1 00:00:02,640 --> 00:00:05,320 Speaker 1: Welcome to the Bloomberg pen L Podcast. I'm Paul Swinge. You, 2 00:00:05,360 --> 00:00:07,680 Speaker 1: along with my co host Lisa Brahma Waits. Each day 3 00:00:07,720 --> 00:00:10,240 Speaker 1: we bring you the most noteworthy and useful interviews for 4 00:00:10,280 --> 00:00:12,520 Speaker 1: you and your money. Whether at the grocery store or 5 00:00:12,560 --> 00:00:15,480 Speaker 1: the trading floor. Find a Bloomberg Penl podcast on Apple 6 00:00:15,520 --> 00:00:17,959 Speaker 1: podcast or wherever you listen to podcasts, as well as 7 00:00:17,960 --> 00:00:23,079 Speaker 1: at Bloomberg dot com. Well, we continue to pour through 8 00:00:23,280 --> 00:00:27,560 Speaker 1: through the page Muller Report. We welcome Jim Grosso, co 9 00:00:27,680 --> 00:00:30,200 Speaker 1: host of Politics, Policy, Power and Law. June. Have you 10 00:00:30,240 --> 00:00:33,879 Speaker 1: read All Foes yet? Oh? Yes, I have. It's you know. 11 00:00:34,000 --> 00:00:36,400 Speaker 1: And also we're going through it not in hard copy 12 00:00:36,440 --> 00:00:39,160 Speaker 1: form but on a computer, so it's sort of difficult 13 00:00:39,200 --> 00:00:41,879 Speaker 1: to read. And we don't have the color coding on 14 00:00:42,040 --> 00:00:47,080 Speaker 1: the website. At the website, I know, I don't understand it. 15 00:00:47,120 --> 00:00:49,320 Speaker 1: We just have the blacked out But I'll tell you 16 00:00:49,400 --> 00:00:54,000 Speaker 1: it's what strikes me is that it is far different 17 00:00:54,120 --> 00:00:57,400 Speaker 1: from what Attorney General William Barr painted the picture he 18 00:00:57,480 --> 00:01:00,960 Speaker 1: painted this morning. In his press conference, he talked a 19 00:01:00,960 --> 00:01:04,319 Speaker 1: lot about collusion and said that Trump that it proved 20 00:01:04,319 --> 00:01:07,480 Speaker 1: that there was no collusion. But Muller on collusion, notes 21 00:01:07,600 --> 00:01:10,280 Speaker 1: that he did not try to prove collusion. So I 22 00:01:10,360 --> 00:01:12,640 Speaker 1: thought it was kind of strange that word collusion has 23 00:01:12,680 --> 00:01:16,039 Speaker 1: been thrown into this by President Trump, because, as we've 24 00:01:16,080 --> 00:01:18,920 Speaker 1: said many times, it's not a word a lawyer would use. 25 00:01:19,040 --> 00:01:21,840 Speaker 1: A lawyer would use the word conspiracy. So it was 26 00:01:21,959 --> 00:01:25,880 Speaker 1: odd that that the a g bar used that today. 27 00:01:26,000 --> 00:01:30,039 Speaker 1: And and also, I mean what strikes me immediately is 28 00:01:30,520 --> 00:01:34,679 Speaker 1: the the that Don McGan, the White House Counsel, his 29 00:01:34,840 --> 00:01:38,399 Speaker 1: interactions with the President, and that he almost came to 30 00:01:38,440 --> 00:01:41,880 Speaker 1: the point of wanting to step down, packing his stuff up. 31 00:01:41,880 --> 00:01:45,559 Speaker 1: It reminded me it echoed Elliott Richardson, who stepped down 32 00:01:45,600 --> 00:01:51,040 Speaker 1: when Richard Nixon asked him to remove Special Counsel Archibald Cox, 33 00:01:51,280 --> 00:01:53,880 Speaker 1: and he said that he told the Chief of Staff 34 00:01:53,960 --> 00:01:56,960 Speaker 1: Rhins pre was that Trump had asked him to do crazy, 35 00:01:57,000 --> 00:02:00,720 Speaker 1: i'll say stuff, and that he was leaving. So you 36 00:02:00,840 --> 00:02:04,960 Speaker 1: have this context that really makes sort of rich what 37 00:02:05,040 --> 00:02:07,600 Speaker 1: we already know the bare bones up. And to get 38 00:02:07,680 --> 00:02:11,040 Speaker 1: his reaction, I'd like to bring in someone who who 39 00:02:11,080 --> 00:02:13,920 Speaker 1: has been able with a prosecutor for many years. He 40 00:02:14,080 --> 00:02:16,880 Speaker 1: is now the head of the white collar division at 41 00:02:16,919 --> 00:02:20,760 Speaker 1: McCarter and English that's Robert Mints from a federal prosecutor. Bob, 42 00:02:20,919 --> 00:02:23,760 Speaker 1: what do you have from looking at this report? What 43 00:02:23,800 --> 00:02:27,880 Speaker 1: do you see that either uh supports what Attorney General 44 00:02:27,919 --> 00:02:32,400 Speaker 1: Barr said or contradicts it. Well, June, I think that 45 00:02:32,560 --> 00:02:35,880 Speaker 1: the press conference held by an attorney general was a 46 00:02:35,960 --> 00:02:39,239 Speaker 1: fairly full throaded defense of the president. I thought that 47 00:02:40,080 --> 00:02:42,560 Speaker 1: it would have been more proper for this press conference 48 00:02:42,600 --> 00:02:46,480 Speaker 1: to have outlined the process that he went through in 49 00:02:46,639 --> 00:02:50,480 Speaker 1: redacting the report and in handing taking the information that 50 00:02:50,520 --> 00:02:53,040 Speaker 1: he had received from a special Council and the passing 51 00:02:53,040 --> 00:02:54,880 Speaker 1: that along to Congress on the public as opposed to 52 00:02:54,919 --> 00:02:57,720 Speaker 1: getting into the substance of it. I was also struck 53 00:02:57,760 --> 00:03:00,040 Speaker 1: by the fact that he talked a lot about the 54 00:03:00,200 --> 00:03:03,840 Speaker 1: sincere beliefs of the president, really trying to get into 55 00:03:03,880 --> 00:03:09,360 Speaker 1: the president's mindset and using that as a admittedly used 56 00:03:09,360 --> 00:03:12,079 Speaker 1: that in reaching his decision that he believed that there 57 00:03:12,120 --> 00:03:14,720 Speaker 1: was no obstruction of justice case. Because he said that 58 00:03:14,800 --> 00:03:17,760 Speaker 1: because the president sincerely believed he had done nothing wrong, 59 00:03:18,440 --> 00:03:20,960 Speaker 1: that that sort of weighed in his favor in terms 60 00:03:20,960 --> 00:03:23,000 Speaker 1: of some of the conduct. And I think that's a 61 00:03:23,040 --> 00:03:26,720 Speaker 1: fairly controversial statement to make you merely because someone might 62 00:03:26,800 --> 00:03:30,160 Speaker 1: be considered um paranoid and be looking at what's going 63 00:03:30,160 --> 00:03:33,840 Speaker 1: on and feelingly being treated unfairly doesn't necessarily mean that 64 00:03:33,919 --> 00:03:36,840 Speaker 1: they're not then trying to obstruct an investigation. I think 65 00:03:36,840 --> 00:03:39,720 Speaker 1: that's really very much of an open question, Bob. The 66 00:03:39,800 --> 00:03:43,160 Speaker 1: question I have going through my mind as I read 67 00:03:43,160 --> 00:03:46,880 Speaker 1: this is the Special Counsel's office, the and the people 68 00:03:46,920 --> 00:03:49,440 Speaker 1: who