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It's Always Time to Talk Donuts · Bloomberg Intelligence

0:02
Speaker 1: Welcome to the Bloomberg Penl podcast. I'm Paul swing you,
0:05
Speaker 1: along with my co host Lisa Brahma wits. Each day
0:07
Speaker 1: we bring you the most noteworthy and useful interviews for
0:10
Speaker 1: you and your money, whether at the grocery store or
0:12
Speaker 1: the trading floor. Find a Bloomberg Penl podcast on Apple
0:15
Speaker 1: podcast or wherever you listen to podcasts, as well as
0:17
Speaker 1: at Bloomberg dot com. Well, retail sales came in this
0:21
Speaker 1: morning a little bit better than expected. January came in
0:25
Speaker 1: at plus zero point two percent. The consensus was flat
0:28
Speaker 1: zero point zero percent. That's certainly an improvement from December
0:31
Speaker 1: when that number came in at minus one point six percent.
0:34
Speaker 1: So to help us dig into the retail sales and
0:36
Speaker 1: all things retail, we're still in retail eLearn experiod, believe
0:38
Speaker 1: or not, I would bring in our friend Sema shaw
0:40
Speaker 1: seem as a consumer analyst for Bloomberg Intelligence. She joins
0:43
Speaker 1: us here in our Bloomberg Interactor Broker studio. So, Seema, welcome, Um.
0:47
Speaker 1: What did you see in the retail report that came
0:49
Speaker 1: out this morning. I'm the biggest thing was that you
0:51
Speaker 1: mentioned that was December was revised down forty bases point
0:54
Speaker 1: to minus one point six. So we've already heard from
0:56
Speaker 1: the retailers that are reported that December was really bad.
0:59
Speaker 1: We had two weeks at the government shutdown. January did
1:02
Speaker 1: beat expectations, but I don't know that it's that good,
1:04
Speaker 1: considering December was revised down, so there might have been
1:07
Speaker 1: some pent up demand and big categories continued to be weak. Furniture,
1:12
Speaker 1: autos Um sima. What would you say to people who
1:15
Speaker 1: say that these numbers are backward looking and don't really
1:19
Speaker 1: tell us anything that we don't know, um, particularly in
1:22
Speaker 1: this case where we're two months behind. I would say
1:24
Speaker 1: that's absolutely true. Um. But I'm still surprised that people
1:28
Speaker 1: are surprised about the the way the numbers are going,
1:31
Speaker 1: because if you've listened to any of the calls, December
1:34
Speaker 1: was really bad across the board. Okay, so was it
1:36
Speaker 1: just December or do you get the sense that there
1:39
Speaker 1: is something sort of deeper here, a weakness that could
1:43
Speaker 1: be seen throughout the year. Um? Definitely, I think there
1:46
Speaker 1: could be, because we're seeing a slowdown in the housing market.
1:49
Speaker 1: That doesn't necessarily affect home depot and low so much
1:52
Speaker 1: as their focus on renovation. But again, if the house
1:55
Speaker 1: home price appreciation seems to plateau, people might be less
1:59
Speaker 1: inclined to a wealthy same with the stock market. And
2:01
Speaker 1: I'd also say that, um, the fact that tax refunds
2:05
Speaker 1: are expected to be lower than they were and delayed,
2:08
Speaker 1: I think that could especially hit the low end where
2:11
Speaker 1: that little bit of money spending. Lisa what I like
2:14
Speaker 1: about seem as researches. I think she's consistently had a
2:17
Speaker 1: more conservative call on the consumer than you what your
2:19
Speaker 1: read out on the street, and that's a It's a
2:21
Speaker 1: great way to balance kind of what we're seeing out there.
2:23
Speaker 1: So seem we're you're always an earning season. It seems
2:26
Speaker 1: like your companies are always kind of reporting you have
2:28
Speaker 1: a strange schedule, but you you're through the majority of them.
