Market And Supply Chain Pressures

money manager to do? What is a portfolio manager to do? Let's check in with Tom Mantion, He's managing director for UBS Wealth Management. Tom, what are you telling your clients here given some of those challenges, those headwinds, including geopolitical issues that are facing investors these days, other than going to get a steak at Keen's. Yeah, absolutely so. Um, Look, the markets probably overreacting to two tensions in in Russian Ukraine.

It's apt to do that. I think you need to look past this where we're gonna be in two years, five years, seven years. Um. If people need to do something and feel like they have to take action, I'm not sure safe Haven treasuries are the place to be right now on the front end of the FED tightening cycle. So maybe commodity exposure energy might be a better way to hedge anybody's fears of escalating tensions in Russia. I wonder about your thoughts on energy, because you know, this

run up hasn't been entirely driven by Russia Ukraine. We were already on the way up. And um, you know, assuming that Putin just takes a couple of states and people get kind of angry but do nothing about it, what happens after everything calms down? Is there still support

for oil at nine dollars a barrel? Well, clearly the global economy is growing, and as the pandemic receives and things open up and people start moving around again, Yeah, there's gonna be more demand for for energy, so there could be support for a higher price of oil for for longer. I think the risk here is that that you know, you get to a hundred and fifty barrel oil and that that will take a chunk out of global demand. So, um, that is the tail risk in

this scenario. I would say, Tom, what's the biggest question? They're the most common question, the most common concern you hear from your clients. I think I think you know, before the Ukraine, Russia, it's the FED, and the said has been been a hundred percent the top of everybody's mind. What are they gonna do as a fifty basis points is if four hikes is six hykes, is it more than six hykes? I think the market is probably overreacted

to that as well. I think, Um, you know, the set has consistently been slow and steady, and I would not anticipate anything different than that. So I would expect basis point hike in March, and that's what we've been telling our our clients, and I think that it will continue slow and steady from there. You know, we're continually continuously hearing um worries about earnings and analysts kind of

downgrading their outlook. UM. The quants over at JP Morgan say, um, you know this glut of earnings gloom signals trouble for the markets. At the same time, JP Morgan's UH chief their strategists, Mislav Matchka, says, UM, stock pessimism is in vogue, but it's wrong. How do you how do you look at US earnings? The US corporate picture and how that's going to affect stocks. I think we're I think we're still in a in a growth mode for for US

corporate earnings for sure. Um, you had to report this morning, it was quite good. Um. I think the US economy continues to show strengths in the stace of of inflationary pressures, and quite frankly, I think you know, inflation will begin to subside, you know, for a host of reasons. Right, cons get easier. Uh, that's just maths. But but more importantly is people spend on services and not goods. That'll that'll help um, some of that inflation data as well.

So you know, I'm I'm kind of unconcerned. So I'm on the I'm on the strategist side. I think I'm constructive of bullish on US equities through the year. So I would I would tell people, you know, take advantage of of things you like here at this market right now and possibly get some capital at work. Yeah, it's interesting, you know, the Federal Reserve. We're looking at the w I r P function on the Bloomberg terminals suggesting that

the market's discounting seven rate hikes in County. Is that really bring to the for the risk that this fed overreacts and maybe does push this economy into recession or at least you know reset. I think it's probably more indicative of the market overreacting to the said than the other way around. Uh, you know it would It would totally surprised me if we saw seven hikes um uh in two Uh that that seems a little aggressive, especially

given the backdrop. Right. Um, you know that if if we do get escalating tensions of oil prices, do get over a hundred bucks at barrel, that's gonna cool demand. It's gonna cool inflation. It's gonna cool demand for goods and services. So yeah, I would go, I would I would play the flip side of that coin for sure. All Right, definitely over reacted here. Interesting. All right, We'll see how this plays out. Tom, Thanks much for joining us. Uh.

I really appreciate getting your thoughts. Tom Manton, Managing director for UBS Wealth Management, based up in Stanford, Connecticut. Let's get to our next get straight away. R J. Gallo, He's no stranger here, senior portfolio manager at Federator Herme's r J. What are you telling your fixed income portfolio managers at Federator Hermes. Today we're still staying short. Um, the Russia Ukraine developments have unfolded in a manner that you can't say it's too surprising, but um, it's it's

hard to argue that it's over. I think the key right now is further escalation in Russia Ukraine grabs the markets by the collar and pulls them away from the inflation movie that we've been watching for obsessively for a while now. But once we get past the most dramatic parts of Russia Ukraine, we still have to focus on inflation. Uh seven percent is too high. If there are many paths that the Ukraine Russia situation can follow, but many

of them involved aggravating the inflation problem. So inflation is still a major issue. As a result, on net we have we're a little less short than we worst day two weeks ago, but we still are maturely short in our duration call across the fixed and confranchise of Federated Herms. So where do you go to hide from Ation's what's the safest place? Brond managers hate inflation right and arose the the value of your fixed coupon. Certainly, consumers are

