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Barr Broke From Mueller On Who Calls Obstruction: Mintz · Bloomberg Intelligence

• 0:02
  Speaker 1: Welcome to the Bloomberg pen L Podcast. I'm Paul Swinge. You,
• 0:05
  Speaker 1: along with my co host Lisa Brahma Waits. Each day
• 0:07
  Speaker 1: we bring you the most noteworthy and useful interviews for
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  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
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  Speaker 1: podcast or wherever you listen to podcasts, as well as
• 0:17
  Speaker 1: at Bloomberg dot com. Well, we continue to pour through
• 0:23
  Speaker 1: through the page Muller Report. We welcome Jim Grosso, co
• 0:27
  Speaker 1: host of Politics, Policy, Power and Law. June. Have you
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  Speaker 1: read All Foes yet? Oh? Yes, I have. It's you know.
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  Speaker 1: And also we're going through it not in hard copy
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  Speaker 1: form but on a computer, so it's sort of difficult
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  Speaker 1: to read. And we don't have the color coding on
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  Speaker 1: the website. At the website, I know, I don't understand it.
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  Speaker 1: We just have the blacked out But I'll tell you
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  Speaker 1: it's what strikes me is that it is far different
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  Speaker 1: from what Attorney General William Barr painted the picture he
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  Speaker 1: painted this morning. In his press conference, he talked a
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  Speaker 1: lot about collusion and said that Trump that it proved
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  Speaker 1: that there was no collusion. But Muller on collusion, notes
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  Speaker 1: that he did not try to prove collusion. So I
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  Speaker 1: thought it was kind of strange that word collusion has
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  Speaker 1: been thrown into this by President Trump, because, as we've
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  Speaker 1: said many times, it's not a word a lawyer would use.
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  Speaker 1: A lawyer would use the word conspiracy. So it was
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  Speaker 1: odd that that the a g bar used that today.
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  Speaker 1: And and also, I mean what strikes me immediately is
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  Speaker 1: the the that Don McGan, the White House Counsel, his
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  Speaker 1: interactions with the President, and that he almost came to
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  Speaker 1: the point of wanting to step down, packing his stuff up.
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  Speaker 1: It reminded me it echoed Elliott Richardson, who stepped down
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  Speaker 1: when Richard Nixon asked him to remove Special Counsel Archibald Cox,
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  Speaker 1: and he said that he told the Chief of Staff
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  Speaker 1: Rhins pre was that Trump had asked him to do crazy,
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  Speaker 1: i'll say stuff, and that he was leaving. So you
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  Speaker 1: have this context that really makes sort of rich what
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  Speaker 1: we already know the bare bones up. And to get
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  Speaker 1: his reaction, I'd like to bring in someone who who
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  Speaker 1: has been able with a prosecutor for many years. He
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  Speaker 1: is now the head of the white collar division at
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  Speaker 1: McCarter and English that's Robert Mints from a federal prosecutor. Bob,
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  Speaker 1: what do you have from looking at this report? What
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  Speaker 1: do you see that either uh supports what Attorney General
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  Speaker 1: Barr said or contradicts it. Well, June, I think that
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  Speaker 1: the press conference held by an attorney general was a
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  Speaker 1: fairly full throaded defense of the president. I thought that
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  Speaker 1: it would have been more proper for this press conference
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  Speaker 1: to have outlined the process that he went through in
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  Speaker 1: redacting the report and in handing taking the information that
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  Speaker 1: he had received from a special Council and the passing
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  Speaker 1: that along to Congress on the public as opposed to
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  Speaker 1: getting into the substance of it. I was also struck
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  Speaker 1: by the fact that he talked a lot about the
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  Speaker 1: sincere beliefs of the president, really trying to get into
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  Speaker 1: the president's mindset and using that as a admittedly used
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  Speaker 1: that in reaching his decision that he believed that there
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  Speaker 1: was no obstruction of justice case. Because he said that
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  Speaker 1: because the president sincerely believed he had done nothing wrong,
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  Speaker 1: that that sort of weighed in his favor in terms
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  Speaker 1: of some of the conduct. And I think that's a
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  Speaker 1: fairly controversial statement to make you merely because someone might
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  Speaker 1: be considered um paranoid and be looking at what's going
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  Speaker 1: on and feelingly being treated unfairly doesn't necessarily mean that
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  Speaker 1: they're not then trying to obstruct an investigation. I think
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  Speaker 1: that's really very much of an open question, Bob. The
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  Speaker 1: question I have going through my mind as I read
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  Speaker 1: this is the Special Counsel's office, the and the people
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  Speaker 1: who worked there seemed to struggle with whether or not
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  Speaker 1: there was obstruction, and they decided to leave it to
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  Speaker 1: perhaps the Congress to decide that. But if this were
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  Speaker 1: a normal case and not a case where a president
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  Speaker 1: of the its states is being investigated for obstruction and
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  Speaker 1: cannot be indicted by Department of Justice guidelines, would this
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  Speaker 1: be the kind of case you would take to a
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  Speaker 1: jury and let the jury make this tough decision. Well,
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  Speaker 1: there's certainly a lot of evidence out there that I
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  Speaker 1: think a prosecutor could use to weave together an obstruction case. Uh.
