WEBVTT - Angela Merkel Pre-Empts Power Vacuum With Exit Strategy 0:00:05.800 --> 0:00:08.720 Welcome to the Bloomberg p m L Podcast. I'm pim Fox. 0:00:08.760 --> 0:00:11.440 Along with my co host Lisa A. Bramowitz. Each day 0:00:11.480 --> 0:00:15.000 we bring you the most important, noteworthy, and useful interviews 0:00:15.040 --> 0:00:17.520 for you and your money, whether you're at the grocery 0:00:17.560 --> 0:00:20.560 store or the trading floor. Find the Bloomberg p m 0:00:20.680 --> 0:00:26.799 L Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot Com. 0:00:26.840 --> 0:00:30.840 Angela miracles reign as the head of Germany appears to 0:00:30.920 --> 0:00:34.319 be coming to an end. This is the news uh 0:00:34.400 --> 0:00:37.240 this morning, we are broadcasting live from the Bloomberg Interactive 0:00:37.360 --> 0:00:41.400 Broker's studios. What does this mean for arguably the most 0:00:41.440 --> 0:00:46.400 powerful country in the European Union going forward? Joining us now, 0:00:46.440 --> 0:00:49.720 Irene finnel Hannegman. She's an adgict Professor of International Affairs 0:00:49.720 --> 0:00:52.640 at Columbia University. Irene, thank you so much for being 0:00:52.800 --> 0:00:55.920 with us. What did you make of this announcement this 0:00:56.000 --> 0:00:59.280 morning from Uncle Bob. Well, first of all, this was 0:00:59.360 --> 0:01:05.240 clearly talk because both the international markets and certainly in 0:01:05.280 --> 0:01:08.080 Germany itself, this was not expected. But I do want 0:01:08.120 --> 0:01:11.000 to make one or two points. We have to understand 0:01:11.040 --> 0:01:13.559 that Andrea Macil has announced that she is stepping down 0:01:13.640 --> 0:01:16.160 from the c E C d U. In other words, 0:01:16.160 --> 0:01:19.880 she will no longer be in the leader of her party, 0:01:20.120 --> 0:01:24.440 which she has been actually UH since almost thirteen years, 0:01:24.760 --> 0:01:28.760 almost twenty years. Excuse me. However, she is not stepping 0:01:28.800 --> 0:01:31.920 down from the translorship. This is very important. She is 0:01:31.959 --> 0:01:34.480 still in her fourth term as Chancellor and will be 0:01:34.560 --> 0:01:37.920 till two thousand twenty one unless for some reason there 0:01:38.000 --> 0:01:41.240 is another real crisis and she is forced out. So 0:01:41.400 --> 0:01:44.240 at this point, which is the reason why there has 0:01:44.280 --> 0:01:46.480 not been as great a shock as they could have been, 0:01:46.840 --> 0:01:49.880 she is not stepping down as Chancellor. That is the 0:01:49.960 --> 0:01:52.520 first thing. The second point I want to make that 0:01:52.640 --> 0:01:54.760 she really at this point did not have a choice, 0:01:54.960 --> 0:01:58.240 as there have been severe electoral losses both in Bavarian 0:01:58.320 --> 0:02:00.600 and Hesse in the last two weeks, and her party 0:02:00.600 --> 0:02:03.840 would choose toff close to has now some been somewhere 0:02:03.880 --> 0:02:07.000 in the twenties, so it was clear that this has 0:02:07.080 --> 0:02:11.120 become more disruptive to have her in charge of that. However, 0:02:11.639 --> 0:02:15.400 I think we never need to underestimate Angel America. In 0:02:15.480 --> 0:02:18.160 many ways, we have to remember she's been underestimated to 0:02:18.400 --> 0:02:21.959 she first came into politics in the ninety nineties under 0:02:22.000 --> 0:02:25.000 Trancellor Cold she was called the Matron, the young lady. 0:02:25.400 --> 0:02:30.640 She then became Muttie, the protective mother figure for Germany, cautious, 0:02:30.639 --> 0:02:34.919 protective and in a sense always pragmatic. So the question 0:02:35.040 --> 0:02:39.080 is is this in fact a very very smart preemptive 0:02:39.160 --> 0:02:44.600 move which instead of risking total disruption and intra factional fights, 0:02:45.160 --> 0:02:49.680 is she now stepping aside before being forced out, but 0:02:49.800 --> 0:02:53.040 actually doing this very much on her own terms. So 0:02:53.280 --> 0:02:57.160 I think that this is still a story in progress. 