1 00:00:00,840 --> 00:00:02,560 Speaker 1: Welcome to the Bloomberg Markets Podcast. 2 00:00:02,720 --> 00:00:03,480 Speaker 2: I'm Paul Sweeney. 3 00:00:03,520 --> 00:00:05,240 Speaker 1: Alongside my co host Matt Miller. 4 00:00:05,640 --> 00:00:09,720 Speaker 3: Every business day we bring you interviews from CEOs, market pros, 5 00:00:09,720 --> 00:00:13,640 Speaker 3: and Bloomberg experts, along with essential market moven news. 6 00:00:14,160 --> 00:00:17,279 Speaker 1: I'm the Bloomberg Markets podcast called Apple Podcasts or wherever 7 00:00:17,400 --> 00:00:20,919 Speaker 1: you listen to podcasts, and at Bloomberg dot com Slash podcast. 8 00:00:21,280 --> 00:00:24,120 Speaker 4: For our Bloomberg television radio audiences worldwide. I'm David Western. 9 00:00:24,160 --> 00:00:26,880 Speaker 4: We're welcome now, Mary bar She is the General Motors 10 00:00:26,960 --> 00:00:29,840 Speaker 4: chair and CEO. So, Mary, you are the woman of 11 00:00:29,880 --> 00:00:31,840 Speaker 4: the hour. I must say, whether you like it or not, 12 00:00:32,280 --> 00:00:33,840 Speaker 4: let me ask the question I think on everyone's mind. 13 00:00:33,880 --> 00:00:36,559 Speaker 4: What comes next? We know there's individual plans to instruct 14 00:00:36,560 --> 00:00:39,400 Speaker 4: at all three of the big automakers in Detroit. How 15 00:00:39,440 --> 00:00:42,360 Speaker 4: far away are we from layoffs as other plants really 16 00:00:42,440 --> 00:00:42,840 Speaker 4: run out. 17 00:00:42,760 --> 00:00:43,200 Speaker 5: Of the parts. 18 00:00:44,640 --> 00:00:45,720 Speaker 6: Well, you know, David. 19 00:00:45,760 --> 00:00:48,440 Speaker 7: First, I want to say, I'm extremely disappointed and frustrated 20 00:00:48,440 --> 00:00:50,120 Speaker 7: that we're even on a strike. We didn't need to 21 00:00:50,120 --> 00:00:52,920 Speaker 7: get here. General Motors has an exceptionally strong offer on 22 00:00:52,960 --> 00:00:53,360 Speaker 7: the table. 23 00:00:53,400 --> 00:00:54,120 Speaker 6: It's historic. 24 00:00:54,520 --> 00:00:59,400 Speaker 7: It's the largest increase from a wage's perspective in our 25 00:00:59,400 --> 00:01:02,440 Speaker 7: one hundred and fifteen year history, along with world class 26 00:01:02,440 --> 00:01:06,080 Speaker 7: healthcare benefits and many other provisions job security, etc. 27 00:01:06,680 --> 00:01:07,800 Speaker 6: And a cola adjustment. 28 00:01:08,000 --> 00:01:09,560 Speaker 7: So when you look at the strength of the agreement 29 00:01:09,640 --> 00:01:12,640 Speaker 7: we have on the table, you know, we really don't 30 00:01:12,680 --> 00:01:15,000 Speaker 7: need to be here. Yes, they have one plant down 31 00:01:15,080 --> 00:01:17,440 Speaker 7: right now, and you know it'll. 32 00:01:17,200 --> 00:01:19,720 Speaker 6: Impact two three very important products. 33 00:01:19,720 --> 00:01:24,160 Speaker 7: Two brand new our Chevrolet Colorado and our GMC Canyon, 34 00:01:24,200 --> 00:01:27,039 Speaker 7: both mid size pickups that are in strong demand, as 35 00:01:27,080 --> 00:01:30,320 Speaker 7: well as our Chevrolet cargo van that does exceptionally well 36 00:01:30,319 --> 00:01:33,240 Speaker 7: in the market. So this is having an impact and 37 00:01:33,240 --> 00:01:35,600 Speaker 7: we'll have to see where they go next. I will 38 00:01:35,640 --> 00:01:37,640 Speaker 7: say we're ready for this, you know, as we've dealt 39 00:01:37,680 --> 00:01:40,959 Speaker 7: with COVID and dealt with the semiconductor shortage as well 40 00:01:41,000 --> 00:01:44,240 Speaker 7: as other supply chain challenges that have you know, continued 41 00:01:44,280 --> 00:01:47,080 Speaker 7: to persist from COVID. Our team knows how to manage 42 00:01:47,120 --> 00:01:49,480 Speaker 7: these situations. They are staying agile and we're going to 43 00:01:49,520 --> 00:01:50,960 Speaker 7: do what's right for the company. We're going to make 44 00:01:51,000 --> 00:01:53,280 Speaker 7: sure everyone stays safe. But this is a strike that 45 00:01:53,320 --> 00:01:54,160 Speaker 7: didn't need to happen. 46 00:01:54,600 --> 00:01:56,840 Speaker 4: As you say, you've made an offer already for rather 47 00:01:56,840 --> 00:02:00,480 Speaker 4: substantial increase in wages it's not what the OW wants. Implicitly, 48 00:02:00,520 --> 00:02:03,200 Speaker 4: you've agreed that they do need and deserve some increase 49 00:02:03,240 --> 00:02:05,680 Speaker 4: in wages. But is this about more than that? Is 50 00:02:05,720 --> 00:02:08,520 Speaker 4: this existential sense for the auto companies in terms of 51 00:02:08,560 --> 00:02:10,720 Speaker 4: your need to move into electric vehicles and from the 52 00:02:10,720 --> 00:02:12,680 Speaker 4: you at W point of view that they believe in 53 00:02:12,680 --> 00:02:15,720 Speaker 4: effect moving to evs will actually cut the workforce by 54 00:02:15,760 --> 00:02:17,040 Speaker 4: as much as forty percent. 55 00:02:18,160 --> 00:02:19,600 Speaker 6: Well, you know, you're absolutely right. 56 00:02:19,639 --> 00:02:23,519 Speaker 7: This is a once in a century transformation. We're in 57 00:02:23,560 --> 00:02:26,800 Speaker 7: the middle of moving from internal combustion engine vehicles to 58 00:02:26,960 --> 00:02:30,120 Speaker 7: electric vehicles, and at GM we're at a very pivotal 59 00:02:30,160 --> 00:02:32,880 Speaker 7: point because we have so many electric vehicles ready to 60 00:02:32,960 --> 00:02:35,760 Speaker 7: launch in the process of launching, and this is important 61 00:02:35,800 --> 00:02:37,919 Speaker 7: to securing all of our futures. We need to get 62 00:02:37,960 --> 00:02:41,160 Speaker 7: these vehicles out. We need to they're wonderful vehicles. We've 63 00:02:41,200 --> 00:02:44,000 Speaker 7: got waiting lists for most of them or orders already 64 00:02:44,000 --> 00:02:46,600 Speaker 7: in place, so it's important that we meet that demand. 65 00:02:46,960 --> 00:02:50,120 Speaker 7: And one thing from a General Motors perspective, from job security, 66 00:02:50,520 --> 00:02:52,840 Speaker 7: we have jobs for all of our people as we 67 00:02:52,880 --> 00:02:55,840 Speaker 7: make this transformation. More than two years ago we started 68 00:02:55,880 --> 00:02:58,200 Speaker 7: planning for this, and one of the reasons General Motors 69 00:02:58,200 --> 00:03:01,280 Speaker 7: invested in doing our own power, which is a component 70 00:03:01,320 --> 00:03:05,040 Speaker 7: that's very important on electric vehicle. We design them internally 71 00:03:05,080 --> 00:03:07,800 Speaker 7: and we are now allocating that production to the plants 72 00:03:07,800 --> 00:03:10,359 Speaker 7: that build internal combustion vehicle. 73 00:03:10,120 --> 00:03:11,040 Speaker 6: Engines right now. 74 00:03:11,360 --> 00:03:14,080 Speaker 7: So we have worked very carefully to have a job 75 00:03:14,120 --> 00:03:17,920 Speaker 7: for everyone so we can make this transformation together. And frankly, 76 00:03:17,960 --> 00:03:20,520 Speaker 7: when you put it up, have a strike and we're 77 00:03:20,560 --> 00:03:22,680 Speaker 7: not making vehicles, you start to put that at risk. 78 00:03:22,720 --> 00:03:25,959 Speaker 7: So it's a historic transformation. We need to make sure 79 00:03:26,000 --> 00:03:28,320 Speaker 7: we can compete, and we need the company to be 80 00:03:28,360 --> 00:03:32,480 Speaker 7: profitable because those profits get invested in new products. That again, 81 00:03:32,560 --> 00:03:35,440 Speaker 7: it's a circle of when we invest in a new product, 82 00:03:35,720 --> 00:03:39,600 Speaker 7: there's demand for that product from consumers that provides the jobs. 83 00:03:39,640 --> 00:03:42,280 Speaker 7: Because we're building those vehicles in our plants. We need 84 00:03:42,320 --> 00:03:44,720 Speaker 7: to invest in our future and we have a plan 85 00:03:44,800 --> 00:03:46,680 Speaker 7: to take all of our employees along. I think this 86 00:03:46,800 --> 00:03:49,280 Speaker 7: is very important. So that concern there's not a place 87 00:03:49,280 --> 00:03:51,080 Speaker 7: for them is not true at General Motors. 88 00:03:51,760 --> 00:03:54,240 Speaker 4: If Mary, you were to find it in your heart 89 00:03:54,320 --> 00:03:56,600 Speaker 4: to come close to what they demand to accept it, 90 00:03:56,600 --> 00:03:58,720 Speaker 4: what would it mean for the future of General Motors. 91 00:03:59,080 --> 00:04:01,040 Speaker 4: You've just come outankruptcy fifteen years ago. 92 00:04:01,080 --> 00:04:03,920 Speaker 7: As I recall, you know, I think that's a very 93 00:04:03,960 --> 00:04:06,880 Speaker 7: important point because if we can't invest in new vehicles, 94 00:04:07,520 --> 00:04:09,760 Speaker 7: which we need, we need to be profitable to do that, 95 00:04:10,400 --> 00:04:13,920 Speaker 7: then we're not going to have a strong future. And David, 96 00:04:13,920 --> 00:04:16,839 Speaker 7: do you know extremely well, this is a very competitive industry. 97 00:04:16,839 --> 00:04:19,719 Speaker 7: There's new entrants that are not represented by the UAW 98 00:04:20,040 --> 00:04:24,040 Speaker 7: that already had a lower wage structure, so we need 99 00:04:24,040 --> 00:04:27,359 Speaker 7: to compete. I'm really proud of our manufacturing team, the 100 00:04:27,400 --> 00:04:29,919 Speaker 7: way they managed through COVID, the way that they have 101 00:04:30,240 --> 00:04:32,520 Speaker 7: worked and been very agile as we've dealt with all 102 00:04:32,560 --> 00:04:35,440 Speaker 7: the supply chain shortages, and the fact that for the 103 00:04:35,560 --> 00:04:39,600 Speaker 7: last two years, between our engineering our manufacturing teams, they've 104 00:04:39,600 --> 00:04:44,080 Speaker 7: delivered world class quality as recognized by JD Powers. We 105 00:04:44,200 --> 00:04:46,440 Speaker 7: have a strong team. We want to do everything in 106 00:04:46,440 --> 00:04:49,599 Speaker 7: our power to win the future, secure their future, and 107 00:04:49,720 --> 00:04:51,800 Speaker 7: lead for the next one hundred and fifteen years. 108 00:04:52,200 --> 00:04:53,320 Speaker 6: We need to be able to do that. 109 00:04:54,080 --> 00:04:57,280 Speaker 4: Mary, are the negotiating teams meeting today, to the best 110 00:04:57,279 --> 00:04:59,039 Speaker 4: of your knowledge, and by the way, are you participating 111 00:04:59,120 --> 00:05:00,280 Speaker 4: directly in any way? 112 00:05:01,160 --> 00:05:02,320 Speaker 6: I have been participating. 113 00:05:02,320 --> 00:05:07,480 Speaker 7: I've been involved since before July eighteenth, when the talks 114 00:05:07,600 --> 00:05:11,760 Speaker 7: kicked off. I've been on call more than once a day, calls, 115 00:05:11,839 --> 00:05:15,800 Speaker 7: text meetings, and I have been at the main table 116 00:05:15,839 --> 00:05:18,120 Speaker 7: myself over the last few days. I'll continue to be 117 00:05:18,600 --> 00:05:22,640 Speaker 7: extremely involved. Our team's ready, they're there waiting to negotiate. 118 00:05:22,960 --> 00:05:26,520 Speaker 7: So my request is the UAW leadership needs to get 119 00:05:26,520 --> 00:05:28,560 Speaker 7: back to the table so we can get these problems solved, 120 00:05:28,720 --> 00:05:31,200 Speaker 7: get our people back to work. I think another important 121 00:05:31,200 --> 00:05:34,680 Speaker 7: point is for every job that General Motors has, there's 122 00:05:34,720 --> 00:05:37,720 Speaker 7: six more jobs in the economy that depend on us running. 123 00:05:37,920 --> 00:05:40,440 Speaker 7: So this is broader than just General Motors. This is 124 00:05:40,480 --> 00:05:44,520 Speaker 7: important for the plant cities especially, but really for the nation. 125 00:05:45,120 --> 00:05:47,760 Speaker 4: Yeah, we talk about one hundred and fifty thousand petitions, 126 00:05:47,800 --> 00:05:50,960 Speaker 4: a lot more than that. To your point there. Lastly, Mary, 127 00:05:51,360 --> 00:05:53,120 Speaker 4: I'm mindful of the fact that your father was a 128 00:05:53,160 --> 00:05:56,080 Speaker 4: tool and dime maker at Pontiac when my father was 129 00:05:56,120 --> 00:05:58,159 Speaker 4: a tool and die maker at Acy Sparkplay, just some 130 00:05:58,279 --> 00:06:02,039 Speaker 4: thirty miles apart, and as young people have gone through 131 00:06:02,120 --> 00:06:04,680 Speaker 4: UAW strikes different from this one, but we've gone through them. 132 00:06:04,880 --> 00:06:06,520 Speaker 4: What do you think our fathers, if they were with 133 00:06:06,600 --> 00:06:08,360 Speaker 4: us today, what do you think they'd say to each 134 00:06:08,400 --> 00:06:09,880 Speaker 4: other about what we're seeing right now. 135 00:06:11,279 --> 00:06:14,880 Speaker 7: Well, you know, I think my father would say, as 136 00:06:14,920 --> 00:06:18,279 Speaker 7: he looked at the historic deal that we put on 137 00:06:18,320 --> 00:06:21,200 Speaker 7: the table, that the company is committed and wants to 138 00:06:21,240 --> 00:06:24,159 Speaker 7: recognize our employees for their hard work and wants to 139 00:06:24,160 --> 00:06:26,360 Speaker 7: make sure they have a secure future. So I think 140 00:06:26,400 --> 00:06:28,560 Speaker 7: he would look at this offer and if it was 141 00:06:28,680 --> 00:06:30,640 Speaker 7: on the table for him to vote, he'd vote yes. 142 00:06:31,080 --> 00:06:32,760 Speaker 4: Okay, Mary, thank you so much for your time. As 143 00:06:32,800 --> 00:06:34,279 Speaker 4: I say, I'm a very very busy day for I 144 00:06:34,279 --> 00:06:37,960 Speaker 4: really appreciate. That's Mary Barr. She's General Motors chair and CEO. 145 00:06:39,400 --> 00:06:42,760 Speaker 8: You're listening to the team Ken's are Live program Bloomberg 146 00:06:42,880 --> 00:06:45,160 Speaker 8: Markets weekdays at ten am Eastern. 147 00:06:44,920 --> 00:06:47,840 Speaker 5: On Bloomberg dot Com, the iHeartRadio. 148 00:06:47,240 --> 00:06:50,040 Speaker 8: App and the Bloomberg Business app, or listen on demand 149 00:06:50,080 --> 00:06:51,640 Speaker 8: wherever you get your podcasts. 150 00:06:53,160 --> 00:06:56,120 Speaker 1: All right, and well, Githa ranging enough and she covers 151 00:06:56,120 --> 00:06:58,039 Speaker 1: all the Meatia stocks, which means she covers Disney, which 152 00:06:58,040 --> 00:06:59,760 Speaker 1: means she's going down to their investor day. 153 00:06:59,640 --> 00:07:01,559 Speaker 2: So all over the place. 154 00:07:01,640 --> 00:07:04,120 Speaker 1: I'm sure, Hey, Githa, there's gonna be a lot to 155 00:07:04,200 --> 00:07:06,120 Speaker 1: talk about at Disney. 156 00:07:06,120 --> 00:07:06,400 Speaker 9: Here. 157 00:07:06,880 --> 00:07:10,400 Speaker 1: Are they really gonna sell the ABC television network? 158 00:07:11,640 --> 00:07:15,559 Speaker 10: It definitely seems like it, Paul. I mean, Bob Iger 159 00:07:15,720 --> 00:07:17,680 Speaker 10: just a few weeks ago, of course, at that Sun 160 00:07:17,760 --> 00:07:20,360 Speaker 10: Valley conference, said that, you know, they're not married to 161 00:07:20,440 --> 00:07:24,600 Speaker 10: the linear TV network business. It's not core to Disney anymore. 