WEBVTT - Pfizer May Have the Edge Over Moderna In Vaccine Race 0:00:01.400 --> 0:00:04.120 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, along 0:00:04.120 --> 0:00:06.200 with my co host of Bonnie Quinn. Every business day 0:00:06.240 --> 0:00:10.360 we bring you interviews from CEOs, market pros, and Bloomberg experts, 0:00:10.400 --> 0:00:13.600 along with essential market moving news. Find the Bloomberg Markets 0:00:13.600 --> 0:00:17.000 Podcast on Apple Podcasts or wherever you listen to podcasts, 0:00:17.000 --> 0:00:20.920 and on Bloomberg dot com. Well, it is time once 0:00:20.960 --> 0:00:24.480 again to check in on COVID progress, not progress of 0:00:24.680 --> 0:00:28.480 the disease per se, but progress towards a vaccine. Let's 0:00:28.480 --> 0:00:32.640 bring in some Faconalty, director of research for Bloomberg Intelligence, 0:00:32.680 --> 0:00:34.920 and Sam. You keep an eye on everything that's out there. 0:00:35.600 --> 0:00:38.519 You've noticed so that some companies do actually have an 0:00:38.640 --> 0:00:41.800 edge over others. Tell us what companies we should be 0:00:42.000 --> 0:00:46.760 most closely watching these days. Yeah, hi, Bunny. Um, So 0:00:47.479 --> 0:00:51.880 you know a lot of this analysis and and conclusion 0:00:52.000 --> 0:00:56.760 is based on early data, and early scientific data has 0:00:56.800 --> 0:00:59.960 a nasty habit of changing when you get into bigger 0:01:00.040 --> 0:01:04.800 trials and test your your product into in multi center trials, etcetera. So, 0:01:05.080 --> 0:01:09.760 with that caveat, if we look at the the on 0:01:09.840 --> 0:01:13.360 the effectiveness side, I think FIDER and Beyond Tech seemed 0:01:13.360 --> 0:01:15.280 to have the age at the minute with regards to 0:01:16.080 --> 0:01:19.280 both generating antibodies and also this other arm of the 0:01:19.280 --> 0:01:23.200 immune system that I keep talking about, the cellular immunity, 0:01:23.360 --> 0:01:27.039 that seems to be the case at the moment. So um, 0:01:27.080 --> 0:01:30.680 you know, they beaten Maderna on the similar arm and 0:01:30.760 --> 0:01:36.440 on the on the antibodies, Astrotennics didn't quiet match up. 0:01:36.480 --> 0:01:39.560 Although it's not bad, it's just not as good as 0:01:39.600 --> 0:01:42.160 So that's where we stand today, although there's a whole 0:01:42.200 --> 0:01:44.400 bunch of other companies that have to still put out 0:01:44.480 --> 0:01:48.400 data with different technologies, and the ones that I'm particularly 0:01:48.400 --> 0:01:51.480 looking forward to seeing someone some of the older technologies. 0:01:52.480 --> 0:01:55.640 The variety of vaccines that we have today don't use 0:01:55.680 --> 0:01:59.040 either of the technologies that moderna Fiser and Astrosennocrat using. 0:01:59.800 --> 0:02:03.680 And also there's one other version of these RNA vaccines 0:02:03.720 --> 0:02:07.400 that Fighter has got that is being tested by Imperial 0:02:07.440 --> 0:02:10.959 College and the company in the US called ARC Tourists, 0:02:10.960 --> 0:02:15.480 amongst others. I'm looking forward seeing from human data for those. Hey, Sam, 0:02:15.560 --> 0:02:19.079 you've followed this pharmer business and vaccine business for decades. 0:02:19.520 --> 0:02:24.160 Help us understand that when and if we get vaccines plural. 0:02:24.280 --> 0:02:28.040 I'm assuming various entities will come out with various vaccines. 0:02:28.520 --> 0:02:31.919 Talk to us about how you actually get a vaccine 0:02:31.960 --> 0:02:38.000 discovery and then into mass production for I'm guessing billions 0:02:38.000 --> 0:02:40.919 of doses and then the distribution of that. How does 0:02:40.919 --> 0:02:45.920 that all work? Yeah, yeah, interesting, Paul. And Actually, vaccines 0:02:45.960 --> 0:02:50.160 were really not sixty at all until quite a few 0:02:50.200 --> 0:02:53.160 years ago when we ended up getting some of the 0:02:53.320 --> 0:02:57.280 newer vaccines like gardensil from like shing gricks from from 0:02:57.320 --> 0:03:01.560 Glaxo and and exactly two point both of those products 0:03:01.800 --> 0:03:06.240 have manufacturing