WEBVTT - It's Always Time to Talk Donuts 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 --> 0:00:21.520 at Bloomberg dot com. Well, retail sales came in this 0:00:21.600 --> 0:00:24.959 morning a little bit better than expected. January came in 0:00:25.000 --> 0:00:28.080 at plus zero point two percent. The consensus was flat 0:00:28.160 --> 0:00:31.560 zero point zero percent. That's certainly an improvement from December 0:00:31.560 --> 0:00:34.080 when that number came in at minus one point six percent. 0:00:34.200 --> 0:00:36.000 So to help us dig into the retail sales and 0:00:36.120 --> 0:00:38.800 all things retail, we're still in retail eLearn experiod, believe 0:00:38.880 --> 0:00:40.760 or not, I would bring in our friend Sema shaw 0:00:40.800 --> 0:00:43.640 seem as a consumer analyst for Bloomberg Intelligence. She joins 0:00:43.720 --> 0:00:47.680 us here in our Bloomberg Interactor Broker studio. So, Seema, welcome, Um. 0:00:47.720 --> 0:00:49.599 What did you see in the retail report that came 0:00:49.600 --> 0:00:51.360 out this morning. I'm the biggest thing was that you 0:00:51.400 --> 0:00:54.200 mentioned that was December was revised down forty bases point 0:00:54.280 --> 0:00:56.640 to minus one point six. So we've already heard from 0:00:56.640 --> 0:00:59.080 the retailers that are reported that December was really bad. 0:00:59.120 --> 0:01:02.360 We had two weeks at the government shutdown. January did 0:01:02.400 --> 0:01:04.800 beat expectations, but I don't know that it's that good, 0:01:04.840 --> 0:01:07.360 considering December was revised down, so there might have been 0:01:07.400 --> 0:01:11.960 some pent up demand and big categories continued to be weak. Furniture, 0:01:12.040 --> 0:01:15.800 autos Um sima. What would you say to people who 0:01:15.880 --> 0:01:19.080 say that these numbers are backward looking and don't really 0:01:19.080 --> 0:01:22.679 tell us anything that we don't know, um, particularly in 0:01:22.720 --> 0:01:24.520 this case where we're two months behind. I would say 0:01:24.560 --> 0:01:28.120 that's absolutely true. Um. But I'm still surprised that people 0:01:28.160 --> 0:01:31.600 are surprised about the the way the numbers are going, 0:01:31.640 --> 0:01:34.200 because if you've listened to any of the calls, December 0:01:34.360 --> 0:01:36.760 was really bad across the board. Okay, so was it 0:01:36.880 --> 0:01:39.600 just December or do you get the sense that there 0:01:39.680 --> 0:01:43.600 is something sort of deeper here, a weakness that could 0:01:43.680 --> 0:01:46.920 be seen throughout the year. Um? Definitely, I think there 0:01:46.959 --> 0:01:49.880 could be, because we're seeing a slowdown in the housing market. 0:01:49.920 --> 0:01:52.720 That doesn't necessarily affect home depot and low so much 0:01:52.720 --> 0:01:55.120 as their focus on renovation. But again, if the house 0:01:55.360 --> 0:01:58.680 home price appreciation seems to plateau, people might be less 0:01:59.240 --> 0:02:01.720 inclined to a wealthy same with the stock market. And 0:02:01.760 --> 0:02:05.120 I'd also say that, um, the fact that tax refunds 0:02:05.120 --> 0:02:08.560 are expected to be lower than they were and delayed, 0:02:08.600 --> 0:02:10.919 I think that could especially hit the low end where 0:02:11.280 --> 0:02:14.600 that little bit of money spending. Lisa what I like 0:02:14.639 --> 0:02:17.240 about seem as researches. I think she's consistently had a 0:02:17.240 --> 0:02:19.880 more conservative call on the consumer than you what your 0:02:19.919 --> 0:02:21.600 read out on the street, and that's a It's a 0:02:21.600 --> 0:02:23.480 great way to balance kind of what we're seeing out there. 