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Markets, Cannabis Industry, Yelp Survey · Bloomberg Intelligence

• 0:02
  Speaker 1: Welcome to the Bloomberg Panel podcast. I'm Paul swing you
• 0:05
  Speaker 1: along with my co host Lisa Brahma Wicks. 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. We're getting some earnings. It's been
• 0:22
  Speaker 1: a great year for pretty much everything because we have
• 0:24
  Speaker 1: experienced the everything rally that if you were entirely expecting.
• 0:29
  Speaker 1: Joining us on to talk about how to position heading
• 0:31
  Speaker 1: into your end is Greg han. He is chief investment
• 0:33
  Speaker 1: officer for Winthrop Capital Management, joining us here in our
• 0:36
  Speaker 1: Bloomberg Interactive Broker studios. So, Greg, what are you doing
• 0:40
  Speaker 1: cashing in, sitting on your hands and waiting for the
• 0:42
  Speaker 1: year to pass. No, I wouldn't say we're cashing in,
• 0:46
  Speaker 1: but we are moving to risk out of portfolios, both
• 0:48
  Speaker 1: on the fixed income side and the equity side. This
• 0:51
  Speaker 1: is something we started probably midway through the last quarter
• 0:55
  Speaker 1: and we're trying to get it done before mid November.
• 0:58
  Speaker 1: So what is your view for as we know pair
• 1:01
  Speaker 1: through these earnings here and we start to look out,
• 1:05
  Speaker 1: do you think the FED will be continued to be
• 1:07
  Speaker 1: supportive and you might go a little bit more risk
• 1:09
  Speaker 1: on as you head into next year. Um, so this
• 1:13
  Speaker 1: is a change for us heading into this quarter. What
• 1:15
  Speaker 1: we're looking at, we would have been saying, yes, we're
• 1:18
  Speaker 1: going to continue to de risk. We're seeing enough momentum
• 1:20
  Speaker 1: in Brexit and US China trade issues that could be
• 1:24
  Speaker 1: a catalyst for fixed investment and consumption from a global standpoint,
• 1:28
  Speaker 1: those barriers get reduced. I don't know that they'll be removed,
• 1:32
  Speaker 1: but reduced. We could actually see this economic recovery go
• 1:36
  Speaker 1: into the next two quarters in two thousand twenty. So
• 1:39
  Speaker 1: which assets in particular look like a bye that wouldn't
• 1:43
  Speaker 1: have otherwise looked like a bye? If Brexit is resolved
• 1:46
  Speaker 1: and there is some sense of some sort of trade
• 1:48
  Speaker 1: truce between the US and China. Large cap equity has
• 1:52
  Speaker 1: had a great run, so the S and ps up
• 1:54
  Speaker 1: over but when you look at mid cap and small cap,
• 1:57
  Speaker 1: small caps legged. So that's one area, and with private
• 2:00
  Speaker 1: credit expansion, we'd expect small cap to do well. The
• 2:02
  Speaker 1: other areas the international space, developed countries have lagged. We
• 2:06
  Speaker 1: have not been a big mean reversion kind of firm.
• 2:09
  Speaker 1: We're looking for capital flows to help support that, and
• 2:12
  Speaker 1: so we'll probably increase our allocation to international next year.
• 2:15
  Speaker 1: And does that include emerging markets? It does, Yeah, as
• 2:17
  Speaker 1: long as capital is flowing. And that was historically the
• 2:21
  Speaker 1: European banks were big lenders into the the emerging economies. Um,
• 2:25
  Speaker 1: but it's right now, it's still It looks like a
• 2:27
  Speaker 1: train wreck when you look backwards, but you have to
• 2:28
  Speaker 1: look forwards and look for the opportunity. So right now,
• 2:31
  Speaker 1: what's your sort of breakdown in terms of the US
• 2:34
  Speaker 1: versus international exposure? We're um in our in our portfolios
• 2:40
  Speaker 1: were about fift internationals, so it would be developed, developed,
• 2:44
  Speaker 1: five percent emerging. So in your fixed income portfolio, you know,
• 2:49
  Speaker 1: I'm starting to think about credit quality a little bit
• 2:52
  Speaker 1: more as were you know, ten eleven years into this
• 2:54
  Speaker 1: economic cycle. It's got to end sometime. What are you
• 2:58
  Speaker 1: see in terms of the credit quality? So we have
• 3:01
  Speaker 1: been watching closely for a shift in credit and it's
• 3:05
  Speaker 1: a great question. We're focused in the leverage loan market.
