WEBVTT - Lending, Markets, Metals, And A Growth Recession (Podcast) 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 0:00:11.520 --> 0:00:15.600 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.600 --> 0:00:18.439 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:21.759 at Bloomberg dot com slash podcast. All right, Matt, you 0:00:21.800 --> 0:00:25.960 go you get your undergraduate degree in English from Trinity College, 0:00:25.960 --> 0:00:28.600 which is just a phenomenal school. Oh my god. The 0:00:28.640 --> 0:00:32.480 squash team is insane, insane and legendary squash team. Yeah, 0:00:32.479 --> 0:00:34.720 in Hertford, Connecticut. And then you go get a master's 0:00:34.720 --> 0:00:36.680 in English from the Universe Chicago, which I didn't even 0:00:36.680 --> 0:00:39.400 know the University of Chicago offered a master's in English. 0:00:39.520 --> 0:00:41.560 I just think numbers when I think of Univerity of Chicago. 0:00:41.880 --> 0:00:43.880 So you get all that going, what do you do? 0:00:44.000 --> 0:00:47.040 You go into the private credit business? How does that work? 0:00:47.120 --> 0:00:49.040 I mean, well that's what I If you're gonna go 0:00:49.159 --> 0:00:52.080 to Wall Street, I think you're gonna do English major 0:00:52.120 --> 0:00:55.160 in the classics or history. I just don't see it. 0:00:55.160 --> 0:00:57.240 But Randy Schwimmer did it. He's co head of senior 0:00:57.320 --> 0:01:01.320 lending and Senior managing Director Churchill as management. Randy, You've 0:01:01.320 --> 0:01:04.720 had a odd career path, but we'll take you as 0:01:04.720 --> 0:01:08.280 an expert on this private credit business. I love the 0:01:08.280 --> 0:01:11.640 private private credit business. I think I can get yield there. 0:01:12.120 --> 0:01:14.000 Just give us an overview of kind of what the 0:01:14.040 --> 0:01:17.039 private credit market is like today, because boy, it's been 0:01:17.160 --> 0:01:20.920 ugly everywhere else in the capital markets it has been. 0:01:20.920 --> 0:01:22.600 But you know, listening to you guys talk, I had 0:01:22.640 --> 0:01:25.160 to do some push ups in my office just exactly 0:01:25.319 --> 0:01:28.000 that's he's shaming us. All. Yeah, but I did on 0:01:28.120 --> 0:01:29.600 my oak mail this more and so I'm good to go. 0:01:29.920 --> 0:01:32.640 But you know, feeling energized actually about where we are. 0:01:32.920 --> 0:01:36.280 Although you know, it's interesting. There's no much more fun 0:01:36.360 --> 0:01:39.720 for capital markets and investor guy to be looking at 0:01:39.760 --> 0:01:42.040 an inflection in the market right because the things are 0:01:42.040 --> 0:01:45.960 going along smoothly. It's like being a weather person meteorologist 0:01:46.040 --> 0:01:48.360 in San Diego. Okay, it's Sunday today, Sunday to Marrow, 0:01:48.360 --> 0:01:50.600 it's gonna be Sunday next week all week, you know. 0:01:50.680 --> 0:01:53.600 Whereas you know New England, it's a little more changeable. 0:01:53.640 --> 0:01:55.960 Sometimes he's raining sometimes and this is what's going on 0:01:56.040 --> 0:01:58.800 kind of right now. Is there a lot of moving 0:01:58.840 --> 0:02:00.400 parts where at the end of a war to your 0:02:00.440 --> 0:02:03.520 cycle where interest rates fell fell fell, you know that's 0:02:03.600 --> 0:02:05.560 over and we're in a new cycle, you know where 0:02:05.600 --> 0:02:08.320 rates are lifting off. We're calling it the Great Unwind. 0:02:08.440 --> 0:02:11.400 So the FEDS on winding its balance sheet, and the 0:02:11.520 --> 0:02:15.480 concern now is inflation, right, and so the Fed has 0:02:15.560 --> 0:02:19.360 to be frustrated because they're wondering, Okay, everybody, what about 0:02:19.440 --> 0:02:22.560 this we're raising rates until inflation is dead message? Have 0:02:22.680 --> 0:02:25.520 you not been getting? Turns out it was the we're 0:02:25.560 --> 0:02:28.360 raising rates until inflation is dead message they weren't getting. Well, 0:02:28.360 --> 0:02:30.120 it feels like they're getting it now, and the market 0:02:30.200 --> 0:02:33.600 is very cautious. Private