bottlenecks in them in that they can't make 0:03:06.440 --> 0:03:09.440 enough of the stuff to sell. So both collects are 0:03:09.560 --> 0:03:15.480 and work either under underestimated the demand or it's just 0:03:15.760 --> 0:03:19.280 very difficult to manufacture these things. So to that point, 0:03:19.760 --> 0:03:22.720 there's a lot of steps required. And I think the 0:03:22.840 --> 0:03:26.160 one person who regularly brought this up was the CEO 0:03:26.240 --> 0:03:29.280 of some of you, saying, it's not just about discovering 0:03:29.320 --> 0:03:32.240 a vaccine. You've got to be able to first show 0:03:32.280 --> 0:03:35.080 that it is safe because you're giving it to a 0:03:35.200 --> 0:03:39.800 large population of otherwise healthy people who don't have a disease. 0:03:40.160 --> 0:03:42.840 And then you've got to get the stuff manufactured, put 0:03:42.880 --> 0:03:46.040 into a vial, send somewhere in a cold chain often, 0:03:46.360 --> 0:03:48.240 so you need to keep it cold and maybe sometimes 0:03:48.240 --> 0:03:53.320 you're frozen. That's a that's an enormous challenge. But I 0:03:53.360 --> 0:03:56.200 think our government can rise up to it if if 0:03:56.280 --> 0:04:01.400 people are um, don't politicize this in again, but but 0:04:01.480 --> 0:04:05.520 it is, it is. It's definitely a hard and tough 0:04:05.600 --> 0:04:08.520 mountain to climb. And one question is you know, how 0:04:08.560 --> 0:04:12.480 much do you give to other countries if anything, even 0:04:12.520 --> 0:04:14.800 though it would probably be in your interest to give 0:04:14.840 --> 0:04:17.560 this to the whole world, right, so yeah, yeah, yeah, 0:04:17.600 --> 0:04:20.400 but let me carry something. We've just added up all 0:04:20.520 --> 0:04:23.360 the doses that people have said they will be making. 0:04:23.480 --> 0:04:26.680 And this is only about twelve fifteen companies, so the 0:04:26.720 --> 0:04:30.360 other hundred companies or more. I don't have numbers four 0:04:31.000 --> 0:04:35.359 and and we're at ten billion doses in one and 0:04:35.400 --> 0:04:37.680 even if you have to take two of those per persons, 0:04:37.680 --> 0:04:41.520 that's five billion people. Now, it doesn't matter how many 0:04:41.600 --> 0:04:44.560 doses you give to America. They don't. We don't need 0:04:44.600 --> 0:04:47.320 more than six seven million dollars in the US, right, 0:04:47.920 --> 0:04:51.440 So there's enough volume being pledged and being worked on 0:04:51.920 --> 0:04:55.040 that if all these vaccines work, that's the point, right, 0:04:55.080 --> 0:04:58.280 Because they're all different vaccines. Then you have more than 0:04:58.400 --> 0:05:01.080 enough to vaccinate a lot the majority of people to 0:05:01.160 --> 0:05:06.800 get to that early immunity if they all worked. So, Sam, 0:05:06.880 --> 0:05:09.080 I guess the next what are some of the next 0:05:09.080 --> 0:05:10.960 mile post that you're looking at real real quickly here 0:05:11.000 --> 0:05:12.800 that you think you're going to kind of come across 0:05:12.839 --> 0:05:15.840 the tape. Yeah. So I'm looking forward to, as I 0:05:15.880 --> 0:05:19.680 said earlier, to data from some of these other technologies 0:05:20.320 --> 0:05:23.400 actually published data. Folks have said that their vaccines worked. 0:05:23.680 --> 0:05:26.520 Some Chinese companies have said their vaccines work, but published 0:05:26.560 --> 0:05:28.760 data that we started to see yesterday with all the 0:05:29.000 --> 0:05:31.880 who harder we had yesterday. Um, so I'd like to 0:05:31.880 --> 0:05:34.159 see some of the older vaccines show some you know, 0:05:34.279 --> 0:05:37.080 just to see how they're doing. And then I'm really 0:05:37.080 --> 0:05:40.760 looking forward to seeing this new even newer version of 0:05:40.760 --> 0:05:44.960 our n A vaccines from Imperial College and our tourists 0:05:45.000 --> 0:05:47.560 and translate by or there's a whole host of companies 0:05:47.560 --> 0:05:50.320 who got these class has got some. But I think 0:05:50.320 --> 0:05:53.719 we're expecting some news from Imperial and our tourists in 0:05:53.760 --> 0:05:57.680 the next few weeks months. That's what I'm looking forward to. Hey, Sam, 0:05:57.720 --> 0:05:59.839 thanks so much once again for joining us giving us 0:05:59.880 --> 0:06:04.320 your thoughts on this whole race for a COVID nineteen vaccine. 