Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside
Speaker 1: my co host Matt Miller. Every business day, we bring
Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast
Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and
Speaker 1: at Bloomberg dot com slash podcast. I saw a pretty
Speaker 1: cool chart this morning on the Daybreak newsletter. Do you
Speaker 1: read that every day? Paul? The Daybreak News like yeah. Um.
Speaker 1: They feature different charts in macro views, and one that
Speaker 1: I saw was going back twenty years. Whenever we go
Speaker 1: into a rate rising cycle, you start to see the
Speaker 1: yield curve go down or tighten so um for example,
Speaker 1: the spreads between spread between twos and the tens just
Speaker 1: starts to tighten up and maybe even at some points invert.
Speaker 1: Every single rate increase cycle that we've had over the
Speaker 1: last twenty years. Now, that maybe is bad news for
Speaker 1: the economy because of what it signals, and because of
Speaker 1: the fact that we're already looking at a yield curve
Speaker 1: that's going down as the fed um is expected to raise.
Speaker 1: For some people saying now five times this year what
Speaker 1: does that mean. Let's go to Jay Hatfield right now.
Speaker 1: He's the CEO uh Infrastructure Capital Advisors. They have a
Speaker 1: number of funds under management, but he has a long
Speaker 1: career on the street as well as uh NBAS from
Speaker 1: Wharton and U. C. Davis. He worked at S A. C. Capital.
Speaker 1: He was a principal and investmentking at Morgan Stanley. Incredible really,
Speaker 1: c v J. So I appreciate you spending some time
Speaker 1: with us. What do you think about the economy now?
Speaker 1: It looks like, uh, we're trending down in some ways
Speaker 1: at a time when the FED is about to tighten. Well,
Speaker 1: first of all, Matta and Paul, thanks for having me
Speaker 1: on your show again. We think the critical judgment is
Speaker 1: whether the FED is going to overtighten. The data is
Speaker 1: that in the nineteen I'm sorry, of the nineteen tightenings,
Speaker 1: eleven have ended up in recessions and eight in a
Speaker 1: mid cycle soft landing. So that's the critical issue. And
Speaker 1: I think the minutes really disturbed the market because there
Speaker 1: was a lot of discussion about quantitative tightening, which is
Speaker 1: a disaster. But we're more optimistic to the market because
Speaker 1: we don't think they've focused on the fact that Biden
Speaker 1: will have that pointed five out of the seven f
Speaker 1: o MC members soon when they get approved. But that
Speaker 1: doesn't mean that the market won't weaken you know, obviously
Speaker 1: weakened from here is a critical area, and I would
Speaker 1: note as well. Alright, so, Jay, I guess the issue
Speaker 1: for this Federal Reserve. It seems to me, and I'm
Speaker 1: just a novice here, that the signaling the communications been
Speaker 1: very good, Yet the market, as you noted, has maybe
Speaker 1: even thought about the Fed might go even further than
Speaker 1: what they've signaled. How do you think this Federal Reserve
Speaker 1: will proceed from here? Well, I think that what you
Speaker 1: could see, which would be the bowl case, is that
Speaker 1: they go and correct a little bit of this what
Speaker 1: we believe is a misconception about the minutes. Keep in
Speaker 1: mind when the minutes say certain participants, but we don't
Speaker 1: know who those people are. They could just be the
Speaker 1: regional FED governors which tend to be more hawkish. So
Speaker 1: there could be a correction in the communication. Because we
Speaker 1: do believe, like you're one of your prior guests, that
Speaker 1: financial conditions have tightened. Mortgage rates are at basis points
Speaker 1: higher than they were prior to the capitulation on transitory
Speaker 1: so it's possible that Powell tries to soften the message
Speaker 1: and maybe take quantitative tightening off the table, which is
Speaker 1: horrendous for the market because liquidity is what really drives
Speaker 1: the market, not interest rates. So if there's more reduction
Speaker 1: in liquidity, then you know, we think there could be
Speaker 1: a crash and Bitcoin and some of these other momentum
Speaker 1: type investments. That's a great point. I was just reading
Speaker 1: a couple of days ago Muhammad al Arian's column where
Speaker 1: he asked, um, when FED tightening is going to hit
Speaker 1: financial conditions or why it isn't now, And one of
Speaker 1: the reasons that he stated is it's really about the
Speaker 1: liquidity and not about the flow. Um, what what do
Speaker 1: you think about the levels here you mentioned and the
Speaker 1: market just started. I guess it's been kind of in
Speaker 1: a downward trend today, um since the open, and then
Speaker 1: it bounced off of basically forty nine and is now
Speaker 1: coming back up pretty dramatically. Well. Yes, the other easy
Speaker 1: rule is to be long during earning season, at least
Speaker 1: when the economy is strong. So typically we've had a
Speaker 1: few misses, obviously Netflix being the poster child, but normally
Speaker 1: earnings are good and the companies retained their their best
Speaker 1: releases for actual earnings call, so they're they're good news.