• 3:08
  Speaker 1: That's where the biggest his you know, where the change
• 3:11
  Speaker 1: in covenants, that's the first sign of a deterioration. But
• 3:14
  Speaker 1: when you look at banks, the when you when you
• 3:17
  Speaker 1: look at the loan lost provisions, UM, they're the banks
• 3:20
  Speaker 1: are really really healthy right now. So we're not seeing
• 3:22
  Speaker 1: it in the credit side. Go back twenty five years
• 3:25
  Speaker 1: and two thirds of the investment grade market was rated
• 3:28
  Speaker 1: single and higher. Today two thirds of the corporate market
• 3:32
  Speaker 1: is rated triple B and lower. It's it's you know,
• 3:35
  Speaker 1: it's it's shifted and we have lower interest rates and
• 3:38
  Speaker 1: lower cost of capital for companies. It doesn't make sense
• 3:41
  Speaker 1: from great So so people have been raising this issue
• 3:43
  Speaker 1: for a while, and everyone's been looking for the cracks
• 3:46
  Speaker 1: in credit markets, and some people point to leverage loans
• 3:50
  Speaker 1: UH and even higher bond saying that there is a
• 3:52
  Speaker 1: slice of them, both markets that have fallowen out of
• 3:55
  Speaker 1: bed recently plunging in price. Is this a market event
• 3:59
  Speaker 1: or an economic event. That's a good question, Lisa Um.
• 4:03
  Speaker 1: From from the standpoint of capital flows, I would say
• 4:07
  Speaker 1: that this is this is a capital market event, UM.
• 4:11
  Speaker 1: And it's when you look at concentrations in certain sectors,
• 4:13
  Speaker 1: like the energy sector in the high yield space, that's
• 4:16
  Speaker 1: citiosyncratic I think in that area, UM. But the rest
• 4:20
  Speaker 1: of the market looks. I mean it's it's credit has
• 4:22
  Speaker 1: been really really healthy, consumers healthy, and we'll tell you
• 4:25
  Speaker 1: the manufacturing sector is healthy. So the FED meets next week,
• 4:29
  Speaker 1: UM on the what do you expect from the Fed?
• 4:33
  Speaker 1: And do you think the Fed will continue to be
• 4:36
  Speaker 1: dubbish and supportive of this economy? Yeah, Paul, I think
• 4:39
  Speaker 1: this is um. We we're expecting twenty five basis points
• 4:42
  Speaker 1: and then in December our base case has shifted out
• 4:45
  Speaker 1: to a hold with improvement. It's all contingent on what
• 4:48
  Speaker 1: we see how a Brexit and the US China trade issues.
• 4:52
  Speaker 1: So right now, what do you like the least to
• 4:55
  Speaker 1: own heading into your end? That's a great question. So
• 4:59
  Speaker 1: financi twill assets have been challenged probably the least. Right
• 5:02
  Speaker 1: now we are reducing significantly high yield. So we still
• 5:06
  Speaker 1: have a short sleeve in short duration high yield, but
• 5:08
  Speaker 1: hi yell pulling that that out, uh anything levered so
• 5:12
  Speaker 1: leverage loans, b dcs. We want to stay out of
• 5:15
  Speaker 1: the levered part of UM the markets, and we're really
• 5:18
  Speaker 1: running right up the middle UM dividend paint stocks we
• 5:21
  Speaker 1: still are invested in, So I was gonna shift gears
• 5:23
  Speaker 1: to stocks. So Again, one of the things we hear
• 5:26
  Speaker 1: a lot from folks that are managing money is need
• 5:30
  Speaker 1: to be defensive. But me talk defensive whether it's utilities
• 5:33
  Speaker 1: or reads or consumer staples. We also hear that those
• 5:37
  Speaker 1: sectors aren't cheap, and so you kind of run into
• 5:40
  Speaker 1: the risk because how do you manage that balance? Yeah,
• 5:42
  Speaker 1: that's that's that's another good point that both bull sectors,
• 5:46
  Speaker 1: reads and utilities have had a great run this year.
• 5:48
  Speaker 1: And really what it is now is named names specific
• 5:51
  Speaker 1: and if you're investing in e t F, you've gotta
• 5:53
  Speaker 1: be careful because a lot of E t F sleeves
• 5:55
  Speaker 1: have concentration issues in um single names like Microsoft in
• 5:59
  Speaker 1: the in the technology sleeve. So you kind of have
• 6:02
  Speaker 1: to do your homework to see what's in there. And
• 6:04
  Speaker 1: you've got to pick your stocks right. So let's say
• 6:07
  Speaker 1: you do everything right heading into your end, what kind
• 6:10
  Speaker 1: of returns are you expecting? So if we ended the
• 6:13
  Speaker 1: year today, which was I start to say that uh
• 6:15
  Speaker 1: the S and P WED it would be twenty it
• 6:17
  Speaker 1: would be return and bonds at eight percent in this
• 6:21
  Speaker 1: interest rate environment, to have an eight percent return in
• 6:23
  Speaker 1: fixed income is surreal, So then why not just cash
• 6:27
  Speaker 1: in well, we have to stay fully invested. Were so
• 6:30
  Speaker 1: much of what we do is either funding liabilities or
• 6:32
  Speaker 1: relative return, and we're not market timers, and we're not
• 6:35
  Speaker 1: good at that the timing thing. So we're about a
• 6:38
  Speaker 1: fifth of the way through earnings. Anything jump out at you.
