WEBVTT - Tariffs Likely Hurt Global Equities' Margin Views 0:00:02.520 --> 0:00:07.000 Bloomberg Audio Studios, Podcasts, radio news. 0:00:08.640 --> 0:00:12.680 This is Bloomberg Business Week Insight from the reporters and 0:00:12.800 --> 0:00:16.800 editors that bring you America's most trusted business magazine, plus 0:00:17.000 --> 0:00:20.799 global business, finance and tech news. The Bloomberg Business Week 0:00:20.840 --> 0:00:25.760 Podcast with Carol Masser and Tim Stenoveek on Bloomberg Radio. 0:00:27.000 --> 0:00:29.600 It is the first full day of Donald Trump in 0:00:29.680 --> 0:00:33.200 the White House. We are expecting an announcement later on 0:00:33.440 --> 0:00:37.760 coming from mister Trump, specifically to announce open Ai SoftBank, 0:00:37.800 --> 0:00:40.839 Oracle and an Ai investment. This was initially reported by 0:00:40.880 --> 0:00:43.920 CBS News. We have seen Oracle shares jump on it. 0:00:44.000 --> 0:00:46.720 But again this is why we are watching very much 0:00:47.080 --> 0:00:49.000 the first few days, the first few weeks, the first 0:00:49.000 --> 0:00:52.000 one hundred days in terms of things that may come 0:00:52.040 --> 0:00:54.720 down that will impact the trade and also impact businesses. 0:00:54.840 --> 0:00:56.600 And that includes the tariff Watch. 0:00:56.680 --> 0:00:59.960 Yeah, things that may or may not come down. What's expected, 0:01:00.080 --> 0:01:03.920 what's not expected. The President's signal plans to impost previously 0:01:04.000 --> 0:01:06.640 threatened tariffs of as much as twenty five percent on 0:01:06.720 --> 0:01:10.240 Mexico and Canada by February first, reiterating his contention that 0:01:10.280 --> 0:01:14.280 America's closest neighbors and largest trading partners, Carol are letting 0:01:14.400 --> 0:01:17.200 undocumented migrants in drugs flood into the US. 0:01:17.240 --> 0:01:19.240 All right, So what might all of this mean for 0:01:19.360 --> 0:01:22.960 US companies? Bloomberg Intelligence Director of Equity Strategy and chief 0:01:23.000 --> 0:01:25.880 equity strategist Gina Martin Adams writes about that she. 0:01:25.920 --> 0:01:27.040 Joins US from New Jersey. 0:01:27.280 --> 0:01:30.920 All Right, Gina, So should investors be more concerned perhaps 0:01:31.280 --> 0:01:34.039 with this round of tariffs than first than compared to 0:01:34.040 --> 0:01:37.360 what we saw in the first Trump White House in 0:01:37.440 --> 0:01:40.560 terms of how it impacts specifically US stocks. 0:01:41.080 --> 0:01:43.160 Yeah, I think that's a really great question and something 0:01:43.160 --> 0:01:45.080 that we're going to have to grapple with probably most 0:01:45.120 --> 0:01:49.040 of this year. Unfortunately, as the tariffs unfolds. Right now, 0:01:49.040 --> 0:01:52.360 it's still relatively speculative. But the one thing we can 0:01:52.400 --> 0:01:54.400 hang our hat on is the fact that the dollar 0:01:54.520 --> 0:01:57.840 has been rallying since late September, in fits and starts, 0:01:57.840 --> 0:01:59.880 of course, but at its peak just a week or 0:01:59.880 --> 0:02:02.360 so ago, the dollar was up ten percent from its 0:02:02.360 --> 0:02:03.480 low in late September. 0:02:04.040 --> 0:02:05.040 The dollar is a. 0:02:04.960 --> 0:02:09.000 Signal for portions of the US market, especially the S 0:02:09.040 --> 0:02:13.080 and P five hundred's most multinational stocks, which tend to 0:02:13.200 --> 0:02:17.160 experience ripple effects of currency in their earnings outlook. Now, 0:02:17.160 --> 0:02:20.160 these happened to be also the stocks that were largely 0:02:20.240 --> 0:02:22.560 leading the S and P five hundred earnings recovery in 0:02:22.600 --> 0:02:25.480 twenty twenty three and twenty twenty four. They now face 0:02:25.560 --> 0:02:29.560 the most difficult comparisons and the highest earnings expectations going 0:02:29.560 --> 0:02:32.359 into twenty twenty five. So I would anticipate that at 0:02:32.360 --> 0:02:36.480 the very least, you have some currency concerns start to 0:02:36.520 --> 0:02:40.200 eat away a little bit at multinational stocks earnings outlook, 0:02:40.480 --> 0:02:43.960 which could create another bout of volatility or indigestion in 0:02:43.960 --> 0:02:45.400 stocks as those emerge. 