Speaker 1: So usually it pays to be long. Journey are in season,
Speaker 1: so it makes sense it's bouncing. But if we violate
Speaker 1: the two hunter day, then usually there's a lot of
Speaker 1: hedging activity that occurs, so it's a risky level in
Speaker 1: the market. What's your favorite sector here that you and
Speaker 1: your team are working on right now. We really prefer
Speaker 1: um are focused on preferred stocks. We think that not
Speaker 1: just value, Like there's been some discussions that even you know,
Speaker 1: value stocks are revived, so we always if we're thinking
Speaker 1: about value, we always want to get paid to weight
Speaker 1: and have income. So preferred stocks were not that bullish
Speaker 1: about the market this year. They have high dividend yields
Speaker 1: and low volatility like today most preferred funds are sort
Speaker 1: of flatished down like twenty basis points, so you get
Speaker 1: high income and low volatility. But we definitely think this
Speaker 1: year is going to be adult swim. So if you
Speaker 1: buy stocks, don't just buy value, but also by income,
Speaker 1: so you get paid to wait, so even if the
Speaker 1: market is down, your income is still stable. All right, Jay,
Speaker 1: Thanks so much for joining us. Really appreciate getting your thoughts.
Speaker 1: They're like getting paid to weight. That's a good feeling.
Speaker 1: I think Jay Halfield, CEO, founder and portfolio manager of
Speaker 1: Infrastructure Capital Advisors here, all right, let's talk energy. I
Speaker 1: got w T I crew eighty five bucks of barrel.
Speaker 1: Where is this thing going? I mean, if I'm gonna
Speaker 1: fill up mats, you know, four D f one fifty,
Speaker 1: it's going to cost a pretty penny. Regina Mayor, she
Speaker 1: is a principal Global sector head for Energy for KPMG,
Speaker 1: and she was a former officer in the U. S.
Speaker 1: Army Reserve, which is very cool. We appreciator service their Regina.
Speaker 1: Where is oil going here? I mean, I've got some
Speaker 1: demand picking up. I have OPEC saying pretty disciplined. Is
Speaker 1: this going higher? Well, it's really all over the map,
Speaker 1: and the predictions are starting to indicate that it will
Speaker 1: go higher. We think triple digit prices are in range
Speaker 1: because we see more upward price pressures versus the onward
Speaker 1: price pressures. UH supply is constrained. I think OPEC plus
Speaker 1: is not necessarily being disciplined. I really think they're at
Speaker 1: near or at capacity that we don't have a global
Speaker 1: safety valve. Yeah, yeah, I think that's partly why they're
Speaker 1: appearing to be so disciplined. Is the word on the
Speaker 1: street is they can't make any morggling. It's it's by
Speaker 1: the way OPEC go on the terminal, you know, of course,
Speaker 1: a great function and you can see that what Regina
Speaker 1: is saying is spot on correct. I mean there are
Speaker 1: very few members of OPEC that have any spare capacity.
