1 00:00:05,800 --> 00:00:08,720 Speaker 1: Welcome to the Bloomberg pim L Podcast. I'm pim Fox. 2 00:00:08,760 --> 00:00:11,520 Speaker 1: Along with my co host Lisa Abramowitz. Each day we 3 00:00:11,640 --> 00:00:15,120 Speaker 1: bring you the most important, noteworthy, and useful interviews for 4 00:00:15,200 --> 00:00:17,840 Speaker 1: you and your money, whether you're at the grocery store 5 00:00:17,960 --> 00:00:20,720 Speaker 1: or the trading floor. Find the Bloomberg p m L 6 00:00:20,840 --> 00:00:32,680 Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. Well. 7 00:00:32,720 --> 00:00:36,080 Speaker 1: In the news today, Tyson food There poultry subsidiary has 8 00:00:36,080 --> 00:00:38,080 Speaker 1: been ordered to pay a two million dollar fine for 9 00:00:38,240 --> 00:00:42,800 Speaker 1: discharges from a Southwest Missouri plant that caused a fish 10 00:00:42,880 --> 00:00:46,720 Speaker 1: kill um and the company. The Arkansas based company said 11 00:00:47,120 --> 00:00:49,839 Speaker 1: that it was taking full responsibility for what it described 12 00:00:49,880 --> 00:00:52,720 Speaker 1: as an unfortunate mistake. And here to tell us more 13 00:00:52,760 --> 00:00:55,240 Speaker 1: about the company right now is Tom Hayes. He is 14 00:00:55,280 --> 00:00:58,280 Speaker 1: the president and the chief executive of Tyson Foods and 15 00:00:58,320 --> 00:01:01,080 Speaker 1: he joins us here in our eleven three studios. Tom, 16 00:01:01,120 --> 00:01:03,680 Speaker 1: thank you very much for being with us. I referenced 17 00:01:03,680 --> 00:01:07,440 Speaker 1: that that news item, but I also wanted to reference 18 00:01:07,480 --> 00:01:11,400 Speaker 1: the fact that you actually took responsibility for the mistake. 19 00:01:11,480 --> 00:01:14,160 Speaker 1: That may not be something that major corporations do. They 20 00:01:14,200 --> 00:01:16,200 Speaker 1: typically will pay a fine, and that's the last to 21 00:01:16,319 --> 00:01:18,319 Speaker 1: hear of it. I want if you could describe this 22 00:01:18,400 --> 00:01:21,600 Speaker 1: but also in the context of taking responsibility, because I 23 00:01:21,640 --> 00:01:24,480 Speaker 1: also want to note that you have taken on the 24 00:01:24,480 --> 00:01:30,400 Speaker 1: pledge to cut greenhouse gas emissions by thirty percent by sure. Yeah, 25 00:01:30,440 --> 00:01:33,440 Speaker 1: thanks for having me. You know, our strategy of Tyson 26 00:01:33,440 --> 00:01:36,880 Speaker 1: is sustainably feed the world with the fastest growing protein brands. 27 00:01:36,920 --> 00:01:39,800 Speaker 1: But with that comes a lot of responsibility. We know 28 00:01:39,880 --> 00:01:42,119 Speaker 1: that the population is going to be you know whatever, 29 00:01:42,319 --> 00:01:45,800 Speaker 1: the estimates are nine and a half billion people by 30 00:01:45,959 --> 00:01:48,800 Speaker 1: and we have to be a part of the solution. 31 00:01:48,880 --> 00:01:51,640 Speaker 1: So absolutely, when there are things that go wrong in 32 00:01:51,680 --> 00:01:54,200 Speaker 1: our system, we will own them. We don't want them 33 00:01:54,240 --> 00:01:56,120 Speaker 1: to go wrong, but sometimes we will. Got a big 34 00:01:56,160 --> 00:01:58,920 Speaker 1: system and we are focused on how we can do better. 35 00:01:58,960 --> 00:02:01,840 Speaker 1: So we've got a big continue improvement program. You know, 36 00:02:01,920 --> 00:02:04,920 Speaker 1: we're transitioning from a company that has a heritage and 37 00:02:04,960 --> 00:02:08,120 Speaker 1: poultry to really a modern food company, so that comes 38 00:02:08,760 --> 00:02:11,560 Speaker 1: with a lot of agility changes and things that are 39 00:02:11,720 --> 00:02:15,200 Speaker 1: focused on sustainability, making sure that we can, you know, 40 00:02:15,320 --> 00:02:17,080 Speaker 1: not only do the things we can do for our 41 00:02:17,120 --> 00:02:19,320 Speaker 1: shareholders to make money, but also do in a way 42 00:02:19,360 --> 00:02:21,680 Speaker 1: that everybody on our team can be proud of. And 43 00:02:21,680 --> 00:02:25,440 Speaker 1: we can have a positive impact Tom modern food company. 44 00:02:25,639 --> 00:02:27,280 Speaker 1: What exactly does that mean? I mean, what's sort of 45 00:02:27,320 --> 00:02:30,239 Speaker 1: the next step for Tyson? So I think of four 46 00:02:30,320 --> 00:02:32,480 Speaker 1: things when I think of modern food company. Firstly that 47 00:02:32,520 --> 00:02:35,640 Speaker 1: I mentioned is sustainability. The second is transparency. You know, 48 00:02:35,720 --> 00:02:38,440 Speaker 1: there's not a lot of trust with big food and 49 00:02:38,480 --> 00:02:41,640 Speaker 1: so we need to become more transparent. Uh. Certainly, as 50 00:02:41,680 --> 00:02:43,680 Speaker 1: it relates to agility that I talked about, it's hard 51 00:02:43,720 --> 00:02:46,640 Speaker 1: for big companies and necessarily move quickly. A lot of 52 00:02:46,680 --> 00:02:49,560 Speaker 1: small food companies are really good at that. We are 53 00:02:49,600 --> 00:02:52,880 Speaker 1: working that agility into everything that we're doing. And then finally, 54 00:02:52,960 --> 00:02:55,520 Speaker 1: just the whole idea of being relevant that is something 55 00:02:55,560 --> 00:02:58,280 Speaker 1: that we have to consistently be with our consumers. So 56 00:02:58,320 --> 00:03:01,279 Speaker 1: we do spend a lot of money on brand building innovation. 57 00:03:01,440 --> 00:03:04,560 Speaker 1: We've got business models that are large, big brands three 58 00:03:04,560 --> 00:03:07,560 Speaker 1: billion dollars, three one billion dollar brands, and we have 59 00:03:07,680 --> 00:03:11,400 Speaker 1: small brands were really cultivating to be more relevant for 60 00:03:11,440 --> 00:03:14,400 Speaker 1: consumers today. All right, just to put it into some numbers, right, 61 00:03:14,480 --> 00:03:17,760 Speaker 1: thirty five million chickens, nearly half a million pigs, a 62 00:03:17,800 --> 00:03:21,360 Speaker 1: hundred and thirty thousand cattle a week. Right, this is big. 63 00:03:22,919 --> 00:03:26,480 Speaker 1: You also have stopped using the antibiotics and chickens. You've 64 00:03:26,520 --> 00:03:29,480 Speaker 1: also said that you've got this line of antibiotic free pork, 65 00:03:30,080 --> 00:03:32,359 Speaker 1: but you've also made an investment in a company that's 66 00:03:32,360 --> 00:03:34,440 Speaker 1: based in Memphis, and I wonder if you could tell 67 00:03:34,480 --> 00:03:37,480 Speaker 1: us about this because this is not anything really to 68 00:03:37,560 --> 00:03:40,240 Speaker 1: do with what you think of when you think of meat. 69 00:03:40,640 --> 00:03:44,040 Speaker 1: So excellent question. Those business models. I talked about one 70 00:03:44,080 --> 00:03:45,440 Speaker 1: of our ways that we are going to grow the 71 00:03:45,480 --> 00:03:50,320 Speaker 1: companies by investing in some new emerging models, uh, and 72 00:03:50,680 --> 00:03:54,040 Speaker 1: simultaneously thinking about ways that we can disrupt ourselves. So 73 00:03:54,080 --> 00:03:57,280 Speaker 1: there are plenty of opportunities for companies to be disrupted. 