding for us, in part because 76 00:04:02,520 --> 00:04:05,400 Speaker 1: the AZTEC class, as you mentioned, is attractive for people. 77 00:04:05,440 --> 00:04:08,600 Speaker 1: It's an alternative asset class to the sort of headline 78 00:04:08,680 --> 00:04:12,440 Speaker 1: bending stuff that's going on and very very popular lately. 79 00:04:12,600 --> 00:04:14,960 Speaker 1: I mean, we hear so many people actually all year 80 00:04:15,040 --> 00:04:17,200 Speaker 1: we've been hearing people talk about it, But how bad 81 00:04:17,240 --> 00:04:19,640 Speaker 1: has it been. It's so opaque that I can't get 82 00:04:19,640 --> 00:04:21,680 Speaker 1: a good picture by typing I N go on my 83 00:04:21,680 --> 00:04:26,120 Speaker 1: Bloomberg terminal. I can see that treasuries UM are off, 84 00:04:26,360 --> 00:04:28,840 Speaker 1: you know, the Treasury's index is down ten percent year 85 00:04:28,920 --> 00:04:31,719 Speaker 1: to date. I can see that corporate debt is down 86 00:04:32,200 --> 00:04:34,599 Speaker 1: UH ten eleven percent year to date. The global agg 87 00:04:34,720 --> 00:04:37,320 Speaker 1: is off almost from its high. So it's been an 88 00:04:37,400 --> 00:04:43,279 Speaker 1: historically bad period for you know, fixed income of all kinds. 89 00:04:43,720 --> 00:04:47,440 Speaker 1: How has it been for uh, for private debt until 90 00:04:47,480 --> 00:04:50,960 Speaker 1: this until this inflection has actually been through this year. 91 00:04:51,000 --> 00:04:53,760 Speaker 1: And I would include include actually leverage loans in general, 92 00:04:53,760 --> 00:04:57,120 Speaker 1: because we have a large cap practice with the now 93 00:04:57,160 --> 00:05:00,560 Speaker 1: vene UM that does the broadly syndicated market liquid loans 94 00:05:00,560 --> 00:05:04,200 Speaker 1: and so forth. Both that asset class and private credit 95 00:05:04,240 --> 00:05:08,680 Speaker 1: have done very well this year relative to other assets, 96 00:05:08,760 --> 00:05:12,280 Speaker 1: in part because of interest rates going up, in part 97 00:05:12,320 --> 00:05:16,360 Speaker 1: because of the collateral and the security and the covenants 98 00:05:16,360 --> 00:05:18,800 Speaker 1: that we have in the direct lending market that gives 99 00:05:18,880 --> 00:05:22,320 Speaker 1: us protection, and in part because we don't trade. You 100 00:05:22,560 --> 00:05:25,480 Speaker 1: mentioned you can't go on Blueberg and find flind these deals. 101 00:05:25,520 --> 00:05:28,560 Speaker 1: That's the beauty of the alternative market, and that's what's 102 00:05:28,560 --> 00:05:31,320 Speaker 1: happening with private credit since you can't trade it. The 103 00:05:31,360 --> 00:05:34,400 Speaker 1: goodness is if you're comfortable with the investments you've made. 104 00:05:34,720 --> 00:05:38,600 Speaker 1: These businesses are throwing off cash flow after cash flow, 105 00:05:39,279 --> 00:05:43,400 Speaker 1: strong valuations because again, we're buying this, we're financing the 106 00:05:43,480 --> 00:05:45,960 Speaker 1: data as a partner to the private equity firm who's 107 00:05:45,960 --> 00:05:49,800 Speaker 1: throwing in tons of private equity cash that they've raised 108 00:05:49,880 --> 00:05:51,839 Speaker 1: below us, So they've got to burn through a lot 109 00:05:52,080 --> 00:05:54,800 Speaker 1: to get to even to us. That's why our default 110 00:05:54,880 --> 00:05:56,800 Speaker 1: rate and laws rate has been so low, and that's 111 00:05:56,880 --> 00:05:59,760 Speaker 1: generally the case in in private credit. The other thing 112 00:05:59,760 --> 00:06:02,760 Speaker 1: that's going on right now is that investors, you know, 113 00:06:02,839 --> 00:06:06,320 Speaker 1: who were investing in platforms like Churchill are looking for 114 00:06:06,800 --> 00:06:11,520 Speaker 1: you know, relatively low risk, conservative but you know, yield 115 00:06:11,600 --> 00:06:14,240 Speaker 1: that is going to be enhanced when rates go up. 116 00:06:14,440 --> 00:06:16,880 Speaker 1: We're a floating right off the class. We've been waiting 117 00:06:17,320 --> 00:06:20,960 Speaker 1: for this news cycle for forty years. Okay. I started 118 00:06:21,000 --> 00:06:23,920 Speaker 1: my career coming out of Universe Chicago forty plus years 119 00:06:23,920 --> 00:06:27,719 Speaker 1: ago and at the time was in charge. Interest rates 120 00:06:27,800 --> 00:06:30,240 Speaker 1: were you know, double digital. I had a mortgage that 121 00:06:30,360 --> 00:06:33,200 Speaker 1: was like twelve percent. I thought I was lucky here 122 00:06:33,240 --> 00:06:36,120 Speaker 1: we are so far went from zero percent so for 123 00:06:36,360 --> 00:06:39,320 Speaker 1: like the I don't use so for I'm a lieboard guy. Okay, 124 00:06:39,360 --> 00:06:42,520 Speaker 1: so it went from zero to three percent? Right, all right, Randy, 125 00:06:42,520 --> 00:06:44,640 Speaker 1: we gotta kint it short there. I could talk private 126 00:06:44,640 --> 00:06:46,760 Speaker 1: credit all day, not at the time, so you can 127 00:06:46,760 --> 00:06:48,839 Speaker 1: get you do you get? Ran Randy back back for 128 00:06:48,839 --> 00:06:51,200 Speaker 1: like a half hour because I love this private credit 129 00:06:51,200 --> 00:06:53,760 Speaker 1: business co had of senior lending and senior managing director 130 00:06:54,000 --> 00:07:00,240 Speaker 1: Churchill Asset Management Private Credit. Check it out, all right, 131 00:07:00,279 --> 00:07:02,560 Speaker 1: Breton Ewing Joints us he's a chief market strategist for 132 00:07:02,600 --> 00:07:07,119 Speaker 1: First Franklin Financial Services. They're based in Tallahassee, and Brett 133 00:07:07,160 --> 00:07:09,840 Speaker 1: has his undergraduate degree from Florida State and he's on 134 00:07:09,880 --> 00:07:14,520 Speaker 1: the board of trustees at Tallahassee Quarterback Club Foundation. So Bred, 135 00:07:14,560 --> 00:07:16,880 Speaker 1: we gotta start up. We'll get to the market stuff later. 