WEBVTT - Markets, Cannabis Industry, Yelp Survey 0:00:02.640 --> 0:00:05.320 Welcome to the Bloomberg Panel podcast. I'm Paul swing you 0:00:05.360 --> 0:00:07.680 along with my co host Lisa Brahma Wicks. 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 --> 0:00:17.960 podcast or wherever you listen to podcasts, as well as 0:00:17.960 --> 0:00:22.200 at Bloomberg dot com. We're getting some earnings. It's been 0:00:22.239 --> 0:00:24.880 a great year for pretty much everything because we have 0:00:24.920 --> 0:00:28.800 experienced the everything rally that if you were entirely expecting. 0:00:29.160 --> 0:00:31.479 Joining us on to talk about how to position heading 0:00:31.480 --> 0:00:33.800 into your end is Greg han. He is chief investment 0:00:33.840 --> 0:00:36.920 officer for Winthrop Capital Management, joining us here in our 0:00:36.960 --> 0:00:40.040 Bloomberg Interactive Broker studios. So, Greg, what are you doing 0:00:40.159 --> 0:00:42.839 cashing in, sitting on your hands and waiting for the 0:00:42.920 --> 0:00:46.279 year to pass. No, I wouldn't say we're cashing in, 0:00:46.280 --> 0:00:48.720 but we are moving to risk out of portfolios, both 0:00:48.760 --> 0:00:51.320 on the fixed income side and the equity side. This 0:00:51.400 --> 0:00:55.320 is something we started probably midway through the last quarter 0:00:55.640 --> 0:00:57.720 and we're trying to get it done before mid November. 0:00:58.080 --> 0:01:01.320 So what is your view for as we know pair 0:01:01.440 --> 0:01:03.319 through these earnings here and we start to look out, 0:01:05.440 --> 0:01:07.399 do you think the FED will be continued to be 0:01:07.440 --> 0:01:09.720 supportive and you might go a little bit more risk 0:01:09.760 --> 0:01:13.080 on as you head into next year. Um, so this 0:01:13.240 --> 0:01:15.440 is a change for us heading into this quarter. What 0:01:15.520 --> 0:01:18.000 we're looking at, we would have been saying, yes, we're 0:01:18.000 --> 0:01:20.600 going to continue to de risk. We're seeing enough momentum 0:01:20.600 --> 0:01:24.280 in Brexit and US China trade issues that could be 0:01:24.880 --> 0:01:28.440 a catalyst for fixed investment and consumption from a global standpoint, 0:01:28.760 --> 0:01:32.840 those barriers get reduced. I don't know that they'll be removed, 0:01:32.880 --> 0:01:36.240 but reduced. We could actually see this economic recovery go 0:01:36.720 --> 0:01:39.240 into the next two quarters in two thousand twenty. So 0:01:39.280 --> 0:01:42.960 which assets in particular look like a bye that wouldn't 0:01:43.000 --> 0:01:46.479 have otherwise looked like a bye? If Brexit is resolved 0:01:46.600 --> 0:01:48.920 and there is some sense of some sort of trade 0:01:48.920 --> 0:01:52.080 truce between the US and China. Large cap equity has 0:01:52.120 --> 0:01:54.040 had a great run, so the S and ps up 0:01:54.040 --> 0:01:56.760 over but when you look at mid cap and small cap, 0:01:57.120 --> 0:01:59.960 small caps legged. So that's one area, and with private 0:02:00.080 --> 0:02:02.760 credit expansion, we'd expect small cap to do well. The 0:02:02.800 --> 0:02:06.240 other areas the international space, developed countries have lagged. We 0:02:06.360 --> 0:02:08.880 have not been a big mean reversion kind of firm. 0:02:09.280 --> 0:02:12.040 We're looking for capital flows to help support that, and 0:02:12.080 --> 0:02:15.200 so we'll probably increase our allocation to international next year. 0:02:15.360 --> 0:02:17.960 And does that include emerging markets? It does, Yeah, as 0:02:17.960 --> 0:02:21.120 long as capital is flowing. And that was historically the 0:02:21.160 --> 0:02:25.200 European banks were big lenders into the the emerging economies. Um, 0:02:25.280 --> 0:02:27.000 but it's right now, it's still It looks like a 0:02:27.000 --> 0:02:28.679 train wreck when you look backwards, but you have to 0:02:28.720 --> 0:02:31.480 look forwards and look for the opportunity. So right now, 0:02:31.520 --> 0:02:34.680 what's your sort of breakdown in terms of the US 0:02:34.840 --> 0:02:39.959 versus international exposure? We're um in our in our portfolios 0:02:40.040 --> 0:02:44.880 were about fift internationals, so it would be developed, developed, 0:02:44.919 --> 0:02:49.680 five percent emerging. So in your fixed income portfolio, you know, 0:02:49.720 --> 0:02:52.520 I'm starting to think about credit quality a little bit 0:02:52.560 --> 0:02:54.720 more as were you know, ten eleven years into this 0:02:54.760 --> 0:02:58.400 economic cycle. It's got to end sometime. What are you 0:02:58.440 --> 0:03:01.400 see in terms of the credit quality? So we have 0:03:01.560 --> 0:03:05.400 been watching closely for a shift in credit and it's 0:03:05.400 --> 0:03:08.239 a great question. We're focused in the leverage loan market. 0:03:08.320 --> 0:03:11.600 That's where the biggest his you know, where the change 0:03:11.600 --> 0:03:14.800 in covenants, that's the first sign of a deterioration. But 0:03:14.840 --> 0:03:17.320 when you look at banks, the when you when you 0:03:17.360 --> 0:03:20.280 look at the loan lost provisions, UM, they're the banks 0:03:20.280 --> 0:03:22.200 are really really healthy right now. So we're not seeing 0:03:22.240 --> 0:03:25.160 it in the credit side. Go back twenty five years 0:03:25.200 --> 0:03:28.560 and two thirds of the investment grade market was rated 0:03:28.600 --> 0:03:32.680 single and higher. Today two thirds of the corporate market 0:03:32.720 --> 0:03:35.440 is rated triple B and lower. It's it's you know, 0:03:35.480 --> 0:03:38.440 it's it's shifted and we have lower interest rates and 0:03:38.440 --> 0:03:41.160 lower cost of capital for companies. It doesn't make sense 0:03:41.200 --> 0:03:43.840 from great So so people have been raising this issue 0:03:43.840 --> 0:03:46.320 for a while, and everyone's been looking for the cracks 0:03:46.360 --> 0:03:49.680 in credit markets, and some people point to leverage loans 0:03:50.080 --> 0:03:52.440 UH and even higher bond saying that there is a 0:03:52.560 --> 0:03:55.200 slice of them, both markets that have fallowen out of 0:03:55.240 --> 0:03:59.120 bed recently plunging in price. Is this a market event 0:03:59.680 --> 0:04:03.440 or an economic event. That's a good question, Lisa Um. 0:04:03.600 --> 0:04:06.960 From from the standpoint of capital flows, I would say 0:04:07.040 --> 0:04:11.160 that this is this is a capital market event, UM. 0:04:11.200 --> 0:04:13.800 And it's when you look at concentrations in certain sectors, 0:04:13.840 --> 0:04:16.200 like the energy sector in the high yield space, that's 0:04:16.200 --> 0:04:19.960 citiosyncratic I think in that area, UM. But the rest 0:04:20.040 --> 0:04:22.560 of the market looks. I mean it's it's credit has 0:04:22.560 --> 0:04:25.000 been really really healthy, consumers healthy, and we'll tell you 0:04:25.080 --> 0:04:29.599 the manufacturing sector is healthy. So the FED meets next week, 0:04:29.960 --> 0:04:33.359 UM on the what do you expect from the Fed? 0:04:33.440 --> 0:04:36.039 And do you think the Fed will continue to be 0:04:36.720 --> 0:04:39.120 dubbish and supportive of this economy? Yeah, Paul, I think 0:04:39.200 --> 0:04:42.400 this is um. We we're expecting twenty five basis points 0:04:42.480 --> 0:04:45.200 and then in December our base case has shifted out 0:04:45.200 --> 0:04:48.320 to a hold with improvement. It's all contingent on what 0:04:48.360 --> 0:04:51.080 we see how a Brexit and the US China trade issues. 0:04:52.080 --> 0:04:55.880 So right now, what do you like the least to 0:04:55.960 --> 0:04:59.560 own heading into your end? That's a great question. So 0:04:59.640 --> 0:05:02.680 financi twill assets have been challenged probably the least. Right 0:05:02.680 --> 0:05:06.960 now we are reducing significantly high yield. So we still 0:05:06.960 --> 0:05:08.920 have a short sleeve in short duration high yield, but 0:05:08.960 --> 0:05:12.320 hi yell pulling that that out, uh anything levered so 0:05:12.440 --> 0:05:15.160 leverage loans, b dcs. We want to stay out of 0:05:15.200 --> 0:05:18.520 the levered part of UM the markets, and we're really 0:05:18.600 --> 0:05:21.200 running right up the middle UM dividend paint stocks we 0:05:21.240 --> 0:05:23.760 still are invested in, So I was gonna