worked there seemed to struggle with whether or not 69 00:03:49,560 --> 00:03:52,760 Speaker 1: there was obstruction, and they decided to leave it to 70 00:03:53,320 --> 00:03:56,640 Speaker 1: perhaps the Congress to decide that. But if this were 71 00:03:56,640 --> 00:03:59,600 Speaker 1: a normal case and not a case where a president 72 00:03:59,600 --> 00:04:04,480 Speaker 1: of the its states is being investigated for obstruction and 73 00:04:05,040 --> 00:04:08,440 Speaker 1: cannot be indicted by Department of Justice guidelines, would this 74 00:04:08,560 --> 00:04:10,800 Speaker 1: be the kind of case you would take to a 75 00:04:10,880 --> 00:04:14,920 Speaker 1: jury and let the jury make this tough decision. Well, 76 00:04:14,960 --> 00:04:17,200 Speaker 1: there's certainly a lot of evidence out there that I 77 00:04:17,240 --> 00:04:22,000 Speaker 1: think a prosecutor could use to weave together an obstruction case. Uh. 78 00:04:22,240 --> 00:04:25,119 Speaker 1: One of the things that the president's defenders have often 79 00:04:25,160 --> 00:04:28,640 Speaker 1: said is that the president doesn't fully understand the way 80 00:04:29,000 --> 00:04:32,160 Speaker 1: a separation of powers works. And certainly this president has 81 00:04:32,240 --> 00:04:35,799 Speaker 1: cross lines that had never before been crossed in terms 82 00:04:35,839 --> 00:04:38,479 Speaker 1: of reaching into what's going on with the FBI and 83 00:04:38,480 --> 00:04:41,800 Speaker 1: with the Department of Justice. UM, I think this case 84 00:04:41,960 --> 00:04:44,359 Speaker 1: could have been brought to a jury. And here I 85 00:04:44,360 --> 00:04:46,840 Speaker 1: thought the most interesting statement that I've seen so far 86 00:04:46,839 --> 00:04:49,880 Speaker 1: on this report on the obstruction of justice issue is 87 00:04:49,920 --> 00:04:52,760 Speaker 1: that the Special Council wrote that with respect to whether 88 00:04:52,760 --> 00:04:55,400 Speaker 1: the President can be found to have obstructed justice by 89 00:04:55,400 --> 00:04:58,479 Speaker 1: exercising his powers under Article two of the Constitution, we 90 00:04:58,560 --> 00:05:01,839 Speaker 1: concluded the Congress has the authority to prohibit a president's 91 00:05:01,839 --> 00:05:04,159 Speaker 1: corrupt use of his authority in order to protect the 92 00:05:04,160 --> 00:05:07,160 Speaker 1: integrity of the administration of Justice. So it answers the 93 00:05:07,279 --> 00:05:11,600 Speaker 1: question when Mueller decided not to reach a conclusion here, 94 00:05:12,080 --> 00:05:15,040 Speaker 1: who makes that call? The Attorney General seemed to suggest 95 00:05:15,080 --> 00:05:17,760 Speaker 1: that the call was then his to make as the 96 00:05:18,200 --> 00:05:20,440 Speaker 1: as the head of the Department of Justice, whereas Mueller 97 00:05:20,600 --> 00:05:22,680 Speaker 1: seems to be safe it seems to be saying that 98 00:05:22,680 --> 00:05:25,440 Speaker 1: that really is going to be Congress's decision. So there's 99 00:05:25,480 --> 00:05:28,559 Speaker 1: a disconnect there between the way Mr Muller Mr Barr 100 00:05:28,560 --> 00:05:32,400 Speaker 1: interpreted UM the decision by Mr Mueller not to reach 101 00:05:32,400 --> 00:05:35,479 Speaker 1: a conclusion, and what Mr Mueller decided to say in 102 00:05:35,600 --> 00:05:37,760 Speaker 1: his report that it really is a question for Congress 103 00:05:37,760 --> 00:05:40,440 Speaker 1: to decide rather than the Attorney general. Let's also talk 104 00:05:40,480 --> 00:05:44,600 Speaker 1: about Mueller's explanation of why he chose not to subpoena 105 00:05:44,680 --> 00:05:47,480 Speaker 1: President Trump. He said he had enough evidence to, you know, 106 00:05:47,560 --> 00:05:50,719 Speaker 1: to subpoena him, but also he had enough evidence that 107 00:05:50,760 --> 00:05:53,880 Speaker 1: he didn't need to subpoena him. And it seemed to 108 00:05:53,880 --> 00:05:56,200 Speaker 1: be based on the fact that it would take too 109 00:05:56,200 --> 00:05:58,920 Speaker 1: long and he wanted to get this report out. But 110 00:05:59,480 --> 00:06:03,039 Speaker 1: does that leave a lot to question if you don't 111 00:06:03,080 --> 00:06:08,560 Speaker 1: have the testimony of the president, Yeah, it does. I 112 00:06:08,600 --> 00:06:10,919 Speaker 1: think he understood that that was going to be a long, 113 00:06:11,640 --> 00:06:15,280 Speaker 1: protracted fight, and ultimately there wasn't going to be much 114 00:06:15,320 --> 00:06:18,320 Speaker 1: to be gained by getting that interview if the courts 115 00:06:18,520 --> 00:06:21,440 Speaker 1: were going to were to force the President to submit 116 00:06:21,520 --> 00:06:24,360 Speaker 1: to an interview by the special counsel. I think they 117 00:06:24,400 --> 00:06:27,640 Speaker 1: also felt that, based upon all the public statements that 118 00:06:27,680 --> 00:06:29,920 Speaker 1: the President has made about this, that they more or 119 00:06:29,960 --> 00:06:32,520 Speaker 1: less knew what his answers were going to be. Uh 120 00:06:32,560 --> 00:06:34,400 Speaker 1: And so at the end, it was really kind of 121 00:06:34,400 --> 00:06:37,200 Speaker 1: a cost benefit analysis. They decided that the time that 122 00:06:37,240 --> 00:06:39,279 Speaker 1: it would take in order to try to force that 123 00:06:39,360 --> 00:06:42,000 Speaker 1: interview was really not worth it. They had enough answers 124 00:06:42,240 --> 00:06:44,400 Speaker 1: and really as they said a minute ago, the president 125 00:06:44,400 --> 00:06:46,320 Speaker 1: really has got on a record when so many of 126 00:06:46,440 --> 00:06:49,760 Speaker 1: these issues that have been identified by Special counsel mother 127 00:06:49,880 --> 00:06:53,760 Speaker 1: as potential areas of obstruction. Thank you so much, Bob. 128 00:06:53,800 --> 00:06:57,360 Speaker 1: That's former federal prosecutor Robert Man's a partner at McCarter 129 00:06:57,480 --> 00:07:00,719 Speaker 1: and English. Lisa June Grazzo of Bloomberg Politics, Policy, Power 130 00:07:00,720 --> 00:07:03,280 Speaker 1: in Law, thank you so much for that. We are 131 00:07:03,279 --> 00:07:07,200 Speaker 1: continuing our coverage of the four forty eight page report 132 00:07:07,320 --> 00:07:22,640 Speaker 1: from Special Prosecutor Robert Mueller. We're gonna take a look 133 00:07:22,680 --> 00:07:26,240 Speaker 1: at Honeywell. Honeywell shares climbed the most in eight months 134 00:07:26,320 --> 00:07:29,560 Speaker 1: after reporting that sales had surged, spurring the company to 135 00:07:29,640 --> 00:07:33,440 Speaker 1: raise its full year guidance despite a global manufacturing slowdown. 