2:31
Speaker 1: What did you take away from this quarters results? And
2:34
Speaker 1: maybe more importantly, kind of what the tone of the
2:36
Speaker 1: outlook is for a lot of these folks, right, I
2:38
Speaker 1: would say across the board, if you exclude the math
2:41
Speaker 1: guys who really took the bulk of the share over
2:43
Speaker 1: holiday and continue to seem very bullish, I would say
2:47
Speaker 1: the bulk of the retailers, from department stores, even to
2:50
Speaker 1: some like home deep and those they had more tempered
2:54
Speaker 1: feeling about what's coming going forward. I think that even
2:57
Speaker 1: the home centers, while they're bullish, it's certainly not as
2:59
Speaker 1: strong as it was last year. And I think you're
3:01
Speaker 1: seeing for the department stores and sort of those other
3:05
Speaker 1: specialty retailers, competition continues to pressure them. So I guess
3:09
Speaker 1: I'm wondering with the breakdown of online versus brick and mortar,
3:14
Speaker 1: if you're seeing the bifurcation continue to increase, or whether
3:17
Speaker 1: you're seeing stabilization, in other words, some sort of uh,
3:20
Speaker 1: you know, gains being made among the healthiest of the
3:23
Speaker 1: brick and mortar, and you know, a stabilization in the
3:26
Speaker 1: rate of the right of the increase in online use. Well,
3:30
Speaker 1: online news does continue to go grow rapidly, but the
3:33
Speaker 1: ones that haven't established and I guess I would say
3:36
Speaker 1: a good infrastructure in their store base are the ones
3:39
Speaker 1: that are saying the biggest gains because they're able to
3:41
Speaker 1: have buy online, pickup in store, and other different fulfillment
3:45
Speaker 1: services that could help mitigate the gross margin pressure from
3:47
Speaker 1: online growth. But I still think that online as a
3:50
Speaker 1: whole in mobile commerce continues to grow, but it's still
3:53
Speaker 1: again as we said that less than mid teens percentage
3:55
Speaker 1: of allive retail. It's interesting. It's so when you think
3:58
Speaker 1: about the Amazon of the world, how much have they
4:00
Speaker 1: gone into how much of their business is apparel versus
4:04
Speaker 1: just buying gadgets and stuff? Right, I think they're increasing.
4:07
Speaker 1: I certainly know that they're increasing their apparel assortment. I
4:10
Speaker 1: mean there's been different players who have sized it, but
4:12
Speaker 1: they are going I think into more basics. Um. But again,
4:16
Speaker 1: the risk to brands when Amazon brings into private label,
4:19
Speaker 1: and my view is that they have the placement, they
4:21
Speaker 1: can put their brands top of mind and you see
4:23
Speaker 1: that also. I think with like supplement and they have
4:26
Speaker 1: private label across the board. So I think that's a risk.
4:29
Speaker 1: I don't think for the high end are really branded
4:31
Speaker 1: product that Amazon's private label is going to push it out. Okay,
4:35
Speaker 1: this is totally off top and I'm gonna this is
4:38
Speaker 1: gonna be absolutely a wild card that you're gonna have
4:41
Speaker 1: to deal with. Huts and Yards is opening this week
4:45
Speaker 1: and it's going to be a retail hub with lots
4:48
Speaker 1: of new brick and mortar retails. Do you think that
4:51
Speaker 1: New York City can absorb a huge chunk of additional
4:55
Speaker 1: retail brick and mortar. I think if you have enough
4:58
Speaker 1: food and stuff, you'll get the traff back in there,
5:00
Speaker 1: But I don't know that it's going to really drive
5:03
Speaker 1: up the sales. Also, just in my opinion, it's pretty
5:05
Speaker 1: far west, and as a person who builds my life
5:09
Speaker 1: around the train and stuff, I feel like it's a
5:10
Speaker 1: little bit far to go. And we already have, you know,
5:14
Speaker 1: the Time Warner Center, So I'm not sure that it's necessary.
5:17
Speaker 1: But if they have a good enough experience, they at
5:18
Speaker 1: least get the traffic, you know, for food and things
5:21
Speaker 1: like that. Senior consumer analyst for Blubberg Intelligence. Thank you
5:24
Speaker 1: so much for being here with us. It's always time
5:28
Speaker 1: to talk donuts, and here to talk donuts with us.
5:30
Speaker 1: Is the very best person or people to talk about
5:33
Speaker 1: it with us. Buzzy good Old and Nancy Goduld. Buzzy
5:36
Speaker 1: Godult of course runs Cougar Capital. He left Wall Street
5:40
Speaker 1: uh and and is still managing money. But he was
5:43
Speaker 1: the super trader running herzog Hein Godult before it was
5:48
Speaker 1: sold to Merrill Lynch in two thousand. He founded his
5:52
Speaker 1: own donut shop and he is here with Nancy, who
5:56
Speaker 1: is of course the manager of a new donut pub
5:59
Speaker 1: because donut is expanding. Buzzy. Let's start with you, thank
6:03
Speaker 1: you so much for being here in our Bloomberg Interactive
6:05
Speaker 1: Broker's studios. First, can you just give us a refresher
6:08
Speaker 1: and how you went from Wall Street two donuts, back
6:11
Speaker 1: to Wall Street, back to donuts again and are now
6:13
Speaker 1: expanding expanding it. Actually it started with doughnuts long before
6:17
Speaker 1: Wall Street, like a backtrack. I had Wall Street for
6:21
Speaker 1: maybe a few months, got fired for my first job,
6:23
Speaker 1: filed with my second job, and the nineteen sixty one
6:26
Speaker 1: ISH went into the donor business with my brother, and
6:30
Speaker 1: nineteen sixty eight Ish Wall Street. My brother decided to
6:34
Speaker 1: go back to Wall streets, hold off four stores that
6:40
Speaker 1: we had four stores, we sold off three. I wanted one.