0:02:57.200 --> 0:03:01.240 This is not a definitive story. The other issue is 0:03:01.280 --> 0:03:03.440 who now takes over as head of the c DU. 0:03:04.280 --> 0:03:09.360 Her chosen successor would be any great Kranenbauer, who was 0:03:09.400 --> 0:03:11.880 the second in command of the c d U and 0:03:11.919 --> 0:03:15.320 who could ideally be able to lead thought a much 0:03:15.400 --> 0:03:19.359 stronger c DU Green coalition, as the Green Party has 0:03:19.360 --> 0:03:23.839 shown very unexpected strength in the last two regional elections. 0:03:24.280 --> 0:03:27.400 So we are still right now in the wait and see. 0:03:27.680 --> 0:03:32.520 Angelmack led Europe through the financial basically all of the 0:03:32.560 --> 0:03:36.040 financial crisis, including the sovereign death crisis. As key player 0:03:36.440 --> 0:03:39.440 before that, she was the one who led Europe into 0:03:39.520 --> 0:03:43.920 a full Eurozone and the European Monetary Union. She has 0:03:44.080 --> 0:03:47.200 in a sense always had to play a tough role, 0:03:47.680 --> 0:03:51.640 often a good cop bad cop versus other European leaders. 0:03:52.040 --> 0:03:54.760 But right now is Europe is again at the cusp 0:03:54.880 --> 0:03:59.800 of two major crises, Brexit and potentially Italy. It's very 0:04:00.000 --> 0:04:04.640 important that are America is down. She's not necessarily out, 0:04:05.280 --> 0:04:08.080 so this I think is essential right now. This is 0:04:08.240 --> 0:04:10.600 say sentiment. I was listening to the German press and 0:04:10.680 --> 0:04:14.360 media this morning. There's a sense of shock across Germany. 0:04:14.440 --> 0:04:17.640 Whether people liked her or hated her, agreed or disagreed. 0:04:17.880 --> 0:04:22.120 The terms that we're hearing is dignified how she presented 0:04:22.120 --> 0:04:26.360 Germany to the world, and extraordinary, brilliant and pragmatic politician 0:04:26.880 --> 0:04:30.679 and very much still the sense of seeing what role 0:04:31.000 --> 0:04:35.320 does she play now the tragedy with are America, and 0:04:35.360 --> 0:04:37.960 it should have been in a way her greatest moral 0:04:38.040 --> 0:04:42.599 victory was the refugee crisis in two thousands fifteen. Uh, 0:04:42.680 --> 0:04:46.320 this was a moral decision, it was not a political decision, 0:04:46.440 --> 0:04:48.760 perhaps for the first time in her life, that she 0:04:49.080 --> 0:04:52.719 stood outside of politics, as brilliant politicians she is. And 0:04:52.920 --> 0:04:56.479 unfortunately the assimilation did not occur she had hoped. It's 0:04:56.520 --> 0:04:59.880 been an unmitigated failure there was never a plan being 0:05:00.320 --> 0:05:04.320 Eastern and Central Europe immediately closed borders and closed their doors. 0:05:04.400 --> 0:05:07.960 And the great tragedy historically is that this actually led 0:05:08.200 --> 0:05:11.280 to the extreme right wing form a neo Nazi party, 0:05:11.560 --> 0:05:15.320 the a f D Atma Tifol Deutschland, coming into the 0:05:15.360 --> 0:05:20.719 German Parliament when Marker won her fourth UH chancellorship and 0:05:21.600 --> 0:05:23.960 at this point is still a major problem for them 0:05:24.000 --> 0:05:26.719 to deal with just quickly. I read can can you 0:05:26.839 --> 0:05:31.159 describe in your experience what do you believe the disposition 0:05:31.200 --> 0:05:36.159 of the German government will be like without Angela Merkel? Well, 0:05:36.240 --> 0:05:40.800 I think the problem is can she maintain still enough 0:05:40.960 --> 0:05:45.880 strength and leadership as chancellor versus what she always wanted 0:05:45.920 --> 0:05:47.839 to do is to be both head of the party 0:05:48.200 --> 0:05:52.240 and chancellor. There is a precedent. Schroeder tried this when 0:05:52.240 --> 0:05:54.560 he was forced out of his party in two thousand 0:05:54.680 --> 0:05:57.400 four and remains still transferred to the end of his 0:05:57.560 --> 0:06:01.520 term in two thousand five. Hard to know. In my opinion, 0:06:01.640 --> 0:06:05.320 I think Marcus can probably do this. It'll be interesting 0:06:05.400 --> 0:06:08.720 to see whether the shop of Andrea Marcos stepping down 0:06:09.320 --> 0:06:13.160 in a way wakes up some of these groups within 0:06:13.200 --> 0:06:16.640 her own party and brings about in fact more rather 0:06:16.720 --> 0:06:21.000 than less cohesion. Uh, this is still very unclear at 0:06:21.000 --> 0:06:23.600 this point. As I said, the feeling I had this 0:06:23.680 --> 0:06:27.680 morning was that everyone is genuinely in shock right now 0:06:27.960 --> 0:06:30.240 and trying to figure out how to pick up the pieces. 