0:06:04.360 --> 0:06:07.600 Santa zelis Director of Research for Bloomberg Intelligence for all 0:06:07.640 --> 0:06:10.120 of Europe, but more importantly his day job as he's 0:06:10.120 --> 0:06:15.080 one of those top farmer healthcare analysts based in London. 0:06:17.000 --> 0:06:20.279 Let's move over and now to Asia and talk China. 0:06:20.520 --> 0:06:23.680 China's market, the new jack MA and I p O 0:06:23.880 --> 0:06:27.160 has bypassed the New York Stock Exchange and has decided 0:06:27.200 --> 0:06:31.000 to list on the Hong Kong and Shanghai Exchanges. And 0:06:31.000 --> 0:06:33.320 of course after that the Hong Kong Exchanges and clearing 0:06:34.480 --> 0:06:37.000 stock surged as much as nine and a half percent. 0:06:37.040 --> 0:06:38.680 Let's bring in someone who knows a lot about this now, 0:06:38.680 --> 0:06:42.719 Brendan and hearn is c i O of Crane Shares. Brendan, 0:06:43.080 --> 0:06:46.760 why did jack MA decide to I p O almost 0:06:46.760 --> 0:06:53.480 everywhere bots New York? Well, I think we've seen US 0:06:53.560 --> 0:06:58.280 listed Chinese companies reissue in Hong Kong as well as 0:06:58.320 --> 0:07:01.320 on the New Shanghai star Board in order to get 0:07:01.320 --> 0:07:06.159 a higher valuation. That US China political rhetor CRIC has 0:07:06.240 --> 0:07:10.760 depressed the US listed companies over the last say two years. 0:07:10.880 --> 0:07:13.040 So they're going to where they're going to be properly 0:07:13.120 --> 0:07:17.040 valued by investors. So Brendan gives a sense of this 0:07:17.120 --> 0:07:18.760 and financial A lot of people here, I think in 0:07:18.800 --> 0:07:21.040 the States don't have a real good understanding of what 0:07:21.120 --> 0:07:24.440 Aunt is. Give us here your your overview of the company. 0:07:24.880 --> 0:07:31.440 So and and financial makes PayPal look like a rounding error. Uh, 0:07:31.480 --> 0:07:36.360 you know, it's it's it's mobile payments dominate the e 0:07:36.520 --> 0:07:40.520 commerce space in China today. Uh, you know, actually finding 0:07:40.560 --> 0:07:43.680 places that will accept cash or in some cases even 0:07:43.720 --> 0:07:46.119 credit cards. It's very difficult when you when you visit 0:07:46.200 --> 0:07:50.160 China because it's all all done mobile and so Aunt's 0:07:50.200 --> 0:07:53.320 really been at the forefront. Um. You know, Ali Baba 0:07:53.800 --> 0:07:56.640 uh now owns about a third of the company and 0:07:56.720 --> 0:07:59.920 it's hooked in with their e commerce outlets team all 0:08:00.040 --> 0:08:03.200 and about. But it's it's it's really, it's really gone viral. 0:08:03.280 --> 0:08:07.680 It's ubiquitous in China today. Two hundred billion dollar valuation 0:08:07.720 --> 0:08:11.520 on that company. So pretty phenomenal. Brendan, What what do 0:08:11.520 --> 0:08:14.920 we need to know about China right now? And it's 0:08:15.480 --> 0:08:18.680 aspect towards free markets. Seen for a long time that 0:08:18.680 --> 0:08:20.560 I was trying to embrace free markets more and more, 0:08:21.440 --> 0:08:24.560 and at a certain point, you know, I think investors 0:08:24.600 --> 0:08:27.200 turned their back a little bit on China, particularly as 0:08:27.240 --> 0:08:29.160 it was comping down on on Hong Kong and so 0:08:29.280 --> 0:08:32.040 on our investors back now, I mean, you can't ignore 0:08:32.040 --> 0:08:34.520 two hundred billion dollar valuation, you know, I p O 0:08:34.600 --> 0:08:38.160 s no no. I mean, certainly we've had a you know, 0:08:38.200 --> 0:08:40.640 the bowls are on parade in Hong Kong right now. 0:08:40.840 --> 0:08:44.200 You had Ali Baba relist in November of last year, 0:08:44.400 --> 0:08:48.679 j D and Nettie's more recently. UM. But you're going 0:08:48.720 --> 0:08:51.120 to have a number of these companies relist and they're 0:08:51.120 --> 0:08:54.400 getting higher valuations. One of the rumors we