0:02:23.680 --> 0:02:26.840 So seem we're you're always an earning season. It seems 0:02:26.880 --> 0:02:28.520 like your companies are always kind of reporting you have 0:02:28.520 --> 0:02:31.480 a strange schedule, but you you're through the majority of them. 0:02:31.480 --> 0:02:34.200 What did you take away from this quarters results? And 0:02:34.240 --> 0:02:36.400 maybe more importantly, kind of what the tone of the 0:02:36.400 --> 0:02:38.519 outlook is for a lot of these folks, right, I 0:02:38.520 --> 0:02:41.480 would say across the board, if you exclude the math 0:02:41.560 --> 0:02:43.400 guys who really took the bulk of the share over 0:02:43.480 --> 0:02:47.079 holiday and continue to seem very bullish, I would say 0:02:47.080 --> 0:02:50.560 the bulk of the retailers, from department stores, even to 0:02:50.840 --> 0:02:53.960 some like home deep and those they had more tempered 0:02:54.040 --> 0:02:57.119 feeling about what's coming going forward. I think that even 0:02:57.160 --> 0:02:59.480 the home centers, while they're bullish, it's certainly not as 0:02:59.480 --> 0:03:01.839 strong as it was last year. And I think you're 0:03:01.840 --> 0:03:05.240 seeing for the department stores and sort of those other 0:03:05.440 --> 0:03:09.799 specialty retailers, competition continues to pressure them. So I guess 0:03:09.960 --> 0:03:14.000 I'm wondering with the breakdown of online versus brick and mortar, 0:03:14.160 --> 0:03:17.400 if you're seeing the bifurcation continue to increase, or whether 0:03:17.400 --> 0:03:20.760 you're seeing stabilization, in other words, some sort of uh, 0:03:20.800 --> 0:03:23.760 you know, gains being made among the healthiest of the 0:03:23.800 --> 0:03:26.600 brick and mortar, and you know, a stabilization in the 0:03:26.720 --> 0:03:30.079 rate of the right of the increase in online use. Well, 0:03:30.120 --> 0:03:33.400 online news does continue to go grow rapidly, but the 0:03:33.400 --> 0:03:36.560 ones that haven't established and I guess I would say 0:03:36.560 --> 0:03:39.400 a good infrastructure in their store base are the ones 0:03:39.440 --> 0:03:41.480 that are saying the biggest gains because they're able to 0:03:41.600 --> 0:03:45.080 have buy online, pickup in store, and other different fulfillment 0:03:45.120 --> 0:03:47.760 services that could help mitigate the gross margin pressure from 0:03:47.840 --> 0:03:50.600 online growth. But I still think that online as a 0:03:50.600 --> 0:03:53.440 whole in mobile commerce continues to grow, but it's still 0:03:53.480 --> 0:03:55.680 again as we said that less than mid teens percentage 0:03:55.680 --> 0:03:58.120 of allive retail. It's interesting. It's so when you think 0:03:58.120 --> 0:04:00.840 about the Amazon of the world, how much have they 0:04:00.880 --> 0:04:04.200 gone into how much of their business is apparel versus 0:04:04.280 --> 0:04:07.360 just buying gadgets and stuff? Right, I think they're increasing. 0:04:07.400 --> 0:04:10.040 I certainly know that they're increasing their apparel assortment. I 0:04:10.080 --> 0:04:12.840 mean there's been different players who have sized it, but 0:04:12.880 --> 0:04:16.520 they are going I think into more basics. Um. But again, 0:04:16.600 --> 0:04:19.360 the risk to brands when Amazon brings into private label, 0:04:19.400 --> 0:04:21.280 and my view is that they have the placement, they 0:04:21.279 --> 0:04:23.880 can put their brands top of mind and you see 0:04:23.880 --> 0:04:26.359 that also. I think with like supplement and they have 0:04:26.400 --> 0:04:29.240 private label across the board. So I think that's a risk. 0:04:29.279 --> 0:04:31.120 I don't think for the high end are really branded 0:04:31.120 --> 0:04:35.599 product that Amazon's private label is going to push it out. Okay, 0:04:35.600 --> 0:04:38.200 this is totally off top and I'm gonna this is 0:04:38.200 --> 0:04:41.359 gonna be absolutely a wild card that you're gonna have 0:04:41.440 --> 0:04:45.400 to deal with. Huts and Yards is opening this week 0:04:45.600 --> 0:04:48.480 and it's going to be a retail hub with lots 0:04:48.520 --> 0:04:51.599 of new brick and mortar retails. Do you think that 0:04:51.680 --> 0:04:55.560 New York City can absorb a huge chunk of additional 0:04:55.760 --> 0:04:58.360 retail brick and mortar. I think if you have enough 0:04:58.400 --> 0:05:00.720 food and stuff, you'll get the traff back in there, 0:05:00.760 --> 0:05:03.240 But I don't know that it's going to really drive 0:05:03.320 --> 0:05:05.640 up the sales. Also, just in my opinion, it's pretty 0:05:05.640 --> 0:05:09.040 far west, and as a person who builds my life 0:05:09.040 --> 0:05:10.840 around the train and stuff, I feel like it's a 0:05:10.839 --> 0:05:14.040 little bit far to go. And we already have, you know, 0:05:14.080 --> 0:05:17.280 the Time Warner Center, So I'm not sure that it's necessary. 