WEBVTT - Debt Capital Will Flow Into Cannabis: Canaccord CEO 0:00:02.640 --> 0:00:05.320 Welcome to the Bloomberg Penl Podcast. I'm Paul swing you, 0:00:05.360 --> 0:00:07.680 along with my co host Lisa Brahma wits. Each day 0:00:07.720 --> 0:00:10.240 we bring you the most noteworthy and useful interviews for 0:00:10.280 --> 0:00:12.520 you and your money. Whether at the grocery store or 0:00:12.560 --> 0:00:15.480 the trading floor, find a Bloomberg Penl podcast on Apple 0:00:15.520 --> 0:00:17.959 podcast or wherever you listen to podcasts, as well as 0:00:17.960 --> 0:00:20.959 at Bloomberg dot com. You know, one of the industry 0:00:21.000 --> 0:00:22.920 sectors that just seems to be more and more in 0:00:22.960 --> 0:00:26.000 the news. Maybe this year more than ever has been cannabis. 0:00:26.239 --> 0:00:29.360 We'd we're talking um. Maybe that's because it's been, you know, 0:00:29.360 --> 0:00:31.360 a pretty big business in Canada. We've got more and 0:00:31.360 --> 0:00:35.280 more US states legalizing uh cannabis. To get the latest 0:00:35.440 --> 0:00:38.080 on that end, on kind of all things in Canada, 0:00:38.120 --> 0:00:41.559 we welcome Dave Dan Devio, President and CEO of Canachord 0:00:41.600 --> 0:00:44.640 Genuity Group based in Toronto, Cannaba, joining us here in 0:00:44.640 --> 0:00:47.040 our Bloomberg Interactive Broker Studio. Dan, thanks so much for 0:00:47.040 --> 0:00:49.760 coming down with us so talk to us about the 0:00:49.840 --> 0:00:53.279 state of the cannabis business, because we've certainly heard more 0:00:53.280 --> 0:00:55.520 and more about it as we've gone through the year. Yeah. No, 0:00:55.600 --> 0:00:58.120 it's been. It's first of all, thanks for very much 0:00:58.120 --> 0:01:00.760 for having me. And secondly, it's been it's been a 0:01:00.880 --> 0:01:04.360 very active segment um. You know, throughout the last two 0:01:04.440 --> 0:01:07.440 or three years, we've seen in an incredible time where 0:01:07.440 --> 0:01:09.760 there was a massive rush to the market by you know, 0:01:09.760 --> 0:01:13.400 probably over a hundred companies that went public, raising four 0:01:13.440 --> 0:01:16.960 to five billion dollars, and you know, there was exuberance 0:01:16.959 --> 0:01:18.560 in the market. It's a new market, no one really 0:01:18.640 --> 0:01:20.440 knew how big it was going to be, and a 0:01:20.520 --> 0:01:22.320 lot of companies raise money. You know, it's taken a 0:01:22.400 --> 0:01:25.640 little bit longer for people to realize on their strategic plans. 0:01:25.920 --> 0:01:28.360 Part of its access to capital, part of its government 0:01:28.400 --> 0:01:31.160 regulations taking a little bit longer. So we've seen some 0:01:31.240 --> 0:01:33.880 volatility in the market. We've seen some people lose money 0:01:33.880 --> 0:01:36.120 as a result, but people made a lot of money 0:01:36.160 --> 0:01:38.400 there for a while. Like I can I can remember 0:01:38.959 --> 0:01:41.760 this market three years ago where you couldn't convince somebody 0:01:41.800 --> 0:01:44.120 to invest in the cannabis stock and the guys that 0:01:44.160 --> 0:01:47.320 we took out, you know, we we ended up having 0:01:47.360 --> 0:01:49.520 to pass the hat, you know, around the firm just 0:01:49.560 --> 0:01:52.000 to fill out deals. At the beginning, did you actually 0:01:52.320 --> 0:01:58.240 ask your employees to the senior people really felt strongly 0:01:58.280 --> 0:02:00.559 about the industry at the beginning, and it wasn't about 0:02:00.600 --> 0:02:04.120 asking and it was you know, they decided to do it. 0:02:04.200 --> 0:02:06.520 But certainly, Yeah, some of our employees at the beginning 0:02:06.560 --> 0:02:09.120 invested in it and and did well. The ones who 0:02:09.120 --> 0:02:11.160 invested lately didn't do so well. We've seen the big 0:02:11.160 --> 0:02:14.440 banks come into the market lately, um and unfortunately that 0:02:14.480 --> 0:02:16.600 hasn't worked out as well. A little late to the sector, 0:02:16.720 --> 0:02:19.560 and some of the broadening of the distribution hasn't worked 0:02:19.560 --> 0:02:21.760 out well. Some of those