AppHarvest CEO on Sustainable Infrastructure

like I'm getting a little closer with new technology. Number two, I'm from Ohio. He's from Kentucky, and I feel like, you know, a lot of states that are next door to each other have rivalries. I think Ohio and Kentucky really compliment each other well. Dwight Yoakum was from Kentucky. He moved to Ohio. You know, Sturgill Simpson was from Kentucky. He moved to Ohio. Uh and a lot of people

have moved the other way around as well. Jonathan Webb joins us right now, founder and chief executive of app harvest Um, which so Jonathan set us set us up as to what your company does as far as I understand it, you basically are bringing tech into farming and really solving some E s G problems as far as food waste is concerned as well. Yeah, Paul Matt, thanks for having me. And yeah, I'm a huge Sturtle Simpson fan.

And uh yeah, heth Kentucky and Ohio. What well, that's right, and we're talking to all those East Kentucky artists now about this. But um, yeah, I've been in d C the past couple of days talking with senators on both sides of the aisle, and and what we've messaged is, you know, controlled environment agriculture is it's inevitable. It's really the third wave of sustainable infrastructure. You look, twenty years

ago was renewable energy the world finally caught on. Ten years ago it was electric vehicles the world finally caught on. Uh And right now you can look at the you know, at the US, and we are incredibly vulnerable as it relates to food security in this country. You know, calif Ornia drought stricken, wildfires, the southwest of the US is drying up. CBS just did a big piece on the Colorado River drying up. You know, I'm standing in coal

country eastern Kentucky. And we've talked about mining fossil fuels for decades. What we've not talked about is we're mining our water. We're we're extracting our water, uh to a point to where you know, our our awkwifers are not refilling, so app harvest. We're building some of the world's largest controlled environment agriculture facilities. We grow a fruit and fruit and vegetable with nine less water and get thirty times

more more yield breaker uh, using technology. So Jonathan described for us, or explain to us, what is a controlled environment agriculture? Yeah, so I think of you know, anything you grow indoors and control the environment. So I'm thinking about weed by the way, I'm thinking just about marijuana basically. But well, well that that that has helped push the industry technology wise forward. You look at LED lights, yeah, hydroponics,

you know, climate control, humidity controls. So you know, there's several companies out there were one of them, and you know, I personally don't see anybody as competition. This problem is so big, uh. We as as you know, the US are not nearly moving fast enough. Uh. The U n is predicted we need fifty to seventy more food by twenty fifty, and we would need to planet Earth's the way we currently grow that food. We've got to use

technology to grow more food with less resource. The point being you can grow a lot of other stuff besides weed. I mean, this is not a little pineapple express barn. You're talking about big indoor farming operations that can feed masses. Right, Yeah, that's that's right. And and no, we're we're growing fruits and vegetables. We're definitely not growing the other stuff. Uh, We're we're growing fruits and vegetables. But yeah, it's we're

at scale. It's massive. So to put this in perspective, our first facility in Morehead, Kentucky is two point eight million square feet UH sixty acres under glass. One of the largest facilities under construction in the world in the middle of COVID is what we built here in Kentucky. We have four more facilities under construction. Uh. We just went public on the NASDAC under a p p H and raised five million dollars to build out our series of of indoor UH facilities here here in eastern Kentucky.

So Jonathan explained to me your business per se, do you go to existing farmers and say, let us kinda help you get to the future. What what what is exactly your day to day business? Well, unfortunately, the American farmers already lost to Mexico. And when I've met with everybody on Capitol Hill last week, that's what we were talking about. We implore most of our fruit and vegetables from Mexico because the US is slowly shutting down for

and vegetable production. So you know, our competition really an app harvest, it's it's the imports from Mexico. Four billion pounds of tomatoes were imported from Mexico last year. That was nearly one point two billion pounds about fifteen years ago. So we're app Harvest is building the facilities, we're operating the facilities. We're selling the Windy's, Walmart, Kroger, uh, some of the so we're selling directly to some of the largest grocers and retailers who see the vulnerability and their

supply chain. How hard is it to get the human I mean, you've got the tech side covered and robotics I know are all are all up and working there as well, but you still need humans to pick the crop, right, I mean, how do you get strawberries off the vine? You've got to have people working. Well, we have robotic harvesters, but we have a lot of people. And look, I'm in I'm in eastern Kentucky. I don't think cause I'm

from the state here and I love this state. But we had some of the hardest working men and women in the US powering or coal mines for the Industrial Revolution and on we hired five for I watched the news every day. People say people didn't want to work, and I laugh. We had eight thousand people apply to work at this company, five hundred and fifty people working now. So we have a workforce here that's going to drive high tech forward for the years to come in Eastern Kentucky.