heard I'll 0:08:54.440 --> 0:08:57.720 share just uh, just you know, Bloomberg Radio has been 0:08:57.720 --> 0:08:59.520 so great to us over the years. But but there's 0:08:59.559 --> 0:09:03.120 actually hatter there's rumors that d D is going to 0:09:03.240 --> 0:09:06.880 go public in Hong Kong. Uh. D D is the 0:09:07.360 --> 0:09:10.560 Uber slayer. Uh. You know d D put Uber out 0:09:10.559 --> 0:09:14.880 of business in China, UM, and there was there's there's 0:09:15.000 --> 0:09:17.480 talk that they're going to come as well. So you know, 0:09:17.480 --> 0:09:22.359 you've got two of the biggest tech unicorns globally potentially 0:09:22.400 --> 0:09:28.040 going public into Hong Kong UM this year. So interesting. Brendon, 0:09:28.040 --> 0:09:30.040 give us a sense of just overall, how the markets 0:09:30.080 --> 0:09:32.920 are over there? I mean, you know, China was obviously 0:09:33.000 --> 0:09:35.360 the beginning of the pandemic and it really bore the 0:09:35.440 --> 0:09:38.679 brunt of it late last year but early this year. 0:09:39.200 --> 0:09:41.560 Yet they've had some much better numbers over the last 0:09:41.600 --> 0:09:45.760 several months. How's the Chinese I guess just market in 0:09:45.800 --> 0:09:49.520 general looking over there. So so China's first in, first out, 0:09:49.559 --> 0:09:54.640 it's it's fifo so so they their worst economic numbers 0:09:54.760 --> 0:09:57.800 corporate earnings took place in in Q one, and we're 0:09:57.840 --> 0:10:02.520 seeing definitively a E shaped rebound. Uh. You know, some 0:10:02.600 --> 0:10:05.240 of this is the strength of the quarantine in China, 0:10:05.280 --> 0:10:07.120 and this is it's not it's not a China thing, 0:10:07.160 --> 0:10:09.920 it's it's an Asia thing. Unfortunately, we've seen a number 0:10:09.920 --> 0:10:13.120 of pandemics in the last twenty years. If it's stars 0:10:13.200 --> 0:10:16.560 or H one N one um and when they say 0:10:16.600 --> 0:10:19.800 don't leave your apartment, it's taken very, very seriously. And 0:10:19.920 --> 0:10:23.319 I would point to Vietnam uh population of a hundred 0:10:23.360 --> 0:10:29.120 million under four hundred cases, zero deaths, Taiwan million people 0:10:29.200 --> 0:10:31.480 under five cases. So it's not a China thing, it's 0:10:31.480 --> 0:10:33.920 an Asia thing. And that's allowed them to go back 0:10:33.920 --> 0:10:37.760 to work. What's next four crane share is Brendan, what 0:10:38.000 --> 0:10:41.040 are you looking at these days? Well, I think we're 0:10:41.080 --> 0:10:43.960 seeing you know, you know, we're in a growth geared 0:10:44.000 --> 0:10:48.320 market and that's globally, it's in emerging markets, it's in China. 0:10:48.840 --> 0:10:51.000 So so I think one, we're out trying to tell 0:10:51.040 --> 0:10:54.720 investors that buying broad e M which has a heavy, 0:10:54.760 --> 0:10:59.120 heavy tilt to value sectors. Uh, you have to piece 0:10:59.160 --> 0:11:03.480 out these these growth parts of EM and China. Um, 0:11:03.520 --> 0:11:05.960 I think you know, further afield, we are looking at 0:11:06.000 --> 0:11:09.920 this new starboard. Uh, this new board on the Shanghai 0:11:10.000 --> 0:11:13.520 Stock Exchange. Uh, it's an area where we hope to 0:11:13.559 --> 0:11:16.080 come to market in in the coming weeks with a 0:11:16.200 --> 0:11:20.680 US listed ETF. Interesting, So interesting, Brended. So we've seen 0:11:20.720 --> 0:11:24.240 fiscal stimulus out of the US today, we had a big, 0:11:24.240 --> 0:11:27.240 big package announced out of the European Union. In China, 0:11:27.320 --> 0:11:31.520 what's the fiscal stimulus environment there for the Chinese government? 