0:06:30.279 --> 0:06:34.880 Irene vanel Hanagan, thank you very much, Adjunct Professor, International Affairs, 0:06:35.279 --> 0:06:42.680 Columbia University. You're listening to Bloomberg Markets. We're broadcasting from 0:06:42.680 --> 0:06:47.000 the Bloomberg Interactive broker's studios. Our topic now is Tesla 0:06:47.640 --> 0:06:51.680 and joining us as Robert Hockett, Professor of laud Cornell University, 0:06:51.760 --> 0:06:54.640 also a consultant for the New York Federal Reserve and 0:06:54.720 --> 0:06:58.520 for the International Monetary Fund. And you think having a 0:06:58.560 --> 0:07:02.119 professor of law comment Tesla not going to talk about 0:07:02.200 --> 0:07:04.880 zero to sixty. We're going to talk about the Federal 0:07:04.920 --> 0:07:10.400 Bureau of Investigation and potential misstatements related to production of 0:07:10.480 --> 0:07:14.440 Model three Sedans. Bob Hockett, what can you tell us 0:07:14.480 --> 0:07:18.120 about this investigation and have you seen anything similar in 0:07:18.160 --> 0:07:21.840 the past? Well, in many ways, um, actually thanks for 0:07:21.840 --> 0:07:23.760 having me on you guys. Um, in many ways this 0:07:23.920 --> 0:07:26.760 is quite reminiscent of the investigation late in the summer 0:07:27.280 --> 0:07:31.440 about mr Or in connection with Mr Musk's tweets right 0:07:31.480 --> 0:07:36.320 about the funding being secured for UH take private transaction, 0:07:36.760 --> 0:07:40.080 it looks as though it's the same sort of thing effectively, UM. 0:07:40.120 --> 0:07:41.600 The worry is that there might have been a bit 0:07:41.600 --> 0:07:43.640 of an overstatement, in other words, a bit of an 0:07:43.640 --> 0:07:48.120 over optimistic statement UM, concerning how ready Tesla was to 0:07:48.200 --> 0:07:51.040 meet its production targets. UH. And the question is whether 0:07:51.080 --> 0:07:56.720 that that overstatement was intentional or reckless, or you know, 0:07:56.800 --> 0:08:00.880 designed to get the shareholders and perspect active shareholders to 0:08:00.880 --> 0:08:05.560 be themselves over optimistic about testless prospects. You know. I 0:08:05.640 --> 0:08:08.880 have to wonder, in this new era of social media 0:08:09.040 --> 0:08:12.200 and a lot of CEO is taking to Twitter, how 0:08:12.240 --> 0:08:16.559 that changes the scenario from a legal perspective. In other words, 0:08:17.080 --> 0:08:20.960 Elon Musk is known as UH an extraordinary human being 0:08:21.040 --> 0:08:24.120 who it can be a bit bombastic, and so does 0:08:24.160 --> 0:08:27.680 that sort of make him less credible and thus less 0:08:27.720 --> 0:08:32.480 liable for misstatements. I think that's a great question, Lisa. 0:08:32.760 --> 0:08:35.360 In theory it could, and I think even in theory 0:08:35.440 --> 0:08:38.560 it should, in the sense that in general, what we 0:08:38.600 --> 0:08:41.640 ask when we're asking whether somebody is misleading investors or 0:08:41.640 --> 0:08:44.480 attempting to mislead investors or acting in a manner that 0:08:44.600 --> 0:08:48.480 is likely to mislead investors. A central inquiry at the 0:08:48.520 --> 0:08:52.120 core of that particular inquiry is what would a reasonable 0:08:52.200 --> 0:08:56.280 investor believe or what would a reasonable investor take the 0:08:56.360 --> 0:08:59.720 speaker to be meaning right? Or how much credence or 0:08:59.720 --> 0:09:03.440 how much reliance would a reasonable investor sort of vest 0:09:03.600 --> 0:09:07.839 in the statements of the um, the the spokesperson, right, uh, 0:09:07.880 --> 0:09:10.280 And as you say, um, the fact that Mr Musk 0:09:10.400 --> 0:09:13.440 is kind of known as a kind of overly optimistic 0:09:13.520 --> 0:09:17.440 prognosticator sometimes, and the fact that social media is a 0:09:17.520 --> 0:09:21.200 very common menu for people to sort of over a 