That's a great story. Johnson Webb, founder and chief executive officer from app Harvest. All right, Matt. When I went on my West Coast marketing trip when I was the South Side analysts, and you go to l A, you have to have to lockdown meetings and then you can book the rest of the day. In l A, one was Capital Group and the other was Trust Company of the West t c W. Just monsters Today, we're joined by Brian Whalen, Group Managing Director for TCWS Fixed Income Group.

And why did I have to get that meeting? Two and fifty three billion dollars in assets under management? Brian, thanks so much for plus the nicest guys. Yeah, my my media guy on the equity I was a great guy and I still keep in touch with them. So um, always a fun meeting to go to to see the folks at tc W Bryant. I'm looking at the ten year here, I got one point four four percent. If I'm a fixed income geek, and I say that nicely?

Uh like you where do I go to get some yield? Boy? Well, first of all, thank you for the nicest introduction I think I've ever heard. Um. Yeah, you know it's pretty hard. I mean you talked about the tenure at one point

four or five percent. That doesn't seem to line up with you know, equities at the all time highs and you know, and there's a story behind that, but you know, looking for yield, I mean, look, you know, within fixed income, to define the high yield bond market, generally speaking, the highest type of yield you can get three point seven five I mean that that's what you get for generic

hi yield portfolio. So, um, the FED has uh you know, and the fiscal side of things has done their job to flood the economy with money, uh, you know, suppressed interest rates and have you know, investors scrambling to to put any type of yielding their portfolio sometimes, I think, regardless of of the risk they're they're they're taking on the underlying credits. So what's going on? Um, why are we seeing yields dumped down to now? And how does

this turn around? If not the FEDS hawkish you know, uh, change in tone, you know, I think first I'd say, remember, you know, we don't have a US capital markets, we have a global capital markets. And you think about the

things going on around the world right now. So first of all, you know, obviously the what's been leading the news and the economy and the markets for a year and a half now is COVID and we've got the delta variant going around and while we may have not really see it here so much, it is affecting other parts of the world. Um. Also, remember that you know, one point four or five percent sounds really low to you and I you look at the developed world out there,

one point four looks really cheap. You know, maybe Australia, New Zealand, places like Singapore slightly higher. But you know, you go to Germany, you go to Switzerland, you go to Japan, you're talking about a ten year yield of zero or less, you know, minus twenty five basis points. And then you know, back back here to the US,

I think, and you focus on the fundamentals. One. I think, you know, investors are starting to you know, realize that the economy, you know, it may not accelerate in the second half of the year as quickly, you know, as they were anticipating. Instead of adding a million jobs a month, we're going to add maybe six D seven hundred thousand

a month, so that might be slower. Uh. And then you know, finally, most recently, you know, the Fed, the Fed just told us, you know, I said, look, you know, we may let inflation run hot for a little while, but we're not ready to turn in our inflation fighting batch. Uh. And so that's why you saw, you know, you saw this flattener, you saw its long end rates come down, you know, as the Fed kind of let everyone know that, you know, they're not going to let inflation get out

of hand or they're gonna try not to. And you saw short end rates go up, meaning that you know, the market just started the price a slightly higher probability that the Fed may move a little bit sooner with regards to interest rates than the market was expecting just prior. So do you put all this together and then a few other factors, and I think it does explain why we're under one. Dude, you had me at negative twenty points on the BUND. I got you cheap now right, yeah,

exactly so. But my question then, and I just want to get your take on this. The dollar is important then if I'm a euro investor, you know, UM and the US. You know, from the perspective of a German, the US budget is like out of control, you know GDP, that's very on Deutsch. Is that does that bother you at all? I think I think that's a problem for

another day, to quite honest with you. You know, we could go on and on about the levels of debt in the economy on the corporate side and as you said, on the fiscal side, and the long term ramifications for the dollar and whether that will retain a reserve currency or whether others will kind of share that that that title. I think in the you know, short term, intermediate time horizon, given what the Fed just said, you know, the dollar looks fairly stay able lift not will continue to strengthen

a bit versus these other currencies. And we've seen that reflecting the bond market, you know, almost it feels like for for months now, you know, you come into you know, you wake up in the United States and you hear about all this buying of US bonds, whether they be treasuries or corporate bonds from overseas because of just like we talked about before the tenure, just how cheap they look. You know, Remember, we're not just starve for yield. The