0:02:45.480 --> 0:02:48.560 Gin We have sort of a playbook here in recent history. 0:02:48.720 --> 0:02:51.720 We saw what happened in the first Trump administration, We 0:02:51.760 --> 0:02:56.640 saw certain tariffs continue in the Biden administration. How were 0:02:56.760 --> 0:02:59.720 the stocks that were affected, the sectors that were affected, 0:03:00.080 --> 0:03:02.040 how were they hit, and how does that play into 0:03:02.120 --> 0:03:03.840 your analysis over at Bloomberg Intelligence. 0:03:04.600 --> 0:03:07.320 Yeah, I think it's a great point. There is a precedent, 0:03:07.360 --> 0:03:10.000 but pass is not necessarily a perfect precedent for what 0:03:10.080 --> 0:03:13.560 to expect in that. In twenty eighteen, the tariffs were 0:03:13.639 --> 0:03:17.400 pretty targeted at China. This time around, it looks like 0:03:17.400 --> 0:03:20.680 the tariffs could be considerably more widespread wrapped up with 0:03:20.840 --> 0:03:24.240 as you mentioned, at the onset and immigration issues targeted 0:03:24.280 --> 0:03:27.720 at least in the short run at Mexico and Canada predominantly, 0:03:28.680 --> 0:03:31.040 China seems to be kind of put on the back burner, 0:03:31.160 --> 0:03:33.560 or at least temporarily on the back burner. Let's see 0:03:33.720 --> 0:03:37.880 where that goes over time. Nonetheless, there's one indicator that 0:03:37.920 --> 0:03:40.240 I think is really the most important for investors to 0:03:40.280 --> 0:03:43.200 follow regarding the potential market implications, and that is the 0:03:43.240 --> 0:03:46.240 operating margin forecast from analysts. This is one of the 0:03:46.280 --> 0:03:49.320 single best indicators of coming performance in the equity market. 0:03:49.360 --> 0:03:52.040 Operating margins obviously have been expanding for the better part 0:03:52.080 --> 0:03:55.400 of the last two years. In twenty eighteen, we saw 0:03:55.440 --> 0:03:59.800 operating margin forecasts turnover very quickly, not only because of 0:03:59.840 --> 0:04:02.280 ten tariffs, but also because the FED was tightening interest 0:04:02.360 --> 0:04:06.000 rates and we had some operating issues at the largest 0:04:06.000 --> 0:04:09.200 tech companies emerge. And so I think you want to 0:04:09.240 --> 0:04:12.320 watch this operating margin forecast pretty carefully. If analysts start 0:04:12.320 --> 0:04:15.200 to lose face the faith that companies can pass through 0:04:15.240 --> 0:04:19.719 prices onto their ultimate consumers, that they can maintain pricing power, 0:04:20.200 --> 0:04:23.240 that is usually pretty problematic for stocks going forward. We 0:04:23.320 --> 0:04:25.599 saw that in twenty eighteen. We may say that again 0:04:26.080 --> 0:04:29.360 now now on the products and areas that could experience 0:04:29.360 --> 0:04:32.040 the greatest operating margin pressure, it could be quite different. 0:04:32.400 --> 0:04:34.240 But the important thing to know for the markets at 0:04:34.360 --> 0:04:36.400 large is that operating margins are the key. 0:04:36.800 --> 0:04:38.480 Also fair to say, and I was thinking about a 0:04:38.520 --> 0:04:41.440 conversation Tim and I and David Gora had yesterday following 0:04:41.480 --> 0:04:44.279 the inauguration, and this was with Stefan Seelig. He was 0:04:44.320 --> 0:04:48.640 Under Secretary of Commerce for International Trade at Commerce during 0:04:48.640 --> 0:04:51.560 the Obama administration. He was also head of the International 0:04:51.600 --> 0:04:53.719 Trade Administration. And he said, when we talked about tiras, 0:04:53.800 --> 0:04:56.920 he said, they're complicated. They are not all one thing. 