0:09:21.240 --> 0:09:24.600 common venue at which people make sort of overly optimistic 0:09:24.840 --> 0:09:27.960 statements of predictions, might make you think that the reasonable 0:09:27.960 --> 0:09:30.560 investor would take anything that they find by or come 0:09:30.880 --> 0:09:33.760 sort of here over social media with the proverbial grain 0:09:33.800 --> 0:09:37.320 of salt. Well, why do why have this investigation in 0:09:37.360 --> 0:09:39.719 the first place. It doesn't even seem as if the 0:09:39.960 --> 0:09:46.440 SECS investigation has curtailed Elon Musk's use of Twitter. Yeah, 0:09:46.480 --> 0:09:48.120 well so, I think a couple of things, right. It 0:09:48.160 --> 0:09:50.520 looks as though the d o J and the SEC 0:09:50.679 --> 0:09:54.960 alike are wanting to see to it that social media 0:09:55.160 --> 0:09:58.400 does not become a sort of gigantic loophole uh in 0:09:58.559 --> 0:10:02.840 the rules that were in early governed communications that firms 0:10:02.840 --> 0:10:05.360 make to the general public or that individual insiders within 0:10:05.400 --> 0:10:08.440 the firms do. So there's sort of, um, you know, 0:10:08.480 --> 0:10:12.640 they're basically trying to set the standard uh of reasonable illness, 0:10:12.720 --> 0:10:15.880 you might say, rather than to simply to react to 0:10:16.400 --> 0:10:20.120 a sort of antecedently given standard a reasonable nous um 0:10:20.200 --> 0:10:23.920 in those particular metaphora. UM. As for why Mr Musk 0:10:24.000 --> 0:10:26.080 has not stopped or why he kind of continues to 0:10:26.120 --> 0:10:28.760 speak optimistically, I think there are two reasons. One is, 0:10:28.800 --> 0:10:30.840 I think it's just in his nature um. And I 0:10:30.840 --> 0:10:33.480 actually don't fault him for that exactly. It It seems 0:10:33.520 --> 0:10:37.360 to come with the sort of entrepreneurial personality that leads 0:10:37.400 --> 0:10:39.320 somebody to innovate in many ways. In the way that 0:10:39.360 --> 0:10:42.559 he does, UH to be UM sort of overly optimistic 0:10:42.600 --> 0:10:44.760 sometimes or a kind of a booster. I mean, I 0:10:44.760 --> 0:10:49.040 think he believes his own overly optimistic uh claims, and 0:10:49.120 --> 0:10:50.959 you know, God love him for it in a sense. Right. 0:10:51.360 --> 0:10:53.960 The other reason I think that he continues is that, 0:10:54.000 --> 0:10:57.679 you know, the fines thus far have been fairly minimal. Right, 0:10:57.800 --> 0:11:00.360 as you guys know, he tweeted this weekend that um 0:11:00.520 --> 0:11:03.400 it was total forty million, that it was quote unquote 0:11:03.400 --> 0:11:06.280 worth it. Yeah, it's sort of maybe being viewed by 0:11:06.360 --> 0:11:08.000 him and others at the moment as sort of just 0:11:08.040 --> 0:11:10.440 one of the costs of doing business, as it were. 0:11:10.720 --> 0:11:12.880 So in other words, going back to your point about 0:11:12.920 --> 0:11:16.240 how regulators have been trying to close this loophole created 0:11:16.240 --> 0:11:21.760 by social media, are they failing? Um, well, I mean 0:11:21.760 --> 0:11:25.079 they're not. Let's say they're not succeeding yet, because it's 0:11:25.120 --> 0:11:27.760 there's a sense in which has only just begune right, 0:11:27.840 --> 0:11:29.920 and it's still kind of I think it's a bit 0:11:29.960 --> 0:11:33.199 of a toss up um where we're ultimately ultimately going 0:11:33.240 --> 0:11:36.760 to end up when it comes to communications over social media. 0:11:36.920 --> 0:11:39.520 I could imagine the law gradually developing in such a 0:11:39.520 --> 0:11:42.040 way as to recognize at least a sort of partial 0:11:42.160 --> 0:11:45.200 loophole in the sense that they say, well, social media 0:11:45.280 --> 0:11:49.200 is a little bit different from say formal communications or 0:11:49.240 --> 0:11:52.720 communications you know in shareholder meetings or you know, in 0:11:53.040 --> 0:11:55.719 the road shows or the like. Uh, and so we'll 0:11:55.760 --> 0:11:58.600 sort of make the standard a little bit more lenient there. 