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Prosecutors in Legal Cannabis States Unlikely To Interfere: Troppe · Bloomberg Intelligence

• 0:05
  Speaker 1: Welcome to the Bloomberg pim L Podcast. I'm Pim Fox.
• 0:08
  Speaker 1: Along with my co host Lisa Abramowitz. Each day we
• 0:11
  Speaker 1: bring you the most important, noteworthy, and useful interviews for
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  Speaker 1: you and your money, whether you're at the grocery store
• 0:17
  Speaker 1: or the trading floor. Find the Bloomberg p and L
• 0:20
  Speaker 1: podcast on Apple Podcasts, SoundCloud and Bloomberg dot com. This
• 0:36
  Speaker 1: is Bloomberg Markets with Pim Fox and Lisa Bramowitz on
• 0:40
  Speaker 1: Bloomberg Radio. Days after recreational popp became legal in California,
• 0:45
  Speaker 1: Attorney General Jeff Sessions decided to revoke Obama era guidance
• 0:50
  Speaker 1: that allowed state to states to actually have legal marijuana markets.
• 0:56
  Speaker 1: And here to tell us about this is Asher Trophy,
• 0:58
  Speaker 1: co founder chief executive of Tress Capital, Ashaal Trumpy. Thank
• 1:02
  Speaker 1: you for being with us. Maybe just tell our listeners
• 1:05
  Speaker 1: what is Trust Capital and what was your reaction when
• 1:10
  Speaker 1: you heard about this change in UH the Department of
• 1:14
  Speaker 1: Justice is treatment of legal marijuana sure thanks to Trust
• 1:20
  Speaker 1: Capitals of leading strategic venture capital firms dedicated to the
• 1:24
  Speaker 1: cannabis industry who are founded in two thousand and thirteen
• 1:28
  Speaker 1: and we were one of the first institutional grade investment
• 1:30
  Speaker 1: platforms in cannabis, promoting institutionalization of investment in the cannabis space.
• 1:37
  Speaker 1: We have an investment focus, UH, diversive global investing with
• 1:41
  Speaker 1: a focus on what we consider infrastructure within the space. So, Asher,
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  Speaker 1: what was your response to this new overhaul of Obama
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  Speaker 1: era rules or policies that basically have allowed legal legal
• 1:56
  Speaker 1: marijuana and frankly the legalization of marijuana and ken best
• 2:00
  Speaker 1: products to flourish. They definitely supported that, um, you know,
• 2:06
  Speaker 1: and the Coal Memo basically relinquished enforcement to the states
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  Speaker 1: under certain conditions. All right, So the recision of that
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  Speaker 1: guidance really just it doesn't change policy. Leave the prosecutorial
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  Speaker 1: discretion up to the local u S attorneys in the states. Now,
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  Speaker 1: the attorneys, the u S attorneys in the legal states
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  Speaker 1: are not exactly incentive to do anything different from what
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  Speaker 1: they have been doing, all right. I mean that's political suicide. Um.
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  Speaker 1: And in Jeff Sessions words yesterday, you know, I'm reading
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  Speaker 1: from his memo, UM, should weigh all relevant considerations the process,
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  Speaker 1: federal prosecutors who all relevant considerations including dot dot dot
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  Speaker 1: cumulative impact on the community. Right, Um, we have seeing
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  Speaker 1: great effects on communities that have taken up legal cannabis programs,
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  Speaker 1: So we find it to be very unlikely that prosecutors
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  Speaker 1: in those states will interfere in regulated markets UH businesses
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  Speaker 1: which are operating strictly within the confines of those states
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  Speaker 1: regulated frameworks. Sure, in other words, you're saying that this
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  Speaker 1: should have little or no effect whatsoever on the legal
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  Speaker 1: enforcement of marijuana rules, and should allow states to maintain
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  Speaker 1: jurisdiction UH and and and the ability to make it
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  Speaker 1: legal in their locale. Um. So, in other words, even
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  Speaker 1: with your investments, you see it having little effect. Is that?
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  Speaker 1: Is that accurate with our investments? We are super conservative
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  Speaker 1: and you know we we factor in these types of risks. Um.
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  Speaker 1: For example, what you saw in the Canadian markets yesterday,
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  Speaker 1: a big Dropadian canvas related stocks. You know that's natural
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  Speaker 1: in a very very frothy public market environment, right. Um.