74 00:03:57,360 --> 00:04:00,440 Speaker 1: We want to disrupt ourselves. So that investment you're talking 75 00:04:00,440 --> 00:04:03,000 Speaker 1: about is Memphis Meats actually based in Chicago, but they 76 00:04:03,000 --> 00:04:06,560 Speaker 1: have the Memphis Meats brand, and what they are doing 77 00:04:06,880 --> 00:04:10,800 Speaker 1: is taking cells from animals, so not raising and then 78 00:04:11,000 --> 00:04:15,839 Speaker 1: harvesting animals, taking cells and essentially culturing those into a 79 00:04:15,840 --> 00:04:19,640 Speaker 1: meat alternative. So it's very interesting technology. It's still very nascent. 80 00:04:20,080 --> 00:04:23,039 Speaker 1: But we're also investing in companies like Beyond Meat so 81 00:04:23,120 --> 00:04:27,239 Speaker 1: plant based protein, introducing our own lines of plant based protein. 82 00:04:27,760 --> 00:04:30,680 Speaker 1: So it requires a lot of different solutions to be 83 00:04:30,920 --> 00:04:33,359 Speaker 1: sustainably feeding the world. And those are just some of 84 00:04:33,360 --> 00:04:36,160 Speaker 1: the examples that we're entering into. Tom You also said 85 00:04:36,440 --> 00:04:39,839 Speaker 1: in a presentation last week UH that Tyson is planning 86 00:04:39,880 --> 00:04:47,320 Speaker 1: to cut greenhouse gas emissions by thirty So if you 87 00:04:47,320 --> 00:04:51,800 Speaker 1: think about the stages UH in one and two, those 88 00:04:51,920 --> 00:04:56,080 Speaker 1: areas of our food production, what we control within our house, basically, 89 00:04:56,440 --> 00:04:58,960 Speaker 1: those are pretty easy for us to get to. The 90 00:04:59,080 --> 00:05:01,800 Speaker 1: things that are different culled are the things that are 91 00:05:02,000 --> 00:05:05,600 Speaker 1: really what are UM phase three, which is we're not 92 00:05:05,720 --> 00:05:08,800 Speaker 1: vertically integrated and cattle and not vertically integrated but for 93 00:05:08,839 --> 00:05:12,479 Speaker 1: a small amount on pork or hugs. So we have 94 00:05:12,560 --> 00:05:16,920 Speaker 1: to work with cattleman and you know, producers to make 95 00:05:16,960 --> 00:05:19,680 Speaker 1: a big change in the system. And so that's where 96 00:05:19,680 --> 00:05:22,599 Speaker 1: the majority that will come from is sort of getting 97 00:05:22,640 --> 00:05:26,560 Speaker 1: after those those UM emissions, and particularly i'd say as 98 00:05:26,560 --> 00:05:31,400 Speaker 1: it relates to cattle. You have also been kind of 99 00:05:31,440 --> 00:05:36,000 Speaker 1: reshaping the company when it comes to what businesses you 100 00:05:36,040 --> 00:05:37,800 Speaker 1: want to be in and what businesses you don't want 101 00:05:37,839 --> 00:05:40,159 Speaker 1: to be in. For example, I believe like frozen some 102 00:05:40,240 --> 00:05:42,880 Speaker 1: of the frozen food businesses are you going to sell 103 00:05:42,960 --> 00:05:44,840 Speaker 1: some give us an idea of the kinds of lines 104 00:05:44,880 --> 00:05:47,320 Speaker 1: that you'd like to sell. Maybe it's the what is 105 00:05:47,360 --> 00:05:51,039 Speaker 1: it the frozen I can't remember frozen food assets. It 106 00:05:51,080 --> 00:05:53,520 Speaker 1: has to do with the at some of it's on 107 00:05:53,560 --> 00:05:56,239 Speaker 1: the block, right, this is the Van's Foods that business. 108 00:05:56,560 --> 00:05:58,279 Speaker 1: But you want to buy others? What what kinds of 109 00:05:58,320 --> 00:06:00,600 Speaker 1: bolt on acquisitions are you're looking for? So we're looking 110 00:06:00,640 --> 00:06:03,680 Speaker 1: for any time we can a new brand. That's again 111 00:06:03,720 --> 00:06:05,760 Speaker 1: going back to protein. So the protein is a tail 112 00:06:05,800 --> 00:06:10,160 Speaker 1: one that we're taking advantage of. Consumers are actively trying 113 00:06:10,200 --> 00:06:11,920 Speaker 1: to get into their diet more and more. So it 114 00:06:11,960 --> 00:06:14,560 Speaker 1: would be assets that either have a brand that we 115 00:06:14,600 --> 00:06:17,480 Speaker 1: can take advantage of, a new capability, Uh do they 116 00:06:17,520 --> 00:06:19,920 Speaker 1: move us into a new geography, whether it's internationally or 117 00:06:19,960 --> 00:06:23,039 Speaker 1: here domestically, and so those are the that's the sort 118 00:06:23,040 --> 00:06:26,240 Speaker 1: of filters we have. And so it would be companies 119 00:06:26,279 --> 00:06:29,600 Speaker 1: like we bought with Advanced Pierre, very Protein Centrick. Not 120 00:06:29,640 --> 00:06:32,600 Speaker 1: necessarily you know a lot of consumer brands, but they 121 00:06:32,640 --> 00:06:36,919 Speaker 1: have a very strong culture of driving profitable foods in 122 00:06:36,920 --> 00:06:40,520 Speaker 1: the marketplace, whether it's branded or unbranded. And so assets 123 00:06:40,560 --> 00:06:42,559 Speaker 1: like that the ones that we can continue to build 124 00:06:42,560 --> 00:06:45,760 Speaker 1: our brand portfolio. Those are the important ones. Thank you 125 00:06:45,800 --> 00:06:48,880 Speaker 1: so much. For joining us. Fascinating to hear how you're 126 00:06:48,920 --> 00:06:53,840 Speaker 1: trying to disrupt yourselves. Uh, fascinating concept. As the world 127 00:06:53,880 --> 00:06:58,800 Speaker 1: expands and as more people look to protein filled meat alternatives. 128 00:06:58,800 --> 00:07:02,880 Speaker 1: Tom Hayes, president and executive officer of Tyson Foods, which 129 00:07:02,960 --> 00:07:05,680 Speaker 1: is based in Springdale, Arizona, but he joins us here 130 00:07:06,040 --> 00:07:23,360 Speaker 1: in our eleven three oh studios. Medical marijuana has been 131 00:07:23,560 --> 00:07:26,640 Speaker 1: one of the hotter bets in the past few years, 132 00:07:27,000 --> 00:07:29,920 Speaker 1: and a company that specializes in it is filing the 133 00:07:30,080 --> 00:07:35,600 Speaker 1: first cannabis related US initial public offering, that is Chronos Group, 134 00:07:35,600 --> 00:07:38,360 Speaker 1: and the chief executive officer joins us now, Michael Gorenstein. 