162 00:07:24,600 --> 00:07:27,320 Speaker 10: I mean, that's so ironic considering you know, they've they 163 00:07:27,400 --> 00:07:29,560 Speaker 10: bought ABAC for there was that huge deal back in 164 00:07:29,640 --> 00:07:32,360 Speaker 10: nineteen ninety five for nineteen billion dollars. I mean, so 165 00:07:32,560 --> 00:07:36,520 Speaker 10: much of you know, Disney's reputation has you know, kind 166 00:07:36,520 --> 00:07:38,480 Speaker 10: of been tied to its TV network. So it's it's 167 00:07:38,960 --> 00:07:41,000 Speaker 10: it's strange, but it really I think what it really 168 00:07:41,040 --> 00:07:43,440 Speaker 10: tells us is that they see the writing on the 169 00:07:43,480 --> 00:07:46,400 Speaker 10: wall and they think that the PayTV universe is probably 170 00:07:46,440 --> 00:07:49,440 Speaker 10: going to implode sooner than the rest of us think. 171 00:07:50,000 --> 00:07:53,119 Speaker 1: All right, so who could buy it? And what's it worth? 172 00:07:54,600 --> 00:07:56,840 Speaker 10: Okay, So there are a lot of rumors and a 173 00:07:56,840 --> 00:07:59,520 Speaker 10: lot of press reports right now circulating. So there has 174 00:07:59,600 --> 00:08:04,160 Speaker 10: been some talk about Disney exploring a sale of ABC 175 00:08:04,240 --> 00:08:06,720 Speaker 10: Networks and the owned and operated stations. They have about 176 00:08:07,080 --> 00:08:11,160 Speaker 10: eight stations in top ten markets with Nextstar, which is 177 00:08:11,320 --> 00:08:14,600 Speaker 10: the largest TV broadcaster right now in the US. So 178 00:08:15,080 --> 00:08:17,320 Speaker 10: you know, Nexttar has said that they should they're very 179 00:08:17,360 --> 00:08:20,000 Speaker 10: interested in the ABC assets, they should be able to 180 00:08:20,920 --> 00:08:24,560 Speaker 10: acquire most of them without too much friction, Meaning there 181 00:08:24,680 --> 00:08:28,160 Speaker 10: is an FCC ownership cap of about thirty nine percent 182 00:08:28,200 --> 00:08:31,520 Speaker 10: for broadcast stations. But NEXTTAR, because it already has a 183 00:08:31,560 --> 00:08:34,640 Speaker 10: presence in most of these stations with their CW network, 184 00:08:34,920 --> 00:08:37,560 Speaker 10: thinks that it should be able to get the deal done. That'said. 185 00:08:37,600 --> 00:08:39,240 Speaker 10: I mean, I think they still will have to you know, 186 00:08:39,280 --> 00:08:42,560 Speaker 10: they have the swaps, so that is a little bit of. 187 00:08:42,559 --> 00:08:43,160 Speaker 11: A question mark. 188 00:08:43,520 --> 00:08:47,439 Speaker 10: So we think that the ABC stations are actually worth 189 00:08:47,679 --> 00:08:50,880 Speaker 10: upwards of stations as well as a network are worth 190 00:08:50,960 --> 00:08:54,240 Speaker 10: upwards of you know, four billion dollars. That's applying a 191 00:08:54,280 --> 00:08:58,840 Speaker 10: pretty conservative seven x EBITDA multiple. Now Byron Allen, who 192 00:08:58,880 --> 00:09:02,200 Speaker 10: is like this really pro media mogul, has put in 193 00:09:02,360 --> 00:09:05,880 Speaker 10: a bid which apparently values those networks at about eight 194 00:09:06,360 --> 00:09:09,040 Speaker 10: x ebitda, which means that those you know, those the 195 00:09:09,520 --> 00:09:11,839 Speaker 10: ABC property would be worth a five billion nine and 196 00:09:11,840 --> 00:09:14,280 Speaker 10: obviously Disney wants to get the most for it. The 197 00:09:14,320 --> 00:09:17,480 Speaker 10: problem with most of these acquirers or the parties that 198 00:09:17,520 --> 00:09:20,760 Speaker 10: are interested in possibly acquiring ABC's that they're all highly 199 00:09:20,880 --> 00:09:24,720 Speaker 10: levered themselves. So most broadcasters, so even an Extra, for instance, 200 00:09:24,760 --> 00:09:28,199 Speaker 10: currently has about seven billion dollars in debt. Alan Media 201 00:09:28,200 --> 00:09:30,600 Speaker 10: obviously has a lot in debt, so we'll have to 202 00:09:30,600 --> 00:09:32,480 Speaker 10: see how they kind of get the deal done. 203 00:09:33,280 --> 00:09:35,880 Speaker 1: So Githa, I guess that calls into question. It's one 204 00:09:35,920 --> 00:09:40,160 Speaker 1: thing to sell a declining broadcast network and some TV stations. 205 00:09:40,160 --> 00:09:42,080 Speaker 1: I think most people would agree that are at the 206 00:09:42,120 --> 00:09:45,920 Speaker 1: time of that business is probably past and all about streaming. 207 00:09:46,280 --> 00:09:48,280 Speaker 1: The bigger question, I think for a lot of investors, 208 00:09:48,280 --> 00:09:50,199 Speaker 1: and you'll probably talk about it next week when you're 209 00:09:50,240 --> 00:09:54,520 Speaker 1: down visiting the Walt Disney folks, is ESPN. What do 210 00:09:54,600 --> 00:09:56,319 Speaker 1: they do with ESPN? What do you think is kind 211 00:09:56,320 --> 00:09:58,120 Speaker 1: of what do you think they will do? What should 212 00:09:58,160 --> 00:09:58,440 Speaker 1: they do? 213 00:10:00,440 --> 00:10:01,480 Speaker 6: So ESPN? 214 00:10:01,559 --> 00:10:04,440 Speaker 10: I actually think they definitely want to keep the asset. Now, 215 00:10:04,520 --> 00:10:07,720 Speaker 10: remember they are going to be breaking out the financials 216 00:10:07,760 --> 00:10:10,800 Speaker 10: for ESPN in a few quarters. That is what they've promised. 217 00:10:10,800 --> 00:10:12,679 Speaker 10: It's going to you know, kind of be its own segment. 218 00:10:12,800 --> 00:10:14,880 Speaker 10: That's the first time that they're doing that in Disney's history. 219 00:10:15,040 --> 00:10:17,040 Speaker 10: So they obviously want to clean up house before they 220 00:10:17,080 --> 00:10:19,480 Speaker 10: do that. And we've seen a lot of you know, 221 00:10:19,600 --> 00:10:22,000 Speaker 10: cost cutting, We've seen a lot of these new deals 222 00:10:22,000 --> 00:10:24,520 Speaker 10: they had that deal with you know, Penn National, and 223 00:10:24,679 --> 00:10:27,800 Speaker 10: most recently, and I think this is really transformative for 224 00:10:27,880 --> 00:10:30,920 Speaker 10: the entire PATV universe, is the deal that they inked 225 00:10:30,920 --> 00:10:33,880 Speaker 10: with Shoter. This is the first time in the history 226 00:10:34,000 --> 00:10:37,720 Speaker 10: of of you know, the PATV media ecosystem that a 227 00:10:37,760 --> 00:10:41,920 Speaker 10: content company is actually offering access to its streaming services. Okay, 228 00:10:41,920 --> 00:10:43,960 Speaker 10: and for you know, kind of either a wholesale rate 229 00:10:44,040 --> 00:10:46,160 Speaker 10: or even for free in certain cases. But the more 230 00:10:46,200 --> 00:10:49,000 Speaker 10: important part is that they're actually going to offer access 231 00:10:49,040 --> 00:10:52,960 Speaker 10: to the flagship ESPN streaming product when it goes out 232 00:10:53,080 --> 00:10:54,920 Speaker 10: in full force, which probably will be sometime in twenty 233 00:10:55,000 --> 00:10:57,600 Speaker 10: twenty five, twenty twenty six, we don't know, but they're 234 00:10:57,640 --> 00:10:59,360 Speaker 10: definitely preparing for that future. 235 00:10:59,400 --> 00:11:00,520 Speaker 1: That's what it So. 236 00:11:00,559 --> 00:11:03,280 Speaker 10: I don't really think that they want to kind of 237 00:11:03,320 --> 00:11:05,199 Speaker 10: get rid of this asset. Maybe they really want to 238 00:11:05,240 --> 00:11:06,840 Speaker 10: clean it up, maybe they want to spin it out, 239 00:11:06,880 --> 00:11:10,000 Speaker 10: but I still think they want to keep control of it. 240 00:11:11,040 --> 00:11:15,840 Speaker 3: I wonder if this is, like Paul Au, the kind 241 00:11:15,840 --> 00:11:18,960 Speaker 3: of shift that you saw when you know, radio used 242 00:11:19,000 --> 00:11:21,480 Speaker 3: to be it. Radio used to be the thing for 243 00:11:21,720 --> 00:11:25,679 Speaker 3: listeners and for advertisers, and that all went away. And 244 00:11:25,720 --> 00:11:29,520 Speaker 3: it's probably a completely uninteresting business for most people. 245 00:11:30,240 --> 00:11:31,000 Speaker 9: They went to TV. 246 00:11:31,240 --> 00:11:35,000 Speaker 3: Right, is this linear TV going through that same transition, 247 00:11:35,160 --> 00:11:39,360 Speaker 3: that same death, and then is streaming the new TV? 248 00:11:39,720 --> 00:11:40,560 Speaker 2: Yeah? I mean it was. 249 00:11:40,640 --> 00:11:42,640 Speaker 1: You know, we went from broadcast television when you had 250 00:11:42,640 --> 00:11:45,360 Speaker 1: three networks and then four with Fox, and then cable 251 00:11:45,400 --> 00:11:48,880 Speaker 1: TV came along, and that totally redefined what we watch, 252 00:11:48,920 --> 00:11:51,719 Speaker 1: how we watch it, and it really made it so 253 00:11:51,800 --> 00:11:52,480 Speaker 1: much more competitive. 254 00:11:52,480 --> 00:11:53,520 Speaker 2: We got so much more product. 255 00:11:53,720 --> 00:11:56,600 Speaker 1: Now you're even taking that to the next stage. And 256 00:11:56,640 --> 00:11:59,559 Speaker 1: I GUESSKEITHA, that brings us to the question if all 257 00:11:59,559 --> 00:12:01,400 Speaker 1: the big companies that you follow, the. 258 00:12:01,360 --> 00:12:03,160 Speaker 2: Paramounts of the world, the Warner. 259 00:12:02,920 --> 00:12:06,640 Speaker 1: Brothers, the Discoveries, is he when you talk to investors, 260 00:12:06,679 --> 00:12:09,880 Speaker 1: do they believe that this transformation can actually work and 261 00:12:09,920 --> 00:12:12,480 Speaker 1: they can make money on it, or does nobody want 262 00:12:12,520 --> 00:12:13,240 Speaker 1: to talk to you anymore? 263 00:12:14,960 --> 00:12:16,000 Speaker 6: A little bit of both. 264 00:12:16,360 --> 00:12:18,240 Speaker 10: But I think the one thing, I mean, for any 265 00:12:18,320 --> 00:12:22,080 Speaker 10: investor who had questions about whether streaming is a good business, 266 00:12:22,440 --> 00:12:25,080 Speaker 10: I think we have our answer right because we've seen 267 00:12:25,160 --> 00:12:29,680 Speaker 10: Netflix kind of turn things around. They are actually expected 268 00:12:29,679 --> 00:12:32,840 Speaker 10: to generate about seven billion dollars in EBITDA this year 269 00:12:33,240 --> 00:12:36,800 Speaker 10: twenty approximately twenty percent margins and the idea is that 270 00:12:36,840 --> 00:12:39,640 Speaker 10: as they kind of gain subscribers and as they lower costs, 271 00:12:39,640 --> 00:12:41,960 Speaker 10: they're able to kind of spread those costs over wider base, 272 00:12:42,160 --> 00:12:45,240 Speaker 10: eventually getting to you know, a twenty five to thirty 273 00:12:45,280 --> 00:12:47,920 Speaker 10: percent margin, which then kind of makes you agnostic because 274 00:12:47,960 --> 00:12:50,240 Speaker 10: in its heyday, you know, TV networks were generating about 275 00:12:50,240 --> 00:12:52,920 Speaker 10: thirty thirty five percent margins. So yes, streaming may not 276 00:12:53,000 --> 00:12:55,679 Speaker 10: be better than the TV network business, but it could 277 00:12:55,720 --> 00:12:59,640 Speaker 10: potentially be as good as Again that we're talking about Netflix, 278 00:12:59,640 --> 00:13:01,480 Speaker 10: which is our see, the industry leader. It is going 279 00:13:01,559 --> 00:13:05,600 Speaker 10: to be a much harder road for all these smaller companies, 280 00:13:05,640 --> 00:13:08,079 Speaker 10: whether it's a paramount of Warner Brothers Discovery, but they 281 00:13:08,080 --> 00:13:10,200 Speaker 10: are kind of doing a lot in terms of content 282 00:13:10,240 --> 00:13:14,000 Speaker 10: cost rationalization. Again, Paul, I mean we've spoken about this 283 00:13:14,040 --> 00:13:16,000 Speaker 10: many times, and I know you think too that there 284 00:13:16,040 --> 00:13:18,280 Speaker 10: will be as streaming shakeout, at some point, there will 285 00:13:18,280 --> 00:13:20,679 Speaker 10: be consolidation. So all that is going to play out 286 00:13:20,679 --> 00:13:23,200 Speaker 10: I think over the next you know, eighteen months, eighteen 287 00:13:23,240 --> 00:13:26,080 Speaker 10: to twenty four months. But yeah, I think we will 288 00:13:26,080 --> 00:13:28,080 Speaker 10: be you know, we'll land up with maybe three four 289 00:13:28,360 --> 00:13:31,840 Speaker 10: major streaming players who should be all profitable hopefully. 290 00:13:32,000 --> 00:13:34,120 Speaker 1: All Right, now we've got some In addition to all 291 00:13:34,160 --> 00:13:36,920 Speaker 1: of that. If that wasn't enough for the industry and 292 00:13:36,920 --> 00:13:40,320 Speaker 1: for investors, there's also this thing of strikes. We've got 293 00:13:40,360 --> 00:13:43,520 Speaker 1: writers on strikes, We've got actors on strikes. What's the 294 00:13:43,600 --> 00:13:47,120 Speaker 1: impact on media, on the companies, on what you and 295 00:13:47,160 --> 00:13:49,160 Speaker 1: I and other consumers will be able to see on 296 00:13:49,200 --> 00:13:50,920 Speaker 1: our TV screens in theaters. 297 00:13:52,320 --> 00:13:55,880 Speaker 10: Yeah, so definitely we're seeing some you know, small effects 298 00:13:55,880 --> 00:13:59,600 Speaker 10: of that right now, nothing really major interms of disruption 299 00:13:59,720 --> 00:14:01,760 Speaker 10: of s edules. But you know, as we kind of 300 00:14:01,800 --> 00:14:04,319 Speaker 10: get deeper into like the film slate for twenty twenty 301 00:14:04,360 --> 00:14:07,600 Speaker 10: three and even twenty twenty four, that's when we're really 302 00:14:07,600 --> 00:14:09,760 Speaker 10: going to start having some problems. We've already seen some 303 00:14:09,840 --> 00:14:13,120 Speaker 10: film delays. You know, Doom two, for instance, from Warner 304 00:14:13,160 --> 00:14:15,600 Speaker 10: Brothers has already moved to twenty twenty four because they're 305 00:14:15,640 --> 00:14:17,960 Speaker 10: not able to market the film, They're not able to 306 00:14:17,960 --> 00:14:19,800 Speaker 10: do promotions. So that's you know, a lot of film 307 00:14:19,840 --> 00:14:22,440 Speaker 10: studios are kind of running into that problem. In fact, 308 00:14:22,560 --> 00:14:25,320 Speaker 10: from a financial aspect, though, what we're seeing is that 309 00:14:25,440 --> 00:14:29,080 Speaker 10: most of these companies and have actually raised their free 310 00:14:29,080 --> 00:14:31,560 Speaker 10: cash flow guidance through the rest of the year. They 311 00:14:31,640 --> 00:14:33,840 Speaker 10: raise their free cash flow guidance, but they've lowered their 312 00:14:33,840 --> 00:14:37,400 Speaker 10: EBITDA guidance because the lack of fresh programming is definitely 313 00:14:37,400 --> 00:14:40,920 Speaker 10: going to have an impact on you know, advertising sales. 314 00:14:40,920 --> 00:14:43,000 Speaker 10: And that's what they've all said. They've all said, you know, 315 00:14:43,120 --> 00:14:46,200 Speaker 10: expect double digit ad declines because you're not going to 316 00:14:46,200 --> 00:14:48,160 Speaker 10: have any fresh programming. We really have nothing to go 317 00:14:48,200 --> 00:14:52,000 Speaker 10: to advertisers with. I think it really becomes a problem 318 00:14:52,120 --> 00:14:54,520 Speaker 10: in twenty twenty four if you know, they're not able 319 00:14:54,520 --> 00:14:56,480 Speaker 10: to resolve the strikes, if people are not going to 320 00:14:56,480 --> 00:14:59,880 Speaker 10: get back, you know, to work and produce new ca 321 00:15:00,200 --> 00:15:02,600 Speaker 10: and we're going to have a real, real headache in 322 00:15:02,600 --> 00:15:03,440 Speaker 10: twenty twenty four. 323 00:15:03,680 --> 00:15:05,640 Speaker 1: All right, Keitha, thanks so much for joining us. As always, 324 00:15:05,680 --> 00:15:08,880 Speaker 1: keith is the expert, Keitha Ranganathan. She is covers all 325 00:15:09,040 --> 00:15:11,960 Speaker 1: the media industry. She's going to the park and she's 326 00:15:12,000 --> 00:15:14,360 Speaker 1: going down on Monday for the investors. 