136 00:07:17,200 --> 00:07:21,720 Speaker 1: Give us the preview Florida State football. Well, we just 137 00:07:21,760 --> 00:07:25,040 Speaker 1: had our first home game, got a pulled out a 138 00:07:25,120 --> 00:07:28,400 Speaker 1: victory in a rainy night. But the big game really 139 00:07:28,520 --> 00:07:31,120 Speaker 1: that's starting our season in our minds is this weekend 140 00:07:31,280 --> 00:07:35,640 Speaker 1: against l s U. This So what's the feeling in 141 00:07:35,760 --> 00:07:38,040 Speaker 1: Tallahassee about Florida State football. I mean they were you 142 00:07:38,040 --> 00:07:40,080 Speaker 1: guys had such a great run for such a long 143 00:07:40,160 --> 00:07:43,000 Speaker 1: time under coach Balden. It's been a little bit follow 144 00:07:43,200 --> 00:07:47,760 Speaker 1: since then. What's the feeling of Tahassee these days? Well, 145 00:07:47,800 --> 00:07:51,440 Speaker 1: we are optimistic. Um, we do feel that we have 146 00:07:51,560 --> 00:07:54,640 Speaker 1: a good coaching and his leadership and what he's done 147 00:07:54,680 --> 00:07:58,880 Speaker 1: with recruiting given the tools he does have, access two 148 00:07:59,080 --> 00:08:02,200 Speaker 1: is pretty strong, and we are optimistic that we'll have 149 00:08:02,240 --> 00:08:04,960 Speaker 1: a pretty decent season this year, which should give us 150 00:08:05,000 --> 00:08:08,080 Speaker 1: momentum going into next fall. All right, good stuff. All right, 151 00:08:08,120 --> 00:08:12,200 Speaker 1: So you've got a Federal Reserve that turn I'm not 152 00:08:12,240 --> 00:08:14,600 Speaker 1: sure if they turned hawker Is on Friday last of 153 00:08:14,720 --> 00:08:18,240 Speaker 1: last week, but boy, they certainly communicated that and that's 154 00:08:18,240 --> 00:08:21,680 Speaker 1: had an impact on these markets. What did you guys 155 00:08:21,720 --> 00:08:25,280 Speaker 1: take away from our Federal Reserve on Friday? Well, I 156 00:08:25,320 --> 00:08:28,920 Speaker 1: think the timing of that meeting was, you know, reflect 157 00:08:29,320 --> 00:08:32,520 Speaker 1: important because I mean we were coming off of a 158 00:08:32,600 --> 00:08:36,560 Speaker 1: pretty big run up from the June Lows. In fact, 159 00:08:36,640 --> 00:08:38,720 Speaker 1: the week prior to that you had the NASDAC up 160 00:08:39,720 --> 00:08:44,160 Speaker 1: from the Lows, SMP up at almost and I think 161 00:08:44,960 --> 00:08:47,880 Speaker 1: I think he didn't turn a little bit more dubblished 162 00:08:47,920 --> 00:08:51,680 Speaker 1: in the market, was kind of hoping for looking forward, 163 00:08:52,440 --> 00:08:56,960 Speaker 1: and his rhetoric just was perfect timing for what we 164 00:08:57,040 --> 00:09:00,760 Speaker 1: feel is a pullback that has been badly needed in 165 00:09:00,800 --> 00:09:03,120 Speaker 1: this market. We think a new bull market has started 166 00:09:03,160 --> 00:09:07,080 Speaker 1: and the June lows will hold. Really I'd like that. See, 167 00:09:07,120 --> 00:09:09,000 Speaker 1: that's the question I've had a lot of people. Yes, 168 00:09:09,040 --> 00:09:13,120 Speaker 1: it is a call like will we retest those June lows, 169 00:09:13,320 --> 00:09:17,520 Speaker 1: and you're suggesting maybe not. I think the only way 170 00:09:17,520 --> 00:09:21,480 Speaker 1: that we retest those June lows over this fall would 171 00:09:21,480 --> 00:09:25,480 Speaker 1: be inflation actually starts picking up at a higher pace, 172 00:09:26,320 --> 00:09:29,760 Speaker 1: and we don't see that happening with our data that 173 00:09:29,800 --> 00:09:33,240 Speaker 1: we're looking at across the board. The FED has really 174 00:09:33,280 --> 00:09:37,760 Speaker 1: done one of the most hawkish beatdowns of this economy 175 00:09:37,840 --> 00:09:41,400 Speaker 1: that we've seen in forty years, and the real effects 176 00:09:41,440 --> 00:09:44,679 Speaker 1: of that are just now starting to flow through. And 177 00:09:44,720 --> 00:09:48,839 Speaker 1: we believe the economic data will still continue to cool, 178 00:09:49,480 --> 00:09:53,400 Speaker 1: and we believe that inflation numbers have peaked and that 179 00:09:53,480 --> 00:09:56,040 Speaker 1: we're going to start seeing some cooling in there as well. 180 00:09:56,240 --> 00:09:57,679 Speaker 1: You know, I want to ask you about the labor 181 00:09:57,720 --> 00:10:01,640 Speaker 1: market because we had um the app firing kind of 182 00:10:01,679 --> 00:10:05,160 Speaker 1: adding to the pile of silicon valley, Um, you know, 183 00:10:05,320 --> 00:10:08,520 Speaker 1: shopping that's going on as well as or At the 184 00:10:08,559 --> 00:10:11,720 Speaker 1: same time, we had a super high job openings and jolts. 185 00:10:11,800 --> 00:10:13,840 Speaker 1: And then I thought, why am I always asking these 186 00:10:13,840 --> 00:10:16,640 Speaker 1: macro questions? Why are we so darn macro? It just 187 00:10:16,720 --> 00:10:19,840 Speaker 1: drives me crazy. It's so annoying bread Does it annoy 188 00:10:19,920 --> 00:10:21,520 Speaker 1: you too? I mean, you have to do you have 189 00:10:21,640 --> 00:10:25,079 Speaker 1: to be this this macro in these markets? I really 190 00:10:25,120 --> 00:10:27,439 Speaker 1: think you do. I mean, what what's going on today? 191 00:10:28,200 --> 00:10:30,599 Speaker 1: I mean, look, a lot depends on what happens in 192 00:10:30,640 --> 00:10:32,920 Speaker 1: the job market as we move forward, right, I mean 193 00:10:32,960 --> 00:10:35,480 Speaker 1: that's one of the primary things that the Fed's looking at. 194 00:10:36,120 --> 00:10:39,120 Speaker 1: And the eight hundred pound gorilla in the room is 195 00:10:39,280 --> 00:10:41,840 Speaker 1: definitely the FED, and we have to pay attention to 196 00:10:41,880 --> 00:10:44,080 Speaker 1: what they're going to be doing. But look, the job 197 00:10:44,080 --> 00:10:48,439 Speaker 1: market is cooling Since April lows, the job four week 198 00:10:48,480 --> 00:10:51,640 Speaker 1: moving average on jobless claim is up fort and I 199 00:10:51,679 --> 00:10:55,840 Speaker 1: would say, you know, statistically, anytime it's moved up fifty 200 00:10:56,360 --> 00:11:00,800 Speaker 1: from those lows, it's it's indicated recession coming down the road. 201 00:11:01,160 --> 00:11:05,040 Speaker 1: And so I do think the job market is cooling off, 202 00:11:05,080 --> 00:11:07,320 Speaker 1: even though we have a big job's report coming up 203 00:11:07,360 --> 00:11:12,600 Speaker 1: this Friday, we're expecting somewhere around three three fifty UM 204 00:11:12,600 --> 00:11:15,959 Speaker 1: on jobs game, which is significantly reduced from the last number. 