135 00:07:38,600 --> 00:07:40,720 Speaker 1: Thank you so much for being here. Michael, can you 136 00:07:40,760 --> 00:07:42,560 Speaker 1: just give us a sense of why you decided to 137 00:07:42,560 --> 00:07:45,360 Speaker 1: file this I p O, how much you plan to raise, 138 00:07:45,560 --> 00:07:48,480 Speaker 1: and what brought you to the US. Sure, thanks for 139 00:07:48,560 --> 00:07:53,000 Speaker 1: having me so A big driver was spreading awareness. We've 140 00:07:53,040 --> 00:07:57,560 Speaker 1: actually been publicly traded in Canada for some time and 141 00:07:57,640 --> 00:08:00,520 Speaker 1: a lot of American investors have questions about the legality. 142 00:08:00,560 --> 00:08:03,040 Speaker 1: Everyone's very surprised to hear that there are legal ways 143 00:08:03,080 --> 00:08:05,840 Speaker 1: to get exposure of the industry and by going through 144 00:08:05,840 --> 00:08:09,640 Speaker 1: the process with the NASDAC and and starting the trading yesterday. 145 00:08:09,960 --> 00:08:11,840 Speaker 1: You know, a big big thing for US as being 146 00:08:11,880 --> 00:08:14,840 Speaker 1: able to help advance things, help explain to people that 147 00:08:14,920 --> 00:08:18,160 Speaker 1: there there is a market. There are federally legal avenues 148 00:08:18,200 --> 00:08:21,000 Speaker 1: where you're able to to invest in the companies that 149 00:08:21,040 --> 00:08:23,920 Speaker 1: are developing the intellectual property, that are building brands and 150 00:08:23,960 --> 00:08:28,520 Speaker 1: are are spreading global distribution without having the legal risk 151 00:08:28,560 --> 00:08:30,800 Speaker 1: that you would otherwise have in the US to find 152 00:08:30,880 --> 00:08:35,560 Speaker 1: for people what your company does. So really we we 153 00:08:35,640 --> 00:08:37,199 Speaker 1: do a number of things we look at as a 154 00:08:37,280 --> 00:08:42,000 Speaker 1: virtual cycle, but ultimately what we're doing is developing global distribution. 155 00:08:42,440 --> 00:08:46,360 Speaker 1: So right now we're across Germany, Israel, Canada, Australia, in 156 00:08:46,360 --> 00:08:51,160 Speaker 1: the Cayman Islands. UH disruptive intellectual property and unlocking the 157 00:08:51,200 --> 00:08:53,960 Speaker 1: science behind cannabis that really hasn't been there because when 158 00:08:54,000 --> 00:08:57,160 Speaker 1: you hang on when you say distribution, distribution of what 159 00:08:57,360 --> 00:08:58,920 Speaker 1: like if I was to go to your company, what 160 00:08:59,080 --> 00:09:03,920 Speaker 1: exactly how's your company divide it up? In what products 161 00:09:03,960 --> 00:09:07,880 Speaker 1: or services do you provide? So we directly will ship 162 00:09:07,880 --> 00:09:10,600 Speaker 1: a number productly of forty three different skews that would 163 00:09:10,600 --> 00:09:12,760 Speaker 1: be available if you were to come to us. UH 164 00:09:13,559 --> 00:09:19,800 Speaker 1: varying ratios of cannabinoids, flower derivative products. We offer a 165 00:09:19,840 --> 00:09:23,600 Speaker 1: wide range depending on on what the therapeutic areas that 166 00:09:23,600 --> 00:09:26,720 Speaker 1: you're looking for for helping. So why list in the US? 167 00:09:27,840 --> 00:09:29,880 Speaker 1: You know, I think a big part of it is 168 00:09:29,960 --> 00:09:33,360 Speaker 1: accessing US capital, being able to uh, you know, to 169 00:09:33,400 --> 00:09:35,920 Speaker 1: get a foothold here, and ultimately we do believe that 170 00:09:35,960 --> 00:09:38,440 Speaker 1: the US will be federally legal, and for US, it 171 00:09:38,480 --> 00:09:41,760 Speaker 1: makes a lot of sense to give American investors a 172 00:09:41,840 --> 00:09:45,200 Speaker 1: chance to get in early because when we come here, 173 00:09:45,240 --> 00:09:47,000 Speaker 1: we do want that support and we don't want to 174 00:09:47,000 --> 00:09:49,640 Speaker 1: be sort of the foreign conquerors. We I grew up 175 00:09:49,679 --> 00:09:52,480 Speaker 1: in the US. Uh. Much much of our management team 176 00:09:52,520 --> 00:09:55,360 Speaker 1: moved to Canada from the US, and we certainly hope 177 00:09:55,400 --> 00:09:57,360 Speaker 1: to keep more people from the US involved. You know, 178 00:09:57,400 --> 00:10:02,440 Speaker 1: I guess it's sort of hard to distinguish, uh, you know, 179 00:10:02,480 --> 00:10:06,240 Speaker 1: sort of the legal aspects of marijuana and how it 180 00:10:06,280 --> 00:10:09,480 Speaker 1: relates to medical versus recreational. And you know, we were 181 00:10:09,480 --> 00:10:13,319 Speaker 1: talking before about how you focus on medical and yet 182 00:10:13,559 --> 00:10:16,000 Speaker 1: do you get a lot of investors coming to you 183 00:10:16,160 --> 00:10:19,120 Speaker 1: and sort of treating you in tandem with alcohol companies 184 00:10:19,120 --> 00:10:21,640 Speaker 1: and trying to get in on the ground floor, uh 185 00:10:21,720 --> 00:10:24,400 Speaker 1: for something that will take off on a recreational level, 186 00:10:24,400 --> 00:10:26,960 Speaker 1: and how do you sort of deal with that? So 187 00:10:27,160 --> 00:10:29,720 Speaker 1: we do you know, we have we do have a 188 00:10:29,720 --> 00:10:32,680 Speaker 1: wholely owned license in British Columbia that will focus exclusively 189 00:10:32,720 --> 00:10:36,160 Speaker 1: on the recreational market. But we do try to educate 190 00:10:36,200 --> 00:10:39,680 Speaker 1: people on though, is the medical opportunity is huge and 191 00:10:39,720 --> 00:10:42,200 Speaker 1: if you look at a few things that might not 192 00:10:42,400 --> 00:10:44,920 Speaker 1: necessarily come top of mind, you start to understand that. 193 00:10:45,000 --> 00:10:49,080 Speaker 1: So first, the countries are much more likely to legalize 194 00:10:49,160 --> 00:10:52,120 Speaker 1: medical before they are recreational. It's just it's a much 195 00:10:52,120 --> 00:10:56,160 Speaker 1: easier argument. It's from policy perspective, makes more sense. Uh. 196 00:10:56,200 --> 00:10:58,439 Speaker 1: And so you've got a global medical market versus just 197 00:10:58,480 --> 00:11:01,240 Speaker 1: the Canadian recreational market and just off sheer numbers, that's 198 00:11:01,280 --> 00:11:05,880 Speaker 1: a very big difference. Uh. The second is thematically, there 199 00:11:05,880 --> 00:11:08,720 Speaker 1: are people that are moving away from from alcohol for 200 00:11:08,800 --> 00:11:11,400 Speaker 1: some health reasons, but it's not very drastic. And you've 201 00:11:11,440 --> 00:11:14,440 Speaker 1: seen in states where cannabis and legalized there's a trend. 