0:11:58.840 --> 0:12:02.000 I can still imagine that turning out to be, uh, 0:12:02.040 --> 0:12:05.280 the ultimate standard. I could also, of course imagine them saying, well, 0:12:05.320 --> 0:12:07.960 there's really nothing different about social media, and the very 0:12:08.000 --> 0:12:10.640 same standards will apply. And because we're just at the 0:12:10.679 --> 0:12:14.080 beginning of the process of determining that, and again the 0:12:14.080 --> 0:12:17.680 regulators will be the determinators ultimately. UM, it's kind of 0:12:17.720 --> 0:12:20.840 hard to say whether they're failing yet or not because 0:12:20.840 --> 0:12:23.880 we're just so still so early in that process. Bob Hockett, 0:12:23.920 --> 0:12:26.080 thank you so much for being with us. Really fascinating. 0:12:26.440 --> 0:12:29.400 Bob hocket is professor of law Cornell University, coming to 0:12:29.480 --> 0:12:32.240 us from Ithaca, New York. He's also a consultant for 0:12:32.280 --> 0:12:35.080 the New York Fed and the International Monetary Fund and Pam, 0:12:35.120 --> 0:12:37.520 you know, this is going to be an ongoing big question, 0:12:37.640 --> 0:12:41.520 especially as we have the cult of personality leading companies 0:12:41.640 --> 0:12:45.640 and leading also the advertising of those companies on social media. 0:12:45.640 --> 0:12:49.000 I mean, this is basically the facto advertising. What is 0:12:49.240 --> 0:12:51.480 sort of the loophole or what are the provisions? What 0:12:51.600 --> 0:12:54.440 can they can they cannot say on social media that 0:12:54.520 --> 0:13:01.240 might end up moving their shares A really interesting question. Well, 0:13:01.360 --> 0:13:05.440 Cure Leaf Holdings, this is a US cannabis producer. It 0:13:05.520 --> 0:13:09.080 began trading on the Canadian Securities Exchange with a valuation 0:13:09.080 --> 0:13:13.080 of about nine rather six billion dollars. It completed a 0:13:13.080 --> 0:13:17.880 reverse takeover of Canada's Lead Ventures. The company is based 0:13:17.880 --> 0:13:22.320 in Wakefield, Massachusetts. Joe Lusardi, the president of cure Leaf, 0:13:22.480 --> 0:13:26.600 joins us here in our Bloomberg Interactive Broker's studio. Joe, 0:13:26.600 --> 0:13:29.080 thank you very much for being here. Congratulations on your 0:13:29.080 --> 0:13:31.680 initial public offering. Thank you. Why did you decide to 0:13:31.800 --> 0:13:36.400 do it as a reverse takeover of lead Ventures rather 0:13:36.440 --> 0:13:38.760 than a pure I p O to be Canadida. That 0:13:38.800 --> 0:13:41.040 was the fastest way to the equity markets, and no 0:13:41.240 --> 0:13:43.960 US company has successfully done an IPO yet in the 0:13:44.000 --> 0:13:46.760 Canadian exchanges. But our offering was I p O like 0:13:46.840 --> 0:13:49.319 in its quality, so we did a full disclosure statement. 0:13:49.520 --> 0:13:52.280 We did a three week international road show and attracted 0:13:52.320 --> 0:13:55.400 investments from over a hundred institutions across the world. So 0:13:55.440 --> 0:13:58.560 we were excited about it. What are curra Leaf's biggest 0:13:58.559 --> 0:14:01.760 competitors and what exactly is curre Leaves business? So Curely 0:14:02.000 --> 0:14:06.960 is a vertical marijuana company. So we cultivate, manufacturing, dispense cannabis. 0:14:06.960 --> 0:14:10.040 We operate twenty eight dispensaries where the largest dispensary network 0:14:10.320 --> 0:14:12.400 under one brand in the US right now, and so 0:14:12.440 --> 0:14:15.719 we are the fastest growing largest US company. So is 0:14:15.760 --> 0:14:19.880 this uh for recreational or medical or both of our 0:14:19.920 --> 0:14:22.960 sales are medical. We service thirty three thousand unique patients 0:14:23.080 --> 0:14:25.400 last month. That's something I'm extremely proud of. And so 0:14:25.440 --> 0:14:28.480 we're primarily a medical business today. But many markets were 0:14:28.480 --> 0:14:31.720 in including Massachusetts, are liberalizing and they're converting from medical 0:14:31.720 --> 0:14:33.800 to adult use. So we can expect that we'll address 0:14:33.880 --> 0:14:36.640 that market in two thousand nineteen as well. Tell us 0:14:36.640 --> 0:14:39.720 a little bit about the process that a company has 0:14:39.800 --> 0:14:42.800 to go through in order to get a license