327 00:15:14,560 --> 00:15:16,640 Speaker 3: I was thinking, kause Tucker asked when the last time 328 00:15:16,680 --> 00:15:20,720 Speaker 3: I was there was, And I remember that the Corey 329 00:15:20,800 --> 00:15:23,320 Speaker 3: Hart album Boy in a Box had just come out. 330 00:15:23,360 --> 00:15:26,720 Speaker 3: I bought the cassette for my Walkman, and so I 331 00:15:26,760 --> 00:15:30,440 Speaker 3: believe it was spring break of nineteen eighty six spring break. 332 00:15:30,720 --> 00:15:33,840 Speaker 8: You're listening to the tape catch are live program Bloomberg 333 00:15:33,920 --> 00:15:37,520 Speaker 8: Markets weekdays at ten am Eastern on Bloomberg Radio, the 334 00:15:37,560 --> 00:15:39,640 Speaker 8: tune in app, Bloomberg dot Com. 335 00:15:39,360 --> 00:15:40,800 Speaker 5: And the Bloomberg Business App. 336 00:15:40,840 --> 00:15:43,640 Speaker 8: You can also listen live on Amazon Alexa from our 337 00:15:43,640 --> 00:15:49,680 Speaker 8: flagship New York station, Just say Alexa play Bloomberg eleven thirty. 338 00:15:49,920 --> 00:15:52,240 Speaker 1: All right, we talked about one of my favorite assa classes, 339 00:15:52,240 --> 00:15:55,040 Speaker 1: wuld jump. My second unis another one of my all 340 00:15:55,080 --> 00:15:57,160 Speaker 1: time faves. Really since the last ten years has been 341 00:15:57,200 --> 00:15:58,640 Speaker 1: this private credit. 342 00:15:58,440 --> 00:15:58,920 Speaker 9: I love it too. 343 00:15:59,080 --> 00:15:59,680 Speaker 2: I love it man. 344 00:15:59,720 --> 00:16:01,880 Speaker 1: And we had this person in a dare or two ago. 345 00:16:02,200 --> 00:16:04,720 Speaker 1: She's more on the syndicated loan side, and I was saying, 346 00:16:04,720 --> 00:16:06,360 Speaker 1: how much competitors are these guys to you? 347 00:16:06,400 --> 00:16:08,600 Speaker 2: And she's just they're big. Yeah, think they're getting bigger. 348 00:16:08,680 --> 00:16:11,480 Speaker 1: Randy Schwimmer, co head of Senior Lending and Senior Managing 349 00:16:11,520 --> 00:16:14,360 Speaker 1: Director Churchill Asset Management, joins us. Randy, talk to us 350 00:16:14,360 --> 00:16:17,360 Speaker 1: about your business, the private credit business. How's it been 351 00:16:17,400 --> 00:16:20,120 Speaker 1: this year? Are are there deals? Because it seems like 352 00:16:20,200 --> 00:16:22,080 Speaker 1: seems slow, But I don't know in your market? 353 00:16:22,160 --> 00:16:22,720 Speaker 2: What do you sing? 354 00:16:22,760 --> 00:16:22,840 Speaker 4: So? 355 00:16:23,040 --> 00:16:24,520 Speaker 12: Last time I was here I promised you guys some 356 00:16:24,560 --> 00:16:28,200 Speaker 12: good news September. Right, so post Labor Day, we're all 357 00:16:28,240 --> 00:16:31,240 Speaker 12: we always wait for the post labor day rush. Well 358 00:16:31,280 --> 00:16:33,680 Speaker 12: I'm here to report that we have a post labor 359 00:16:33,760 --> 00:16:36,320 Speaker 12: day rush. Okay, So let's talk with the public markets 360 00:16:36,400 --> 00:16:39,280 Speaker 12: right now. So high yield bond market, which was kind 361 00:16:39,320 --> 00:16:43,720 Speaker 12: of you know, not very active all year, rates are 362 00:16:43,800 --> 00:16:47,440 Speaker 12: very high issue and slow. They had an eleven billion 363 00:16:47,520 --> 00:16:52,000 Speaker 12: dollar a week last week. Okay, that's the large issuance 364 00:16:52,040 --> 00:16:52,680 Speaker 12: in two years. 365 00:16:52,760 --> 00:16:53,400 Speaker 5: So that's good. 366 00:16:53,400 --> 00:16:56,040 Speaker 12: So that's waking up the liquid loan market, which you 367 00:16:56,240 --> 00:16:59,680 Speaker 12: talked about, probably syndicated loans twenty billion dollars so far 368 00:16:59,720 --> 00:17:03,080 Speaker 12: and so stember first two weeks. That's that's more than 369 00:17:03,160 --> 00:17:05,879 Speaker 12: any month, full month, all year long. So we're starting 370 00:17:05,880 --> 00:17:08,840 Speaker 12: to see some activity in the public side. Why because 371 00:17:08,960 --> 00:17:11,840 Speaker 12: things are starting to heal. The economy is better, inflation 372 00:17:11,960 --> 00:17:15,120 Speaker 12: is under control. The other thing that's going on now 373 00:17:15,240 --> 00:17:18,200 Speaker 12: is some of the as a result, the larger buyouts 374 00:17:18,240 --> 00:17:21,120 Speaker 12: are starting to come to the market. We haven't seen 375 00:17:21,160 --> 00:17:24,760 Speaker 12: any of those mega deals this year, going back once 376 00:17:24,800 --> 00:17:27,480 Speaker 12: the Fed started raising rates. So we now have the 377 00:17:27,560 --> 00:17:32,520 Speaker 12: ninth largest deal ever since the Great Recession, company called 378 00:17:32,560 --> 00:17:33,360 Speaker 12: World Pay. 379 00:17:33,520 --> 00:17:34,879 Speaker 2: That's what this other guest was talking to. 380 00:17:34,960 --> 00:17:38,639 Speaker 12: Yes being launched this week and seventeen billion dollar LBO 381 00:17:39,280 --> 00:17:42,760 Speaker 12: nine billion dollars in financing. That's a big deal, and 382 00:17:42,840 --> 00:17:46,679 Speaker 12: so the private credit. So right now it's not clear. 383 00:17:46,800 --> 00:17:48,560 Speaker 12: It looks like it's you know, some of it's going 384 00:17:48,560 --> 00:17:50,960 Speaker 12: to be in that market, but that's a big number. 385 00:17:50,760 --> 00:17:52,760 Speaker 1: Right for so that's something you would take a look at. 386 00:17:52,920 --> 00:17:56,520 Speaker 12: Yeah, I think it's all about pricing instruction, but the 387 00:17:56,520 --> 00:17:58,480 Speaker 12: fact that a large deal like that's coming out is 388 00:17:58,480 --> 00:18:02,359 Speaker 12: a big deal. One of your all time favorite restaurant chains, 389 00:18:02,359 --> 00:18:05,240 Speaker 12: Foga to Chow, which is you know, a billion dollar 390 00:18:05,280 --> 00:18:07,119 Speaker 12: deal also coming out. So what's happening now in the 391 00:18:07,160 --> 00:18:09,720 Speaker 12: large cat market. They're starting to wake up now that 392 00:18:10,200 --> 00:18:13,520 Speaker 12: the direct lending market. Our business has actually been active 393 00:18:13,560 --> 00:18:15,880 Speaker 12: all year long. We if you'd said to me back 394 00:18:15,880 --> 00:18:17,800 Speaker 12: in January, Randy, what do you think the year is going. 395 00:18:17,720 --> 00:18:18,080 Speaker 5: To be like? 396 00:18:18,200 --> 00:18:20,920 Speaker 12: Just giving all the static on rates and inflation, I 397 00:18:20,960 --> 00:18:23,359 Speaker 12: would have said, boy, we'll be lucky to get to 398 00:18:23,440 --> 00:18:26,359 Speaker 12: where we were last year. We are now at and 399 00:18:26,400 --> 00:18:29,640 Speaker 12: perhaps even ahead in some of our businesses of last year, 400 00:18:29,920 --> 00:18:32,240 Speaker 12: in part because of this flow going from public to 401 00:18:32,280 --> 00:18:35,400 Speaker 12: private so and then I think, you know, our skill 402 00:18:35,480 --> 00:18:39,159 Speaker 12: now is growing. We have the ability to hold larger deals. 403 00:18:39,240 --> 00:18:41,840 Speaker 12: Since the result of that is the sponsors. They keep 404 00:18:41,840 --> 00:18:44,400 Speaker 12: coming back to us for Okay, we like the witch 405 00:18:44,400 --> 00:18:47,040 Speaker 12: you did the last deal, Let's do it again. You know, 406 00:18:47,080 --> 00:18:49,399 Speaker 12: we negotiated all the documents. That was a pain in 407 00:18:49,400 --> 00:18:52,119 Speaker 12: the neck. Let's let's do just the same document and 408 00:18:52,200 --> 00:18:55,080 Speaker 12: keep going. The other thing that's adding to the activity 409 00:18:55,240 --> 00:18:57,160 Speaker 12: is these and I mentioned this to you last time. 410 00:18:57,560 --> 00:19:01,240 Speaker 12: The number of acquisitions that the platform businesses are doing 411 00:19:01,320 --> 00:19:05,159 Speaker 12: in order to grow has significantly increased. So we actually 412 00:19:05,200 --> 00:19:07,359 Speaker 12: we just looked at the league tables for the quarter 413 00:19:07,920 --> 00:19:11,720 Speaker 12: we are we're the most active lender in direct lending 414 00:19:11,840 --> 00:19:16,640 Speaker 12: right now for for add on acquisition Churchill Asset Management, 415 00:19:17,760 --> 00:19:20,600 Speaker 12: and we're like the second largest for all everything in 416 00:19:21,160 --> 00:19:24,479 Speaker 12: the traditional direct lending business. So what's happening is our 417 00:19:24,520 --> 00:19:29,720 Speaker 12: portfolio is actually generating deal flow. It's by just virtue 418 00:19:29,720 --> 00:19:32,439 Speaker 12: of these are platform companies that are making acquisitions. You know, 419 00:19:32,480 --> 00:19:35,360 Speaker 12: my wife calls it shopping in your closet. So this 420 00:19:35,400 --> 00:19:38,359 Speaker 12: is what's happening. The portfolio companies are actually generating deal flow. 421 00:19:38,440 --> 00:19:41,200 Speaker 12: So we are having a bigger year than we thought. 422 00:19:41,240 --> 00:19:43,720 Speaker 12: And then in our junior capital business, which is mezzanine 423 00:19:43,800 --> 00:19:48,399 Speaker 12: dat co investor equity, that team is having a significantly 424 00:19:48,400 --> 00:19:52,040 Speaker 12: better year than last year because of the activity that 425 00:19:52,080 --> 00:19:55,240 Speaker 12: the sponsors are looking for more equity to put into 426 00:19:55,400 --> 00:19:58,439 Speaker 12: their deals because who knows when their next fundraising is 427 00:19:58,480 --> 00:20:00,800 Speaker 12: going to happen. They have limited capital, so they go 428 00:20:00,840 --> 00:20:03,159 Speaker 12: to their LP relationships say hey, Churchill, how would you 429 00:20:03,200 --> 00:20:04,520 Speaker 12: like to put in some money into this deal. 430 00:20:04,760 --> 00:20:08,200 Speaker 3: It's so interesting that this whole market that you guys, 431 00:20:08,359 --> 00:20:12,040 Speaker 3: but also the whole industry is growing so quickly in 432 00:20:12,080 --> 00:20:15,359 Speaker 3: the face of rising rates, right, or maybe because of 433 00:20:15,560 --> 00:20:18,120 Speaker 3: rising rates. I was talking with Mark Liftschultz last week 434 00:20:18,160 --> 00:20:21,760 Speaker 3: from Blue Owl, and he thinks that we're gonna see 435 00:20:22,119 --> 00:20:26,840 Speaker 3: a ten billion dollar private credit deal, you know, shortly correct, 436 00:20:27,560 --> 00:20:29,680 Speaker 3: which would be you know now, I think the biggest 437 00:20:30,040 --> 00:20:33,400 Speaker 3: single direct lending deal is like five billion dollars, which 438 00:20:33,440 --> 00:20:36,240 Speaker 3: is already huge. No question, is it because of rising 439 00:20:36,320 --> 00:20:38,800 Speaker 3: rates that this industry is growing? I mean, why why 440 00:20:38,800 --> 00:20:42,920 Speaker 3: are the banks letting so much of this high. 441 00:20:42,800 --> 00:20:43,640 Speaker 11: Get away right away? 442 00:20:43,760 --> 00:20:44,040 Speaker 5: Yeah? 443 00:20:44,080 --> 00:20:46,960 Speaker 12: So they've been letting it get away since nineteen ninety three, right, 444 00:20:47,040 --> 00:20:51,359 Speaker 12: because they've been regulated consolidated out of the leverage lending business, 445 00:20:51,359 --> 00:20:53,720 Speaker 12: particularly in the middle market. So the deals that you're 446 00:20:53,720 --> 00:20:57,320 Speaker 12: seeing now are very like corporatetty, double Beach, triple b 447 00:20:57,480 --> 00:21:00,520 Speaker 12: those kinds of things for the For the direct lenders, 448 00:21:00,520 --> 00:21:03,600 Speaker 12: what's happening is everything else is coming our way. All 449 00:21:03,600 --> 00:21:06,280 Speaker 12: the middle market flow is coming our way. A lot 450 00:21:06,320 --> 00:21:10,080 Speaker 12: of the sponsors who are trying to get quick executions 451 00:21:10,080 --> 00:21:13,159 Speaker 12: in this market are trying to get this stuff done. Now, 452 00:21:13,200 --> 00:21:16,879 Speaker 12: what's driving it. The investors who in a high rate 453 00:21:17,000 --> 00:21:20,159 Speaker 12: environment are looking for yield right now are looking to 454 00:21:20,200 --> 00:21:23,080 Speaker 12: private debt. That's what's actually fueling our activity because the 455 00:21:23,119 --> 00:21:26,159 Speaker 12: more money that we raise, more fundraising that happens in 456 00:21:26,200 --> 00:21:29,200 Speaker 12: our business, allows us to scale our platform. The most 457 00:21:29,400 --> 00:21:30,359 Speaker 12: interesting stats. 458 00:21:30,160 --> 00:21:32,199 Speaker 3: There's just so many more lenders out there, not as 459 00:21:32,320 --> 00:21:33,639 Speaker 3: much about the borrowers. 460 00:21:33,320 --> 00:21:37,200 Speaker 12: Well, it's more the investors who are focusing on the 461 00:21:37,320 --> 00:21:40,679 Speaker 12: leading lenders like Churchill to dedicate their money to. So 462 00:21:40,760 --> 00:21:42,440 Speaker 12: there was a survey I was at a conference Lase. 463 00:21:42,480 --> 00:21:45,919 Speaker 12: We got on a panel. Sixty two percent of investors 464 00:21:45,920 --> 00:21:49,720 Speaker 12: surveyed said they were under allocated private debt. That was 465 00:21:49,840 --> 00:21:52,640 Speaker 12: that blew me away, Like wait a minute. The three 466 00:21:52,680 --> 00:21:54,399 Speaker 12: of US have been talking about private debt for a 467 00:21:54,400 --> 00:21:57,240 Speaker 12: couple of years now, right, you think this messagers out there, 468 00:21:57,520 --> 00:22:00,000 Speaker 12: But because rates are higher, and now I can get 469 00:22:00,040 --> 00:22:03,960 Speaker 12: at a twelve percent yield on a unleveraged senior debt 470 00:22:04,040 --> 00:22:06,520 Speaker 12: investment you know, out of whether it's a Churchill or 471 00:22:06,560 --> 00:22:09,440 Speaker 12: you know some of our other you know, uh providers 472 00:22:09,480 --> 00:22:11,840 Speaker 12: out there, that's a that's a really good number. And 473 00:22:11,880 --> 00:22:13,639 Speaker 12: so when you compare that to it even what you 474 00:22:13,640 --> 00:22:16,080 Speaker 12: can get in the bond market. What's happening is investors 475 00:22:16,080 --> 00:22:17,720 Speaker 12: are saying, you know, I need to do more. 476 00:22:17,880 --> 00:22:18,600 Speaker 11: Even though I'm. 477 00:22:18,640 --> 00:22:21,160 Speaker 12: Maybe allocated right now to private, I need to do more. 478 00:22:21,240 --> 00:22:23,440 Speaker 12: So I feel I'm there's two thirds of the market 479 00:22:23,520 --> 00:22:26,560 Speaker 12: saying they're under allocated in this asset class. And we 480 00:22:26,640 --> 00:22:29,280 Speaker 12: haven't really gotten going yet. I mean, it's still there's 481 00:22:29,280 --> 00:22:30,760 Speaker 12: still a lot of runway for us. 482 00:22:31,080 --> 00:22:34,040 Speaker 2: So are you guys raising money at the moment currently? 