202 00:11:14,960 --> 00:11:18,000 Speaker 1: But a much bigger trend is what's going on with opioids. 203 00:11:18,040 --> 00:11:20,920 Speaker 1: The opioid epidemic. It's ripping across North America and really 204 00:11:20,960 --> 00:11:23,720 Speaker 1: across the world. And chronic pain is one of the 205 00:11:23,760 --> 00:11:26,559 Speaker 1: largest indications that we see for cannabis. So being able 206 00:11:26,600 --> 00:11:30,720 Speaker 1: to provide UH medicine that doesn't have the same harmful 207 00:11:30,760 --> 00:11:33,640 Speaker 1: effects is something that we see as a as a 208 00:11:33,640 --> 00:11:38,160 Speaker 1: big catalyst. And finally, UH insurance coverage is something that 209 00:11:38,200 --> 00:11:40,679 Speaker 1: we haven't seen in the US. Everyone looked at Colorado 210 00:11:40,760 --> 00:11:44,199 Speaker 1: to say, well, this wasn't a real industry. UH companies 211 00:11:44,200 --> 00:11:48,240 Speaker 1: gonna be profitable until recreational. How are you going to 212 00:11:48,280 --> 00:11:50,200 Speaker 1: compete with the guy on the corner that's just gonna 213 00:11:50,240 --> 00:11:51,520 Speaker 1: sell you a bag. If you've got to go to 214 00:11:51,520 --> 00:11:56,120 Speaker 1: a doctor. Well, Germany there is full insurance coverage and 215 00:11:56,240 --> 00:11:58,800 Speaker 1: so you're able to go to your doctor and reimburse 216 00:11:58,920 --> 00:12:02,000 Speaker 1: like a true medicine. So that's part of why our 217 00:12:02,040 --> 00:12:05,600 Speaker 1: strategy is UH, you know, is being able to target 218 00:12:05,640 --> 00:12:08,800 Speaker 1: European markets. We have an exclusive distribution agreement with a 219 00:12:08,880 --> 00:12:11,480 Speaker 1: h three year old pharmaceutical company in Germany and gives 220 00:12:11,520 --> 00:12:14,920 Speaker 1: us access to twelve thousand pharmacies. I think the medicinal 221 00:12:15,000 --> 00:12:18,320 Speaker 1: market is is a very very great opportunity, and we 222 00:12:18,400 --> 00:12:21,760 Speaker 1: try to educate people and it's a form of social entrepreneurship. 223 00:12:21,800 --> 00:12:25,160 Speaker 1: You're also doing good. Can you also just educate us 224 00:12:25,520 --> 00:12:28,600 Speaker 1: and our listeners in you know maybe thirty seconds that 225 00:12:28,760 --> 00:12:32,800 Speaker 1: there is a very a wide variation of what is 226 00:12:32,840 --> 00:12:37,320 Speaker 1: available from cannabis. So for example, th HC is one, 227 00:12:37,960 --> 00:12:40,160 Speaker 1: c b D is another. A lot of acronyms here 228 00:12:40,160 --> 00:12:43,000 Speaker 1: at th h c V, which is what you're focused on. 229 00:12:43,320 --> 00:12:45,480 Speaker 1: Just describe if you cantata top leve level of you 230 00:12:45,640 --> 00:12:49,400 Speaker 1: what people need them to understand. Yeah, so a lot 231 00:12:49,400 --> 00:12:52,080 Speaker 1: of the misconception about cannabis. You do hear people always 232 00:12:52,080 --> 00:12:54,319 Speaker 1: tell you they've had different effects that you know, makes 233 00:12:54,360 --> 00:12:56,200 Speaker 1: them tired, it wakes them up and makes them laugh, 234 00:12:56,280 --> 00:13:02,000 Speaker 1: makes them scared, cures cancer, cure as headaches. The analogy 235 00:13:02,040 --> 00:13:03,880 Speaker 1: there would be if I were to tell you, hey, 236 00:13:04,000 --> 00:13:07,000 Speaker 1: you know pills are really good for making you sleep well? 237 00:13:07,040 --> 00:13:09,640 Speaker 1: What's inside of the pill. So cannabis is you can 238 00:13:09,679 --> 00:13:11,600 Speaker 1: think of it as a vessel. But depending on the 239 00:13:11,600 --> 00:13:14,720 Speaker 1: different genetics, there over a hundred different cannabinoids. There are 240 00:13:14,760 --> 00:13:17,640 Speaker 1: thousands of turpenes, and these work together synergistically to create 241 00:13:17,640 --> 00:13:21,000 Speaker 1: an entourage effect. So what the actual type of cannabis is, 242 00:13:21,000 --> 00:13:23,600 Speaker 1: what the cannabinoids are, is very very important to what 243 00:13:23,679 --> 00:13:28,880 Speaker 1: effect you'll get. Just really really really quick. Our opioids 244 00:13:28,920 --> 00:13:33,319 Speaker 1: more expensive that are used for pain killing than be cannaboid, uh, 245 00:13:33,520 --> 00:13:37,800 Speaker 1: than the cannabis product in general. Yes, they are. I 246 00:13:37,920 --> 00:13:39,800 Speaker 1: just say that there's a recent study we were talking 247 00:13:39,800 --> 00:13:42,560 Speaker 1: about this offtline that was just published in the European 248 00:13:42,640 --> 00:13:47,520 Speaker 1: Journal of Internal Medicine that the Israeli researchers have said 249 00:13:47,559 --> 00:13:52,080 Speaker 1: that the efficacy of cannabis for cancer patients helps those 250 00:13:52,160 --> 00:13:56,200 Speaker 1: avoid their opioid dependency even before it starts. Thanks very 251 00:13:56,280 --> 00:13:58,600 Speaker 1: much for being with us. Michael Gorenstein is the chief 252 00:13:58,600 --> 00:14:01,880 Speaker 1: executive of a Chrono, a group, and yes they are 253 00:14:01,960 --> 00:14:19,520 Speaker 1: trading in the United States. We got some data overnight 254 00:14:19,640 --> 00:14:22,400 Speaker 1: out of China showing that a gauge of demand for 255 00:14:22,520 --> 00:14:25,840 Speaker 1: factory made goods in the nation fell the most in 256 00:14:26,160 --> 00:14:30,960 Speaker 1: five years, much more than any economist survey by Bloomberg 257 00:14:31,000 --> 00:14:33,480 Speaker 1: had expected. Here to help us understand how much we 258 00:14:33,480 --> 00:14:35,840 Speaker 1: ought to pay attention to this is Leland Miller, chief 259 00:14:35,840 --> 00:14:39,080 Speaker 1: executive officer of China beige Book International in New York, 260 00:14:39,480 --> 00:14:42,080 Speaker 1: and he joins us here in the studios. Leland, thank 261 00:14:42,080 --> 00:14:43,760 Speaker 1: you so much for being here. So what did you 262 00:14:43,800 --> 00:14:47,480 Speaker 1: make of this read? Well, not much uh February data. 263 00:14:47,720 --> 00:14:49,600 Speaker 1: When you when you're talking about January in February and 264 00:14:49,680 --> 00:14:52,160 Speaker 1: China you've got the lunar New year, which means that 265 00:14:53,000 --> 00:14:56,600 Speaker 1: any comparison either between those two months or between January 266 00:14:56,640 --> 00:15:00,360 Speaker 1: February and the years before are are hard and any 267 00:15:00,440 --> 00:15:03,680 Speaker 1: any real conclusions about so we don't think that