It's Always Time to Talk Donuts

zero point zero percent. That's certainly an improvement from December when that number came in at minus one point six percent. So to help us dig into the retail sales and all things retail, we're still in retail eLearn experiod, believe or not, I would bring in our friend Sema shaw seem as a consumer analyst for Bloomberg Intelligence. She joins us here in our Bloomberg Interactor Broker studio. So, Seema, welcome, Um. What did you see in the retail report that came

out this morning. I'm the biggest thing was that you mentioned that was December was revised down forty bases point to minus one point six. So we've already heard from the retailers that are reported that December was really bad. We had two weeks at the government shutdown. January did beat expectations, but I don't know that it's that good, considering December was revised down, so there might have been some pent up demand and big categories continued to be weak. Furniture,

autos Um sima. What would you say to people who say that these numbers are backward looking and don't really tell us anything that we don't know, um, particularly in this case where we're two months behind. I would say that's absolutely true. Um. But I'm still surprised that people are surprised about the the way the numbers are going, because if you've listened to any of the calls, December

was really bad across the board. Okay, so was it just December or do you get the sense that there is something sort of deeper here, a weakness that could be seen throughout the year. Um? Definitely, I think there could be, because we're seeing a slowdown in the housing market. That doesn't necessarily affect home depot and low so much as their focus on renovation. But again, if the house home price appreciation seems to plateau, people might be less

inclined to a wealthy same with the stock market. And I'd also say that, um, the fact that tax refunds are expected to be lower than they were and delayed, I think that could especially hit the low end where that little bit of money spending. Lisa what I like about seem as researches. I think she's consistently had a more conservative call on the consumer than you what your read out on the street, and that's a It's a great way to balance kind of what we're seeing out there.

So seem we're you're always an earning season. It seems like your companies are always kind of reporting you have a strange schedule, but you you're through the majority of them.

What did you take away from this quarters results? And maybe more importantly, kind of what the tone of the outlook is for a lot of these folks, right, I would say across the board, if you exclude the math guys who really took the bulk of the share over holiday and continue to seem very bullish, I would say the bulk of the retailers, from department stores, even to some like home deep and those they had more tempered

feeling about what's coming going forward. I think that even the home centers, while they're bullish, it's certainly not as strong as it was last year. And I think you're seeing for the department stores and sort of those other

specialty retailers, competition continues to pressure them. So I guess I'm wondering with the breakdown of online versus brick and mortar, if you're seeing the bifurcation continue to increase, or whether you're seeing stabilization, in other words, some sort of uh, you know, gains being made among the healthiest of the brick and mortar, and you know, a stabilization in the

rate of the right of the increase in online use. Well, online news does continue to go grow rapidly, but the ones that haven't established and I guess I would say a good infrastructure in their store base are the ones that are saying the biggest gains because they're able to have buy online, pickup in store, and other different fulfillment services that could help mitigate the gross margin pressure from

online growth. But I still think that online as a whole in mobile commerce continues to grow, but it's still again as we said that less than mid teens percentage of allive retail. It's interesting. It's so when you think about the Amazon of the world, how much have they gone into how much of their business is apparel versus just buying gadgets and stuff? Right, I think they're increasing.

I certainly know that they're increasing their apparel assortment. I mean there's been different players who have sized it, but they are going I think into more basics. Um. But again, the risk to brands when Amazon brings into private label, and my view is that they have the placement, they can put their brands top of mind and you see that also. I think with like supplement and they have private label across the board. So I think that's a risk. I don't think for the high end are really branded

product that Amazon's private label is going to push it out. Okay, this is totally off top and I'm gonna this is gonna be absolutely a wild card that you're gonna have to deal with. Huts and Yards is opening this week and it's going to be a retail hub with lots of new brick and mortar retails. Do you think that New York City can absorb a huge chunk of additional

retail brick and mortar. I think if you have enough food and stuff, you'll get the traff back in there, But I don't know that it's going to really drive up the sales. Also, just in my opinion, it's pretty far west, and as a person who builds my life around the train and stuff, I feel like it's a little bit far to go. And we already have, you know, the Time Warner Center, So I'm not sure that it's necessary.