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  Speaker 1: You know we're as there are certainly much more considervative
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  Speaker 1: and more prudent ways to invest in the space, and
• 4:17
  Speaker 1: that's how we do it. Behalf of our family officer
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  Speaker 1: institutional clients. Have you had any pushback or any comments
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  Speaker 1: from any of your investors regarding this move by Attorney
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  Speaker 1: General Jeff sessions. Uh, not really. We we got a
• 4:33
  Speaker 1: couple of phone calls asking about it, and you know,
• 4:37
  Speaker 1: to to U two closings that we have on the
• 4:40
  Speaker 1: table right now. Those are both you know, heavily moving
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  Speaker 1: forward today and uh post weekends, and that's domestic and international.
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  Speaker 1: Sure have you actually been buying on any weakness from
• 4:53
  Speaker 1: regulatory jitters? Um, I'd say that we've not been buying. Um.
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  Speaker 1: We we don't acquire publicly traded stocks at the time
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  Speaker 1: due to the you know, the the way the mark
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  Speaker 1: is right now. These opportunities um, that are proven and
• 5:13
  Speaker 1: more safe are on the private side of the market. UM.
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  Speaker 1: And so I think the effect that it might have
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  Speaker 1: is that it might move the balance a little bit
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  Speaker 1: more in our favorite of negotiating terms, UM, you know,
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  Speaker 1: on venture investments of that nature. How does the legal
• 5:32
  Speaker 1: cannabis industry bank its money? Sure? Uh. There are over
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  Speaker 1: four hundred banks according to since NUM three hundred banks
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  Speaker 1: plus a hundred credit unions UM from since and data
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  Speaker 1: in the fall that currently bank the cannabis industry in
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  Speaker 1: some way. I personally posit that every major financial banking
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  Speaker 1: institution in this country is whether they know it or not, UM.
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  Speaker 1: So there are many the state charter banks credit unions
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  Speaker 1: are the safer bess um for people seeking those accounts
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  Speaker 1: inside the industry, and you know that that sometimes becomes
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  Speaker 1: a strategic point in the space of you know, knowing
• 6:16
  Speaker 1: which banks work with the space in which you don't,
• 6:19
  Speaker 1: and really finding the right fit. There are banks certainly
• 6:22
  Speaker 1: out there banking. All of our portfolio companies have banking relationships. UM.
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  Speaker 1: So you know, it's definitely one of the key challenges
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  Speaker 1: in the space brought on the flip side. You know
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  Speaker 1: that that is what that is part of what creates
• 6:37
  Speaker 1: the opportunity that exists, right, that inefficiency in the market.
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  Speaker 1: If if all that went away and the sky was
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  Speaker 1: nice and clear and blue, that would be great, But
• 6:46
  Speaker 1: surely we'd want to position much before that, um, when
• 6:50
  Speaker 1: there is uncertainty, so you're closer to the ground and
• 6:53
  Speaker 1: you're less underside risk. Well. Sure, there have been a
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  Speaker 1: number of investors that have turned to bitcoin or blockchain
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  Speaker 1: uh to get around traditional banking structures that might not
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  Speaker 1: be uh so warm towards this industry. Have you done that?
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  Speaker 1: Do you see that gaining speed even more? Uh? We
• 7:14
  Speaker 1: are exploring blockchain. We have not done anything in crypto
• 7:19
  Speaker 1: or blockchain to date, but we're in some active conversations
• 7:24
  Speaker 1: in terms of people using those cryptocurrencies. Um. You know,
• 7:29
  Speaker 1: we look at banking kind of the way it is
• 7:33
  Speaker 1: now as a um the banking will open up over
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  Speaker 1: time and thus the round banking are almost a secular
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  Speaker 1: declient so to speak. Yeah, and overtime as the industry
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  Speaker 1: grows and growing. Believer, Yeah, sure you're you're breaking up.
• 7:51
  Speaker 1: Thank you so much for joining us. Fascinating conversation. Asher Trophy,
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  Speaker 1: co founder and chief executive of Trust Capital. I'm talking
• 8:00
  Speaker 1: about the cannabis industry at a time when some states
• 8:04
  Speaker 1: like California are legalizing it and the current Justice Department
• 8:07
  Speaker 1: seems to be moving in the opposite direction and tightening
• 8:10
  Speaker 1: the screws a bit. Coming up, Politics, policy and power
• 8:14
  Speaker 1: and law, Amy Morris, So, what do you have on
• 8:17
  Speaker 1: tap today? The President's lawyers threatened the publisher of Fire
• 8:21
  Speaker 1: and Fury with legal action if they released the book.