205 00:11:16,559 --> 00:11:19,880 Speaker 1: But yeah, moving forward, I think you're going to continue 206 00:11:19,880 --> 00:11:22,680 Speaker 1: to see some economic numbers to terryate. So what have 207 00:11:22,760 --> 00:11:25,000 Speaker 1: you guys been doing in the market here, Brett in 208 00:11:25,000 --> 00:11:28,240 Speaker 1: in the last you know, several weeks here again, we 209 00:11:28,240 --> 00:11:30,960 Speaker 1: had a brutal first half of the year, bounce off 210 00:11:31,040 --> 00:11:34,160 Speaker 1: the bottom. Now a little bit of uncertainty here. What 211 00:11:34,200 --> 00:11:37,840 Speaker 1: are you guys doing over the last several weeks. Well, strategically, 212 00:11:37,880 --> 00:11:42,280 Speaker 1: we have shifted to we are by dips and specifically 213 00:11:42,360 --> 00:11:44,520 Speaker 1: we like the small and mid cap arena. I think 214 00:11:44,559 --> 00:11:49,120 Speaker 1: the valuations on their four p's are probably the best 215 00:11:49,760 --> 00:11:53,240 Speaker 1: going back to the early two thousands, and we're paying 216 00:11:53,240 --> 00:11:57,560 Speaker 1: attention to that. We're taking advantage of individual stock picking, 217 00:11:57,600 --> 00:11:59,760 Speaker 1: I think is the way to play this. There's just 218 00:11:59,800 --> 00:12:02,320 Speaker 1: some companies that have been thrown out with the bathwater 219 00:12:03,080 --> 00:12:06,960 Speaker 1: and I think there's incredible opportunities and we're taking advantage 220 00:12:06,960 --> 00:12:09,360 Speaker 1: on any of these dips as we move forward. It's 221 00:12:09,360 --> 00:12:11,760 Speaker 1: awesome to get a straight talker, you know. Yeah, Well 222 00:12:11,800 --> 00:12:14,320 Speaker 1: you get good to Tallahassee. You get straight talkers. I 223 00:12:14,400 --> 00:12:16,360 Speaker 1: like it. Yeah, I like it. Don't mess around that. 224 00:12:16,520 --> 00:12:20,040 Speaker 1: And it's also rare to get a street talker that's 225 00:12:20,040 --> 00:12:22,080 Speaker 1: so bullish these days, right, even the big bulls seem 226 00:12:22,120 --> 00:12:24,160 Speaker 1: to have turned bearish. And the bear sounds so much 227 00:12:24,200 --> 00:12:27,079 Speaker 1: smarter with their doom and gloom if you step back 228 00:12:27,120 --> 00:12:31,160 Speaker 1: and look at the charts longer term. Absolutely yeah. Alright, 229 00:12:31,200 --> 00:12:35,400 Speaker 1: Florida State at l s U this Sunday, September four pm. 230 00:12:35,520 --> 00:12:39,320 Speaker 1: That is game, all right, Brett, you in chief market 231 00:12:39,320 --> 00:12:46,559 Speaker 1: strategist First Franklin Financial Services. We appreciate getting your thoughts. 232 00:12:46,679 --> 00:12:50,200 Speaker 1: Our next guest, this is interesting. A bus hater, CEO 233 00:12:50,200 --> 00:12:55,000 Speaker 1: and president of a peto based in Fredericksburg, Virginia. I 234 00:12:55,000 --> 00:12:58,920 Speaker 1: think all of us. What do you guys do at 235 00:12:58,920 --> 00:13:01,800 Speaker 1: a specto? This is really interesting? Tell us about your 236 00:13:01,840 --> 00:13:09,480 Speaker 1: company absolutely so. Basically, um, A Speedo provides innovative solutions 237 00:13:09,520 --> 00:13:14,600 Speaker 1: to the government, military, and the intel community protecting their interest, 238 00:13:14,800 --> 00:13:18,320 Speaker 1: human assets and infrastructure. And I have a feeling you're 239 00:13:18,320 --> 00:13:21,560 Speaker 1: going to get into one of our more interesting products 240 00:13:21,559 --> 00:13:23,880 Speaker 1: here in a little bit, but I'll wait for that. No, 241 00:13:23,960 --> 00:13:27,640 Speaker 1: it's bullet bulletproof close. I'm so down with this and 242 00:13:27,640 --> 00:13:30,040 Speaker 1: by the way, it's not just like vests. Right, do 243 00:13:30,040 --> 00:13:35,560 Speaker 1: you make actually bulletproof suits? Can I wear this on TV? Oh? Absolutely? 244 00:13:35,600 --> 00:13:38,240 Speaker 1: It's uh, no such thing as bulletproof, but yes, we 245 00:13:38,320 --> 00:13:42,679 Speaker 1: are America's first bullet resistant clothing company. Many many years 246 00:13:42,679 --> 00:13:45,839 Speaker 1: ago we created suits that look like regular suits that 247 00:13:45,920 --> 00:13:48,520 Speaker 1: you wear to work, but they'll stop a nine millimeter 248 00:13:51,200 --> 00:13:54,720 Speaker 1: fifty and all that. How how does that just tell us? How? 249 00:13:56,160 --> 00:14:01,319 Speaker 1: Um we work with the special arameds and integrated into clothing. 250 00:14:01,840 --> 00:14:05,360 Speaker 1: I've talked to you before, I've talked you. I've talked 251 00:14:05,360 --> 00:14:07,160 Speaker 1: to you about this before. My first thought goes to 252 00:14:07,240 --> 00:14:12,120 Speaker 1: motorcycle clothing because it's so difficult to find good, uh, 253 00:14:12,760 --> 00:14:17,080 Speaker 1: motorcycle clothing that's not big and bulky, and clearly suits 254 00:14:17,080 --> 00:14:19,920 Speaker 1: are not that. So why don't you branch out into 255 00:14:19,960 --> 00:14:25,560 Speaker 1: that business? We've actually done stuff like that on individual basis. 256 00:14:25,600 --> 00:14:28,760 Speaker 1: But I mean our focus is government, uh, in the 257 00:14:28,760 --> 00:14:33,600 Speaker 1: intel community, the military, So we're right now sticking to that. 258 00:14:33,720 --> 00:14:37,720 Speaker 1: But who knows, Yeah, that's my tip, you know, like military, well, police, 259 00:14:37,880 --> 00:14:41,720 Speaker 1: police ride a lot of times. But so so what 260 00:14:41,720 --> 00:14:45,800 Speaker 1: what else? What are the most interesting aspects of espetto 261 00:14:46,040 --> 00:14:48,760 Speaker 1: for you? Beyond the one that you have to talk 262 00:14:48,760 --> 00:14:52,600 Speaker 1: about every time someone finds happy. But well, we're also 263 00:14:53,320 --> 00:14:56,280 Speaker 1: the first ones to introduce female focused body armor to 264 00:14:56,320 --> 00:14:59,440 Speaker 1: the military. Women in the military have been wearing uh 265 00:14:59,720 --> 00:15:03,200 Speaker 1: men body armor for the longest time, and it affects 266 00:15:03,200 --> 00:15:07,280 