February 268 00:15:03,760 --> 00:15:07,280 Speaker 1: means much. Is there some expectation of a slowdown particularly 269 00:15:07,280 --> 00:15:10,840 Speaker 1: in manufacturing this year? Sure was the fifty one to 270 00:15:10,960 --> 00:15:14,400 Speaker 1: fifty uh noticeable drop? Not really should be worried about 271 00:15:14,440 --> 00:15:17,840 Speaker 1: February data regardless, Not really so. I think people have 272 00:15:17,920 --> 00:15:21,240 Speaker 1: been watching for a slowdown in China and so they 273 00:15:21,280 --> 00:15:24,120 Speaker 1: took note of this. But this is the trepidation the 274 00:15:24,120 --> 00:15:26,080 Speaker 1: market seems to be seemed to be feeling that that's 275 00:15:26,200 --> 00:15:29,440 Speaker 1: not warranted yet Leland, what's the big deal right now 276 00:15:29,480 --> 00:15:33,080 Speaker 1: with China? Is it tariffs on things like aluminum foil? 277 00:15:33,880 --> 00:15:36,320 Speaker 1: Is it steal tariffs? What's going on and what should 278 00:15:36,360 --> 00:15:39,640 Speaker 1: investors really be paying attention to? That's see, that's a 279 00:15:39,640 --> 00:15:42,200 Speaker 1: great question, and I don't think people are asking this enough. 280 00:15:42,240 --> 00:15:45,320 Speaker 1: They see the headlines on stealing aluminium tariffs and I think, well, 281 00:15:45,360 --> 00:15:47,880 Speaker 1: this this is gonna just crush China. Well, it won't 282 00:15:47,880 --> 00:15:50,320 Speaker 1: be good for China. But but while we will be 283 00:15:50,360 --> 00:15:53,000 Speaker 1: dealing in the coming weeks with stealing aluminium tariffs and 284 00:15:53,000 --> 00:15:55,120 Speaker 1: whether President Trump is really gonna go big on them, 285 00:15:55,560 --> 00:15:58,880 Speaker 1: the real question for China is the intellectual property theft 286 00:15:59,400 --> 00:16:02,640 Speaker 1: UH investor gaistion Section three oh one and whatever tariffs 287 00:16:02,760 --> 00:16:05,960 Speaker 1: they do on that. Now that's been backtracked a little 288 00:16:06,000 --> 00:16:08,800 Speaker 1: bit behind the scenes. It's still moving through UH the 289 00:16:08,800 --> 00:16:14,760 Speaker 1: inter agency process. But if scenario worst worst case scenario 290 00:16:14,920 --> 00:16:17,120 Speaker 1: is that President Trump decides he's gonna he's gonna make 291 00:16:17,120 --> 00:16:20,920 Speaker 1: a big move before the midterms, puts sectoral tariffs on 292 00:16:20,960 --> 00:16:24,120 Speaker 1: say consumer electronics, something giant like that, and you have 293 00:16:25,040 --> 00:16:28,280 Speaker 1: absolutely justifiable use of the term trade war. That is 294 00:16:28,320 --> 00:16:30,760 Speaker 1: a big, big deal. It doesn't mean it's gonna happen, 295 00:16:30,840 --> 00:16:33,040 Speaker 1: but the worst case scenario is an all out, big 296 00:16:33,040 --> 00:16:35,600 Speaker 1: time trade war. What do you hear from people who 297 00:16:35,640 --> 00:16:39,360 Speaker 1: are close to who are involved in these negotiations, Well, 298 00:16:39,440 --> 00:16:42,000 Speaker 1: that the administration is having a very very difficult time 299 00:16:42,040 --> 00:16:44,240 Speaker 1: coming to consensus on this um. You know, you read 300 00:16:44,280 --> 00:16:46,600 Speaker 1: this in the media, but it's the reality behind the scenes. 301 00:16:46,920 --> 00:16:48,640 Speaker 1: So one of the reasons that you don't have a 302 00:16:48,680 --> 00:16:52,560 Speaker 1: two thirty two announcement yet is that there's the president 303 00:16:52,680 --> 00:16:55,800 Speaker 1: wants to do something big on stealing aluminium being the 304 00:16:55,800 --> 00:16:58,440 Speaker 1: stealings to steal it aluminium tariffs, right, he wants to 305 00:16:58,440 --> 00:17:01,040 Speaker 1: do something big. Uh. But at the same time, almost 306 00:17:01,080 --> 00:17:04,959 Speaker 1: everyone's administration, every cabin official except a few uh as, 307 00:17:05,119 --> 00:17:07,640 Speaker 1: entire National Economic Council think that this this the still 308 00:17:07,680 --> 00:17:10,640 Speaker 1: aluminum tariffs, these global tariffs in a non targeted way 309 00:17:10,800 --> 00:17:13,720 Speaker 1: would be an awful idea. Similarly, section three oh one, 310 00:17:13,760 --> 00:17:15,960 Speaker 1: the president wants to go big. Other people are saying, look, 311 00:17:16,000 --> 00:17:18,920 Speaker 1: this is potentially problematic. Sorry, that's the intellectual property theft 312 00:17:19,240 --> 00:17:22,760 Speaker 1: uh tariffs uh. And and so there's this desire by 313 00:17:22,760 --> 00:17:25,359 Speaker 1: the president to go big, and his even inside the 314 00:17:25,359 --> 00:17:27,720 Speaker 1: Trump White House, there's a desire to tamp this down 315 00:17:27,760 --> 00:17:29,680 Speaker 1: because they realize that this could get out of control. 316 00:17:29,920 --> 00:17:32,480 Speaker 1: And as a result, you've had this in action because 317 00:17:32,520 --> 00:17:35,200 Speaker 1: there's an inability to come to consensus. This will end 318 00:17:35,240 --> 00:17:37,760 Speaker 1: sometime soon because you have deadlines on some of these 319 00:17:37,840 --> 00:17:40,639 Speaker 1: endings soon the steel aluminum terrorists, for instance, had to 320 00:17:40,680 --> 00:17:43,880 Speaker 1: be done by mid April or the authority goes away 321 00:17:44,040 --> 00:17:46,679 Speaker 1: just to go back to this intellectual property thing. In 322 00:17:46,760 --> 00:17:50,239 Speaker 1: the worst case scenario for consumer how does this show up. 323 00:17:50,280 --> 00:17:53,840 Speaker 1: Does this mean someone's iPhone becomes more expensive? Does this 324 00:17:53,920 --> 00:17:56,679 Speaker 1: mean you can't afford the via television? Tell us the 325 00:17:56,720 --> 00:18:00,199 Speaker 1: detail right, So you have first order effects and then 326 00:18:00,200 --> 00:18:01,920 Speaker 1: you have second and third order effects. So the first 327 00:18:02,000 --> 00:18:04,800 Speaker 1: order effect. In the worst case scenario, which of course 328 00:18:04,880 --> 00:18:08,080 Speaker 1: is not our baseline scenario right now, the President decides 329 00:18:08,119 --> 00:18:10,679 Speaker 1: to go big on consumer electronics and says We're going 330 00:18:10,720 --> 00:18:15,640 Speaker 1: to put a large tariff on everything coming out of China. Yes, 331 00:18:15,680 --> 00:18:17,720 Speaker 1: consumers will feel the brunt to that, but I think 332 00:18:17,760 --> 00:18:20,160 Speaker 1: the bigger brunt will be the second thord or effects. 