0:05:17.279 --> 0:05:18.840 But if they have a good enough experience, they at 0:05:18.880 --> 0:05:21.520 least get the traffic, you know, for food and things 0:05:21.520 --> 0:05:24.520 like that. Senior consumer analyst for Blubberg Intelligence. Thank you 0:05:24.600 --> 0:05:28.080 so much for being here with us. It's always time 0:05:28.120 --> 0:05:30.080 to talk donuts, and here to talk donuts with us. 0:05:30.760 --> 0:05:33.280 Is the very best person or people to talk about 0:05:33.320 --> 0:05:36.360 it with us. Buzzy good Old and Nancy Goduld. Buzzy 0:05:36.360 --> 0:05:39.800 Godult of course runs Cougar Capital. He left Wall Street 0:05:40.200 --> 0:05:43.359 uh and and is still managing money. But he was 0:05:43.600 --> 0:05:48.400 the super trader running herzog Hein Godult before it was 0:05:48.560 --> 0:05:52.640 sold to Merrill Lynch in two thousand. He founded his 0:05:52.720 --> 0:05:56.520 own donut shop and he is here with Nancy, who 0:05:56.640 --> 0:05:59.280 is of course the manager of a new donut pub 0:05:59.320 --> 0:06:03.240 because donut is expanding. Buzzy. Let's start with you, thank 0:06:03.279 --> 0:06:05.080 you so much for being here in our Bloomberg Interactive 0:06:05.080 --> 0:06:08.240 Broker's studios. First, can you just give us a refresher 0:06:08.400 --> 0:06:11.560 and how you went from Wall Street two donuts, back 0:06:11.560 --> 0:06:13.840 to Wall Street, back to donuts again and are now 0:06:13.880 --> 0:06:17.359 expanding expanding it. Actually it started with doughnuts long before 0:06:17.360 --> 0:06:21.480 Wall Street, like a backtrack. I had Wall Street for 0:06:21.520 --> 0:06:23.719 maybe a few months, got fired for my first job, 0:06:23.800 --> 0:06:26.680 filed with my second job, and the nineteen sixty one 0:06:26.800 --> 0:06:30.120 ISH went into the donor business with my brother, and 0:06:30.480 --> 0:06:34.240 nineteen sixty eight Ish Wall Street. My brother decided to 0:06:34.240 --> 0:06:40.719 go back to Wall streets, hold off four stores that 0:06:40.760 --> 0:06:43.599 we had four stores, we sold off three. I wanted one. 0:06:44.320 --> 0:06:46.760 He went back to Wall Street. I would bake in 0:06:46.800 --> 0:06:49.240 the morning, take the trainer down and just kind of 0:06:49.240 --> 0:06:52.279 hang around post these positions orfer the job. And that 0:06:52.400 --> 0:06:54.560 was it. So from sixty eight to two thousand, that 0:06:54.720 --> 0:06:59.840 was in the Harzack. It's so Nancy. So now yet 0:07:00.000 --> 0:07:02.520 are you're you're expanding right, We're expanding donut pub right, 0:07:02.560 --> 0:07:04.960 So tell us about that? Yea, So we're opening UM 0:07:05.000 --> 0:07:08.880 the second location since nine on Astar Place in Broadway. 0:07:09.400 --> 0:07:11.760 So I'm super excited to be involved and to be 0:07:11.840 --> 0:07:15.760 continuing the legacy. So how is the doughnut business in general? 0:07:15.880 --> 0:07:20.160 People health conscious process or health conscious? But they still 0:07:20.200 --> 0:07:26.400 eight donuts donuts, So we're business fifty four years. At 0:07:26.440 --> 0:07:27.920 the end of twound the eighteen it was the best 0:07:28.000 --> 0:07:30.440 year we've ever had. And why is that dealing? What's 0:07:30.720 --> 0:07:34.040 changing do you guys? I think I think people enjoy 0:07:34.200 --> 0:07:37.440 an inexpensive treat that puts a smile on their face 0:07:37.520 --> 0:07:39.880 and don't let's go back in vogue. And we have 0:07:39.960 --> 0:07:42.960 become a destination. So on weekends you'll see people from 0:07:43.280 --> 0:07:46.920 Japan and Germany and Holland basically all over the world 0:07:46.960 --> 0:07:49.560 and all over the country. It's a destination point. And 0:07:49.600 --> 0:07:51.840 the product is a great product. We make three times 0:07:51.840 --> 0:07:55.760 a day. It's so refresh So, Nancy, where's the new 0:07:55.800 --> 0:07:59.240 location and what's the client's hell that you're looking for? 0:07:59.680 --> 0:08:04.000 So new location is Astro Place in Broadway, So UM 0:08:04.040 --> 0:08:05.880 it's gonna be a super busy area. A lot of 0:08:05.920 --> 0:08:08.720 students from n y U and Pratt and the New School. 