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00:00We start with you Howard because you were there first in a sense as far as I know. Tell us about this company setting logic and your deal with it why it's a good investment. Well we felt we felt that space and the satellites in particular is really the next coming gigantic market for data. I mean to have images of the whole of our data on the whole Earth the amount of decisions that that would unlock and the ability and the economics how that will unlock was extraordinary. So we found the company set of logic. It has the best technology builds and redesigned every inch of the satellite. It takes 10 times the images of everybody else. I mean you look at these images 70 centimeters. You can count the containers on this ships count the cast count the trees count the number of what's working and what's not working in a solar farm. I mean this is this is incredible technology. And I think it just unlocks a vast sea of opportunity and marketplaces. And so this was the best technology. And that's why they needed to transact. Just for our radio listeners. We've been seeing on TV some images of some of these remote sensing and how incredibly detailed it is. So Mr. Secretary from your point of view we've talked before about your new fund the things you want to do with it. Explain why this was such an important investment for you and your fund. Well David it's great to be with you and we're very focused on investments where not only can we bring capital but we can bring our expertise and we're particularly focused on the technology area national security and in other forums where we can add a lot of value. So what we liked about this is great technology very scalable very affordable. And the combination of having a lot of data with a lot of A.I. really will enable both very big government markets and more importantly very big commercial markets. So Stephen if I could listen when the deal comes up the deal comes up and make the deal. But right now there's a lot of turmoil in the marketplace. Did it give you any pause right now. For example just today we're seeing with equities a lot of turmoil because of rate increases. Not at all the evidence as you recall last time I was on your show I was commenting on ISE rate increases. So we expect interest rates to continue to go up. We're a long term investor. Our horizon is generally five years or longer. So we're really not focused on where the markets are in the short term. But you know the opportunity here is with vast amounts of data we can really analyze climate issues energy supply food security supply chains. So we really believe that this is going to create all new types of markets with scalable affordable inventory. How are you have a lot of experience in this area. And you know with specs there is sort of the hot new thing. Not all of them have done very well in fact. Overall the last several months last year or so they've actually tended to underperform. Why is this one different. Well you know you go into one of the world's great marketplaces which is imagery from satellites. Right. We will be able to finally enter the concept of climate change meaning it didn't count every tree and revisit the sites all the time every day. You'll literally remap the earth every day. So this kind of data is such a big market. So the question is you know how do you address big big markets spots in general. Are way for people to go public. But it's really about the company. And satellite is the best technology. It's launching satellites all the time. It's extraordinary energy. We can take the space of more than a minute of an airport and tell you the brand of plane that is taking off. Imagine that. That is just it is just incredible data that of course together with the secretary helping us really walk into these great potential clients is going to change the outcome. This company great technology combined with a great investor like Secretary Emily Chang. I think this is going to completely change the way people view space imagery. Steven you've been an investor for a long time and you know as well as anyone that the mode around the business also counts. Right now. There are a lot of people going into space including private sector people in United States. Also we have people like China things like that. How do you make sure there's a moat around this business so that you really can make it a good business. Well the company has very strong patentable technology and has a significant manufacturing advantage. One of the things is the company can really produce these satellites in very very economic levels. And for that reason they can sell the data in very economic reasons. So there's a lot of people who are investing in space. I think there is a lot of opportunities in space. We think of this as more of a data company than necessarily just a space company. Finally. I mean I can't let somebody who knows the market so well go without coming in the markets right now. Again today they're down again. We're looking right now I think at a fairly volatile 20 22 given what we talked about with the secretary about increasing rates what do you make of the markets and where are the opportunities where the risks are right now. Well this is sort of the market sort of squares with this that the Fed's going to raise rates. OK. We all know the Fed's going to raise rates. So as soon as the market gets there it's going to level out. So I think it's going to be a short term rocky road for sure. And you're feeling it today. But I think as soon as the Fed gets out there it defines where it's going to go. Clarifies how they're tightening is going to end inflation. I think you're gonna find a nice floor. Granted it's gonna be bumpy and a nice but a nice floor. But you know for me the this transaction today is so much is so much fun because the company with great technology and a great partner and second terminates and coming in and validating their technology helping the company satellite itself. And the concept of really being able to unleash a giant data and image market is really so much fun for me that I don't think it matters that this market goes up or down. There is a company like this just performed brilliantly in one of the great markets of Europe which will be data collected across the globe. It's it's really amazing because remember if you can take an image of every square inch of the earth every day the marginal cost of being able to give it to farmers to give it to insurance companies climate change. It's very low marginal costs. And that's amazing. Well that's a kind of deal. All this one doesn't matter where the stock goes up or down it still does well. I think a pretty good deal to me. It's only one last one to you. Mr. Secretary we hear a lot about possible policy error right now the Fed. It's clearly going to raise rates. As you say. You predicted you knew they were going to do it. What is the risk of a policy error and would the risk be going too far too fast or not going far enough fast enough. Well I just want to clarify. I didn't know they were going to do what I predicted they were going to do it. But what the fuck. Well what I said is look you know for a long time the Fed tried to get to 2 percent. Inflation and couldn't. I do agree with Chair Powers position that he he said we're not going to target 2 percent we're going to target 2 percent over time. We then saw Marcel massive fiscal response because of it. I think we're most proud of the CARES Act deals that we did and the impact they've had on the economy. And now we have somewhere between 5 and 6 percent inflation. So it's obvious to me the Fed has to raise rates. They're doing that. And by the way that's that's a good thing. Many businesses many investors are hurt by zero percent interest rates. So over a long period of time if we have 3 percent 10 years over a long period of time that's actually still pretty low interest rates and I think a good equilibrium for the economy.

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Why Mnuchin, Lutnick Teamed Up on Satellite Investment

Cantor Fitzgerald CEO Howard Lutnick and former U.S. Treasury Secretary Steven Mnuchin explain why Liberty Strategic Capital, a private equity firm founded and led by Mnuchin, is investing $150 million in satellite company Satellogic and CF Acquisition Corp. V. They speak with Bloomberg's David Westin on "Balance of Power." (Source: Bloomberg)

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The only daily news program focused exclusively on technology, innovation and the future of business from San Francisco. Hosted by Emily Chang.
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