483 00:22:34,080 --> 00:22:35,480 Speaker 12: We're always raised always. 484 00:22:35,200 --> 00:22:35,520 Speaker 2: Is that right? 485 00:22:36,040 --> 00:22:38,879 Speaker 12: So I'm headed to Scandinavia next week to people with 486 00:22:38,880 --> 00:22:42,200 Speaker 12: our clients and potential clients there, going to Copenhagen, going 487 00:22:42,240 --> 00:22:46,159 Speaker 12: to Stockholm, and I know your favorite Helsinki never been 488 00:22:46,200 --> 00:22:47,840 Speaker 12: to hell sinking, So let me know, if you've got 489 00:22:47,840 --> 00:22:52,760 Speaker 12: some good restaurants. But when I'm no, because it's out thinking, okay, 490 00:22:53,000 --> 00:22:53,639 Speaker 12: do you like fish? 491 00:22:53,720 --> 00:22:55,040 Speaker 13: Yeah. 492 00:22:55,080 --> 00:22:56,680 Speaker 12: So I was in and I was in the West 493 00:22:56,680 --> 00:23:02,160 Speaker 12: Coast this week, and I'm telling very sophisticated institutional investors 494 00:23:02,440 --> 00:23:04,840 Speaker 12: are saying, we'd like to talk to you about your 495 00:23:04,840 --> 00:23:07,840 Speaker 12: platform because we think we need to explore more in 496 00:23:07,880 --> 00:23:08,720 Speaker 12: the private det space. 497 00:23:09,280 --> 00:23:12,159 Speaker 2: So who's your competition. 498 00:23:12,880 --> 00:23:16,119 Speaker 12: Well, it's funny, you know, we don't really have competition. 499 00:23:16,160 --> 00:23:20,320 Speaker 12: We have collaborators, we have partners that we lend with. 500 00:23:20,359 --> 00:23:22,520 Speaker 12: So what happens is since we're an investor in all 501 00:23:22,560 --> 00:23:25,800 Speaker 12: of the funds with the sponsors that we're financing, we 502 00:23:25,800 --> 00:23:28,239 Speaker 12: don't lose deals. They'll say, hey, even if let's say 503 00:23:28,240 --> 00:23:30,919 Speaker 12: Blue Out perfect example, they say to Mark, hey, you know, 504 00:23:31,000 --> 00:23:32,959 Speaker 12: we want you to lead this one, because you know, 505 00:23:33,000 --> 00:23:34,679 Speaker 12: they tell us Church that you led the last too, 506 00:23:34,720 --> 00:23:37,120 Speaker 12: so we're gonna give Mark one. They'll say to Mark, hey, 507 00:23:37,400 --> 00:23:39,440 Speaker 12: would you please include Church on the deal because they're 508 00:23:39,440 --> 00:23:43,080 Speaker 12: a significant LP investor in our fund, and Mark saying okay, fine, 509 00:23:43,119 --> 00:23:46,200 Speaker 12: we'll give them a little piece. So that that makes 510 00:23:46,280 --> 00:23:49,760 Speaker 12: us sort of invaluable to the sponsors because they know 511 00:23:49,800 --> 00:23:51,200 Speaker 12: that we're always investing in their funds. 512 00:23:51,600 --> 00:23:54,399 Speaker 1: Frankly, we're investing equity into their equity. 513 00:23:54,000 --> 00:23:54,639 Speaker 5: Into their funds. 514 00:23:54,920 --> 00:23:57,760 Speaker 12: And it also makes it invaluable for the other lenders 515 00:23:57,760 --> 00:23:59,680 Speaker 12: out there because they know they can always count in 516 00:23:59,800 --> 00:24:02,880 Speaker 12: Church for a good transaction to split the deal with them, 517 00:24:03,080 --> 00:24:05,400 Speaker 12: lead the deal with them, and we we frankly, whether 518 00:24:05,440 --> 00:24:07,639 Speaker 12: we lead or you know, we co lead with someone, 519 00:24:07,880 --> 00:24:11,199 Speaker 12: all we really want to do is have split the 520 00:24:11,240 --> 00:24:13,560 Speaker 12: deal fifty to fifty, be able to talk to the 521 00:24:13,600 --> 00:24:16,440 Speaker 12: economics in terms of the transaction, so we control the deal. 522 00:24:17,320 --> 00:24:19,040 Speaker 12: But other than that, you know, we have a lot 523 00:24:19,040 --> 00:24:21,360 Speaker 12: of partners out there that we do business with, and 524 00:24:21,440 --> 00:24:22,919 Speaker 12: we're very happy to do business with them. 525 00:24:22,960 --> 00:24:24,480 Speaker 1: All Right, So you do a deal, how much do 526 00:24:24,520 --> 00:24:26,280 Speaker 1: you sell off and how much do you keep? 527 00:24:26,359 --> 00:24:29,040 Speaker 12: We just did it financing right now that it was 528 00:24:29,080 --> 00:24:31,760 Speaker 12: five hundred million dollar hole that we're we're probably going 529 00:24:31,800 --> 00:24:33,560 Speaker 12: to sell down to. I'm going to say like three 530 00:24:33,680 --> 00:24:34,399 Speaker 12: hundred millions. 531 00:24:34,600 --> 00:24:37,880 Speaker 2: You'll still hold three big un Is it typical? 532 00:24:38,400 --> 00:24:41,640 Speaker 1: Because it Chase Bank we sell down to fifteen cents left. 533 00:24:41,800 --> 00:24:44,159 Speaker 12: That's why you're not in the business anymore. Okay, But 534 00:24:44,240 --> 00:24:46,560 Speaker 12: what's happening is we have mouths to feed too, right, 535 00:24:46,560 --> 00:24:48,880 Speaker 12: We have all these investors, and so the more investors 536 00:24:48,920 --> 00:24:51,520 Speaker 12: that we have, the more we want to spread that 537 00:24:51,720 --> 00:24:54,360 Speaker 12: wealth out too, and so the more money we raise, 538 00:24:54,400 --> 00:24:56,359 Speaker 12: now we're going to spread four hundred around. Now we 539 00:24:56,400 --> 00:24:58,719 Speaker 12: do five hundred. But if you have forty funds that 540 00:24:58,760 --> 00:25:02,199 Speaker 12: you're allocating across all forty funds, the amount of that 541 00:25:02,240 --> 00:25:04,920 Speaker 12: deal per fund is really small. We don't have any 542 00:25:04,920 --> 00:25:06,840 Speaker 12: exposure over two percent of the whole portfolio. 543 00:25:07,040 --> 00:25:09,920 Speaker 9: What is the default rate? 544 00:25:10,040 --> 00:25:13,400 Speaker 3: Because people look at these juicy yields and say, sure, 545 00:25:13,440 --> 00:25:17,680 Speaker 3: I want to get in, but this is floating rate debt, right, 546 00:25:17,760 --> 00:25:23,360 Speaker 3: So some of your deals previously would have been paying. 547 00:25:23,080 --> 00:25:25,320 Speaker 9: I don't know, six percent interest, and. 548 00:25:25,240 --> 00:25:27,840 Speaker 3: Now they're paying double that, right, So you that's got 549 00:25:27,840 --> 00:25:29,680 Speaker 3: to be hard for some of the portfolio companies. 550 00:25:29,720 --> 00:25:29,880 Speaker 2: Yea. 551 00:25:30,200 --> 00:25:33,679 Speaker 12: So because we've been through this before, we pre model 552 00:25:33,760 --> 00:25:35,760 Speaker 12: everything as if it's going to be a twelve percent, 553 00:25:35,840 --> 00:25:38,320 Speaker 12: so we haven't had the kind of issues. Now the 554 00:25:38,760 --> 00:25:42,000 Speaker 12: coverage has shrunk for sure. We did just a model 555 00:25:42,040 --> 00:25:43,680 Speaker 12: the other day and it looks like instead of four 556 00:25:43,720 --> 00:25:45,880 Speaker 12: times coverage, we're like two and a half times coverage 557 00:25:46,160 --> 00:25:49,199 Speaker 12: because of that doubling of interest costs. But you know, 558 00:25:49,320 --> 00:25:51,240 Speaker 12: the free cash flows of these companies and the growth 559 00:25:51,240 --> 00:25:53,919 Speaker 12: of these businesses. I mentioned the add ons. All of 560 00:25:53,920 --> 00:25:57,399 Speaker 12: that is helping to grow those companies to accommodate the 561 00:25:57,480 --> 00:26:00,119 Speaker 12: higher debt. But still you've got every deal we do, 562 00:26:00,160 --> 00:26:01,840 Speaker 12: we look at it and say, what's gonna happen if 563 00:26:01,920 --> 00:26:04,199 Speaker 12: rates continue to go up, what's gonna happen if we 564 00:26:04,240 --> 00:26:07,600 Speaker 12: go into recession. The result is we do only like 565 00:26:07,720 --> 00:26:10,280 Speaker 12: five deals of every hundred that come in the door. 566 00:26:10,400 --> 00:26:13,919 Speaker 12: Think about that. So I'm turning down ninety five percent 567 00:26:13,960 --> 00:26:15,600 Speaker 12: of every deal that comes in the door. I mean, 568 00:26:15,600 --> 00:26:19,720 Speaker 12: that's a tough commercial proposition. But the reason that we're successful. 569 00:26:19,800 --> 00:26:22,159 Speaker 3: You're very picky, well very picky, but you know the 570 00:26:22,160 --> 00:26:24,760 Speaker 3: people you're lending money to, you're working hand in hand 571 00:26:24,760 --> 00:26:25,080 Speaker 3: with them. 572 00:26:25,119 --> 00:26:27,119 Speaker 12: And we don't see hundred deals. We see a thousand deals. 573 00:26:27,160 --> 00:26:29,680 Speaker 12: So we do fifty new transactions, one hundred and fifty 574 00:26:29,680 --> 00:26:32,679 Speaker 12: add ons, and with each deal we're doing more and 575 00:26:32,720 --> 00:26:33,840 Speaker 12: more per deal. 576 00:26:34,359 --> 00:26:35,800 Speaker 9: So we'll still do six. 577 00:26:35,680 --> 00:26:38,879 Speaker 12: Billion dollars or so of volume this year. And just 578 00:26:38,920 --> 00:26:39,879 Speaker 12: senior lending. 579 00:26:39,800 --> 00:26:42,000 Speaker 1: Man, what a business I want to be in that business? 580 00:26:42,040 --> 00:26:43,840 Speaker 9: No, exactly what am I doing here? 581 00:26:44,080 --> 00:26:46,439 Speaker 3: Exactly get Randy, I'm gonna I'm gonna pep up my 582 00:26:46,480 --> 00:26:48,159 Speaker 3: resume and send it on. 583 00:26:48,600 --> 00:26:50,640 Speaker 1: All right, Randy, thanks so much for joining us. We 584 00:26:50,680 --> 00:26:52,760 Speaker 1: was appreciate getting some of your time. Randy Swimmer East 585 00:26:52,760 --> 00:26:56,479 Speaker 1: cohead of Senior Lending and Senior Managing Director Churchill Asset Management, 586 00:26:56,520 --> 00:26:58,560 Speaker 1: and more than anybody else, I think he schooled us. 587 00:26:58,680 --> 00:27:00,800 Speaker 3: All right, Well, he schools I think the industry because 588 00:27:00,840 --> 00:27:03,440 Speaker 3: he also is the publisher of The Left Lead, which 589 00:27:03,480 --> 00:27:06,840 Speaker 3: is one of the most popular places to get information 590 00:27:06,880 --> 00:27:07,200 Speaker 3: on this. 591 00:27:07,320 --> 00:27:11,200 Speaker 8: Yep, you're listening to the team Ken's Are Live program 592 00:27:11,320 --> 00:27:14,200 Speaker 8: Bloomberg Markets weekdays at ten am Eastern. 593 00:27:13,960 --> 00:27:17,040 Speaker 5: On Bloomberg dot com, the iHeartRadio. 594 00:27:16,320 --> 00:27:19,080 Speaker 8: App, and the Bloomberg Business App, or listen on demand 595 00:27:19,119 --> 00:27:20,840 Speaker 8: wherever you get your podcasts. 596 00:27:22,720 --> 00:27:25,920 Speaker 1: All right, let's switch gears do our C suite. Check 597 00:27:25,960 --> 00:27:29,359 Speaker 1: in here today with Jenna Droso's CEO of Signet Jewelers. 598 00:27:29,359 --> 00:27:34,440 Speaker 1: Signat Jewelers trades on New York Stock Exchange SIG based 599 00:27:34,480 --> 00:27:37,960 Speaker 1: in Akron, Ohio. Se Matt, We've got you another Ohio 600 00:27:37,960 --> 00:27:39,960 Speaker 1: company like good Stuff. It's got a market cap of 601 00:27:40,000 --> 00:27:42,320 Speaker 1: three point four billion stocks up about twelve. 602 00:27:42,040 --> 00:27:45,040 Speaker 3: And it's a very correlated town, right, because isn't that 603 00:27:45,080 --> 00:27:46,080 Speaker 3: we're good good year. 604 00:27:46,119 --> 00:27:48,280 Speaker 1: Yeah, one of the tire things. Man, Jinna, thanks so 605 00:27:48,320 --> 00:27:50,200 Speaker 1: much for joining us here. Talk to us about your 606 00:27:50,240 --> 00:27:52,240 Speaker 1: business here. What are the trends you're seeing so far 607 00:27:52,800 --> 00:27:54,680 Speaker 1: this year and what are you telling your shareholders about 608 00:27:54,680 --> 00:27:55,080 Speaker 1: next year. 609 00:27:56,640 --> 00:28:00,399 Speaker 14: Yes, we're seeing some very interesting trends. In the second order, 610 00:28:00,960 --> 00:28:05,680 Speaker 14: we were able to over deliver our revenue and bottom 611 00:28:05,720 --> 00:28:09,600 Speaker 14: line guide. And some of the strength that we saw 612 00:28:09,760 --> 00:28:13,719 Speaker 14: was in lower priced fashion jewelry, So jewelry under one 613 00:28:13,720 --> 00:28:17,760 Speaker 14: thousand dollars, almost a back to school like trend, whether 614 00:28:17,800 --> 00:28:20,359 Speaker 14: you go back to school or not. You know, people 615 00:28:20,440 --> 00:28:24,560 Speaker 14: often refresh their look at that time of year, and 616 00:28:24,600 --> 00:28:28,520 Speaker 14: we saw strong sales that boats well for jewelry being 617 00:28:28,560 --> 00:28:32,760 Speaker 14: in the consideration set as people move toward holiday. I 618 00:28:32,760 --> 00:28:35,199 Speaker 14: think the other really big trend that we've seen is 619 00:28:35,240 --> 00:28:40,080 Speaker 14: that there has been a lull in engagements. So this 620 00:28:40,240 --> 00:28:44,719 Speaker 14: year calendar year twenty three, engagements are down about twenty 621 00:28:44,800 --> 00:28:49,080 Speaker 14: five percent versus a typical pre COVID year. That's a 622 00:28:49,160 --> 00:28:54,760 Speaker 14: temporary COVID disruption. People usually get engaged three point two 623 00:28:54,840 --> 00:28:58,680 Speaker 14: five years after they meet, and and you know, three 624 00:28:58,720 --> 00:29:01,160 Speaker 14: years ago we were in lockdown and so people were 625 00:29:01,200 --> 00:29:02,920 Speaker 14: not meeting in the same way. 626 00:29:03,080 --> 00:29:06,240 Speaker 15: So that's for metic Yeah, yeah, exactly that. 627 00:29:06,560 --> 00:29:10,040 Speaker 14: So that trough of engagements is happening right now, but 628 00:29:10,120 --> 00:29:12,800 Speaker 14: we expect it to begin to come back in our 629 00:29:12,880 --> 00:29:17,040 Speaker 14: fourth quarter and that provides a three year tailwind actually 630 00:29:17,120 --> 00:29:20,040 Speaker 14: for us because about fifty percent of our business is 631 00:29:20,040 --> 00:29:21,160 Speaker 14: in the bridle category. 632 00:29:22,800 --> 00:29:26,239 Speaker 1: So do you care about the Chinese and coming in 633 00:29:26,520 --> 00:29:29,040 Speaker 1: and buying stuff or is that really not your business 634 00:29:29,120 --> 00:29:32,160 Speaker 1: Chinese consumer to you know, tourists coming into the States 635 00:29:32,440 --> 00:29:34,120 Speaker 1: that or is that not really your business because I 636 00:29:34,120 --> 00:29:36,800 Speaker 1: know for a lot of the folks here in New 637 00:29:36,880 --> 00:29:39,680 Speaker 1: York City, they welcome they can't wait for the Chinese 638 00:29:39,720 --> 00:29:40,560 Speaker 1: consumer to come back. 639 00:29:42,440 --> 00:29:45,200 Speaker 14: That's not really a big part of our business. So 640 00:29:46,080 --> 00:29:48,880 Speaker 14: it's not a strong impact one way or the other. 