• 6:41
  Speaker 1: Here's you kind of parsed through some of the early
• 6:43
  Speaker 1: country reporting. Yeah, the banks have done really well. Again,
• 6:46
  Speaker 1: I was surprised at how well the bank earnings have
• 6:48
  Speaker 1: come through, and and um, so that was that was
• 6:51
  Speaker 1: a pleasant surprise. We're we're gonna be looking at Microsoft
• 6:53
  Speaker 1: coming up and the Amazon comes up this week also,
• 6:57
  Speaker 1: so we're watching that. Sorry, are you long the banks
• 7:00
  Speaker 1: right here? How's your exposure? Yeah, we've we've we've shifted. Um,
• 7:03
  Speaker 1: we we swapped Bank America into City. We still own
• 7:06
  Speaker 1: JP Morgan and we're trying to get into the regional sleeve. Um,
• 7:10
  Speaker 1: we've been longholders of Wells Fargo and we're encouraged by
• 7:13
  Speaker 1: new management. So very good. Greig Han, thanks so much
• 7:16
  Speaker 1: for joining us. Craig Han as President, chief Investment Officer
• 7:19
  Speaker 1: Winthrop Capital Management based in Indianapolis, but joining us here
• 7:22
  Speaker 1: in our Bloomberg Broker's Interact. Their Brokers studio. Greig, thanks
• 7:26
  Speaker 1: so much for joining us. All Right, now let's shift
• 7:44
  Speaker 1: gears to UBS for getting earnings from a number of
• 7:48
  Speaker 1: banks UVS reporting it's investment bank lagging behind here with
• 7:52
  Speaker 1: all the details. Alison Williams, Bloomberg Intelligence Senior Financial Analyst. Alison,
• 7:57
  Speaker 1: what are sort of the highlights of the financial report here? So?
• 8:01
  Speaker 1: I think the number one highlight was the strong wealth flows,
• 8:04
  Speaker 1: especially in Asia. This is of strategic importance for you,
• 8:08
  Speaker 1: bas It's I think why a lot of investors own
• 8:11
  Speaker 1: the stock and we saw sort of a dip last quarter,
• 8:14
  Speaker 1: very strong flows there and invested assets at a record.
• 8:18
  Speaker 1: Obviously we have to watch what's happening with asset prices
• 8:21
  Speaker 1: going forward. The negative, um was the investment bank because
• 8:25
  Speaker 1: you pointed out and so profit coming in below expectations. Um,
• 8:30
  Speaker 1: you know a lot of companies have been beating the numbers.
• 8:32
  Speaker 1: However they're beating, they're beating beaten down expectations and unfixed
• 8:36
  Speaker 1: income treating which isn't a big as big of a
• 8:39
  Speaker 1: piece for UBS. But I think that the critical thing
• 8:42
  Speaker 1: that they talked about was they are they're reorganizing the bank.
• 8:45
  Speaker 1: This is something that Bloomberg News has reported on UM.
• 8:48
  Speaker 1: They didn't say specifics there, but they did say they're
• 8:51
  Speaker 1: going to take a one hundred million dollar restructuring charge
• 8:55
  Speaker 1: leading to ninety million dollars of annual savings going forward. So, Alison,
• 9:00
  Speaker 1: what do you think what is your view of UBS?
• 9:02
  Speaker 1: Can they continue to be? Well? First of all, are
• 9:05
  Speaker 1: they a global investment bank? And if so, can they
• 9:07
  Speaker 1: continue to be Because we've seen, you know, Deutsche Bank
• 9:10
  Speaker 1: essentially say we're not a global investment bank and we're
• 9:13
  Speaker 1: cutting back. What's the UB strategy? So I think they
• 9:16
  Speaker 1: are global investment bank, but they do have a little
• 9:19
  Speaker 1: bit of a different mix. So they are more focused
• 9:22
  Speaker 1: on Asia and they are more focused on Europe UM,
• 9:26
  Speaker 1: and so they say they're gaining share in those areas.