136 00:07:33,760 --> 00:07:35,920 Speaker 1: That was kind of breakdown what we saw from Honeywell 137 00:07:35,960 --> 00:07:38,760 Speaker 1: this quarter. We welcome back Karen uble Heart. Karen is 138 00:07:38,800 --> 00:07:42,880 Speaker 1: a senior Industrials annalyso Bloomberg Intelligence. She joins us live 139 00:07:42,880 --> 00:07:45,800 Speaker 1: here in a Bloomberg Interactive broker studio. So a pretty 140 00:07:45,880 --> 00:07:48,280 Speaker 1: darn good quarter. I saw that the organic growth rate 141 00:07:48,280 --> 00:07:50,280 Speaker 1: for Honeywell was eight percent. I can't remember the last 142 00:07:50,280 --> 00:07:52,720 Speaker 1: time we saw that type of growth from one of 143 00:07:52,760 --> 00:07:55,640 Speaker 1: your industrial companies. Yeah, no, that it was. It was 144 00:07:55,680 --> 00:07:58,640 Speaker 1: a much better than expected and it was in three 145 00:07:58,640 --> 00:08:01,320 Speaker 1: of the four businesses grew eight and and percent real surprise. 146 00:08:01,600 --> 00:08:04,480 Speaker 1: The biggest surprise was building products, where they got rid 147 00:08:04,480 --> 00:08:07,200 Speaker 1: of the home um automation business because they didn't want 148 00:08:07,200 --> 00:08:10,400 Speaker 1: to compete with Amazon, etcetera. Um. The buildings products business 149 00:08:10,440 --> 00:08:13,080 Speaker 1: is growing at nine percent, largely due to new product launches. 150 00:08:13,640 --> 00:08:17,600 Speaker 1: His top priority is growing organic growth, and I think 151 00:08:17,640 --> 00:08:19,880 Speaker 1: we're actually starting to see some of that happening. So 152 00:08:19,960 --> 00:08:22,240 Speaker 1: here's my question. How much is this a Honeywell I 153 00:08:22,400 --> 00:08:24,840 Speaker 1: used some credic story, and how much does this indicate 154 00:08:24,880 --> 00:08:27,760 Speaker 1: that we are seeing a stronger pace of growth around 155 00:08:27,800 --> 00:08:29,800 Speaker 1: the world. I think a lot of its Honeywell. I mean, 156 00:08:30,120 --> 00:08:32,920 Speaker 1: aerospace is very strong. It was eight percent against a 157 00:08:32,960 --> 00:08:36,439 Speaker 1: ten percent comp but aerospace is is strong for everyone. 158 00:08:36,840 --> 00:08:41,200 Speaker 1: But the building to business and the safety products business 159 00:08:41,200 --> 00:08:44,480 Speaker 1: are both Honeywell driven. They did an big acquisition in 160 00:08:44,559 --> 00:08:47,040 Speaker 1: the safety business, They've done a lot of new products 161 00:08:47,080 --> 00:08:49,240 Speaker 1: in both, and they're both growing eight to nine percent. 162 00:08:49,320 --> 00:08:52,840 Speaker 1: So that's Honeywell. So how how exposed is Honeywell to 163 00:08:53,520 --> 00:08:56,959 Speaker 1: kind of what's happening in China? Trade negotiations in terms 164 00:08:56,960 --> 00:08:59,439 Speaker 1: of their global businesses, well, they said ton of was down, 165 00:08:59,679 --> 00:09:02,440 Speaker 1: um a little bit actually, And and what's interesting about 166 00:09:02,480 --> 00:09:05,560 Speaker 1: their guidances they didn't raise the second half and a 167 00:09:05,600 --> 00:09:07,480 Speaker 1: lot of people press them on that because growth is 168 00:09:07,480 --> 00:09:09,760 Speaker 1: so good. But there they are worried. They're hedging their 169 00:09:09,760 --> 00:09:11,480 Speaker 1: bets for a glow you know, a little bit slower 170 00:09:11,480 --> 00:09:14,320 Speaker 1: global growth. So when you take Honeywell out of it, 171 00:09:14,360 --> 00:09:16,599 Speaker 1: they think, like the core economic growth is going to 172 00:09:16,679 --> 00:09:19,320 Speaker 1: be slower in the second half globally, and they're hedging 173 00:09:19,320 --> 00:09:20,920 Speaker 1: their bets. Can you give us a sense of the 174 00:09:20,920 --> 00:09:24,840 Speaker 1: breakdown of the geographic distribution of Honeywell's business, Um, you know, 175 00:09:24,960 --> 00:09:27,520 Speaker 1: you know, China's um a decent size for them, but 176 00:09:27,559 --> 00:09:30,679 Speaker 1: it's still like seven percent. It's still pretty pretty low, 177 00:09:30,720 --> 00:09:33,160 Speaker 1: but it's a good grower. Um. The US is in 178 00:09:33,240 --> 00:09:36,000 Speaker 1: the forties and Europe is in the twenties, and you know, 179 00:09:36,080 --> 00:09:38,280 Speaker 1: so it's you it might be up to thirty, I think, 180 00:09:38,320 --> 00:09:42,439 Speaker 1: But I guess I'm wondering, is there a big divergence 181 00:09:42,559 --> 00:09:45,680 Speaker 1: between the US and the performance there versus the rest 182 00:09:45,720 --> 00:09:48,520 Speaker 1: of the world. Well, interestingly, Europe is not as bad 183 00:09:48,600 --> 00:09:51,680 Speaker 1: so far um that as people expected. Because those are 184 00:09:51,720 --> 00:09:53,800 Speaker 1: those numbers A P, M I and GDP numbers do 185 00:09:53,880 --> 00:09:56,040 Speaker 1: not look good. But you know it's hole, it's holding 186 00:09:56,120 --> 00:09:58,360 Speaker 1: up there getting you know, mid single low mid single 187 00:09:58,440 --> 00:10:01,720 Speaker 1: digit growth there you're us of course is the growth 188 00:10:01,720 --> 00:10:04,280 Speaker 1: engine right now, although there's concerns about the second half 189 00:10:04,559 --> 00:10:08,320 Speaker 1: and then ages growing. UM China is weak because of trade. 190 00:10:08,600 --> 00:10:11,200 Speaker 1: So but overall a lot of this is product driven. 191 00:10:11,320 --> 00:10:13,600 Speaker 1: I think you're interesting. I was looking through the report 192 00:10:13,640 --> 00:10:16,199 Speaker 1: and I see that the surging e commerce helped drive 193 00:10:16,240 --> 00:10:20,320 Speaker 1: a ten percent improvement in Honeywell's SPS warehouse automation. So 194 00:10:20,559 --> 00:10:24,240 Speaker 1: there's an Amazon play here for Honeywell, right, yeah. I 195 00:10:24,280 --> 00:10:27,080 Speaker 1: mean they did a large acquisition, one of their largest 196 00:10:27,120 --> 00:10:30,960 Speaker 1: ever in warehouse automation, a company called UM Intelligrated and 197 00:10:31,000 --> 00:10:34,160 Speaker 1: it's growing like fifteen percent against fifteen percent. You know, 198 00:10:34,280 --> 00:10:38,240 Speaker 1: it's it's it's growing extraordinarily well. And then they did 199 00:10:38,280 --> 00:10:42,280 Speaker 1: another UH automation where he automation business in Europe, so 200 00:10:42,320 --> 00:10:45,040 Speaker 1: they're growing that