shift gears 0:05:23.760 --> 0:05:26.159 to stocks. So Again, one of the things we hear 0:05:26.320 --> 0:05:30.080 a lot from folks that are managing money is need 0:05:30.120 --> 0:05:33.279 to be defensive. But me talk defensive whether it's utilities 0:05:33.400 --> 0:05:37.560 or reads or consumer staples. We also hear that those 0:05:37.560 --> 0:05:40.320 sectors aren't cheap, and so you kind of run into 0:05:40.320 --> 0:05:42.920 the risk because how do you manage that balance? Yeah, 0:05:42.920 --> 0:05:46.239 that's that's that's another good point that both bull sectors, 0:05:46.240 --> 0:05:48.240 reads and utilities have had a great run this year. 0:05:48.560 --> 0:05:51.279 And really what it is now is named names specific 0:05:51.640 --> 0:05:53.640 and if you're investing in e t F, you've gotta 0:05:53.640 --> 0:05:55.599 be careful because a lot of E t F sleeves 0:05:55.600 --> 0:05:59.599 have concentration issues in um single names like Microsoft in 0:05:59.600 --> 0:06:02.359 the in the technology sleeve. So you kind of have 0:06:02.440 --> 0:06:04.200 to do your homework to see what's in there. And 0:06:04.200 --> 0:06:07.120 you've got to pick your stocks right. So let's say 0:06:07.760 --> 0:06:10.560 you do everything right heading into your end, what kind 0:06:10.560 --> 0:06:13.200 of returns are you expecting? So if we ended the 0:06:13.279 --> 0:06:15.920 year today, which was I start to say that uh 0:06:15.960 --> 0:06:17.800 the S and P WED it would be twenty it 0:06:17.839 --> 0:06:21.400 would be return and bonds at eight percent in this 0:06:21.440 --> 0:06:23.880 interest rate environment, to have an eight percent return in 0:06:23.960 --> 0:06:27.560 fixed income is surreal, So then why not just cash 0:06:27.600 --> 0:06:30.120 in well, we have to stay fully invested. Were so 0:06:30.240 --> 0:06:32.880 much of what we do is either funding liabilities or 0:06:32.960 --> 0:06:35.599 relative return, and we're not market timers, and we're not 0:06:35.640 --> 0:06:38.080 good at that the timing thing. So we're about a 0:06:38.080 --> 0:06:41.080 fifth of the way through earnings. Anything jump out at you. 0:06:41.160 --> 0:06:43.160 Here's you kind of parsed through some of the early 0:06:43.200 --> 0:06:46.599 country reporting. Yeah, the banks have done really well. Again, 0:06:46.640 --> 0:06:48.800 I was surprised at how well the bank earnings have 0:06:48.880 --> 0:06:51.240 come through, and and um, so that was that was 0:06:51.279 --> 0:06:53.799 a pleasant surprise. We're we're gonna be looking at Microsoft 0:06:53.800 --> 0:06:57.600 coming up and the Amazon comes up this week also, 0:06:57.640 --> 0:06:59.960 so we're watching that. Sorry, are you long the banks 0:07:00.160 --> 0:07:03.800 right here? How's your exposure? Yeah, we've we've we've shifted. Um, 0:07:03.920 --> 0:07:06.800 we we swapped Bank America into City. We still own 0:07:06.920 --> 0:07:10.560 JP Morgan and we're trying to get into the regional sleeve. Um, 0:07:10.560 --> 0:07:13.720 we've been longholders of Wells Fargo and we're encouraged by 0:07:13.720 --> 0:07:16.360 new management. So very good. Greig Han, thanks so much 0:07:16.400 --> 0:07:19.040 for joining us. Craig Han as President, chief Investment Officer 0:07:19.320 --> 0:07:22.720 Winthrop Capital Management based in Indianapolis, but joining us here 0:07:22.720 --> 0:07:26.800 in our Bloomberg Broker's Interact. Their Brokers studio. Greig, thanks 0:07:26.840 --> 0:07:44.880 so much for joining us. All Right, now let's shift 0:07:44.880 --> 0:07:48.120 gears to UBS for getting earnings from a number of 0:07:48.160 --> 0:07:51.960 banks UVS reporting it's investment bank lagging behind here with 0:07:52.000 --> 0:07:56.520 all the details. Alison Williams, Bloomberg Intelligence Senior Financial Analyst. Alison, 0:07:57.040 --> 0:08:01.040 what are sort of the highlights of the financial report here? So? 0:08:01.080 --> 0:08:04.520 I think the number one highlight was the strong wealth flows, 0:08:04.600 --> 0:08:08.240 especially in Asia. This is of strategic importance for you, 0:08:08.360 --> 0:08:11.600 bas It's I think why a lot of investors own 0:08:11.640 --> 0:08:14.160 the stock and we saw sort of a dip last quarter, 0:08:14.840 --> 0:08:18.520 very strong flows there and invested assets at a record. 