credit, i would say, is somewhere 0:02:33.639 --> 0:02:38.560 between cautious, um and constructive depending on what's going on. 0:02:39.400 --> 0:02:43.839 Our portfolio, interestingly, which is comprised of almost three hundred 0:02:44.480 --> 0:02:49.960 private equity backed companies and all sorts of sectors, mostly defensive, healthcare, 0:02:50.040 --> 0:02:54.480 business services, technology, that portfolio is actually doing pretty well. 0:02:54.600 --> 0:02:58.200 Revenues are generally up, cash closer are also up. Now 0:02:58.200 --> 0:03:01.840 there are obviously, see situations where companies are struggling with 0:03:01.880 --> 0:03:04.920 supply chain issues. You mentioned labor costs before we started, 0:03:04.919 --> 0:03:08.600 you know, labor costs and labor availability is certainly an issue. 0:03:09.040 --> 0:03:12.280 But in the right sectors, and particularly with private equity 0:03:12.320 --> 0:03:15.680 sponsors who have raised long term capital with decades of 0:03:15.720 --> 0:03:19.440 experience around those sectors, and they have conviction with these 0:03:19.480 --> 0:03:23.200 businesses based not only in their decades, you know, going 0:03:23.200 --> 0:03:26.680 through cycles, but also in the recent experience going through COVID, 0:03:27.120 --> 0:03:28.840 And so they're coming out of COVID and looking at 0:03:28.840 --> 0:03:31.600 this new opportunity in the market and saying, you know, 0:03:31.680 --> 0:03:34.960 we think we have found companies that will continue to 0:03:35.000 --> 0:03:40.960 do well, less consumer facing, lower cap acts, and higher 0:03:40.960 --> 0:03:45.960 cash free cash flow uh generation, and those businesses we 0:03:46.000 --> 0:03:48.360 think we're going to do really well. We're partnering with 0:03:48.440 --> 0:03:52.200 them up and down the capital structure, senior debt, junior capital, 0:03:52.280 --> 0:03:56.160 equity co investing, and and have found that all of 0:03:56.160 --> 0:03:58.600 a sudden over the last you know, year or two, 0:03:59.080 --> 0:04:02.480 that opportunity is actually expanding for us, in part because 0:04:02.520 --> 0:04:05.400 the AZTEC class, as you mentioned, is attractive for people. 0:04:05.440 --> 0:04:08.600 It's an alternative asset class to the sort of headline 0:04:08.680 --> 0:04:12.440 bending stuff that's going on and very very popular lately. 0:04:12.600 --> 0:04:14.960 I mean, we hear so many people actually all year 0:04:15.040 --> 0:04:17.200 we've been hearing people talk about it, But how bad 0:04:17.240 --> 0:04:19.640 has it been. It's so opaque that I can't get 0:04:19.640 --> 0:04:21.680 a good picture by typing I N go on my 0:04:21.680 --> 0:04:26.120 Bloomberg terminal. I can see that treasuries UM are off, 0:04:26.360 --> 0:04:28.840 you know, the Treasury's index is down ten percent year 0:04:28.920 --> 0:04:31.719 to date. I can see that corporate debt is down 0:04:32.200 --> 0:04:34.599 UH ten eleven percent year to date. The global agg 0:04:34.720 --> 0:04:37.320 is off almost from its high. So it's been an 0:04:37.400 --> 0:04:43.279 historically bad period for you know, fixed income of all kinds. 0:04:43.720 --> 0:04:47.440 How has it been for uh, for private debt until 0:04:47.480 --> 0:04:50.960 this until this inflection has actually been through this year. 0:04:51.000 --> 0:04:53.760 And I would include include actually leverage loans in general, 0:04:53.760 --> 0:04:57.120 because we have a large cap practice with the now 0:04:57.160 --> 0:05:00.560 vene UM that does the broadly syndicated market liquid loans 0:05:00.560 --> 0:05:04.200 and so forth. Both that asset class and private credit 0:05:04.240 --> 0:05:08.680 have done very well this year relative to other assets, 0:05:08.760 --> 0:05:12.280 in part because of interest rates going up, in part 0:05:12.320 --> 0:05:16.360 because of the collateral and the security and the covenants 0:05:16.360 --> 0:05:18.800 that we have in the direct lending market that gives 0:05:18.880 --> 0:05:22.320 us protection, and in part because we don't trade. You 0:05:22.560 --> 0:05:25.480 mentioned you can't go on Blueberg and find flind these deals. 