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  Speaker 1: One of the things that the president's defenders have often
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  Speaker 1: said is that the president doesn't fully understand the way
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  Speaker 1: a separation of powers works. And certainly this president has
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  Speaker 1: cross lines that had never before been crossed in terms
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  Speaker 1: of reaching into what's going on with the FBI and
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  Speaker 1: with the Department of Justice. UM, I think this case
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  Speaker 1: could have been brought to a jury. And here I
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  Speaker 1: thought the most interesting statement that I've seen so far
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  Speaker 1: on this report on the obstruction of justice issue is
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  Speaker 1: that the Special Council wrote that with respect to whether
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  Speaker 1: the President can be found to have obstructed justice by
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  Speaker 1: exercising his powers under Article two of the Constitution, we
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  Speaker 1: concluded the Congress has the authority to prohibit a president's
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  Speaker 1: corrupt use of his authority in order to protect the
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  Speaker 1: integrity of the administration of Justice. So it answers the
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  Speaker 1: question when Mueller decided not to reach a conclusion here,
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  Speaker 1: who makes that call? The Attorney General seemed to suggest
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  Speaker 1: that the call was then his to make as the
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  Speaker 1: as the head of the Department of Justice, whereas Mueller
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  Speaker 1: seems to be safe it seems to be saying that
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  Speaker 1: that really is going to be Congress's decision. So there's
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  Speaker 1: a disconnect there between the way Mr Muller Mr Barr
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  Speaker 1: interpreted UM the decision by Mr Mueller not to reach
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  Speaker 1: a conclusion, and what Mr Mueller decided to say in
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  Speaker 1: his report that it really is a question for Congress
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  Speaker 1: to decide rather than the Attorney general. Let's also talk
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  Speaker 1: about Mueller's explanation of why he chose not to subpoena
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  Speaker 1: President Trump. He said he had enough evidence to, you know,
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  Speaker 1: to subpoena him, but also he had enough evidence that
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  Speaker 1: he didn't need to subpoena him. And it seemed to
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  Speaker 1: be based on the fact that it would take too
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  Speaker 1: long and he wanted to get this report out. But
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  Speaker 1: does that leave a lot to question if you don't
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  Speaker 1: have the testimony of the president, Yeah, it does. I
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  Speaker 1: think he understood that that was going to be a long,
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  Speaker 1: protracted fight, and ultimately there wasn't going to be much
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  Speaker 1: to be gained by getting that interview if the courts
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  Speaker 1: were going to were to force the President to submit
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  Speaker 1: to an interview by the special counsel. I think they
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  Speaker 1: also felt that, based upon all the public statements that
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  Speaker 1: the President has made about this, that they more or
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  Speaker 1: less knew what his answers were going to be. Uh
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  Speaker 1: And so at the end, it was really kind of
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  Speaker 1: a cost benefit analysis. They decided that the time that
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  Speaker 1: it would take in order to try to force that
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  Speaker 1: interview was really not worth it. They had enough answers
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  Speaker 1: and really as they said a minute ago, the president
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  Speaker 1: really has got on a record when so many of
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  Speaker 1: these issues that have been identified by Special counsel mother
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  Speaker 1: as potential areas of obstruction. Thank you so much, Bob.
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  Speaker 1: That's former federal prosecutor Robert Man's a partner at McCarter
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  Speaker 1: and English. Lisa June Grazzo of Bloomberg Politics, Policy, Power
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  Speaker 1: in Law, thank you so much for that. We are
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  Speaker 1: continuing our coverage of the four forty eight page report
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  Speaker 1: from Special Prosecutor Robert Mueller. We're gonna take a look
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  Speaker 1: at Honeywell. Honeywell shares climbed the most in eight months
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  Speaker 1: after reporting that sales had surged, spurring the company to
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  Speaker 1: raise its full year guidance despite a global manufacturing slowdown.
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  Speaker 1: That was kind of breakdown what we saw from Honeywell
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  Speaker 1: this quarter. We welcome back Karen uble Heart. Karen is
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  Speaker 1: a senior Industrials annalyso Bloomberg Intelligence. She joins us live
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  Speaker 1: here in a Bloomberg Interactive broker studio. So a pretty
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  Speaker 1: darn good quarter. I saw that the organic growth rate
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  Speaker 1: for Honeywell was eight percent. I can't remember the last
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  Speaker 1: time we saw that type of growth from one of
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  Speaker 1: your industrial companies. Yeah, no, that it was. It was
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  Speaker 1: a much better than expected and it was in three
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  Speaker 1: of the four businesses grew eight and and percent real surprise.
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  Speaker 1: The biggest surprise was building products, where they got rid
• 8:04
  Speaker 1: of the home um automation business because they didn't want
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  Speaker 1: to compete with Amazon, etcetera. Um. The buildings products business
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  Speaker 1: is growing at nine percent, largely due to new product launches.