0:11:32.280 --> 0:11:36.240 So they've taken a very incremental process. The raw numbers 0:11:36.320 --> 0:11:39.600 showed that China, yes they're stimulating, but so much more 0:11:39.720 --> 0:11:42.480 supporting it. They have not pulled the band aid and 0:11:42.600 --> 0:11:46.520 gone kind of two thousand nine debt driven so so 0:11:46.520 --> 0:11:49.599 they're doing very targeted measures trying to get credit to 0:11:49.720 --> 0:11:55.000 private companies, smaller, UH medium and small companies. So so 0:11:55.040 --> 0:11:58.640 they've been lowering some of some of the lending rates UM, 0:11:58.840 --> 0:12:03.400 but more targeted, more targeted exposure. I think they realize 0:12:03.400 --> 0:12:05.760 that they're not going to be immune to the economic 0:12:05.840 --> 0:12:08.320 consequence of global quarantine. So they're keeping a lot of 0:12:08.400 --> 0:12:12.040 dry powder. Where do you think that dry powder will 0:12:12.160 --> 0:12:16.480 end up? So I think ultimately if we if we 0:12:17.040 --> 0:12:20.920 hopefully we we get a Q three rebound here in 0:12:20.920 --> 0:12:23.319 the United States, I think that you know, as the 0:12:23.400 --> 0:12:27.440 number largest economy globally, it's very critical UM and I 0:12:27.480 --> 0:12:29.520 think I think what China is doing is you know, 0:12:29.559 --> 0:12:33.040 they've not cut interest rates UM and I think I 0:12:33.080 --> 0:12:36.840 think if if we have a negative outcome in terms 0:12:36.880 --> 0:12:41.120 of a quarantine social distance measures, you know, China will 0:12:41.160 --> 0:12:45.720 have to push further stimulus to offset um external weakness. 0:12:46.679 --> 0:12:48.440 Hey Brandon, thanks so much for joining us. We always 0:12:48.480 --> 0:12:52.000 appreciate getting your thoughts on all things Asia, including China. 0:12:52.040 --> 0:12:55.480 Brendan her In, chief investment officer for Crane Shares based 0:12:55.520 --> 0:12:58.080 in New York City, And Vonnie, it's interesting to see 0:12:58.160 --> 0:13:00.680 kind of how you know the the of those Asian 0:13:00.880 --> 0:13:07.400 um countries have done very well with containing the virus. Well, 0:13:07.440 --> 0:13:10.240 we've been talking about the cannabis market really for several 0:13:10.320 --> 0:13:12.520 years now as it continues to go not just in Canada, 0:13:12.559 --> 0:13:14.880 but now in the United States as well as a 0:13:14.920 --> 0:13:16.760 handful of states are more than a handful of states 0:13:16.760 --> 0:13:20.760 have legalized recreational marijuana. Matt Hawkins managing partner for Entourage 0:13:20.800 --> 0:13:24.360 Effect Capital. They're based in Dallas, Texas, private equity firm 0:13:24.520 --> 0:13:28.959 focusing on a number of sectors, including UH the cannabis 0:13:29.120 --> 0:13:30.959 business as well. So let's get a sense kind of 0:13:30.960 --> 0:13:35.240 where things are pre and post pandemic in the cannabis business. UH. Matt, 0:13:35.280 --> 0:13:38.160 thanks so much for joining us here. Give us a snapshot, 0:13:38.240 --> 0:13:41.480 if you would, of the cannabis market place kind of 0:13:41.559 --> 0:13:45.760 pre and post pandemic here. Sure, happy to do so, 0:13:45.800 --> 0:13:50.800 Thanks for having me. Before the pandemic started, there was 0:13:50.920 --> 0:13:55.240 a downturn in the in the cannabis markets UH. In general. 0:13:55.920 --> 0:14:00.079 It was driven by the public company and more the 0:14:00.120 --> 0:14:02.480 state operators in the United States that they're listed on 0:14:02.600 --> 0:14:07.240 the Canadian exchanges that were unable to meet their projections 0:14:07.280 --> 0:14:11.720 to to UH. A lot of factors of the first 0:14:11.760 --> 0:14:16.920 and foremost being their inability to convert a large number 0:14:16.960 --> 0:14:20.360 of the illicit market into the legalized market, so that 0:14:21.000 --> 0:14:24.000 the projections that they had come out with obviously weren't met. 0:14:24.680 --> 0:14:28.760 That trickles down, you know, following quarter to anything. It 0:14:28.760 --> 0:14:32.640 also trickles down to the private companies as well. So 0:14:32.680 --> 0:14:36.040 there was a distress a moment in time board for 0:14:36.200 --> 0:14:40.240 you know, distress buying, and there was also a cash 0:14:40.240 --> 0:14:44.400 crunch in the industry. What's happened post pandemic is that 0:14:45.000 --> 0:14:48.520 in all the legalized states, um with the exception of 0:14:48.520 --> 0:14:54.200 Massachusetts for recreational, the company that cannabis industry was deemed essential. 