Speaker 1: There's a graph in the lower left corner is very
Speaker 1: cool that shows you, UM, So it's interesting to me
Speaker 1: the demand side Regina is telling in terms of the
Speaker 1: global economy. Everyone's worried about um, the yield curve coming
Speaker 1: down and you know, oh Macron plus tightening of the FED.
Speaker 1: But if if the market's willing to bet so big
Speaker 1: on oil, it's got to say something about global growth, right.
Speaker 1: I think that's fair. I mean there's pent up consumer
Speaker 1: demand for consumable goods for travel, and a lot of
Speaker 1: those consumable goods have components that all come from hydro
Speaker 1: carbons and from a barrel of crude, and with supply
Speaker 1: constrained and demand expected to increase, that's why you're starting
Speaker 1: to see triple digits potentially come into the frame. And
Speaker 1: then you add into that the inflationary pressures, increasing cost
Speaker 1: of capital some of the geopolitical hotspots. It all leads
Speaker 1: to potential upward momentum for oil price, at least in
Speaker 1: the near term. Regina, how about our good friends in
Speaker 1: Texas and Oklahoma, the shale patch folks. I kind of
Speaker 1: expected them to not be as disciplined as they have been.
Speaker 1: I expected them when they saw seventy start, you know,
Speaker 1: putting some holes in the ground. I think you're right,
Speaker 1: it's definitely coming um. And also our friends to the north,
Speaker 1: like Canadian rig count and one week went up fifty rigs.
Speaker 1: The US is up thirteen week over week. We are
Speaker 1: in the range where it will spur marginal production, and
Speaker 1: that expectation is that US, Canada and Brazil will start
Speaker 1: to help fill the gap. We've seen so many headlines
Speaker 1: about the popularity of e vs, especially in Europe. The
Speaker 1: growth in sales is that making a dent at all
Speaker 1: in demand? No, no, not yet. It's so marginal. It's
Speaker 1: such a it's such a blip in terms of overall
Speaker 1: fuel consumption that it cannot yet make a dent in
Speaker 1: liquid fuels demand. How about Russia, just real quickly, what
Speaker 1: should we expect from Russia in terms of their discipline? Well,
Speaker 1: how are they going to disappear? They're at capacity to um.
Speaker 1: You know, they may say other things, but what we're
Speaker 1: hearing is they would pump more if they could. All right, Regina,
Speaker 1: thank you so much for joining us. We always appreciate
Speaker 1: getting your perspective on these global energy markets. Again, w
Speaker 1: T I crew to oil eight five bucks empower. Whenever
Speaker 1: I see that, I just expect those wildcatters down in
Speaker 1: Texas and Oklahoma and it started drilling. But they've been
Speaker 1: pretty disciplined to date. Regina mayor Use, a principal Global
Speaker 1: sector head of Energy at KPMG, giving us the thoughts
Speaker 1: here again raising the specter that we're gonna get you know,
Speaker 1: triple digit oil. It's been a long time since we've
Speaker 1: seen that. But you've got rising demand on a reopening
Speaker 1: global economy, and then to date you've had this supply
Speaker 1: pretty well fixed by OPEC, OPEC plus and even by
Speaker 1: the U S producers. So there you go. It's a
Speaker 1: commodity supply demand. All right. Let's talk supply chain. We
Speaker 1: talked about that a lot. It's an issue for so
Speaker 1: many companies, really on a global scale, And I think
Speaker 1: about supply chain concerns. I think about big cargo ships
Speaker 1: starranded off the coast of l A waiting to get
Speaker 1: into port. I think about not enough truck drivers to
Speaker 1: get the stuff out of the ports. But it's also
Speaker 1: that last mile getting the stuff to your door and questions,
Speaker 1: you know, when can technology do? How can technology help
Speaker 1: this whole process? Pain Hunter, he's a CEO and board
Speaker 1: member of get Swift. Pain thanks so much for joining
Speaker 1: us here. Tell us just a little bit about what
Speaker 1: debts swift does and how you kind of work with
Speaker 1: the supply chain. Good morning Matt and Paul. Thanks thanks
Speaker 1: for having me on. So get Swift we operate in
Speaker 1: about seventy countries across almost seventy verticals, so different different industries.