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  Speaker 1: His top priority is growing organic growth, and I think
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  Speaker 1: we're actually starting to see some of that happening. So
• 8:19
  Speaker 1: here's my question. How much is this a Honeywell I
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  Speaker 1: used some credic story, and how much does this indicate
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  Speaker 1: that we are seeing a stronger pace of growth around
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  Speaker 1: the world. I think a lot of its Honeywell. I mean,
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  Speaker 1: aerospace is very strong. It was eight percent against a
• 8:32
  Speaker 1: ten percent comp but aerospace is is strong for everyone.
• 8:36
  Speaker 1: But the building to business and the safety products business
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  Speaker 1: are both Honeywell driven. They did an big acquisition in
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  Speaker 1: the safety business, They've done a lot of new products
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  Speaker 1: in both, and they're both growing eight to nine percent.
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  Speaker 1: So that's Honeywell. So how how exposed is Honeywell to
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  Speaker 1: kind of what's happening in China? Trade negotiations in terms
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  Speaker 1: of their global businesses, well, they said ton of was down,
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  Speaker 1: um a little bit actually, And and what's interesting about
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  Speaker 1: their guidances they didn't raise the second half and a
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  Speaker 1: lot of people press them on that because growth is
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  Speaker 1: so good. But there they are worried. They're hedging their
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  Speaker 1: bets for a glow you know, a little bit slower
• 9:11
  Speaker 1: global growth. So when you take Honeywell out of it,
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  Speaker 1: they think, like the core economic growth is going to
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  Speaker 1: be slower in the second half globally, and they're hedging
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  Speaker 1: their bets. Can you give us a sense of the
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  Speaker 1: breakdown of the geographic distribution of Honeywell's business, Um, you know,
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  Speaker 1: you know, China's um a decent size for them, but
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  Speaker 1: it's still like seven percent. It's still pretty pretty low,
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  Speaker 1: but it's a good grower. Um. The US is in
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  Speaker 1: the forties and Europe is in the twenties, and you know,
• 9:36
  Speaker 1: so it's you it might be up to thirty, I think,
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  Speaker 1: But I guess I'm wondering, is there a big divergence
• 9:42
  Speaker 1: between the US and the performance there versus the rest
• 9:45
  Speaker 1: of the world. Well, interestingly, Europe is not as bad
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  Speaker 1: so far um that as people expected. Because those are
• 9:51
  Speaker 1: those numbers A P, M I and GDP numbers do
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  Speaker 1: not look good. But you know it's hole, it's holding
• 9:56
  Speaker 1: up there getting you know, mid single low mid single
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  Speaker 1: digit growth there you're us of course is the growth
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  Speaker 1: engine right now, although there's concerns about the second half
• 10:04
  Speaker 1: and then ages growing. UM China is weak because of trade.
• 10:08
  Speaker 1: So but overall a lot of this is product driven.
• 10:11
  Speaker 1: I think you're interesting. I was looking through the report
• 10:13
  Speaker 1: and I see that the surging e commerce helped drive
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  Speaker 1: a ten percent improvement in Honeywell's SPS warehouse automation. So
• 10:20
  Speaker 1: there's an Amazon play here for Honeywell, right, yeah. I
• 10:24
  Speaker 1: mean they did a large acquisition, one of their largest
• 10:27
  Speaker 1: ever in warehouse automation, a company called UM Intelligrated and
• 10:31
  Speaker 1: it's growing like fifteen percent against fifteen percent. You know,
• 10:34
  Speaker 1: it's it's it's growing extraordinarily well. And then they did
• 10:38
  Speaker 1: another UH automation where he automation business in Europe, so
• 10:42
  Speaker 1: they're growing that business and it is a it's it's
• 10:45
  Speaker 1: you know, double digit, nice solid double digit growth. Yes,
• 10:47
  Speaker 1: that is e commerce. It's the Amazon play there. Make
• 10:51
  Speaker 1: an Amazon play on anything, Lisa, anything. I'm going to
• 10:54
  Speaker 1: challenge you. I'm going to find something and see what
• 10:56
  Speaker 1: you can come up with. Uh, you know, I gotta say,
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  Speaker 1: Karen yu Buhart, you say that this is an idiosyncredit issue, Honeywell, Uh,
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  Speaker 1: their management actually doing a good job. Is there any
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  Speaker 1: takeaway that another big industrial company could take away from
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  Speaker 1: this to possibly spur their growth. Well, it's really interesting
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  Speaker 1: because um, they're not. They didn't run out and buy things.