But if they have a good enough experience, they at least get the traffic, you know, for food and things like that. Senior consumer analyst for Blubberg Intelligence. Thank you so much for being here with us. It's always time to talk donuts, and here to talk donuts with us. Is the very best person or people to talk about it with us. Buzzy good Old and Nancy Goduld. Buzzy Godult of course runs Cougar Capital. He left Wall Street

uh and and is still managing money. But he was the super trader running herzog Hein Godult before it was sold to Merrill Lynch in two thousand. He founded his own donut shop and he is here with Nancy, who is of course the manager of a new donut pub because donut is expanding. Buzzy. Let's start with you, thank you so much for being here in our Bloomberg Interactive

Broker's studios. First, can you just give us a refresher and how you went from Wall Street two donuts, back to Wall Street, back to donuts again and are now expanding expanding it. Actually it started with doughnuts long before Wall Street, like a backtrack. I had Wall Street for maybe a few months, got fired for my first job, filed with my second job, and the nineteen sixty one ISH went into the donor business with my brother, and

nineteen sixty eight Ish Wall Street. My brother decided to go back to Wall streets, hold off four stores that we had four stores, we sold off three. I wanted one. He went back to Wall Street. I would bake in the morning, take the trainer down and just kind of hang around post these positions orfer the job. And that was it. So from sixty eight to two thousand, that was in the Harzack. It's so Nancy. So now yet are you're you're expanding right, We're expanding donut pub right,

So tell us about that? Yea, So we're opening UM the second location since nine on Astar Place in Broadway. So I'm super excited to be involved and to be continuing the legacy. So how is the doughnut business in general? People health conscious process or health conscious? But they still eight donuts donuts, So we're business fifty four years. At the end of twound the eighteen it was the best year we've ever had. And why is that dealing? What's

changing do you guys? I think I think people enjoy an inexpensive treat that puts a smile on their face and don't let's go back in vogue. And we have become a destination. So on weekends you'll see people from Japan and Germany and Holland basically all over the world and all over the country. It's a destination point. And the product is a great product. We make three times a day. It's so refresh So, Nancy, where's the new location and what's the client's hell that you're looking for?

So new location is Astro Place in Broadway, So UM it's gonna be a super busy area. A lot of students from n y U and Pratt and the New School. So we're hoping to get UM a younger clientele and some more college students in the store. You know, Buzzy, I want to ask you something about the connection between Wall Street and donuts. Is there? What you know, business is business and I learned how to run the brokerage firm by running a donut shop. And there's a very

little difference. You've got clients and both you want to serve. You want them to leave, whether they're buying or selling a million shares of a security or whether they're buying it doesn't don't that you want to leave this This was the right place I went to. So it's all about product and service and I learned how to do that,

and they don't the shop. So Nancy, as you guys think about your opening up this a new store at astra place, what's the competition Like with the big donut national chains and things like that, you try to put a store where there isn't another donut store. So there's actually a story about how a couple of Duncan Donuts opened next to the original location of the Donut Hub and they have since left, which is good for us.

But I think we're pretty different from the like huge chain stores where everything is baked fresh on the premises. All of our donuts are hand cut. Um, so in that way, we're still a very old fashioned and I think people appreciate that authenticity in that freshness. Buzzy, am I correct in thinking, So you were the main baker. You you're the one who actually made the donuts. Well, back in the day, I did baking, a dressed the donuts, which was putting the icing, filling the jelly, et cetera. Yes,

So what's your favorite donut? Black or white? Boston Cream? Okay? And right now, so how do you how do you divvy up your day now between managing money and making donuts? Well, the only thing I do with with donuts is on Saturday morning, if I'm in town, I stopped by that there on the shop, I have a cup of coffee with the guy who manages critique the chalk that may not be shiny enough where he has a new idea

for a new that that's my involvement. Now that we've got a new store coming, I've been involved in the construction, which is the fun pot for me. And then after that I'll turn it over the nacy and manager. Do you actually make money from it or is it something that is enjoyable to do you actually now do make money from it? Yes? The reason as it's like it's tough to make money right, absolutely, I have to ask you. So you sold your specialist firm to Merrill Lynch at

two thousand UM top of the market. It sounds like to me, I remember two thousand kind of peaking in March, so hopefully that worked out. Um, what is the state of the specialist business today? Are there specialists left? I think they're a specialist, but it's not the business anymore. I think it kind of topped out short after we sold between decimalization limit or the protection uh electronics, etcetera.