0:04:56.960 --> 0:05:00.040 And as you made that distinction between twenty eighteen and 0:05:00.040 --> 0:05:03.359 the teriffs were very targeted at China versus maybe something 0:05:03.400 --> 0:05:06.600 here that's more like a blanket tariff, it does become 0:05:06.640 --> 0:05:08.320 a different issue. So we have to be smart about 0:05:08.400 --> 0:05:11.200 kind of the devil and the details we do. 0:05:11.240 --> 0:05:13.400 And I think the other thing to consider is that 0:05:13.880 --> 0:05:19.000 tariffs target at economies often impact markets through companies, and 0:05:19.120 --> 0:05:23.120 economies and markets are not the same thing. Economies companies 0:05:23.160 --> 0:05:26.200 are really a microcosm of economies are certainly related to 0:05:26.279 --> 0:05:28.800 the economies, but the companies are the ones that oftentimes 0:05:28.839 --> 0:05:31.880 pay the tariffs. A good example is, you know, these 0:05:31.920 --> 0:05:34.360 tariffs targeted at Canada. How much of that is actually 0:05:34.360 --> 0:05:37.280 going to impact US auto manufacturers, who are some of 0:05:37.320 --> 0:05:40.839 the biggest exporters of products from Canada into the US 0:05:41.279 --> 0:05:43.280 is a huge question, and I think we have to 0:05:43.320 --> 0:05:46.760 consider that companies are very multinational in nature. Many of 0:05:46.760 --> 0:05:50.920 the US companies that are multinational will ultimately be the 0:05:51.040 --> 0:05:54.599 payers of these tariffs. So we want to be really 0:05:54.640 --> 0:05:58.920 careful and conscientious in not suggesting that tariffs that are 0:05:58.920 --> 0:06:03.200 targeted at economy are paid by those economies exclusively. They're 0:06:03.240 --> 0:06:07.240 generally paid by companies, and companies are often multinational in 0:06:07.320 --> 0:06:10.279 nature and can sit on various exchanges across the world, 0:06:10.360 --> 0:06:12.640 don't necessarily represent those economies. 0:06:12.839 --> 0:06:17.080 Gina, in your analysis, does any of the transformation that 0:06:17.360 --> 0:06:22.080 the president is hoping actually happen? The idea that maybe 0:06:22.080 --> 0:06:25.719 because of tariffs, companies based here in the US will 0:06:25.839 --> 0:06:30.640 manufacture goods closer to home in the US, employ more Americans, 0:06:31.080 --> 0:06:33.760 and make it work as the whole idea behind these 0:06:34.880 --> 0:06:37.480 being implemented is well. 0:06:37.560 --> 0:06:39.080 I think there have to be a lot of other 0:06:39.240 --> 0:06:43.520 changes that happen to get US companies to relocate into 0:06:43.520 --> 0:06:48.360 the United States beyond simply an acceleration and cost. Companies 0:06:48.400 --> 0:06:51.280 tend to find lowest cost labor around the world. They 0:06:51.279 --> 0:06:54.480 will not necessarily relocate to the US. They may relocate 0:06:54.520 --> 0:06:57.520 to other nations. They may find other ways to path 0:06:57.560 --> 0:07:00.480 through costs. There are a lot of different ads by 0:07:00.480 --> 0:07:05.480 which companies can flexibly approach a sanctions or a tariff's environment, 0:07:05.520 --> 0:07:07.400 such as the one that we're likely to go into. 0:07:07.760 --> 0:07:10.840 I think you can see some relocations to the degree 0:07:10.840 --> 0:07:13.400 that's in the best interest of profitability of the company. 0:07:13.800 --> 0:07:16.880 But that profitability is most important for public companies to 0:07:16.960 --> 0:07:20.240 keep an eye on, obviously, and if it's not in 0:07:20.320 --> 0:07:22.960 the best interest of their shareholders, if it's not in 0:07:23.080 --> 0:07:26.760 the best interest of seeking profits, then why would they 0:07:26.760 --> 0:07:29.520 relocate to the United States. There has to be a 0:07:29.560 --> 0:07:33.400 pretty compelling reason beyond tariffs. One of the biggest reasons 0:07:33.400 --> 0:07:35.840 companies locate outside of the United States is it's just 0:07:35.920 --> 0:07:39.360 more efficient, more effective, and better for their cost structure. 0:07:40.440 --> 0:07:44.760 Will tariffs ultimately overwhelm that decision. It seems unlikely, given 0:07:44.760 --> 0:07:48.360 that labor is such a huge portion ultimately of company costs, 0:07:48.800 --> 0:07:52.200 but we'll see you can also see efficiencies gained in 0:07:52.240 --> 0:07:55.720 other ways, another by relocating into other regions of the world, 0:07:55.760 --> 0:07:58.120 particularly when we're selling into other regions of the world 0:07:58.160 --> 0:08:01.360 as a corporation. So I think think it is very complicated. 