deals haven't performed as well. Well. 0:02:21.800 --> 0:02:23.640 I love the idea of passing a hat around the 0:02:23.680 --> 0:02:25.919 office to say, like, what what are we putting mine 0:02:25.960 --> 0:02:29.000 in for? Hot? Exactly? We call that in a business 0:02:29.080 --> 0:02:32.240 co investing. Yeah, exactly. Well, I will say this, it's 0:02:32.240 --> 0:02:33.960 interesting that you say that the big banks have tried 0:02:33.960 --> 0:02:35.720 to get in lately and it hasn't worked out. Is 0:02:35.720 --> 0:02:38.359 that good for you because that would have potentially been 0:02:38.440 --> 0:02:43.000 competition for you. Yeah. We have dominant market share. When 0:02:43.000 --> 0:02:46.520 I mean dominant, I mean we raise the majority of 0:02:46.560 --> 0:02:49.000 the money in the market and probably represent most of 0:02:49.040 --> 0:02:51.920 the M and A trade, So it's clearly competition you'd 0:02:51.919 --> 0:02:54.680 think would be bad, but but you know, the broadening 0:02:54.680 --> 0:02:56.120 out of the market would be a good thing. That 0:02:56.160 --> 0:02:58.919 market would be five times larger, so our market share 0:02:58.919 --> 0:03:01.919 would go from the right to clee a hundred. We'd 0:03:01.919 --> 0:03:04.160 still do very well as an institution because the market 0:03:04.160 --> 0:03:05.960 would be that much larger. We'll talk to us in 0:03:05.960 --> 0:03:08.799 the US and so Canada, is it federally legalized? Is 0:03:08.880 --> 0:03:12.120 that correct? Okay? And so and that's good? Um, And 0:03:12.200 --> 0:03:15.000 in the US we just have a limited number of states. 0:03:15.040 --> 0:03:19.480 What's the understanding about at a possible federal legalization in 0:03:19.520 --> 0:03:23.040 the United States? Yeah, Well, there's the industry is not 0:03:24.040 --> 0:03:26.680 doesn't have the stigma that it used to have, clearly. 0:03:26.720 --> 0:03:29.400 So there's three pieces of federal legislation working their way 0:03:29.400 --> 0:03:32.040 through the government. There's a Safe Act, States Act, and 0:03:32.120 --> 0:03:34.680 More Act, all three of them. And who knows exactly 0:03:34.680 --> 0:03:37.400 what we'll get past and when the point is, eventually 0:03:37.600 --> 0:03:40.440 it's coming. Eventually we're gonna see it. So we don't 0:03:40.480 --> 0:03:42.480 I like to make either a prediction or give a 0:03:42.480 --> 0:03:44.800 time frame. I don't like to do both. But eventually 0:03:44.840 --> 0:03:47.520 we're going to see federal legislation in the industry, and 0:03:47.560 --> 0:03:49.480 that's going to help from a state level, there's a 0:03:49.560 --> 0:03:52.320 number of state votes happening every year. This year there's 0:03:52.360 --> 0:03:56.240 four states voting on adult legal use recreational use. So 0:03:56.320 --> 0:03:58.080 that's going to continue to play out. We're going to 0:03:58.160 --> 0:04:01.440 continue to see states uh um, you know, legalize it 0:04:01.800 --> 0:04:04.640 at that level. But until we have federal lead legislation, 0:04:04.920 --> 0:04:07.880 you're not going to see uh companies be able to 0:04:07.920 --> 0:04:10.400 list on the NASDAC or New York Stock Exchange, and 0:04:10.440 --> 0:04:13.000 you're not going to see the big big mutual funds 0:04:13.000 --> 0:04:15.360 and big big money invest in the sector. All right, 0:04:15.400 --> 0:04:17.240 let's just gears a little bit. Uh. I know that 0:04:17.320 --> 0:04:19.520 Ken Accord focuses a lot and a whole host of 0:04:19.520 --> 0:04:22.080 different functions within the financial services, whether it's the wealth 0:04:22.120 --> 0:04:26.680 management business or whether it is facilitating mergers and acquisitions. 0:04:26.720 --> 0:04:30.600 What are you expecting in in terms of corporate health 0:04:30.680 --> 0:04:33.800 and their willingness to complete transactions given how high valuations 0:04:33.839 --> 0:04:36.800 are right now? Yeah, I think high valuations does does 0:04:36.960 --> 0:04:38.760 does a lot of things. I mean, certainly, companies are 0:04:38.760 --> 0:04:40.719 prepared to raise money when their values are high, and 0:04:40.800 --> 0:04:43.760 companies are prepared to buy and sell each other when 0:04:43.800 --> 0:04:47.479 their values are high, and there's pretty good access to capital. 