worried about it. Ha's become a political issue. Within a fixed income portfolio. The ways to play defense floating rate, take credit risk, reduced duration. UH. Last year we were heavily overweight TIPS and our total return bond fund that was a huge wind. Tips this year haven't been quite as strong because it was basically pricing in the inflation surprise. You want to get in before the inflation surprises in

the price. And then the feed had to react by their massively hawk ish one eighty, which drives really yields up and is now depressing TIPS returns on a year today basis the Tips, the Bloomberg Tips index is down about three and a half percent. We have a Bloomberg Tips index. Yeah, wow, yeah for sure. Why not? Why you t t R you you if you have a terminal in front of you, all right, So it's interesting here are j You know. One of the concerns I have is that the FED is going to blow this,

that they're gonna be too aggressive. Maybe do fifty basis points in March and then do maybe total seven or so I think the market that could be a problem for the market. Are you concerned about the Fed maybe overstepping their bounds. Um, I'm concerned that it could happen, but I do think I'm often almost a little surprised if you talk about this in the markets so that much. If you desktop your macroeconomics from grad school, Um, you know years ago. For a lot of people, maybe more.

The role of expectations is fundamental. Uh, And the Fed now has to talk tough. They need to fuel expectations that they will maybe go too far. Why because that helps them from not having to go too far. If people are concerned that the Fed is going to tighten seven times and slow the economy and slow stocks, what happens financial conditions tighten. That's what the FED wants. It could actually reduce the terminal FED funds rate. If the markets believe the Fed is going to be tough on inflation,

it is in that's their objective. Now, you don't hear Powell talking about it because he's not like he's only a ben burnankie. He's not a macroeconomist who's all about shaping expectations. But that's the script they're following. Now is the time to talk tough on inflation. Even Neil Kashkari is somewhat become more hawkish than he was, all right, I mean, how could you not. There's no other direction for him to go. Let's face it, that's right now. I'd argued today I was talking to our ahead of

risk management. I said, the FED is not hawk is The FED is a hawk and they're they're talking like a hawk and they're hunting inflation and that serves their objective. It actually could reduce the level to which they have to hike rates if they weren't talking tough. Yeah. I don't know what the FED can do though. I think it's a supply chain issue primarily. But we'll see. R. J. Gallows, Senior portfolio manager for Federated Herme's you never see a

mission undergrad. He's got an MP from Princeton. He's had a couple of economics. They're pretty good. They're pretty good schools. Matt and I love talking about the global supply chain challenges out there, from the ship stuck at sea to

the ports overloaded and how it impacts different industries. Statement take a view of that from the world of the fashion industry, and we could do that with ronand Samuel CEO of corn It Digital is a publicly traded company on the NASTAC k r NT is a symbol Ronan. Thanks so much for joining us here. Just let's just start out and just refresh our memory. What do you guys do at Corner Digital. Yeah, first of all, it's

great to be here with all of you. And what is Corny Digital is doing is actually comes forming the textile industry and the fashion industry to on demand, sustainable production and changing totally the supply chain of this industry. So, um, how are you doing that right now? As we run into these incredible supply chain walls and chip shortages. How much more difficult is it? So? As you know, um, the supply chain is broken, and specifically the supply chain

for the fashion industries, who is totally broken. The industry used to produce in large quantities in China, in Bangladesh, shipping it overseas UH and planning everything eighteen months in entrance, um, and trying to focus what the consumer and people will consume in eighteen months from now, which is impossible in today worlds where everything is moving digital and the consumer would like to get things on demand and the generations

that would like to be unique, it's almost impossible to focus, and what we see today is at thirty percent of the everything that being produced is actually being thrown away. This industry is the second most polluted industry and one of the main reasons over productions are being made in China and by Gladesh. What Comte is driving is the fully different supply chain. Actually, what we are enabling is the consumers to order what they want in e commerce

in any marketplace, um any products they would like. The products exists, virtually does not exist, was not produced yet, and only one the consumer order the product. Only then it goes to production and being delivered to the consumer within forty eight hours to his house. So this is the entire system is actually creating the new operating system for the fashion industry. For the text that is so Ronnan.

You know, for pretty much anywhere around the world, you look at a piece of clothing and you look at the tag and it is made in China. And for a lot of industries, you know, we've heard about the move to kind of onshore some production. Is that also an issue for the fashion industry If I look at the tagle actually made in the USA or made in Italy more going forward, do you think, yeah, it's actually what we see today is a move to on show

and new show production. We see massively brands. Fashion brands cannot any more trust the supply chains are being produced in China, uh, and they're moving on shore. We see production moving into US definitely with the trends of selling through the e commerce, through the Yeah, digital commerce, Um,

you have to change the supply chain, um. And digital commerce enabled the brand actually to provide endless amount of products, endless amount of design which you don't need to carry, they don't need to produce it in advance, and and by that enabling the consume to choose what they want when they want, and to produce exactly what the consumer needs without waste because being produced after the consumer place