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  Speaker 1: They have so much money and they're scared to do
• 11:19
  Speaker 1: M and A. But he really put the u you know,
• 11:22
  Speaker 1: the pedal to the metal on on internal spending, not
• 11:26
  Speaker 1: on capacity, on making new things. And that's and then
• 11:30
  Speaker 1: of course they've been doing the efficiency game and margin
• 11:32
  Speaker 1: improvement for a long time. I mean the you know
• 11:35
  Speaker 1: ten plus years of Dave Cody was about let's get
• 11:38
  Speaker 1: respectable margins. He did that, although there's room to go,
• 11:41
  Speaker 1: and now this guy's let's get growing. So I see
• 11:44
  Speaker 1: the stock up. Just put up the stock the five
• 11:46
  Speaker 1: year chart on the bloomber terminal and Honeywells, you know,
• 11:49
  Speaker 1: looks on a five year basis that it's high here. Uh,
• 11:51
  Speaker 1: you know, up another percent this year. Maybe did they
• 11:55
  Speaker 1: you start thinking about using their stock for acquisition currency. Uh,
• 11:58
  Speaker 1: you know they won't because they're sitting on their sitting
• 12:00
  Speaker 1: on ten eleven billion in cash and another seven billion
• 12:04
  Speaker 1: in debt capacity because their leverage is pretty low. So
• 12:07
  Speaker 1: I don't think they will. In fact, they're they're buying
• 12:09
  Speaker 1: backs a ton of stock because they don't know what
• 12:11
  Speaker 1: to do with all this money. So um, I don't
• 12:14
  Speaker 1: think they would use stuff. This is really interesting to
• 12:17
  Speaker 1: me that they spent their money on actually making stuff.
• 12:21
  Speaker 1: Are we starting to see companies get rewarded by shareholders
• 12:25
  Speaker 1: for deploying their cash into R and D. Well, it's
• 12:28
  Speaker 1: funny because three M always gets paid for being an
• 12:31
  Speaker 1: R and D and I t W I mean and
• 12:33
  Speaker 1: paid in terms of margins outstanding margins, and there is
• 12:36
  Speaker 1: a payback on that. I don't think people spend enough
• 12:38
  Speaker 1: time noticing that, um, just across the board, but they
• 12:42
  Speaker 1: will notice the organic growth going up and and uh
• 12:44
  Speaker 1: so I think they will. They are getting rewarded for that.
• 12:47
  Speaker 1: So coming. I mean, you think about your industrial coverage.
• 12:49
  Speaker 1: You cover these big diversified manufacturing companies. It's big agricultural
• 12:53
  Speaker 1: guys that making the deers this and so on and
• 12:55
  Speaker 1: so forth. Given that word, your ten of this cycle
• 12:58
  Speaker 1: where like what your day when they get orders, they
• 13:01
  Speaker 1: get big orders that people are buying submarines or they're
• 13:03
  Speaker 1: buying tractors, or they're buying you know, big stuff. Again,
• 13:07
  Speaker 1: ten years into the cycle, are we still seeing decent
• 13:09
  Speaker 1: demand globally for a lot of your industrial companies. Yeah,
• 13:12
  Speaker 1: you know, it's been a weird cycle because my cycles
• 13:15
  Speaker 1: are usually in industrials are usually boom bust, you know,
• 13:18
  Speaker 1: and we we didn't really have boom. I mean we
• 13:20
  Speaker 1: had in certain cyclical markets we did, you know. Um,
• 13:23
  Speaker 1: but it's been a long cycle. But it's been sort
• 13:25
  Speaker 1: of moderate um growth, you know, with some blips up
• 13:29
  Speaker 1: and down, but so's it's usually a ramp up and
• 13:32
  Speaker 1: a rampdown and so um, it's been long, but it's
• 13:35
  Speaker 1: more like a slow and steady rather than a real
• 13:37
  Speaker 1: rod bust. So I think there is going to be
• 13:39
  Speaker 1: slower growth, um, you know. And I think we're talking
• 13:42
  Speaker 1: low single digits. We're you know, we're not talking high
• 13:45
  Speaker 1: high um single digits as we have been looking in
• 13:48
  Speaker 1: overall growth for these companies. But I still think we're
• 13:50
  Speaker 1: gonna see growth. Just lastly, here, I'm wondering who is
• 13:54
  Speaker 1: Honeywell beating out in terms of competition. In other words,
• 13:57
  Speaker 1: who are they taking share away from? If this is
• 13:59
  Speaker 1: not a story, worry just about generally strong economic growth
• 14:02
  Speaker 1: globally building products would be like a Johnson controls UM
• 14:08
  Speaker 1: you know, uh, you know Emerson to some degree. And
• 14:12
  Speaker 1: then in SPS it's a lot of technology companies. Um,
• 14:15
  Speaker 1: Dana hars a small business a compete in, but it's
• 14:17
  Speaker 1: a lot of smaller technology companies actually. Karen ubal Heart,
• 14:21
  Speaker 1: thank you so much for joining us on Honey Welso
• 14:23
  Speaker 1: good numbers, stock trading up. Karen Uberhart, senior analyst at
• 14:26
  Speaker 1: Bloomberg Intelligence, covering all things industrial, all things Middle America.