to 0:14:43.040 --> 0:14:47.480 operate a dispensary, because there are so many different state 0:14:47.600 --> 0:14:50.800 rules and regulations, and then there's also the divergence between 0:14:50.840 --> 0:14:54.680 recreational use and medical use medicinal use. Correct. I mean, 0:14:54.680 --> 0:14:57.200 it's a really rigorous process. I think that you have 0:14:57.240 --> 0:14:59.520 to understand that each state is unique and they all 0:14:59.520 --> 0:15:03.240 have different regulatory requirements. But our business is primarily on 0:15:03.280 --> 0:15:04.800 the East Coast and those are some of the most 0:15:04.800 --> 0:15:08.000 regulated markets in the country. For example, in New Jersey, 0:15:08.040 --> 0:15:10.240 we had to be background checked by the New Jersey 0:15:10.280 --> 0:15:13.160 Gaming Commission as well as the state regulators. So, um, 0:15:13.160 --> 0:15:16.520 we are probably the most vetted, background checked individuals in 0:15:16.560 --> 0:15:18.240 the in the country. I would say at this point 0:15:18.240 --> 0:15:20.400 were we operate in ten states and so we've been 0:15:20.400 --> 0:15:23.680 through this, uh, you know, ten times already. So Joe, 0:15:23.720 --> 0:15:25.560 can you can you talk a little bit about what 0:15:25.640 --> 0:15:28.200 it's been like from your perspective watching the up and 0:15:28.320 --> 0:15:31.360 down in pot stocks that we've been experiencing and the 0:15:31.400 --> 0:15:35.160 comparisons between bitcoin and pot stocks. How has that sort 0:15:35.160 --> 0:15:37.720 of influenced your decision and when to go public and 0:15:37.760 --> 0:15:40.160 how Yeah, yeah, I mean, I mean, certainly the markets 0:15:40.160 --> 0:15:42.280 are volatile, no doubt, But I mean the reality is 0:15:42.280 --> 0:15:44.120 this is our first day of trading, not our last, 0:15:44.160 --> 0:15:46.680 and my job is to create long term shareholder value 0:15:46.680 --> 0:15:48.560 and I intend to do that. I don't think it's 0:15:48.560 --> 0:15:50.640 a good analogy to compare us to bitcoin. We're a 0:15:50.680 --> 0:15:53.280 real company with earnings and revenue, and I think that 0:15:53.320 --> 0:15:56.920 as we post quarterly returns, I think investors will recognize that, Um, 0:15:57.080 --> 0:15:58.440 you know, we're going to generate a lot of value 0:15:58.440 --> 0:16:01.440 for shareholders. I was I was going to ask about 0:16:01.480 --> 0:16:05.480 some of the medicinal research that's going on, because you know, 0:16:05.760 --> 0:16:11.880 it's understandable that t HC, which is the psychoactive UH 0:16:12.160 --> 0:16:15.320 portion of the cannabis plant, gets a lot of attention. 0:16:15.360 --> 0:16:18.920 But there's c B D, CBC, c b G. I mean, 0:16:18.920 --> 0:16:21.080 there are a lot of acronyms here. Can you just 0:16:21.480 --> 0:16:23.840 pull out a couple of them and explain to people 0:16:24.000 --> 0:16:26.560 what kind of research is going on? Absolutely, I mean 0:16:26.680 --> 0:16:29.320 there are over a hundred compounds and the cannabis plants, 0:16:29.400 --> 0:16:32.160 some of which we don't really understand yet. There's a 0:16:32.200 --> 0:16:35.360 lot of research happening internationally, and the reality is that 0:16:35.440 --> 0:16:37.440 we need that research to happen in the US, and 0:16:37.480 --> 0:16:41.280 so we're working very hard with our representatives and in Washington, 0:16:41.360 --> 0:16:42.720 d C. To get a bill pass so we can 0:16:42.720 --> 0:16:45.400 study cannabis in the US. UM. It's a shame that 0:16:45.440 --> 0:16:48.000 most of the research is happening UM internationally at the moment, 0:16:48.000 --> 0:16:50.960 but we have tremendous amount of anecdotal evidence that cannabis 0:16:51.040 --> 0:16:53.560 is effective. We have millions of people in the United 0:16:53.560 --> 0:16:56.520 States using cannabis to UM, you know, treat some very 0:16:56.600 --> 0:16:58.840 very serious diseases, and so there's no doubt in my 0:16:58.880 --> 0:17:00.720 mind that over time and we'll be able to do 0:17:00.760 --> 0:17:04.159 profound research and demonstrate that all that cannabinoids in the 0:17:04.280 --> 0:17:07.680 cannabis plant can have