Speaker 1: their mobility. Uh you know, it's not as safe. It 267 00:15:07,440 --> 00:15:12,280 Speaker 1: causes a lot of injuries. So we were the first 268 00:15:12,280 --> 00:15:15,880 Speaker 1: ones to work with the US Air Force and create 269 00:15:16,040 --> 00:15:19,400 Speaker 1: the female focused body armors. So we did that. We 270 00:15:19,480 --> 00:15:22,440 Speaker 1: also right now are working on something really cool. We're 271 00:15:22,440 --> 00:15:26,360 Speaker 1: calling it Scaliflex, which is going to be the you know, 272 00:15:26,560 --> 00:15:29,760 Speaker 1: the next level of female focused body armors. So doing 273 00:15:29,800 --> 00:15:34,320 Speaker 1: those things, but we have an entire division called a 274 00:15:34,360 --> 00:15:39,560 Speaker 1: Speado Labs were we're just developing cool technology and we 275 00:15:39,600 --> 00:15:42,440 Speaker 1: have in house engineers, tree d printers, all of that. 276 00:15:42,560 --> 00:15:44,560 Speaker 1: And then the other side of a Speadow Labs is 277 00:15:44,560 --> 00:15:48,240 Speaker 1: where we actually invest were incumbator accelrator model on that 278 00:15:48,560 --> 00:15:53,000 Speaker 1: where we invest in cool technologies and bring them to 279 00:15:53,760 --> 00:15:57,160 Speaker 1: the government. Because the biggest issue with startup communities that 280 00:15:57,800 --> 00:16:01,320 Speaker 1: they can't really present their products to the federal government. 281 00:16:01,360 --> 00:16:04,400 Speaker 1: There's I mean, you have to have contracts, you have 282 00:16:04,440 --> 00:16:07,880 Speaker 1: to have contact, past performances and everything well has all 283 00:16:07,920 --> 00:16:11,800 Speaker 1: of that, and so we would just invest in that. 284 00:16:11,960 --> 00:16:15,720 Speaker 1: See I see, so you're there in basically you're absolutely 285 00:16:15,840 --> 00:16:21,200 Speaker 1: there so to speak. Or nobody wants to have to 286 00:16:21,320 --> 00:16:24,400 Speaker 1: use these kind of products, right. Um, I'm sure you 287 00:16:24,560 --> 00:16:27,960 Speaker 1: also would prefer if there were no war, but there 288 00:16:28,080 --> 00:16:31,200 Speaker 1: is one right now. Vladimir Putin invaded Ukraine. Are you 289 00:16:31,560 --> 00:16:34,680 Speaker 1: shipping armor? Um? Two soldiers there? Are you helping out 290 00:16:34,680 --> 00:16:36,840 Speaker 1: in that? Uh, you know, on the good side of 291 00:16:36,880 --> 00:16:41,440 Speaker 1: that fight? Yeah? Absolutely, the good side of the fight. Um, yeah, 292 00:16:41,560 --> 00:16:45,280 Speaker 1: we are. We have a cargo plane full of products 293 00:16:45,320 --> 00:16:48,040 Speaker 1: that goes out. In the beginning, it was going out 294 00:16:48,040 --> 00:16:51,040 Speaker 1: pretty much every week, every other week, and now it's 295 00:16:51,160 --> 00:16:53,600 Speaker 1: more or less like a couple of times a month. Uh, 296 00:16:53,720 --> 00:16:58,080 Speaker 1: that we have. So we've done um, body armor carriers, 297 00:16:58,520 --> 00:17:04,040 Speaker 1: UM m r E, medical equipment, flashlights, and you know, 298 00:17:04,600 --> 00:17:07,080 Speaker 1: a whole bunch of stuff. Is this I've actually been 299 00:17:07,119 --> 00:17:09,800 Speaker 1: to Ukraine. I was right at the beginning of this war. 300 00:17:09,880 --> 00:17:12,120 Speaker 1: I was I was at the border of Poland in Ukraine. 301 00:17:12,119 --> 00:17:15,359 Speaker 1: But in eighteen I also supplied a whole lot of 302 00:17:16,200 --> 00:17:20,520 Speaker 1: armor to Ukraine and I was actually there delivering that. Interesting, 303 00:17:20,600 --> 00:17:23,200 Speaker 1: So I mean, is it for the Ukraine army as 304 00:17:23,400 --> 00:17:27,919 Speaker 1: for civilians, who knows for the military, it's the military 305 00:17:27,960 --> 00:17:32,480 Speaker 1: and border control. So what what how do you finance 306 00:17:32,520 --> 00:17:36,439 Speaker 1: all this stuff? I mean, um, are you looking at 307 00:17:36,520 --> 00:17:40,479 Speaker 1: raising money in public markets? Are you? Um? You know 308 00:17:40,760 --> 00:17:43,160 Speaker 1: taking out debt right now is a very interesting time 309 00:17:43,200 --> 00:17:45,680 Speaker 1: to I guess already have done that. You don't maybe 310 00:17:45,720 --> 00:17:48,520 Speaker 1: don't want to do it, um, as as as rates 311 00:17:48,560 --> 00:17:51,320 Speaker 1: go up and up, But what's the capital structure look like? 312 00:17:52,560 --> 00:17:58,120 Speaker 1: So espeto? UM. We we are cash positive. We were 313 00:17:58,160 --> 00:18:01,800 Speaker 1: not in lost. Uh, We're doing well. So a lot 314 00:18:01,840 --> 00:18:04,480 Speaker 1: of it is just you know, utilizing our own cash. 315 00:18:04,520 --> 00:18:07,080 Speaker 1: We worked great deals with some of her suppliers. We've 316 00:18:07,080 --> 00:18:09,960 Speaker 1: got great partners in the industry with great terms with that. 317 00:18:10,080 --> 00:18:15,680 Speaker 1: But we are looking at talking to some pees and vcs. 318 00:18:15,680 --> 00:18:18,439 Speaker 1: But the biggest thing that we're gearing up for is 319 00:18:18,600 --> 00:18:22,920 Speaker 1: at the end of three for early hopefully we will 320 00:18:23,760 --> 00:18:26,520 Speaker 1: be going public UM. Right now, we're just in the 321 00:18:26,560 --> 00:18:29,320 Speaker 1: prep mode forward. We're we have a firm we're working 322 00:18:29,359 --> 00:18:32,959 Speaker 1: with in New York, have taken hundreds of companies public um. 323 00:18:33,000 --> 00:18:36,000 Speaker 1: We've got a great board of advisors. UM. Heck, one 324 00:18:36,040 --> 00:18:37,440 Speaker 1: of the one of the guys on our board of 325 00:18:37,480 --> 00:18:39,199 Speaker 1: advisor is the guy who wrote the book, The I 326 00:18:39,280 --> 00:18:42,720 Speaker 1: P O Playbook. Uh, Steve cake Bread, he took sales 327 00:18:42,760 --> 00:18:46,399 Speaker 1: Force Pandora, yes public, he was their CFOs. So just 328 00:18:46,400 --> 00:18:49,560 Speaker 1: putting all the pieces in place right now and scale 329 00:18:49,680 --> 00:18:54,320 Speaker 1: to scale you want to really out? Yeah, absolutely. I 330 00:18:54,359 --> 00:18:57,040 Speaker 1: mean most of the companies that go public are are 331 00:18:57,080 --> 00:18:59,960 Speaker 1: in a loss right, but they have exponential growth. We're 332 00:19:00,080 --> 00:19:02,760 Speaker 1: a company that has been positive for years and we're 333 00:19:03,119 --> 00:19:06,480 Speaker 1: still have that exponential growth. Where did you guys come from? 334 00:19:06,520 --> 00:19:08,439 Speaker 1: I mean, where do you find people like you? I 335 00:19:08,480 --> 00:19:13,200 Speaker 1: mean doing a bullet resistant clothing I mean, I don't 336 00:19:13,200 --> 00:19:16,120 Speaker 1: even think I can even think of that. So you're 337 00:19:16,119 --> 00:19:18,199 Speaker 1: and you're a bit of a serial entrepreneur, aren't you? 338 00:19:18,320 --> 00:19:22,720 Speaker 1: After ships in ports? Hope, you're sending your ships in 339 00:19:22,760 --> 00:19:30,200 Speaker 1: ports That was a great business senior year of high school. Um, 340 00:19:30,480 --> 00:19:33,520 Speaker 1: that's all so, so basically you've been starting businesses since 341 00:19:33,520 --> 00:19:36,400 Speaker 1: you were a kid. Yeah. Especially I started freshman year 342 00:19:36,400 --> 00:19:38,840 Speaker 1: of college and senior year of colleges when we introduced 343 00:19:38,840 --> 00:19:44,240 Speaker 1: the America's first bullet resistant clothing line. Unbelievable. Why, I 344 00:19:44,280 --> 00:19:48,159 Speaker 1: mean party, Why wasn't just just drinking beer with the 345 00:19:48,160 --> 00:19:52,520 Speaker 1: rest of the college kids. I was, but I was 346 00:19:52,560 --> 00:19:56,480 Speaker 1: working at men'sware house full time, learning my business full time, 347 00:19:56,520 --> 00:19:59,919 Speaker 1: going to school full time. Um and uh it was. 348 00:20:00,160 --> 00:20:03,040 Speaker 1: It was tough. But University of Mary Washington, that's a hustle. 349 00:20:03,119 --> 00:20:05,040 Speaker 1: Where's the University Mary Washing? I know it's in Virginia. 350 00:20:05,040 --> 00:20:09,080 Speaker 1: We're in Virginia. You guys stayed right there. You're close 351 00:20:09,119 --> 00:20:11,880 Speaker 1: to d C. You're close to d C all those 352 00:20:11,920 --> 00:20:16,119 Speaker 1: government businesses. That's cool stuff. Alright, great figure build up 353 00:20:16,160 --> 00:20:20,320 Speaker 1: contacts on the Colorado to so Colorado's big. Colorados are 354 00:20:20,560 --> 00:20:23,440 Speaker 1: another tech side. So we have our offices in Colorado 355 00:20:23,480 --> 00:20:27,399 Speaker 1: and Charleston. Colorado is mostly you know, Space Force Missile 356 00:20:27,440 --> 00:20:30,160 Speaker 1: Defense System and APETO is in all of those nassas 357 00:20:30,640 --> 00:20:35,479 Speaker 1: for Missile Defense System. A boss Hayter when you make 358 00:20:35,520 --> 00:20:38,960 Speaker 1: your first billion remember remember us, Yes exactly, A boss 359 00:20:39,000 --> 00:20:42,080 Speaker 1: Hater CEO and president of ASPECTA. One of our more 360 00:20:42,359 --> 00:20:48,400 Speaker 1: interesting guest all right, want to bring in Anna Want 361 00:20:48,480 --> 00:20:51,160 Speaker 1: she's the chief US economist with Bloomberg Economics. I'm glad 362 00:20:51,200 --> 00:20:52,760 Speaker 1: we got her on today because I have some questions. 363 00:20:52,760 --> 00:20:54,800 Speaker 1: Will you go hit well? So all right, Anna, thanks 364 00:20:54,840 --> 00:20:58,560 Speaker 1: so much for joining us. We had this um piece 365 00:20:58,600 --> 00:21:01,680 Speaker 1: of news from snap You know, the owners of Snapchat, 366 00:21:01,760 --> 00:21:05,320 Speaker 1: they're firing twenty percent of their staff. And we've been 367 00:21:05,359 --> 00:21:08,639 Speaker 1: seeing stuff like this at a Silicon valley for a 368 00:21:08,720 --> 00:21:12,159 Speaker 1: month two months now, where they're either freezing, hiring or 369 00:21:12,200 --> 00:21:16,840 Speaker 1: reducing headcount by ten percent or twenty You know, from 370 00:21:17,280 --> 00:21:24,400 Speaker 1: social media to UH to UM, UH, crypto to software, 371 00:21:24,840 --> 00:21:28,560 Speaker 1: everybody seems to be slowing, stopping, or firing at the 372 00:21:28,600 --> 00:21:31,840 Speaker 1: same time. The JOLTS yesterday showed the biggest amount of 373 00:21:31,920 --> 00:21:34,320 Speaker 1: job openings, one of the highest on record, eleven point 374 00:21:34,359 --> 00:21:39,359 Speaker 1: eight million. What gives Yeah, I think definitely there has 375 00:21:39,440 --> 00:21:44,679 Speaker 1: been a tech recession UM, but techno technology technology sector 376 00:21:44,720 --> 00:21:48,480 Speaker 1: accounts for but just a small proportion of the labor 377 00:21:48,520 --> 00:21:53,199 Speaker 1: force UM. In JOLTS data yesterday, we saw that the 378 00:21:53,320 --> 00:21:58,040 Speaker 1: job openings UH increase has been concentrated in government and 379 00:21:58,400 --> 00:22:03,679 Speaker 1: UH low sort of the low income services sector. And 380 00:22:03,720 --> 00:22:07,040 Speaker 1: I think that seems to be consistent with what I'm 381 00:22:07,080 --> 00:22:09,640 Speaker 1: seeing outside in the real world too. That is, if 382 00:22:09,680 --> 00:22:12,320 Speaker 1: you just get out of the cities and go out 383 00:22:12,359 --> 00:22:15,160 Speaker 1: to you know, Brew America, there's still a lot of 384 00:22:15,600 --> 00:22:18,480 Speaker 1: a lot of UM for higher signs. People are still 385 00:22:18,960 --> 00:22:22,560 Speaker 1: small businesses, are still complaining about not being able to 386 00:22:22,560 --> 00:22:27,520 Speaker 1: to find workers. So I think two things could happen 387 00:22:27,640 --> 00:22:30,000 Speaker 1: at once in the in the economy, which is you 388 00:22:30,040 --> 00:22:32,640 Speaker 1: have these pockets of weaknesses, which is good to save 389 00:22:32,760 --> 00:22:37,240 Speaker 1: from the fetch perspective, but also that there's a strength 390 00:22:37,400 --> 00:22:40,760 Speaker 1: in the rest of the service economy. Matt, I don't 391 00:22:40,760 --> 00:22:42,600 Speaker 1: know how you and I made it to Bloomberg. I mean, 392 00:22:42,600 --> 00:22:45,440 Speaker 1: we are surrounded by really smart people. And it's got 393 00:22:45,440 --> 00:22:49,840 Speaker 1: her undergraduate degree economics and statistics, which is just the worst. 