business and it is a it's it's 201 00:10:45,120 --> 00:10:47,760 Speaker 1: you know, double digit, nice solid double digit growth. Yes, 202 00:10:47,800 --> 00:10:51,160 Speaker 1: that is e commerce. It's the Amazon play there. Make 203 00:10:51,160 --> 00:10:54,120 Speaker 1: an Amazon play on anything, Lisa, anything. I'm going to 204 00:10:54,280 --> 00:10:56,480 Speaker 1: challenge you. I'm going to find something and see what 205 00:10:56,520 --> 00:10:58,559 Speaker 1: you can come up with. Uh, you know, I gotta say, 206 00:10:58,640 --> 00:11:02,240 Speaker 1: Karen yu Buhart, you say that this is an idiosyncredit issue, Honeywell, Uh, 207 00:11:02,520 --> 00:11:05,280 Speaker 1: their management actually doing a good job. Is there any 208 00:11:05,440 --> 00:11:10,160 Speaker 1: takeaway that another big industrial company could take away from 209 00:11:10,160 --> 00:11:13,880 Speaker 1: this to possibly spur their growth. Well, it's really interesting 210 00:11:13,920 --> 00:11:17,120 Speaker 1: because um, they're not. They didn't run out and buy things. 211 00:11:17,520 --> 00:11:19,680 Speaker 1: They have so much money and they're scared to do 212 00:11:19,840 --> 00:11:22,600 Speaker 1: M and A. But he really put the u you know, 213 00:11:22,679 --> 00:11:26,440 Speaker 1: the pedal to the metal on on internal spending, not 214 00:11:26,559 --> 00:11:30,240 Speaker 1: on capacity, on making new things. And that's and then 215 00:11:30,280 --> 00:11:32,800 Speaker 1: of course they've been doing the efficiency game and margin 216 00:11:32,840 --> 00:11:35,480 Speaker 1: improvement for a long time. I mean the you know 217 00:11:35,760 --> 00:11:38,120 Speaker 1: ten plus years of Dave Cody was about let's get 218 00:11:38,160 --> 00:11:41,040 Speaker 1: respectable margins. He did that, although there's room to go, 219 00:11:41,360 --> 00:11:44,680 Speaker 1: and now this guy's let's get growing. So I see 220 00:11:44,679 --> 00:11:46,520 Speaker 1: the stock up. Just put up the stock the five 221 00:11:46,600 --> 00:11:49,000 Speaker 1: year chart on the bloomber terminal and Honeywells, you know, 222 00:11:49,080 --> 00:11:51,600 Speaker 1: looks on a five year basis that it's high here. Uh, 223 00:11:51,640 --> 00:11:55,040 Speaker 1: you know, up another percent this year. Maybe did they 224 00:11:55,040 --> 00:11:58,560 Speaker 1: you start thinking about using their stock for acquisition currency. Uh, 225 00:11:58,600 --> 00:12:00,920 Speaker 1: you know they won't because they're sitting on their sitting 226 00:12:00,960 --> 00:12:04,240 Speaker 1: on ten eleven billion in cash and another seven billion 227 00:12:04,280 --> 00:12:07,000 Speaker 1: in debt capacity because their leverage is pretty low. So 228 00:12:07,080 --> 00:12:09,640 Speaker 1: I don't think they will. In fact, they're they're buying 229 00:12:09,640 --> 00:12:11,840 Speaker 1: backs a ton of stock because they don't know what 230 00:12:11,880 --> 00:12:14,440 Speaker 1: to do with all this money. So um, I don't 231 00:12:14,440 --> 00:12:17,440 Speaker 1: think they would use stuff. This is really interesting to 232 00:12:17,480 --> 00:12:21,079 Speaker 1: me that they spent their money on actually making stuff. 233 00:12:21,360 --> 00:12:25,280 Speaker 1: Are we starting to see companies get rewarded by shareholders 234 00:12:25,559 --> 00:12:28,600 Speaker 1: for deploying their cash into R and D. Well, it's 235 00:12:28,600 --> 00:12:31,080 Speaker 1: funny because three M always gets paid for being an 236 00:12:31,160 --> 00:12:33,000 Speaker 1: R and D and I t W I mean and 237 00:12:33,360 --> 00:12:36,400 Speaker 1: paid in terms of margins outstanding margins, and there is 238 00:12:36,440 --> 00:12:38,520 Speaker 1: a payback on that. I don't think people spend enough 239 00:12:38,600 --> 00:12:42,400 Speaker 1: time noticing that, um, just across the board, but they 240 00:12:42,400 --> 00:12:44,839 Speaker 1: will notice the organic growth going up and and uh 241 00:12:44,960 --> 00:12:47,200 Speaker 1: so I think they will. They are getting rewarded for that. 242 00:12:47,280 --> 00:12:49,600 Speaker 1: So coming. I mean, you think about your industrial coverage. 243 00:12:49,600 --> 00:12:52,959 Speaker 1: You cover these big diversified manufacturing companies. It's big agricultural 244 00:12:53,360 --> 00:12:55,440 Speaker 1: guys that making the deers this and so on and 245 00:12:55,480 --> 00:12:58,360 Speaker 1: so forth. Given that word, your ten of this cycle 246 00:12:58,800 --> 00:13:01,000 Speaker 1: where like what your day when they get orders, they 247 00:13:01,040 --> 00:13:03,760 Speaker 1: get big orders that people are buying submarines or they're 248 00:13:03,760 --> 00:13:07,120 Speaker 1: buying tractors, or they're buying you know, big stuff. Again, 249 00:13:07,160 --> 00:13:09,559 Speaker 1: ten years into the cycle, are we still seeing decent 250 00:13:09,600 --> 00:13:12,280 Speaker 1: demand globally for a lot of your industrial companies. Yeah, 251 00:13:12,360 --> 00:13:15,360 Speaker 1: you know, it's been a weird cycle because my cycles 252 00:13:15,360 --> 00:13:18,160 Speaker 1: are usually in industrials are usually boom bust, you know, 253 00:13:18,320 --> 00:13:20,160 Speaker 1: and we we didn't really have boom. I mean we 254 00:13:20,200 --> 00:13:23,040 Speaker 1: had in certain cyclical markets we did, you know. Um, 255 00:13:23,400 --> 00:13:25,719 Speaker 1: but it's been a long cycle. But it's been sort 256 00:13:25,760 --> 00:13:29,000 Speaker 1: of moderate um growth, you know, with some blips up 257 00:13:29,000 --> 00:13:32,120 Speaker 1: and down, but so's it's usually a ramp up and 258 00:13:32,160 --> 00:13:35,160 Speaker 1: a rampdown and so um, it's been long, but it's 259 00:13:35,160 --> 00:13:37,520 Speaker 1: more like a slow and steady rather than a real 260 00:13:37,600 --> 00:13:39,719 Speaker 1: rod bust. So I think there is going to be 261 00:13:39,760 --> 00:13:42,120 Speaker 1: slower growth, um, you know. And I think we're talking 262 00:13:42,160 --> 00:13:44,920 Speaker 1: low single digits. We're you know, we're not talking high 263 00:13:45,080 --> 00:13:47,760 Speaker 1: high um single digits as we have been looking in 264 00:13:48,200 --> 00:13:50,320 Speaker 1: overall growth for these companies. But I still think we're 265 00:13:50,320 --> 00:13:54,400 Speaker 1: gonna see growth. Just lastly, here, I'm wondering who is 266 00:13:54,559 --> 00:13:57,199 Speaker 1: Honeywell beating out in terms of competition. In other words, 267 00:13:57,400 --> 00:13:59,440 Speaker 1: who are they taking share away from? If this is 268 00:13:59,480 --> 00:14:02,400 Speaker 1: not a story, worry just about generally strong economic growth 269 00:14:02,440 --> 00:14:08,240 Speaker 1: globally building products would be like a Johnson controls UM 270 00:14:08,280 --> 00:14:12,040 Speaker 1: you know, uh, you know Emerson to some degree. And 271 00:14:12,080 --> 00:14:15,240 Speaker 1: then in SPS it's a lot of technology companies. Um, 272 00:14:15,320 --> 00:14:17,280 Speaker 1: Dana hars a small business a compete in, but it's 273 00:14:17,320 --> 00:14:21,400 Speaker 1: a lot of smaller technology companies actually. Karen ubal Heart, 274 00:14:21,520 --> 00:14:23,440 Speaker 1: thank you so much for joining us on Honey Welso 275 00:14:23,520 --> 00:14:26,600 Speaker 1: good numbers, stock trading up. Karen Uberhart, senior analyst at 276 00:14:26,600 --> 00:14:30,440 Speaker 1: Bloomberg Intelligence, covering all things industrial, all things Middle America. 