medicinal qualities. How much of your 0:17:07.760 --> 0:17:10.960 future business Planet hinges on the idea of marijuana being 0:17:11.000 --> 0:17:14.000 legalized for recreational use in the US well, as I said, 0:17:14.080 --> 0:17:17.720 right now, we're mostly medical, but certainly as the markets liberalized, 0:17:17.760 --> 0:17:20.240 we will address that market. If you think about the 0:17:20.240 --> 0:17:22.960 cannabis today in the US, by any estimate, it's about 0:17:22.960 --> 0:17:26.280 a seventy five billion dollar industry and only eleven billion 0:17:26.320 --> 0:17:28.200 of that is regulated at the moment, So there's a 0:17:28.280 --> 0:17:30.159 huge amount of growth we think ahead of us in 0:17:30.160 --> 0:17:33.679 this industry, both in medical formats and and recreational. There 0:17:33.680 --> 0:17:35.760 are only eight states that have adult use programs at 0:17:35.800 --> 0:17:37.520 the moment, so um, you know, we think there's a 0:17:37.560 --> 0:17:39.520 lot of growth to come and we'll be part of that. 0:17:39.720 --> 0:17:41.560 Thank you so much for being with us, My pleasure. 0:17:41.560 --> 0:17:45.000 Thank you. Joe Lisard loose Hardy is president of cure Leaf, 0:17:45.200 --> 0:17:47.760 which is based in Wakefield and is one of the 0:17:47.840 --> 0:17:52.479 largest cannabis retailers in the United States. Deciding UH an 0:17:52.520 --> 0:17:56.040 interesting way to list in Canada since in the US 0:17:56.200 --> 0:18:00.320 it is not broadly legalized, even on the medical side. 0:18:00.320 --> 0:18:05.120 PIM and the state. Uh, well, the individual provinces rather 0:18:05.200 --> 0:18:07.520 of Canada are going to be the ones that they're 0:18:07.560 --> 0:18:13.639 the ones that offer the products. The topic now is 0:18:13.840 --> 0:18:18.320 China considering a tax cut in order to revive and 0:18:18.400 --> 0:18:21.960 help their automotive industry. Brendan to Hearn is the chief 0:18:22.000 --> 0:18:25.359 investment officer for Crane Shares. They are experts when it 0:18:25.400 --> 0:18:28.320 comes to investing in China. Brendan joins us here in 0:18:28.359 --> 0:18:31.479 our eleven three oh studios. Thanks very much for being here. Brendon, 0:18:31.600 --> 0:18:34.480 Let's talk or have you talk about how bad is 0:18:34.520 --> 0:18:37.320 the automotive industry in China? Why do they need this 0:18:37.480 --> 0:18:41.560 tax cut? Well, China is still the global leader in 0:18:41.640 --> 0:18:44.960 terms of auto sales that you have, almost twenty four 0:18:45.000 --> 0:18:48.840 million cars were sold in China last year. GM alone 0:18:48.880 --> 0:18:52.240 sold more four million cars in China three million cars 0:18:52.240 --> 0:18:56.240 here in the US. But we've seen the UH rate 0:18:56.280 --> 0:18:58.439 of sales come down a bit. So in order to 0:18:58.480 --> 0:19:02.320 help push this con assumption, h autos is a big 0:19:02.359 --> 0:19:04.560 part of that, we're seeing a potential tax cut when 0:19:04.600 --> 0:19:07.760 it comes to car car purchases. How big are the taxes? 0:19:08.000 --> 0:19:11.439 And with this tax cut applied to global companies that 0:19:11.480 --> 0:19:14.119 don't that aren't based in China that are also rallying 0:19:14.119 --> 0:19:18.240 on this news. So the foreign autos that are imported, 0:19:18.280 --> 0:19:21.760 there is a there is a pretty meaningful tariff that's 0:19:21.760 --> 0:19:24.760 actually gone up due to this trade war. But a 0:19:24.800 --> 0:19:29.520 lot of the foreign automakers Volkswagen, GM Ford actually manufacture 0:19:29.560 --> 0:19:33.320 their vehicles within China and therefore avoid the tariff. So 0:19:33.520 --> 0:19:37.280 the ones that have the local manufacturing capacity would would 0:19:37.280 --> 0:19:39.359 actually benefit from that. And how big is the tax 0:19:39.400 --> 0:19:42.639 just in general, even for local cars, So the China 0:19:42.680 --> 0:19:45.680 has a vat tax which runs around twelve percent. Uh 0:19:45.720 --> 0:19:47.840 so it's it's you know, any sort of tax cut 0:19:47.920 --> 0:19:52.200 is gonna have a pretty meaningful impact the automotive industry 0:19:52.200 --> 0:19:54.840 in China, as you said, has an effect on companies 0:19:54.920 --> 0:19:59.440 outside of China. Is the economy in China doing well? 0:20:00.080 --> 0:20:03.160 So China it's a it's a big country geographically and 0:20:03.240 --> 0:20:05.879 likewise the economy is very big. So parts of China's 0:20:05.920 --> 0:20:09.879 economy are definitively slowing a lot of those traditional economic sectors. 