0:08:18.560 --> 0:08:21.480 Obviously we have to watch what's happening with asset prices 0:08:21.520 --> 0:08:25.280 going forward. The negative, um was the investment bank because 0:08:25.320 --> 0:08:30.000 you pointed out and so profit coming in below expectations. Um, 0:08:30.040 --> 0:08:32.560 you know a lot of companies have been beating the numbers. 0:08:32.640 --> 0:08:36.480 However they're beating, they're beating beaten down expectations and unfixed 0:08:36.520 --> 0:08:39.080 income treating which isn't a big as big of a 0:08:39.120 --> 0:08:42.600 piece for UBS. But I think that the critical thing 0:08:42.640 --> 0:08:45.640 that they talked about was they are they're reorganizing the bank. 0:08:45.679 --> 0:08:48.679 This is something that Bloomberg News has reported on UM. 0:08:48.760 --> 0:08:51.520 They didn't say specifics there, but they did say they're 0:08:51.520 --> 0:08:54.720 going to take a one hundred million dollar restructuring charge 0:08:55.440 --> 0:09:00.640 leading to ninety million dollars of annual savings going forward. So, Alison, 0:09:00.640 --> 0:09:02.800 what do you think what is your view of UBS? 0:09:02.920 --> 0:09:05.400 Can they continue to be? Well? First of all, are 0:09:05.440 --> 0:09:07.520 they a global investment bank? And if so, can they 0:09:07.559 --> 0:09:10.480 continue to be Because we've seen, you know, Deutsche Bank 0:09:10.640 --> 0:09:13.319 essentially say we're not a global investment bank and we're 0:09:13.360 --> 0:09:16.880 cutting back. What's the UB strategy? So I think they 0:09:16.920 --> 0:09:19.320 are global investment bank, but they do have a little 0:09:19.320 --> 0:09:22.240 bit of a different mix. So they are more focused 0:09:22.360 --> 0:09:26.160 on Asia and they are more focused on Europe UM, 0:09:26.200 --> 0:09:28.840 and so they say they're gaining share in those areas. 0:09:28.920 --> 0:09:30.920 We don't have sort of all the numbers in from 0:09:31.000 --> 0:09:33.600 from some of those local competitors to sort of validate 0:09:33.679 --> 0:09:37.080 that UM, but they are generally more focused on those 0:09:37.120 --> 0:09:40.280 areas which have been feeling the pressure. And I was 0:09:40.360 --> 0:09:43.559 waiting for you, Paul to ask me if the savings 0:09:43.600 --> 0:09:46.800 meant staff cut. That's where I was going. And I 0:09:46.880 --> 0:09:49.079 was prepared with my answer this time, which is you 0:09:49.120 --> 0:09:51.480 always asked me this class savings me and staff cuts. 0:09:51.880 --> 0:09:53.880 And my answer to you is always like, well, there's 0:09:53.880 --> 0:09:57.880 staff with Zoso technology and we're seeing both at ubs. 0:09:57.960 --> 0:10:00.600 And basically what they're saying is, look, you know, we 0:10:00.640 --> 0:10:03.560 are gonna cut some staff a hundred percent of the 0:10:03.559 --> 0:10:06.240 cost savings are going to be in compensation, but we're 0:10:06.240 --> 0:10:08.520 going to continue to invest in technology. And I think 0:10:08.559 --> 0:10:11.480 that's important because I think that's really what the US 0:10:11.559 --> 0:10:14.560 banks have done, right, is that you know, they sort 0:10:14.559 --> 0:10:17.439 of benefited from this virtuous cycle about our economy. We 0:10:17.559 --> 0:10:20.200 got the tax cuts, they were able to spend. But 0:10:20.280 --> 0:10:23.360 I think you know, UMS has had some interesting anecdotal 0:10:23.360 --> 0:10:29.319 wins in their research department. They have this UM Evidence lab. 0:10:29.600 --> 0:10:33.200 They've also invested in their electronic trading platform, and I 0:10:33.200 --> 0:10:35.640 think that's the story we're going to continue to hear 0:10:35.720 --> 0:10:38.240 more about. In terms of fixed income trading. We also 0:10:38.280 --> 0:10:40.880 got this big announcement from Deutsche Bank. We knew they 0:10:40.920 --> 0:10:43.400 were going to be making cuts to their rate business, 0:10:43.800 --> 0:10:45.679 Bloomberg News saying they think it's going to be ten 0:10:45.720 --> 0:10:49.640 per cent. Um also saying, and again this is hearsay, 0:10:49.720 --> 0:10:51.680 but you know that the bank is going to continue 0:10:51.679 --> 0:10:54.640 to invest on technology. You know, the shift in fixed 0:10:54.679 --> 0:10:57.400 income trading that we've seen in equities trading I think 0:10:57.480 --> 0:11:00.000 is going to continue, and I think it is important. 