• 9:28
  Speaker 1: We don't have sort of all the numbers in from
• 9:31
  Speaker 1: from some of those local competitors to sort of validate
• 9:33
  Speaker 1: that UM, but they are generally more focused on those
• 9:37
  Speaker 1: areas which have been feeling the pressure. And I was
• 9:40
  Speaker 1: waiting for you, Paul to ask me if the savings
• 9:43
  Speaker 1: meant staff cut. That's where I was going. And I
• 9:46
  Speaker 1: was prepared with my answer this time, which is you
• 9:49
  Speaker 1: always asked me this class savings me and staff cuts.
• 9:51
  Speaker 1: And my answer to you is always like, well, there's
• 9:53
  Speaker 1: staff with Zoso technology and we're seeing both at ubs.
• 9:57
  Speaker 1: And basically what they're saying is, look, you know, we
• 10:00
  Speaker 1: are gonna cut some staff a hundred percent of the
• 10:03
  Speaker 1: cost savings are going to be in compensation, but we're
• 10:06
  Speaker 1: going to continue to invest in technology. And I think
• 10:08
  Speaker 1: that's important because I think that's really what the US
• 10:11
  Speaker 1: banks have done, right, is that you know, they sort
• 10:14
  Speaker 1: of benefited from this virtuous cycle about our economy. We
• 10:17
  Speaker 1: got the tax cuts, they were able to spend. But
• 10:20
  Speaker 1: I think you know, UMS has had some interesting anecdotal
• 10:23
  Speaker 1: wins in their research department. They have this UM Evidence lab.
• 10:29
  Speaker 1: They've also invested in their electronic trading platform, and I
• 10:33
  Speaker 1: think that's the story we're going to continue to hear
• 10:35
  Speaker 1: more about. In terms of fixed income trading. We also
• 10:38
  Speaker 1: got this big announcement from Deutsche Bank. We knew they
• 10:40
  Speaker 1: were going to be making cuts to their rate business,
• 10:43
  Speaker 1: Bloomberg News saying they think it's going to be ten
• 10:45
  Speaker 1: per cent. Um also saying, and again this is hearsay,
• 10:49
  Speaker 1: but you know that the bank is going to continue
• 10:51
  Speaker 1: to invest on technology. You know, the shift in fixed
• 10:54
  Speaker 1: income trading that we've seen in equities trading I think
• 10:57
  Speaker 1: is going to continue, and I think it is important.
• 11:00
  Speaker 1: And to your point, if you want to be a player,
• 11:03
  Speaker 1: that you need to invest just get your sense. Do
• 11:07
  Speaker 1: you think that UBS would be better off just as
• 11:10
  Speaker 1: a wealth management unit and not with its investment bank?
• 11:14
  Speaker 1: I think And that is the questions that investors asked
• 11:17
  Speaker 1: because I think, you know, when people look at companies
• 11:20
  Speaker 1: like UBS and Credit SUITEZ, that's what they want to own.
• 11:23
  Speaker 1: They want to own the wealth management business, recurring revenue,
• 11:27
  Speaker 1: very high return on equity um. But there are sort
• 11:31
  Speaker 1: of benefits of having the investment capabilities. Think about wealthy
• 11:35
  Speaker 1: Asians that want to sell their businesses, the M and
• 11:38
  Speaker 1: A opportunities, the financing opportunities, and UBS and credit switets,
• 11:42
  Speaker 1: you know, continue to pound the table to make the
• 11:45
  Speaker 1: case of the synergies between the banks. You know. I
• 11:48
  Speaker 1: do think that there is some, uh, there is some
• 11:51
  Speaker 1: validity to that argument, um. And I think we will
• 11:54
  Speaker 1: see from from Credit Suite next week, who has also
• 11:57
  Speaker 1: been under pressure given they're sort of trailing trading revenue
• 12:01
  Speaker 1: a lot of which I do think it is due
• 12:02
  Speaker 1: to mix. You know theyy I think are going to
• 12:05
  Speaker 1: continue to outperform when they report next week. Alison William
• 12:09
  Speaker 1: thanks so much for joining us. We really appreciate. We
• 12:11
  Speaker 1: know it's a busy time with the global investment banks
• 12:13
  Speaker 1: reporting earnings. Allison's the senior analysts covering global investment banks
• 12:17
  Speaker 1: and asset management for Bloomberg Intelligence, joining us on uh
• 12:20
  Speaker 1: the phone. Well, we all know that the cannabis market
• 12:40
  Speaker 1: in the United States is growing rapidly and there's a
• 12:43
  Speaker 1: lot of players that are trying to find their niche
• 12:45
  Speaker 1: within the business that includes the marketing and advertising and
• 12:48
  Speaker 1: education around cannabis, and our next guests are certainly trying
• 12:51
  Speaker 1: to make their mark there. We welcome Jeremy Jacob's, co
• 12:54
  Speaker 1: founder and chairman of Enlightened, and Colby mackenzie, co founder
• 12:58
  Speaker 1: also on their board of managers of Enlightened. Both of
• 13:00
  Speaker 1: them join us here in our Bloomberg Interactive Brokers studio.