0:05:25.520 --> 0:05:28.560 That's the beauty of the alternative market, and that's what's 0:05:28.560 --> 0:05:31.320 happening with private credit since you can't trade it. The 0:05:31.360 --> 0:05:34.400 goodness is if you're comfortable with the investments you've made. 0:05:34.720 --> 0:05:38.600 These businesses are throwing off cash flow after cash flow, 0:05:39.279 --> 0:05:43.400 strong valuations because again, we're buying this, we're financing the 0:05:43.480 --> 0:05:45.960 data as a partner to the private equity firm who's 0:05:45.960 --> 0:05:49.800 throwing in tons of private equity cash that they've raised 0:05:49.880 --> 0:05:51.839 below us, So they've got to burn through a lot 0:05:52.080 --> 0:05:54.800 to get to even to us. That's why our default 0:05:54.880 --> 0:05:56.800 rate and laws rate has been so low, and that's 0:05:56.880 --> 0:05:59.760 generally the case in in private credit. The other thing 0:05:59.760 --> 0:06:02.760 that's going on right now is that investors, you know, 0:06:02.839 --> 0:06:06.320 who were investing in platforms like Churchill are looking for 0:06:06.800 --> 0:06:11.520 you know, relatively low risk, conservative but you know, yield 0:06:11.600 --> 0:06:14.240 that is going to be enhanced when rates go up. 0:06:14.440 --> 0:06:16.880 We're a floating right off the class. We've been waiting 0:06:17.320 --> 0:06:20.960 for this news cycle for forty years. Okay. I started 0:06:21.000 --> 0:06:23.920 my career coming out of Universe Chicago forty plus years 0:06:23.920 --> 0:06:27.719 ago and at the time was in charge. Interest rates 0:06:27.800 --> 0:06:30.240 were you know, double digital. I had a mortgage that 0:06:30.360 --> 0:06:33.200 was like twelve percent. I thought I was lucky here 0:06:33.240 --> 0:06:36.120 we are so far went from zero percent so for 0:06:36.360 --> 0:06:39.320 like the I don't use so for I'm a lieboard guy. Okay, 0:06:39.360 --> 0:06:42.520 so it went from zero to three percent? Right, all right, Randy, 0:06:42.520 --> 0:06:44.640 we gotta kint it short there. I could talk private 0:06:44.640 --> 0:06:46.760 credit all day, not at the time, so you can 0:06:46.760 --> 0:06:48.839 get you do you get? Ran Randy back back for 0:06:48.839 --> 0:06:51.200 like a half hour because I love this private credit 0:06:51.200 --> 0:06:53.760 business co had of senior lending and senior managing director 0:06:54.000 --> 0:07:00.240 Churchill Asset Management Private Credit. Check it out, all right, 0:07:00.279 --> 0:07:02.560 Breton Ewing Joints us he's a chief market strategist for 0:07:02.600 --> 0:07:07.119 First Franklin Financial Services. They're based in Tallahassee, and Brett 0:07:07.160 --> 0:07:09.840 has his undergraduate degree from Florida State and he's on 0:07:09.880 --> 0:07:14.520 the board of trustees at Tallahassee Quarterback Club Foundation. So Bred, 0:07:14.560 --> 0:07:16.880 we gotta start up. We'll get to the market stuff later. 0:07:17.200 --> 0:07:21.720 Give us the preview Florida State football. Well, we just 0:07:21.760 --> 0:07:25.040 had our first home game, got a pulled out a 0:07:25.120 --> 0:07:28.400 victory in a rainy night. But the big game really 0:07:28.520 --> 0:07:31.120 that's starting our season in our minds is this weekend 0:07:31.280 --> 0:07:35.640 against l s U. This So what's the feeling in 0:07:35.760 --> 0:07:38.040 Tallahassee about Florida State football. I mean they were you 0:07:38.040 --> 0:07:40.080 guys had such a great run for such a long 0:07:40.160 --> 0:07:43.000 time under coach Balden. It's been a little bit follow 0:07:43.200 --> 0:07:47.760 since then. What's the feeling of Tahassee these days? Well, 0:07:47.800 --> 0:07:51.440 we are optimistic. Um, we do feel that we have 0:07:51.560 --> 0:07:54.640 a good coaching and his leadership and what he's done 0:07:54.680 --> 0:07:58.880 with recruiting given the tools he does have, access two 0:07:59.080 --> 0:08:02.200 is pretty strong, and we are optimistic that we'll have 0:08:02.240 --> 0:08:04.960 a pretty decent season this year, which should give us 0:08:05.000 --> 0:08:08.080 momentum going into next fall. All right, good stuff. All right, 0:08:08.120 --> 0:08:12.200 So you've got a Federal Reserve that turn I'm not 0:08:12.240 --> 0:08:14.600 sure if they turned hawker Is on Friday last of 0:08:14.720 --> 0:08:18.240 last week, but boy, they certainly communicated that and that's 0:08:18.240 --> 0:08:21.680 had an impact on these markets. What did you guys 0:08:21.720 --> 0:08:25.280 take away from our Federal Reserve on Friday? Well, I 0:08:25.320 --> 0:08:28.920 think the timing of that meeting was, you know, reflect 0:08:29.320 --> 0:08:32.520 important because I mean we were coming off of a 0:08:32.600 --> 0:08:36.560 pretty big run up from the June Lows. In fact, 0:08:36.640 --> 0:08:38.720 the week prior to that you had the NASDAC up 0:08:39.720 --> 0:08:44.160 from the Lows, SMP up at almost and I think 0:08:44.960 --> 0:08:47.880 I think he didn't turn a little bit more dubblished 0:08:47.920 --> 0:08:51.680 in the market, was kind of hoping for looking forward, 0:08:52.440 --> 0:08:56.960 and his rhetoric just was perfect timing for what we 0:08:57.040 --> 0:09:00.760 feel is a pullback that has been badly needed in 0:09:00.800 --> 0:09:03.120 this market. We think a new bull market has started 0:09:03.160 --> 0:09:07.080 and the June lows will hold. Really I'd like that. See, 0:09:07.120 --> 0:09:09.000 that's the question I've had a lot of people. Yes, 0:09:09.040 --> 0:09:13.120 it is a call like will we retest those June lows, 0:09:13.320 --> 0:09:17.520 and you're suggesting maybe not. I think the only way 0:09:17.520 --> 0:09:21.480 that we retest those June lows over this fall would 0:09:21.480 --> 0:09:25.480 be inflation actually starts picking up at a higher pace, 0:09:26.320 --> 0:09:29.760 and we don't see that happening with our data that 0:09:29.800 --> 0:09:33.240 we're looking at across the board. The FED has really 0:09:33.280 --> 0:09:37.760 done one of the most hawkish beatdowns of this economy 0:09:37.840 --> 0:09:41.400 that we've seen in forty years, and the real effects 0:09:41.440 --> 0:09:44.679 of that are just now starting to flow through. And 0:09:44.720 --> 0:09:48.839 we believe the economic data will still continue to cool, 0:09:49.480 --> 0:09:53.400 and we believe that inflation numbers have peaked and that 0:09:53.480 --> 0:09:56.040 we're going to start seeing some cooling in there as well. 0:09:56.240 --> 0:09:57.679 You know, I want to ask you about the labor 0:09:57.720 --> 0:10:01.640 market because we had um the app firing kind of 0:10:01.679 --> 0:10:05.160 adding to the pile of silicon valley, Um, you know, 0:10:05.320 --> 0:10:08.520 shopping that's going on as well as or At the 0:10:08.559 --> 0:10:11.720 same time, we had a super high job openings and jolts. 0:10:11.800 --> 0:10:13.840 And then I thought, why am I always asking these 0:10:13.840 --> 0:10:16.640 macro questions? Why are we so darn macro? It just 0:10:16.720 --> 0:10:19.840 drives me crazy. It's so annoying bread Does it annoy 0:10:19.920 --> 0:10:21.520 you too? I mean, you have to do you have 0:10:21.640 --> 0:10:25.079 to be this this macro in these markets? I really 0:10:25.120 --> 0:10:27.439 think you do. I mean, what what's going on today? 0:10:28.200 --> 0:10:30.599 I mean, look, a lot depends on what happens in 0:10:30.640 --> 0:10:32.920 the job market as we move forward, right, I mean 0:10:32.960 --> 0:10:35.480 that's one of the primary things that the Fed's looking at. 0:10:36.120 --> 0:10:39.120 And the eight hundred pound gorilla in the room is 0:10:39.280 --> 0:10:41.840 definitely the FED, and we have to pay attention to 0:10:41.880 --> 0:10:44.080 what they're going to be doing. But look, the job 0:10:44.080 --> 0:10:48.439 market is cooling Since April lows, the job four week 0:10:48.480 --> 0:10:51.640 moving average on jobless claim is up fort and I 0:10:51.679 --> 0:10:55.840 would say, you know, statistically, anytime it's moved up fifty 0:10:56.360 --> 0:11:00.800 from those lows, it's it's indicated recession coming down the road. 0:11:01.160 --> 0:11:05.040 And so I do think the job market is cooling off, 0:11:05.080 --> 0:11:07.320 even though we have a big job's report coming up 0:11:07.360 --> 0:11:12.600 this Friday, we're expecting somewhere around three three fifty UM 0:11:12.600 --> 0:11:15.959 on jobs game, which is significantly reduced from the last number. 