0:11:00.080 --> 0:11:03.040 And to your point, if you want to be a player, 0:11:03.160 --> 0:11:07.200 that you need to invest just get your sense. Do 0:11:07.240 --> 0:11:10.240 you think that UBS would be better off just as 0:11:10.280 --> 0:11:14.120 a wealth management unit and not with its investment bank? 0:11:14.679 --> 0:11:17.840 I think And that is the questions that investors asked 0:11:17.880 --> 0:11:20.640 because I think, you know, when people look at companies 0:11:20.640 --> 0:11:23.760 like UBS and Credit SUITEZ, that's what they want to own. 0:11:23.800 --> 0:11:26.520 They want to own the wealth management business, recurring revenue, 0:11:27.679 --> 0:11:31.800 very high return on equity um. But there are sort 0:11:31.800 --> 0:11:35.920 of benefits of having the investment capabilities. Think about wealthy 0:11:35.960 --> 0:11:38.200 Asians that want to sell their businesses, the M and 0:11:38.200 --> 0:11:42.559 A opportunities, the financing opportunities, and UBS and credit switets, 0:11:42.920 --> 0:11:45.240 you know, continue to pound the table to make the 0:11:45.240 --> 0:11:48.240 case of the synergies between the banks. You know. I 0:11:48.280 --> 0:11:51.160 do think that there is some, uh, there is some 0:11:51.280 --> 0:11:54.760 validity to that argument, um. And I think we will 0:11:54.800 --> 0:11:57.160 see from from Credit Suite next week, who has also 0:11:57.200 --> 0:12:01.280 been under pressure given they're sort of trailing trading revenue 0:12:01.320 --> 0:12:02.880 a lot of which I do think it is due 0:12:02.920 --> 0:12:05.840 to mix. You know theyy I think are going to 0:12:05.840 --> 0:12:09.280 continue to outperform when they report next week. Alison William 0:12:09.320 --> 0:12:11.319 thanks so much for joining us. We really appreciate. We 0:12:11.360 --> 0:12:13.960 know it's a busy time with the global investment banks 0:12:13.960 --> 0:12:17.320 reporting earnings. Allison's the senior analysts covering global investment banks 0:12:17.320 --> 0:12:20.720 and asset management for Bloomberg Intelligence, joining us on uh 0:12:20.760 --> 0:12:40.000 the phone. Well, we all know that the cannabis market 0:12:40.040 --> 0:12:43.320 in the United States is growing rapidly and there's a 0:12:43.360 --> 0:12:45.959 lot of players that are trying to find their niche 0:12:45.960 --> 0:12:48.440 within the business that includes the marketing and advertising and 0:12:48.559 --> 0:12:51.720 education around cannabis, and our next guests are certainly trying 0:12:51.800 --> 0:12:54.760 to make their mark there. We welcome Jeremy Jacob's, co 0:12:54.800 --> 0:12:58.320 founder and chairman of Enlightened, and Colby mackenzie, co founder 0:12:58.520 --> 0:13:00.640 also on their board of managers of Enlightened. Both of 0:13:00.640 --> 0:13:03.880 them join us here in our Bloomberg Interactive Brokers studio. 0:13:04.080 --> 0:13:05.480 So Jeremy and let me let me start with you, 0:13:05.480 --> 0:13:07.920 which give us a sense of what Enlightened is and 0:13:08.000 --> 0:13:10.080 what you guys are trying to do in this market. Yeah, 0:13:10.160 --> 0:13:13.480 so Enlightened feels a really interesting niche. We're the largest 0:13:14.200 --> 0:13:17.120 media company within the cannabis space. We operate a network 0:13:17.160 --> 0:13:20.600 of television screens and roughly a thousand cannabis dispensaries across 0:13:20.640 --> 0:13:23.480 thirty six states and three countries. Really to kind of 0:13:23.480 --> 0:13:25.440 get a feel. If you imagine standing in line and 0:13:25.480 --> 0:13:28.560 you look up and there's a television screen. It's educating you, 0:13:28.600 --> 0:13:31.720 it's entertaining you, but it's also advertising to you. That's 0:13:31.720 --> 