Speaker 1: And what we do is we provide assess softwares and
Speaker 1: service um automation for last mail delivery, including a workforce
Speaker 1: automation in a series of other kind activity services. So
Speaker 1: you could say that we touch everything from your local
Speaker 1: mom and pop store at the corner all the way
Speaker 1: to large multinationals. Now, what I have to do point
Speaker 1: out is what we don't do is we don't actually
Speaker 1: provide drivers. So what we do is effectively partner with
Speaker 1: the companies and the service providers to automate everything. We
Speaker 1: have technology. So how hectic had the last two years
Speaker 1: been for you? Um? Think of it this way? I
Speaker 1: would put it by saying that two years have equated
Speaker 1: to probably ten to fifteen years in normal times. Everything
Speaker 1: kind of got hyper compressed, to put it mildly, And
Speaker 1: I'm not what was it? What was it like? I mean,
Speaker 1: talk to us about March um of was it just
Speaker 1: all of a sudden business is going bananas? It's more
Speaker 1: than going bananas. Really, what you had is I think
Speaker 1: you had to breakdown what I call organizational inertia. Right
Speaker 1: any time you would try to talk about how the
Speaker 1: market is changing, consumer behavior was changing, you would invariably
Speaker 1: encounter resist. It's not in organizations, but some all of
Speaker 1: a sudden, literally in a period of a few months,
Speaker 1: um consumer behavior didn't just expect they demanded it. And
Speaker 1: for a lot of our customers and a lot of
Speaker 1: I would say businesses out there, the realization was a
Speaker 1: very simple real station. Either you evolved and change and
Speaker 1: you provide the service, or you're going to go by
Speaker 1: the way of the dinosaur, and it was really something
Speaker 1: to behold. I haven't seen anything like it probably since
Speaker 1: the days of the you know, the dot com one,
Speaker 1: you know, everybody started going onto the what do you
Speaker 1: call world what web bin? You know, we as we
Speaker 1: think about the supply chain challenges here and again it's
Speaker 1: a global issue. Does this call into question the whole
Speaker 1: concept of just in time inventory? Yes, it does. And
Speaker 1: I think there's a very important lesson in all this,
Speaker 1: you know, and I'm going to use in an analogy,
Speaker 1: and the analogy is that, you know, the lack of
Speaker 1: pain does not mean that there's not a fundamentally something
Speaker 1: wrong underneath it. You know, you're still have some form
Speaker 1: of disease. So what really the pandemic in the last
Speaker 1: two years have done is they have stress tested the system.
Speaker 1: And what has come out as a result of that
Speaker 1: is that first of all, one, it's not unified to
Speaker 1: um it's it's really not being managed effectively from like
Speaker 1: call it a risk horizon aspect of it. And the
Speaker 1: third aspect that I would also point out, it's disjointed.
Speaker 1: Technology is really not unified. There's not visibility in the
Speaker 1: full supply chet system. And that's exactly what we're seeing
Speaker 1: right now, both in terms of you know, what we
Speaker 1: see on the shelves and in terms of the cost
Speaker 1: of goods going up. What is the future bane of
Speaker 1: your industry? I mean, is there a blockchain involved somehow? Um?
Speaker 1: Is there drastic change coming up? Yeah? I would say
Speaker 1: you would have to kind of you know, segmented a bit.