0:11:16.559 --> 0:11:19.880 But yeah, moving forward, I think you're going to continue 0:11:19.880 --> 0:11:22.680 to see some economic numbers to terryate. So what have 0:11:22.760 --> 0:11:25.000 you guys been doing in the market here, Brett in 0:11:25.000 --> 0:11:28.240 in the last you know, several weeks here again, we 0:11:28.240 --> 0:11:30.960 had a brutal first half of the year, bounce off 0:11:31.040 --> 0:11:34.160 the bottom. Now a little bit of uncertainty here. What 0:11:34.200 --> 0:11:37.840 are you guys doing over the last several weeks. Well, strategically, 0:11:37.880 --> 0:11:42.280 we have shifted to we are by dips and specifically 0:11:42.360 --> 0:11:44.520 we like the small and mid cap arena. I think 0:11:44.559 --> 0:11:49.120 the valuations on their four p's are probably the best 0:11:49.760 --> 0:11:53.240 going back to the early two thousands, and we're paying 0:11:53.240 --> 0:11:57.560 attention to that. We're taking advantage of individual stock picking, 0:11:57.600 --> 0:11:59.760 I think is the way to play this. There's just 0:11:59.800 --> 0:12:02.320 some companies that have been thrown out with the bathwater 0:12:03.080 --> 0:12:06.960 and I think there's incredible opportunities and we're taking advantage 0:12:06.960 --> 0:12:09.360 on any of these dips as we move forward. It's 0:12:09.360 --> 0:12:11.760 awesome to get a straight talker, you know. Yeah, Well 0:12:11.800 --> 0:12:14.320 you get good to Tallahassee. You get straight talkers. I 0:12:14.400 --> 0:12:16.360 like it. Yeah, I like it. Don't mess around that. 0:12:16.520 --> 0:12:20.040 And it's also rare to get a street talker that's 0:12:20.040 --> 0:12:22.080 so bullish these days, right, even the big bulls seem 0:12:22.120 --> 0:12:24.160 to have turned bearish. And the bear sounds so much 0:12:24.200 --> 0:12:27.079 smarter with their doom and gloom if you step back 0:12:27.120 --> 0:12:31.160 and look at the charts longer term. Absolutely yeah. Alright, 0:12:31.200 --> 0:12:35.400 Florida State at l s U this Sunday, September four pm. 0:12:35.520 --> 0:12:39.320 That is game, all right, Brett, you in chief market 0:12:39.320 --> 0:12:46.559 strategist First Franklin Financial Services. We appreciate getting your thoughts. 0:12:46.679 --> 0:12:50.200 Our next guest, this is interesting. A bus hater, CEO 0:12:50.200 --> 0:12:55.000 and president of a peto based in Fredericksburg, Virginia. I 0:12:55.000 --> 0:12:58.920 think all of us. What do you guys do at 0:12:58.920 --> 0:13:01.800 a specto? This is really interesting? Tell us about your 0:13:01.840 --> 0:13:09.480 company absolutely so. Basically, um, A Speedo provides innovative solutions 0:13:09.520 --> 0:13:14.600 to the government, military, and the intel community protecting their interest, 0:13:14.800 --> 0:13:18.320 human assets and infrastructure. And I have a feeling you're 0:13:18.320 --> 0:13:21.560 going to get into one of our more interesting products 0:13:21.559 --> 0:13:23.880 here in a little bit, but I'll wait for that. No, 0:13:23.960 --> 0:13:27.640 it's bullet bulletproof close. I'm so down with this and 0:13:27.640 --> 0:13:30.040 by the way, it's not just like vests. Right, do 0:13:30.040 --> 0:13:35.560 you make actually bulletproof suits? Can I wear this on TV? Oh? Absolutely? 0:13:35.600 --> 0:13:38.240 It's uh, no such thing as bulletproof, but yes, we 0:13:38.320 --> 0:13:42.679 are America's first bullet resistant clothing company. Many many years 0:13:42.679 --> 0:13:45.839 ago we created suits that look like regular suits that 0:13:45.920 --> 0:13:48.520 you wear to work, but they'll stop a nine millimeter 0:13:51.200 --> 0:13:54.720 fifty and all that. How how does that just tell us? How? 0:13:56.160 --> 0:14:01.319 Um we work with the special arameds and integrated into clothing. 