0:04:47.520 --> 0:04:50.920 Still both equity capital, but more importantly credit capital. All 0:04:51.000 --> 0:04:54.640 those things direct you towards a pretty active market, both 0:04:54.640 --> 0:04:57.480 from a new issue perspective and an M and A perspective, 0:04:57.760 --> 0:05:00.000 So we see both markets continue to be active. We're 0:05:00.040 --> 0:05:02.560 busy in technology. It's a huge area of US. We 0:05:02.640 --> 0:05:06.039 bought a firm here called Petski Prunier last year, and 0:05:06.120 --> 0:05:07.960 are you know the share of our M and A 0:05:08.000 --> 0:05:10.120 business has gone up substantially. I think we're number three 0:05:10.120 --> 0:05:13.680 in that mid market TMT area and we continue to 0:05:13.720 --> 0:05:15.920 see that being very active in the US. We've got 0:05:15.920 --> 0:05:19.960 a great healthcare presence, both biotech and healthcare services, and 0:05:20.000 --> 0:05:22.880 that's been very active for us. So broadly speaking, we 0:05:22.960 --> 0:05:26.000 continue to be pretty optimistic. Tony Dwyer, our main market 0:05:26.000 --> 0:05:29.000 strategists continues to see a very strong market over the 0:05:29.000 --> 0:05:32.039 next year. So well, you know, we're pretty bullish on 0:05:32.080 --> 0:05:34.640 that industry. Your stocks down, Third Team cent you today, 0:05:34.680 --> 0:05:37.440 what's what's the story? What's going on? Not in more 0:05:37.560 --> 0:05:43.560 more more sellers than buyers? No, thank you, No, I 0:05:43.600 --> 0:05:45.920 mean it's it's unfortunate that our stock is down because 0:05:45.920 --> 0:05:48.240 our earnings has been Our earnings have been incredibly strong. 0:05:48.279 --> 0:05:51.000 We've been increasingly profitable every year. Last year we did 0:05:51.040 --> 0:05:53.200 about eighty cents of share and earnings. This year today 0:05:53.240 --> 0:05:55.800 we've done forty one census share and earnings. You know, 0:05:55.839 --> 0:05:58.679 we trade at six to seven times earnings, and given 0:05:58.680 --> 0:06:01.200 that most of our earnings come from our wealth business, 0:06:01.200 --> 0:06:04.040 I think people see as as a relatively volatile capital 0:06:04.040 --> 0:06:07.159 markets type stock. But but the truth is seventy of 0:06:07.160 --> 0:06:09.720 our earnings last quarter came from our wealth business and 0:06:09.720 --> 0:06:12.240 that's been a growing area of profitability. We've been able 0:06:12.240 --> 0:06:15.520 to attract a remarkable number of new advisory teams in 0:06:15.520 --> 0:06:18.440 our Canadian wealth business and in our UK wealth business, 0:06:18.440 --> 0:06:21.200 which is forty five billion Canadian dollars. It's a big business. 0:06:21.640 --> 0:06:23.840 We've we've bought a lot of firms and integrated them 0:06:23.839 --> 0:06:26.080 in and our margins keep on going up, our profitability 0:06:26.120 --> 0:06:28.960 goes up. We've also been buying back our stock because 0:06:28.960 --> 0:06:31.560 we see it's relatively cheap. We bought forty million dollars 0:06:31.560 --> 0:06:35.280 Canadian stock last year and we're going to continue that activity. Dan, 0:06:35.320 --> 0:06:37.080 thank you so much for being with us today. Thanks 0:06:37.080 --> 0:06:39.480 so much for having me. Dan Davio. He is president, 0:06:39.600 --> 0:06:44.160 chief executive officer of Kenda cord Enuity Group corporation with 0:06:44.200 --> 0:06:47.640 forty four billion dollars of assets under management, based in Toronto, Canada, 0:06:47.680 --> 0:06:50.359 but he joins us here in our interactive broker studios 0:06:50.360 --> 0:06:53.080 in New York City, where it is just about the 0:06:53.120 --> 0:06:55.239 same type of weather as they normally see in Canada, 0:06:55.240 --> 0:06:58.880 which is absolutely freezing. But really interesting to talk about 0:06:59.040 --> 0:07:02.279 the outlook for cannabis given how much optimism there's been 0:07:02.640 --> 0:07:05.760 around that sector, although of late