641 00:29:49,680 --> 00:29:52,680 Speaker 14: What is interesting, though, is that people tend to buy 642 00:29:52,760 --> 00:29:57,120 Speaker 14: jewelry associated with travel. And one of the things that 643 00:29:57,160 --> 00:29:59,680 Speaker 14: we talked a lot about on our second quarter earnings 644 00:29:59,720 --> 00:30:04,680 Speaker 14: call is the proprietary data that we now understand about 645 00:30:04,720 --> 00:30:09,080 Speaker 14: couple's relationship formation. So we have forty five milestones that 646 00:30:09,120 --> 00:30:12,160 Speaker 14: we look at that happened from you know, we went 647 00:30:12,160 --> 00:30:14,640 Speaker 14: to a movie all the way to we met the parents, 648 00:30:14,720 --> 00:30:18,040 Speaker 14: to we move in together, and so we can track 649 00:30:18,120 --> 00:30:20,720 Speaker 14: that going on a romantic trip together is. 650 00:30:20,600 --> 00:30:21,760 Speaker 15: One of those milestones. 651 00:30:21,840 --> 00:30:24,880 Speaker 14: So for our business, it was actually good to see 652 00:30:24,920 --> 00:30:28,040 Speaker 14: a lot of couples traveling together over the summer, attending 653 00:30:28,040 --> 00:30:31,840 Speaker 14: a concert together. That kind of thing is good for 654 00:30:31,960 --> 00:30:33,520 Speaker 14: future engagement ring sales. 655 00:30:34,200 --> 00:30:39,120 Speaker 3: How about you know, I think of class rings, yep, I. 656 00:30:39,000 --> 00:30:40,960 Speaker 9: Think of Super Bowl rings. 657 00:30:41,120 --> 00:30:45,360 Speaker 3: I think of signet rings, and I assume that's where 658 00:30:45,400 --> 00:30:48,680 Speaker 3: you got your name. Are those things anywhere near as 659 00:30:48,720 --> 00:30:50,040 Speaker 3: important as engagement rings? 660 00:30:50,080 --> 00:30:50,320 Speaker 5: To you? 661 00:30:52,280 --> 00:30:55,120 Speaker 14: Not as important? But it's part of the you know, 662 00:30:55,520 --> 00:30:58,080 Speaker 14: customers journey. I mean, what we try to do is 663 00:30:58,520 --> 00:31:01,959 Speaker 14: meet customers at the point of market entry to the category, 664 00:31:02,320 --> 00:31:05,760 Speaker 14: which is usually either getting your ears pierced or buying 665 00:31:05,800 --> 00:31:09,719 Speaker 14: an engagement ring, and then we try to follow that 666 00:31:09,800 --> 00:31:13,600 Speaker 14: customer and you know, throughout their life through other milestones 667 00:31:13,680 --> 00:31:18,920 Speaker 14: like birthdays or graduations or you know, anniversaries, things like that. 668 00:31:19,080 --> 00:31:22,840 Speaker 14: So rings itself, fashion rings are a big part of 669 00:31:22,840 --> 00:31:23,400 Speaker 14: our business. 670 00:31:23,760 --> 00:31:26,960 Speaker 15: Also, our k banner makes all of the NFL Hall 671 00:31:27,040 --> 00:31:27,720 Speaker 15: of Fame. 672 00:31:27,560 --> 00:31:32,840 Speaker 14: Rings, and our sales banner makes all of the rings 673 00:31:32,920 --> 00:31:38,160 Speaker 14: for historically black colleges and universities and so we have 674 00:31:38,240 --> 00:31:40,600 Speaker 14: a presence in those special kind of rings as well. 675 00:31:41,280 --> 00:31:43,640 Speaker 1: Jina, talk to us about the cost side of your business. 676 00:31:43,640 --> 00:31:45,960 Speaker 1: What are the key drivers in your cost structure and 677 00:31:46,040 --> 00:31:48,080 Speaker 1: kind of where are they moving these days. 678 00:31:48,760 --> 00:31:51,120 Speaker 15: Yeah, that's a great story for us. 679 00:31:51,160 --> 00:31:54,480 Speaker 14: We've really developed a competitive advantage in sourcing. 680 00:31:55,240 --> 00:31:56,640 Speaker 15: We are vertically integrated. 681 00:31:56,720 --> 00:32:01,040 Speaker 14: We're one of only a small group of retailers who 682 00:32:01,040 --> 00:32:03,000 Speaker 14: are site holders with de Beers. 683 00:32:03,440 --> 00:32:05,680 Speaker 15: So we buy diamonds right from the mine. 684 00:32:06,000 --> 00:32:09,400 Speaker 14: We own our own cutting and polishing facility in Botswana 685 00:32:10,120 --> 00:32:13,800 Speaker 14: and contract with several others in India, and so we 686 00:32:13,840 --> 00:32:18,320 Speaker 14: have very good visibility into how the prices move of 687 00:32:18,520 --> 00:32:20,560 Speaker 14: diamonds at different times. 688 00:32:20,960 --> 00:32:22,800 Speaker 15: What that gives us is an ability to. 689 00:32:22,880 --> 00:32:27,600 Speaker 14: Continuously offer customers a great value, and it also is 690 00:32:27,640 --> 00:32:31,920 Speaker 14: part of our responsible sourcing strategy. We know that all 691 00:32:32,000 --> 00:32:36,440 Speaker 14: of the gemstones and metals that we sell are sourced 692 00:32:36,480 --> 00:32:40,080 Speaker 14: in an ethical way and completely conflict free. That's something 693 00:32:40,080 --> 00:32:43,640 Speaker 14: customers really care about. So I'm proud that our company 694 00:32:43,680 --> 00:32:43,920 Speaker 14: can be. 695 00:32:43,920 --> 00:32:44,520 Speaker 15: A leader in that. 696 00:32:45,440 --> 00:32:47,120 Speaker 3: How about the cost of gold is that not a 697 00:32:47,440 --> 00:32:50,240 Speaker 3: I mean that's what I think of. Of course, the 698 00:32:50,280 --> 00:32:53,320 Speaker 3: diamond is I guess far more valuable than the gold 699 00:32:53,400 --> 00:32:56,280 Speaker 3: ring that you put it in. But we have seen 700 00:32:56,320 --> 00:33:00,440 Speaker 3: gold rise up right now we're just under one nine 701 00:33:00,760 --> 00:33:01,880 Speaker 3: and thirty dollars a troy. 702 00:33:01,680 --> 00:33:05,920 Speaker 15: Ounce, yes, so so that does matter. What I would 703 00:33:05,920 --> 00:33:06,400 Speaker 15: say is. 704 00:33:06,360 --> 00:33:11,760 Speaker 14: That while our product contains commodities like gold, like diamonds, 705 00:33:11,760 --> 00:33:15,920 Speaker 14: it's not a commodity product, and so the retail pricing 706 00:33:16,120 --> 00:33:20,880 Speaker 14: tends to have less fluctuation than the actual ingredient cost, 707 00:33:21,840 --> 00:33:24,160 Speaker 14: and we tend to be able to price to cover 708 00:33:24,240 --> 00:33:28,680 Speaker 14: that because you know, when when people want a great look, 709 00:33:28,800 --> 00:33:31,720 Speaker 14: you know with a gold necklace or a chain or whatever, 710 00:33:31,840 --> 00:33:34,800 Speaker 14: they are willing to pay to get the high quality 711 00:33:35,120 --> 00:33:37,800 Speaker 14: that we can provide them. The other thing that we 712 00:33:37,880 --> 00:33:40,320 Speaker 14: do in a time like this is we bring innovations 713 00:33:40,360 --> 00:33:43,200 Speaker 14: to the market. So one of the innovations that we 714 00:33:43,280 --> 00:33:47,320 Speaker 14: have for holiday, and the technical name of it is electroform. 715 00:33:47,800 --> 00:33:51,760 Speaker 14: But think of it like putting gold around a straw, 716 00:33:52,400 --> 00:33:55,240 Speaker 14: where you know, we have a metal in the inside 717 00:33:55,240 --> 00:34:00,640 Speaker 14: that we actually can can chemically remove like straw, and 718 00:34:00,680 --> 00:34:03,480 Speaker 14: so then the gold is just formed around the outside. 719 00:34:03,640 --> 00:34:06,720 Speaker 14: So you get a very big look for a lot 720 00:34:06,920 --> 00:34:11,440 Speaker 14: less cost because there's less actual gold in the product. 721 00:34:11,760 --> 00:34:15,200 Speaker 14: And so innovations like that. We work, you know, years 722 00:34:15,239 --> 00:34:18,280 Speaker 14: out with our vendors to be able to uniquely offer 723 00:34:18,280 --> 00:34:20,760 Speaker 14: to our customers so they can get a great value 724 00:34:21,239 --> 00:34:23,759 Speaker 14: no matter what the commodity price market looks like. 725 00:34:24,160 --> 00:34:26,280 Speaker 1: Hi, Jenna, thanks so much for joining us. Really appreciate 726 00:34:26,280 --> 00:34:30,160 Speaker 1: getting some of your time. Jennett draws us. She is 727 00:34:30,200 --> 00:34:32,680 Speaker 1: the CEOP signa jewelers that trades on the New York 728 00:34:32,680 --> 00:34:33,520 Speaker 1: Stock Exchange. 729 00:34:33,800 --> 00:34:36,880 Speaker 8: You're listening to the tape cans our live program, Bloomberg 730 00:34:37,000 --> 00:34:40,600 Speaker 8: Markets weekdays at ten am Eastern on Bloomberg Radio, the 731 00:34:40,640 --> 00:34:42,799 Speaker 8: tune in app, Bloomberg dot Com, and the. 732 00:34:42,680 --> 00:34:43,879 Speaker 5: Bloomberg Business App. 733 00:34:43,920 --> 00:34:46,719 Speaker 8: You can also listen live on Amazon Alexa from our 734 00:34:46,760 --> 00:34:51,760 Speaker 8: flagship New York station, Just say Alexa play Bloomberg eleven thirty. 735 00:34:52,280 --> 00:34:54,200 Speaker 1: That certainly one of the key stories we are following 736 00:34:54,239 --> 00:34:57,239 Speaker 1: today is the strike by the UAW against the big 737 00:34:57,239 --> 00:34:59,960 Speaker 1: three auto makers. Ed Corey, he's an anchor and reporter 738 00:35:00,080 --> 00:35:03,160 Speaker 1: for Bloomberg Radio. He is at the Detroit Auto Show, 739 00:35:03,239 --> 00:35:04,600 Speaker 1: so we can get a little bit of a different 740 00:35:04,640 --> 00:35:07,360 Speaker 1: view there from the floor. Ed, thanks so much for 741 00:35:07,440 --> 00:35:10,560 Speaker 1: joining us here. What's the feeling there at the auto show? 742 00:35:10,600 --> 00:35:13,040 Speaker 1: About you know, day one of this strike. 743 00:35:14,719 --> 00:35:16,200 Speaker 11: You know, it's kind of a mixed vibe. 744 00:35:16,200 --> 00:35:18,719 Speaker 16: The people who are behind the show promoting it, the 745 00:35:18,719 --> 00:35:23,759 Speaker 16: people putting displays together, the people working refreshments and so on. 746 00:35:23,960 --> 00:35:26,840 Speaker 16: They know that their goal is to continue to push 747 00:35:26,880 --> 00:35:29,959 Speaker 16: the future, the electric future of the auto industry, show 748 00:35:29,960 --> 00:35:32,360 Speaker 16: off what's new, and try to build some excitement. On 749 00:35:32,400 --> 00:35:35,160 Speaker 16: the other hand, there is a lot of nervousness about 750 00:35:35,200 --> 00:35:39,839 Speaker 16: this strike. How long will it last? Auto plans affected, 751 00:35:40,120 --> 00:35:43,560 Speaker 16: which are very profitable for the automakers. So kind of 752 00:35:43,640 --> 00:35:45,480 Speaker 16: a mixed bag of emotions here. 753 00:35:46,880 --> 00:35:49,640 Speaker 9: In terms of the political fallout. 754 00:35:49,719 --> 00:35:54,600 Speaker 3: Are they expecting, you know, President Biden, who is reportedly 755 00:35:54,680 --> 00:35:56,960 Speaker 3: going to come out and make a statement on this today, 756 00:35:57,239 --> 00:36:00,440 Speaker 3: to get behind the unions as he is, you know, 757 00:36:01,120 --> 00:36:04,279 Speaker 3: as he proclaims himself the most pro union president and 758 00:36:04,400 --> 00:36:05,240 Speaker 3: history of America. 759 00:36:05,360 --> 00:36:06,520 Speaker 9: Or is he going to try and put us out 760 00:36:06,560 --> 00:36:07,080 Speaker 9: to this strike. 761 00:36:08,480 --> 00:36:10,960 Speaker 16: You know what we've been hearing from the President that 762 00:36:11,000 --> 00:36:15,240 Speaker 16: he wants an agreement to be hammered out. He doesn't 763 00:36:15,360 --> 00:36:19,400 Speaker 16: want the detrimental economic effects that we've all heard about 764 00:36:19,400 --> 00:36:21,799 Speaker 16: to come to fruition. Now we're going to see some 765 00:36:21,920 --> 00:36:28,120 Speaker 16: political political action this evening here at Huntington place in Detroit. 766 00:36:28,120 --> 00:36:31,120 Speaker 16: There will be a charity preview for the auto show. 767 00:36:31,120 --> 00:36:34,560 Speaker 16: They raise a ton of money for kids charities in Detroit. 768 00:36:34,880 --> 00:36:38,600 Speaker 16: Outside just a block from here, the Bernie Sanders will 769 00:36:38,600 --> 00:36:41,759 Speaker 16: be here with a bunch of uaw members. They will 770 00:36:41,760 --> 00:36:46,640 Speaker 16: be demonstrating near the UAW Ford Center. So we're going 771 00:36:46,719 --> 00:36:50,160 Speaker 16: to have that type of you know, again, mixed feelings 772 00:36:50,200 --> 00:36:53,040 Speaker 16: about this evening and the strike. And I think it's 773 00:36:53,040 --> 00:36:56,719 Speaker 16: safe to say that everyone involved on's a quick resolution. 774 00:36:56,920 --> 00:36:59,319 Speaker 16: But right now, as you've been hearing, there doesn't seem 775 00:36:59,320 --> 00:37:02,080 Speaker 16: to be one in at least not in the near future. 776 00:37:02,560 --> 00:37:05,560 Speaker 1: So is there any sense out there of how strong 777 00:37:05,640 --> 00:37:09,440 Speaker 1: or how together, how cohesive unit the rank and file 778 00:37:09,520 --> 00:37:10,440 Speaker 1: are behind the strike. 779 00:37:12,160 --> 00:37:18,080 Speaker 16: Oh, in Detroit there have been union members speaking out 780 00:37:18,640 --> 00:37:21,120 Speaker 16: even at plants that are not affected yet by any 781 00:37:21,120 --> 00:37:24,680 Speaker 16: type of walkout. As you know, selected plants have been 782 00:37:25,800 --> 00:37:29,600 Speaker 16: picked for strike activity. But even those who are working 783 00:37:29,640 --> 00:37:33,839 Speaker 16: today said they, you know, they feel a little nervousness 784 00:37:33,880 --> 00:37:34,400 Speaker 16: about this. 785 00:37:34,760 --> 00:37:36,560 Speaker 11: They don't want a lengthy strike. 786 00:37:36,880 --> 00:37:38,759 Speaker 16: But you know, the thing you hear over and over 787 00:37:38,800 --> 00:37:41,120 Speaker 16: again from the rank and file here at Detroit in 788 00:37:41,120 --> 00:37:43,239 Speaker 16: the area auto factories, they want they want to go 789 00:37:43,280 --> 00:37:44,080 Speaker 16: back to where they were. 790 00:37:44,120 --> 00:37:46,560 Speaker 11: They lost some ground, you know, two thousand and eight 791 00:37:46,800 --> 00:37:47,280 Speaker 11: was rough. 792 00:37:47,920 --> 00:37:51,360 Speaker 16: They don't like the fact that some workers doing the 793 00:37:51,400 --> 00:37:54,799 Speaker 16: same job or making more than others. So if they 794 00:37:54,840 --> 00:37:58,680 Speaker 16: want that parody to be restored. And again they would 795 00:37:58,719 --> 00:38:01,160 Speaker 16: like to see a pay increase because they hear and 796 00:38:01,200 --> 00:38:04,600 Speaker 16: read about the increases that the CEOs have been giving. 797 00:38:05,280 --> 00:38:05,879 Speaker 2: That's for sure. 798 00:38:05,960 --> 00:38:11,200 Speaker 1: And you know ed David weston Bloomberg Television interviewed Borough 799 00:38:11,280 --> 00:38:13,680 Speaker 1: of a borough of GM earlier today. 800 00:38:14,120 --> 00:38:17,040 Speaker 2: Boy, she came across, at least to me, is quite upset. 