Speaker 1: The first one is workforce management, right, Um, there has
Speaker 1: to be fundamentally a change in terms of the way
Speaker 1: you know, we are evaluating and we're managing the workforce
Speaker 1: in terms of the supply chain. The second is I'm
Speaker 1: a huge believer in automation, and I'm a huge believer
Speaker 1: in emerging technologies, whether there be green I know, you
Speaker 1: guys were talking about hydrogen, you know, and e V
Speaker 1: vehicles and what have you not. I think that is
Speaker 1: a very important component. But together with that, I think
Speaker 1: the other component is going to be a I uh
Speaker 1: and or machine learning in other words, what portion of
Speaker 1: what we do can be automated? And then the last
Speaker 1: component is, uh, you know, let's call the future modeling.
Speaker 1: What does technology to tell you what the upcoming needs
Speaker 1: for the supply chain aren't. And then how do you
Speaker 1: manage that to the full life cycle, whether it's farm
Speaker 1: to table, whether it's managing something from overseas or dealing
Speaker 1: with you know, your basic obstacles that you have, wants,
Speaker 1: you're good to land at the port. All right, very
Speaker 1: cool stuff. I find it fascinating. Paul and I have
Speaker 1: been talking supply chain. Yeah, a lot about the supply chain,
Speaker 1: obviously everyone has over the last two years, which is
Speaker 1: why it's so great to get some time with you. Bin,
Speaker 1: thanks so much for joining us. Baint Hunter is the
Speaker 1: CEO of get Swift, the ticker g S. W Andy
Speaker 1: Marsh joins us. He's the ce of Plug Power and
Speaker 1: this is a company that is innovative in terms of
Speaker 1: alternative energy sources, specifically hydrogen and fuel cell technology, and
Speaker 1: he thanks so much for joining us. Um it has
Speaker 1: been an amazing time for your company and for alternative
Speaker 1: fuel sources. But you know, you know a lot of
Speaker 1: people here hydrogen fuel cell and they think, isn't that
Speaker 1: you know? And also ran, isn't that done? Didn't batteries win?
Speaker 1: What do you say? Well, I would step back and say,
Speaker 1: you know, we've been Plug has been doing this for
Speaker 1: twenty five years. UH, we have fifty tho UITs out
Speaker 1: there were the largest user of liquid hydrogen. And I
Speaker 1: think when you step back and you look at Walmart
Speaker 1: distribution centers, in those distribution centers and around the country,
Speaker 1: the food that got on people's table were in COVID
Speaker 1: somewhere along the line touched the plug power product. And
Speaker 1: you can't say the same for listening batteries. When is though,
Speaker 1: you know? UM I started out as a cover reporter
Speaker 1: in and Frankfurt and around that time BMW had these
Speaker 1: hydrogen fuel cell seven series running around Germany, UH, and
Speaker 1: they said, you know, in giant letters, hydrogen fuel cell
Speaker 1: on the side, and I thought, man, that's got to
Speaker 1: be the future. They're not doing that now, though, how
Speaker 1: come we don't see it coming to you know, consumer vehicles. Well,
Speaker 1: I think we're you're going first hydrogen, you know plugs,
Speaker 1: learning that hydrogen really has its greatest value in commercial activities.
Speaker 1: And we have a joint venture with Renault you Inferrance,
Speaker 1: for which is the second largest battery electric vehicle commercial
Speaker 1: vehicle company in Europe, and we're putting on the road
Speaker 1: this year three fuel cell power vehicles UH for moving
Speaker 1: goods for moving people at airports. And by the year
Speaker 1: we expect to have about a hundred thousand of these
Speaker 1: vehicles on the road. The developments happening, the technology is there,
Speaker 1: and PLUGS been deeply involved in all of it. So
Speaker 1: andy hell supportive is US policy to date for hydrogen
Speaker 1: fuel and hydrogen use? Is there some things need to
Speaker 1: change or is it pretty accommodative supportive? You know, one
Speaker 1: of the advantages I've seen in the United States that
Speaker 1: PLUGS worked closely with people like Senator Schumer for twenty
Speaker 1: years in setting the setting the policy in place in
Speaker 1: the US for fuel fell tax credits. You know, at
Speaker 1: the moment we're building the largest green hydrogen network across
Speaker 1: the country. We have one in Alabama, New York, one
Speaker 1: in California, one in Georgia. And with those hydrogen plants.