6:44
Speaker 1: He went back to Wall Street. I would bake in
6:46
Speaker 1: the morning, take the trainer down and just kind of
6:49
Speaker 1: hang around post these positions orfer the job. And that
6:52
Speaker 1: was it. So from sixty eight to two thousand, that
6:54
Speaker 1: was in the Harzack. It's so Nancy. So now yet
7:00
Speaker 1: are you're you're expanding right, We're expanding donut pub right,
7:02
Speaker 1: So tell us about that? Yea, So we're opening UM
7:05
Speaker 1: the second location since nine on Astar Place in Broadway.
7:09
Speaker 1: So I'm super excited to be involved and to be
7:11
Speaker 1: continuing the legacy. So how is the doughnut business in general?
7:15
Speaker 1: People health conscious process or health conscious? But they still
7:20
Speaker 1: eight donuts donuts, So we're business fifty four years. At
7:26
Speaker 1: the end of twound the eighteen it was the best
7:28
Speaker 1: year we've ever had. And why is that dealing? What's
7:30
Speaker 1: changing do you guys? I think I think people enjoy
7:34
Speaker 1: an inexpensive treat that puts a smile on their face
7:37
Speaker 1: and don't let's go back in vogue. And we have
7:39
Speaker 1: become a destination. So on weekends you'll see people from
7:43
Speaker 1: Japan and Germany and Holland basically all over the world
7:46
Speaker 1: and all over the country. It's a destination point. And
7:49
Speaker 1: the product is a great product. We make three times
7:51
Speaker 1: a day. It's so refresh So, Nancy, where's the new
7:55
Speaker 1: location and what's the client's hell that you're looking for?
7:59
Speaker 1: So new location is Astro Place in Broadway, So UM
8:04
Speaker 1: it's gonna be a super busy area. A lot of
8:05
Speaker 1: students from n y U and Pratt and the New School.
8:08
Speaker 1: So we're hoping to get UM a younger clientele and
8:12
Speaker 1: some more college students in the store. You know, Buzzy,
8:14
Speaker 1: I want to ask you something about the connection between
8:17
Speaker 1: Wall Street and donuts. Is there? What you know, business
8:21
Speaker 1: is business and I learned how to run the brokerage
8:23
Speaker 1: firm by running a donut shop. And there's a very
8:26
Speaker 1: little difference. You've got clients and both you want to serve.
8:29
Speaker 1: You want them to leave, whether they're buying or selling
8:32
Speaker 1: a million shares of a security or whether they're buying
8:35
Speaker 1: it doesn't don't that you want to leave this This
8:37
Speaker 1: was the right place I went to. So it's all
8:39
Speaker 1: about product and service and I learned how to do that,
8:42
Speaker 1: and they don't the shop. So Nancy, as you guys
8:45
Speaker 1: think about your opening up this a new store at
8:47
Speaker 1: astra place, what's the competition Like with the big donut
8:50
Speaker 1: national chains and things like that, you try to put
8:53
Speaker 1: a store where there isn't another donut store. So there's
8:56
Speaker 1: actually a story about how a couple of Duncan Donuts
8:59
Speaker 1: opened next to the original location of the Donut Hub
9:02
Speaker 1: and they have since left, which is good for us.
9:05
Speaker 1: But I think we're pretty different from the like huge
9:08
Speaker 1: chain stores where everything is baked fresh on the premises.
9:11
Speaker 1: All of our donuts are hand cut. Um, so in
9:14
Speaker 1: that way, we're still a very old fashioned and I
9:16
Speaker 1: think people appreciate that authenticity in that freshness. Buzzy, am
9:21
Speaker 1: I correct in thinking, So you were the main baker.
9:23
Speaker 1: You you're the one who actually made the donuts. Well,
9:26
Speaker 1: back in the day, I did baking, a dressed the donuts,
9:30
Speaker 1: which was putting the icing, filling the jelly, et cetera. Yes,
9:34
Speaker 1: So what's your favorite donut? Black or white? Boston Cream? Okay?