0:14:54.880 --> 0:14:58.720 So all of our dispensaries and and uh and and 0:14:58.800 --> 0:15:01.720 you know in in production facilities were all all remained 0:15:01.760 --> 0:15:05.800 open and in fact, sales skyrocket and have continued to 0:15:05.800 --> 0:15:09.120 do so. And so the pandemic and a you know, 0:15:09.200 --> 0:15:12.880 in a in an awful irony has helped the industry. 0:15:12.880 --> 0:15:16.120 And so excuse me, you still have valuations that are low, 0:15:16.600 --> 0:15:18.960 but you have companies that are in better shape. Are 0:15:19.000 --> 0:15:22.120 we sure? Go ahead? We'll just on that. Are we 0:15:22.160 --> 0:15:25.120 seeing deals yet, Matt? And if so, you know, are 0:15:25.160 --> 0:15:27.720 they small deals? Medium sized deals? Is this one private 0:15:27.760 --> 0:15:32.120 equity goes notes well, again a good question that the 0:15:32.120 --> 0:15:36.160 private equity world and cannabis is small comparatively speaking. We 0:15:36.160 --> 0:15:38.520 we have no institutional capital in the industry and all 0:15:38.560 --> 0:15:41.640 of our investors we've been placing money in the industry 0:15:41.720 --> 0:15:45.360 since two thousand fourteen, we've made almost seventy investments, but 0:15:45.400 --> 0:15:48.800 all of our investors come from hind it worth individuals 0:15:48.960 --> 0:15:54.000 or family offices. We don't have any true institutional quality 0:15:54.120 --> 0:15:58.440 investors because of the federal legality, and so until that changes, 0:15:58.520 --> 0:16:02.120 it's going to be small all comparatively speaking. But what's 0:16:02.160 --> 0:16:04.760 happening now to answer your question about deals getting done, 0:16:04.960 --> 0:16:08.240 is that the capital markets and cannabis industry have opened 0:16:08.280 --> 0:16:12.600 up a bit since the pandemic um started. Obviously, at 0:16:12.600 --> 0:16:15.640 the beginning, even though we were uh deemed essential, there 0:16:15.680 --> 0:16:18.440 was no deals getting done because money was on the sidelines. 0:16:18.520 --> 0:16:21.240 Things are starting to pick up a bit. Anticipated by 0:16:21.240 --> 0:16:23.360 the fall, we're gonna see a lot of activity both 0:16:23.360 --> 0:16:29.760 at the private and the scale building deals to where 0:16:30.200 --> 0:16:33.400 excuse me, in advance of some type of legalization the 0:16:33.440 --> 0:16:37.560 next several years um. Those are the companies that are 0:16:37.560 --> 0:16:41.920 going to be in position with scale to attract big 0:16:41.920 --> 0:16:44.640 institutional capital, and that's when the way we'll really hit 0:16:45.600 --> 0:16:47.440 So Matt, on the on the credit site, give us 0:16:47.480 --> 0:16:49.480 a sense of how these companies are financing kind of 0:16:49.480 --> 0:16:53.120 their day to day operations. Are banks lending to this sector? 0:16:54.080 --> 0:16:58.280 Absolutely not. It is a we have the sixties some 0:16:58.400 --> 0:17:01.800 odd investments we have they all have of making relationships 0:17:01.800 --> 0:17:04.360 where business services and checking accounts. I mean that that's 0:17:04.359 --> 0:17:06.040 been a bit of a missnomber in the industry and 0:17:06.080 --> 0:17:09.760 that there are following federal guidelines to provide services, but 0:17:09.800 --> 0:17:13.400 they're not able to lend money. And so that that's 0:17:13.440 --> 0:17:16.080 what it would have been a disaster to the industry 0:17:16.680 --> 0:17:19.640 if there was a prolonged putdown because we don't have 0:17:19.920 --> 0:17:24.520 lines of credit, we don't have huge ballot sheets to 0:17:24.920 --> 0:17:29.080 the weather rainy day, and so that that intel and 0:17:29.160 --> 0:17:33.480 intil it becomes federally legal or federally quasi legal through 0:17:33.640 --> 0:17:36.159 the States Act or the Safe Banking Act. Um, it's 0:17:36.160 --> 0:17:39.600 going to remain that way, Matt, who are your competitors 0:17:39.640 --> 0:17:42.600 in private equity? You know, there's a sense out there 0:17:42.680 --> 0:17:44.200 that at some point there will be two or three 0:17:44.240 --> 0:17:47.080 private equity firms that will own up all of the 0:17:47.119 --> 0:17:49.520 