has been rather beaten up. 0:07:20.080 --> 0:07:22.800 Let's talk about emerging markets. This is another consensus call 0:07:22.920 --> 0:07:27.080 heading into is that emerging markets will outperform on the 0:07:27.120 --> 0:07:30.160 heels in part of a weaker dollar. Joining us now 0:07:30.200 --> 0:07:33.040 to talk about this, Vincent Ward. He is a global 0:07:33.080 --> 0:07:35.680 macro strategist at I N T l F C Stone, 0:07:36.240 --> 0:07:38.800 based in San Francisco. Vincent, thank you so much for 0:07:38.840 --> 0:07:42.040 being with us people saying that there are opportunities here. 0:07:42.320 --> 0:07:45.600 You're going a step further and calling currencies in developing 0:07:45.600 --> 0:07:51.320 markets dirt cheap. Please explain absolutely, um, and I mean 0:07:51.320 --> 0:07:55.000 he's been going on for a wide but uh, last 0:07:55.040 --> 0:07:58.400 year we added to the case, especially if you'll get 0:07:58.480 --> 0:08:01.640 Latin American currencies where in a way declines of like 0:08:03.040 --> 0:08:07.559 in in some of the spaceless currencies like literally and beso. Um, 0:08:07.680 --> 0:08:10.600 if you're going to look at Asia, it strikes me 0:08:10.640 --> 0:08:14.200 as um just in saying that basically the core in 0:08:14.280 --> 0:08:17.320 one or the Thai bath are basically where they were 0:08:17.320 --> 0:08:21.080 in two thousands, just after the station crisis, the Internet 0:08:21.080 --> 0:08:23.360 bubble in the US, and if you look how far 0:08:23.440 --> 0:08:26.920 these countries have come since that time, it seems odd 0:08:26.960 --> 0:08:30.080 that on a real effective basis the currencies have not 0:08:30.200 --> 0:08:33.400 appreciated in the past twenty years. So Vincent, in your 0:08:33.400 --> 0:08:35.840 most recent research note you do a maya culpa here. 0:08:35.880 --> 0:08:39.360 You had a call of overweight em and that's uh 0:08:39.600 --> 0:08:41.680 not been the right cause that e M is once 0:08:41.720 --> 0:08:45.240 again trailed kind of the SMP and broader markets. Why 0:08:45.240 --> 0:08:49.120 do you think emerging markets are in fact not getting 0:08:49.160 --> 0:08:54.360 rewarded Maybe just from evaluation perspective of nothing else right? Um, Well, 0:08:54.440 --> 0:08:58.040 I think last year it really came down to two 0:08:58.200 --> 0:09:02.240 macro developments that the mark get had not anticipated. One 0:09:02.480 --> 0:09:04.960 was the escaation of the trade wars in the summer. 0:09:05.000 --> 0:09:06.559 I mean, if you look at the beginning of the year, 0:09:06.679 --> 0:09:08.840 he looked like the e M trade was going to work, 0:09:09.320 --> 0:09:11.920 and then as soon as we had the new round 0:09:12.000 --> 0:09:15.080 of summer terrists and everything kind of broke down. And 0:09:15.080 --> 0:09:19.240 then the second element was the wave of protests that 0:09:19.320 --> 0:09:22.560 we saw from you know, Santiago to Peru to Baghdad 0:09:22.600 --> 0:09:26.200 to Cairo. UM. So that's what we took down, the 0:09:26.200 --> 0:09:30.880 the m trade down. UM. As far as the valuation gap, 0:09:31.000 --> 0:09:33.680 I mean, it's been there for close to ten years now, 0:09:33.720 --> 0:09:37.160 but it's it's getting too ridiculous proportions. I mean, one 0:09:37.600 --> 0:09:39.760 one way to look at it that I like is 0:09:39.800 --> 0:09:43.320 to compare the growth the valuation of the nastag emerging markets, 0:09:43.320 --> 0:09:47.360 because I feel, you know, we have two big growth narratives. 0:09:47.400 --> 0:09:49.760 For the past twenty years. It's been either you know, 0:09:49.840 --> 0:09:52.200 internet software is going to eat the world or the 0:09:52.320 --> 0:09:56.600 rising emerging market middle class. And right now that gap 0:09:56.679 --> 0:09:58.839 is about forty percent bigger than it was at the 0:09:58.880 --> 0:10:01.440 height of the Internet bubble. So I know people have 0:10:01.480 --> 0:10:03.800 said before, but at some point there will be some 0:10:03.840 --> 0:10:08.560 min reversion that ratio. How much of this hinges entirely 0:10:08.679 --> 0:10:11.400 on the dollar, and I say this