9:39
Speaker 1: And right now, so how do you how do you
9:42
Speaker 1: divvy up your day now between managing money and making donuts? Well,
9:47
Speaker 1: the only thing I do with with donuts is on
9:50
Speaker 1: Saturday morning, if I'm in town, I stopped by that
9:52
Speaker 1: there on the shop, I have a cup of coffee
9:54
Speaker 1: with the guy who manages critique the chalk that may
9:57
Speaker 1: not be shiny enough where he has a new idea
9:59
Speaker 1: for a new that that's my involvement. Now that we've
10:02
Speaker 1: got a new store coming, I've been involved in the construction,
10:04
Speaker 1: which is the fun pot for me. And then after
10:06
Speaker 1: that I'll turn it over the nacy and manager. Do
10:10
Speaker 1: you actually make money from it or is it something
10:13
Speaker 1: that is enjoyable to do you actually now do make
10:15
Speaker 1: money from it? Yes? The reason as it's like it's
10:19
Speaker 1: tough to make money right, absolutely, I have to ask you.
10:23
Speaker 1: So you sold your specialist firm to Merrill Lynch at
10:26
Speaker 1: two thousand UM top of the market. It sounds like
10:30
Speaker 1: to me, I remember two thousand kind of peaking in March,
10:32
Speaker 1: so hopefully that worked out. Um, what is the state
10:35
Speaker 1: of the specialist business today? Are there specialists left? I
10:38
Speaker 1: think they're a specialist, but it's not the business anymore.
10:41
Speaker 1: I think it kind of topped out short after we
10:43
Speaker 1: sold between decimalization limit or the protection uh electronics, etcetera.
10:50
Speaker 1: Is electronics. You know, when when we made markets, there
10:53
Speaker 1: were spreads, so you're rather if you could make some
10:55
Speaker 1: money out of spread. Now the spreads are a penny
10:58
Speaker 1: and things trade in between that penny. It's just not
11:00
Speaker 1: a business, so what I mean? So again, most of
11:03
Speaker 1: the trading today is electronic. It's off off the exchange.
11:06
Speaker 1: So are there how many did you have to offhand?
11:08
Speaker 1: How many specialists are left on the New York Stock Change?
11:11
Speaker 1: I don't but I can't imagine it's anything like whether
11:14
Speaker 1: it was in the for these fifties sixties seven. So
11:18
Speaker 1: as you manage your own money, given your extensive experience
11:21
Speaker 1: in markets, where are you seeing the opportunities right now? Well,
11:25
Speaker 1: you know, it's a market the stocks which is a
11:28
Speaker 1: kind of saying, but it's true, it's not a stock markets.
11:30
Speaker 1: So there's there's opportunities always, and whether it's biotech, whether
11:34
Speaker 1: it's technology, whether it's retail, there's always opportunities. So, Nancy,
11:39
Speaker 1: getting back to the topic at headhand, donuts, What are
11:43
Speaker 1: some of the best selling donuts right now? Um, that
11:46
Speaker 1: coming out of your store? Um? So I think the
11:48
Speaker 1: classic donuts are always top sellers, like glazed Boston cream.
11:52
Speaker 1: We do a black and white Boston cream with half analyzing,
11:54
Speaker 1: half chocolate. Um. And then the croissant donuts, which are
11:58
Speaker 1: a sort of recent addition. Those are croissant donuts. Yeah,
12:03
Speaker 1: you're basically doing everything in your power not to say cronut. Right.
12:06
Speaker 1: Oh yeah, that was very well, I'm not allowed to
12:09
Speaker 1: say literally, that's that's that's trademarked. Oh yeah, okay, I'll
12:13
Speaker 1: say it for you. Coronuts, croissant doughnuts. Give me a break,
12:17
Speaker 1: just real quick, Nancy, how many people are actually worried about,
12:20
Speaker 1: you know, calories and health or are we moving to
12:24
Speaker 1: a phase that's that's different in a different sense where
12:27
Speaker 1: people are basically saying, uh, they want to be more gourmand,
12:30
Speaker 1: they want to support or be involved in an experience
12:34
Speaker 1: in a local shop. I think that people are super
12:37
Speaker 1: health conscious, but they also appreciate these sort of small
12:41
Speaker 1: like luxuries of having once in a while, you know,
12:45
Speaker 1: a sweet treat. So I think, you know, it's a
12:47
Speaker 1: combination of both. And I think people appreciate how fresh
12:50
Speaker 1: our product is um so maybe it makes them feel
12:53
Speaker 1: a little bit less guilty about it. That's a great story.