0:08:08.720 --> 0:08:11.880 So we're hoping to get UM a younger clientele and 0:08:12.040 --> 0:08:14.720 some more college students in the store. You know, Buzzy, 0:08:14.800 --> 0:08:17.240 I want to ask you something about the connection between 0:08:17.280 --> 0:08:21.360 Wall Street and donuts. Is there? What you know, business 0:08:21.440 --> 0:08:23.560 is business and I learned how to run the brokerage 0:08:23.560 --> 0:08:26.160 firm by running a donut shop. And there's a very 0:08:26.160 --> 0:08:29.400 little difference. You've got clients and both you want to serve. 0:08:29.960 --> 0:08:32.560 You want them to leave, whether they're buying or selling 0:08:32.559 --> 0:08:35.360 a million shares of a security or whether they're buying 0:08:35.360 --> 0:08:37.679 it doesn't don't that you want to leave this This 0:08:37.720 --> 0:08:39.959 was the right place I went to. So it's all 0:08:39.960 --> 0:08:42.719 about product and service and I learned how to do that, 0:08:42.960 --> 0:08:45.160 and they don't the shop. So Nancy, as you guys 0:08:45.240 --> 0:08:47.200 think about your opening up this a new store at 0:08:47.240 --> 0:08:50.760 astra place, what's the competition Like with the big donut 0:08:50.960 --> 0:08:53.040 national chains and things like that, you try to put 0:08:53.040 --> 0:08:56.120 a store where there isn't another donut store. So there's 0:08:56.120 --> 0:08:59.040 actually a story about how a couple of Duncan Donuts 0:08:59.040 --> 0:09:02.280 opened next to the original location of the Donut Hub 0:09:02.360 --> 0:09:05.400 and they have since left, which is good for us. 0:09:05.440 --> 0:09:08.120 But I think we're pretty different from the like huge 0:09:08.240 --> 0:09:11.480 chain stores where everything is baked fresh on the premises. 0:09:11.920 --> 0:09:14.320 All of our donuts are hand cut. Um, so in 0:09:14.360 --> 0:09:16.240 that way, we're still a very old fashioned and I 0:09:16.240 --> 0:09:21.000 think people appreciate that authenticity in that freshness. Buzzy, am 0:09:21.000 --> 0:09:23.720 I correct in thinking, So you were the main baker. 0:09:23.840 --> 0:09:26.520 You you're the one who actually made the donuts. Well, 0:09:26.520 --> 0:09:30.000 back in the day, I did baking, a dressed the donuts, 0:09:30.000 --> 0:09:34.079 which was putting the icing, filling the jelly, et cetera. Yes, 0:09:34.640 --> 0:09:39.160 So what's your favorite donut? Black or white? Boston Cream? Okay? 0:09:39.360 --> 0:09:42.680 And right now, so how do you how do you 0:09:42.720 --> 0:09:47.839 divvy up your day now between managing money and making donuts? Well, 0:09:47.880 --> 0:09:50.000 the only thing I do with with donuts is on 0:09:50.160 --> 0:09:52.520 Saturday morning, if I'm in town, I stopped by that 0:09:52.559 --> 0:09:54.480 there on the shop, I have a cup of coffee 0:09:54.520 --> 0:09:57.440 with the guy who manages critique the chalk that may 0:09:57.480 --> 0:09:59.480 not be shiny enough where he has a new idea 0:09:59.520 --> 0:10:02.439 for a new that that's my involvement. Now that we've 0:10:02.440 --> 0:10:04.800 got a new store coming, I've been involved in the construction, 0:10:04.800 --> 0:10:06.520 which is the fun pot for me. And then after 0:10:06.559 --> 0:10:10.200 that I'll turn it over the nacy and manager. Do 0:10:10.240 --> 0:10:13.160 you actually make money from it or is it something 0:10:13.200 --> 0:10:15.360 that is enjoyable to do you actually now do make 0:10:15.400 --> 0:10:19.360 money from it? Yes? The reason as it's like it's 0:10:19.360 --> 0:10:23.719 tough to make money right, absolutely, I have to ask you. 0:10:23.840 --> 0:10:26.600 So you sold your specialist firm to Merrill Lynch at 0:10:26.640 --> 0:10:30.120 two thousand UM top of the market. It sounds like 0:10:30.120 --> 0:10:32.200 to me, I remember two thousand kind of peaking in March, 0:10:32.280 --> 0:10:35.080 so hopefully that worked out. Um, what is the state 0:10:35.080 --> 0:10:38.080 of the specialist business today? Are there specialists left? I 0:10:38.120 --> 0:10:40.480 think they're a specialist, but it's not the business anymore. 