• 8:23
  Speaker 1: The publisher responded by releasing it early this morning, and
• 8:26
  Speaker 1: we're gonna find out what it might mean for the
• 8:28
  Speaker 1: administration's agenda. Well, that's coming up, Politics, Policy, power and law.
• 8:33
  Speaker 1: You don't want to miss it so much going on
• 8:35
  Speaker 1: in Washington. Uh, that is important to keep track up.
• 8:39
  Speaker 1: This is Bloomberg. For years, the iPhone and other smartphones
• 9:01
  Speaker 1: have been engines of dollars, a cash minting machine. This
• 9:06
  Speaker 1: industry has been. But there have been a series of developments,
• 9:09
  Speaker 1: not least of which is a saturation in the market.
• 9:13
  Speaker 1: But now the end news that perhaps the chips might
• 9:16
  Speaker 1: be compromised. The batteries have had issues that are leading
• 9:19
  Speaker 1: to questions about how much more steam there is here
• 9:22
  Speaker 1: with us. Is Shira o v Day, technology columnist for
• 9:25
  Speaker 1: Bloomberg goad Fly. You wrote a column about Apple in particular,
• 9:30
  Speaker 1: looking at the specific news about them replacing a battery
• 9:34
  Speaker 1: that had been flawed, and how bravo for them that
• 9:38
  Speaker 1: they finally told people, albeit a year after they should have.
• 9:42
  Speaker 1: But this could be bad for their business in a
• 9:44
  Speaker 1: way that perhaps people are not taking into account. Can
• 9:46
  Speaker 1: you explain, yes, So in December, Apple essentially said that
• 9:51
  Speaker 1: they had made a software change more than a year
• 9:54
  Speaker 1: ago that did a couple things. So on phones that
• 9:57
  Speaker 1: had older, worn out batteries, It's low down the processing
• 10:01
  Speaker 1: power on purpose so that those phones didn't shut off unexpectedly,
• 10:05
  Speaker 1: which was behavior that some phones had been doing and
• 10:08
  Speaker 1: it was very bad. But Apple said, basically they didn't.
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  Speaker 1: They weren't really forthcoming about this trade off of power
• 10:16
  Speaker 1: and performance, and they should have been. They apologized in
• 10:19
  Speaker 1: a kind of Apple not quite apology way, and they
• 10:22
  Speaker 1: did something unusual, which is for the rest of this year,
• 10:26
  Speaker 1: Apple has said that on affected phones, which are kind
• 10:29
  Speaker 1: of one to three years year old iPhones, it's gonna
• 10:32
  Speaker 1: replace batteries for twenty nine dollars instead of the usual price,
• 10:35
  Speaker 1: which is seventy nine dollars. So this is a pretty
• 10:38
  Speaker 1: big deal. And you're taking them up on this, and
• 10:41
  Speaker 1: so are probably a lot of other people. And how
• 10:44
  Speaker 1: is this potentially bad for their business going forward? And
• 10:48
  Speaker 1: frankly harbinger of a slowdown that perhaps analysts are not
• 10:52
  Speaker 1: taking into account right, So I think it's a it's
• 10:54
  Speaker 1: a little bit hard to know exactly what the impact
• 10:56
  Speaker 1: is going to be, but you can imagine there are
• 10:58
  Speaker 1: people like me who have iPhones that are two or
• 11:01
  Speaker 1: three years old who would be perfectly happy to pay
• 11:05
  Speaker 1: thirty dollars to get a new battery that might perk
• 11:08
  Speaker 1: up the processing power on those phones and in some ways,
• 11:11
  Speaker 1: in many cases make them feel almost like new. And
• 11:14
  Speaker 1: if that's a good alternative to buying a new iPhone
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  Speaker 1: at seven hundred or a thousand dollars, I'm gladly pay
• 11:21
  Speaker 1: thirty dollars for a shot at getting a like new
• 11:24
  Speaker 1: sort of iPhone. And so the question is how much
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  Speaker 1: does that affect sales of new iPhones at a time
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  Speaker 1: when the entire smartphone industry is having these problems with growth.