12:56
Speaker 1: Buzzy Cadeld and Nancy Cadeld. Nancy's a VP and manager
12:59
Speaker 1: of new Donut pub opening up on Astro Place and
13:02
Speaker 1: Buzzies the CEO of Cougar Capital and founder of Donut
13:05
Speaker 1: Pub way back in today. Thanks so much for coming
13:07
Speaker 1: in and joining us. I don't know about you, Lisa,
13:09
Speaker 1: but I mean I'm gonna head down to the fourteen
13:11
Speaker 1: Street and take a look, because I haven't been. Someone
13:14
Speaker 1: just tweeted at me, do they have diet donuts? I'm
13:17
Speaker 1: going to answer that no, that doesn't happen. Actually, Buzzy
13:23
Speaker 1: says they're all diet donuts. There you go. Interesting. Ethiopian
13:28
Speaker 1: Airlines flight three zero two crashed over the weekend, killing
13:31
Speaker 1: all one fifty seven people on board. Africa's biggest carrier
13:35
Speaker 1: decided not to use its seven thirty seven Max eight
13:37
Speaker 1: planes until further notice, while China and Indonesia also grounded
13:41
Speaker 1: seven thirty seven Max jets. So to get the latest
13:44
Speaker 1: on this developing story, let's bring in George Ferguson. George
13:48
Speaker 1: is a senior aerospace, defense and airline animals from Bloomberg Intelligence.
13:52
Speaker 1: He joins us on the phone from Bloomberg Intelligence HQ
13:54
Speaker 1: in Princeton, New Jersey. George, thanks for joining us. It
13:57
Speaker 1: seems like, you know, the stock is bouncing back a
14:00
Speaker 1: little bit, down about six percent. It had been down
14:02
Speaker 1: about earlier in the day. How material is this growing
14:07
Speaker 1: issue with the seven thirty seven Max to the company.
14:11
Speaker 1: So look, any time anything happens to the seven thirty
14:14
Speaker 1: seven to a seven thirty seven, it's important to Boeing
14:17
Speaker 1: because it's the most important program, accounts for over thirty
14:21
Speaker 1: percent of revenues, probably over of operating income. But I
14:26
Speaker 1: think what we're gonna find out here is that UM
14:30
Speaker 1: and the Bowling has made some changes to this jet
14:32
Speaker 1: since the previous version, the n G, and they pushed
14:35
Speaker 1: the engines forward, and they've they've changed the physics a
14:38
Speaker 1: little bit. And when they did that, they changed some
14:41
Speaker 1: of the program that the computer and the airplane that
14:45
Speaker 1: helps ensure that the pilot doesn't pull the airplane up
14:48
Speaker 1: too fast and stall the wing. And so I think
14:51
Speaker 1: what we're gonna find out is UM, we're still bowing,
14:54
Speaker 1: still not getting enough training into the into the market
14:58
Speaker 1: for pilots to understand that and disabled that. So I
15:02
Speaker 1: think this is going to end up being a training issue.
15:07
Speaker 1: But almost like a George, if it's a training issue,
15:10
Speaker 1: that's actually that could go back to Boeing and Boeing's
15:13
Speaker 1: liability because wasn't that part of Boeing's push here that
15:17
Speaker 1: this was not a craft and aircraft that required substantial
15:22
Speaker 1: increasing in training for pilots just to reduce the cost
15:27
Speaker 1: and better to compete with the Airbus. Yes, so I
15:30
Speaker 1: think there's gonna be a debate about that, UM, about
15:33
Speaker 1: whether or not this was Boeing's responsibility or the airline's responsibility.
15:38
Speaker 1: But I totally agree. I've heard from a number of
15:40
Speaker 1: pilots in the industry who are concerned that Boeing sort
15:44
Speaker 1: of soft pedaled the training pilot needed to get the
15:47
Speaker 1: transition to the MAX because they want to make the Energy,
15:51
Speaker 1: which is the previous version, and the MAX looked like
15:53
Speaker 1: very similar airplanes in an airline suite, and they want
15:56
Speaker 1: to minimize the training between the two. So Georgia this
15:59
Speaker 1: early stage age, is there any sense of the exposure
16:02
Speaker 1: to Boeing. Yeah, you know, we're always we're always sort
16:06
Speaker 1: of quite sensitive about that, given lives are lost here.
16:10
Speaker 1: But um, I mean airline crashes happen an occasion. They
16:14
Speaker 1: don't they don't put those companies out of business. You know,
16:17
Speaker 1: I think that attorneys will probably sit down and think
16:20
Speaker 1: about how much every life on the airplane is worth. It.