• 14:30
  Speaker 1: She joins us on Bloomberg eleven three oh Studios. Let's
• 14:45
  Speaker 1: bring in Jacob Frankel, who is a former federal prosecutor
• 14:48
  Speaker 1: with an independent Council who is familiar with writing such
• 14:51
  Speaker 1: reports that are delivered to Congress. He is now a
• 14:54
  Speaker 1: partner at Dickinson. Right, Jacob, thank you so much for
• 14:58
  Speaker 1: being with us. I want to start at first with
• 15:00
  Speaker 1: the Attorney General's press conference. What did you glean from
• 15:04
  Speaker 1: the tone of that and sort of the nature of
• 15:07
  Speaker 1: how this investigation is being spun from a partisan level
• 15:10
  Speaker 1: on both sides. I actually tried to separate out the
• 15:14
  Speaker 1: partisan component of the press conference and focus on what
• 15:20
  Speaker 1: was the substance to what he was saying about the
• 15:23
  Speaker 1: process of the investigation. And I was actually somewhat refreshed
• 15:28
  Speaker 1: by his decision to focus on process, because the biggest
• 15:33
  Speaker 1: concern in what was going to be coming out of
• 15:36
  Speaker 1: this report, what would the redactions look like, was really
• 15:39
  Speaker 1: a focus on who ultimately was making the decisions, not
• 15:44
  Speaker 1: only in terms of the report itself, but what would
• 15:47
  Speaker 1: be reported and how it would be reported. And I know,
• 15:51
  Speaker 1: you know, to your point about my having been part
• 15:53
  Speaker 1: of an independent council, you know, they're always was a
• 15:56
  Speaker 1: lot of deference, you know, to the career prosecutors. I
• 16:00
  Speaker 1: found refreshing Attorney General Bars reference to that, specifically that
• 16:06
  Speaker 1: it was the career prosecutors in the Department of Justice,
• 16:09
  Speaker 1: and that he and Rod Rosenstein disagreed with some of
• 16:14
  Speaker 1: the premises that were that were established by by Special
• 16:19
  Speaker 1: Counsel Muller and his team, but nevertheless deferred to them.
• 16:23
  Speaker 1: So I found very helpful, you know, that reference to
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  Speaker 1: the level of deference, and when I, as with all
• 16:30
  Speaker 1: of us were just beginning to look at the report.
• 16:33
  Speaker 1: When I look at the report, you know, we're really
• 16:35
  Speaker 1: talking about a robust narrative. Because the other point that
• 16:39
  Speaker 1: I was looking for was is this going to be
• 16:42
  Speaker 1: a spin news conference as it has been, you know,
• 16:45
  Speaker 1: as was sort of projected, or was this going to
• 16:48
  Speaker 1: be sort of laying the groundwork for a report. Because again,
• 16:52
  Speaker 1: what I was waiting for, which is why I have
• 16:55
  Speaker 1: sort of yet to have been exercised by a lot
• 16:57
  Speaker 1: of findings, is a lot of the you know, expert
• 17:01
  Speaker 1: commentators have spent the last two years speculating as to
• 17:05
  Speaker 1: what would be the evidence. Up until now, the only
• 17:08
  Speaker 1: evidence that I've been able to discern is what has
• 17:10
  Speaker 1: come out with what has actually been published in the indictments.
• 17:14
  Speaker 1: So now that we got a report that more robustly
• 17:17
  Speaker 1: talks about the findings, to me, this is really the
• 17:20
  Speaker 1: first opportunity to see what the evidence actually has revealed.
• 17:25
  Speaker 1: So Jacob special counsel Mueller h and the report suggests
• 17:29
  Speaker 1: that Congress could take action on at least ten instances
• 17:33
  Speaker 1: where the President sought to interfere with the probe. What
• 17:35
  Speaker 1: do you think Congress will do? How aggressive do you
• 17:37
  Speaker 1: think they'll be that's a great question, And I think
• 17:40
  Speaker 1: what you're I think what we're really talking about there
• 17:42
  Speaker 1: is deference to the language of what is the standard
• 17:46
  Speaker 1: for impeachment high crimes and misdemeanors. And of course, as
• 17:50
  Speaker 1: we know from you know, from two years of discussion
• 17:53
  Speaker 1: in this and and and a lot of the narrative,
• 17:56
  Speaker 1: the term of what he is a misdemeanor really is
• 18:00
  Speaker 1: somewhat unclear. And I and I interpret that to be
• 18:03
  Speaker 1: a you know, a reference to Congress being able to
• 18:08
  Speaker 1: make a determination independently that even without an affirmative finding
• 18:14
  Speaker 1: of conduct that would rise the level of criminality. That
• 18:18
  Speaker 1: is that they're being specific intent, which to me is
• 18:21
  Speaker 1: the type of issue that would actually be the determinant
• 18:24
  Speaker 1: if I were trying to decide whether this what or
• 18:27
  Speaker 1: would not be presented to a uh, you know, in
• 18:30
  Speaker 1: in trial indicted and to a jury. On the other hand,
• 18:34
  Speaker 1: Congress has the authority to a to apply a lesser
• 18:38
  Speaker 1: standard in determining what constitutes a misdemeanor. So what I
• 18:43
  Speaker 1: read that to mean that if Congress really wants to
• 18:45
  Speaker 1: do so, it has the authority to begin impeachment proceedings
• 18:50
  Speaker 1: based on the evidence is actually narrated in the report.