277 00:14:30,920 --> 00:14:45,240 Speaker 1: She joins us on Bloomberg eleven three oh Studios. Let's 278 00:14:45,280 --> 00:14:48,600 Speaker 1: bring in Jacob Frankel, who is a former federal prosecutor 279 00:14:48,680 --> 00:14:51,800 Speaker 1: with an independent Council who is familiar with writing such 280 00:14:51,880 --> 00:14:54,440 Speaker 1: reports that are delivered to Congress. He is now a 281 00:14:54,520 --> 00:14:58,160 Speaker 1: partner at Dickinson. Right, Jacob, thank you so much for 282 00:14:58,240 --> 00:15:00,680 Speaker 1: being with us. I want to start at first with 283 00:15:00,720 --> 00:15:04,360 Speaker 1: the Attorney General's press conference. What did you glean from 284 00:15:04,440 --> 00:15:07,520 Speaker 1: the tone of that and sort of the nature of 285 00:15:07,600 --> 00:15:10,640 Speaker 1: how this investigation is being spun from a partisan level 286 00:15:10,680 --> 00:15:14,160 Speaker 1: on both sides. I actually tried to separate out the 287 00:15:14,240 --> 00:15:20,200 Speaker 1: partisan component of the press conference and focus on what 288 00:15:20,320 --> 00:15:23,080 Speaker 1: was the substance to what he was saying about the 289 00:15:23,160 --> 00:15:27,200 Speaker 1: process of the investigation. And I was actually somewhat refreshed 290 00:15:28,160 --> 00:15:33,040 Speaker 1: by his decision to focus on process, because the biggest 291 00:15:33,040 --> 00:15:36,240 Speaker 1: concern in what was going to be coming out of 292 00:15:36,240 --> 00:15:39,920 Speaker 1: this report, what would the redactions look like, was really 293 00:15:39,960 --> 00:15:44,200 Speaker 1: a focus on who ultimately was making the decisions, not 294 00:15:44,320 --> 00:15:47,640 Speaker 1: only in terms of the report itself, but what would 295 00:15:47,640 --> 00:15:51,360 Speaker 1: be reported and how it would be reported. And I know, 296 00:15:51,640 --> 00:15:53,880 Speaker 1: you know, to your point about my having been part 297 00:15:53,880 --> 00:15:56,680 Speaker 1: of an independent council, you know, they're always was a 298 00:15:56,680 --> 00:16:00,280 Speaker 1: lot of deference, you know, to the career prosecutors. I 299 00:16:00,360 --> 00:16:06,400 Speaker 1: found refreshing Attorney General Bars reference to that, specifically that 300 00:16:06,480 --> 00:16:09,360 Speaker 1: it was the career prosecutors in the Department of Justice, 301 00:16:09,840 --> 00:16:14,320 Speaker 1: and that he and Rod Rosenstein disagreed with some of 302 00:16:14,320 --> 00:16:19,680 Speaker 1: the premises that were that were established by by Special 303 00:16:19,760 --> 00:16:23,640 Speaker 1: Counsel Muller and his team, but nevertheless deferred to them. 304 00:16:23,720 --> 00:16:27,560 Speaker 1: So I found very helpful, you know, that reference to 305 00:16:27,600 --> 00:16:30,640 Speaker 1: the level of deference, and when I, as with all 306 00:16:30,680 --> 00:16:32,640 Speaker 1: of us were just beginning to look at the report. 307 00:16:33,040 --> 00:16:35,720 Speaker 1: When I look at the report, you know, we're really 308 00:16:35,760 --> 00:16:39,000 Speaker 1: talking about a robust narrative. Because the other point that 309 00:16:39,040 --> 00:16:42,120 Speaker 1: I was looking for was is this going to be 310 00:16:42,600 --> 00:16:45,440 Speaker 1: a spin news conference as it has been, you know, 311 00:16:45,480 --> 00:16:48,440 Speaker 1: as was sort of projected, or was this going to 312 00:16:48,480 --> 00:16:52,640 Speaker 1: be sort of laying the groundwork for a report. Because again, 313 00:16:52,720 --> 00:16:55,120 Speaker 1: what I was waiting for, which is why I have 314 00:16:55,240 --> 00:16:57,920 Speaker 1: sort of yet to have been exercised by a lot 315 00:16:57,920 --> 00:17:01,560 Speaker 1: of findings, is a lot of the you know, expert 316 00:17:01,600 --> 00:17:05,399 Speaker 1: commentators have spent the last two years speculating as to 317 00:17:05,480 --> 00:17:08,080 Speaker 1: what would be the evidence. Up until now, the only 318 00:17:08,119 --> 00:17:10,640 Speaker 1: evidence that I've been able to discern is what has 319 00:17:10,680 --> 00:17:14,320 Speaker 1: come out with what has actually been published in the indictments. 320 00:17:14,520 --> 00:17:17,119 Speaker 1: So now that we got a report that more robustly 321 00:17:17,240 --> 00:17:20,480 Speaker 1: talks about the findings, to me, this is really the 322 00:17:20,600 --> 00:17:24,720 Speaker 1: first opportunity to see what the evidence actually has revealed. 323 00:17:25,680 --> 00:17:29,680 Speaker 1: So Jacob special counsel Mueller h and the report suggests 324 00:17:29,680 --> 00:17:32,639 Speaker 1: that Congress could take action on at least ten instances 325 00:17:33,119 --> 00:17:35,879 Speaker 1: where the President sought to interfere with the probe. What 326 00:17:35,920 --> 00:17:37,560 Speaker 1: do you think Congress will do? How aggressive do you 327 00:17:37,600 --> 00:17:40,120 Speaker 1: think they'll be that's a great question, And I think 328 00:17:40,119 --> 00:17:42,440 Speaker 1: what you're I think what we're really talking about there 329 00:17:42,640 --> 00:17:46,399 Speaker 1: is deference to the language of what is the standard 330 00:17:46,760 --> 00:17:50,280 Speaker 1: for impeachment high crimes and misdemeanors. And of course, as 331 00:17:50,320 --> 00:17:53,639 Speaker 1: we know from you know, from two years of discussion 332 00:17:53,680 --> 00:17:56,600 Speaker 1: in this and and and a lot of the narrative, 333 00:17:56,960 --> 00:18:00,119 Speaker 1: the term of what he is a misdemeanor really is 334 