801 00:38:17,160 --> 00:38:19,680 Speaker 1: I mean, I think she feels that General Motors has 802 00:38:19,680 --> 00:38:23,440 Speaker 1: put a very credible deal on the table. And I 803 00:38:23,520 --> 00:38:25,800 Speaker 1: kind of came away from that interview thinking, boy, I 804 00:38:25,840 --> 00:38:27,440 Speaker 1: don't think the auto guys are going to be at 805 00:38:27,440 --> 00:38:29,120 Speaker 1: the company's going to be budging much, at least in 806 00:38:29,120 --> 00:38:30,040 Speaker 1: the near near term. 807 00:38:31,360 --> 00:38:35,400 Speaker 16: Well you might expect that kind of stance maybe, you know, 808 00:38:36,280 --> 00:38:40,560 Speaker 16: in the initial phase of this strike. The automakers are, 809 00:38:40,680 --> 00:38:46,160 Speaker 16: you know, trying to maintain the position that they've had. 810 00:38:46,560 --> 00:38:50,279 Speaker 16: You know that we came through tough economic times, that 811 00:38:50,760 --> 00:38:54,840 Speaker 16: there is a bright future ahead. And you heard Mary 812 00:38:54,880 --> 00:38:59,080 Speaker 16: Barrs say that her salary is based on the performance 813 00:38:59,120 --> 00:39:02,680 Speaker 16: of the company, and the company has earned money, and 814 00:39:02,719 --> 00:39:05,839 Speaker 16: then just part of her contract she gets increases too. 815 00:39:06,200 --> 00:39:09,120 Speaker 16: But the rank and file, the union members, say, hey, look, 816 00:39:09,160 --> 00:39:13,440 Speaker 16: you know we are a huge part of the of 817 00:39:13,920 --> 00:39:18,000 Speaker 16: the of the success that the company has had. Models 818 00:39:18,000 --> 00:39:21,080 Speaker 16: are coming in as a new models are coming on 819 00:39:21,120 --> 00:39:23,680 Speaker 16: the scene, and as we head into an electric future. 820 00:39:23,719 --> 00:39:25,920 Speaker 16: They want to make sure that they're not going to 821 00:39:25,920 --> 00:39:28,319 Speaker 16: be behind. They at least want to recoup some of 822 00:39:28,360 --> 00:39:31,319 Speaker 16: what they believe they've lost over the last few years. 823 00:39:31,520 --> 00:39:33,080 Speaker 3: Had you been at the auto show for a couple 824 00:39:33,120 --> 00:39:36,400 Speaker 3: of days now? I used to go every single year. 825 00:39:36,520 --> 00:39:40,680 Speaker 3: It was like the biggest event of my on my calendar, 826 00:39:42,600 --> 00:39:45,560 Speaker 3: and it has dwindled, right, I mean back in the 827 00:39:45,640 --> 00:39:48,640 Speaker 3: day everybody was at the Detroit Auto Show is the 828 00:39:48,640 --> 00:39:52,120 Speaker 3: most important one for the industry. What's it like this 829 00:39:52,239 --> 00:39:53,800 Speaker 3: year and have you seen anything cool? 830 00:39:55,200 --> 00:39:58,920 Speaker 16: Well, you know, the good news is it is bigger 831 00:39:58,960 --> 00:40:02,239 Speaker 16: than last year. There was you know, the pandemic when 832 00:40:02,280 --> 00:40:04,880 Speaker 16: we didn't see any activity, and so yeah, it is 833 00:40:04,920 --> 00:40:07,200 Speaker 16: bigger than last year. No, it's not up to pre 834 00:40:07,320 --> 00:40:11,720 Speaker 16: pandemic levels. But there's a lot of excitement at the show. 835 00:40:12,080 --> 00:40:14,440 Speaker 16: I mean, sure, you have the prototypes, you know, the 836 00:40:14,760 --> 00:40:17,359 Speaker 16: whiz bang models that may or may not go into 837 00:40:17,360 --> 00:40:20,640 Speaker 16: production ten years from now, but models that you can buy, 838 00:40:21,040 --> 00:40:24,280 Speaker 16: you know, in the very near future are are pretty 839 00:40:24,280 --> 00:40:26,480 Speaker 16: hot here. I mean, Ford is out with a new 840 00:40:26,600 --> 00:40:32,319 Speaker 16: F one fifty. There is a jeep that's coming out 841 00:40:32,400 --> 00:40:37,080 Speaker 16: and it's attracting a lot of excitement. And also the 842 00:40:37,120 --> 00:40:41,239 Speaker 16: Cadillac CT five has a new look this year and 843 00:40:41,280 --> 00:40:44,319 Speaker 16: that's been a very very popular model. So those big 844 00:40:44,360 --> 00:40:47,600 Speaker 16: three Detroit automakers with a strong showing of something you know, 845 00:40:47,640 --> 00:40:51,680 Speaker 16: people can really check out and then you know, put 846 00:40:51,680 --> 00:40:53,799 Speaker 16: a deposit on or go, you know, order from the 847 00:40:53,800 --> 00:40:54,840 Speaker 16: automaker too. 848 00:40:54,640 --> 00:40:56,759 Speaker 11: So there's still is some excitement here. 849 00:40:57,360 --> 00:40:59,280 Speaker 1: And thanks so much for joining us. So I appreciate 850 00:40:59,280 --> 00:41:02,440 Speaker 1: getting it ten and reporting from you. Ed Query's anchor 851 00:41:02,520 --> 00:41:07,040 Speaker 1: and reporter for Bloomberg Radio in the great city of Detroit. 852 00:41:07,360 --> 00:41:10,480 Speaker 8: You're listening to the tape ketch Are live program Bloomberg 853 00:41:10,560 --> 00:41:14,160 Speaker 8: Markets weekdays at ten am Eastern on Bloomberg Radio, the 854 00:41:14,200 --> 00:41:16,279 Speaker 8: tune in app, Bloomberg dot Com, and the. 855 00:41:16,239 --> 00:41:17,439 Speaker 5: Bloomberg Business app. 856 00:41:17,480 --> 00:41:20,279 Speaker 8: You can also listen live on Amazon Alexa from our 857 00:41:20,320 --> 00:41:25,320 Speaker 8: flagship New York station, Just say Alexa Play Bloomberg eleven thirty. 858 00:41:26,160 --> 00:41:28,520 Speaker 3: I've been looking forward all day to this. We have 859 00:41:28,600 --> 00:41:32,399 Speaker 3: somewhat of a Wall Street legend. Nice joining us right now. 860 00:41:32,480 --> 00:41:36,000 Speaker 3: Todd Harrison is founding partner and chief investment officer at 861 00:41:36,000 --> 00:41:37,880 Speaker 3: CB one Capital Management. 862 00:41:37,920 --> 00:41:40,279 Speaker 9: But he has spent decades. 863 00:41:39,840 --> 00:41:44,600 Speaker 3: On Wall Street working for the big banks, including Morgan Stanley. 864 00:41:44,760 --> 00:41:47,040 Speaker 3: He founded a company that I think a lot of 865 00:41:47,120 --> 00:41:50,759 Speaker 3: us loved very much, Minyonville Media back in the day, 866 00:41:50,760 --> 00:41:55,080 Speaker 3: which won Emmy Awards, And as I said, he founded 867 00:41:55,080 --> 00:41:57,560 Speaker 3: the Ruby Peck Foundation for Children's Education, which is an 868 00:41:57,560 --> 00:41:59,000 Speaker 3: important charity that I think a lot of people on 869 00:41:59,040 --> 00:42:03,239 Speaker 3: Wall Street like to support as well. Todd, first of all, 870 00:42:03,440 --> 00:42:05,960 Speaker 3: great to see you, Thanks so much for joining us. 871 00:42:06,160 --> 00:42:08,680 Speaker 3: Tell us what you're doing now at CB one Capital Management. 872 00:42:08,719 --> 00:42:09,560 Speaker 3: What's that business? 873 00:42:10,800 --> 00:42:13,399 Speaker 17: I mean, we've been involved in the cannabis space for 874 00:42:13,480 --> 00:42:17,760 Speaker 17: over a decade now. I actually just uncovered an interview 875 00:42:17,840 --> 00:42:20,200 Speaker 17: that we did about ten years ago talking about how 876 00:42:20,200 --> 00:42:23,120 Speaker 17: cannabis was going to be my single best investment idea 877 00:42:23,160 --> 00:42:24,960 Speaker 17: for the next decade, and that was actually. 878 00:42:24,760 --> 00:42:27,040 Speaker 13: Nine years ago and it hasn't been. 879 00:42:27,760 --> 00:42:30,680 Speaker 17: But recently there's been some news that we think is 880 00:42:30,719 --> 00:42:33,480 Speaker 17: going to change the space and change the fortunes and 881 00:42:33,520 --> 00:42:35,960 Speaker 17: really move this in a better direction. But CB one 882 00:42:36,080 --> 00:42:39,239 Speaker 17: Capital we have an investment arm, we have an advisory. 883 00:42:38,760 --> 00:42:40,640 Speaker 13: Arm, and we have an advocacy arm where we. 884 00:42:40,600 --> 00:42:43,399 Speaker 17: Help Weldon Angelis and Mission Green to get people out 885 00:42:43,400 --> 00:42:44,880 Speaker 17: of prison for this plant. 886 00:42:44,960 --> 00:42:46,359 Speaker 13: So it's pretty comprehensive. 887 00:42:46,640 --> 00:42:52,279 Speaker 3: It surprises me that potstocks haven't done better considering the 888 00:42:52,400 --> 00:42:53,640 Speaker 3: uptake of the product. 889 00:42:54,000 --> 00:42:57,799 Speaker 9: You know, on I think right now twenty three. 890 00:42:57,640 --> 00:43:02,120 Speaker 3: States have legalized recreational marriaorrijuana, and you only have to 891 00:43:02,120 --> 00:43:03,840 Speaker 3: walk around New York City for a few minutes to 892 00:43:03,880 --> 00:43:09,000 Speaker 3: understand that people are consuming cannabis. Is there a disconnect 893 00:43:09,120 --> 00:43:14,200 Speaker 3: between the sales, the outlook, and you know, the performance 894 00:43:14,239 --> 00:43:14,920 Speaker 3: of the stocks. 895 00:43:16,360 --> 00:43:16,800 Speaker 13: Certainly. 896 00:43:17,200 --> 00:43:20,839 Speaker 17: I think it's one of the biggest asymmetric opportunities right now, 897 00:43:20,960 --> 00:43:22,919 Speaker 17: right here that I've seen in my thirty four years 898 00:43:22,960 --> 00:43:23,640 Speaker 17: on Wall Street. 899 00:43:23,680 --> 00:43:26,520 Speaker 13: And and why now is very. 900 00:43:26,400 --> 00:43:29,720 Speaker 17: Much because of how we got here, right so, because 901 00:43:29,800 --> 00:43:33,719 Speaker 17: cannabis has been a Schedule one narcotic for so long, 902 00:43:33,800 --> 00:43:36,560 Speaker 17: and we won't go into that rabbit hole of why, 903 00:43:37,239 --> 00:43:40,760 Speaker 17: But because of that, the big takeaways that US cannabis 904 00:43:40,760 --> 00:43:44,319 Speaker 17: companies can't deduct normal operating expenses it's called Section two 905 00:43:44,400 --> 00:43:47,200 Speaker 17: eighty of the tax code. So they're being taxed at 906 00:43:47,239 --> 00:43:50,240 Speaker 17: an effective rate right now of seventy five to eighty percent, 907 00:43:50,400 --> 00:43:52,960 Speaker 17: and they have been for years, which is why only 908 00:43:53,000 --> 00:43:54,880 Speaker 17: the best have been able to survive. 909 00:43:55,080 --> 00:43:58,640 Speaker 13: And the industry was up until two weeks ago. 910 00:43:58,560 --> 00:44:02,040 Speaker 17: Really you know, looking at an extinction event because of 911 00:44:02,120 --> 00:44:06,839 Speaker 17: the regulatory construct. But as you probably know, the HHS 912 00:44:06,880 --> 00:44:09,280 Speaker 17: came out two weeks ago on Wednesday. 913 00:44:09,280 --> 00:44:10,960 Speaker 13: It was the last couple of days of summer. I 914 00:44:11,040 --> 00:44:12,399 Speaker 13: was here, but not many people were. 915 00:44:12,840 --> 00:44:15,439 Speaker 17: They recommended cannabis go to a Schedule three, which would 916 00:44:15,440 --> 00:44:16,680 Speaker 17: importantly remove. 917 00:44:16,400 --> 00:44:19,440 Speaker 13: That two way to e tax code. And now we're 918 00:44:19,480 --> 00:44:21,840 Speaker 13: just waiting on the DEA to codify that opinion. 919 00:44:21,920 --> 00:44:24,160 Speaker 17: We think that could happen by year end and then 920 00:44:24,200 --> 00:44:26,640 Speaker 17: buy to consign it into law before next year's election. 921 00:44:27,320 --> 00:44:30,080 Speaker 17: That's just one thing that's happening. Safe banking we heard 922 00:44:30,120 --> 00:44:32,880 Speaker 17: last night. It was broke news broke last night, and 923 00:44:32,920 --> 00:44:36,160 Speaker 17: it's moving around today or getting out today that safe 924 00:44:36,160 --> 00:44:38,400 Speaker 17: Banking is going to go through a Senate committee markup. 925 00:44:38,440 --> 00:44:41,320 Speaker 17: This is the sign or the tell that the Senate's 926 00:44:41,320 --> 00:44:43,719 Speaker 17: going to pass safe banking for the first time. The 927 00:44:43,840 --> 00:44:47,520 Speaker 17: Upper Chamber and then conceivably be tacked onto a must 928 00:44:47,520 --> 00:44:50,520 Speaker 17: pass bill by year end. So there's a few things right, 929 00:44:51,520 --> 00:44:53,760 Speaker 17: and if they all happened, this could get really spicy. 930 00:44:53,800 --> 00:44:57,200 Speaker 13: But just on the math alone, without anything else. 931 00:44:57,280 --> 00:44:59,800 Speaker 17: If we moved to a schedule three, if that gets codified, 932 00:45:00,080 --> 00:45:02,520 Speaker 17: talking about a two to three x turn on. 933 00:45:02,440 --> 00:45:03,959 Speaker 13: Some of these names, just on map. 934 00:45:04,760 --> 00:45:09,319 Speaker 1: So explain to us why it's developed this way. Ten 935 00:45:09,400 --> 00:45:11,720 Speaker 1: years ago you thought it would be a much better 936 00:45:11,760 --> 00:45:16,040 Speaker 1: proposition than it has been. What have been the big missteps? 937 00:45:16,080 --> 00:45:19,280 Speaker 1: Maybe what is the industry missed? What has Washington missed 938 00:45:19,760 --> 00:45:20,640 Speaker 1: over the last decade. 939 00:45:21,840 --> 00:45:22,720 Speaker 13: You know, it's interesting. 940 00:45:23,000 --> 00:45:25,040 Speaker 17: We spent a lot of time in Washington, and they 941 00:45:25,040 --> 00:45:27,319 Speaker 17: had explained to us that the states are designed to 942 00:45:27,320 --> 00:45:29,960 Speaker 17: be nimble and the federal government's designed to move slow. 943 00:45:30,320 --> 00:45:33,080 Speaker 17: And then added, but the thing about the federal government 944 00:45:33,200 --> 00:45:35,080 Speaker 17: is that when change happens, it tends. 945 00:45:34,800 --> 00:45:35,800 Speaker 13: To happen all at once. 946 00:45:36,400 --> 00:45:39,560 Speaker 17: But because of the disconnect between state and federal laws, 947 00:45:40,120 --> 00:45:43,320 Speaker 17: because the politicians have been very slow on the uptake, 948 00:45:43,600 --> 00:45:47,040 Speaker 17: because cannabis is a complex issue with a lot of stakeholders, 949 00:45:47,320 --> 00:45:48,440 Speaker 17: stakeholders that have a. 950 00:45:48,400 --> 00:45:52,080 Speaker 13: Legitimate claim to participate in the industry. 951 00:45:52,680 --> 00:45:55,640 Speaker 17: It's really become muddled down in a lot of different 952 00:45:55,800 --> 00:46:00,400 Speaker 17: cross currents as the illicit markets really proliferated, you know, 953 00:46:00,480 --> 00:46:04,000 Speaker 17: as this comes online and becomes a legal framework, which 954 00:46:04,000 --> 00:46:07,000 Speaker 17: we just took again a seismic shift two weeks ago 955 00:46:07,040 --> 00:46:07,759 Speaker 17: for the first time. 956 00:46:07,800 --> 00:46:09,520 Speaker 13: That they're two and a half year bear market. 957 00:46:09,800 --> 00:46:11,919 Speaker 17: This is the first domino and it's a big one, 958 00:46:12,440 --> 00:46:14,440 Speaker 17: and if the others fall, it can get spicy. But 959 00:46:14,520 --> 00:46:18,440 Speaker 17: we need this to sort of relax the arbitrage between 960 00:46:18,520 --> 00:46:19,520 Speaker 17: federal and state law. 961 00:46:19,680 --> 00:46:22,040 Speaker 13: Allow these companies to operate on an even playing field. 962 00:46:22,080 --> 00:46:24,400 Speaker 17: And after what they've just been through, I would argue 963 00:46:24,400 --> 00:46:26,360 Speaker 17: that they're they're pretty lean and mean and ready to 964 00:46:26,560 --> 00:46:27,000 Speaker 17: ready to. 965 00:46:26,960 --> 00:46:27,480 Speaker 13: Go to work. 966 00:46:28,280 --> 00:46:29,239 Speaker 15: I look across the. 967 00:46:31,480 --> 00:46:34,239 Speaker 3: Market, there are a lot of different participants, right, not 968 00:46:34,360 --> 00:46:38,759 Speaker 3: just in North America, but mainly right in the US 969 00:46:38,800 --> 00:46:41,600 Speaker 3: and Canada. Are there companies you think that really have 970 00:46:41,680 --> 00:46:44,280 Speaker 3: got it right? Are the companies you think that are solid, 971 00:46:45,040 --> 00:46:48,520 Speaker 3: you know, investible that we should be looking at more closely? 