• 11:34
  Speaker 1: This is not just an Apple problem. Certainly, Apple is
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  Speaker 1: not immune that the sales of new iPhones UM have
• 11:41
  Speaker 1: slowed almost to a crawl at a point when many
• 11:45
  Speaker 1: people have phones and they're good enough and we're holding
• 11:48
  Speaker 1: onto them for longer and longer. What do you think
• 11:50
  Speaker 1: the value of the Apple brand is? I mean, it's
• 11:53
  Speaker 1: an incredibly valuable brand. If you look at those rankings
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  Speaker 1: of UM, what do you what do you call them
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  Speaker 1: consumer brand preferences? Apple is at the top or near
• 12:03
  Speaker 1: the top in almost every country in which it operates. Okay,
• 12:06
  Speaker 1: so by doing this, do you think that they've enhanced
• 12:08
  Speaker 1: the brand? Well, look, I mean I think they might
• 12:12
  Speaker 1: have done the brand damage by not being forthcoming about
• 12:16
  Speaker 1: this change they made in the software to slow down
• 12:19
  Speaker 1: phones with older batteries. You know, the company had an
• 12:22
  Speaker 1: opportunity for a year to talk about this publicly, and
• 12:26
  Speaker 1: instead it allowed this flourishing of conspiracy theories that Apple
• 12:30
  Speaker 1: intentionally slowed down older phones to prod people to buy
• 12:34
  Speaker 1: new ones. And it turns out there's I mean, the
• 12:37
  Speaker 1: motivation was maybe not true, but there was a shred
• 12:39
  Speaker 1: of truth in those conspiracy conspiracy theories. Okay, but you
• 12:43
  Speaker 1: don't believe that by lowering the price of replacement batteries
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  Speaker 1: to solve this problem, you don't think that that has
• 12:50
  Speaker 1: enhanced the brand and the loyalty of customers to Apple. Yeah,
• 12:55
  Speaker 1: that's a good question. I mean, look, it's it's a
• 12:58
  Speaker 1: throwing away their Apple. No, but I think I want
• 13:02
  Speaker 1: to out that that pim is actually clutching, clutching his
• 13:05
  Speaker 1: iPhone as we talk, which I think is actually older
• 13:07
  Speaker 1: than five years. But yes, my point that Apple plays
• 13:14
  Speaker 1: for the long haul, yes, customers, Yes, I think is
• 13:19
  Speaker 1: something that Apple understands almost uh intrinsically. It's part of
• 13:24
  Speaker 1: the d NA. So they did the brand damage and
• 13:27
  Speaker 1: now they're doing some brand burnishing and I don't know
• 13:31
  Speaker 1: what the ultimate trade office. But there's a larger point here,
• 13:34
  Speaker 1: which is if people are prolonging the cycle with which
• 13:38
  Speaker 1: they own phones. What does that do to the future
• 13:41
  Speaker 1: of smartphone makers that have gotten used to minting cash?
• 13:45
  Speaker 1: And I guess that that My question is, let's say
• 13:49
  Speaker 1: growth does stagnate here, what's the outlook for Apple? I mean,
• 13:53
  Speaker 1: they're still minting cash. Look to me, the existential threat
• 13:58
  Speaker 1: for companies like Apple is the changes we've seen in
• 14:03
  Speaker 1: consumer buying behavior of smartphones. Again, our phones are really good,
• 14:07
  Speaker 1: we rely on them a lot, but we're not buying
• 14:10
  Speaker 1: new ones at at least in countries like the US
• 14:13
  Speaker 1: and in Europe. We're not buying new ones at the
• 14:15
  Speaker 1: rate that we used to. If you look at the
• 14:17
  Speaker 1: average time period between new smartphone purchases, it used to
• 14:21
  Speaker 1: be something like once in every two years in the
• 14:23
  Speaker 1: United States, and now it's more like three years plus, right,
• 14:28
  Speaker 1: And that has a huge impact on sales numbers. Right,
• 14:33
  Speaker 1: If we're holding onto our new phones, that reduces the
• 14:35
  Speaker 1: number of new phones sold every year, and that is again,
• 14:38
  Speaker 1: that is a big headwind for companies like Apple that
• 14:41
  Speaker 1: I just I don't think they can overcome what seems
• 14:44
  Speaker 1: like a permanent shift in buying behavior. Three hundred million
• 14:48
  Speaker 1: dollars in a day. Doesn't that make your question this thesis?