0:10:41.200 --> 0:10:43.240 I think it kind of topped out short after we 0:10:43.360 --> 0:10:50.080 sold between decimalization limit or the protection uh electronics, etcetera. 0:10:50.440 --> 0:10:53.720 Is electronics. You know, when when we made markets, there 0:10:53.760 --> 0:10:55.880 were spreads, so you're rather if you could make some 0:10:55.920 --> 0:10:57.960 money out of spread. Now the spreads are a penny 0:10:58.000 --> 0:11:00.679 and things trade in between that penny. It's just not 0:11:00.800 --> 0:11:03.400 a business, so what I mean? So again, most of 0:11:03.400 --> 0:11:06.199 the trading today is electronic. It's off off the exchange. 0:11:06.240 --> 0:11:08.240 So are there how many did you have to offhand? 0:11:08.280 --> 0:11:11.199 How many specialists are left on the New York Stock Change? 0:11:11.480 --> 0:11:14.160 I don't but I can't imagine it's anything like whether 0:11:14.200 --> 0:11:18.320 it was in the for these fifties sixties seven. So 0:11:18.360 --> 0:11:20.960 as you manage your own money, given your extensive experience 0:11:21.200 --> 0:11:25.480 in markets, where are you seeing the opportunities right now? Well, 0:11:25.480 --> 0:11:27.240 you know, it's a market the stocks which is a 0:11:28.080 --> 0:11:30.480 kind of saying, but it's true, it's not a stock markets. 0:11:30.520 --> 0:11:34.280 So there's there's opportunities always, and whether it's biotech, whether 0:11:34.320 --> 0:11:39.880 it's technology, whether it's retail, there's always opportunities. So, Nancy, 0:11:39.920 --> 0:11:43.000 getting back to the topic at headhand, donuts, What are 0:11:43.040 --> 0:11:46.320 some of the best selling donuts right now? Um, that 0:11:46.480 --> 0:11:48.560 coming out of your store? Um? So I think the 0:11:48.600 --> 0:11:52.120 classic donuts are always top sellers, like glazed Boston cream. 0:11:52.160 --> 0:11:54.679 We do a black and white Boston cream with half analyzing, 0:11:54.720 --> 0:11:57.600 half chocolate. Um. And then the croissant donuts, which are 0:11:58.000 --> 0:12:03.120 a sort of recent addition. Those are croissant donuts. Yeah, 0:12:03.240 --> 0:12:06.560 you're basically doing everything in your power not to say cronut. Right. 0:12:06.800 --> 0:12:09.240 Oh yeah, that was very well, I'm not allowed to 0:12:09.240 --> 0:12:13.959 say literally, that's that's that's trademarked. Oh yeah, okay, I'll 0:12:13.960 --> 0:12:17.280 say it for you. Coronuts, croissant doughnuts. Give me a break, 0:12:17.760 --> 0:12:20.679 just real quick, Nancy, how many people are actually worried about, 0:12:20.760 --> 0:12:24.280 you know, calories and health or are we moving to 0:12:24.320 --> 0:12:27.040 a phase that's that's different in a different sense where 0:12:27.040 --> 0:12:30.720 people are basically saying, uh, they want to be more gourmand, 0:12:30.880 --> 0:12:34.199 they want to support or be involved in an experience 0:12:34.360 --> 0:12:37.480 in a local shop. I think that people are super 0:12:37.520 --> 0:12:41.359 health conscious, but they also appreciate these sort of small 0:12:41.640 --> 0:12:45.120 like luxuries of having once in a while, you know, 0:12:45.120 --> 0:12:47.080 a sweet treat. So I think, you know, it's a 0:12:47.120 --> 0:12:50.600 combination of both. And I think people appreciate how fresh 0:12:50.600 --> 0:12:53.280 our product is um so maybe it makes them feel 0:12:53.320 --> 0:12:56.280 a little bit less guilty about it. That's a great story. 