333 00:18:21,040 --> 00:18:23,480 Speaker 1: First of all, China will retaliate. They'll start nail, you know, 334 00:18:23,920 --> 00:18:27,560 Speaker 1: hammering our farmers, soybean exports, et cetera. At the same time, 335 00:18:27,840 --> 00:18:30,360 Speaker 1: businesses operating in China will have a very difficult time. 336 00:18:30,400 --> 00:18:32,280 Speaker 1: So if you're Bowing, if your Apple, if you're any 337 00:18:32,280 --> 00:18:34,120 Speaker 1: of these other companies that are trying to make inroads, 338 00:18:34,400 --> 00:18:36,600 Speaker 1: you're in big trouble because the Chinese will either react 339 00:18:36,600 --> 00:18:39,800 Speaker 1: immediately or you will have this cloud of uncertainty hanging 340 00:18:39,880 --> 00:18:43,719 Speaker 1: over you for the for the foreseeable future. Are there 341 00:18:43,760 --> 00:18:48,560 Speaker 1: any estimates for how much China's GDP will get reduced 342 00:18:48,880 --> 00:18:52,800 Speaker 1: if there is some sort of trade war, the question 343 00:18:52,880 --> 00:18:56,160 Speaker 1: is is will will any reduction GDP ever get acknowledged 344 00:18:56,160 --> 00:18:58,600 Speaker 1: by the government. So maybe this will be without any 345 00:18:58,680 --> 00:19:01,240 Speaker 1: loss of GDP for the all right, fair enough. But 346 00:19:01,280 --> 00:19:03,120 Speaker 1: the reason why I asked, though, is because people say, 347 00:19:03,200 --> 00:19:05,600 Speaker 1: you know, if China catches a cold, the emerging markets 348 00:19:05,600 --> 00:19:07,840 Speaker 1: get the flu. UH. People look at this as a 349 00:19:07,840 --> 00:19:10,439 Speaker 1: bell weather of one of the hottest trades UH, you know, 350 00:19:10,600 --> 00:19:13,760 Speaker 1: in the past few years. So you know what's going 351 00:19:13,800 --> 00:19:16,080 Speaker 1: to be the bleed out effect of a trade war. 352 00:19:16,280 --> 00:19:19,880 Speaker 1: So again, if you have this worst case scenario, UM, 353 00:19:19,960 --> 00:19:23,359 Speaker 1: you will have a substantial drop in GDP UM the 354 00:19:23,440 --> 00:19:26,440 Speaker 1: Chinese UH. You can talk about the Chinese economy being 355 00:19:26,480 --> 00:19:29,000 Speaker 1: more and more reliant on its own consumers internally, but 356 00:19:29,040 --> 00:19:31,720 Speaker 1: that just hasn't happened yet. You know, you're still seeing 357 00:19:31,760 --> 00:19:35,240 Speaker 1: these enormous trade flows UM and and and that's the 358 00:19:35,280 --> 00:19:37,280 Speaker 1: way they wanted. And so if you have a problem 359 00:19:37,320 --> 00:19:40,119 Speaker 1: with UH, with with trade, and you have the US 360 00:19:40,160 --> 00:19:42,600 Speaker 1: clamping down and China clamping down back, you will have 361 00:19:42,640 --> 00:19:44,320 Speaker 1: a problem in China. You will have a problem in 362 00:19:44,359 --> 00:19:47,960 Speaker 1: emerging markets. And UM's it's a little bit hard hard 363 00:19:47,960 --> 00:19:50,200 Speaker 1: to quantify because you can't believe the GDP figures, but 364 00:19:50,240 --> 00:19:52,919 Speaker 1: you would certainly have something at least as serious as 365 00:19:52,960 --> 00:19:56,720 Speaker 1: what happened at the end of two fifteen early in 366 00:19:56,840 --> 00:20:01,080 Speaker 1: terms of in terms of an economic crisis, Leland, what 367 00:20:01,320 --> 00:20:05,360 Speaker 1: books or journals would you recommend that people read if 368 00:20:05,359 --> 00:20:08,600 Speaker 1: they want to educate themselves more deeply in how China 369 00:20:08,720 --> 00:20:12,399 Speaker 1: really works. You know, it's getting harder and harder because 370 00:20:12,600 --> 00:20:15,560 Speaker 1: if you if you saw the the announcement the Chinese 371 00:20:16,200 --> 00:20:18,919 Speaker 1: are banning like the letter N, the words shameless and 372 00:20:18,920 --> 00:20:22,439 Speaker 1: all these other other things. Um, you know, it's it's 373 00:20:22,440 --> 00:20:25,160 Speaker 1: getting hold hold. Maybe people don't know about Hell's help, 374 00:20:25,240 --> 00:20:27,280 Speaker 1: what happened well, and and and the other. The last 375 00:20:27,280 --> 00:20:30,360 Speaker 1: few weeks, the censorship has been ramping up even more 376 00:20:30,400 --> 00:20:33,120 Speaker 1: than in the norm. And if you're seeing these almost 377 00:20:33,440 --> 00:20:37,960 Speaker 1: comical censorship of words from shameless was one of them. 378 00:20:37,960 --> 00:20:40,600 Speaker 1: There was a handful of other words that are hominem's 379 00:20:40,640 --> 00:20:43,439 Speaker 1: with leaders names. But the word the letter N was 380 00:20:43,440 --> 00:20:46,760 Speaker 1: was actually banned because that was supposed to signify uh 381 00:20:46,960 --> 00:20:50,320 Speaker 1: n is greater than two, which means she's terms were 382 00:20:50,560 --> 00:20:53,560 Speaker 1: she's new term, lifelong term is is greater than two, 383 00:20:53,600 --> 00:20:57,080 Speaker 1: it's any equals infinity, whatever it might be. The Chinese 384 00:20:57,119 --> 00:20:58,959 Speaker 1: were going overboard with that. It's got a lot of 385 00:20:59,200 --> 00:21:01,560 Speaker 1: media coverage lately, and it just shows you that getting 386 00:21:01,560 --> 00:21:05,320 Speaker 1: information out of China is much more difficult now than 387 00:21:05,320 --> 00:21:07,719 Speaker 1: it was in past years. But I mean, is there 388 00:21:07,800 --> 00:21:09,879 Speaker 1: something that you could recommend, because I mean, even just 389 00:21:09,920 --> 00:21:13,080 Speaker 1: to understand the structure of the of the country's politics, 390 00:21:13,160 --> 00:21:18,520 Speaker 1: the party is actually above the government, right, not anymore 391 00:21:18,600 --> 00:21:21,320 Speaker 1: now it's all the same, right. Well, that's that's the idea. 392 00:21:21,400 --> 00:21:23,920 Speaker 1: I mean, the party, the theory, the party above all. 393 00:21:23,960 --> 00:21:26,160 Speaker 1: But the more these these things are all merging into 394 00:21:26,200 --> 00:21:31,360 Speaker 1: this monolithic chi jin Ping uh force. Uh. That's that's 395 00:21:31,400 --> 00:21:34,840 Speaker 1: what China is now. You know. The mantra is China is, 396 00:21:34,880 --> 00:21:37,760 Speaker 1: the party is chi Jinping. Is there any economic data 397 00:21:37,800 --> 00:21:40,359 Speaker 1: that you rely upon that is actually an accurate number 398 00:21:40,440 --> 00:21:44,000 Speaker 1: coming out of China? We look at everything because everything, 399 00:21:44,400 --> 00:21:48,679 Speaker 1: uh put some shades, some some flavor into the overall picture. 