• 13:04
  Speaker 1: So Jeremy and let me let me start with you,
• 13:05
  Speaker 1: which give us a sense of what Enlightened is and
• 13:08
  Speaker 1: what you guys are trying to do in this market. Yeah,
• 13:10
  Speaker 1: so Enlightened feels a really interesting niche. We're the largest
• 13:14
  Speaker 1: media company within the cannabis space. We operate a network
• 13:17
  Speaker 1: of television screens and roughly a thousand cannabis dispensaries across
• 13:20
  Speaker 1: thirty six states and three countries. Really to kind of
• 13:23
  Speaker 1: get a feel. If you imagine standing in line and
• 13:25
  Speaker 1: you look up and there's a television screen. It's educating you,
• 13:28
  Speaker 1: it's entertaining you, but it's also advertising to you. That's
• 13:31
  Speaker 1: the biggest part of enlightened business. So Colby, how often
• 13:36
  Speaker 1: are people standing online at a cannabis dispensary able to
• 13:40
  Speaker 1: watch television? Yeah, it's It's actually an interesting thing because
• 13:44
  Speaker 1: I was definitely a newbie to the space when I
• 13:47
  Speaker 1: co founded this with Jeremy and expected it to be
• 13:50
  Speaker 1: like most of a retail where you just walk in
• 13:52
  Speaker 1: walk out as fast as you can. But you've kind
• 13:55
  Speaker 1: of seen this trend in retail as a whole, and
• 13:58
  Speaker 1: cannabis is kind of leading that, and it's really become
• 14:00
  Speaker 1: like this experience. So you're not going there just to
• 14:03
  Speaker 1: have a quick general store type transaction. Instead, you're going
• 14:07
  Speaker 1: there to experience and learn and really find your niche
• 14:10
  Speaker 1: within the space. And so we actually have tracking technology
• 14:13
  Speaker 1: that says they're in there for twenty one minutes. Okay,
• 14:15
  Speaker 1: when when when you say you're in cannabis dispensary for
• 14:19
  Speaker 1: an experience, I know, I just think, okay, so you
• 14:21
  Speaker 1: go there to get high? Is that? What's going on? UM?
• 14:25
  Speaker 1: A little different than that. So, because there's so many
• 14:28
  Speaker 1: different strains, so many different types, so many different things
• 14:30
  Speaker 1: that you have options, it actually is like information overload
• 14:34
  Speaker 1: and it turns into this like please help me, like
• 14:38
  Speaker 1: deer in the headlights type experience. And that's why our
• 14:40
  Speaker 1: screen is there to kind of guide them along the
• 14:42
  Speaker 1: way without feeling embarrassed. So, Jeremy, what are the types
• 14:45
  Speaker 1: of advertisers that advertise on the Enlightened Network? Great question. Really,
• 14:49
  Speaker 1: they fall into two categories. The first one is obvious,
• 14:52
  Speaker 1: the endemic advertisers the products that would be carried on
• 14:55
  Speaker 1: the shield same way if you had a screen in
• 14:56
  Speaker 1: a convenience store and be obvious to promote candy balls
• 15:00
  Speaker 1: and cokes, well, vape pins, edibles, uh, you know, premium
• 15:04
  Speaker 1: bud that's prepackaged. Those types of advertisers. But what we're
• 15:08
  Speaker 1: seeing really more than anything, is an increasing demand from
• 15:12
  Speaker 1: non cannabis companies that have decided to focus on that
• 15:16
  Speaker 1: cannabis market. For example, Vice Showtime, a lot of entertainment
• 15:20
  Speaker 1: companies that come out with programs like Long Appetite Obviously
• 15:24
  Speaker 1: that's catered towards the cannabis market. Uh. And then you
• 15:27
  Speaker 1: look at companies like door Dashes an advertiser of ours,
• 15:29
  Speaker 1: and Vans delivery of food that's excellent for cannabis consumers
• 15:33
  Speaker 1: both hungry and lazy, as well as Vans, you know,
• 15:36
  Speaker 1: a very popular skateboarding shoe. So there is a portion
• 15:39
  Speaker 1: of the cannabis demographic that that fits perfectly. So we're
• 15:42
  Speaker 1: really seeing a growth in the non endemic advertisers in
• 15:45