0:12:56.640 --> 0:12:59.840 Buzzy Cadeld and Nancy Cadeld. Nancy's a VP and manager 0:12:59.840 --> 0:13:01.959 of new Donut pub opening up on Astro Place and 0:13:02.000 --> 0:13:05.000 Buzzies the CEO of Cougar Capital and founder of Donut 0:13:05.040 --> 0:13:07.320 Pub way back in today. Thanks so much for coming 0:13:07.320 --> 0:13:09.480 in and joining us. I don't know about you, Lisa, 0:13:09.520 --> 0:13:11.560 but I mean I'm gonna head down to the fourteen 0:13:11.600 --> 0:13:14.200 Street and take a look, because I haven't been. Someone 0:13:14.240 --> 0:13:17.480 just tweeted at me, do they have diet donuts? I'm 0:13:17.480 --> 0:13:23.320 going to answer that no, that doesn't happen. Actually, Buzzy 0:13:23.320 --> 0:13:27.960 says they're all diet donuts. There you go. Interesting. Ethiopian 0:13:28.040 --> 0:13:31.240 Airlines flight three zero two crashed over the weekend, killing 0:13:31.280 --> 0:13:35.120 all one fifty seven people on board. Africa's biggest carrier 0:13:35.160 --> 0:13:37.800 decided not to use its seven thirty seven Max eight 0:13:37.880 --> 0:13:41.720 planes until further notice, while China and Indonesia also grounded 0:13:41.800 --> 0:13:44.640 seven thirty seven Max jets. So to get the latest 0:13:44.720 --> 0:13:48.360 on this developing story, let's bring in George Ferguson. George 0:13:48.400 --> 0:13:52.040 is a senior aerospace, defense and airline animals from Bloomberg Intelligence. 0:13:52.200 --> 0:13:54.640 He joins us on the phone from Bloomberg Intelligence HQ 0:13:54.880 --> 0:13:57.920 in Princeton, New Jersey. George, thanks for joining us. It 0:13:57.960 --> 0:14:00.240 seems like, you know, the stock is bouncing back a 0:14:00.240 --> 0:14:02.120 little bit, down about six percent. It had been down 0:14:02.120 --> 0:14:07.240 about earlier in the day. How material is this growing 0:14:07.320 --> 0:14:09.800 issue with the seven thirty seven Max to the company. 0:14:11.320 --> 0:14:14.120 So look, any time anything happens to the seven thirty 0:14:14.160 --> 0:14:16.640 seven to a seven thirty seven, it's important to Boeing 0:14:17.000 --> 0:14:21.360 because it's the most important program, accounts for over thirty 0:14:21.440 --> 0:14:26.480 percent of revenues, probably over of operating income. But I 0:14:26.480 --> 0:14:29.160 think what we're gonna find out here is that UM 0:14:30.320 --> 0:14:32.240 and the Bowling has made some changes to this jet 0:14:32.320 --> 0:14:35.880 since the previous version, the n G, and they pushed 0:14:35.880 --> 0:14:38.840 the engines forward, and they've they've changed the physics a 0:14:38.840 --> 0:14:41.360 little bit. And when they did that, they changed some 0:14:41.440 --> 0:14:45.600 of the program that the computer and the airplane that 0:14:45.760 --> 0:14:48.840 helps ensure that the pilot doesn't pull the airplane up 0:14:48.840 --> 0:14:51.560 too fast and stall the wing. And so I think 0:14:51.600 --> 0:14:54.920 what we're gonna find out is UM, we're still bowing, 0:14:54.960 --> 0:14:58.320 still not getting enough training into the into the market 0:14:58.360 --> 0:15:02.440 for pilots to understand that and disabled that. So I 0:15:02.440 --> 0:15:05.200 think this is going to end up being a training issue. 0:15:07.080 --> 0:15:09.600 But almost like a George, if it's a training issue, 0:15:10.240 --> 0:15:13.800 that's actually that could go back to Boeing and Boeing's 0:15:13.840 --> 0:15:17.400 liability because wasn't that part of Boeing's push here that 0:15:17.520 --> 0:15:22.280 this was not a craft and aircraft that required substantial 0:15:22.480 --> 0:15:26.960 increasing in training for pilots just to reduce the cost 0:15:27.160 --> 0:15:30.720 and better to compete with the Airbus. Yes, so I 0:15:30.720 --> 0:15:33.880 think there's gonna be a debate about that, UM, about 0:15:33.880 --> 0:15:38.320 whether or not this was Boeing's responsibility or the airline's responsibility. 