you know, the the cannabis facilities, particularly in states like 0:17:49.560 --> 0:17:53.920 California and so on. Who should we be looking at? Well, 0:17:54.400 --> 0:17:56.199 we we we like to say in the in the 0:17:56.280 --> 0:17:58.800 PE world in cannabis that we don't have any competitors 0:17:58.840 --> 0:18:02.520 because the industries there's such a dearth of capital that 0:18:02.640 --> 0:18:04.760 we all work together. I mean we when we look 0:18:04.760 --> 0:18:07.200 at deals, we look to see who's in the who's 0:18:07.240 --> 0:18:10.080 in the capital stack, and we look for people that 0:18:10.520 --> 0:18:13.280 we've invested with in the past. There's there's very few 0:18:13.600 --> 0:18:17.160 organized capital groups like us that are in the industry. 0:18:17.760 --> 0:18:20.320 Um of course that will change. I think what you'll 0:18:20.359 --> 0:18:23.399 see happening, you know, as we get towards federal legalization, 0:18:23.480 --> 0:18:26.280 that the opposite will happen. A lot more griffs will 0:18:26.320 --> 0:18:30.119 come in and they'll be backed by you know, Wall 0:18:30.119 --> 0:18:35.199 Street names, and you'll see, uh, you know, a large 0:18:35.760 --> 0:18:39.320 industry being you know, being owned and operated and invested 0:18:39.359 --> 0:18:42.800 in by the large pe shops. What kind of size 0:18:42.800 --> 0:18:44.440 of an industry is it right now in the US? 0:18:46.280 --> 0:18:49.480 Um are It's hard to say because what's happened is, 0:18:49.520 --> 0:18:51.719 you know, we think it could be as big as 0:18:51.720 --> 0:18:54.439 a fifty billion dollar industry in the in the United 0:18:54.480 --> 0:18:58.760 States you know, by two thousand or twenty one, twenty two, 0:18:59.280 --> 0:19:03.119 But big portion of that include the illicit market. And 0:19:03.160 --> 0:19:06.119 because of the illicit market is what it is. We 0:19:06.200 --> 0:19:08.720 really don't know how big that is. But what we 0:19:08.800 --> 0:19:11.000 always say is that this is a conversion of a market, 0:19:11.000 --> 0:19:13.960 not a creation of one, like for example, California. Well, 0:19:14.240 --> 0:19:16.560 actually not, We'll have to make you say that example 0:19:16.600 --> 0:19:18.960 for the next time. But you're leaving us on a 0:19:19.000 --> 0:19:21.080 sweet note there. Let's put it that way that as 0:19:21.119 --> 0:19:25.160 Matt Hawkins, managing partner of Entourage Effect Capital, great name 0:19:25.240 --> 0:19:30.440 for for accounabis capital business, coming to us from Dallas. 0:19:32.040 --> 0:19:36.240 Time now to get back to some market conversation. David 0:19:36.240 --> 0:19:38.640 Harden is CEO of some of Global Investments with one 0:19:38.640 --> 0:19:41.560 point two billion dollars in assets under management. He manages 0:19:41.600 --> 0:19:43.960 the US Large Cap Equity Fund. And wouldn't you know 0:19:43.960 --> 0:19:47.640 what the U s art caps are rallying today? Not unusual, 0:19:48.160 --> 0:19:51.520 funnily enough, So let's bring in David to figure out why, David, 0:19:51.640 --> 0:19:55.520 why are we continuing to see just the market move 0:19:55.640 --> 0:19:58.640 higher and higher and higher in spite of so many challenges. 0:19:59.760 --> 0:20:02.080 Well there, thank you, Vannie, Glad to be on your show. 0:20:02.160 --> 0:20:06.199 Paul and excited to be here again and and appreciate 0:20:06.240 --> 0:20:08.960 that the market is moving. And let's face it, a 0:20:09.000 --> 0:20:10.840 lot of that has to do with the FED. The 0:20:10.880 --> 0:20:14.200 FED put, the FED, zero interest rates, the system, open 0:20:14.280 --> 0:20:18.240 market accounts. UM, it's working and it is moving the 0:20:18.280 --> 0:20:21.280 markets forward, for sure. And that's a lot of what's 0:20:21.280 --> 0:20:23.520 going on right now. There's a little bit of euphoria 0:20:23.600 --> 0:20:27.520 as well. We have people using robin Hood, you know, 0:20:27.680 --> 0:20:30.080 and and buying stock, so there's a lot of speculation 0:20:30.119 --> 0:20:32.600 out there. But in general I had attributed to the FED, 0:20:33.200 --> 0:20:35.159 so David, and