globe is starf for yield. And every night these investors from un from outside the U S. They come in their poor dollars in here because even when you adjust for the currency, it's still the best place to find some yield. I feel you, Brian, thank you so much for joining us. Brian Whale and there group managing director Fixed Income and portfolio manager at TCW talking to us about what's going on in markets. By the way, as he was talking, I saw the yen. UM, Well, the

dollars jump against the end. You can now buy a hundred ten yen for your dollar. Let's get over to Everett Millman. He's apprecially med medals specialist with Gainesville Coins. He's gonna talk to us about commodities even more broadly. We'll get into copper and bitcoin as well, but I want to focus it on gold first. Everett, good morning, Thank you for joining us. UM. Why is gold not

performing the way? UM? Well, look, we've got rates that are coming down, which I would think means gold goes up. The ten year over the last three months goes from one seventy five to one forty five, and we're seeing gold UM that has done a whole lot of nothing at seventeen sixty three. What's what gives? Right? I think part of that is that risk appetite seems to be elevated right now. That's siphoning off some of the normal saife haven demand for gold. But also we're seeing seasonality

kind of return to normal for the gold market. The summer months are almost always unkind to gold, and the only reason that hasn't been reflected in the price the past two years years is some unprecedented circumstances with the early stages of the pandemic in tw and some fluctuations in the rebo market in twenty nineteen, So I think

that's one of the main factors. And also, as you pointed out, with rates um, I think this is a knee jerk reaction and overreaction even to the hawkishness by the Fed, because if you look at the tenure yield, it actually fell in response to that, And with inflation rising, that means that real rates, the federal funds rate minus the rate of inflation, is still rather negative. So you would expect that to be a favorable environment for gold.

But I think that risk sentiment and kind of the summer doldrums of seasonality are the main factors holding back gold right now. Everard, I wonder if you know bitcoin has is having an impact on how gold is trading. You know, the smart folks around crypto are trying to convince me that a bitcoin is a store of value, and that's kind of typically how folks have you gold? How do you think bitcoin is impacting, if at all,

kind of how how gold is trading. I do tend to agree that it is drawing away some of that store of value appeal of gold into the crypto market, as it's essentially the most appealing alternative to the dollar right now. And although we have seen the dollar been rising, that's been reflected in the bitcoin price that we've had this significant pullback. But as you pointed out at the beginning, that gold have been kind of moving sideways, hasn't done

a whole lot. We don't often see that from bitcoin. The volatility is certainly a feature of bitcoin, and I think that appeals a lot to most investors that if they want to get some exposure to something that is anti dollar or outside of the dollar, then they'd rather have that greater upside with something like bitcoin rather than gold, which is fundamental, more boring and sort of a conservative investment. Also, bitcoin maybe a little bit easier to use in the catastrophe,

you know. I like, uh the idea of both because I'm looking forward to some post apocalyptic world when all we have is gold, guns, and water. Right, But you're not going to get a hundred cents on the dollar for your gold and bitcoin. You can just zap over to somebody else, isn't it you know? In the end

days going to be easier to use digital currency. That's a fascinating point, and I do agree that I think a little bit of both is ideal because although it's true that the digital nature of bitcoin makes it much more easy to use in those situations. Um, if we're talking about kind of a a end of time scenario, you would think that some of our digital Internet capabilities would perhaps be offline. So I think that the physical nature of gold sort of is the backup plan for that.

Could be a red dawn, could be a red dawn kind of moment, you know, when the Soviets invade and occupy the US and we all have to huddle up with our teenage friends in the Colorado Mountains. Who knows? Who knows? What could it happened? Yeah? Every aside from gold, give it. Where where do you see the best I guess value or opportunities here in the precious metal space? Well, the precious metals I think are sort of mixed right now.

Silver seems to be tracking gold, but it is much more sensitive to the industrial metals, to what's going on in the broader economy. And although we have seen um some encouraging manufacturing numbers, particularly in Japan and Germany. UM. These potential setbacks with the delta variant of the coronavirus may kind of crimp that potential UM, although it's considered

a semi precious metal. I'm also looking at copper because some of the UH impediments, some of the roadblocks to hire copper demand that we've seen are are pretty well understood. The crackdown in China where Beijing and is limiting its exposure to UM, commodity inflation, and also in the housing market, the fact that new home sales are dropping. That's a

major source for copper demand. But UM Chile is far and away the world's number one producer of copper, and right now their legislature is considering legislation that would impose pretty steep taxes on their copper miners. So if that were to come to pass, it is estimated that about a one million metric tons of copper output from Chile

would be in doubt. So on the supply side, I think that UM copper does have some potential headwinds, and that these supply concerns would mean that prices won't fall quite as far as many are as expecting. All right, ever, thank you so much. We always appreciate chatting with you, getting in getting the latest on precious metals. Everett moment, he's a precious metal specialist at Gainesville. All coins, Let's talk tech, Let's talk cybersecurity, chip shortages, all that good stuff.