0:15:38.400 --> 0:15:40.840 But I totally agree. I've heard from a number of 0:15:40.840 --> 0:15:44.160 pilots in the industry who are concerned that Boeing sort 0:15:44.160 --> 0:15:47.360 of soft pedaled the training pilot needed to get the 0:15:47.360 --> 0:15:51.040 transition to the MAX because they want to make the Energy, 0:15:51.120 --> 0:15:53.720 which is the previous version, and the MAX looked like 0:15:53.960 --> 0:15:56.640 very similar airplanes in an airline suite, and they want 0:15:56.720 --> 0:15:59.400 to minimize the training between the two. So Georgia this 0:15:59.480 --> 0:16:01.920 early stage age, is there any sense of the exposure 0:16:02.320 --> 0:16:06.520 to Boeing. Yeah, you know, we're always we're always sort 0:16:06.560 --> 0:16:10.000 of quite sensitive about that, given lives are lost here. 0:16:10.560 --> 0:16:14.080 But um, I mean airline crashes happen an occasion. They 0:16:14.080 --> 0:16:17.680 don't they don't put those companies out of business. You know, 0:16:17.920 --> 0:16:20.200 I think that attorneys will probably sit down and think 0:16:20.200 --> 0:16:23.600 about how much every life on the airplane is worth. It. 0:16:23.680 --> 0:16:26.040 Sort of hate to get juma commists, but you could 0:16:26.040 --> 0:16:29.000 find five or ten million dollars a person could be 0:16:29.000 --> 0:16:31.520 a liability. Bowing may have some insurance policies to help 0:16:31.560 --> 0:16:34.440 cover some of that. It's nothing that would am Bowling 0:16:34.480 --> 0:16:36.240 is ten billion dollars in the bounty. I think it's 0:16:36.280 --> 0:16:40.080 nothing that would that would put the company out of business. Well, 0:16:40.600 --> 0:16:42.400 it doesn't have to be putting the company out of 0:16:42.400 --> 0:16:45.120 the business. I mean it's the biggest uh, it's the 0:16:45.160 --> 0:16:47.880 biggest share in in in the Dow Index. I mean, 0:16:48.000 --> 0:16:50.080 it just has to go down a substantial mouth. There's 0:16:50.120 --> 0:16:53.520 also a question, of course, reputational risk as well as 0:16:53.800 --> 0:16:58.320 whether a nation like China, which accounted the orders I 0:16:58.320 --> 0:17:01.600 believe of this new seven thirties seven uh, if they 0:17:01.640 --> 0:17:05.480 could use this as an excuse to reduce the number 0:17:05.520 --> 0:17:09.520 of aircraft that they order from Boeing for whatever reason, 0:17:09.640 --> 0:17:13.200 whether it be that they want to reduce their exposure 0:17:13.200 --> 0:17:17.640 to US companies or what have you. I think there 0:17:17.680 --> 0:17:20.639 could be agreed at least I think there's there's the 0:17:20.640 --> 0:17:23.000 potential that some of that could be going on in 0:17:23.080 --> 0:17:25.800 the backdrop, because I would note that the largest operator 0:17:25.840 --> 0:17:28.919 the airplane is Southwest. They fly thirty four of them 0:17:28.960 --> 0:17:31.960 by my last count. They're flying them every day. They're 0:17:32.000 --> 0:17:35.639 working fine in the fleet, um, you know, and I 0:17:35.680 --> 0:17:38.800 would say the US and Europe, we haven't seen any 0:17:38.840 --> 0:17:41.920 of those regulators come in and try to temporarily ground 0:17:41.960 --> 0:17:45.720 the airplane. So it seems to me like the biggest, 0:17:46.040 --> 0:17:49.439 the most safe markets in the world have been the 0:17:49.440 --> 0:17:53.400 airplane is good to go and so yeah, because there 0:17:53.400 --> 0:17:55.680 may be a little bit negotiation behind the scenes here 0:17:55.760 --> 0:18:00.639 from from airlines in Indonesia or in China that might 0:18:00.640 --> 0:18:02.560 give them some legal room to take some orders off 0:18:02.600 --> 0:18:05.160 the book it. Frankly, I think the Chinese probably need 0:18:06.000 --> 0:18:09.360 the airplane flow to to grow their their airline industry 0:18:09.359 --> 0:18:12.320 as much as they want to. Um. Look, there's only 0:18:12.359 --> 0:18:16.440 I think, you know, I looked there's probably thirty orst 0:18:16.440 --> 0:18:19.760 flying inside of China right now, So it's not it's 0:18:19.800 --> 0:18:22.440 not a huge ask for them to pull them out 0:18:22.440 --> 0:18:25.840 of the fleet temporarily, you know. So I don't