16:23
Speaker 1: Sort of hate to get juma commists, but you could
16:26
Speaker 1: find five or ten million dollars a person could be
16:29
Speaker 1: a liability. Bowing may have some insurance policies to help
16:31
Speaker 1: cover some of that. It's nothing that would am Bowling
16:34
Speaker 1: is ten billion dollars in the bounty. I think it's
16:36
Speaker 1: nothing that would that would put the company out of business. Well,
16:40
Speaker 1: it doesn't have to be putting the company out of
16:42
Speaker 1: the business. I mean it's the biggest uh, it's the
16:45
Speaker 1: biggest share in in in the Dow Index. I mean,
16:48
Speaker 1: it just has to go down a substantial mouth. There's
16:50
Speaker 1: also a question, of course, reputational risk as well as
16:53
Speaker 1: whether a nation like China, which accounted the orders I
16:58
Speaker 1: believe of this new seven thirties seven uh, if they
17:01
Speaker 1: could use this as an excuse to reduce the number
17:05
Speaker 1: of aircraft that they order from Boeing for whatever reason,
17:09
Speaker 1: whether it be that they want to reduce their exposure
17:13
Speaker 1: to US companies or what have you. I think there
17:17
Speaker 1: could be agreed at least I think there's there's the
17:20
Speaker 1: potential that some of that could be going on in
17:23
Speaker 1: the backdrop, because I would note that the largest operator
17:25
Speaker 1: the airplane is Southwest. They fly thirty four of them
17:28
Speaker 1: by my last count. They're flying them every day. They're
17:32
Speaker 1: working fine in the fleet, um, you know, and I
17:35
Speaker 1: would say the US and Europe, we haven't seen any
17:38
Speaker 1: of those regulators come in and try to temporarily ground
17:41
Speaker 1: the airplane. So it seems to me like the biggest,
17:46
Speaker 1: the most safe markets in the world have been the
17:49
Speaker 1: airplane is good to go and so yeah, because there
17:53
Speaker 1: may be a little bit negotiation behind the scenes here
17:55
Speaker 1: from from airlines in Indonesia or in China that might
18:00
Speaker 1: give them some legal room to take some orders off
18:02
Speaker 1: the book it. Frankly, I think the Chinese probably need
18:06
Speaker 1: the airplane flow to to grow their their airline industry
18:09
Speaker 1: as much as they want to. Um. Look, there's only
18:12
Speaker 1: I think, you know, I looked there's probably thirty orst
18:16
Speaker 1: flying inside of China right now, So it's not it's
18:19
Speaker 1: not a huge ask for them to pull them out
18:22
Speaker 1: of the fleet temporarily, you know. So I don't think
18:25
Speaker 1: it's Um, I don't know that they're going to shut
18:28
Speaker 1: off the pipeline and Boeing, but they may use it too.
18:32
Speaker 1: So so in in the U S. Here have we
18:33
Speaker 1: yet heard for the fa A about whether they want
18:36
Speaker 1: to temporarily ground these planes. So I've heard nothing at
18:42
Speaker 1: at this stage. Um. You know, look, we just we
18:45
Speaker 1: went to the Indonesia crash, and I would remind everybody
18:48
Speaker 1: that the Indonesia crash the Lion Air crash. I think
18:52
Speaker 1: what we've learned so far was that an angle of
18:54
Speaker 1: attack indicator wasn't properly maintained and the pilot wasn't fully
18:59
Speaker 1: trained on how to shut off this nose over computer control,
19:04
Speaker 1: so I wouldn't see anything from that would lead me
19:07
Speaker 1: to believe that the FED would want to restrict flights
19:11
Speaker 1: for this, the seven thirty seven Max. And look, they've
19:13
Speaker 1: been looking at that data since the Lion air crash occurred,
19:16
Speaker 1: like the FAE has been looking at that and they
19:18
Speaker 1: haven't ground the airplane. So again I think that we
19:21
Speaker 1: won't see a grounding out of this crash. George Ferguson,
19:25
Speaker 1: thank you so much for being with us. George Ferguson,
19:27
Speaker 1: Bloomberg Intelligence, Senior Aerospace defense an airline analyst, talking of
19:32
Speaker 1: course about the tragic Boeing Max UH crash which took
19:38
Speaker 1: the lives of nearly two hundred people crashed in Ethiopia.