• 14:53
  Speaker 1: It does not. New Year's Day three million dollars. Yes,
• 14:57
  Speaker 1: you're talking about Apple disclosed that New Year's Day sales
• 15:01
  Speaker 1: of things from the app store's three hundred million dollars.
• 15:03
  Speaker 1: So i'll I'll point out a couple of things. One
• 15:05
  Speaker 1: is and I'm gonna give you ten seconds. Sorry. Um.
• 15:09
  Speaker 1: The rate of growth in the app store is slowing
• 15:13
  Speaker 1: down significantly, with something like thirty plus percent in two
• 15:16
  Speaker 1: thousand seventeen and forty plus percent in two thousands sixteen.
• 15:20
  Speaker 1: And if Apple Apple wants that number to go in
• 15:23
  Speaker 1: the other direction up down. I love I love being
• 15:30
  Speaker 1: set straight by Shira Over. They are Gadfly columnists for
• 15:33
  Speaker 1: all Things technology. Always read her columns. Right now, I
• 15:54
  Speaker 1: want to get an on the ground version of what's
• 15:57
  Speaker 1: going on in the jobs market, and really there's no
• 15:59
  Speaker 1: one better to do that than Tom Gimble, founder and
• 16:02
  Speaker 1: chief executive LASAL Network in Chicago. LASL is one of
• 16:06
  Speaker 1: the leading staffing and recruiting firms in the country, and Tom,
• 16:10
  Speaker 1: I'd love to get your sense of what's happening under
• 16:14
  Speaker 1: the numbers. I mean, it seems like we are reaching
• 16:17
  Speaker 1: a full capacity here full jobs market, full employment. UM,
• 16:21
  Speaker 1: we are not seeing the wage growth that people would
• 16:24
  Speaker 1: like to see. Is it really so good or the
• 16:27
  Speaker 1: numbers masking some sort of broader weakness that isn't being
• 16:30
  Speaker 1: accounted for. No, the numbers are really good. This is
• 16:33
  Speaker 1: the best economy that we've seen in twenty five years,
• 16:36
  Speaker 1: probably longer than that. I've been in the market for
• 16:38
  Speaker 1: twenty years. UM, we're seeing that you know, unemployed. Acceptable
• 16:43
  Speaker 1: unemployment rate is between two and two and a half
• 16:45
  Speaker 1: percent historically, so as we as we scoot under four percent,
• 16:49
  Speaker 1: then you're you're getting a little bit close to that.
• 16:51
  Speaker 1: What you're gonna have is in It's an interesting situation
• 16:53
  Speaker 1: where baby boomers are retiring, you have more millennials entering
• 16:57
  Speaker 1: the workhorse. UM. What will really be interesting thing to
• 17:00
  Speaker 1: see is UM jobs are affected if this infrastructure bill
• 17:05
  Speaker 1: gets passed and we're gonna have more people throwing hammers?
• 17:08
  Speaker 1: Are we going to have the people to do that?
• 17:09
  Speaker 1: In addition to the white collar and I think too
• 17:11
  Speaker 1: often we look at immigration as people crossing the border
• 17:15
  Speaker 1: from Mexico to America for um, blue collar and trade jobs,
• 17:19
  Speaker 1: versus people coming here for white collar education and staying
• 17:23
  Speaker 1: here and and some of the technology and innovation, and
• 17:26
  Speaker 1: some of those immigration situations. So there's really across the board,
• 17:30
  Speaker 1: but the numbers aren't lying. The economy is great and
• 17:33
  Speaker 1: people should embrace it while while it's here. Okay, you said,
• 17:36
  Speaker 1: while it's here, do you see any signs? Are based
• 17:38
  Speaker 1: on your experience, how long can something like this last?
• 17:43
  Speaker 1: I'm very confident that that based you know, well, while
• 17:46
  Speaker 1: no one loves the tweets and the communication that might
• 17:49
  Speaker 1: come out of d c UM, the lack of pending
• 17:52
  Speaker 1: regulation that changes at the n l RB, the tax overhaul,
• 17:56
  Speaker 1: I see this thing going for another two years. Uh,
• 17:59
  Speaker 1: there's no reasm to think that that it should end.