400 00:21:48,760 --> 00:21:51,000 Speaker 1: But the reason we started China Bejing book back in 401 00:21:51,000 --> 00:21:53,200 Speaker 1: two thousand and ten is we didn't believe this stuff. 402 00:21:53,240 --> 00:21:55,720 Speaker 1: We thought we had to get it ourselves. So not really, 403 00:21:56,560 --> 00:21:58,000 Speaker 1: I want to thank you very much for coming in 404 00:21:58,040 --> 00:22:01,439 Speaker 1: and joining us. Leland Miller Chief exec gtive of China 405 00:22:01,640 --> 00:22:04,879 Speaker 1: beige Book International. Go ahead and follow them on Twitter 406 00:22:05,000 --> 00:22:21,919 Speaker 1: at China beige Book. Seems like an increasing number of 407 00:22:22,040 --> 00:22:26,479 Speaker 1: equity investors have sounded the all clear bell have dived 408 00:22:26,560 --> 00:22:31,000 Speaker 1: back into equities after the minor hiccup over the past 409 00:22:31,200 --> 00:22:34,439 Speaker 1: few weeks. Here to take stock of what investors are 410 00:22:34,480 --> 00:22:37,640 Speaker 1: looking to do in their stock portfolios. As Scott Wren, 411 00:22:37,880 --> 00:22:41,720 Speaker 1: senior Global Equity Strategist for the Wells Fargo Investment Institute 412 00:22:41,760 --> 00:22:44,440 Speaker 1: in St. Louis, he joins us here in our eleven 413 00:22:44,480 --> 00:22:46,680 Speaker 1: three studios in New York. Scott, thank you so much 414 00:22:47,040 --> 00:22:49,919 Speaker 1: for being here. I was just this morning looking at 415 00:22:50,040 --> 00:22:52,439 Speaker 1: twelve months tea bells and looking at how you can 416 00:22:52,440 --> 00:22:55,160 Speaker 1: now get two percent yields on that, and I'm wondering, 417 00:22:55,480 --> 00:23:00,640 Speaker 1: what do you tell your equity investors, your clients with 418 00:23:00,720 --> 00:23:02,679 Speaker 1: respect to how much money they should be holding in 419 00:23:02,720 --> 00:23:05,280 Speaker 1: cash right now. Well, Lisa, first of all, it's great 420 00:23:05,280 --> 00:23:06,520 Speaker 1: to be here. It's been a while since I've been 421 00:23:06,560 --> 00:23:10,560 Speaker 1: in studio. But you know, as far as our investors 422 00:23:10,760 --> 00:23:13,120 Speaker 1: and and I think you can generalize this to most 423 00:23:13,200 --> 00:23:16,120 Speaker 1: retail investors who that's That's who I'm dealing with. Most 424 00:23:16,119 --> 00:23:19,320 Speaker 1: of the time, UM, they've been under invested in stocks, 425 00:23:19,320 --> 00:23:21,920 Speaker 1: they've been sitting on too much cash. Would they love 426 00:23:21,960 --> 00:23:24,440 Speaker 1: to see five percent CE deals? Sure they would, We 427 00:23:24,480 --> 00:23:26,680 Speaker 1: probably all would, but you know that's probably not going 428 00:23:26,720 --> 00:23:30,199 Speaker 1: to happen anytime soon. These these interest rates are a 429 00:23:30,240 --> 00:23:33,399 Speaker 1: little higher, UM, but when we look out over the 430 00:23:33,440 --> 00:23:36,520 Speaker 1: course of the next few years, I still think that 431 00:23:36,720 --> 00:23:41,320 Speaker 1: stocks are going to be the outperformers there. So UM, 432 00:23:41,359 --> 00:23:44,879 Speaker 1: you know, our fixed income um UH team has not 433 00:23:45,000 --> 00:23:48,840 Speaker 1: really started to recommend getting locked in here with these 434 00:23:48,840 --> 00:23:52,760 Speaker 1: slightly higher rates, but UM, we like stocks order bonds, 435 00:23:52,960 --> 00:23:54,919 Speaker 1: all right, So do you sell bonds in order to 436 00:23:55,119 --> 00:23:59,600 Speaker 1: deploy the cash that you might have into equities? Well, 437 00:23:59,640 --> 00:24:03,560 Speaker 1: I think that that UM for one thing, PIM most 438 00:24:03,600 --> 00:24:05,439 Speaker 1: of our clients still have cash, so they could just 439 00:24:05,480 --> 00:24:07,840 Speaker 1: step in and not do anything with their bond portfolio. 440 00:24:07,880 --> 00:24:10,199 Speaker 1: But I think, you know, you could argue that if 441 00:24:10,240 --> 00:24:12,879 Speaker 1: you're locked in in an intermediate type of duration and 442 00:24:12,960 --> 00:24:15,439 Speaker 1: you don't have any cash, you know, we want to 443 00:24:15,440 --> 00:24:17,800 Speaker 1: be in stock. So I mean, if if that's your 444 00:24:17,800 --> 00:24:20,720 Speaker 1: only choice and you do not have any cash, UM, 445 00:24:20,760 --> 00:24:23,800 Speaker 1: you know, we wouldn't mind lightning up on let's say, 446 00:24:23,880 --> 00:24:27,800 Speaker 1: high yield bonds. Something like that, and and moving some 447 00:24:27,840 --> 00:24:31,160 Speaker 1: of that money into stocks. So, Scott, have you changed 448 00:24:31,359 --> 00:24:35,080 Speaker 1: any of your preferences within the equity universe over the 449 00:24:35,119 --> 00:24:39,199 Speaker 1: past few weeks, just as we kind of reassessed the 450 00:24:39,320 --> 00:24:43,720 Speaker 1: growth picture the yield picture. Well, I would like to 451 00:24:43,760 --> 00:24:46,000 Speaker 1: say that, you know, this was all skilled, but it 452 00:24:46,080 --> 00:24:48,280 Speaker 1: was probably a little luck to in the sectors that 453 00:24:48,320 --> 00:24:51,679 Speaker 1: we have been really leaning toward. UM. In terms of 454 00:24:51,680 --> 00:24:56,600 Speaker 1: domestic we've been leaning towards industrials and consumer discretionary and 455 00:24:56,720 --> 00:25:00,040 Speaker 1: financials and healthcare, and we like those. We had in 456 00:25:00,359 --> 00:25:03,159 Speaker 1: those for a while, but we like them prior to 457 00:25:03,520 --> 00:25:05,720 Speaker 1: the change in the tax code, and then when the 458 00:25:05,760 --> 00:25:08,760 Speaker 1: tax code was changed, we even like them more. So. 459 00:25:09,080 --> 00:25:12,080 Speaker 1: You know, what we want our clients doing is being assertive. 