• 18:55
  Speaker 1: Whether it chooses to do so, that is a political decision.
• 18:59
  Speaker 1: That's a any big statements saying that basically they do
• 19:01
  Speaker 1: have enough to start impeachment, even if it isn't necessarily
• 19:05
  Speaker 1: a criminal act that could be prosecuted otherwise. One thing
• 19:09
  Speaker 1: that I'm curious about from your perspective going forward, are
• 19:13
  Speaker 1: we gleaning any information about the nature of what the
• 19:16
  Speaker 1: Muller investigation referred out to other prosecutorial offices. I think
• 19:21
  Speaker 1: this other district or the Eastern Eastern District. I think
• 19:25
  Speaker 1: I'm not far enough into the report to make that determination,
• 19:27
  Speaker 1: but I certainly think by the nature of the redactions
• 19:30
  Speaker 1: and the UH and the efforts by Attorney General bar
• 19:35
  Speaker 1: to protect UM, the you know, the referrals and the
• 19:39
  Speaker 1: and the content of referral related information UM, I think
• 19:43
  Speaker 1: we may be able to discern some of what really
• 19:48
  Speaker 1: is the basis for the you know, for the referrals UM.
• 19:51
  Speaker 1: But in terms of beyond what has already been referred,
• 19:54
  Speaker 1: I don't know that we can. But I also think
• 19:56
  Speaker 1: that we have to be mindful that you know, we're taught.
• 19:59
  Speaker 1: Unlike the Dependent Council Statute under which I lived here.
• 20:03
  Speaker 1: Everything has been conducted within the framework of the of
• 20:07
  Speaker 1: the Department of Justice. So as we know from just
• 20:10
  Speaker 1: our conversations over the years, in the context of white
• 20:12
  Speaker 1: collar cases, one case will spawn another. So as you know,
• 20:17
  Speaker 1: as grand juries, as prosecutors, as the FBI continue to
• 20:21
  Speaker 1: look at evidence and gather information and possibly additional cooperation,
• 20:26
  Speaker 1: we can still see the spawning of further related cases. So, Jacob,
• 20:32
  Speaker 1: from your perspective, your experience, are you surprised or disappointed
• 20:36
  Speaker 1: or dismayed that Mr Muller did not choose to appine
• 20:40
  Speaker 1: on the obstruction issues, I'm actually not well, you know,
• 20:47
  Speaker 1: I'm I'm not surprised given that he has actually laid
• 20:52
  Speaker 1: out the evidence and has stated that based on the
• 20:56
  Speaker 1: evidence that was presented, it was sufficiently ambiguous at least
• 21:02
  Speaker 1: with respect to intent, to enable him to reach a conclusion,
• 21:07
  Speaker 1: because that is the exact type of deliberation that that
• 21:13
  Speaker 1: career prosecutors and even non career prosecutors are supposed to
• 21:18
  Speaker 1: engage in in making in making an ultimate charging decision.
• 21:23
  Speaker 1: So I think by laying out the evidence and not
• 21:27
  Speaker 1: expressing an opinion so as not to color or otherwise
• 21:32
  Speaker 1: influence the decision, that ultimately could be made by a
• 21:38
  Speaker 1: charging body, which in this case would be a deference
• 21:42
  Speaker 1: to Congress to undertake that role if it were to
• 21:45
  Speaker 1: choose to do so. I think he really did strike
• 21:50
  Speaker 1: the appropriate balance based on the evidence that he had developed. Jacob,
• 21:55
  Speaker 1: thank you so much. Jacob Frankel is a formal federal
• 21:58
  Speaker 1: prosecutor with an independent council now a partner at Dinckinson. Right,
• 22:12
  Speaker 1: we're monitoring markets in one very active area has been
• 22:15
  Speaker 1: the marijuana stocks. Pot stocks surging today after Cannopy Growth
• 22:19
  Speaker 1: agreed to buy acreage holdings for three point four billion dollars.
• 22:23
  Speaker 1: This is a massive cross border cannabis deal that is
• 22:27
  Speaker 1: conditional on the US eventually legalizing pot for recreational use.
• 22:31
  Speaker 1: Joining us now to talk about this is Christine Oram.