• 18:01
  Speaker 1: If we can get interest rates a couple bumps this year,
• 18:05
  Speaker 1: two or three bumps this year. I think we're in
• 18:06
  Speaker 1: a pretty good place. Tom Which industries are benefiting the most,
• 18:10
  Speaker 1: or I should say the workers in which industries are
• 18:12
  Speaker 1: benefiting the most? In which are being left behind? Right now?
• 18:16
  Speaker 1: I don't know if any any working classes getting left behind.
• 18:20
  Speaker 1: I think what we have in America is there's pockets
• 18:23
  Speaker 1: of population, meaning what's going on in New York or
• 18:26
  Speaker 1: San Francisco may not be the same that's going on
• 18:28
  Speaker 1: in in Omaha or or or you know, Madison, Wisconsin.
• 18:33
  Speaker 1: But across the board, whether it's technology or sales, healthcare, finance,
• 18:38
  Speaker 1: companies are hiring and growing. What we're seeing and it's
• 18:41
  Speaker 1: really interesting, and why wage growth isn't hiring or isn't
• 18:45
  Speaker 1: increasing is because now small and medium sized companies can
• 18:49
  Speaker 1: also offshore business that twenty years ago was really just
• 18:53
  Speaker 1: a big fortune one thousand type of of of option.
• 18:57
  Speaker 1: And so we're not competing against just our neighbors for
• 19:00
  Speaker 1: for jobs and more money. We're competing globally. So as
• 19:03
  Speaker 1: that change is now we will see towards the end
• 19:05
  Speaker 1: of predict is we'll start to see wage increase because
• 19:10
  Speaker 1: the municipalities that have increased a higher minimum wage. That
• 19:13
  Speaker 1: will expect the service sector, in the hospitality jobs, and
• 19:16
  Speaker 1: you'll start to see wage increase from those because those
• 19:20
  Speaker 1: jobs obviously can't be off short. Well with those wage increases,
• 19:24
  Speaker 1: will you see employers trying to find less costly ways
• 19:28
  Speaker 1: to advance their businesses. Well, what will what will probably
• 19:32
  Speaker 1: see as more automation. So when you have the kiosks
• 19:35
  Speaker 1: that have appeared in some McDonald's and other fast food
• 19:37
  Speaker 1: chains that are trying to um automated and quite frankly,
• 19:42
  Speaker 1: save money and make things more efficient for the consumer.
• 19:45
  Speaker 1: If those can continue to grow with their level of
• 19:48
  Speaker 1: sophistication and the consumer doesn't suffer, you will see that. Uh,
• 19:52
  Speaker 1: the wages may increase in the service sector and hospitality sector,
• 19:56
  Speaker 1: but um, you won't see as many jobs in that.
• 20:00
  Speaker 1: So it really is, word a word, an interesting intersection.
• 20:02
  Speaker 1: But as you said to open the segment, is that
• 20:04
  Speaker 1: with unemployment creeping down from from four point one four percent,
• 20:08
  Speaker 1: of that continues in we're going to see that the
• 20:11
  Speaker 1: worker the workforce isn't in an abundance anyway, so it's
• 20:15
  Speaker 1: really more the participation, Right, Tom, have you been crazy
• 20:18
  Speaker 1: busy and do you expect an even busier The fourth
• 20:22
  Speaker 1: quarter was the best quarter I've had in twenty five years,
• 20:26
  Speaker 1: and we've grown every single year for for twenty years
• 20:28
  Speaker 1: that I've had the company. So yeah, it's been It's
• 20:30
  Speaker 1: been great. I I see things. I know I'm a
• 20:33
  Speaker 1: little bit sound, a little bullish and a little little
• 20:35
  Speaker 1: happy happy pill focus this morning, but uh, it is
• 20:39
  Speaker 1: it has been really good both in the Midwest and
• 20:41
  Speaker 1: we do work around the country and uh, companies and
• 20:44
  Speaker 1: CEOs have confidence in the economy and they're hiring. Thanks
• 20:48
  Speaker 1: very much for being with us. Tom Kimball is the
• 20:50
  Speaker 1: chief executive of LaSalle Networks and very interesting comments. As
• 20:56
  Speaker 1: you said, from the ground up right, this is not
• 20:58
  Speaker 1: big macro numbers. This is actually filling jobs in accounting, finance,
• 21:03
  Speaker 1: call centers, executive search, healthcare and so on. Yeah, you're
• 21:21
  Speaker 1: listening to Bloomberg Markets with the Fox and Lisa Bramwitz
• 21:26
  Speaker 1: on Bloomberg Radio. Well, we all want cheaper drugs, and
• 21:30
  Speaker 1: the US has been trying to approve generic drugs at
• 21:34
  Speaker 1: a faster clip to expedite some of these more cheaper
• 21:38
  Speaker 1: drugs to the market. But they are hitting into a
• 21:41
  Speaker 1: pipeline issue. Here to talk about it, as Anna Edney,
• 21:45
  Speaker 1: she's a health policy and FDA reporter for Bloomberg News,
• 21:48
  Speaker 1: and thank you so much for joining us. Can you
• 21:51
  Speaker 1: explain how drugs get to market in the US and
• 21:56
  Speaker 1: why this is a huge factor in the FDA's ability
• 22:00
  Speaker 1: to expedite generic generic drugs? Sure, so, in UM in
• 22:06
  Speaker 1: the US, a lot of the drugs that we take
• 22:08
  Speaker 1: are generic, and many of those are coming from India.