Speaker 1: You know, if you look at the what was in
Speaker 1: the Build Back Better Bill, and I think you saw
Speaker 1: have been seeing that the climate provisions are still strongly
Speaker 1: supported by Senator Mansion, who has been deeply involved in
Speaker 1: writing the green hydrogen aspect of that bill. With that
Speaker 1: built passes, the US will have the leading policy in
Speaker 1: the world of support the deployment of green hydrogen. And
Speaker 1: no company is going to be in a better position
Speaker 1: than Plug because quite honestly, we're building it now and greener.
Speaker 1: I imagine you know there are I guess, different kinds
Speaker 1: of hydrogen when you look at the production right, Um,
Speaker 1: is there a greener way to do it? A better
Speaker 1: way to make hydrogen? So? Plug absolutely, and that's why
Speaker 1: we're building the first nationwide network and even in Europe
Speaker 1: we're doing activities today. Maybe take a look at the
Speaker 1: plant we're building in Alabama, New York. It uses hydro
Speaker 1: electric power. If you look at the plant we're building
Speaker 1: in Texas, it uses wind power. It's a feed stock
Speaker 1: with plug power electrolyzers to create the hydrogen. And in California,
Speaker 1: the facilities running off solar power couple with plug power electrolyzers.
Speaker 1: That's the way to do it. I was over at
Speaker 1: cop and even when you talk to utilities, they know
Speaker 1: ultimately the hydrogen needed for the world needs to be green,
Speaker 1: and that really gives PLUG a differential advantage. So, and
Speaker 1: I'm looking at your stock, it's off on a trailing
Speaker 1: twelve month basis. About what's the market concerned about with
Speaker 1: your company? Well, I think that when you you know,
Speaker 1: take a look first, I want to take a step
Speaker 1: back and say, when you start thinking about a world
Speaker 1: where the world's going to be renewable high hydrogen that look,
Speaker 1: there's ups and down, there's issues with the FEDS, but
Speaker 1: long term, this company has an incredibly strong balance sheet
Speaker 1: that can execute on its business plan. With the balance
Speaker 1: sheet it has today, we ended the year with over
Speaker 1: four and a half billion dollars in the bank. I think, uh,
Speaker 1: you know, we're feeling some of the impacts of the
Speaker 1: down downward spiral in the market. We believe it's going
Speaker 1: to recover soon, and we believe that, uh, you know,
Speaker 1: as many analysts. I had an update call him update
Speaker 1: call on Tuesday, and the analysts, you know, thirteen analysts
Speaker 1: came up and said said, plug Power as the stock
Speaker 1: you one I owned in this space. And that I
Speaker 1: think is because we've been doing it so long. People
Speaker 1: know we're not an overnight success. We know how to
Speaker 1: make fuel cells, we know how to generate hydrogen, we
Speaker 1: know how to put vehicles on the road. Yeah, I'm
Speaker 1: looking at the in our function met on the Bloomberg
Speaker 1: terminal twenty buys five holds in one cell. So still
Speaker 1: Street pretty supportive here of this story. But is there
Speaker 1: a path to profitability? Andy? Oh? Absolutely, you You're you're
Speaker 1: going to see late that the company will be profitable.
Speaker 1: All right, We appreciate it. Andy, thanks so much for
Speaker 1: taking the time to get on the phone with us.
Speaker 1: Andy Marcy's the CEO of Plug Power. It's a publicly
Speaker 1: traded company symbol p l u G. Thanks for listening
Speaker 1: to the Bloomberg Markets podcast. You can subscribe and listen
Speaker 1: to interviews with Apple Podcasts or whatever podcast platform you prefer.
Speaker 1: I'm Matt Miller. I'm on Twitter at Matt Miller three.
Speaker 1: Put on fall Sweeney. I'm on Twitter at pt Sweeney
Speaker 1: Before the podcast. You can always catch us worldwide at
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