when we think about the FED and 0:20:35.160 --> 0:20:36.679 the FED put, it seems like a lot of the 0:20:36.720 --> 0:20:38.680 performance when you look at the SP five hunderd is 0:20:38.720 --> 0:20:42.840 limited to a handful of names, those big tech names. Um, 0:20:43.000 --> 0:20:45.080 how do you view that? Is that a concern for you? 0:20:45.200 --> 0:20:47.320 Is it time to rotate out of some of those 0:20:47.320 --> 0:20:51.919 winners into maybe some other sectors that perhaps have been lagging. Well, 0:20:51.960 --> 0:20:54.040 there's a little bit of difference between and and one 0:20:54.040 --> 0:20:55.520 of the things we look at a lot at some 0:20:55.800 --> 0:20:59.320 global is risk and trying to help manage the risk 0:20:59.359 --> 0:21:02.280 that is in the stock market without having negative surprises. 0:21:02.720 --> 0:21:05.000 And when you look at these big names That's what's 0:21:05.040 --> 0:21:08.119 really different between the if you want to call it 0:21:08.240 --> 0:21:10.400 a bubble territory that we may be in right now 0:21:10.440 --> 0:21:13.600 compared to stay two thousand, is that in two thousand 0:21:13.640 --> 0:21:16.639 you had a lot of low quality, um call it junk, 0:21:16.800 --> 0:21:22.760 risky names. Now you have a very high quality Microsoft, up, Amazon, 0:21:22.840 --> 0:21:28.200 up Apple. These are very good, rated the most innovative 0:21:28.240 --> 0:21:31.520 companies that we have in America today. So the difference 0:21:31.600 --> 0:21:33.959 I think that you can hold on to this and 0:21:34.000 --> 0:21:37.160 continue to hold these names is they're so high quality 0:21:37.160 --> 0:21:40.000 and such good companies that they deserve to be up. 0:21:40.440 --> 0:21:42.760 No one in Microsoft is laid off, so to speak. 0:21:43.080 --> 0:21:45.919 Right they can continue to work. Forty some odd million 0:21:45.960 --> 0:21:48.240 people out of work right now, but they're not off 0:21:48.280 --> 0:21:51.120 the internet, they're not off their technology. They're all still 0:21:51.200 --> 0:21:55.000 using their phones. So very important that these companies can 0:21:55.040 --> 0:21:58.880 continue to execute. I know anothers actually, like is Walmart? 0:21:58.920 --> 0:22:02.960 Is that also a pandemic play um In some respects 0:22:02.960 --> 0:22:05.679 it is, but we held it long before this came about. 0:22:06.119 --> 0:22:09.840 But in recessions and periods of where people are unemployed 0:22:09.880 --> 0:22:12.680 like we are in right now, Walmart tends to gain 0:22:12.760 --> 0:22:14.919 market share. If you look at the past, they're up 0:22:14.960 --> 0:22:18.080 about twelve percent year today. But this is with really 0:22:18.160 --> 0:22:22.240 low risk. With the beta point five three, Walmart provides 0:22:22.280 --> 0:22:28.080 you good return with very very um low downside risk 0:22:28.520 --> 0:22:30.760 and that's what we like alright. So, David how Abot, 0:22:30.800 --> 0:22:33.280 we just got through the earnings from the big banks 0:22:33.400 --> 0:22:37.640 last week, some really really strong trading results coming out 0:22:37.640 --> 0:22:39.320 of some of those banks. How do you look at 0:22:39.320 --> 0:22:42.280 the banks right here? Well, and that's and that's just 0:22:42.600 --> 0:22:45.600 if they can make money through their trading through other 0:22:45.760 --> 0:22:49.440 areas besides the yield curve, then that's worth looking at 0:22:49.480 --> 0:22:52.440 and that's worth investing in. If they're making money from 0:22:52.480 --> 0:22:55.399 small business and the yield curve, that's something that I 0:22:55.400 --> 0:23:01.360 would want to avoid. So economic and monamental is disconnected. 0:23:01.640 --> 0:23:04.160 At what point do they reconnect? And do you very 0:23:04.240 --> 0:23:07.360 very quickly shoveled shuffle the playing cards in your deck 0:23:07.400 --> 0:23:10.680 at that point, well, you have to write, because right 0:23:10.680 --> 0:23:13.480 now the reality is weren't not We're not trading on 0:23:13.560 --> 0:23:16.600 fundamentals as a whole. It is focused in a very 0:23:16.680 --> 0:23:20.320