• 22:15
  Speaker 1: So it's either UM drug makers that are based there,
• 22:19
  Speaker 1: UM they're large generic drug makers, or there are even bigger,
• 22:23
  Speaker 1: sort of more well established drug makers that we might
• 22:26
  Speaker 1: know of that are in the US or in Europe.
• 22:28
  Speaker 1: Many of them have manufacturing plants that are based in
• 22:32
  Speaker 1: India UM because that helps them bring down the cost
• 22:35
  Speaker 1: of manufacturing their drugs. The issue that you know we're
• 22:40
  Speaker 1: seeing is UM for you know, the FDA has been
• 22:43
  Speaker 1: trying to increase oversight there because there are just so
• 22:47
  Speaker 1: many issues cropping up with UM. You know, the testing
• 22:52
  Speaker 1: that happens when they're manufacturing these drugs. They need to
• 22:55
  Speaker 1: check and make sure that the drugs are you know,
• 22:58
  Speaker 1: still safe and that they have as much active ingredient
• 23:01
  Speaker 1: as they should basically that they're going to work the
• 23:03
  Speaker 1: same as a brand name drug UM that they're copying.
• 23:07
  Speaker 1: And a lot of times the f d A is
• 23:10
  Speaker 1: finding in India the companies are deleting testing data if
• 23:16
  Speaker 1: it isn't desirable. So if they fail some of those testing,
• 23:20
  Speaker 1: or if it looks like a drug is going to
• 23:21
  Speaker 1: fail that testing, the the results will just sort of
• 23:26
  Speaker 1: vanish or be invalidated in some way. They might abort
• 23:30
  Speaker 1: the test UM. So what the f d A is
• 23:33
  Speaker 1: getting from them on the quality of their drugs might
• 23:36
  Speaker 1: not exactly be accurate. And a doctor Ready's laboratories. It's
• 23:41
  Speaker 1: got a plant in and Pradesh, and I want you
• 23:44
  Speaker 1: to explain what happened. In March of the f d
• 23:49
  Speaker 1: A was doing an inspection there. So there were two
• 23:53
  Speaker 1: agency inspectors that went to this this plant, UM and
• 23:58
  Speaker 1: they were they go into the computers a lot of times,
• 24:03
  Speaker 1: sort of like computer forensic experts essentially, UM to try
• 24:07
  Speaker 1: and and look and see, you know what the analysts
• 24:11
  Speaker 1: they're working on this testing have been doing. What they
• 24:15
  Speaker 1: found were what looked like, you know, deleted documents. They
• 24:20
  Speaker 1: didn't find the documents, but they found sort of a
• 24:21
  Speaker 1: trail that, you know, the documents were gone. So there
• 24:25
  Speaker 1: were you know, you open up Microsoft word, there's your
• 24:28
  Speaker 1: file of recent files. They looked at that file and
• 24:31
  Speaker 1: when they clicked on those documents, they weren't there anymore.
• 24:34
  Speaker 1: So they obviously had very recently been deleted from that computer.