• 22:34
  Speaker 1: She's a Canadian cannabis and equity reporter for US here
• 22:37
  Speaker 1: at Bloomberg in Toronto. So Christine, can you just give
• 22:40
  Speaker 1: us a sense why is this particular deal, Canopy buying
• 22:44
  Speaker 1: acreage such a big deal. Well, it's the first major
• 22:48
  Speaker 1: cross border deal the cannabis industry has seen, and it's
• 22:51
  Speaker 1: structured in a very complex and interesting way. So basically,
• 22:55
  Speaker 1: um Canopy is going to pay three hundred million dollars
• 22:58
  Speaker 1: up front, but the remainder of the transaction, the rest
• 23:00
  Speaker 1: of that three point four billion dollars, won't happen until
• 23:04
  Speaker 1: if and when the US legalizes cannabis at the federal level.
• 23:09
  Speaker 1: So essentially the deal is set to expire in about
• 23:12
  Speaker 1: seven if that doesn't happen. So these two companies are
• 23:15
  Speaker 1: making a bet that sometime between now and seven UM,
• 23:18
  Speaker 1: at which point we will have had another whole presidential
• 23:21
  Speaker 1: term and a half uh pot will be legalized, and
• 23:24
  Speaker 1: therefore they'll be able to truly close this transaction. But
• 23:26
  Speaker 1: in the meantime, they're very restricted in what they can
• 23:29
  Speaker 1: do because of that federal illegality. So you can kind
• 23:31
  Speaker 1: of see that uncertainty in the way that shares the
• 23:33
  Speaker 1: reaction today. Reacting today, Acreage was initially up twenty one
• 23:38
  Speaker 1: but now it's only up about one and a half percent,
• 23:41
  Speaker 1: so clearly shareholders are still trying to digest this and
• 23:43
  Speaker 1: figure out exactly what it means for the company. So, Christine,
• 23:46
  Speaker 1: sounds kind of like a call option on buying this company,
• 23:50
  Speaker 1: you know, kind of a multi year call option. What
• 23:52
  Speaker 1: are the where are we in terms of the federal
• 23:55
  Speaker 1: legalization process in the United States for marijuana, Well, there
• 23:58
  Speaker 1: are a lot of bills that are currently working their
• 24:01
  Speaker 1: way through various congressional committees. Um, there's the two main
• 24:05
  Speaker 1: ones being the Safe Banking Act, which would essentially open
• 24:08
  Speaker 1: up banking to cannabis companies across the US. Currently, very
• 24:14
  Speaker 1: few banks will work with these companies because they're worried
• 24:17
  Speaker 1: that they could get into trouble around money laundering or
• 24:20
  Speaker 1: other federal issues, and so many of them have to
• 24:23
  Speaker 1: pay their employees and their taxes in cash, which has
• 24:25
  Speaker 1: been a very awkward and kind of semi dangerous proposition
• 24:28
  Speaker 1: for some of them. So that's the one, and the
• 24:29
  Speaker 1: other is the States Act, which would have been essentially
• 24:32
  Speaker 1: say that if the federal government will take a hands
• 24:36
  Speaker 1: off approach and let the states make their own decisions
• 24:39
  Speaker 1: on legalization. So but essentially if that happens, most people
• 24:42
  Speaker 1: say that's equivalent to federal legalization, and that would probably
• 24:45
  Speaker 1: be enough to get this deal done. The House seems
• 24:48
  Speaker 1: very open to working on and passing these deals. I
• 24:51
  Speaker 1: think the more difficult proposition will be getting them through
• 24:53
  Speaker 1: the Senate. Well, this is really interesting that this deal
• 24:56
  Speaker 1: is conditional on the legalization of farrijuana because Acreage specializes
• 25:00
  Speaker 1: in medical marijuana use right, which has been more widely
• 25:04
  Speaker 1: legalized throughout the States. So I'm wondering what this says
• 25:08
  Speaker 1: about the business prospects of companies that specialize in medical
• 25:12
  Speaker 1: marijuana use. Is their future really conditional unrecreational use? Well,
• 25:18
  Speaker 1: I think, I mean there's an assumption that medical uses
• 25:21
  Speaker 1: more politically palatable, and you see that with Acreage. I
• 25:24
  Speaker 1: mean it has former U. S. House Speaker John Bayner
• 25:27
  Speaker 1: on its board. It has former Canadian Prime Minister Brian
• 25:30
  Speaker 1: Ulrooney on its board. So these are political heavyweights who
• 25:33
  Speaker 1: have a lot of contacts and cloud on both sides
• 25:36
  Speaker 1: of the border. Um. And clearly they wouldn't be on
• 25:39
  Speaker 1: this company's board if they didn't see real prospects for legalization.
• 25:43
  Speaker 1: And they have both come out. These are two people
• 25:45
  Speaker 1: who were pretty opposed to the idea of legalization in
• 25:47
  Speaker 1: the past, and they've come out and said what they're
• 25:49
  Speaker 1: really um, the reason they support Acreage and what they
• 25:53
  Speaker 1: can really get behind is the idea of medical use
• 25:56
  Speaker 1: for you know, people like veterans who are struggled stuggling
• 25:59
  Speaker 1: with PTSD for examples. So the fact that you have
• 26:01
  Speaker 1: people of that caliber getting behind this, people who used
• 26:04
  Speaker 1: to be a post legalization does indicate that I think
• 26:07
  Speaker 1: there's there's a real prospect for medical approval, probably before
• 26:11
  Speaker 1: recreational approval at the federal level. So, Christie, what's been
• 26:14
  Speaker 1: some of the early feedback from some of the states
• 26:16
  Speaker 1: that have legalized marijuana. I'm thinking Colorado for example. Is
• 26:20
  Speaker 1: it they seen a big pickup in demand in sales
• 26:23
  Speaker 1: and usage? Uh? Definitely over time in demand in sales. Um.