because people are 0:10:11.440 --> 0:10:14.680 expecting the dollar to weaken a bit next year. The 0:10:14.720 --> 0:10:17.640 dollar has been the hardest call to get right, uh, 0:10:17.679 --> 0:10:19.560 and it really has driven a lot of what we've 0:10:19.559 --> 0:10:24.120 seen in developing markets. Now, absolutely, I mean this is 0:10:24.200 --> 0:10:27.720 this is indeed the crucial question it comes to. Yeah, 0:10:27.800 --> 0:10:30.679 I mean the emerging market trade is a synthetic short 0:10:30.800 --> 0:10:33.920 data trade. Uh. And the reason is, I mean, part 0:10:33.920 --> 0:10:36.240 of it for commodity explorers. Obviously you have a very 0:10:36.280 --> 0:10:38.400 clear relation. You know, the week of the daughter, the 0:10:38.440 --> 0:10:42.800 more the more to get. But also really what what 0:10:42.920 --> 0:10:45.400 makes makes it special recycle is the amount of data 0:10:45.480 --> 0:10:48.800 debts that these emerging markets have contracted three point six 0:10:48.880 --> 0:10:52.800 trillion UM as of the latest b I S data. UH. 0:10:52.960 --> 0:10:55.080 And really, by the way, that is the one common 0:10:55.120 --> 0:10:58.120 team about emerging markets. I mean, emerging market has been 0:10:58.120 --> 0:11:01.480 a misnomer for you know, twenty years now. The only 0:11:01.559 --> 0:11:05.079 one thing in your monkey is like China, Malaysia, Turkey 0:11:05.160 --> 0:11:08.720 or Argentina having common is that they all borrowing dollars 0:11:08.760 --> 0:11:12.240 and they can print it um. So when the daughter weekends, 0:11:12.440 --> 0:11:15.880 they're you know, servicing plants get easier, they can eat 0:11:15.920 --> 0:11:18.400 morning if we policy at home, and you see both 0:11:18.440 --> 0:11:21.160 when the daughters strengthens, as it has in much of 0:11:21.200 --> 0:11:24.240 the past five years, you have balance of fame and 0:11:24.320 --> 0:11:26.360 critis all over the board. So it is indeed a 0:11:26.400 --> 0:11:31.360 daughter's short call, So Vincent, the trade deal between China 0:11:31.360 --> 0:11:34.200 and the US. It appears that we're making some progress 0:11:34.240 --> 0:11:36.560 on a phase one deal. We might even actually see 0:11:36.600 --> 0:11:41.520 something on paper one day. How critical is the trade deal, 0:11:41.920 --> 0:11:44.360 even if it's just a phase one or a light 0:11:44.679 --> 0:11:47.640 trade deal. How important is that for the psyche of 0:11:47.720 --> 0:11:51.520 emerging market investors? I think psyche is the is the 0:11:51.640 --> 0:11:54.320 right word again. I mean, we we've been, you know, 0:11:54.520 --> 0:11:56.959 very close to a trade deal. Four year, talks are 0:11:57.000 --> 0:11:59.079 going away. You get these tweets every day for four 0:11:59.160 --> 0:12:02.360 year now. Um, I have no instad as to what 0:12:02.600 --> 0:12:04.720 there is in that trade deal or you know, even 0:12:04.760 --> 0:12:06.360 if the trade deal is going to be the same 0:12:06.600 --> 0:12:08.679 in the from the perspective of China as it will 0:12:08.720 --> 0:12:11.400 be from the US. But all that matters, I think 0:12:11.520 --> 0:12:14.600 is is just no more insanity, as long as we 0:12:14.679 --> 0:12:17.560 don't have you know, we had, uh, you know, out 0:12:17.559 --> 0:12:19.640 of the blue, we say I'm going to hike Carris 0:12:19.640 --> 0:12:22.800 some you know, this country or whatever next year, which 0:12:22.840 --> 0:12:25.640 I think is unlikely because that's of the electoral cycle, 0:12:26.440 --> 0:12:28.600 just the promise of stability. I mean, we don't need 0:12:28.679 --> 0:12:31.680 to solve I t there's probably no solution there anyway 0:12:31.840 --> 0:12:35.600 or states on enterprise. Just no more insanity and there's 0:12:35.600 --> 0:12:37.920 some really The other thing to you know, think about 0:12:38.160 --> 0:12:40.720 is it's not just about the trade deal. I mean 0:12:40.720 --> 0:12:43.400 if you look at the auto cycle in China or 0:12:43.440 --> 0:12:46.960 you know, even even cell phones, these things are bottoming 0:12:47.040 --> 0:12:49.920 on their own. So as long as we don't kind 0:12:49.920 --> 0:12:53.679 of you know, run the market with with unpredicted policies, 0:12:54.040 --> 0:12:56.679 things should get better. I love it. Our headline for 0:12:56.679 --> 0:13:00.959 this segment is going to be, uh emerging market global 0:13:01.000 --> 0:13:04.439 macro strategist says, no more insanity, Just stop the insanity 0:13:04.520 --> 0:13:07.680 and emerging markets can rally. I'm wondering, are there any 0:13:07.760 --> 0:13:10.640 developing market currencies that you do not like that you 0:13:10.640 --> 0:13:19.000 think are going to underperform? Sorry developing market currencies? Yeah, okay, 0:13:19.120 --> 0:13:23.560 I mean you still have the the generally the most 0:13:23.640 --> 0:13:25.640 vulnerable ones, right, I mean I don't ones to have 0:13:25.679 --> 0:13:27.480 that you know a lot of either other death current 0:13:27.520 --> 0:13:32.120 account deficits. Uh so. But again so that would be 0:13:32.160 --> 0:13:36.960 the Argentine pezo, the South African rand to something ex 0:13:37.200 --> 0:13:41.000 maybe the Indonesian rupiah. But all these currencies have been 0:13:41.200 --> 0:13:44.719 so massacreed, uh you know in the past two to 0:13:44.840 --> 0:13:48.600 three years that you've gotta wonder if despite the vulnerabrilities, 0:13:48.840 --> 0:13:51.640 they could actually be kind of the the best on 0:13:52.120 --> 0:13:56.080 on on the bottoming on the bottoming process. Um, it's 0:13:56.080 --> 0:13:58.080 the same suffering up all the Chilean peso you know 0:13:58.160 --> 0:14:02.840 got down. I'm sure people would you know that that's 0:14:02.840 --> 0:14:04.800 one of the ones that will come come come top 0:14:04.800 --> 0:14:07.240 of mind. But again there's so much damage that have 0:14:07.360 --> 0:14:09.840 been done that even a week emerging market currencies may 0:14:09.840 --> 0:14:12.959 actually do well next year. Vincent Ward, thank you so 0:14:13.040 --> 0:14:15.520 much for joining us Vincent as global macro strategist for 0:14:15.679 --> 0:14:19.160 I N T l f C Stone, based in San Francisco. 0:14:19.200 --> 0:14:22.440 I like his note basically saying, all right, we were 0:14:22.560 --> 0:14:25.160 really wrong in twenty nineteen with our overweight call on 0:14:25.200 --> 0:14:27.880 emerging markets, but we're sticking with it. And here are 0:14:27.920 --> 0:14:48.680 the reasons why that takes um some gumption. Certainly right now, 0:14:48.720 --> 0:14:51.480 we want to focus on everything else going on in Washington, 0:14:51.600 --> 0:14:55.360 d C. Other than impeachment, which brings us to healthcare 0:14:55.400 --> 0:14:59.080 backstas and joining us now in our interactive broker studio 0:14:59.200 --> 0:15:00.960 is and the reason why we wanted to have you here, 0:15:01.320 --> 0:15:03.480 uh is because we always love having you on. You 0:15:03.600 --> 0:15:07.040 cover biotech and Pharma and healthcare over at Bloomberg opinion. 0:15:07.040 --> 0:15:09.840 But it's because there was a court decision having to 0:15:09.880 --> 0:15:14.640 do with Obamacare that seemed to be potentially detrimental to 0:15:14.800 --> 0:15:16.640 the healthcare program. Can you talk a little bit about 0:15:16.680 --> 0:15:20.120 what the decision was. Yeah, absolutely, So. This is a 0:15:20.200 --> 0:15:22.200 long running case that that made its way to the 0:15:22.280 --> 0:15:26.240 Fifth Circuit, And what they essentially decided was that the 0:15:26.240 --> 0:15:30.400 individual mandate, which is you know from a prior core case. 0:15:30.520 --> 0:15:34.080 You know, this is a decade of legal back and forth, 0:15:34.440 --> 0:15:37.440 was deemed at tax. Then Congress zeroed out the tax. 0:15:38.720 --> 0:15:40.720 So because it's zeroed out, it can no longer be 0:15:40.760 --> 0:15:45.680 seen as attacks. Therefore it's once again unconstitutional. But they 0:15:45.840 --> 0:15:49.080 punted essentially on the more important part the case. Because 0:15:49.200 --> 0:15:52.560 the individual mandate is zeroed out, it doesn't really matter 0:15:53.000 --> 0:15:56.840 that it's unconstitutional. What matters is whether that means that 0:15:56.880 --> 0:15:59.040 