• 24:39
  Speaker 1: They asked the employees, UM, you know, if they had
• 24:41
  Speaker 1: been if they had deleted them. They said no. They
• 24:44
  Speaker 1: asked them again, they said no. And this is from
• 24:46
  Speaker 1: me reading the inspection report. They finally asked them a
• 24:50
  Speaker 1: third time um. So they pressed them on this and
• 24:52
  Speaker 1: they admitted, yes, they had deleted these files. They couldn't
• 24:55
  Speaker 1: remember why. Okay, so Anna, there is a big question
• 25:00
  Speaker 1: of the the accuracy of some of the testing and
• 25:05
  Speaker 1: the production that's coming out of India, which supplies about
• 25:08
  Speaker 1: of the generic drugs that Americans take. Um, what what's
• 25:13
  Speaker 1: the outcome here? If the f d A is trying
• 25:15
  Speaker 1: to expedite generic approvals to lower drug costs, if they
• 25:19
  Speaker 1: are approving these at a faster clip, and yet it
• 25:23
  Speaker 1: sounds like, especially reading your story, they don't have the
• 25:25
  Speaker 1: boots on the ground in India to oversee some of
• 25:29
  Speaker 1: these plants. Does that mean that drugs are making their
• 25:31
  Speaker 1: way to the US that are not safe? Does it
• 25:34
  Speaker 1: mean that it's going to slow down the process of
• 25:37
  Speaker 1: generic drugs that are approved getting to the market. What's
• 25:39
  Speaker 1: the implication here? I think it raises a lot of
• 25:42
  Speaker 1: questions about whether those drugs are safe that are coming
• 25:47
  Speaker 1: to market here from India. The companies um that I
• 25:51
  Speaker 1: mentioned in the stories and that I contacted all said,
• 25:55
  Speaker 1: you know, they are working on these issues. The f
• 25:58
  Speaker 1: d A hasn't gone as are as to ban their products,
• 26:01
  Speaker 1: which the FDA can do if they find significant problems um.
• 26:05
  Speaker 1: And so they say that, you know, that basically means
• 26:08
  Speaker 1: that the FDA thinks they're still safe enough to come here.
• 26:12
  Speaker 1: They're just you know, keeping an eye on these manufacturing
• 26:16
  Speaker 1: issues that they need to clean up before the f
• 26:19
  Speaker 1: D a kind of gives them, uh, you know, the
• 26:23
  Speaker 1: green light that that everything is okay. So I'm just wondering,
• 26:27
  Speaker 1: i x f D a sort of the first and
• 26:29
  Speaker 1: last stop to oversee these factories or are distributors, the
• 26:34
  Speaker 1: big pharmaceutical distributors or uh, you know, the the actual
• 26:38
  Speaker 1: companies that came up with the drugs. Are they the
• 26:41
  Speaker 1: ones that that could potentially have some oversight over this.
• 26:45
  Speaker 1: The f D a is um is you know, considers
• 26:49
  Speaker 1: itself the authority to be able to you know, investigate
• 26:54
  Speaker 1: inspect these companies, but they do put the onus on
• 26:57
  Speaker 1: the companies themselves to sure that their products are safe um.
• 27:02
  Speaker 1: And so the sort of the buck stops there. There
• 27:05
  Speaker 1: is a sort of a thing in Europe um A
• 27:08
  Speaker 1: lot of the drugs have to have testing before they
• 27:11
  Speaker 1: crossed the border um into those countries. The US does
• 27:15
  Speaker 1: not have that, so you know, there isn't sort of
• 27:18
  Speaker 1: that check um. The final check where you might be
• 27:22
  Speaker 1: testing those products at that point. Thank you very much
• 27:26
  Speaker 1: and a any very important story. And just to note
• 27:28
  Speaker 1: that the Dr Ready Laboratories had declined to comment for
• 27:32
  Speaker 1: the story. Anna Edwards our Edna our healthcare policy reporter
• 27:37
  Speaker 1: for Bloomberg News talking about generic drugs made in factories
• 27:43
  Speaker 1: that may not get the greatest kind of oversight. Thanks
• 27:47
  Speaker 1: for listening to the Bloomberg P and L podcast. You
• 27:50
  Speaker 1: can subscribe and listen to interviews at Apple Podcasts, SoundCloud,
• 27:54
  Speaker 1: or whatever podcast platform you prefer. I'm pim Fox. I'm
• 27:57
  Speaker 1: on Twitter at pim Fox. I'm on Twitter at Lisa
• 28:01
  Speaker 1: abramoits one before the podcast. You can always catch us
• 28:04
  Speaker 1: worldwide on Bloomberg Radio