• 26:29
  Speaker 1: Canada is in the very early days of legalization up here.
• 26:33
  Speaker 1: We just legalized in October, and all of the states
• 26:36
  Speaker 1: that have legalized in Canada as well have gone through
• 26:38
  Speaker 1: initial supply shortages. It's like the companies haven't been able
• 26:42
  Speaker 1: to produce enough to to keep up with demand and
• 26:44
  Speaker 1: didn't really know what demand was going to look like.
• 26:46
  Speaker 1: So once those supply shortages get worked out, which usually
• 26:49
  Speaker 1: takes a year or two at the state level, that's
• 26:51
  Speaker 1: what we've seen. Uh, then they hit sort of a
• 26:54
  Speaker 1: steady state, uh set of demand where essentially, you know,
• 26:58
  Speaker 1: there's still some people using the black mark it and
• 27:00
  Speaker 1: for the most part, from from what I've read, it's
• 27:03
  Speaker 1: people who were previously using black market sources who have
• 27:06
  Speaker 1: converted to the legal market, not necessarily getting a lot
• 27:09
  Speaker 1: of new users in UM, but we'll see if that
• 27:11
  Speaker 1: changes in Canada over time as we get more supply
• 27:14
  Speaker 1: in stores. We're currently speaking with Christina Orum, she's Canadian
• 27:17
  Speaker 1: cannabis and equity reporter for Bloomberg, and we are awaiting
• 27:20
  Speaker 1: comments from President Trump, who will be speaking at a
• 27:23
  Speaker 1: Wounded Warrior project. It will be his first comments publicly
• 27:27
  Speaker 1: made after the Molo report press conference, at least by
• 27:31
  Speaker 1: Attorney General. The Attorney General. So, Christine, I want to
• 27:35
  Speaker 1: get your sense of what the business case is for
• 27:38
  Speaker 1: a big merger for consolidation in marijuana firms, right, I mean,
• 27:42
  Speaker 1: my my question is, is the big concern that now
• 27:46
  Speaker 1: Tria Group or Philip Morris is going to get into
• 27:48
  Speaker 1: the business and just absolutely dominate because they already have
• 27:52
  Speaker 1: the distribution networks. Yeah, that's a really good question me.
• 27:54
  Speaker 1: Cannopy is an interesting illustration because they currently have a
• 27:57
  Speaker 1: major investment from Constellation Brands, the alcohol company that makes
• 28:00
  Speaker 1: Corona and Modelo beer UM and they're also now pursuing
• 28:04
  Speaker 1: this cross border transaction. So it indicates that I think
• 28:08
  Speaker 1: a lot of these really large Canadian based cannabis companies
• 28:11
  Speaker 1: and can and Cannopy is the biggest cannabis company in
• 28:13
  Speaker 1: the world, with a market value about twenty billion dollars
• 28:16
  Speaker 1: or close to it now. Um, you know, I see
• 28:19
  Speaker 1: that they have to be in the US in the
• 28:21
  Speaker 1: future to really dominate globally. I mean, Canopy has isn't
• 28:25
  Speaker 1: just in Canada, has operations in Europe, Latin America. Um,
• 28:30
  Speaker 1: They're really they become a truly international company. But without
• 28:33
  Speaker 1: that American present, it's very difficult to to generate, uh,
• 28:37
  Speaker 1: you know, real brand revenue in those margins that come
• 28:40
  Speaker 1: from the U S consumer market. And so that's the
• 28:42
  Speaker 1: case for the cross border transactions. We haven't seen many
• 28:45
  Speaker 1: of them because the federal illegality, but I suspect this
• 28:48
  Speaker 1: will kind of form the the impetus and the structure
• 28:51
  Speaker 1: that others can follow to do other similar deals in
• 28:54
  Speaker 1: the future. Christine or Um, thank you so much for
• 28:56
  Speaker 1: your time. Christine or Um covers then Canadian cannabis an
• 29:00
  Speaker 1: equity business for us here at Bloomberg. Thanks for listening
• 29:06
  Speaker 1: to the Bloomberg P and L podcast. You can subscribe
• 29:08
  Speaker 1: and listen to interviews at Apple Podcasts. Or whatever podcast
• 29:11
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  Speaker 1: pt Sweeney. I'm Lisa abram Woyit's I'm on Twitter at
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  Speaker 1: Lisa abram Woits one before the podcast. You can always
• 29:19
  Speaker 1: catch us worldwide. I'm Bloomberg Radio