00:18:00,320 --> 00:18:03,280 Speaker 1: somewhat unclear. And I and I interpret that to be 335 00:18:03,920 --> 00:18:08,399 Speaker 1: a you know, a reference to Congress being able to 336 00:18:08,480 --> 00:18:13,919 Speaker 1: make a determination independently that even without an affirmative finding 337 00:18:14,600 --> 00:18:18,320 Speaker 1: of conduct that would rise the level of criminality. That 338 00:18:18,520 --> 00:18:21,879 Speaker 1: is that they're being specific intent, which to me is 339 00:18:21,920 --> 00:18:24,760 Speaker 1: the type of issue that would actually be the determinant 340 00:18:24,800 --> 00:18:27,000 Speaker 1: if I were trying to decide whether this what or 341 00:18:27,000 --> 00:18:30,560 Speaker 1: would not be presented to a uh, you know, in 342 00:18:30,560 --> 00:18:34,000 Speaker 1: in trial indicted and to a jury. On the other hand, 343 00:18:34,240 --> 00:18:38,000 Speaker 1: Congress has the authority to a to apply a lesser 344 00:18:38,119 --> 00:18:42,960 Speaker 1: standard in determining what constitutes a misdemeanor. So what I 345 00:18:43,080 --> 00:18:45,479 Speaker 1: read that to mean that if Congress really wants to 346 00:18:45,520 --> 00:18:50,880 Speaker 1: do so, it has the authority to begin impeachment proceedings 347 00:18:50,880 --> 00:18:54,840 Speaker 1: based on the evidence is actually narrated in the report. 348 00:18:55,200 --> 00:18:58,840 Speaker 1: Whether it chooses to do so, that is a political decision. 349 00:18:59,600 --> 00:19:01,840 Speaker 1: That's a any big statements saying that basically they do 350 00:19:01,960 --> 00:19:05,320 Speaker 1: have enough to start impeachment, even if it isn't necessarily 351 00:19:05,920 --> 00:19:09,840 Speaker 1: a criminal act that could be prosecuted otherwise. One thing 352 00:19:09,840 --> 00:19:12,960 Speaker 1: that I'm curious about from your perspective going forward, are 353 00:19:13,000 --> 00:19:16,800 Speaker 1: we gleaning any information about the nature of what the 354 00:19:16,880 --> 00:19:21,520 Speaker 1: Muller investigation referred out to other prosecutorial offices. I think 355 00:19:21,600 --> 00:19:24,960 Speaker 1: this other district or the Eastern Eastern District. I think 356 00:19:25,000 --> 00:19:27,880 Speaker 1: I'm not far enough into the report to make that determination, 357 00:19:27,920 --> 00:19:30,360 Speaker 1: but I certainly think by the nature of the redactions 358 00:19:30,440 --> 00:19:35,040 Speaker 1: and the UH and the efforts by Attorney General bar 359 00:19:35,200 --> 00:19:39,199 Speaker 1: to protect UM, the you know, the referrals and the 360 00:19:39,240 --> 00:19:43,440 Speaker 1: and the content of referral related information UM, I think 361 00:19:43,480 --> 00:19:47,879 Speaker 1: we may be able to discern some of what really 362 00:19:48,000 --> 00:19:51,360 Speaker 1: is the basis for the you know, for the referrals UM. 363 00:19:51,440 --> 00:19:54,400 Speaker 1: But in terms of beyond what has already been referred, 364 00:19:54,480 --> 00:19:56,720 Speaker 1: I don't know that we can. But I also think 365 00:19:56,760 --> 00:19:59,120 Speaker 1: that we have to be mindful that you know, we're taught. 366 00:19:59,320 --> 00:20:03,240 Speaker 1: Unlike the Dependent Council Statute under which I lived here. 367 00:20:03,600 --> 00:20:07,040 Speaker 1: Everything has been conducted within the framework of the of 368 00:20:07,080 --> 00:20:10,080 Speaker 1: the Department of Justice. So as we know from just 369 00:20:10,320 --> 00:20:12,760 Speaker 1: our conversations over the years, in the context of white 370 00:20:12,800 --> 00:20:17,560 Speaker 1: collar cases, one case will spawn another. So as you know, 371 00:20:17,640 --> 00:20:21,800 Speaker 1: as grand juries, as prosecutors, as the FBI continue to 372 00:20:21,840 --> 00:20:25,960 Speaker 1: look at evidence and gather information and possibly additional cooperation, 373 00:20:26,640 --> 00:20:32,080 Speaker 1: we can still see the spawning of further related cases. So, Jacob, 374 00:20:32,160 --> 00:20:36,080 Speaker 1: from your perspective, your experience, are you surprised or disappointed 375 00:20:36,200 --> 00:20:40,560 Speaker 1: or dismayed that Mr Muller did not choose to appine 376 00:20:40,600 --> 00:20:47,119 Speaker 1: on the obstruction issues, I'm actually not well, you know, 377 00:20:47,640 --> 00:20:52,440 Speaker 1: I'm I'm not surprised given that he has actually laid 378 00:20:52,480 --> 00:20:56,320 Speaker 1: out the evidence and has stated that based on the 379 00:20:56,359 --> 00:21:01,960 Speaker 1: evidence that was presented, it was sufficiently ambiguous at least 380 00:21:02,080 --> 00:21:06,680 Speaker 1: with respect to intent, to enable him to reach a conclusion, 381 00:21:07,240 --> 00:21:12,440 Speaker 1: because that is the exact type of deliberation that that 382 00:21:13,000 --> 00:21:18,000 Speaker 1: career prosecutors and even non career prosecutors are supposed to 383 00:21:18,040 --> 00:21:23,440 Speaker 1: engage in in making in making an ultimate charging decision. 384 00:21:23,840 --> 00:21:27,520 Speaker 1: So I think by laying out the evidence and not 385 00:21:27,720 --> 00:21:32,240 Speaker 1: expressing an opinion so as not to color or otherwise 386 00:21:32,440 --> 00:21:38,320 Speaker 1: influence the decision, that ultimately could be made by a 387 00:21:38,520 --> 00:21:42,080 Speaker 1: charging body, which in this case would be a deference 388 00:21:42,400 --> 00:21:45,800 Speaker 1: to Congress to undertake that role if it were to 389 00:21:45,880 --> 00:21:50,200 Speaker 1: choose to do so. I think he really did strike 390 00:21:50,440 --> 00:21:55,560 Speaker 1: the appropriate balance based on the evidence that he had developed. Jacob, 391 00:21:55,600 --> 00:21:58,200 Speaker 1: thank you so much. Jacob Frankel is a formal federal 392 00:21:58,200 --> 00:22:01,840 Speaker 1: prosecutor with an independent council now a partner at Dinckinson. Right, 393 00:22:12,400 --> 00:22:15,680 Speaker 1: we're monitoring markets in one very active area has been 394 00:22:15,720 --> 00:22:19,679 Speaker 1: the marijuana stocks. Pot stocks surging today after Cannopy Growth 395 00:22:19,720 --> 00:22:23,640 Speaker 1: agreed to buy acreage holdings for three point four billion dollars. 