0:20:10.760 --> 0:20:12.480 At the same time, parts of China are doing very 0:20:12.600 --> 0:20:16.040 very well. The more domestically oriented domestic consumption names are 0:20:16.160 --> 0:20:19.040 performing quite well. So as investors, we want to be 0:20:19.160 --> 0:20:21.840 very specific and where we're kind of placing our chips 0:20:21.920 --> 0:20:25.199 in order to really overweight the parts of China that 0:20:25.200 --> 0:20:27.840 are doing well, where lessening our exposure to some of 0:20:27.880 --> 0:20:30.960 those slowing parts of China. So Howard Marks, one of 0:20:31.000 --> 0:20:34.399 the co founders of Oak Trade, the world's biggest distress 0:20:34.440 --> 0:20:37.080 debt investors, said that he was actually interested in starting 0:20:37.119 --> 0:20:42.000 to buy distressed debt and equities in China. Um, what 0:20:42.080 --> 0:20:44.480 do you make of that? Well, certainly Mr Marks is 0:20:44.760 --> 0:20:48.199 you know, a very well regarded, well followed investors, so 0:20:48.280 --> 0:20:51.520 certainly his words carry a lot of gravitas um. And 0:20:51.560 --> 0:20:53.680 certainly I think it's very encouraging that at these two 0:20:53.680 --> 0:20:57.439 price levels in terms of equities Shanghai Composite, the pe 0:20:57.720 --> 0:21:00.399 is now under eleven four looking pees those are the 0:21:00.480 --> 0:21:04.360 ten uh. You get these discount sales um not very 0:21:04.359 --> 0:21:06.200 often as investors, so we do think it's a great 0:21:06.280 --> 0:21:11.639 entry point. You talked about specific areas of investment in China, 0:21:11.800 --> 0:21:17.399 So what are those specific areas? So we we Domestic consumption, healthcare, 0:21:17.480 --> 0:21:20.159 clean energy are three of our as well as the 0:21:20.200 --> 0:21:24.200 Belton Road related infrastructure names. UH. Domestic consumption is area 0:21:24.240 --> 0:21:26.920 that has come down a lot of the US list 0:21:26.920 --> 0:21:30.680 of Chinese internet and e commerce companies are off very dramatically. 0:21:31.280 --> 0:21:35.119 For instance, Tal Education Great Online Education It's it's stock 0:21:35.200 --> 0:21:38.840 is off over fifty percent from its June highs. They 0:21:38.880 --> 0:21:42.120 just reported earnings on Friday. They grew revenue fifty year 0:21:42.119 --> 0:21:44.639 over year. So I think that's where the sediment and 0:21:44.680 --> 0:21:47.960 the fundamentals have potentially diverged very greatly. I think that 0:21:48.080 --> 0:21:51.520 one challenge for investors with respect to China, and something 0:21:51.520 --> 0:21:54.239 that sort of clouds my understanding of what's going on 0:21:54.320 --> 0:21:58.080 there is the government intervention and the huge leverage pile 0:21:58.200 --> 0:22:01.359 that is sort of supported and fueled economy. You just 0:22:01.400 --> 0:22:04.040 have to wonder at what point will the government be 0:22:04.280 --> 0:22:07.119 unable to step in and support markets the way that 0:22:07.160 --> 0:22:09.480 they have continued to do so year after year to 0:22:09.560 --> 0:22:12.000 keep this growth going. So yeah, I mean, I would 0:22:12.000 --> 0:22:15.600 agree that the China's economy has one it has been slowing. 0:22:15.600 --> 0:22:18.560 They've been fighting an anti pollution campaign. They've been very 0:22:18.560 --> 0:22:21.520 aware of debt to GDP growth, so they're trying to 0:22:21.640 --> 0:22:25.040 de leverage uh debt in China. It's not the government, 0:22:25.080 --> 0:22:27.480 it's not the household, it's not the private companies, it's 0:22:27.480 --> 0:22:29.400 the big s O ees. So there's a big focus 0:22:29.440 --> 0:22:33.760 on basically making credit more difficult for these s o 0:22:34.000 --> 0:22:36.040 s make it more expensive at s, and they don't 0:22:36.040 --> 0:22:40.280