the rest of the law or parts of the rest 0:15:59.080 --> 0:16:01.480 of the law have to go with did And instead 0:16:01.480 --> 0:16:04.040 of making some kind of decision on that, they kicked 0:16:04.080 --> 0:16:07.800 it back down to the lower court judge you already 0:16:07.880 --> 0:16:10.400 ruled that he thought the whole law was unconstitutional. They 0:16:10.480 --> 0:16:13.360 just thought he wasn't careful enough or didn't look at 0:16:13.360 --> 0:16:16.520 the details enough to make that decision, although he probably 0:16:16.560 --> 0:16:18.760 will end up making the same decision. He's a he's 0:16:18.760 --> 0:16:22.200 a pretty conservative guy. So what our next steps here? 0:16:22.240 --> 0:16:25.160 Because I'm just thinking about the election coming up, and boy, 0:16:25.160 --> 0:16:27.320 it's once again healthcare is going to be a you know, 0:16:27.400 --> 0:16:30.680 a hot button issue for the candidates. How's the timing 0:16:30.720 --> 0:16:33.000 of this gonna play into what do youthink? Yeah, so 0:16:33.080 --> 0:16:36.800 it mostly depends on what the Supreme Court decides to do. 0:16:37.320 --> 0:16:42.360 They could wait until we get another decision from from 0:16:42.400 --> 0:16:45.320 that lower court judge and then um, you know that 0:16:45.400 --> 0:16:47.840 it might be appealed up to them. I believe that 0:16:47.920 --> 0:16:50.080 Democrats are going to try and take it directly to 0:16:50.160 --> 0:16:52.920 the Supreme Court, um, you know, in the hope of 0:16:52.960 --> 0:16:56.120 a faster resolution and putting this front and center in 0:16:56.200 --> 0:16:59.920 the election, because it is probably not a court case 0:17:00.400 --> 0:17:03.440 that at this point is is of benefits of the 0:17:03.440 --> 0:17:07.040 Trump administration, even though it's his Justice Department that continues 0:17:07.080 --> 0:17:11.200 to push it because we saw in in the midterm elections, uh, 0:17:11.280 --> 0:17:13.400 portions of the law that that could be struck down 0:17:13.440 --> 0:17:16.879 by this case. Protections for people with prehisting conditions, staying 0:17:16.880 --> 0:17:19.720 on your parents and surrow stuff like that could go 0:17:19.800 --> 0:17:23.080 with it, and that's become wildly popular. So if this 0:17:23.440 --> 0:17:26.359 lawsuit does strike the law down in its entirety, it 0:17:26.400 --> 0:17:28.800 would create a big mess for the election and the 0:17:28.800 --> 0:17:31.560 healthcare system at large. I'm wondering, we we've been talking 0:17:31.680 --> 0:17:36.520 for years now about uncertainty around Obamacare. What's the practical 0:17:36.560 --> 0:17:40.720 implication of having a sort of overhang of a cloud 0:17:41.600 --> 0:17:45.560 on the healthcare program given the fact that insurance companies 0:17:45.680 --> 0:17:48.600 and healthcare providers have to have you know, two year, 0:17:48.720 --> 0:17:52.600 three year or four year outlooks for their financial plans. Yeah, 0:17:52.640 --> 0:17:55.240 I mean it's created uh, you know, there's been a 0:17:55.280 --> 0:17:58.280 whole series of messes um. You know, if you go 0:17:58.359 --> 0:18:00.919 back all the way, so the earliers of law, the 0:18:00.920 --> 0:18:05.159 fact that the Medicaid expansion wouldn't be universally implemented, throwing 0:18:05.240 --> 0:18:08.760 out certain categories of subsidies for insurers all along, and 0:18:09.040 --> 0:18:11.800 then losing the individual mandate all along. This is sort 0:18:11.800 --> 0:18:15.520 of made it harder to price plans to to profitably 0:18:15.560 --> 0:18:18.320 participate in the market UM. And and and that's created a 0:18:18.320 --> 0:18:22.000 lot of disruption and made insurance UM on the individual 0:18:22.040 --> 0:18:26.439 market pretty unaffordable for people that don't qualify for for subsidies, 0:18:26.600 --> 0:18:29.159 the fact that their income linked subsidies. That's kept the 0:18:29.200 --> 0:18:33.000 market stable enough to survive. But um, you know, enrollment 0:18:33.119 --> 0:18:36.960 is way down from what was initially initially forecasted, and 0:18:36.960 --> 0:18:39.960 and it you know, it's