396 00:22:23,640 --> 00:22:27,359 Speaker 1: This is a massive cross border cannabis deal that is 397 00:22:27,480 --> 00:22:31,440 Speaker 1: conditional on the US eventually legalizing pot for recreational use. 398 00:22:31,840 --> 00:22:34,000 Speaker 1: Joining us now to talk about this is Christine Oram. 399 00:22:34,119 --> 00:22:37,000 Speaker 1: She's a Canadian cannabis and equity reporter for US here 400 00:22:37,000 --> 00:22:40,480 Speaker 1: at Bloomberg in Toronto. So Christine, can you just give 401 00:22:40,520 --> 00:22:44,000 Speaker 1: us a sense why is this particular deal, Canopy buying 402 00:22:44,160 --> 00:22:48,040 Speaker 1: acreage such a big deal. Well, it's the first major 403 00:22:48,200 --> 00:22:51,160 Speaker 1: cross border deal the cannabis industry has seen, and it's 404 00:22:51,280 --> 00:22:54,480 Speaker 1: structured in a very complex and interesting way. So basically, 405 00:22:55,040 --> 00:22:57,960 Speaker 1: um Canopy is going to pay three hundred million dollars 406 00:22:58,080 --> 00:23:00,800 Speaker 1: up front, but the remainder of the transaction, the rest 407 00:23:00,800 --> 00:23:04,119 Speaker 1: of that three point four billion dollars, won't happen until 408 00:23:04,600 --> 00:23:08,440 Speaker 1: if and when the US legalizes cannabis at the federal level. 409 00:23:09,040 --> 00:23:11,560 Speaker 1: So essentially the deal is set to expire in about 410 00:23:12,400 --> 00:23:15,040 Speaker 1: seven if that doesn't happen. So these two companies are 411 00:23:15,080 --> 00:23:18,359 Speaker 1: making a bet that sometime between now and seven UM, 412 00:23:18,400 --> 00:23:21,240 Speaker 1: at which point we will have had another whole presidential 413 00:23:21,320 --> 00:23:24,359 Speaker 1: term and a half uh pot will be legalized, and 414 00:23:24,400 --> 00:23:26,919 Speaker 1: therefore they'll be able to truly close this transaction. But 415 00:23:26,960 --> 00:23:29,320 Speaker 1: in the meantime, they're very restricted in what they can 416 00:23:29,359 --> 00:23:31,800 Speaker 1: do because of that federal illegality. So you can kind 417 00:23:31,800 --> 00:23:33,879 Speaker 1: of see that uncertainty in the way that shares the 418 00:23:33,960 --> 00:23:37,720 Speaker 1: reaction today. Reacting today, Acreage was initially up twenty one 419 00:23:38,160 --> 00:23:40,879 Speaker 1: but now it's only up about one and a half percent, 420 00:23:41,000 --> 00:23:43,840 Speaker 1: so clearly shareholders are still trying to digest this and 421 00:23:43,880 --> 00:23:46,719 Speaker 1: figure out exactly what it means for the company. So, Christine, 422 00:23:46,800 --> 00:23:49,920 Speaker 1: sounds kind of like a call option on buying this company, 423 00:23:50,080 --> 00:23:52,199 Speaker 1: you know, kind of a multi year call option. What 424 00:23:52,240 --> 00:23:54,960 Speaker 1: are the where are we in terms of the federal 425 00:23:55,080 --> 00:23:58,679 Speaker 1: legalization process in the United States for marijuana, Well, there 426 00:23:58,680 --> 00:24:01,240 Speaker 1: are a lot of bills that are currently working their 427 00:24:01,280 --> 00:24:05,800 Speaker 1: way through various congressional committees. Um, there's the two main 428 00:24:05,840 --> 00:24:08,840 Speaker 1: ones being the Safe Banking Act, which would essentially open 429 00:24:08,960 --> 00:24:14,320 Speaker 1: up banking to cannabis companies across the US. Currently, very 430 00:24:14,359 --> 00:24:17,439 Speaker 1: few banks will work with these companies because they're worried 431 00:24:17,480 --> 00:24:20,680 Speaker 1: that they could get into trouble around money laundering or 432 00:24:20,720 --> 00:24:23,040 Speaker 1: other federal issues, and so many of them have to 433 00:24:23,080 --> 00:24:25,520 Speaker 1: pay their employees and their taxes in cash, which has 434 00:24:25,560 --> 00:24:28,400 Speaker 1: been a very awkward and kind of semi dangerous proposition 435 00:24:28,440 --> 00:24:29,840 Speaker 1: for some of them. So that's the one, and the 436 00:24:29,840 --> 00:24:32,440 Speaker 1: other is the States Act, which would have been essentially 437 00:24:32,480 --> 00:24:36,520 Speaker 1: say that if the federal government will take a hands 438 00:24:36,520 --> 00:24:39,400 Speaker 1: off approach and let the states make their own decisions 439 00:24:39,400 --> 00:24:42,640 Speaker 1: on legalization. So but essentially if that happens, most people 440 00:24:42,680 --> 00:24:45,840 Speaker 1: say that's equivalent to federal legalization, and that would probably 441 00:24:45,840 --> 00:24:48,600 Speaker 1: be enough to get this deal done. The House seems 442 00:24:48,680 --> 00:24:51,480 Speaker 1: very open to working on and passing these deals. I 443 00:24:51,480 --> 00:24:53,520 Speaker 1: think the more difficult proposition will be getting them through 444 00:24:53,520 --> 00:24:56,840 Speaker 1: the Senate. Well, this is really interesting that this deal 445 00:24:56,960 --> 00:25:00,760 Speaker 1: is conditional on the legalization of farrijuana because Acreage specializes 446 00:25:00,880 --> 00:25:04,040 Speaker 1: in medical marijuana use right, which has been more widely 447 00:25:04,440 --> 00:25:08,440 Speaker 1: legalized throughout the States. So I'm wondering what this says 448 00:25:08,480 --> 00:25:12,600 Speaker 1: about the business prospects of companies that specialize in medical 449 00:25:12,840 --> 00:25:18,560 Speaker 1: marijuana use. Is their future really conditional unrecreational use? Well, 450 00:25:18,600 --> 00:25:21,399 Speaker 1: I think, I mean there's an assumption that medical uses 451 00:25:21,520 --> 00:25:24,720 Speaker 1: more politically palatable, and you see that with Acreage. I 452 00:25:24,760 --> 00:25:27,720 Speaker 1: mean it has former U. S. House Speaker John Bayner 453 00:25:27,840 --> 00:25:30,840 Speaker 1: on its board. It has former Canadian Prime Minister Brian 454 00:25:30,920 --> 00:25:33,640 Speaker 1: Ulrooney on its board. So these are political heavyweights who 455 00:25:33,680 --> 00:25:36,440 Speaker 1: have a lot of contacts and cloud on both sides 456 00:25:36,480 --> 00:25:39,640 Speaker 1: of the border. Um. And clearly they wouldn't be on 457 00:25:39,680 --> 00:25:43,080 Speaker 1: this company's board if they didn't see real prospects for legalization. 