0:13:36.040 the biggest part of enlightened business. So Colby, how often 0:13:36.120 --> 0:13:40.400 are people standing online at a cannabis dispensary able to 0:13:40.480 --> 0:13:44.280 watch television? Yeah, it's It's actually an interesting thing because 0:13:44.720 --> 0:13:47.760 I was definitely a newbie to the space when I 0:13:47.800 --> 0:13:50.439 co founded this with Jeremy and expected it to be 0:13:50.480 --> 0:13:52.520 like most of a retail where you just walk in 0:13:52.720 --> 0:13:55.880 walk out as fast as you can. But you've kind 0:13:55.880 --> 0:13:58.040 of seen this trend in retail as a whole, and 0:13:58.120 --> 0:14:00.800 cannabis is kind of leading that, and it's really become 0:14:00.840 --> 0:14:03.240 like this experience. So you're not going there just to 0:14:03.360 --> 0:14:07.360 have a quick general store type transaction. Instead, you're going 0:14:07.400 --> 0:14:10.040 there to experience and learn and really find your niche 0:14:10.080 --> 0:14:13.480 within the space. And so we actually have tracking technology 0:14:13.600 --> 0:14:15.680 that says they're in there for twenty one minutes. Okay, 0:14:15.720 --> 0:14:19.000 when when when you say you're in cannabis dispensary for 0:14:19.040 --> 0:14:21.680 an experience, I know, I just think, okay, so you 0:14:21.720 --> 0:14:25.400 go there to get high? Is that? What's going on? UM? 0:14:25.480 --> 0:14:28.040 A little different than that. So, because there's so many 0:14:28.040 --> 0:14:30.600 different strains, so many different types, so many different things 0:14:30.640 --> 0:14:34.040 that you have options, it actually is like information overload 0:14:34.560 --> 0:14:38.160 and it turns into this like please help me, like 0:14:38.280 --> 0:14:40.600 deer in the headlights type experience. And that's why our 0:14:40.640 --> 0:14:42.840 screen is there to kind of guide them along the 0:14:42.840 --> 0:14:45.560 way without feeling embarrassed. So, Jeremy, what are the types 0:14:45.600 --> 0:14:49.560 of advertisers that advertise on the Enlightened Network? Great question. Really, 0:14:49.600 --> 0:14:52.440 they fall into two categories. The first one is obvious, 0:14:52.440 --> 0:14:55.160 the endemic advertisers the products that would be carried on 0:14:55.200 --> 0:14:56.840 the shield same way if you had a screen in 0:14:56.880 --> 0:15:00.160 a convenience store and be obvious to promote candy balls 0:15:00.200 --> 0:15:04.239 and cokes, well, vape pins, edibles, uh, you know, premium 0:15:04.320 --> 0:15:08.160 bud that's prepackaged. Those types of advertisers. But what we're 0:15:08.160 --> 0:15:11.960 seeing really more than anything, is an increasing demand from 0:15:12.080 --> 0:15:16.680 non cannabis companies that have decided to focus on that 0:15:16.800 --> 0:15:20.440 cannabis market. For example, Vice Showtime, a lot of entertainment 0:15:20.480 --> 0:15:24.240 companies that come out with programs like Long Appetite Obviously 0:15:24.280 --> 0:15:27.160 that's catered towards the cannabis market. Uh. And then you 0:15:27.200 --> 0:15:29.920 look at companies like door Dashes an advertiser of ours, 0:15:29.960 --> 0:15:33.760 and Vans delivery of food that's excellent for cannabis consumers 0:15:33.760 --> 0:15:36.480 both hungry and lazy, as well as Vans, you know, 0:15:36.560 --> 0:15:39.320 a very popular skateboarding shoe. So there is a portion 0:15:39.400 --> 0:15:42.160 of the cannabis demographic that that fits perfectly. So we're 0:15:42.200 --> 0:15:45.440 really seeing a growth in the non endemic advertisers in 0:15:45.440 --> 0:15:48.440 a really big way. How many cannabis dispensaries are there 0:15:49.200 --> 0:15:53.600 so interesting question because it is a transition from a 0:15:53.680 --> 0:15:56.120 gray market in many states to a legal market. So 0:15:56.200 --> 0:15:59.680 from a legal perspective, you're looking at about five thousand 0:16:00.000 --> 0:16:02.400 cross the nation. So I guess that when you say 0:16:02.400 --> 0:16:05.800 it's a gray area, are there other facilities that have 0:16:05.880 --> 0:16:10.800 access to your television feed? Sadly, no, we actually only 