0:08:01.440 --> 0:08:03.640 I think that a blund instrument of tariffs can be 0:08:03.720 --> 0:08:09.840 effective in certain instances, particularly at protecting domestic industries, but 0:08:10.080 --> 0:08:12.840 it's not one big broad brush that we can paint 0:08:12.880 --> 0:08:15.240 and I think that each company decision will be made 0:08:15.280 --> 0:08:18.120 on a profitability perspective of that independent company. 0:08:18.280 --> 0:08:19.640 Hey, you know one thing I want to ask you, 0:08:19.680 --> 0:08:21.160 and one of the things that we've talked about over 0:08:21.160 --> 0:08:23.120 the last couple of years is some of the spending 0:08:23.160 --> 0:08:27.320 plant programs that Congress passed a Biden initiated that Congress 0:08:27.400 --> 0:08:32.600 ultimately passed and put investment dollars certainly into the US economy, 0:08:32.600 --> 0:08:35.160 spending on infrastructure, green initiatives, and so on. 0:08:35.840 --> 0:08:36.240 Chips. 0:08:36.880 --> 0:08:39.880 Donald Trump is expected to announce an open AI SoftBank 0:08:39.920 --> 0:08:43.480 Oracle AI investment. We've been talking about this news out 0:08:43.480 --> 0:08:47.000 of CBS reports, and I just wonder how you were 0:08:47.040 --> 0:08:50.520 thinking about or watching the Trump administration for other things 0:08:50.520 --> 0:08:54.199 that you think could potentially increase kind of the liquidity 0:08:54.240 --> 0:08:56.560 and cashets out there to put to work that would 0:08:56.600 --> 0:08:58.679 impact the markets, the equity market as well. 0:08:59.520 --> 0:09:02.559 Yeah, I think federal spending programs have become a really 0:09:02.600 --> 0:09:05.560 big bogie to watch for companies. Over the course of 0:09:05.600 --> 0:09:09.560 the last several years. The Chips Act was very consequential. 0:09:09.600 --> 0:09:12.640 The Inflation Reduction Act was also pretty consequential to certain 0:09:12.679 --> 0:09:17.480 industries profitability trends. So any sort of fiscal spending package 0:09:17.640 --> 0:09:21.840 or public private partnership dedicated to elevating investment into certain 0:09:21.880 --> 0:09:25.000 sectors can be very meaningful. I think we have to 0:09:25.040 --> 0:09:27.959 watch rather than speculate as to what may happen. I 0:09:27.960 --> 0:09:29.720 think we want to watch for the details of each 0:09:29.760 --> 0:09:32.880 of these packages to assess the viability and certainly the 0:09:32.920 --> 0:09:36.280 market impact. But nonetheless, we are in an era where 0:09:36.720 --> 0:09:40.640 federal spending and targeted federal spending is having real economic 0:09:40.760 --> 0:09:41.960 and market consequences. 0:09:42.040 --> 0:09:44.760 Hey, speaking of market consequences, just thirty seconds, real quickly, 0:09:44.760 --> 0:09:46.360 we've got Netflix after the earnings. 0:09:46.400 --> 0:09:48.400 We are an earning season. This is a big one 0:09:48.400 --> 0:09:48.920 to watch. 0:09:49.640 --> 0:09:51.280 It's been on a tear the last couple of years, 0:09:51.280 --> 0:09:53.800 but it's down about seven percent since early December. How 0:09:53.840 --> 0:09:56.120 might a name light Netflix kind of help or hurt 0:09:56.200 --> 0:09:57.760 sentiment in the markets just quickly. 0:09:58.080 --> 0:10:00.920 Yeah, it's a great question because Netflix is sort of 0:10:01.240 --> 0:10:05.040 one of those representative examples of the media segment within 0:10:05.280 --> 0:10:09.480 a tech telecom and media. It's pretty important for driving 0:10:09.600 --> 0:10:13.720 sentiment with respect to content producers. I think that it's 0:10:13.920 --> 0:10:16.960 less important than say the Mag seven. Yeah, but we 0:10:17.040 --> 0:10:19.920 do want to watch for persistence of profitability. I think 0:10:19.960 --> 0:10:22.680 Netflix could give us some pretty good indications as to 0:10:22.720 --> 0:10:26.200 sustainability of spending, but also what's happening with margins. Margins 0:10:26.200 --> 0:10:30.679 are really key right now for that entire space. To 0:10:30.760 --> 0:10:33.640 the degree that this company is navigating the margin outlook 0:10:33.640 --> 0:10:37.360 relatively with a relative strength, I think that could be 0:10:37.920 --> 0:10:41.480 fairly supportive for the broad sector. But ultimately we want 0:10:41.480 --> 0:10:44.120 to watch for the Mag seven, which are obviously have 0:10:44.320 --> 0:10:45.880 potentially profound impacts. 