972 00:46:49,440 --> 00:46:51,880 Speaker 5: And sure? So, yeah, of. 973 00:46:51,920 --> 00:46:54,440 Speaker 13: Course, And I say this, you know word, we have positions. 974 00:46:54,520 --> 00:46:56,480 Speaker 17: We advise some of these companies, but we got to 975 00:46:56,520 --> 00:46:58,200 Speaker 17: know a lot of companies very well. 976 00:46:58,400 --> 00:46:59,920 Speaker 13: You know, iron sharpens iron. 977 00:47:00,080 --> 00:47:01,799 Speaker 17: During the two and a half year bear market, this 978 00:47:01,880 --> 00:47:04,640 Speaker 17: was a ninety one percent drawdown for MSOs, which is 979 00:47:04,640 --> 00:47:08,719 Speaker 17: the ETF that we advise. But you know, certainly you 980 00:47:08,760 --> 00:47:10,640 Speaker 17: can learn a lot just by watching how some of 981 00:47:10,680 --> 00:47:13,600 Speaker 17: these companies did during that trough. As we think it 982 00:47:13,680 --> 00:47:16,080 Speaker 17: is as in front of all these states onboarding. 983 00:47:15,600 --> 00:47:18,040 Speaker 13: On the East coast, and you know, you look at. 984 00:47:17,880 --> 00:47:21,719 Speaker 17: The Veranos, the Terra sends the green thumbs, and there's 985 00:47:21,760 --> 00:47:23,839 Speaker 17: others right at Glasshouse in California. 986 00:47:24,520 --> 00:47:26,960 Speaker 13: You know, as two way to eges away. 987 00:47:27,160 --> 00:47:29,759 Speaker 17: As the federal government starts to move out of the way, 988 00:47:30,280 --> 00:47:33,760 Speaker 17: it has to be incremental the change, and that change 989 00:47:34,200 --> 00:47:37,719 Speaker 17: because it's incremental, like we don't have the political wherewithal 990 00:47:37,840 --> 00:47:41,239 Speaker 17: capacity to move this to a deschedule where it should be. 991 00:47:41,520 --> 00:47:44,359 Speaker 17: But Schedule three is a stepping stone to descheduling. 992 00:47:44,920 --> 00:47:46,400 Speaker 13: Happens to play right. 993 00:47:46,280 --> 00:47:50,320 Speaker 17: Into the MSOs and the publicly traded companies hands because 994 00:47:50,440 --> 00:47:52,840 Speaker 17: they still have some of the protections and the barriers 995 00:47:52,840 --> 00:47:56,240 Speaker 17: to entry and a very regulated market at the state level. 996 00:47:56,440 --> 00:48:00,279 Speaker 17: But the federal government's moving to really support the tenth 997 00:48:00,320 --> 00:48:04,040 Speaker 17: Amendment and let the states become the laboratories of democracy. 998 00:48:04,160 --> 00:48:08,520 Speaker 17: And those industries evolve at the state level as the 999 00:48:08,520 --> 00:48:11,680 Speaker 17: federal framework pick shit. So this is a big you know, 1000 00:48:11,960 --> 00:48:14,360 Speaker 17: this is a big, big catalyst. I don't think people 1001 00:48:14,400 --> 00:48:18,480 Speaker 17: really understand it. What's interesting a is that there is 1002 00:48:18,760 --> 00:48:21,920 Speaker 17: a pretty significant structural short in these names, we feel 1003 00:48:22,520 --> 00:48:26,320 Speaker 17: because of without getting too far into the weeds, because 1004 00:48:26,719 --> 00:48:29,520 Speaker 17: the US cannabis companies have to list on the Canadian 1005 00:48:29,520 --> 00:48:32,759 Speaker 17: Stock Exchange. They can't list on US stock exchanges, but 1006 00:48:32,800 --> 00:48:35,719 Speaker 17: the MSOs ETF is on the New York Stock Exchange. 1007 00:48:36,000 --> 00:48:40,120 Speaker 17: There's been a pretty pernicious algorithm that's been hitting these 1008 00:48:40,440 --> 00:48:43,840 Speaker 17: stocks down. Naked short we believe, naked short in these stocks, 1009 00:48:44,440 --> 00:48:46,400 Speaker 17: routing them through Europe, however it may be. 1010 00:48:46,800 --> 00:48:49,280 Speaker 13: But we think they're still there. We think they're still trapped, 1011 00:48:49,280 --> 00:48:52,359 Speaker 13: and we'll see how that plays out over the time 1012 00:48:52,400 --> 00:48:52,719 Speaker 13: to come. 1013 00:48:52,760 --> 00:48:55,680 Speaker 17: But the other interesting part is all the institutions and 1014 00:48:55,719 --> 00:48:56,920 Speaker 17: you know, you know, we talked to a. 1015 00:48:56,920 --> 00:48:59,120 Speaker 13: Lot of these guys. We made a lot of calls 1016 00:48:59,160 --> 00:49:00,160 Speaker 13: after this news. 1017 00:49:00,040 --> 00:49:03,000 Speaker 17: And even the institutions or the funds of the family 1018 00:49:03,080 --> 00:49:06,960 Speaker 17: offices that can buy US cannabis are telling us, a 1019 00:49:06,960 --> 00:49:09,680 Speaker 17: lot of them are telling us. After so many disappointments, 1020 00:49:09,719 --> 00:49:11,440 Speaker 17: we want to actually see it happen. We want to 1021 00:49:11,440 --> 00:49:13,480 Speaker 17: see this play through. We want to see it get 1022 00:49:13,480 --> 00:49:15,919 Speaker 17: done before we're going to believe it. And I think 1023 00:49:15,920 --> 00:49:16,960 Speaker 17: that's incredibly bullish. 1024 00:49:16,960 --> 00:49:20,640 Speaker 1: Also, Tod, given all that background, what types of investments 1025 00:49:20,840 --> 00:49:22,520 Speaker 1: are you making in the space today? 1026 00:49:24,680 --> 00:49:26,879 Speaker 17: I mean we mentioned some of them. You know, there's 1027 00:49:26,880 --> 00:49:31,360 Speaker 17: only a handfeit. There's really only so many tradable names 1028 00:49:31,400 --> 00:49:31,920 Speaker 17: in this space. 1029 00:49:31,960 --> 00:49:35,360 Speaker 3: I mean the top holdings in MSOs or Green Thumb, 1030 00:49:35,640 --> 00:49:38,280 Speaker 3: cure Leaf, Verano, truly, Cresco. 1031 00:49:39,080 --> 00:49:41,560 Speaker 1: So that's is there anything in the private space you're 1032 00:49:41,560 --> 00:49:42,000 Speaker 1: looking at? 1033 00:49:42,840 --> 00:49:43,120 Speaker 5: Sure? 1034 00:49:43,239 --> 00:49:45,600 Speaker 17: I mean, just to talk about MSOs, the way that 1035 00:49:45,600 --> 00:49:48,640 Speaker 17: that portfolio is constructed is that fang on one side 1036 00:49:48,680 --> 00:49:50,400 Speaker 17: that you know, if you look at Y two K 1037 00:49:50,520 --> 00:49:52,520 Speaker 17: as sort of a preamble of what we're going through. 1038 00:49:52,520 --> 00:49:53,440 Speaker 13: Everything they said. 1039 00:49:53,239 --> 00:49:55,799 Speaker 17: Technology was going to be happened, but not before the 1040 00:49:55,880 --> 00:49:58,560 Speaker 17: tech crash. I think cannabis is that is at that 1041 00:49:58,680 --> 00:50:01,400 Speaker 17: spot right now. But I think that you know the 1042 00:50:01,520 --> 00:50:04,799 Speaker 17: fang if you will, those five names on one side 1043 00:50:04,840 --> 00:50:07,280 Speaker 17: and then forgotten as we say, some of these lower 1044 00:50:07,640 --> 00:50:10,439 Speaker 17: tiered MSOs on the other side, I think are having 1045 00:50:10,480 --> 00:50:12,799 Speaker 17: more beata because a lot of them were treating at 1046 00:50:12,800 --> 00:50:14,759 Speaker 17: their cash levels a couple of weeks ago, because there 1047 00:50:14,800 --> 00:50:16,640 Speaker 17: was no visibility on how they were going to service 1048 00:50:16,680 --> 00:50:19,280 Speaker 17: their debt, on what they're on, what their cash generation 1049 00:50:19,440 --> 00:50:21,759 Speaker 17: levels are we're going to be and that's starting to 1050 00:50:21,760 --> 00:50:24,759 Speaker 17: come into view right now. So both of the I 1051 00:50:24,760 --> 00:50:27,239 Speaker 17: think that portfolio as well positioned MSS and. 1052 00:50:27,280 --> 00:50:28,160 Speaker 13: Again we're involved. 1053 00:50:28,640 --> 00:50:31,319 Speaker 17: But on the private side, Yes, the capital markets have 1054 00:50:31,320 --> 00:50:31,840 Speaker 17: been shut. 1055 00:50:31,680 --> 00:50:34,040 Speaker 13: Down for a number of years, and I think that 1056 00:50:34,239 --> 00:50:35,880 Speaker 13: you know, not only for the stocks, but for the 1057 00:50:35,960 --> 00:50:39,279 Speaker 13: research and for the sentiment. This will help close the 1058 00:50:39,360 --> 00:50:43,080 Speaker 13: chasm between the state and the federal sort of discrepancies. 1059 00:50:43,080 --> 00:50:47,600 Speaker 3: Do you have a view on what the heck has 1060 00:50:47,680 --> 00:50:49,440 Speaker 3: gone wrong in New York State? 1061 00:50:50,000 --> 00:50:52,719 Speaker 9: I mean, it is an absolute mess, right. 1062 00:50:52,800 --> 00:50:58,200 Speaker 3: There's only a few licensed dispensaries here. They only sell 1063 00:50:58,800 --> 00:51:02,840 Speaker 3: a select number of products, the best stuff that everybody wants. 1064 00:51:03,320 --> 00:51:08,120 Speaker 3: You know, the Kana and the Camino products are only 1065 00:51:08,200 --> 00:51:11,040 Speaker 3: in like Empire, and then you know the million other 1066 00:51:11,120 --> 00:51:13,279 Speaker 3: shops around town that aren't licensed. 1067 00:51:14,239 --> 00:51:19,000 Speaker 9: How did they do such a bad job in New York? 1068 00:51:19,560 --> 00:51:21,560 Speaker 13: Well, you sound like a consumer, my man. 1069 00:51:21,640 --> 00:51:23,760 Speaker 17: I mean you you just rattled a couple of brands 1070 00:51:23,840 --> 00:51:26,480 Speaker 17: right there that this is not your first rodeo, I 1071 00:51:26,520 --> 00:51:26,959 Speaker 17: could tell. 1072 00:51:27,719 --> 00:51:30,439 Speaker 13: But New York, I mean, you know, it's a cautionary tale. 1073 00:51:31,360 --> 00:51:33,960 Speaker 13: And listen, well intentioned, right, I mean, they tried to 1074 00:51:33,960 --> 00:51:34,680 Speaker 13: do the right thing. 1075 00:51:35,080 --> 00:51:38,080 Speaker 17: But what happened was when when COVID hit and and 1076 00:51:38,120 --> 00:51:40,200 Speaker 17: you know, again follow the money. The reason this was 1077 00:51:40,200 --> 00:51:43,160 Speaker 17: coming online in all these states was because the tax 1078 00:51:43,200 --> 00:51:46,560 Speaker 17: revenues are ridiculous, the job creations are ridiculous, and oh, 1079 00:51:46,560 --> 00:51:48,319 Speaker 17: by the way, it's good for you, like as we're 1080 00:51:48,360 --> 00:51:51,319 Speaker 17: finding out more and more. But when the COVID, when 1081 00:51:51,320 --> 00:51:55,120 Speaker 17: COVID hit, and the federal government just completely you know, 1082 00:51:55,360 --> 00:51:58,719 Speaker 17: flushed all these budgets with cash. New York in particular said, 1083 00:51:58,760 --> 00:52:01,480 Speaker 17: you know, we're going to create this framework that we 1084 00:52:01,520 --> 00:52:05,799 Speaker 17: think is just and rights the wrongs of the war 1085 00:52:05,880 --> 00:52:09,240 Speaker 17: on drugs, And like I said, well intentioned, But anybody 1086 00:52:09,320 --> 00:52:10,960 Speaker 17: that's been around the block a few times knows that 1087 00:52:11,000 --> 00:52:13,560 Speaker 17: you can't legislate wealth, right. And there's a big difference 1088 00:52:13,600 --> 00:52:16,080 Speaker 17: between criminal justice. People shouldn't be in prison for a 1089 00:52:16,120 --> 00:52:19,239 Speaker 17: plant and social justice. Right, they necessarily shouldn't be at 1090 00:52:19,239 --> 00:52:21,359 Speaker 17: the front of the line either. And I think that 1091 00:52:21,400 --> 00:52:24,120 Speaker 17: there is there's a balance there, and there's a Toget. 1092 00:52:24,160 --> 00:52:26,480 Speaker 13: You know, we can do this together. I believe that. 1093 00:52:26,680 --> 00:52:30,440 Speaker 17: But New York never really allowed the opportunity. Maryland did 1094 00:52:30,440 --> 00:52:31,759 Speaker 17: it right, Missouri did it right. 1095 00:52:31,800 --> 00:52:35,480 Speaker 13: They levered the medical industry into an adult use industry, 1096 00:52:35,560 --> 00:52:38,839 Speaker 13: and then when they made money, they you know, sort 1097 00:52:38,840 --> 00:52:41,640 Speaker 13: of address the social issues, justice issues. New York tried 1098 00:52:41,680 --> 00:52:44,839 Speaker 13: to do that the opposite way. Now you walk down 1099 00:52:45,000 --> 00:52:48,040 Speaker 13: there's fourteen thousand, you know street, fourteen thousand shops in 1100 00:52:48,040 --> 00:52:48,399 Speaker 13: New York. 1101 00:52:48,400 --> 00:52:51,640 Speaker 17: Most New Yorkers think that's the legal framework. But that's 1102 00:52:51,680 --> 00:52:53,000 Speaker 17: going to transition, right, So. 1103 00:52:53,080 --> 00:52:56,920 Speaker 13: It's a process. Over time, prices will come down, the 1104 00:52:56,960 --> 00:52:58,640 Speaker 13: ilestle market will get crowded out. 1105 00:52:58,760 --> 00:53:02,080 Speaker 17: Besides, they're selling pest size and a multification agents that 1106 00:53:02,120 --> 00:53:05,440 Speaker 17: are literally poison, so that'll go away like bathtub Gin 1107 00:53:05,600 --> 00:53:05,960 Speaker 17: once went. 1108 00:53:06,040 --> 00:53:08,919 Speaker 3: Dude, imagine if you could only buy Brooklyn Lauger. Yeah, 1109 00:53:09,120 --> 00:53:12,399 Speaker 3: you want a Lagunitas or you want Sierra Nevada, and 1110 00:53:12,440 --> 00:53:14,799 Speaker 3: they're telling you you can't get that at. 1111 00:53:14,680 --> 00:53:16,799 Speaker 2: A legal show. The social injustice of it all. 1112 00:53:16,800 --> 00:53:18,680 Speaker 1: Todd Harrison, thank you so much for joining us founding 1113 00:53:18,680 --> 00:53:22,640 Speaker 1: partner and CIO at c B one Capital Management. 1114 00:53:23,000 --> 00:53:26,600 Speaker 8: You're listening to the tape cansur live program Bloomberg Markets 1115 00:53:26,640 --> 00:53:30,040 Speaker 8: weekdays at ten am Eastern on Bloomberg Radio, the tune 1116 00:53:30,080 --> 00:53:31,959 Speaker 8: in app, Bloomberg dot Com, and the. 1117 00:53:31,840 --> 00:53:33,040 Speaker 5: Bloomberg Business App. 1118 00:53:33,080 --> 00:53:35,880 Speaker 8: You can also listen live on Amazon Alexa from our 1119 00:53:35,920 --> 00:53:41,000 Speaker 8: flagship New York station, Just say Alexa play Bloomberg eleven thirty. 1120 00:53:42,360 --> 00:53:43,920 Speaker 9: Let's get to what I'm driving this week? 1121 00:53:44,040 --> 00:53:45,239 Speaker 2: Yeah, what are you driving? I? 1122 00:53:45,280 --> 00:53:47,839 Speaker 3: Well, I just a disclaimer that you know, the car 1123 00:53:47,880 --> 00:53:51,080 Speaker 3: makers allow me to use these cars to test drive. 1124 00:53:51,080 --> 00:53:53,560 Speaker 3: You've been covering the industry for twenty years now, and 1125 00:53:54,080 --> 00:53:56,720 Speaker 3: so I often get a new car or a truck 1126 00:53:56,800 --> 00:54:00,200 Speaker 3: or a motorcycle to test out. This week, I have 1127 00:54:00,280 --> 00:54:04,280 Speaker 3: something special, and so the purpose of this hit is twofold. 