394 00:22:50,000 --> 00:22:53,640 Speaker 1: I was just luck lucky, but I thinks is the best. 395 00:22:53,760 --> 00:22:55,600 Speaker 1: I couldn't get away in it. It's just the worst. 396 00:22:55,640 --> 00:22:57,760 Speaker 1: And then she gets her PhD from the universe of Chicago. 397 00:22:57,800 --> 00:22:59,920 Speaker 1: I don't have no idea how we made it here. 398 00:23:00,240 --> 00:23:03,760 Speaker 1: But and I talked to us about a growth recession. 399 00:23:04,280 --> 00:23:06,399 Speaker 1: What is a growth recession? Or is that something you 400 00:23:06,480 --> 00:23:09,640 Speaker 1: just made up? Didn't we just see that? I don't know. Well, 401 00:23:10,280 --> 00:23:12,439 Speaker 1: I'm I'm on the same boat as you guys. Actually, 402 00:23:12,480 --> 00:23:17,960 Speaker 1: I have not seen this terminology at Berkeley or Chicago, 403 00:23:19,440 --> 00:23:22,920 Speaker 1: but apparently once I looked it up. What this means 404 00:23:23,040 --> 00:23:27,280 Speaker 1: is that it is positive growth that but it's not 405 00:23:27,440 --> 00:23:31,639 Speaker 1: positive enough to bring down unemployment rate. So unemployment rate 406 00:23:31,680 --> 00:23:34,199 Speaker 1: will still go up. UM. So I think it's just 407 00:23:34,240 --> 00:23:39,040 Speaker 1: a euphemism for soft landing UM. And you know, in 408 00:23:39,040 --> 00:23:42,760 Speaker 1: in the June's Summary of Economic projections, the median f 409 00:23:42,840 --> 00:23:46,919 Speaker 1: o MC members sees unemployment rate rising from you know, 410 00:23:47,000 --> 00:23:49,480 Speaker 1: three point six at that time to four point one 411 00:23:49,480 --> 00:23:53,480 Speaker 1: pc by the end of still very low, very low, 412 00:23:53,600 --> 00:23:57,159 Speaker 1: very low, but with positive GDP growth. So that is 413 00:23:57,200 --> 00:23:59,800 Speaker 1: the growth recession. I think that that would be consistent 414 00:23:59,840 --> 00:24:04,080 Speaker 1: with growth recession. That's just weird. Okay, what do we 415 00:24:04,119 --> 00:24:08,159 Speaker 1: call what just happened? We had contraction, no growth in 416 00:24:08,200 --> 00:24:10,399 Speaker 1: the first two quarters. And do you think we're going 417 00:24:10,440 --> 00:24:13,760 Speaker 1: to continue to see um, you know, back to back 418 00:24:13,840 --> 00:24:17,880 Speaker 1: quarters of contraction without calling it a recession. I mean, 419 00:24:17,880 --> 00:24:20,040 Speaker 1: it doesn't feel like a recession, does it unless you 420 00:24:20,640 --> 00:24:25,200 Speaker 1: are one in five people at snapchat. UM. I think 421 00:24:25,240 --> 00:24:29,240 Speaker 1: there's a big debate in the economic profession right now, 422 00:24:29,280 --> 00:24:33,720 Speaker 1: which is what is the real data and GDP. There 423 00:24:33,760 --> 00:24:36,800 Speaker 1: there are two measures of GDP. One is the from 424 00:24:36,800 --> 00:24:39,600 Speaker 1: the expenditure side, where you know C plus G plus 425 00:24:39,600 --> 00:24:43,760 Speaker 1: I plus net exports and that is showing two consecutive 426 00:24:43,840 --> 00:24:47,159 Speaker 1: quarters of negative growth. But the other measure, which is 427 00:24:47,200 --> 00:24:51,840 Speaker 1: based on summing the income and corporate profits. That's called 428 00:24:51,880 --> 00:24:56,280 Speaker 1: the gross domestic income that is showing positive growth in 429 00:24:56,320 --> 00:24:59,720 Speaker 1: the last two quarters. So usually the economists think that 430 00:24:59,800 --> 00:25:02,320 Speaker 1: the average of those two is the best gauge of 431 00:25:02,400 --> 00:25:05,480 Speaker 1: what's going on in the economy, and that will tell 432 00:25:05,520 --> 00:25:09,040 Speaker 1: you that, well, growth has stalled definitely in the first 433 00:25:09,080 --> 00:25:11,879 Speaker 1: half of this year, but it did not go negative. 434 00:25:12,520 --> 00:25:14,959 Speaker 1: And what's this what's this half look like? Are we 435 00:25:15,119 --> 00:25:17,240 Speaker 1: what's this quarter look like? What are we in right now? 436 00:25:18,560 --> 00:25:22,320 Speaker 1: I think the troth of consumer spending was around June 437 00:25:22,480 --> 00:25:27,760 Speaker 1: or early July, when gasoline prices was uh was very high. 438 00:25:27,840 --> 00:25:31,680 Speaker 1: And from high frequency data, I'm seeing that spending has 439 00:25:32,119 --> 00:25:37,160 Speaker 1: has been going back up again truck yesterday. And even 440 00:25:37,200 --> 00:25:40,240 Speaker 1: the housing market, Yeah, we are seeing these dramatic plunges 441 00:25:40,320 --> 00:25:43,160 Speaker 1: in home sales, but you know, if you look at 442 00:25:43,400 --> 00:25:47,160 Speaker 1: actual real time data, like I have the app red 443 00:25:47,240 --> 00:25:49,840 Speaker 1: fin on my phone, there has been just a lot 444 00:25:49,880 --> 00:25:52,840 Speaker 1: of pending and continguous Like the moment that houses comes on, 445 00:25:53,040 --> 00:25:56,280 Speaker 1: it's pending contingency. Good stuff an a long Next time 446 00:25:56,320 --> 00:25:58,600 Speaker 1: you're in New York, you are coming into our studio, 447 00:25:58,600 --> 00:26:03,000 Speaker 1: no questions ask all right, I think we're all gonna 448 00:26:03,119 --> 00:26:05,560 Speaker 1: learn a lot here. I know I am in this 449 00:26:05,600 --> 00:26:08,439 Speaker 1: next segment. Dr Luisa Marino joins us. She's president of 450 00:26:08,600 --> 00:26:12,920 Speaker 1: Defense Metals Corporation. That makes it sound so so serious, 451 00:26:13,000 --> 00:26:14,560 Speaker 1: I know, but that's why I want to go there. 452 00:26:14,600 --> 00:26:17,040 Speaker 1: So uh, Dr Marina, thank you so much for joining 453 00:26:17,080 --> 00:26:20,359 Speaker 1: us here. Tell us what Defense Metals Corporation is. What 454 00:26:20,400 --> 00:26:24,600 Speaker 1: do you guys do well? Defense Metals is a junior 455 00:26:24,600 --> 00:26:28,720 Speaker 1: mining company and we are in the process of developing 456 00:26:29,440 --> 00:26:33,560 Speaker 1: um mine, a rare earth mine, and rare earth is 457 00:26:33,560 --> 00:26:38,080 Speaker 1: is a critical material um for technologies and for the 458 00:26:38,119 --> 00:26:41,440 Speaker 1: defense sector. I thought rare earth was like a whole 459 00:26:41,480 --> 00:26:46,440 Speaker 1: group of minerals. It is. It is so rares. Uh. 460 00:26:46,480 --> 00:26:48,680 Speaker 1: They are the London Nights. They'll find at the bottom 461 00:26:48,920 --> 00:26:54,080 Speaker 1: of the the periodic table, and they're about seventeen elements. 