think 0:18:25.840 --> 0:18:28.360 it's Um, I don't know that they're going to shut 0:18:28.400 --> 0:18:31.719 off the pipeline and Boeing, but they may use it too. 0:18:32.080 --> 0:18:33.800 So so in in the U S. Here have we 0:18:33.880 --> 0:18:36.840 yet heard for the fa A about whether they want 0:18:36.880 --> 0:18:42.040 to temporarily ground these planes. So I've heard nothing at 0:18:42.200 --> 0:18:45.320 at this stage. Um. You know, look, we just we 0:18:45.359 --> 0:18:48.320 went to the Indonesia crash, and I would remind everybody 0:18:48.480 --> 0:18:52.360 that the Indonesia crash the Lion Air crash. I think 0:18:52.359 --> 0:18:54.480 what we've learned so far was that an angle of 0:18:54.520 --> 0:18:59.399 attack indicator wasn't properly maintained and the pilot wasn't fully 0:18:59.440 --> 0:19:04.360 trained on how to shut off this nose over computer control, 0:19:04.600 --> 0:19:07.199 so I wouldn't see anything from that would lead me 0:19:07.240 --> 0:19:10.960 to believe that the FED would want to restrict flights 0:19:11.080 --> 0:19:13.880 for this, the seven thirty seven Max. And look, they've 0:19:13.880 --> 0:19:16.880 been looking at that data since the Lion air crash occurred, 0:19:16.880 --> 0:19:18.240 like the FAE has been looking at that and they 0:19:18.280 --> 0:19:21.240 haven't ground the airplane. So again I think that we 0:19:21.280 --> 0:19:25.600 won't see a grounding out of this crash. George Ferguson, 0:19:25.720 --> 0:19:27.560 thank you so much for being with us. George Ferguson, 0:19:27.560 --> 0:19:32.639 Bloomberg Intelligence, Senior Aerospace defense an airline analyst, talking of 0:19:32.680 --> 0:19:38.600 course about the tragic Boeing Max UH crash which took 0:19:38.680 --> 0:19:41.680 the lives of nearly two hundred people crashed in Ethiopia. 0:19:43.560 --> 0:19:46.919 You're listening to Bloomberg Markets with Lisa Ramo, Eds and 0:19:46.960 --> 0:19:51.040 Paul Sweeney on Bloomberg Radio. First, Linton just walked into 0:19:51.040 --> 0:19:54.159 our Interactive Broker Studios in a fantastic food as he 0:19:54.200 --> 0:19:58.800 should because his company, Canopy Growth shares up more than 0:19:58.960 --> 0:20:03.000 seventy scent so far just this year. They have been 0:20:03.040 --> 0:20:05.639 absolutely on a tear. We are talking marijuana, and we 0:20:05.640 --> 0:20:08.800 are talking of course the company uh that Constellation Brands 0:20:08.840 --> 0:20:11.080 bought a share of and that last week. And as 0:20:11.400 --> 0:20:16.359 a business partnership with television personality and lifestyle authority Martha 0:20:16.560 --> 0:20:20.320 Stewart very much the Rage one of the biggest and 0:20:20.960 --> 0:20:24.520 arguably most ambitious kidnabis companies in the United States. Bruce 0:20:24.600 --> 0:20:28.040 joining us here as the CEO here in our eleven 0:20:28.040 --> 0:20:30.240 three oh studio. So Bruce, first, I just want to 0:20:30.240 --> 0:20:33.720 start with the Martha Stewart Association here. What is the 0:20:33.720 --> 0:20:37.800 business partnership exactly? Just please explain. Yeah, no, and I 0:20:37.880 --> 0:20:39.920 thought that bringing was great. You didn't actually use any 0:20:39.960 --> 0:20:41.440 pot puns. I thought you're going to talk about the 0:20:41.440 --> 0:20:43.760 stock high or something. So that was I think that's 0:20:43.760 --> 0:20:45.600 been tired. It's you know, I'm going to give that 0:20:45.640 --> 0:20:47.359 a T shirt, a T shirt to anyone who can 0:20:47.400 --> 0:20:48.720 come up with a new one of those. And I don't. 0:20:48.720 --> 0:20:50.600 I don't think I handle any T shirts. But this 0:20:50.680 --> 0:20:53.600 is a real business. We can move away from the 0:20:53.640 --> 0:20:56.280 puns to this is real business. Well, what's happened is 0:20:56.320 --> 0:20:58.960 people needed puns when it was uncomfortable. Now what it 0:20:59.040 --> 0:21:00.960 is is more than Curry City. It's a real business, 0:21:00.960 --> 0:21:03.400 which is why you're gonna name like Martha Stewart coming by. 0:21:03.480 --> 0:21:06.359