1128 00:54:04,360 --> 00:54:06,480 Speaker 9: Number one, I want to tell. 1129 00:54:06,280 --> 00:54:10,480 Speaker 3: Our viewers about a product, and number two, I'm trying 1130 00:54:10,520 --> 00:54:13,240 Speaker 3: to convince you to get to get one of these cars. 1131 00:54:13,400 --> 00:54:15,160 Speaker 3: I'm going to bring in my buddy Matt Hart agree 1132 00:54:15,200 --> 00:54:17,560 Speaker 3: to help me do that. He was the editor in 1133 00:54:17,640 --> 00:54:21,040 Speaker 3: chief of Jalopnik. He's now working on a site called Autopia, 1134 00:54:21,120 --> 00:54:23,399 Speaker 3: but he's been also in the industry for a couple 1135 00:54:23,480 --> 00:54:26,560 Speaker 3: of decades here at covering cars. Matt, you know it's 1136 00:54:26,640 --> 00:54:30,120 Speaker 3: long been the dream of I think every auto journalist 1137 00:54:30,320 --> 00:54:33,280 Speaker 3: to get an absolute stripper of a nine to eleven, 1138 00:54:33,640 --> 00:54:38,040 Speaker 3: that is, to order the base model with no options 1139 00:54:38,160 --> 00:54:40,920 Speaker 3: at all, and I have almost achieved that in this 1140 00:54:41,000 --> 00:54:44,800 Speaker 3: test Dride. It's a Carrera T, which is like already 1141 00:54:44,800 --> 00:54:47,920 Speaker 3: the stripped down version of the nine to eleven. It 1142 00:54:47,960 --> 00:54:49,960 Speaker 3: only has the essentials, the things you need, like a 1143 00:54:49,960 --> 00:54:52,839 Speaker 3: short throw shifter, and it has almost no options on it. 1144 00:54:52,920 --> 00:54:56,839 Speaker 3: I absolutely love it, with one exception, and. 1145 00:54:56,760 --> 00:54:57,560 Speaker 9: That is the color. 1146 00:54:57,640 --> 00:54:58,040 Speaker 2: I love. 1147 00:54:58,080 --> 00:54:58,440 Speaker 9: The color. 1148 00:54:59,160 --> 00:55:00,840 Speaker 3: I don't know, Matt, you I probably can't see it, 1149 00:55:00,840 --> 00:55:04,040 Speaker 3: but maybe you've seen. The color is called ruby star Neo. 1150 00:55:04,400 --> 00:55:05,000 Speaker 2: It's like a. 1151 00:55:04,920 --> 00:55:06,800 Speaker 9: Purple pink, like a Barbie pink. 1152 00:55:08,080 --> 00:55:10,960 Speaker 18: You mean, it's the best color. You got the best color, 1153 00:55:11,000 --> 00:55:11,680 Speaker 18: and you're complaining. 1154 00:55:12,160 --> 00:55:14,800 Speaker 9: My daughter thinks so as well. But give me your thoughts. 1155 00:55:14,800 --> 00:55:17,280 Speaker 3: First off, on the Carrera T, the nine to eleven 1156 00:55:17,360 --> 00:55:19,719 Speaker 3: Carrera Tea, it's great. 1157 00:55:19,800 --> 00:55:23,160 Speaker 18: I mean, I think what Portia has done is realized that, 1158 00:55:24,080 --> 00:55:26,840 Speaker 18: as with a lot of things in life, the more options, 1159 00:55:26,880 --> 00:55:29,479 Speaker 18: the better and the more money they can get. And 1160 00:55:29,920 --> 00:55:33,319 Speaker 18: you know, for an enthusiast, I am not likely to 1161 00:55:33,440 --> 00:55:36,120 Speaker 18: buy a nine to eleven Turbo. It's a little pricey, 1162 00:55:36,160 --> 00:55:38,080 Speaker 18: but if I'm in a nine to eleven range. They 1163 00:55:38,120 --> 00:55:41,040 Speaker 18: have created something that fits between the true bass Carrera 1164 00:55:41,239 --> 00:55:43,439 Speaker 18: and the Korera S and they call it the Karrera Tea. 1165 00:55:43,960 --> 00:55:47,560 Speaker 18: And somehow by creating a cheaper version of the Karrera S, 1166 00:55:47,640 --> 00:55:51,279 Speaker 18: they've made it more desirable than a Korera S. They 1167 00:55:51,280 --> 00:55:54,120 Speaker 18: are selling at a pretty high levels for people I've 1168 00:55:54,120 --> 00:55:55,920 Speaker 18: spoken to. And the problem is even though it's the 1169 00:55:55,920 --> 00:55:58,760 Speaker 18: stripper version, it's a little bit faster than the base Carrera. 1170 00:55:59,600 --> 00:56:02,200 Speaker 18: I'm I did one myself. I built one before the 1171 00:56:02,200 --> 00:56:03,600 Speaker 18: show and I was like, oh, you know, it starts 1172 00:56:03,600 --> 00:56:05,320 Speaker 18: a one hundred and thirty. That's such a great price. 1173 00:56:05,400 --> 00:56:07,279 Speaker 18: I'm only going to add a couple of options. And 1174 00:56:07,320 --> 00:56:09,759 Speaker 18: you get on a port of personalization page and then 1175 00:56:09,760 --> 00:56:13,640 Speaker 18: you're like, well, I need Hardiburg yellow seatbelts. I definitely 1176 00:56:13,640 --> 00:56:15,640 Speaker 18: need to have this special I like it in brown, 1177 00:56:15,640 --> 00:56:17,879 Speaker 18: the special brown color. I need this, I need that, 1178 00:56:17,920 --> 00:56:21,439 Speaker 18: And then all of a sudden it's you're one hundred 1179 00:56:21,480 --> 00:56:23,440 Speaker 18: and forty thousand dollars into a car. So it's genius. 1180 00:56:23,440 --> 00:56:25,320 Speaker 18: I think it's genius. You got it with the manual. 1181 00:56:25,320 --> 00:56:27,040 Speaker 18: Who cares what color it is as long as it 1182 00:56:27,080 --> 00:56:28,879 Speaker 18: has a manual that is the right cardigat well. 1183 00:56:28,800 --> 00:56:29,799 Speaker 9: And that's the beauty of this. 1184 00:56:30,160 --> 00:56:33,320 Speaker 3: So the base model Carrera, the absolute cheapest one you 1185 00:56:33,320 --> 00:56:36,279 Speaker 3: could get, doesn't have the manual as an option. You 1186 00:56:36,320 --> 00:56:39,600 Speaker 3: have to get the PDK, which is a very amazing 1187 00:56:39,640 --> 00:56:43,840 Speaker 3: automatic transmission, but it's still an automatic transmission. And Matt 1188 00:56:43,880 --> 00:56:47,360 Speaker 3: the benefit that the T has over the Carrera S. 1189 00:56:47,440 --> 00:56:48,200 Speaker 9: I was talking Luke. 1190 00:56:48,239 --> 00:56:52,000 Speaker 3: With Luke van Derzany, you know who runs PR for 1191 00:56:52,600 --> 00:56:55,319 Speaker 3: the nine to eleven at Portia in the US. He 1192 00:56:55,440 --> 00:56:58,440 Speaker 3: told me you can't get the short throw shifter on 1193 00:56:58,520 --> 00:57:00,520 Speaker 3: the S. You have to go up a level to 1194 00:57:00,560 --> 00:57:03,680 Speaker 3: the GTS to get that, And that to me has 1195 00:57:03,719 --> 00:57:05,920 Speaker 3: been the revelation with this car. You know, I had 1196 00:57:05,920 --> 00:57:08,520 Speaker 3: a Carrera ass a nine nine to one Carrera ass sure, 1197 00:57:08,920 --> 00:57:13,800 Speaker 3: and I I had never thought about changing out the stick. 1198 00:57:14,160 --> 00:57:17,320 Speaker 9: This little stick is so much better than the big stick. 1199 00:57:17,360 --> 00:57:18,280 Speaker 9: I don't like a big stick. 1200 00:57:18,320 --> 00:57:19,320 Speaker 1: I like a little students. 1201 00:57:19,640 --> 00:57:22,600 Speaker 9: You know. The other revelation for me with this car 1202 00:57:22,760 --> 00:57:23,160 Speaker 9: is the. 1203 00:57:23,160 --> 00:57:27,320 Speaker 3: Cloth seats are amazing. I've never preferred cloth over leather, 1204 00:57:27,840 --> 00:57:31,920 Speaker 3: and these are just I'd rather have them. So I 1205 00:57:31,960 --> 00:57:34,880 Speaker 3: feel like it's an opportunity for Paul Sweeney to get 1206 00:57:34,920 --> 00:57:36,400 Speaker 3: a new car and save a little bit of money 1207 00:57:36,400 --> 00:57:37,760 Speaker 3: because he's not buying the turbos. 1208 00:57:38,760 --> 00:57:40,800 Speaker 18: It's a great deal. Oh all right, I think you 1209 00:57:40,840 --> 00:57:43,040 Speaker 18: would really not to buy it at this point. 1210 00:57:43,240 --> 00:57:45,600 Speaker 1: Hey, Matt, how about you're you would like matter a 1211 00:57:45,600 --> 00:57:48,400 Speaker 1: car guy and you're at the high end here. I 1212 00:57:48,440 --> 00:57:51,600 Speaker 1: can't imagine the Ferraris, the Lamborghinis, the portions of the 1213 00:57:51,600 --> 00:57:55,680 Speaker 1: world they are going electric willingly. Are they scratching and 1214 00:57:55,720 --> 00:57:58,000 Speaker 1: clawing to remain in the ice world. 1215 00:57:59,440 --> 00:58:02,520 Speaker 18: No. If you look at especially in Germany, there's been 1216 00:58:02,520 --> 00:58:05,720 Speaker 18: a big push with the EU regulations coming up the 1217 00:58:05,720 --> 00:58:08,280 Speaker 18: theoretically that in a decade, you know, we're going to 1218 00:58:08,360 --> 00:58:11,880 Speaker 18: have to have essentially no gas powered cars to get 1219 00:58:11,920 --> 00:58:17,440 Speaker 18: that legislation through Brussels. Basically, the Germans said, specifically, Portia 1220 00:58:17,480 --> 00:58:20,080 Speaker 18: of Volkswagen said, you know what, E fuels, give us 1221 00:58:20,120 --> 00:58:24,400 Speaker 18: an exception for carbon neutral e fuels because no matter what, 1222 00:58:24,680 --> 00:58:26,680 Speaker 18: even if they build electric cars, even if they sell 1223 00:58:26,720 --> 00:58:29,800 Speaker 18: primarily electric cars. No one I've talked about Ferrari, no 1224 00:58:29,840 --> 00:58:33,120 Speaker 18: one I've talked about Portia has given up on a 1225 00:58:33,160 --> 00:58:35,800 Speaker 18: gas powered car because for a sports car, even though 1226 00:58:35,840 --> 00:58:39,400 Speaker 18: an electric car might be faster. Nothing just sounds, and 1227 00:58:39,440 --> 00:58:41,920 Speaker 18: I love driving sports cars. Nothing sounds right. You don't 1228 00:58:41,920 --> 00:58:43,800 Speaker 18: get that feel of a short throw shifter like you 1229 00:58:44,080 --> 00:58:47,760 Speaker 18: need that visceral reaction because that's what you're paying where. 1230 00:58:47,800 --> 00:58:49,760 Speaker 18: You're not paying to get somewhere faster, You're paying to 1231 00:58:49,800 --> 00:58:52,400 Speaker 18: get somewhere with more excitement, with more joy. 1232 00:58:53,240 --> 00:58:56,400 Speaker 3: That's this car definitely fits that bill. I mean, it 1233 00:58:56,440 --> 00:58:59,360 Speaker 3: isn't the fastest car on the road. It doesn't feel 1234 00:58:59,400 --> 00:59:02,200 Speaker 3: as quick as my Carrera S, and it doesn't have 1235 00:59:02,200 --> 00:59:04,680 Speaker 3: as much horse powers three hundred and seventy nine horse power. 1236 00:59:05,520 --> 00:59:08,000 Speaker 3: You know, my Carera had I think four hundred and 1237 00:59:08,040 --> 00:59:09,000 Speaker 3: now the Carrera S. 1238 00:59:09,040 --> 00:59:10,440 Speaker 9: Has probably four thirty. 1239 00:59:11,760 --> 00:59:15,360 Speaker 3: But it's got that build up, it's got that uh 1240 00:59:15,800 --> 00:59:19,440 Speaker 3: you know, the gradual acceleration and the sound from the 1241 00:59:19,440 --> 00:59:22,360 Speaker 3: sport exhausted just amazing that I absolutely love. Plus it 1242 00:59:22,400 --> 00:59:25,280 Speaker 3: only weighs like thirty one hundred pounds, so that's incredibly light. 1243 00:59:25,440 --> 00:59:27,200 Speaker 3: By the way, maybe you can help Paul out with 1244 00:59:27,240 --> 00:59:30,560 Speaker 3: his conundrum veering away from the nine to eleven for 1245 00:59:30,600 --> 00:59:33,760 Speaker 3: a moment. He has the last manual five series. He 1246 00:59:33,800 --> 00:59:37,200 Speaker 3: has the twenty fourteen five point thirty five Eye with 1247 00:59:37,320 --> 00:59:40,640 Speaker 3: a stick, and now he's worried that it's gonna start 1248 00:59:40,640 --> 00:59:44,120 Speaker 3: getting old and he's gonna have to make repairs. Should 1249 00:59:44,160 --> 00:59:45,800 Speaker 3: he get something else or should he just make the 1250 00:59:45,840 --> 00:59:47,880 Speaker 3: repairs and keep the car that he loves the most. 1251 00:59:49,360 --> 00:59:50,680 Speaker 18: He should get rid of it and give it to me, 1252 00:59:50,800 --> 00:59:52,960 Speaker 18: because I have a I have a two thousand and 1253 00:59:52,960 --> 00:59:55,400 Speaker 18: three five Series five thirty I with the five speed, 1254 00:59:55,760 --> 00:59:57,800 Speaker 18: and it has two hundred and thirty five thousand miles 1255 00:59:57,880 --> 00:59:58,160 Speaker 18: on it. 1256 00:59:58,120 --> 01:00:00,680 Speaker 9: Two hundred thirty five thousand miles two. 1257 01:00:00,640 --> 01:00:02,840 Speaker 18: D and thirty five. The look twenty fourteen. It's a 1258 01:00:02,840 --> 01:00:05,200 Speaker 18: little sketchy. You're you're on the edge where the car 1259 01:00:05,280 --> 01:00:09,960 Speaker 18: is so modern that sometimes fixing things becomes cost prohibitive. 1260 01:00:10,960 --> 01:00:12,760 Speaker 18: But you're just on the right side of the edge. 1261 01:00:12,760 --> 01:00:15,160 Speaker 18: I think, I think you can make this car last. 1262 01:00:15,280 --> 01:00:17,920 Speaker 18: And it's not like mine. Mine is like Legos. You 1263 01:00:17,920 --> 01:00:19,640 Speaker 18: can pop something out, you can pop something in, you 1264 01:00:19,640 --> 01:00:22,720 Speaker 18: can generally fix the car. Your car isn't Legos, unfortunately, 1265 01:00:22,760 --> 01:00:25,080 Speaker 18: it's tech Lego technic. It's a little bit more advanced. 1266 01:00:25,120 --> 01:00:27,720 Speaker 18: But no, you're never going to find this is the problem. 1267 01:00:27,840 --> 01:00:31,640 Speaker 18: You're never going to find something new that feels as 1268 01:00:31,680 --> 01:00:34,480 Speaker 18: good as that car, because they can't make cars like 1269 01:00:34,520 --> 01:00:37,040 Speaker 18: that anymore. So either put it on, bring a trailer, 1270 01:00:37,080 --> 01:00:38,720 Speaker 18: and regret it for the rest of your life, or 1271 01:00:38,920 --> 01:00:41,160 Speaker 18: you know, spend two or three thousand dollars a year 1272 01:00:41,160 --> 01:00:43,600 Speaker 18: with your mechanic getting out. I think that's the best move. 1273 01:00:43,720 --> 01:00:45,760 Speaker 18: Got to keep the car or give it to me also. 1274 01:00:47,720 --> 01:00:50,640 Speaker 1: Exactly that could be an option, all right, Matt, thanks 1275 01:00:50,640 --> 01:00:52,040 Speaker 1: so much for joining us. 1276 01:00:51,760 --> 01:00:53,920 Speaker 2: Lots for me to think about over the weekend. 1277 01:00:54,320 --> 01:00:57,480 Speaker 1: Matt Hart agree, he's a publisher of the Auto Utopian. 1278 01:00:57,880 --> 01:01:00,640 Speaker 1: Sorry and talking cars with Matt Miller. Matt driving the 1279 01:01:01,160 --> 01:01:04,520 Speaker 1: Barbie Pink Portie. 1280 01:01:04,040 --> 01:01:05,560 Speaker 2: Carrera T love it. 1281 01:01:05,640 --> 01:01:06,520 Speaker 9: I have to give it back. 1282 01:01:06,600 --> 01:01:09,000 Speaker 3: Unfortunately I only had it for a week. But I 1283 01:01:09,120 --> 01:01:12,720 Speaker 3: joined The Utopian so I get that membership I think 1284 01:01:12,720 --> 01:01:14,640 Speaker 3: for a whole year. And plus they're gonna send me 1285 01:01:14,760 --> 01:01:16,400 Speaker 3: like a velvet T shirt. 1286 01:01:16,560 --> 01:01:17,440 Speaker 2: Oh cool, very good. 1287 01:01:17,440 --> 01:01:19,560 Speaker 1: And I'll tell you the Bloomberg Courtyard is a great 1288 01:01:19,600 --> 01:01:21,000 Speaker 1: place to kind of showcase cars. 1289 01:01:21,000 --> 01:01:21,640 Speaker 2: It looks cool. 1290 01:01:21,880 --> 01:01:23,800 Speaker 1: Yeah, I mean you could rent that out, maybe make 1291 01:01:23,840 --> 01:01:25,400 Speaker 1: up a couple of bucks where our owns this place. 1292 01:01:27,080 --> 01:01:30,160 Speaker 3: Thanks for listening to the Bloomberg Markets podcast. You can 1293 01:01:30,200 --> 01:01:33,960 Speaker 3: subscribe and listen to interviews at Apple Podcasts or whatever 1294 01:01:34,080 --> 01:01:37,760 Speaker 3: podcast platform you prefer. I'm Matt Miller. I'm on Twitter 1295 01:01:38,000 --> 01:01:39,919 Speaker 3: at Matt Miller nineteen seventy three. 1296 01:01:40,360 --> 01:01:42,800 Speaker 1: And I'm fall Sweeney. I'm on Twitter at pt Sweeney. 1297 01:01:42,840 --> 01:01:45,520 Speaker 1: Before the podcast, you can always catch us worldwide at 1298 01:01:45,560 --> 01:01:47,320 Speaker 1: Bloomberg Radio