0:10:45.920 --> 0:10:47.640 I feel like I'm going to make up t shirts 0:10:47.640 --> 0:10:49.839 watch operating margins because I feel like that's my big 0:10:49.880 --> 0:10:50.880 message from you right now. 0:10:50.920 --> 0:10:53.240 Overall, it is the big message this year. 0:10:54.640 --> 0:10:58.200 You're listening to the Bloomberg Business Week podcast. Catch us 0:10:58.280 --> 0:11:01.720 live weekday afternoons from two to five pm Eastern. Listen 0:11:01.760 --> 0:11:04.959 on Applecarplay and the Android Auto with the Bloomberg Business 0:11:05.000 --> 0:11:07.280 ap or watch us live on YouTube. 0:11:08.120 --> 0:11:09.160 The thiny twa billion. 0:11:08.960 --> 0:11:12.319 Dollar cannabis industry in the United States is watching perhaps 0:11:12.320 --> 0:11:15.040 what a Trump administration in Republican Congress may mean for 0:11:15.120 --> 0:11:18.520 their world. Bloomberg Intelligence Nathan Dean writing last month that quote, 0:11:18.520 --> 0:11:22.240 while legislation to let US banks service cannabis based businesses 0:11:22.280 --> 0:11:24.920 will face similar policy hurdles in twenty twenty five as 0:11:24.920 --> 0:11:27.839 in the past, Donald Trump's election victory raised the odds 0:11:27.840 --> 0:11:30.280 at a long awaited goal of the cannabis sector can 0:11:30.320 --> 0:11:33.120 make it to the President's desk this year. Let's see 0:11:33.160 --> 0:11:35.600 what Erwin Simon has to say. He's chairman, president and 0:11:35.720 --> 0:11:38.280 CEO of the one point one billion dollar market cap 0:11:38.320 --> 0:11:39.920 cannabis company Tillray Brands. 0:11:40.160 --> 0:11:41.480 He joins us from New York City. 0:11:41.559 --> 0:11:44.000 Tillery, by the way, is one of the world's largest 0:11:44.080 --> 0:11:45.800 licensed cannabis companies. 0:11:46.200 --> 0:11:48.719 Erwin, nice to have you back here on Bloomberg. 0:11:48.840 --> 0:11:53.000 We are curious about your thoughts regarding the Trump administration 0:11:53.360 --> 0:11:58.240 and their stance his stance toward federal legalization of marijuana. 0:11:58.240 --> 0:11:59.559 What do you think the outlook is. 0:12:00.960 --> 0:12:03.360 So Number one, thank you very much for having me 0:12:03.840 --> 0:12:07.000 listen It was great to see President Trump, you know, 0:12:07.320 --> 0:12:12.119 inauguration yesterday and ultimately see him come back to office. 0:12:12.480 --> 0:12:14.640 You know, Trump is about business. You hear him talk 0:12:14.679 --> 0:12:18.120 about terrorts. You hear him talk about you know, free trade. 0:12:18.600 --> 0:12:21.640 And if you come back and look at cannabis and 0:12:21.679 --> 0:12:25.400 the opportunities there to legalize that and the excise tax 0:12:25.440 --> 0:12:28.240 that can be brought into the US coppers, I think 0:12:28.280 --> 0:12:31.000 he looks at as a business and I think, as 0:12:31.040 --> 0:12:35.079 I said before, I think medical cannabis in the US legalizes, 0:12:35.160 --> 0:12:40.480 and that enacts safe bank ultimately from a decriminalization, and 0:12:40.520 --> 0:12:42.679 that takes the illicted market off the street. 0:12:42.720 --> 0:12:45.679 And I think absolutely Trump will absolutely look at that. 0:12:45.800 --> 0:12:48.080 And I think you know, he has already looked at that. 0:12:48.160 --> 0:12:51.040 When it came to the election in November, he was 0:12:51.040 --> 0:12:55.240 in favor of cannabis, you know, legalizing from a recreational standpoint. 0:12:55.280 --> 0:12:58.200 In Florida. It didn't pass that has needed sixty percent, 0:12:58.600 --> 0:13:00.960 and I think it was around fifty three fifty four percent. 