0:14:01.840 --> 0:14:05.360 I've talked to you before, I've talked you. I've talked 0:14:05.360 --> 0:14:07.160 to you about this before. My first thought goes to 0:14:07.240 --> 0:14:12.120 motorcycle clothing because it's so difficult to find good, uh, 0:14:12.760 --> 0:14:17.080 motorcycle clothing that's not big and bulky, and clearly suits 0:14:17.080 --> 0:14:19.920 are not that. So why don't you branch out into 0:14:19.960 --> 0:14:25.560 that business? We've actually done stuff like that on individual basis. 0:14:25.600 --> 0:14:28.760 But I mean our focus is government, uh, in the 0:14:28.760 --> 0:14:33.600 intel community, the military, So we're right now sticking to that. 0:14:33.720 --> 0:14:37.720 But who knows, Yeah, that's my tip, you know, like military, well, police, 0:14:37.880 --> 0:14:41.720 police ride a lot of times. But so so what 0:14:41.720 --> 0:14:45.800 what else? What are the most interesting aspects of espetto 0:14:46.040 --> 0:14:48.760 for you? Beyond the one that you have to talk 0:14:48.760 --> 0:14:52.600 about every time someone finds happy. But well, we're also 0:14:53.320 --> 0:14:56.280 the first ones to introduce female focused body armor to 0:14:56.320 --> 0:14:59.440 the military. Women in the military have been wearing uh 0:14:59.720 --> 0:15:03.200 men body armor for the longest time, and it affects 0:15:03.200 --> 0:15:07.280 their mobility. Uh you know, it's not as safe. It 0:15:07.440 --> 0:15:12.280 causes a lot of injuries. So we were the first 0:15:12.280 --> 0:15:15.880 ones to work with the US Air Force and create 0:15:16.040 --> 0:15:19.400 the female focused body armors. So we did that. We 0:15:19.480 --> 0:15:22.440 also right now are working on something really cool. We're 0:15:22.440 --> 0:15:26.360 calling it Scaliflex, which is going to be the you know, 0:15:26.560 --> 0:15:29.760 the next level of female focused body armors. So doing 0:15:29.800 --> 0:15:34.320 those things, but we have an entire division called a 0:15:34.360 --> 0:15:39.560 Speado Labs were we're just developing cool technology and we 0:15:39.600 --> 0:15:42.440 have in house engineers, tree d printers, all of that. 0:15:42.560 --> 0:15:44.560 And then the other side of a Speadow Labs is 0:15:44.560 --> 0:15:48.240 where we actually invest were incumbator accelrator model on that 0:15:48.560 --> 0:15:53.000 where we invest in cool technologies and bring them to 0:15:53.760 --> 0:15:57.160 the government. Because the biggest issue with startup communities that 0:15:57.800 --> 0:16:01.320 they can't really present their products to the federal government. 0:16:01.360 --> 0:16:04.400 There's I mean, you have to have contracts, you have 0:16:04.440 --> 0:16:07.880 to have contact, past performances and everything well has all 0:16:07.920 --> 0:16:11.800 of that, and so we would just invest in that. 0:16:11.960 --> 0:16:15.720 See I see, so you're there in basically you're absolutely 0:16:15.840 --> 0:16:21.200 there so to speak. Or nobody wants to have to 0:16:21.320 --> 0:16:24.400 use these kind of products, right. Um, I'm sure you 0:16:24.560 --> 0:16:27.960 also would prefer if there were no war, but there 0:16:28.080 --> 0:16:31.200 is one right now. Vladimir Putin invaded Ukraine. Are you 0:16:31.560 --> 0:16:34.680 shipping armor? Um? Two soldiers there? Are you helping out 0:16:34.680 --> 0:16:36.840 in that? Uh, you know, on the good side of 0:16:36.880 --> 0:16:41.440 that fight? Yeah? Absolutely, the good side of the fight. Um, yeah, 0:16:41.560 --> 0:16:45.280 we are. We have a cargo plane full of products 0:16:45.320 --> 0:16:48.040 that goes out. In the beginning, it was going out 0:16:48.040 --> 0:16:51.040 pretty much every week, every other week, and now it's 0:16:51.160 --> 0:16:53.600 more or less like a couple of times a month. Uh, 0:16:53.720 --> 0:16:58.080 that we have. So we've done um, body armor carriers, 0:16:58.520 --> 0:17:04.040 UM m r E, medical equipment, flashlights, and you know, 0:17:04.600 --> 0:17:07.080 a whole bunch of stuff. Is this I've actually been 0:17:07.119 --> 0:17:09.800 to Ukraine. I was right at the beginning of this war. 0:17:09.880 --> 0:17:12.120 I was I was at the border of Poland in Ukraine. 