462 00:26:54,640 --> 00:26:57,280 Speaker 1: And so the reason why they all grouped together is 463 00:26:57,320 --> 00:27:00,440 Speaker 1: that when you mind one effectively mining all of them, 464 00:27:00,480 --> 00:27:05,560 Speaker 1: because they tend to occur together. So where does one 465 00:27:05,760 --> 00:27:08,200 Speaker 1: mind for these? Are they in certain parts of the world? 466 00:27:08,520 --> 00:27:12,720 Speaker 1: And what are there like neodymium or prodium? Are you 467 00:27:12,720 --> 00:27:15,200 Speaker 1: you just pulled up the periodic table. I'm just looking 468 00:27:15,200 --> 00:27:17,280 Speaker 1: at the last seventeen I thought he had that memories 469 00:27:17,320 --> 00:27:22,200 Speaker 1: from hyd chemistry. Now, they are not very common. Most 470 00:27:22,200 --> 00:27:25,760 Speaker 1: people don't know about them. Like I said, they are seventeen. 471 00:27:26,160 --> 00:27:28,840 Speaker 1: Some of the most known would be, for instance, new 472 00:27:28,880 --> 00:27:34,040 Speaker 1: demium presidymium. They make the strongest known magnets um and 473 00:27:34,280 --> 00:27:39,320 Speaker 1: and they go into everything from speakers to too electric 474 00:27:39,359 --> 00:27:42,280 Speaker 1: mortars for electric vehicles and things like that, as well 475 00:27:42,320 --> 00:27:45,520 Speaker 1: as m right machines for for in medicine. So those 476 00:27:45,560 --> 00:27:49,000 Speaker 1: are very popular ones. But there's this prosium, there's lenten um, 477 00:27:49,040 --> 00:27:52,080 Speaker 1: there's therium. There's so many for so many different applications. 478 00:27:53,080 --> 00:27:56,359 Speaker 1: But they are so so so what's your focused that 479 00:27:56,400 --> 00:28:00,720 Speaker 1: I mean, it's this is something that is of uh 480 00:28:01,000 --> 00:28:06,880 Speaker 1: sort of national security importance because um otherwise, in order 481 00:28:06,920 --> 00:28:10,119 Speaker 1: to build the batteries we need or um, you know, 482 00:28:10,160 --> 00:28:13,560 Speaker 1: the medical equipment that we need, we have to rely 483 00:28:13,840 --> 00:28:19,040 Speaker 1: on China or other countries that we don't necessarily so 484 00:28:19,400 --> 00:28:21,399 Speaker 1: um so so so what are you what are the 485 00:28:21,440 --> 00:28:24,280 Speaker 1: one what are the use cases that you're focused on 486 00:28:24,320 --> 00:28:27,199 Speaker 1: with the stuff that you you're gonna mind, right, So, 487 00:28:27,280 --> 00:28:29,080 Speaker 1: like I said, when you mind one, you mind all 488 00:28:29,119 --> 00:28:31,840 Speaker 1: of them. So we tend to have the most important 489 00:28:31,840 --> 00:28:35,560 Speaker 1: ones for us. Definitely the new Demium, presidimium UM, some 490 00:28:35,760 --> 00:28:39,160 Speaker 1: other minds, mostly in China. They will have you know, 491 00:28:39,440 --> 00:28:42,000 Speaker 1: what we call the heavy arths, which are the least 492 00:28:42,680 --> 00:28:46,600 Speaker 1: uh common ones, the more the more difficult ones to find. 493 00:28:46,760 --> 00:28:49,880 Speaker 1: And those have even more scientific and and and and 494 00:28:50,120 --> 00:28:54,520 Speaker 1: you know, very specialized applications. UM. For instance, this podium 495 00:28:54,760 --> 00:28:57,720 Speaker 1: that's go into magnets as well, but those are for 496 00:28:57,960 --> 00:29:01,040 Speaker 1: magnets that need to be exposed to very high temperatures 497 00:29:01,080 --> 00:29:05,360 Speaker 1: for instance, UM. And so they are you right, um. 498 00:29:05,560 --> 00:29:11,320 Speaker 1: China is responsible for refining of all the earth in 499 00:29:11,320 --> 00:29:18,760 Speaker 1: the world, although the US does mine about fifteen um 500 00:29:18,840 --> 00:29:24,520 Speaker 1: of in our accounts for fifteen of the world mind production. 501 00:29:24,920 --> 00:29:27,760 Speaker 1: But he exports everything to China as well, but is processed, 502 00:29:28,480 --> 00:29:33,080 Speaker 1: so China controls effectively the supply chain for for for earth. 503 00:29:33,920 --> 00:29:36,239 Speaker 1: The world is dependent on China for that that if 504 00:29:36,320 --> 00:29:39,400 Speaker 1: they were that's not good. How do we diversify? Is 505 00:29:39,400 --> 00:29:44,160 Speaker 1: it possible toy away from that? Right? That's what Defense 506 00:29:44,200 --> 00:29:47,320 Speaker 1: Mental is trying to do. We're trying to to to 507 00:29:47,400 --> 00:29:50,640 Speaker 1: build this mind in in British Columbia and Canada and 508 00:29:50,880 --> 00:29:54,360 Speaker 1: and build a supply chain in North America. There are 509 00:29:54,640 --> 00:29:58,800 Speaker 1: a couple other projects some in Africa, UM, some in 510 00:29:58,840 --> 00:30:03,440 Speaker 1: South America, UM one or two in Europe. And you 511 00:30:03,480 --> 00:30:06,760 Speaker 1: know it's it takes time to develop that. So mining 512 00:30:06,840 --> 00:30:08,960 Speaker 1: is one part of it, and then there's different stages 513 00:30:10,040 --> 00:30:13,040 Speaker 1: of processing. You have to float to produce a munal concentrate, 514 00:30:13,080 --> 00:30:15,600 Speaker 1: which you do UNUS, but and then they haven't been 515 00:30:15,600 --> 00:30:18,120 Speaker 1: able to economically refine it and they are sending it 516 00:30:18,160 --> 00:30:20,560 Speaker 1: at a moment to to China. And so the rest 517 00:30:20,560 --> 00:30:24,680 Speaker 1: of the world has to find ways of economically refined 518 00:30:24,760 --> 00:30:27,760 Speaker 1: these these materials and the defense metals that that's what 519 00:30:27,960 --> 00:30:31,080 Speaker 1: we focus on doing. So where is the US government 520 00:30:31,120 --> 00:30:33,920 Speaker 1: in this and trying to diversify away from trying I 521 00:30:33,960 --> 00:30:36,640 Speaker 1: would think you would have a tremendous amount of government 522 00:30:36,640 --> 00:30:40,160 Speaker 1: support and incentives to try to diversify away from China. 