0:13:01.640 --> 0:13:04.480 Why are you optimistic that he'll do this stuff during 0:13:04.480 --> 0:13:06.360 this term when during his first term there was a 0:13:06.400 --> 0:13:08.720 lot of optimism and a lot of hope from folks 0:13:08.760 --> 0:13:11.760 in the cannabis industry. I know you weren't at Tilray 0:13:11.880 --> 0:13:15.080 at that time, but there was a lot of optimism 0:13:15.240 --> 0:13:18.920 coming from the industry and that ultimately did not come 0:13:18.920 --> 0:13:19.640 to pass. 0:13:20.720 --> 0:13:24.280 So listen again, I think from a business standpoint, and 0:13:24.320 --> 0:13:26.800 he looks at it from two things. He looks at 0:13:26.800 --> 0:13:29.400 it from the tax dollars and the excise tax that 0:13:29.440 --> 0:13:32.480 come into place. And he looks at an illicted market 0:13:32.480 --> 0:13:34.480 that he takes off the street, and he gets real 0:13:34.559 --> 0:13:38.720 regulation in here, and he ultimately brings safe baking in here, 0:13:38.880 --> 0:13:41.800 which allows money that's going through going through the banks. 0:13:41.800 --> 0:13:45.200 From a regulatory standpoint, Listen, you come back and look 0:13:45.200 --> 0:13:47.360 at Canada today, and Canada is a tenth of the 0:13:47.400 --> 0:13:50.480 size of the US, and there's over a billion and 0:13:50.559 --> 0:13:53.520 a half dollars in excise tax that comes into Canada 0:13:53.559 --> 0:13:56.000 each year. If you multiply that by ten, you look 0:13:56.040 --> 0:13:59.880 at the fifteen billion dollars opportunity here in the US. 0:14:00.360 --> 0:14:03.960 So I come back and absolutely if you look at 0:14:03.960 --> 0:14:07.280 Europe today, there's twenty different countries that allow medical cannabis 0:14:07.320 --> 0:14:11.000 in Europe today, And come back and look at recreational cannabis. 0:14:11.040 --> 0:14:14.240 Recreational cannabis day is legal in twenty seven states in 0:14:14.320 --> 0:14:17.720 the US and medical cannabis is in thirty five states, 0:14:18.080 --> 0:14:22.640 so a big part of the US population wants cannabis legalized. 0:14:22.800 --> 0:14:24.640 But I'll tell you this here, till Ray is in 0:14:24.720 --> 0:14:27.480 a good spot. You know, we can't sell cannabis in 0:14:27.520 --> 0:14:30.720 the US because we're a NaSTA eclistic company. We're the 0:14:30.840 --> 0:14:34.080 largest cannabis company in Canada today. We have a good 0:14:34.120 --> 0:14:38.520 sized beverage business in the US today with our craft beers, 0:14:38.560 --> 0:14:43.200 our spirits with Breckinridge, and our hemp business of Manitoba Harvest. 0:14:43.440 --> 0:14:45.800 We also have a good sized business in Europe today 0:14:45.800 --> 0:14:48.680 with our medical cannabis business, where there we only can 0:14:48.680 --> 0:14:52.000 sell cannabis through prescriptions from doctors. So we're a well 0:14:52.040 --> 0:14:54.600 diversified company. And I got to tell you it would 0:14:54.640 --> 0:14:57.400 be very helpful to tell Ray if cannabis did legalize 0:14:57.400 --> 0:15:00.200 in the US from a medical standpoint, and I think, hey, 0:15:00.360 --> 0:15:02.320 it's a two three hundred million dollar business for US 0:15:02.360 --> 0:15:04.880 right away at a three percent size of the market. 0:15:04.880 --> 0:15:06.840 As you just said, you know, it's a ten billion 0:15:06.880 --> 0:15:09.920 dollar market here in the US. I'm a medical standpoint. 0:15:10.200 --> 0:15:13.040 What about what about tariffs and the comments that the 0:15:13.080 --> 0:15:16.040 President has made about Canada the possibility that there could 0:15:16.080 --> 0:15:18.840 be twenty five percent on good twenty five percent tariffs 0:15:18.840 --> 0:15:21.200 on goods coming from Canada by February first, and also 0:15:21.520 --> 0:15:23.800 the jokes that he made over the last month about 0:15:23.880 --> 0:15:26.000 essentially Canada becoming the fifty first state. How do you 0:15:26.000 --> 0:15:26.520 look at all that. 0:15:27.920 --> 0:15:30.160 Well, I don't think that's going to happen, number one, 0:15:30.200 --> 0:15:32.560 But number two, I think you got Canada's attention. 