  Speaker 1: a really big way. How many cannabis dispensaries are there
• 15:49
  Speaker 1: so interesting question because it is a transition from a
• 15:53
  Speaker 1: gray market in many states to a legal market. So
• 15:56
  Speaker 1: from a legal perspective, you're looking at about five thousand
• 16:00
  Speaker 1: cross the nation. So I guess that when you say
• 16:02
  Speaker 1: it's a gray area, are there other facilities that have
• 16:05
  Speaker 1: access to your television feed? Sadly, no, we actually only
• 16:10
  Speaker 1: work in the legal ones. But sadly, when I say gray,
• 16:12
  Speaker 1: you're talking largely about like a California market where it
• 16:16
  Speaker 1: was medical and it was very kind of gray as
• 16:19
  Speaker 1: to what was a dispensary. We've always had a role
• 16:22
  Speaker 1: in a board. Our board is very strict on this rule,
• 16:25
  Speaker 1: legal or no TV for them. So so Jeremy, give
• 16:29
  Speaker 1: us a sense of and Kobe as well. I know
• 16:30
  Speaker 1: you guys have maybe some maybe different thoughts. Where are
• 16:33
  Speaker 1: we Just give us a sense of where are we
• 16:35
  Speaker 1: in terms of the states, How many states have legalized marijuana,
• 16:39
  Speaker 1: and what is I would guess the holding grail for
• 16:42
  Speaker 1: the industry would be a federal legalization. Give us a
• 16:45
  Speaker 1: sense where you think that might be. Yeah, so you've
• 16:47
  Speaker 1: you've got about a dozen states that are now recreational. Uh,
• 16:50
  Speaker 1: and you know that's really when the tipping point occurs,
• 16:53
  Speaker 1: especially for sales volume, is when you go recreational. Outside
• 16:57
  Speaker 1: of that totality, you've got around thirty thirty three thirty six,
• 17:01
  Speaker 1: depending on how you look at medical marijuana, whether it's
• 17:03
  Speaker 1: been elected or actually implemented. So you're looking at two
• 17:06
  Speaker 1: thirds of the country past that there's at least decriminalization
• 17:10
  Speaker 1: and most of the other states. There's very few states
• 17:12
  Speaker 1: that don't have some sort of cannabis legislation that's in place.
• 17:15
  Speaker 1: As far as federal legalization, I think that's a big
• 17:18
  Speaker 1: debate with everyone, but most of us with inside the
• 17:20
  Speaker 1: industry definitely feel it's within two years. You know, it's
• 17:23
  Speaker 1: a strong political marketplace right now, and so everybody wants
• 17:26
  Speaker 1: to grab ahold of that. I wonder how much though
• 17:28
  Speaker 1: the vaping scare recently has sort of set that effort
• 17:32
  Speaker 1: back me. I mean, have you've seen a sort of
• 17:34
  Speaker 1: fewer people showing up to the dispensaries or if not
• 17:36
  Speaker 1: that more pushback from regulators and so the interesting thing
• 17:40
  Speaker 1: on the vaping scare is, I feel like you saw
• 17:42
  Speaker 1: a ton of reaction outside the industry. Inside the industry,
• 17:46
  Speaker 1: it was it wasn't really viewed in any major capacity
• 17:49
  Speaker 1: because it actually shows a sign that you need to
• 17:52
  Speaker 1: move towards legalization because with legalization you have more regulation,
• 17:56
  Speaker 1: particularly coming from federal assistance and money, and all of
• 18:00
  Speaker 1: the illegal activity and kind of the vaping scare came
• 18:04
  Speaker 1: from stuff that turned out to be not legal. Jeremy,
• 18:07
  Speaker 1: we have literally twenty seconds. How much buying power do
• 18:09
  Speaker 1: these people have? Cannabas consumers are some of the strongest
• 18:13
  Speaker 1: bars on the planet. There's some of the most loyal
• 18:15
  Speaker 1: They're big spenders. They spend on averages short of a
• 18:17
  Speaker 1: hundred extra dollars on cannabis, and so they've been proven
• 18:21
  Speaker 1: to be some of the most loyal, biggest spenders. Jeremy
• 18:24
  Speaker 1: Jacobs as well as Colby Mackenzie, co founders of the
• 18:28
  Speaker 1: company Enlightened, which runs a television in dispensaries across the country.