458 00:25:43,160 --> 00:25:45,480 Speaker 1: And they have both come out. These are two people 459 00:25:45,480 --> 00:25:47,720 Speaker 1: who were pretty opposed to the idea of legalization in 460 00:25:47,760 --> 00:25:49,840 Speaker 1: the past, and they've come out and said what they're 461 00:25:49,880 --> 00:25:53,359 Speaker 1: really um, the reason they support Acreage and what they 462 00:25:53,520 --> 00:25:56,280 Speaker 1: can really get behind is the idea of medical use 463 00:25:56,440 --> 00:25:59,160 Speaker 1: for you know, people like veterans who are struggled stuggling 464 00:25:59,200 --> 00:26:01,560 Speaker 1: with PTSD for examples. So the fact that you have 465 00:26:01,960 --> 00:26:04,560 Speaker 1: people of that caliber getting behind this, people who used 466 00:26:04,600 --> 00:26:07,120 Speaker 1: to be a post legalization does indicate that I think 467 00:26:07,119 --> 00:26:11,040 Speaker 1: there's there's a real prospect for medical approval, probably before 468 00:26:11,560 --> 00:26:14,600 Speaker 1: recreational approval at the federal level. So, Christie, what's been 469 00:26:14,640 --> 00:26:16,439 Speaker 1: some of the early feedback from some of the states 470 00:26:16,440 --> 00:26:20,439 Speaker 1: that have legalized marijuana. I'm thinking Colorado for example. Is 471 00:26:20,440 --> 00:26:23,879 Speaker 1: it they seen a big pickup in demand in sales 472 00:26:23,960 --> 00:26:29,760 Speaker 1: and usage? Uh? Definitely over time in demand in sales. Um. 473 00:26:29,920 --> 00:26:33,160 Speaker 1: Canada is in the very early days of legalization up here. 474 00:26:33,200 --> 00:26:36,240 Speaker 1: We just legalized in October, and all of the states 475 00:26:36,240 --> 00:26:38,440 Speaker 1: that have legalized in Canada as well have gone through 476 00:26:38,680 --> 00:26:42,360 Speaker 1: initial supply shortages. It's like the companies haven't been able 477 00:26:42,400 --> 00:26:44,399 Speaker 1: to produce enough to to keep up with demand and 478 00:26:44,440 --> 00:26:46,239 Speaker 1: didn't really know what demand was going to look like. 479 00:26:46,320 --> 00:26:49,520 Speaker 1: So once those supply shortages get worked out, which usually 480 00:26:49,520 --> 00:26:51,880 Speaker 1: takes a year or two at the state level, that's 481 00:26:51,880 --> 00:26:54,280 Speaker 1: what we've seen. Uh, then they hit sort of a 482 00:26:54,280 --> 00:26:58,159 Speaker 1: steady state, uh set of demand where essentially, you know, 483 00:26:58,200 --> 00:27:00,600 Speaker 1: there's still some people using the black mark it and 484 00:27:00,680 --> 00:27:03,080 Speaker 1: for the most part, from from what I've read, it's 485 00:27:03,119 --> 00:27:06,919 Speaker 1: people who were previously using black market sources who have 486 00:27:06,920 --> 00:27:09,560 Speaker 1: converted to the legal market, not necessarily getting a lot 487 00:27:09,640 --> 00:27:11,560 Speaker 1: of new users in UM, but we'll see if that 488 00:27:11,640 --> 00:27:13,919 Speaker 1: changes in Canada over time as we get more supply 489 00:27:14,359 --> 00:27:17,600 Speaker 1: in stores. We're currently speaking with Christina Orum, she's Canadian 490 00:27:17,640 --> 00:27:20,520 Speaker 1: cannabis and equity reporter for Bloomberg, and we are awaiting 491 00:27:20,560 --> 00:27:23,159 Speaker 1: comments from President Trump, who will be speaking at a 492 00:27:23,160 --> 00:27:27,439 Speaker 1: Wounded Warrior project. It will be his first comments publicly 493 00:27:27,720 --> 00:27:31,480 Speaker 1: made after the Molo report press conference, at least by 494 00:27:31,560 --> 00:27:35,240 Speaker 1: Attorney General. The Attorney General. So, Christine, I want to 495 00:27:35,280 --> 00:27:38,680 Speaker 1: get your sense of what the business case is for 496 00:27:38,760 --> 00:27:42,560 Speaker 1: a big merger for consolidation in marijuana firms, right, I mean, 497 00:27:42,720 --> 00:27:45,880 Speaker 1: my my question is, is the big concern that now 498 00:27:46,000 --> 00:27:48,920 Speaker 1: Tria Group or Philip Morris is going to get into 499 00:27:48,920 --> 00:27:51,920 Speaker 1: the business and just absolutely dominate because they already have 500 00:27:52,000 --> 00:27:54,679 Speaker 1: the distribution networks. Yeah, that's a really good question me. 501 00:27:54,680 --> 00:27:57,399 Speaker 1: Cannopy is an interesting illustration because they currently have a 502 00:27:57,480 --> 00:28:00,720 Speaker 1: major investment from Constellation Brands, the alcohol company that makes 503 00:28:00,760 --> 00:28:04,720 Speaker 1: Corona and Modelo beer UM and they're also now pursuing 504 00:28:04,760 --> 00:28:08,120 Speaker 1: this cross border transaction. So it indicates that I think 505 00:28:08,160 --> 00:28:11,360 Speaker 1: a lot of these really large Canadian based cannabis companies 506 00:28:11,359 --> 00:28:13,840 Speaker 1: and can and Cannopy is the biggest cannabis company in 507 00:28:13,840 --> 00:28:16,639 Speaker 1: the world, with a market value about twenty billion dollars 508 00:28:16,720 --> 00:28:19,439 Speaker 1: or close to it now. Um, you know, I see 509 00:28:19,560 --> 00:28:21,760 Speaker 1: that they have to be in the US in the 510 00:28:21,800 --> 00:28:25,600 Speaker 1: future to really dominate globally. I mean, Canopy has isn't 511 00:28:25,600 --> 00:28:30,360 Speaker 1: just in Canada, has operations in Europe, Latin America. Um, 512 00:28:30,400 --> 00:28:33,040 Speaker 1: They're really they become a truly international company. But without 513 00:28:33,040 --> 00:28:37,080 Speaker 1: that American present, it's very difficult to to generate, uh, 514 00:28:37,119 --> 00:28:40,600 Speaker 1: you know, real brand revenue in those margins that come 515 00:28:40,600 --> 00:28:42,720 Speaker 1: from the U S consumer market. And so that's the 516 00:28:42,760 --> 00:28:45,200 Speaker 1: case for the cross border transactions. We haven't seen many 517 00:28:45,200 --> 00:28:48,080 Speaker 1: of them because the federal illegality, but I suspect this 518 00:28:48,120 --> 00:28:51,240 Speaker 1: will kind of form the the impetus and the structure 519 00:28:51,280 --> 00:28:54,040 Speaker 1: that others can follow to do other similar deals in 520 00:28:54,040 --> 00:28:56,040 Speaker 1: the future. Christine or Um, thank you so much for 521 00:28:56,080 --> 00:29:00,200 Speaker 1: your time. Christine or Um covers then Canadian cannabis an 522 00:29:00,200 --> 00:29:06,160 Speaker 1: equity business for us here at Bloomberg. Thanks for listening 523 00:29:06,160 --> 00:29:08,560 Speaker 1: to the Bloomberg P and L podcast. You can subscribe 524 00:29:08,560 --> 00:29:11,400 Speaker 1: and listen to interviews at Apple Podcasts. Or whatever podcast 525 00:29:11,400 --> 00:29:14,160 Speaker 1: platform you prefer. I'm Paul Sweeney. I'm on Twitter at 526 00:29:14,160 --> 00:29:16,840 Speaker 1: pt Sweeney. I'm Lisa abram Woyit's I'm on Twitter at 527 00:29:16,880 --> 00:29:19,680 Speaker 1: Lisa abram Woits one before the podcast. You can always 528 00:29:19,680 --> 00:29:21,760 Speaker 1: catch us worldwide. I'm Bloomberg Radio