0:15:32.960 --> 0:15:33.160 You know. 0:15:33.200 --> 0:15:35.200 The good news is, you know, the only thing we 0:15:35.280 --> 0:15:37.680 bring in from Canada today is we bring some hented 0:15:37.800 --> 0:15:40.040 for our hemp business. You know, none of our beer, 0:15:40.080 --> 0:15:42.880 and of course none of our cannabis does sell within 0:15:43.120 --> 0:15:44.960 you know, the US. None of the cannabis we make 0:15:45.040 --> 0:15:48.040 today and growing Canada is sold in the US. Listen, 0:15:48.080 --> 0:15:51.840 the Canadian dollar, you know, has quite a bit of value. 0:15:51.920 --> 0:15:54.600 So if there was a tariff, I think ultimately it 0:15:54.600 --> 0:15:57.160 gets passed on to the consumer. I don't think it's 0:15:57.200 --> 0:15:58.960 going to be twenty five percent. I think there could 0:15:59.000 --> 0:16:02.280 be tariffs. We have five million square feet to grow 0:16:02.320 --> 0:16:05.880 in Canada today, and if we could produce there, which 0:16:05.920 --> 0:16:08.120 would be about sixty metric tons, and be able to 0:16:08.120 --> 0:16:10.960 sell them in the US, it would be very, very beneficial. 0:16:11.080 --> 0:16:11.880 To till errate. 0:16:12.120 --> 0:16:14.600 Where's the growth in your business? Right, there's cannabis, there's 0:16:14.640 --> 0:16:19.280 the beverage business. You guys are also moving increasingly into 0:16:19.640 --> 0:16:22.360 vape and infused pre role categories. So tell us a 0:16:22.360 --> 0:16:25.320 little bit about where the biggest opportunities are for you. 0:16:26.360 --> 0:16:30.600 So the growth in Canada today is in pre rolls. 0:16:30.680 --> 0:16:33.600 The growth in Canada today is cannabis and tu streets 0:16:33.640 --> 0:16:36.440 and the fake business. And that's where the growth is 0:16:36.480 --> 0:16:39.320 in Canada today. And as the market continues to mature 0:16:39.720 --> 0:16:43.080 and more and more consumers are buying, you know, from 0:16:43.120 --> 0:16:46.120 the legalized market, not buying the illicit market. And being 0:16:46.160 --> 0:16:49.400 one of the largest growers today in Canada, that's a 0:16:49.400 --> 0:16:52.120 big opportunity for the Canadian market. But you know, Canada's 0:16:52.160 --> 0:16:55.480 forty million people in size, and ultimately the market is 0:16:55.520 --> 0:16:58.720 going to continue to mature. In the US, we're the 0:16:58.800 --> 0:17:02.680 fifth largest craft brewer in the US today and we 0:17:02.880 --> 0:17:05.560 became a beverage company. So big opportunities that we come 0:17:05.600 --> 0:17:08.280 out with a treat called Liquid Love are not out 0:17:08.359 --> 0:17:11.040 drinks or energy drinks. So the beverage business for us, 0:17:11.280 --> 0:17:14.560 big opportunity for us. And listen, as people walk around, 0:17:14.600 --> 0:17:17.040 they always have something in their hand, whether it's a coffee, 0:17:17.080 --> 0:17:20.040 whether it's a drink, whether it's a water. And listen, 0:17:20.320 --> 0:17:24.240 beer business is not going away. And ultimately the beverage 0:17:24.280 --> 0:17:26.480 business is one of the biggest categories out there, and 0:17:26.520 --> 0:17:29.680 today we have ten breweries out there, We have seven 0:17:29.800 --> 0:17:32.560 hundred distributors, We have an infrastructure of sales. 0:17:32.280 --> 0:17:34.240 And marketing people in Europe. 0:17:34.600 --> 0:17:38.760 Medical cannabis big opportunity for US, as doctors are prescribing 0:17:38.920 --> 0:17:43.440 cannabis today as medicines for paying for anxiety, for sleep, etc. 0:17:43.840 --> 0:17:47.000 So we're really in some good businesses. We're a five 0:17:47.080 --> 0:17:50.320 year old company. As I put this together, we're investing 0:17:50.359 --> 0:17:52.600 in these business We're investing in these brands. We have 0:17:52.680 --> 0:17:57.119 over forty brands today with three diversified business So I 0:17:57.240 --> 0:18:00.119 like the cannabis business. I love the beverage business, and 0:18:00.160 --> 0:18:02.600 the wellness business is another big opportunity for US. 0:18:02.840 --> 0:18:04.400 Erinde. Your beverage portfolio. 