• 18:36
  Speaker 1: Who knew that it was twenty one minutes in in
• 18:38
  Speaker 1: a cannabis Who knew a lot of these things. We're
• 18:40
  Speaker 1: having so many people associated with the cannabis business come
• 18:43
  Speaker 1: in here, and there's so many different ways that this
• 18:45
  Speaker 1: is actually growing as a business. Yeah, and then it's
• 18:47
  Speaker 1: a it's a real big money maker. The official data
• 19:07
  Speaker 1: is confusing, conflicted, and often not enough. That has been
• 19:10
  Speaker 1: the conclusion of many investors certainly that are looking for
• 19:13
  Speaker 1: alternative sources of data, one of them being yelped, where
• 19:17
  Speaker 1: you write reviews of the places you go. Uh. Carl Biolic,
• 19:20
  Speaker 1: Data science editor joining us here for yelp in our
• 19:24
  Speaker 1: Blombergadder Actor Broger Studios. Carl, can you give us a
• 19:26
  Speaker 1: sense you have this yelp economic average? Can you give
• 19:31
  Speaker 1: us a sense of what it is and what it's
• 19:32
  Speaker 1: showing us right now? Sure, it's a look at how
• 19:35
  Speaker 1: businesses are doing, and how consumers are engaging with businesses
• 19:39
  Speaker 1: and how that's changing. And it's across many different industries
• 19:44
  Speaker 1: and all across the country, including in fifty metros that
• 19:47
  Speaker 1: we track, And we just released today our third quarter findings,
• 19:52
  Speaker 1: which show that things were pretty flat. The economic average
• 19:56
  Speaker 1: was up about zero point one percent, so a little
• 20:00
  Speaker 1: bit of good news, sort of the sum total of
• 20:02
  Speaker 1: all the different things we saw affecting the national and
• 20:05
  Speaker 1: local economy in the third quarter. So, Carl, is there
• 20:08
  Speaker 1: anything did you guys in your data see any regional differences.
• 20:11
  Speaker 1: Are certain parts of the country doing better than others. Yeah,
• 20:15
  Speaker 1: this time we really focused on California and California metros
• 20:19
  Speaker 1: which have been struggling, in particular in the Bay Area.
• 20:22
  Speaker 1: San Jose, out of the fifty big metro's we've been
• 20:25
  Speaker 1: tracking for almost three years now, has fallen the most
• 20:28
  Speaker 1: and San Francisco has fallen the second most, So it's
• 20:30
  Speaker 1: a pretty clear picture. In northern California, Sacramento is also
• 20:35
  Speaker 1: below average. And then if you go to southern California,
• 20:37
  Speaker 1: San Diego is one of the worst performing metros. In
• 20:41
  Speaker 1: l A is in the bottom town as the West
• 20:42
  Speaker 1: wrong with California. Well, so this has changed since the
• 20:45
  Speaker 1: third quarter of fourth quarter of sixteen. So there's certainly
• 20:48
  Speaker 1: many great things going on in California. I say, is
• 20:51
  Speaker 1: you know California based business. I mean, there's there's great
• 20:54
  Speaker 1: things in the economy. It would be one of the
• 20:55
  Speaker 1: world's largest economies. There is what nasty letters from people
• 20:58
  Speaker 1: living in California. But you know this has changed, so
• 21:01
  Speaker 1: there are struggles. There are declines that we attribute, we
• 21:05
  Speaker 1: think mainly to just the difficulty of being able to
• 21:07
  Speaker 1: set up shop in California and then to find workers
• 21:10
  Speaker 1: who are near your business and to be able to
• 21:12
  Speaker 1: pay them enough that they can afford to live near
• 21:15
  Speaker 1: your business while still turning a profit and having enough
• 21:18
  Speaker 1: customers nearby who are going to give you that density
• 21:21
  Speaker 1: that you need to to stay competitive. Are there areas
• 21:24
  Speaker 1: where you saw a surprising amount of strength. Yeah. We
• 21:28
  Speaker 1: we've been tracking for the last two quarters. A We
• 21:29
  Speaker 1: call the five boom towns, the ones each quarter that
• 21:32
  Speaker 1: have grown the most since the start of this series
• 21:34
  Speaker 1: three years ago. This time, Milwaukee was the strongest. There's
• 21:38
  Speaker 1: also strength in Buffalo, Portland, Maine, Honolulu. You know, maybe
• 21:43
  Speaker 1: these are not the ones you would put on a
• 21:45
  Speaker 1: list normally, and you know, what do we say they
• 21:47
  Speaker 1: have in common besides that they've been doing very well
• 21:49
  Speaker 1: in the ELP economic average. But we do think there
• 21:51
  Speaker 1: are these smaller metros that have been able to attract
• 21:54
  Speaker 1: businesses and uh, you know, allow people to take more
• 21:58
  Speaker 1: risks perhap. But is this is this a real sort
• 22:00
  Speaker 1: of sense of where we are in terms of you know, however,
• 22:03
  Speaker 1: many years into this economic recovery, the areas that kind
• 22:07
  Speaker 1: of lagged behind for longest are finally seeing some positive
• 22:11
  Speaker 1: momentum in their local growth. Is that sort of the
• 22:13
  Speaker 1: story here? I think that's a big part of it. Yes,
• 22:16
  Speaker 1: I think we are seeing that there are places that
• 22:19
  Speaker 1: if you had checked in, you know, ten years ago
• 22:21
  Speaker 1: and where were they relative to each other, you might
• 22:23
  Speaker 1: see something really different. And that this last three year
• 22:27
  Speaker 1: periods of interesting period, as you're saying, like in terms
• 22:29
  Speaker 1: of recovery. We've had a new president during this time.