460 00:25:12,119 --> 00:25:14,800 Speaker 1: We want them leaning towards these sectors that are going 461 00:25:14,880 --> 00:25:18,720 Speaker 1: to benefit from a continuation of this expansion, which I 462 00:25:18,720 --> 00:25:23,640 Speaker 1: think was probably UM drawn out for maybe another year 463 00:25:23,720 --> 00:25:26,119 Speaker 1: or two couple of years based on the new tax 464 00:25:26,320 --> 00:25:29,840 Speaker 1: uh tax reform. But what we don't want our clients 465 00:25:29,880 --> 00:25:33,640 Speaker 1: doing is getting defensive. There will be some time at 466 00:25:33,720 --> 00:25:35,760 Speaker 1: some point in the future to get defensive, but we've 467 00:25:35,800 --> 00:25:40,160 Speaker 1: been underweight staples, underweight utilities. We we like those positions. Um, 468 00:25:40,240 --> 00:25:43,440 Speaker 1: and we like them more since the new tax code 469 00:25:43,440 --> 00:25:45,680 Speaker 1: went into effect. Scott. It's interesting that you say we 470 00:25:45,680 --> 00:25:48,240 Speaker 1: we don't want them to get defensive. It suggests to 471 00:25:48,320 --> 00:25:51,119 Speaker 1: me that a number of clients have called you saying 472 00:25:51,280 --> 00:25:53,359 Speaker 1: is it time to get defensive? Is that the case? 473 00:25:53,640 --> 00:25:55,040 Speaker 1: That is the case? Lee, So you know, and I 474 00:25:55,040 --> 00:25:58,280 Speaker 1: think it's safe to say that. Um. You know, when 475 00:25:58,320 --> 00:26:00,640 Speaker 1: the when the market steadily goes up like it did 476 00:26:00,720 --> 00:26:03,720 Speaker 1: last year, my phone does not ring frequently. But when 477 00:26:03,720 --> 00:26:07,880 Speaker 1: the market drops in you know, five or six trading days, 478 00:26:07,960 --> 00:26:13,320 Speaker 1: my phone rings constantly. And so, um, you know they're 479 00:26:13,400 --> 00:26:20,639 Speaker 1: they're um, uh, they're concerned. Um, they're fearful. Uh. Initially 480 00:26:20,680 --> 00:26:22,720 Speaker 1: they were a little fearful that they missed out. Some 481 00:26:22,800 --> 00:26:24,919 Speaker 1: of them stepped in maybe a little closer to the 482 00:26:24,920 --> 00:26:27,080 Speaker 1: top than what they would like. But for the most part, 483 00:26:27,080 --> 00:26:31,080 Speaker 1: there are clients at on their side, on their hands. So, um, 484 00:26:31,280 --> 00:26:33,440 Speaker 1: some want to get defensive. We're trying to encourage them 485 00:26:33,480 --> 00:26:36,600 Speaker 1: not to do that. Scott. I want to steal something 486 00:26:36,640 --> 00:26:39,320 Speaker 1: from our colleague Tom Keane. The other day he talked 487 00:26:39,320 --> 00:26:42,560 Speaker 1: about the amount of time that investors spend worrying about 488 00:26:42,560 --> 00:26:44,760 Speaker 1: whether to get into a market can be something like 489 00:26:46,920 --> 00:26:49,960 Speaker 1: but when they pushed the panic button to get out, 490 00:26:50,119 --> 00:26:52,919 Speaker 1: that's something that maybe they spend five or ten percent 491 00:26:52,960 --> 00:26:55,679 Speaker 1: at the time. How do you educate someone to flip 492 00:26:55,720 --> 00:26:58,160 Speaker 1: that equation. I think what we try to do him 493 00:26:58,240 --> 00:27:01,280 Speaker 1: is is we try to look forward, of course, and 494 00:27:01,320 --> 00:27:04,159 Speaker 1: we're trying to say, what is the economy going to do? 495 00:27:04,200 --> 00:27:06,639 Speaker 1: What is inflation going to do? What is the federal 496 00:27:06,720 --> 00:27:09,800 Speaker 1: Reserve going to do? That's certainly we're focused on those 497 00:27:09,840 --> 00:27:12,080 Speaker 1: things right now. What are wages going to do? Because 498 00:27:12,119 --> 00:27:15,239 Speaker 1: I think that's been a worry for the market. Um So, 499 00:27:15,280 --> 00:27:18,920 Speaker 1: if the forward outlook is good and and valuations are 500 00:27:19,040 --> 00:27:21,840 Speaker 1: not stretched, which I don't believe that they are right now, 501 00:27:22,440 --> 00:27:26,560 Speaker 1: then we want our clients taking advantage of this volatility 502 00:27:26,680 --> 00:27:29,359 Speaker 1: and and I think you're going to see more downside 503 00:27:29,400 --> 00:27:31,080 Speaker 1: volatility now do I think we're going to see the 504 00:27:31,080 --> 00:27:33,520 Speaker 1: two hun day moving average again? And the SMP fund 505 00:27:34,520 --> 00:27:36,920 Speaker 1: probably not certainly not impossible, but I think we will 506 00:27:36,920 --> 00:27:39,639 Speaker 1: probably test a little lower here. You know, we've wanted 507 00:27:39,640 --> 00:27:43,000 Speaker 1: our clients to have a plan to put the cash 508 00:27:43,040 --> 00:27:46,600 Speaker 1: to work, and then when you have the opportunity, and 509 00:27:46,640 --> 00:27:48,480 Speaker 1: one of the hardest things to do is then to 510 00:27:48,560 --> 00:27:51,359 Speaker 1: get them to pull the trigger and jump in there. 511 00:27:51,400 --> 00:27:53,159 Speaker 1: You know, it's amazing to me that you've got that 512 00:27:53,200 --> 00:27:56,040 Speaker 1: many calls because of volatility. Wasn't that extreme, I mean, 513 00:27:56,240 --> 00:27:59,680 Speaker 1: aside from the VIX, but equities didn't sell off that much, 514 00:28:00,320 --> 00:28:04,080 Speaker 1: just really quickly. Does this concern you with respect to 515 00:28:04,119 --> 00:28:07,760 Speaker 1: investors sentiment and just how judy people could get if say, 516 00:28:07,960 --> 00:28:10,760 Speaker 1: the market does decline for an extended period of time. 517 00:28:11,040 --> 00:28:12,840 Speaker 1: It does. And you know, Lisa, when you look back 518 00:28:13,080 --> 00:28:16,840 Speaker 1: and and uh um, and you say, well gee um. 519 00:28:16,840 --> 00:28:19,760 Speaker 1: Over the over the last ninety years, the S and 520 00:28:19,840 --> 00:28:22,200 Speaker 1: P s had a ten percent pullback on average every 521 00:28:22,200 --> 00:28:25,159 Speaker 1: eleven months. We hadn't had one for two years. It 522 00:28:25,200 --> 00:28:27,280 Speaker 1: all happened in the course of a very short period 523 00:28:27,320 --> 00:28:31,919 Speaker 1: of time. That does uh. That does scare people. And 524 00:28:32,000 --> 00:28:35,639 Speaker 1: it is a concern because we had a number of 525 00:28:35,760 --> 00:28:41,440 Speaker 1: clients who were posing up to you know, better things 526 00:28:41,440 --> 00:28:44,719 Speaker 1: happening in the stock market. We dropped ten percent very quickly, 527 00:28:45,080 --> 00:28:47,320 Speaker 1: they back away. It makes them nervous. I want to 528 00:28:47,320 --> 00:28:49,000 Speaker 1: thank you very much for being with us as always. 529 00:28:49,040 --> 00:28:52,959 Speaker 1: Scott Wren is senior Global equity strategist for Wells Fargo 530 00:28:53,400 --> 00:29:00,320 Speaker 1: Investment Institute. Thanks for listening to the Bloomberg P and 531 00:29:00,400 --> 00:29:03,440 Speaker 1: L podcast. You can subscribe and listen to interviews at 532 00:29:03,520 --> 00:29:07,960 Speaker 1: Apple Podcasts, SoundCloud, or whatever podcast platform you prefer. I'm 533 00:29:07,960 --> 00:29:11,440 Speaker 1: pim Fox. I'm on Twitter at pim Fox. I'm on 534 00:29:11,440 --> 00:29:14,760 Speaker 1: Twitter at Lisa Abramo wits one. Before the podcast, you 535 00:29:14,760 --> 00:29:17,280 Speaker 1: can always catch us worldwide on Bloomberg Radio