down again this year. It persists, 0:18:40.000 --> 0:18:42.480 but not in the form that the people who are 0:18:42.600 --> 0:18:44.400 the law would have voped. Yeah, that's kind of where 0:18:44.400 --> 0:18:46.280 I wanted to go. It just seems like at Leasta mentioned, 0:18:46.480 --> 0:18:48.880 you know, it's since Obamacare has been passed, it's been 0:18:49.000 --> 0:18:51.320 it seems like it's the opposition forces and now the 0:18:51.560 --> 0:18:54.000 Republicans over the last three years have been chipping away, 0:18:54.080 --> 0:18:57.200 chipping away, chipping away at the Affordable Care Act. Is 0:18:57.240 --> 0:18:59.200 there a sense of like how much has even left 0:18:59.280 --> 0:19:03.679 of the original plan? Yeah, you know it it it 0:19:03.840 --> 0:19:07.280 is not what was originally envisioned. There are still you know, 0:19:07.320 --> 0:19:10.639 more than twenty million people that's still that are covered 0:19:10.720 --> 0:19:12.359 for the first time, that have insurance that might not 0:19:12.400 --> 0:19:15.840 otherwise not because of the individual market and because of 0:19:15.840 --> 0:19:18.800 the Medicaid expansion and then a variety of other you know, 0:19:18.880 --> 0:19:23.760 changes throughout the U system. Still enormously impactful and beneficial, uh, 0:19:23.920 --> 0:19:26.359 you know, but at the same time, it's it's not 0:19:26.440 --> 0:19:28.439 what it might have been. Or on the other you know, 0:19:28.480 --> 0:19:30.640 you might say it's not what it could be with 0:19:30.680 --> 0:19:34.440 a few tweaks to to some some loopholes and errors 0:19:34.440 --> 0:19:36.600 that that I'm sure the drafters would like to get back. 0:19:37.000 --> 0:19:38.720 Or if you, you know, you boost this up to 0:19:38.800 --> 0:19:41.280 these a little bit, you could get that coverage number 0:19:41.359 --> 0:19:44.360 a lot higher and make that coverage a lot more useful. 0:19:45.000 --> 0:19:47.480 But that will take a very different Congress than the 0:19:47.480 --> 0:19:50.359 one we have right now. So just real, quoc, twenty 0:19:50.359 --> 0:19:53.040 million people covered that wouldn't be covered. What's the bad 0:19:53.080 --> 0:19:56.160 part of that? I mean, what's the opposition saying about 0:19:56.160 --> 0:19:59.960 that it's just too expensive? Um? Well, the the argument 0:20:00.040 --> 0:20:05.280 in is that by forcing insurance to cover, you know, 0:20:05.640 --> 0:20:09.840 make women, making sure have give the same place to 0:20:09.920 --> 0:20:16.040 women as men um, that's basically cuts it freedom and 0:20:16.160 --> 0:20:19.399 kills the market. You know, I'm I'm I'm articulating for 0:20:19.520 --> 0:20:21.600 a certain angle because I think the arguments are bad. 0:20:22.200 --> 0:20:24.879 But but more or less, it's okay, they've made the 0:20:24.920 --> 0:20:30.400 market um less functional by adding these regulations. Yeah. Max Neeson, Biotech, 0:20:30.480 --> 0:20:33.240 Farm and Healthcare Commus for Bloomberg Opinion. Every time you 0:20:33.240 --> 0:20:34.920 walk in here, I think I'm gonna get smarter, but 0:20:34.960 --> 0:20:37.320 I just it just reminds me this healthcare thing is 0:20:37.440 --> 0:20:40.840 brutally complex. Max. Thanks so much for joining us. We 0:20:40.880 --> 0:20:43.440 appreciate it. It's something that you constantly have to pay 0:20:43.440 --> 0:20:58.959 attention to it because it is constantly changing. We are 0:20:59.080 --> 0:21:02.160 right smack in the middle of the holiday shopping season 0:21:02.200 --> 0:21:04.120 to get an update on what's going on out there 0:21:04.160 --> 0:21:06.280 in the world of retail. We welcome back our good 0:21:06.320 --> 0:21:09.440 friends Sema Shaw. She is director of Consumer and Retail 0:21:09.480 --> 0:21:13.000 Trends at Credit Intel, formerly a Bloomberg Intelligence. She joins 0:21:13.040 --> 0:21:16.120 us here in our Bloomberg Interactive Broker studios. Sama, thanks 0:21:16.160 --> 0:21:18.040 so much for joining us again. We always love having 0:21:18.040 --> 0:21:23.359 you talking retail. How is the holiday selling season going. 0:21:23.400 --> 0:21:25.600