• 22:32
  Speaker 1: So it is really just this change through the history
• 22:35
  Speaker 1: of this average, and we're gonna be interested to see
• 22:37
  Speaker 1: what's the boom town in one year, in five years. So, Caroll,
• 22:40
  Speaker 1: one of the great things about the YELP reviews is
• 22:42
  Speaker 1: the restaurant reviews, So what are you seeing in that categories.
• 22:45
  Speaker 1: I'm sure you guys have a lot of data points there. Yeah,
• 22:48
  Speaker 1: and we're looking at reviews potentially, but also all the
• 22:52
  Speaker 1: other things people do with restaurants and seeing that really
• 22:56
  Speaker 1: the lower priced restaurants and the restaurant and food options
• 23:00
  Speaker 1: that you might go to when you really want to
• 23:01
  Speaker 1: eat at home and they're supplying food that you're gonna
• 23:03
  Speaker 1: take and eat at home, those are the strongest um.
• 23:06
  Speaker 1: You know, there are some exceptions, but we're also seeing
• 23:08
  Speaker 1: some of the more expensive categories and restaurants declining, which
• 23:13
  Speaker 1: you know, could be a signal that people are being
• 23:15
  Speaker 1: more frugal, but they might also just want to eat
• 23:18
  Speaker 1: food made outside the home more often, so they're going
• 23:20
  Speaker 1: to lower priced options to make that possible. But it's
• 23:23
  Speaker 1: interesting to see strength in some of these categories like
• 23:25
  Speaker 1: pizza and chicken wings and delis. Although this all goes together, right,
• 23:28
  Speaker 1: some of the higher priced markets are seeing the slowest growth,
• 23:33
  Speaker 1: and you know, when whether it's in other businesses as well. California,
• 23:36
  Speaker 1: I know that New York with property, but you're also
• 23:39
  Speaker 1: seeing slower growth or less popularity at the higher end
• 23:42
  Speaker 1: of restaurants. What is the implication economically if the high
• 23:46
  Speaker 1: end is starting to pull back a bit, I mean,
• 23:49
  Speaker 1: it could it could suggest that there's some lack of
• 23:51
  Speaker 1: confidence in you know, spending money and consumption. Uh, there
• 23:55
  Speaker 1: are other signals we look to for that, of course,
• 23:57
  Speaker 1: but you know, I think that it's it's a complex
• 24:02
  Speaker 1: picture because I think there's also just shifting geographically and
• 24:05
  Speaker 1: that may have to do with how expensive markets are,
• 24:08
  Speaker 1: but also what the local regulations are and opportunities for
• 24:10
  Speaker 1: workers in different sectors around the country. And in terms
• 24:14
  Speaker 1: of food, I think one thing that we've seen as
• 24:17
  Speaker 1: a company in general is just a stepping up of
• 24:19
  Speaker 1: quality in the lower price categories. So I think people
• 24:22
  Speaker 1: also have recognized that that, you know, what used to
• 24:25
  Speaker 1: be considered like fast food, let's say, has has really
• 24:28
  Speaker 1: stepped up in a lot of cases. You know, some
• 24:31
  Speaker 1: of the lower priced local restaurants as well have really
• 24:33
  Speaker 1: been competitive in quality. Carl bial like, thank you so
• 24:36
  Speaker 1: much for joining us. Carls a data science editor for YEP,
• 24:39
  Speaker 1: joining us here in our Bloomberg Inactive Broker studio. Thanks
• 24:42
  Speaker 1: for listening to the Bloomberg P and L podcast. You
• 24:45
  Speaker 1: can subscribe and listen to interviews at Apple Podcasts or
• 24:47
  Speaker 1: whatever podcast platform you prefer. Paul Sweeney, I'm on Twitter
• 24:51
  Speaker 1: at pt Sweeney. I'm Lisa abram Boy. It's I'm on
• 24:53
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• 24:56
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• 25:01
  Speaker 1: belated