0:17:12.119 --> 0:17:15.359 But in eighteen I also supplied a whole lot of 0:17:16.200 --> 0:17:20.520 armor to Ukraine and I was actually there delivering that. Interesting, 0:17:20.600 --> 0:17:23.200 So I mean, is it for the Ukraine army as 0:17:23.400 --> 0:17:27.919 for civilians, who knows for the military, it's the military 0:17:27.960 --> 0:17:32.480 and border control. So what what how do you finance 0:17:32.520 --> 0:17:36.439 all this stuff? I mean, um, are you looking at 0:17:36.520 --> 0:17:40.479 raising money in public markets? Are you? Um? You know 0:17:40.760 --> 0:17:43.160 taking out debt right now is a very interesting time 0:17:43.200 --> 0:17:45.680 to I guess already have done that. You don't maybe 0:17:45.720 --> 0:17:48.520 don't want to do it, um, as as as rates 0:17:48.560 --> 0:17:51.320 go up and up, But what's the capital structure look like? 0:17:52.560 --> 0:17:58.120 So espeto? UM. We we are cash positive. We were 0:17:58.160 --> 0:18:01.800 not in lost. Uh, We're doing well. So a lot 0:18:01.840 --> 0:18:04.480 of it is just you know, utilizing our own cash. 0:18:04.520 --> 0:18:07.080 We worked great deals with some of her suppliers. We've 0:18:07.080 --> 0:18:09.960 got great partners in the industry with great terms with that. 0:18:10.080 --> 0:18:15.680 But we are looking at talking to some pees and vcs. 0:18:15.680 --> 0:18:18.439 But the biggest thing that we're gearing up for is 0:18:18.600 --> 0:18:22.920 at the end of three for early hopefully we will 0:18:23.760 --> 0:18:26.520 be going public UM. Right now, we're just in the 0:18:26.560 --> 0:18:29.320 prep mode forward. We're we have a firm we're working 0:18:29.359 --> 0:18:32.959 with in New York, have taken hundreds of companies public um. 0:18:33.000 --> 0:18:36.000 We've got a great board of advisors. UM. Heck, one 0:18:36.040 --> 0:18:37.440 of the one of the guys on our board of 0:18:37.480 --> 0:18:39.199 advisor is the guy who wrote the book, The I 0:18:39.280 --> 0:18:42.720 P O Playbook. Uh, Steve cake Bread, he took sales 0:18:42.760 --> 0:18:46.399 Force Pandora, yes public, he was their CFOs. So just 0:18:46.400 --> 0:18:49.560 putting all the pieces in place right now and scale 0:18:49.680 --> 0:18:54.320 to scale you want to really out? Yeah, absolutely. I 0:18:54.359 --> 0:18:57.040 mean most of the companies that go public are are 0:18:57.080 --> 0:18:59.960 in a loss right, but they have exponential growth. We're 0:19:00.080 --> 0:19:02.760 a company that has been positive for years and we're 0:19:03.119 --> 0:19:06.480 still have that exponential growth. Where did you guys come from? 0:19:06.520 --> 0:19:08.439 I mean, where do you find people like you? I 0:19:08.480 --> 0:19:13.200 mean doing a bullet resistant clothing I mean, I don't 0:19:13.200 --> 0:19:16.120 even think I can even think of that. So you're 0:19:16.119 --> 0:19:18.199 and you're a bit of a serial entrepreneur, aren't you? 0:19:18.320 --> 0:19:22.720 After ships in ports? Hope, you're sending your ships in 0:19:22.760 --> 0:19:30.200 ports That was a great business senior year of high school. Um, 0:19:30.480 --> 0:19:33.520 that's all so, so basically you've been starting businesses since 0:19:33.520 --> 0:19:36.400 you were a kid. Yeah. Especially I started freshman year 0:19:36.400 --> 0:19:38.840 of college and senior year of colleges when we introduced 0:19:38.840 --> 0:19:44.240 the America's first bullet resistant clothing line. Unbelievable. Why, I 0:19:44.280 --> 0:19:48.159 mean party, Why wasn't just just drinking beer with the 0:19:48.160 --> 0:19:52.520 rest of the college kids. I was, but I was 0:19:52.560 --> 0:19:56.480 working at men'sware house full time, learning my business full time, 0:19:56.520 --> 0:19:59.919 going to school full time. Um and uh it was. 0:20:00.160 --> 0:20:03.040 It was tough. But University of Mary Washington, that's a hustle. 0:20:03.119 --> 0:20:05.040 Where's the University Mary Washing? I know it's in Virginia. 