19:43
Speaker 1: You're listening to Bloomberg Markets with Lisa Ramo, Eds and
19:46
Speaker 1: Paul Sweeney on Bloomberg Radio. First, Linton just walked into
19:51
Speaker 1: our Interactive Broker Studios in a fantastic food as he
19:54
Speaker 1: should because his company, Canopy Growth shares up more than
19:58
Speaker 1: seventy scent so far just this year. They have been
20:03
Speaker 1: absolutely on a tear. We are talking marijuana, and we
20:05
Speaker 1: are talking of course the company uh that Constellation Brands
20:08
Speaker 1: bought a share of and that last week. And as
20:11
Speaker 1: a business partnership with television personality and lifestyle authority Martha
20:16
Speaker 1: Stewart very much the Rage one of the biggest and
20:20
Speaker 1: arguably most ambitious kidnabis companies in the United States. Bruce
20:24
Speaker 1: joining us here as the CEO here in our eleven
20:28
Speaker 1: three oh studio. So Bruce, first, I just want to
20:30
Speaker 1: start with the Martha Stewart Association here. What is the
20:33
Speaker 1: business partnership exactly? Just please explain. Yeah, no, and I
20:37
Speaker 1: thought that bringing was great. You didn't actually use any
20:39
Speaker 1: pot puns. I thought you're going to talk about the
20:41
Speaker 1: stock high or something. So that was I think that's
20:43
Speaker 1: been tired. It's you know, I'm going to give that
20:45
Speaker 1: a T shirt, a T shirt to anyone who can
20:47
Speaker 1: come up with a new one of those. And I don't.
20:48
Speaker 1: I don't think I handle any T shirts. But this
20:50
Speaker 1: is a real business. We can move away from the
20:53
Speaker 1: puns to this is real business. Well, what's happened is
20:56
Speaker 1: people needed puns when it was uncomfortable. Now what it
20:59
Speaker 1: is is more than Curry City. It's a real business,
21:00
Speaker 1: which is why you're gonna name like Martha Stewart coming by.
21:03
Speaker 1: And what Martha saw is about three years ago. First
21:06
Speaker 1: we associated with Snoop and it was his request. He
21:09
Speaker 1: reached to us because he saw us doing brand right Tweed,
21:12
Speaker 1: and then we worked with him for about two and
21:14
Speaker 1: a half years and we got to know Martha, and
21:16
Speaker 1: Martha's on ramp is really about wellness health advising us
21:20
Speaker 1: and how we could actually focus on animal care products
21:22
Speaker 1: which would incorporate CBD, and where we can do all
21:25
Speaker 1: that work in America's right here in New York State,
21:28
Speaker 1: because New York State figured out when the Farm Act passed,
21:31
Speaker 1: how to create state level regulations that are very welcoming
21:34
Speaker 1: to business. And I, as a business, don't need a
21:37
Speaker 1: tax break. I need good policy. And so it kind
21:41
Speaker 1: of makes me show up without having my hand out
21:43
Speaker 1: because I just want to get to work. That was
21:45
Speaker 1: a very subtle tag at Amazon. Did I do that?
21:49
Speaker 1: Was that? If I was subtle in any way, I
21:50
Speaker 1: apologize for being subtled. So interesting, I said, your business
21:54
Speaker 1: is all in Canada? Now, is that right? No? So
21:57
Speaker 1: what wait? It's starting Canada? But um I can as
22:00
Speaker 1: a proud Canadian. Canada is a very good place to
22:01
Speaker 1: be from and if you stay there, there's only thirty
22:04
Speaker 1: six million of US. So we started there using the
22:07
Speaker 1: public policy research, intellectual property development, and now we're in
22:10
Speaker 1: more than a dozen countries any place that it's federally legal.
22:12
Speaker 1: So in the US, in the US, we're only pursuing
22:16
Speaker 1: CBD where it's governed federally. Butt in Germany to define CBD. So,
22:21
Speaker 1: CBD is one of the two primary measured ingredients in
22:24
Speaker 1: both cannabis and in hemp. And what CBD is associated
22:28
Speaker 1: with is like neurological commings. So if you think of
22:31
Speaker 1: a Parkinson's patient, they have money symptoms, one of them shaking.