0:18:04.440 --> 0:18:07.679 You guys have done some streamlining, and you know, the 0:18:07.720 --> 0:18:11.160 recently announced portfolio rationalization of beer brands in the US 0:18:11.680 --> 0:18:15.280 is really kind of consistent across the overall slowdown that 0:18:15.280 --> 0:18:18.800 we've seen with other alcoholic producers. Tim and I talk 0:18:18.840 --> 0:18:21.920 about it all the time with folks in the alcohol industry. 0:18:22.000 --> 0:18:25.119 Is cannabis use among young adults at the expense of alcohol. 0:18:25.200 --> 0:18:26.320 The reason why. 0:18:27.480 --> 0:18:30.400 So, Number one is, you know, we've done multiple acquisitions 0:18:30.440 --> 0:18:33.200 within the beer business in the US. We bought eight 0:18:33.280 --> 0:18:36.520 businesses from Anheuser Busch. We just bought four from Mulson's. 0:18:36.800 --> 0:18:39.600 We bought Montak Brewer. We we got Sweetwater. With that, 0:18:39.800 --> 0:18:42.040 we're doing a couple of things. We're doing a skew 0:18:42.160 --> 0:18:44.800 rationalization as we had way too many skews out there. 0:18:44.960 --> 0:18:47.760 We're coming up with a lot of new innovation. We 0:18:47.760 --> 0:18:49.520 have over one hundred and forty new products. 0:18:49.640 --> 0:18:50.679 And the other thing what we're. 0:18:50.560 --> 0:18:54.080 Doing is they're skeewing our brands to such regional brands 0:18:54.160 --> 0:18:56.600 and we're before we are selling them in multi states. 0:18:56.840 --> 0:18:58.320 Now we're only going to sell it in two or 0:18:58.359 --> 0:18:59.280 three different states. 0:18:59.520 --> 0:19:02.439 But shot Talk will become, you know, a national brand 0:19:02.480 --> 0:19:05.640 for US, and Sweetwater will be expelled and with half 0:19:05.680 --> 0:19:08.120 the US. So that's one of the big reasons. And 0:19:08.160 --> 0:19:10.560 the other thing is is we bring all these businesses 0:19:10.600 --> 0:19:14.160 together taken out costs. Is taking ours all these SKUs So. 0:19:14.240 --> 0:19:17.000 Yes or no, it's not because young adults are doing 0:19:17.000 --> 0:19:18.440 more cannabis versus drinking. 0:19:19.800 --> 0:19:23.480 So I think the young adults absolutely are doing more 0:19:23.600 --> 0:19:27.760 cannabis and absolutely that is you know, a rationalization, and 0:19:27.840 --> 0:19:30.200 that is affecting the drinking business. 0:19:30.359 --> 0:19:32.720 Absolutely great to get some time with you, Ern Simon, 0:19:32.800 --> 0:19:34.280 He's CEO of Tillry Brands. 0:19:34.359 --> 0:19:35.280 This is Business Week. 0:19:38.400 --> 0:19:42.040 This is the Bloomberg Business Week Podcast. Listen live each 0:19:42.080 --> 0:19:45.480 weekday starting at two pm Eastern on Applecarcklay, and Android 0:19:45.520 --> 0:19:48.560 Auto with the Bloomberg Business App. You can also listen 0:19:48.640 --> 0:19:51.920 live on Amazon Alexa from our flagship New York station. 0:19:52.440 --> 0:19:55.119 Just say Alexa Play Bloomberg eleven thirty. 0:19:56.040 --> 0:19:57.760 I said we were going to start with Apple, but 0:19:57.800 --> 0:20:00.480 that was before I learned about this bloom A News 0:20:00.520 --> 0:20:03.440 story from our next guest, Mark German, Bloomberg News Chief 0:20:03.440 --> 0:20:06.200 Technology correspondent, joining us from our San Francisco bureau. That's 0:20:06.240 --> 0:20:08.360 exactly where I want to start off. 0:20:08.359 --> 0:20:08.560 Mark. 0:20:08.640 --> 0:20:10.840 We'll get to Apple in just a minute. But you've 0:20:10.840 --> 0:20:14.000 got this story out about Meta working on upgrades too. 0:20:14.080 --> 0:20:17.720 It's smart glasses exploring new wearable devices. We're talking watches, 0:20:17.840 --> 0:20:21.960 camera equipped earbuds, looking to embed AI into more of 0:20:22.000 --> 0:20:23.480 its products. What did you learn? 0:20:24.720 --> 0:20:29.320 Yeah, so Meta that's the hot story this morning. Obviously, 0:20:29.359 --> 0:20:32.200 they've got their hardware division, Reality Labs, and they're cooking 0:20:32.280 --> 0:20:34.920 up a lot of stuff. They're cooking up some ideas 0:20:34.960 --> 0:20:37.359