523 00:30:40,520 --> 00:30:43,200 Speaker 1: How do you deal with the US government and maybe 524 00:30:43,240 --> 00:30:45,440 Speaker 1: some other governments. Why isn't the military just doing this 525 00:30:45,520 --> 00:30:48,880 Speaker 1: itself find the stuff, you know, kick people out of 526 00:30:48,920 --> 00:30:51,040 Speaker 1: their houses where it is, and then rip up the 527 00:30:51,040 --> 00:30:54,800 Speaker 1: ground and get it. It would be extremely expensive and 528 00:30:54,880 --> 00:30:59,160 Speaker 1: if every if everything else fails, UM, probably that's that's 529 00:30:59,240 --> 00:31:01,400 Speaker 1: that's the way to Oh. I mean, some of these 530 00:31:01,440 --> 00:31:05,400 Speaker 1: materials already very very expensive five hundred dollars per kilo, 531 00:31:05,640 --> 00:31:10,320 Speaker 1: thousand dollars per kilo UM. And so you know, if you, 532 00:31:10,440 --> 00:31:14,120 Speaker 1: if you, if we have an incident with China, for instance, 533 00:31:14,120 --> 00:31:17,240 Speaker 1: and these cars, the prices of these of these elements 534 00:31:17,280 --> 00:31:19,880 Speaker 1: will go through the roof, like they did back into 535 00:31:19,880 --> 00:31:22,080 Speaker 1: thousand and ten when there was a conflict between China 536 00:31:22,080 --> 00:31:25,400 Speaker 1: and Japan and they were, you know, effectively rumors that 537 00:31:25,520 --> 00:31:29,920 Speaker 1: China was going to halt exports too of rats to Japan, 538 00:31:30,000 --> 00:31:33,160 Speaker 1: which at that time was the second consumer, and prices 539 00:31:33,200 --> 00:31:36,040 Speaker 1: went up a thousand percent, two thousand percent. Linden in Syria, 540 00:31:36,080 --> 00:31:38,160 Speaker 1: which was two dollars went to two hundred and fifty 541 00:31:38,200 --> 00:31:40,760 Speaker 1: dollars per kilo. And that is used for instance for 542 00:31:40,800 --> 00:31:43,280 Speaker 1: oil refinery. By the way, where is this stuff? Where 543 00:31:43,400 --> 00:31:45,800 Speaker 1: is this stuff traded? Louis says it it's not a 544 00:31:45,840 --> 00:31:49,080 Speaker 1: lot of metals exchange right, Well, no, it's not really 545 00:31:49,080 --> 00:31:53,560 Speaker 1: traded um not yet. So you could see prices launch 546 00:31:53,560 --> 00:31:58,080 Speaker 1: Shanghai metals, UM and uh and and some other Asian 547 00:31:58,120 --> 00:32:02,080 Speaker 1: metals and in in you know, some some other websites, 548 00:32:02,120 --> 00:32:09,160 Speaker 1: but it's it's usually uh, you know, confidential contracts, different amounts, 549 00:32:09,160 --> 00:32:11,880 Speaker 1: some you know, it's it's not that large. It's not 550 00:32:11,920 --> 00:32:15,280 Speaker 1: like iron ore or copper. You know, there's only about 551 00:32:15,360 --> 00:32:20,600 Speaker 1: two eighty thousand tons produced around the world, and these 552 00:32:20,600 --> 00:32:25,680 Speaker 1: are really unique, very strong materials which with a small 553 00:32:25,720 --> 00:32:30,520 Speaker 1: amount of it you can get fantastic magnetic, electric, optical properties. 554 00:32:31,120 --> 00:32:34,760 Speaker 1: So you mentioned you're starting a mine in Canada. Give 555 00:32:34,840 --> 00:32:36,760 Speaker 1: us kind of the update there. Where are you What 556 00:32:36,800 --> 00:32:38,360 Speaker 1: are some of the challenges you're facing. How do you 557 00:32:38,400 --> 00:32:39,960 Speaker 1: find the stuff? Yea, how do you find How do 558 00:32:39,960 --> 00:32:44,320 Speaker 1: you know it was there? Yes, you know, it's started 559 00:32:44,320 --> 00:32:47,480 Speaker 1: a long time ago. I mean they had associated with 560 00:32:47,960 --> 00:32:53,080 Speaker 1: sometimes niobium and other elements, and the geological survey of 561 00:32:53,080 --> 00:32:55,800 Speaker 1: of of of Briach, Columbia was was looking at the time, 562 00:32:55,840 --> 00:32:59,040 Speaker 1: I believe for food for niobium, and they find out 563 00:32:59,080 --> 00:33:01,160 Speaker 1: that there was rares as well, and it was not 564 00:33:01,280 --> 00:33:04,080 Speaker 1: important for a long time until somebody find out, Okay, 565 00:33:04,120 --> 00:33:06,560 Speaker 1: now is the time for rats, and you start developing it. 566 00:33:06,880 --> 00:33:09,720 Speaker 1: So that happens a little bit. So you do find 567 00:33:09,960 --> 00:33:15,200 Speaker 1: um rats with sometimes associated with with uranium or or 568 00:33:15,320 --> 00:33:19,959 Speaker 1: autorium or other elements, and so historically we know more 569 00:33:20,040 --> 00:33:22,680 Speaker 1: or less where where they occur. The problem is not 570 00:33:22,720 --> 00:33:24,440 Speaker 1: so much to find them, but it's but it's to 571 00:33:24,480 --> 00:33:28,520 Speaker 1: develop them, is to ultimately find an economic way of 572 00:33:28,560 --> 00:33:31,920 Speaker 1: processing them. And so we have been very successful at 573 00:33:31,960 --> 00:33:34,680 Speaker 1: Defense Metals. So we have a unique deposit. We are 574 00:33:34,680 --> 00:33:37,280 Speaker 1: able to do one important thing, which is to produce 575 00:33:37,360 --> 00:33:41,000 Speaker 1: mintal concentrate first, which then makes the whole profits more. 576 00:33:41,080 --> 00:33:43,640 Speaker 1: All right, good stuff, A good stuff. Dr Louisa Marino, 577 00:33:43,720 --> 00:33:46,920 Speaker 1: President Defense Metals Corporation. You get a PhD and Material 578 00:33:47,000 --> 00:33:50,120 Speaker 1: science and mechanics from Imperial College, London. What do you 579 00:33:50,160 --> 00:33:53,840 Speaker 1: do when you become the president of Defense Medals Corporation. 580 00:33:58,440 --> 00:34:01,400 Speaker 1: Thanks for listening to the Bloomberg Mark Gets podcasts. You 581 00:34:01,400 --> 00:34:04,720 Speaker 1: can subscribe and listen to interviews of Apple Podcasts or 582 00:34:04,960 --> 00:34:08,719 Speaker 1: whatever podcast platform you prefer. I'm Matt Miller. I'm on 583 00:34:08,719 --> 00:34:12,799 Speaker 1: Twitter at Matt Miller three and on Fall Sweeney I'm 584 00:34:12,800 --> 00:34:15,440 Speaker 1: on Twitter at pt Sweeney. Before the podcast, you can 585 00:34:15,480 --> 00:34:17,719 Speaker 1: always catch us worldwide at Bloomberg Radio.