22:34
Speaker 1: CBD appears to be effective and diminishing the shaking. But
22:37
Speaker 1: if they need to deal with pain anxiety, maybe they
22:40
Speaker 1: need THHD. So CBD comes principally from hemp. Hemp looks
22:44
Speaker 1: like marijuana. It's a big plant. But when you do
22:46
Speaker 1: it in the US the right way, as it's going
22:47
Speaker 1: to happen. Now you extract the CBD, you end up
22:51
Speaker 1: with this protein which is very digestible. So now we're
22:54
Speaker 1: getting this protein available and you end up with a
22:56
Speaker 1: fiber that could be very disruptive or impactful on places
23:00
Speaker 1: that do cotton, and so there's a whole bunch of
23:03
Speaker 1: things that happened when you let the government create a
23:06
Speaker 1: policy so you can actually not break a lot and
23:08
Speaker 1: use a plant, all right. So there's a lot of
23:10
Speaker 1: optimism around cannabis and the entire industry around it, and
23:15
Speaker 1: certainly that's been reflected in the amount that your shares
23:18
Speaker 1: of Search can it be shares up nearly six hundred
23:21
Speaker 1: percent since the end of two thousand and sixteen. A
23:24
Speaker 1: lot of people have been saying that there is a
23:26
Speaker 1: bubble in pot stocks. I'm wondering, do you think are
23:29
Speaker 1: you concerned about how much your stocks have gone up
23:33
Speaker 1: given the fact that there is still so much uncertainty
23:36
Speaker 1: about the policy level of marijuana. Yeah, I would say
23:40
Speaker 1: my concern is more for the portfolio stocks in the
23:43
Speaker 1: sector than our specifically. Right. So, we have a lot
23:45
Speaker 1: of capital. We're using that capital to do a lot
23:47
Speaker 1: of research. We have over a hundred and forty patent
23:50
Speaker 1: families that we put together. We've got a huge facility
23:53
Speaker 1: that we're just finishing construction that will launch the first
23:55
Speaker 1: real beverages driven by cannabis. So don't think beer, think tweet,
24:00
Speaker 1: tonic um think very low dosage, no calories, always standard,
24:06
Speaker 1: reasonably easy to sit and experience, versus have a drink
24:09
Speaker 1: and wait forty minutes. So this is gonna be you know,
24:12
Speaker 1: that kind of impact. So what you're having is a
24:14
Speaker 1: company that's creating a lot of depth of value when
24:17
Speaker 1: prohibition ends and patents can be made. But then you
24:20
Speaker 1: have a lot of folks who feel this could be
24:21
Speaker 1: a terrific get rich scheme, and so there's a lot
24:24
Speaker 1: of announcements. I think the way I like determine is
24:26
Speaker 1: there are several businesses in this sector and a whole
24:30
Speaker 1: bunch of companies. Um, so investors should be cautious to
24:33
Speaker 1: find the business and the company. Well, Bruce, how about
24:35
Speaker 1: just just crossing the Bloomberg terminal? This morning was headlined
24:38
Speaker 1: that Harvest Health and Recreation is acquiring closely held Verronto
24:41
Speaker 1: Holdings for about fifty million dollars in the largest U
24:45
Speaker 1: S pot deal. Uh. Do you expect more consolidation in
24:49
Speaker 1: the cannabis business. Yeah, I think there's gonna be two things.
24:51
Speaker 1: There's gonna be disintegration. So a whole bunch of companies
24:54
Speaker 1: that are just throwing stuff around aren't gonna be bought,
24:57
Speaker 1: they're going to disappear. Those would be the really sad ones,
25:00
Speaker 1: and then there's going to be some consolidation. And the
25:01
Speaker 1: reason for that is, um, we're running clinical trials. We're
25:05
Speaker 1: chatting off fair about, you know, having five long term
25:07
Speaker 1: care facility elders who will be on cannabis as an
25:11
Speaker 1: alternate to a lot of the other medicines. Running these
25:14
Speaker 1: trials creates intellectual property, but it's also a burden. And
25:17
Speaker 1: if you're a little company or you're gonna plan how
25:19
Speaker 1: we are really dominant three years from now, not likely.
25:22
Speaker 1: So that's where you're gonna see consolidation. Interesting, Bruce, thank
25:26
Speaker 1: you very much. Bruce Litton, Founder, chairman and CEO of
25:29
Speaker 1: Cannopy Growth Corporation Simple c G c g C based
25:34
Speaker 1: in Smith Falls, Ontario, but joining us here in a
25:35
Speaker 1: Bloomberg eleven three oh studios. We can talk about this
25:37
Speaker 1: industry all day. We honestly, I find it so interesting.
25:41
Speaker 1: Thanks for listening to the Bloomberg P and L podcast.
25:43
Speaker 1: You can subscribe and listen to interviews at Apple Podcasts
25:46
Speaker 1: or whatever podcast platform you prefer. Paul Sweeney, I'm on
25:49
Speaker 1: Twitter at pt Sweeney. I'm Lisa Abram woy It's I'm
25:51
Speaker 1: on Twitter at Lisa abram Woyds one before the podcast,
25:54
Speaker 1: you can always catch us worldwide on Bloomberg Radio speaking