to order. Running, you're not just running cornet, I mean um, in terms of your your knowledge base, you also got your NBA Northwestern. Paul tells me it's one of the best business fouls in the world. And I just wonder about the considering the current news the headlines of Russia and Ukraine. UM, we know that the economy in that part of the world is incredibly poor. Are they active

in the global supply chain? Does that you know I'm not asking if your specific business now has needs there, but how much of a wrench does that throw into manufacturing globally? So Russia is a big capital professhion um, but it's mainly for the local market. Um. So I do not foresee impact on the global fashion world due to this uh potential world that happening right now for but definitely going to be an impact for the local

market in Russia. And Rade, Yeah, I figured, um, you know, there probably wasn't a huge impact on the global supply chain. But I thought, if we're going to ask anybody'll be let me ask this guy who went to the Kellogg School of Business, Absolutely Ronan, what what aircraft did you fly in the Israeli Air Force? Um My flew Apache helicopter. That could be that just gives them that your man

card is automatically been gold plated. That is incredible. Um alright, So just getting back too quickly, Um, the business and the demand I wonder about from corn it Um, what kind of demand growth are you seeing as we come out of this pandemic? Yeah, so we just finish twenty one was the recording for us. Of course, we finished the year with more than sixty. Growth over years to

four was very strong. Usually the peak season is in Q four where we saw many new customers entering and also our existing customers, some big brands of very fast. All right, and thank you so much for joining us. Running Samuel CEO of Corner Digital, talking about the apparel space. All right, let's switch the page here, talk a little bit of satellites. Uh. You know, I've been reading stories that there's a lot of satellites in the sky and

the risk as they start crashing into each other. I'm not sure if that's a big issue, but let's talk satellites with Emiliano car Damon, CEO and founder of State Logic. That is a nastact traded stock s A t L. I think it was spack situation earlier in the year. Uh, Ameliana, thanks so much for joining us here. Love for it to take. Just give us a quick overview of satill Logic. What were you guys up to? Thanks for having great to be here. So we are. We're a satellite company.

As you say, we build high resolutions imaging satellite or satellites basically take very detailed pictures often happening on Earth. We have a seven team around the planet. Today. We have the ability to image any point on the planet four times per day today and we're launching over two

hundred satellite in the next few years to remap. It will give us the ability to remap the entire surface of the planet, every spur of the surface of Earth, every single day, so that we can deliver this data to prove decision making for governments and for every corporation or financial institutions and so on. What what's the story with the price? Because I see the stock up at twelve thirty three in the middle of January. Now you're

down at five seventy nine. What happened there? Well, the market in general, I think have a lot of other visually where you know, we we came out, we started listening and bespact earlier this year after announcing the transaction with Liberty Strategic Capital to fully fund or business and uh, you know, more than looking at the day to day at the stock, they were looking down and going to execute.

But we think, you know, the current prize the stock is significantly under that needs to We recently announced the UH stop UH repurchase program because we just think the you know, in time, Boue that's what we fund about representatility. But by the way, in terms of um what clients do with your data? Um who who? Who wants these pictures and what are they using them for? Today? The largest customers are governments around the world, so the US government and U S allies around the world that wants

to see what's happening so defense and intelligence purposes. He received today on the East situation in Ukraine. Um or customers will use the data to see what's happening there every single day, several times per day. How close can you get? Is this like uh like adjacent Bourne situation where like the n s A can can watch me passing someone. Uh, you know the MicroTape in Washington Square Park. No,

let's still on the movies, right. We get to around seventy cents of residues, which means, you know, each pixel in our image is around seventies tent years or you know, uh to see on the side. That basically means we can see small vehicles, we can see large vehicles, we can see movements, we can see the individual trees in a plentation for example, we can see dividual buildings or that sort of things. Like it doesn't get to the point where you can see, you know, read the license

plate on a car. So Emiliana, I guess you know. Over the last couple of weeks, as we watched the newscast, we're seeing a lot of satellite imagery of military installations in Ukraine on the board and all that type of stuff. Is that something? Is that a part of the market, the military application that your company looks at. That has been the market for observation up until now, and we are changing that way because our satellites have a hundred

times better unit economics. We can build a satellite or less than a million dollars, we can put them in more of it and they get to collect data continuously in the very entire resolution. Because of this hundred times that are un economics that when any other satellite company have. We are now in a position to change this and

make it so that everybody can afford it. So every financial institution and insurance company, every agricultural company, we can all start affording now to get the state and that

up until now only government. Right, So, if you're a small farmer and you want to see, you know, what's happening in your fields or what's happened with your supplied Now you can afford that you know the same way that he has gone on things, go and look at what's happening on the other side of all right, that's really interesting stuff at Miliano Cardamon, the EO and founder of a Sata Logic fascinating story company, just came public VS back. 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 three. On Fall Sweeney, I'm on Twitter at pt Sweeney before the podcast. You can always catch us worldwide at Bloomberg Radio.