0:16:10.800 --> 0:16:12.880 work in the legal ones. But sadly, when I say gray, 0:16:12.920 --> 0:16:15.880 you're talking largely about like a California market where it 0:16:16.000 --> 0:16:19.080 was medical and it was very kind of gray as 0:16:19.080 --> 0:16:22.080 to what was a dispensary. We've always had a role 0:16:22.080 --> 0:16:24.840 in a board. Our board is very strict on this rule, 0:16:25.160 --> 0:16:28.960 legal or no TV for them. So so Jeremy, give 0:16:29.000 --> 0:16:30.720 us a sense of and Kobe as well. I know 0:16:30.800 --> 0:16:33.880 you guys have maybe some maybe different thoughts. Where are 0:16:33.920 --> 0:16:35.240 we Just give us a sense of where are we 0:16:35.280 --> 0:16:39.240 in terms of the states, How many states have legalized marijuana, 0:16:39.320 --> 0:16:42.280 and what is I would guess the holding grail for 0:16:42.360 --> 0:16:45.080 the industry would be a federal legalization. Give us a 0:16:45.080 --> 0:16:47.120 sense where you think that might be. Yeah, so you've 0:16:47.200 --> 0:16:50.600 you've got about a dozen states that are now recreational. Uh, 0:16:50.640 --> 0:16:53.280 and you know that's really when the tipping point occurs, 0:16:53.520 --> 0:16:57.480 especially for sales volume, is when you go recreational. Outside 0:16:57.520 --> 0:17:01.160 of that totality, you've got around thirty thirty three thirty six, 0:17:01.160 --> 0:17:03.280 depending on how you look at medical marijuana, whether it's 0:17:03.320 --> 0:17:06.080 been elected or actually implemented. So you're looking at two 0:17:06.119 --> 0:17:09.960 thirds of the country past that there's at least decriminalization 0:17:10.000 --> 0:17:12.119 and most of the other states. There's very few states 0:17:12.119 --> 0:17:15.439 that don't have some sort of cannabis legislation that's in place. 0:17:15.880 --> 0:17:18.160 As far as federal legalization, I think that's a big 0:17:18.200 --> 0:17:20.399 debate with everyone, but most of us with inside the 0:17:20.480 --> 0:17:23.320 industry definitely feel it's within two years. You know, it's 0:17:23.320 --> 0:17:26.760 a strong political marketplace right now, and so everybody wants 0:17:26.800 --> 0:17:28.920 to grab ahold of that. I wonder how much though 0:17:28.960 --> 0:17:32.240 the vaping scare recently has sort of set that effort 0:17:32.240 --> 0:17:34.280 back me. I mean, have you've seen a sort of 0:17:34.280 --> 0:17:36.320 fewer people showing up to the dispensaries or if not 0:17:36.440 --> 0:17:39.800 that more pushback from regulators and so the interesting thing 0:17:40.000 --> 0:17:42.320 on the vaping scare is, I feel like you saw 0:17:42.359 --> 0:17:46.200 a ton of reaction outside the industry. Inside the industry, 0:17:46.240 --> 0:17:49.560 it was it wasn't really viewed in any major capacity 0:17:49.680 --> 0:17:52.520 because it actually shows a sign that you need to 0:17:52.520 --> 0:17:56.800 move towards legalization because with legalization you have more regulation, 0:17:56.880 --> 0:18:00.679 particularly coming from federal assistance and money, and all of 0:18:00.680 --> 0:18:04.360 the illegal activity and kind of the vaping scare came 0:18:04.440 --> 0:18:07.280 from stuff that turned out to be not legal. Jeremy, 0:18:07.359 --> 0:18:09.720 we have literally twenty seconds. How much buying power do 0:18:09.800 --> 0:18:13.120 these people have? Cannabas consumers are some of the strongest 0:18:13.160 --> 0:18:15.080 bars on the planet. There's some of the most loyal 0:18:15.119 --> 0:18:17.520 They're big spenders. They spend on averages short of a 0:18:17.560 --> 0:18:21.159 hundred extra dollars on cannabis, and so they've been proven 0:18:21.160 --> 0:18:24.080 to be some of the most loyal, biggest spenders. Jeremy 0:18:24.119 --> 0:18:28.800 Jacobs as well as Colby Mackenzie, co founders of the 0:18:28.840 --> 0:18:35.160 company Enlightened, which runs a television in dispensaries across the country. 