0:20:05.040 --> 0:20:09.080 We're in Virginia. You guys stayed right there. You're close 0:20:09.119 --> 0:20:11.880 to d C. You're close to d C all those 0:20:11.920 --> 0:20:16.119 government businesses. That's cool stuff. Alright, great figure build up 0:20:16.160 --> 0:20:20.320 contacts on the Colorado to so Colorado's big. Colorados are 0:20:20.560 --> 0:20:23.440 another tech side. So we have our offices in Colorado 0:20:23.480 --> 0:20:27.399 and Charleston. Colorado is mostly you know, Space Force Missile 0:20:27.440 --> 0:20:30.160 Defense System and APETO is in all of those nassas 0:20:30.640 --> 0:20:35.479 for Missile Defense System. A boss Hayter when you make 0:20:35.520 --> 0:20:38.960 your first billion remember remember us, Yes exactly, A boss 0:20:39.000 --> 0:20:42.080 Hater CEO and president of ASPECTA. One of our more 0:20:42.359 --> 0:20:48.400 interesting guest all right, want to bring in Anna Want 0:20:48.480 --> 0:20:51.160 she's the chief US economist with Bloomberg Economics. I'm glad 0:20:51.200 --> 0:20:52.760 we got her on today because I have some questions. 0:20:52.760 --> 0:20:54.800 Will you go hit well? So all right, Anna, thanks 0:20:54.840 --> 0:20:58.560 so much for joining us. We had this um piece 0:20:58.600 --> 0:21:01.680 of news from snap You know, the owners of Snapchat, 0:21:01.760 --> 0:21:05.320 they're firing twenty percent of their staff. And we've been 0:21:05.359 --> 0:21:08.639 seeing stuff like this at a Silicon valley for a 0:21:08.720 --> 0:21:12.159 month two months now, where they're either freezing, hiring or 0:21:12.200 --> 0:21:16.840 reducing headcount by ten percent or twenty You know, from 0:21:17.280 --> 0:21:24.400 social media to UH to UM, UH, crypto to software, 0:21:24.840 --> 0:21:28.560 everybody seems to be slowing, stopping, or firing at the 0:21:28.600 --> 0:21:31.840 same time. The JOLTS yesterday showed the biggest amount of 0:21:31.920 --> 0:21:34.320 job openings, one of the highest on record, eleven point 0:21:34.359 --> 0:21:39.359 eight million. What gives Yeah, I think definitely there has 0:21:39.440 --> 0:21:44.679 been a tech recession UM, but techno technology technology sector 0:21:44.720 --> 0:21:48.480 accounts for but just a small proportion of the labor 0:21:48.520 --> 0:21:53.199 force UM. In JOLTS data yesterday, we saw that the 0:21:53.320 --> 0:21:58.040 job openings UH increase has been concentrated in government and 0:21:58.400 --> 0:22:03.679 UH low sort of the low income services sector. And 0:22:03.720 --> 0:22:07.040 I think that seems to be consistent with what I'm 0:22:07.080 --> 0:22:09.640 seeing outside in the real world too. That is, if 0:22:09.680 --> 0:22:12.320 you just get out of the cities and go out 0:22:12.359 --> 0:22:15.160 to you know, Brew America, there's still a lot of 0:22:15.600 --> 0:22:18.480 a lot of UM for higher signs. People are still 0:22:18.960 --> 0:22:22.560 small businesses, are still complaining about not being able to 0:22:22.560 --> 0:22:27.520 to find workers. So I think two things could happen 0:22:27.640 --> 0:22:30.000 at once in the in the economy, which is you 0:22:30.040 --> 0:22:32.640 have these pockets of weaknesses, which is good to save 0:22:32.760 --> 0:22:37.240 from the fetch perspective, but also that there's a strength 0:22:37.400 --> 0:22:40.760 in the rest of the service economy. Matt, I don't 0:22:40.760 --> 0:22:42.600 know how you and I made it to Bloomberg. I mean, 0:22:42.600 --> 0:22:45.440 we are surrounded by really smart people. And it's got 0:22:45.440 --> 0:22:49.840 her undergraduate degree economics and statistics, which is just the worst. 0:22:50.000 --> 0:22:53.640 I was just luck lucky, but I thinks is the best. 0:22:53.760 --> 0:22:55.600 I couldn't get away in it. It's just the worst. 0:22:55.640 --> 0:22:57.760 And then she gets her PhD from the universe of Chicago. 0:22:57.800 --> 0:22:59.920 I don't have no idea how we made it here. 0:23:00.240 --> 0:23:03.760 But and I talked to us about a growth recession. 0:23:04.280 --> 0:23:06.399 What is a growth recession? Or is that something you 0:23:06.480 --> 0:23:09.640 just made up? Didn't we just see that? I don't know. Well, 0:23:10.280 --> 0:23:12.439