Nicola Marini, chief technical officer for e Y, joins us. Uh, Nicola, thanks so much for joining us here. Love to get your thoughts on I'm thinking cybersecurity. We've seen a lot of ransomware hacks, and I was just going to ask myself it doesn't Corporate America or just the C suite in general get it that they need to spend money to protect their systems. What's the latest? Yeah, so, hi, Hi guys, good morning. It's great to be here. Thank you for having me. Uh yeah, exactly. I think it's

a very bizarre situation. I said, on one side, you know, cybersecurities on the front page everywhere, right, and then on the other hand, we're not seeing, uh, the same type of reaction intense of the prioritization of of investment for cybersecurity.

So I would summarize it as a sort of you know, on one side that is alarmed, you know, exact to be almost panic in some some elements and as well at the same time, you know, with subt of the important it's a sense of resignation and say, you know, this is something that sooner or later it's going to

happen to us, and we're gonna sit and wait. So we had done, for example, a survey very recently, and we see that, you know, for s the CEOs that we have interviewed, you know, day sacience technology is I consider, you know, the base of the future growth. And at the same time, only one third of the same CEO ce cybersecurity as as a top priority. So it's kind of puzzling. Well, I guess the ransomware attacks are the alarm sounding and and and maybe they're gonna start ramping

up spending. By the way, I love Ernst and Young. The word for the business that you're in in German is vietshaft's proofunk's gazelle shaft Vshaft's proofunks gazelle shaft. That's one word, thirty two letters. I just thought it was probably I didn't know that it's a professional services is auditing, taxes,

financials all rolled up into one. And obviously e Y is one of the biggest in the globe and you know you advise businesses from mining to real estate tech, you vice finance and government and automotive, the automotive industry. So I wanted to ask a little bit about the chip shortage. Um, this affects more than just cars obviously, but they're most important to me. How soon do you expect companies to be able to solve this issue? Yeah, I think the time a rising is still probably between

one and two years. Still, uh, the because the systemic issues, right, that actually led to that problems almost like a perfect storm of I think a little bit of an obsolete way of planning, right, very localized for for some companies where they look at the supply chain in components versus looking at the supply chain a systemic as a system.

And so that led to you know, compound with the pandemic maybe you know, very conservative estimates around potential growth excess that they all contributed to a massive, massive clock. This is one almost in a lifetime, you know, a case study for for food planning any way, So explain to us the nicol of the you know, digital twin concept and how that might be impactful here. So we

think its p what are digital twins. Yes, So the digital twin is expectively like a the digital representation of a system, right, And so it started with dirt in the manufacturing space where you know, you could build For example, I think a General Electric was one of the first ones to actually launch the concept where they were able to build the turbine in a in a computer simulation and so using that you can understand, you know, what are the impacts of changes in some of the variables

that this particular system was experiencing it. So if you take the concept, then you're actually evolved it from a very specific sub atomics right into the whole system. I think you'll be able to capture, you know, the signals that you're saying in the system itself and be able to react even if you don't know exactly how things

will play out. But the ability through technology and the gathering on data to understand the correlation across the variable state of seeing and how they're evolving time, I think at least raises those red flags that in the case of the ship shortage and nobody has seen coming, what's the what's the competition? Like, I'm always interested to hear about the Big Four and you guys are truly the

heavyweights of the world. What's it like coming out of COVID competing with the likes of KPMG, pw C, the Lloyd An Y. Yeah, it's a it's a fierce competition. But you know, I think you're saying, actually very strong growth across across the world for for the professional services business. Okay, so lots of new things happening and in a very dynamic world, driving new regulation. Your saying, since so, John

is an evolution of the marketplace. I think that is U is the rewarding right And Nicola, thanks so much for joining us. Really appreciate Nicola Marini, chief Technical Officer for Why thanks for listening to the Bloomberg Markets podcast. You can subscribe and listen to interviews with Apple Podcasts or whatever podcast platform you prefer. I'm Matt Miller. I'm on Twitter at Matt Miller. Yet on ball Sweeney, I'm

on Twitter at pt Sweeney. Before the podcast, you can always catch us worldwide at Bloomberg Radio.