0:18:36.000 --> 0:18:38.320 Who knew that it was twenty one minutes in in 0:18:38.400 --> 0:18:40.040 a cannabis Who knew a lot of these things. We're 0:18:40.080 --> 0:18:43.320 having so many people associated with the cannabis business come 0:18:43.359 --> 0:18:45.399 in here, and there's so many different ways that this 0:18:45.480 --> 0:18:47.520 is actually growing as a business. Yeah, and then it's 0:18:47.520 --> 0:19:07.040 a it's a real big money maker. The official data 0:19:07.200 --> 0:19:10.919 is confusing, conflicted, and often not enough. That has been 0:19:10.920 --> 0:19:13.359 the conclusion of many investors certainly that are looking for 0:19:13.480 --> 0:19:17.160 alternative sources of data, one of them being yelped, where 0:19:17.200 --> 0:19:20.639 you write reviews of the places you go. Uh. Carl Biolic, 0:19:20.720 --> 0:19:24.119 Data science editor joining us here for yelp in our 0:19:24.119 --> 0:19:26.840 Blombergadder Actor Broger Studios. Carl, can you give us a 0:19:26.880 --> 0:19:31.280 sense you have this yelp economic average? Can you give 0:19:31.359 --> 0:19:32.600 us a sense of what it is and what it's 0:19:32.600 --> 0:19:35.639 showing us right now? Sure, it's a look at how 0:19:35.760 --> 0:19:39.560 businesses are doing, and how consumers are engaging with businesses 0:19:39.680 --> 0:19:44.520 and how that's changing. And it's across many different industries 0:19:44.560 --> 0:19:47.359 and all across the country, including in fifty metros that 0:19:47.400 --> 0:19:52.160 we track, And we just released today our third quarter findings, 0:19:52.400 --> 0:19:56.880 which show that things were pretty flat. The economic average 0:19:56.920 --> 0:20:00.240 was up about zero point one percent, so a little 0:20:00.280 --> 0:20:02.879 bit of good news, sort of the sum total of 0:20:02.920 --> 0:20:05.879 all the different things we saw affecting the national and 0:20:05.880 --> 0:20:08.159 local economy in the third quarter. So, Carl, is there 0:20:08.160 --> 0:20:11.840 anything did you guys in your data see any regional differences. 0:20:11.840 --> 0:20:14.960 Are certain parts of the country doing better than others. Yeah, 0:20:15.000 --> 0:20:19.000 this time we really focused on California and California metros 0:20:19.000 --> 0:20:21.879 which have been struggling, in particular in the Bay Area. 0:20:22.160 --> 0:20:25.359 San Jose, out of the fifty big metro's we've been 0:20:25.359 --> 0:20:28.160 tracking for almost three years now, has fallen the most 0:20:28.280 --> 0:20:30.800 and San Francisco has fallen the second most, So it's 0:20:30.800 --> 0:20:35.160 a pretty clear picture. In northern California, Sacramento is also 0:20:35.200 --> 0:20:37.760 below average. And then if you go to southern California, 0:20:37.840 --> 0:20:40.879 San Diego is one of the worst performing metros. In 0:20:41.040 --> 0:20:42.400 l A is in the bottom town as the West 0:20:42.400 --> 0:20:45.600 wrong with California. Well, so this has changed since the 0:20:45.600 --> 0:20:48.600 third quarter of fourth quarter of sixteen. So there's certainly 0:20:48.720 --> 0:20:51.239 many great things going on in California. I say, is 0:20:51.320 --> 0:20:53.680 you know California based business. I mean, there's there's great 0:20:54.040 --> 0:20:55.480 things in the economy. It would be one of the 0:20:55.480 --> 0:20:58.360 world's largest economies. There is what nasty letters from people 0:20:58.359 --> 0:21:01.760 living in California. But you know this has changed, so 0:21:01.800 --> 0:21:05.159 there are struggles. There are declines that we attribute, we 0:21:05.240 --> 0:21:07.679 think mainly to just the difficulty of being able to 0:21:07.680 --> 0:21:10.200 set up shop in California and then to find workers 0:21:10.200 --> 0:21:12.840 who are near your business and to be able to 0:21:12.920 --> 0:21:15.160 pay them enough that they can afford to live near 0:21:15.200 --> 0:21:18.520 your business while still turning a profit and having enough 0:21:18.560 --> 0:21:21.560 customers nearby who are going to give you that density 0:21:21.600 --> 0:21:24.320 that you need to to stay competitive. Are there areas 0:21:24.400 --> 0:21:28.000 where you saw a surprising amount of strength. Yeah. We 0:21:28.000 --> 0:21:29.760 we've been tracking for the last two quarters. A We 0:21:29.840 --> 0:21:32.159