Is electronics. You know, when when we made markets, there were spreads, so you're rather if you could make some money out of spread. Now the spreads are a penny and things trade in between that penny. It's just not a business, so what I mean? So again, most of the trading today is electronic. It's off off the exchange. So are there how many did you have to offhand? How many specialists are left on the New York Stock Change? I don't but I can't imagine it's anything like whether

it was in the for these fifties sixties seven. So as you manage your own money, given your extensive experience in markets, where are you seeing the opportunities right now? Well, you know, it's a market the stocks which is a kind of saying, but it's true, it's not a stock markets. So there's there's opportunities always, and whether it's biotech, whether it's technology, whether it's retail, there's always opportunities. So, Nancy, getting back to the topic at headhand, donuts, What are

some of the best selling donuts right now? Um, that coming out of your store? Um? So I think the classic donuts are always top sellers, like glazed Boston cream. We do a black and white Boston cream with half analyzing, half chocolate. Um. And then the croissant donuts, which are a sort of recent addition. Those are croissant donuts. Yeah, you're basically doing everything in your power not to say cronut. Right. Oh yeah, that was very well, I'm not allowed to

say literally, that's that's that's trademarked. Oh yeah, okay, I'll say it for you. Coronuts, croissant doughnuts. Give me a break, just real quick, Nancy, how many people are actually worried about, you know, calories and health or are we moving to a phase that's that's different in a different sense where people are basically saying, uh, they want to be more gourmand, they want to support or be involved in an experience

in a local shop. I think that people are super health conscious, but they also appreciate these sort of small like luxuries of having once in a while, you know, a sweet treat. So I think, you know, it's a combination of both. And I think people appreciate how fresh our product is um so maybe it makes them feel a little bit less guilty about it. That's a great story.

Buzzy Cadeld and Nancy Cadeld. Nancy's a VP and manager of new Donut pub opening up on Astro Place and Buzzies the CEO of Cougar Capital and founder of Donut Pub way back in today. Thanks so much for coming in and joining us. I don't know about you, Lisa, but I mean I'm gonna head down to the fourteen Street and take a look, because I haven't been. Someone just tweeted at me, do they have diet donuts? I'm going to answer that no, that doesn't happen. Actually, Buzzy

says they're all diet donuts. There you go. Interesting. Ethiopian Airlines flight three zero two crashed over the weekend, killing all one fifty seven people on board. Africa's biggest carrier decided not to use its seven thirty seven Max eight planes until further notice, while China and Indonesia also grounded seven thirty seven Max jets. So to get the latest

on this developing story, let's bring in George Ferguson. George is a senior aerospace, defense and airline animals from Bloomberg Intelligence. He joins us on the phone from Bloomberg Intelligence HQ in Princeton, New Jersey. George, thanks for joining us. It seems like, you know, the stock is bouncing back a little bit, down about six percent. It had been down about earlier in the day. How material is this growing issue with the seven thirty seven Max to the company.

So look, any time anything happens to the seven thirty seven to a seven thirty seven, it's important to Boeing because it's the most important program, accounts for over thirty percent of revenues, probably over of operating income. But I think what we're gonna find out here is that UM and the Bowling has made some changes to this jet since the previous version, the n G, and they pushed the engines forward, and they've they've changed the physics a

little bit. And when they did that, they changed some of the program that the computer and the airplane that helps ensure that the pilot doesn't pull the airplane up too fast and stall the wing. And so I think what we're gonna find out is UM, we're still bowing, still not getting enough training into the into the market for pilots to understand that and disabled that. So I think this is going to end up being a training issue.

But almost like a George, if it's a training issue, that's actually that could go back to Boeing and Boeing's liability because wasn't that part of Boeing's push here that this was not a craft and aircraft that required substantial increasing in training for pilots just to reduce the cost and better to compete with the Airbus. Yes, so I think there's gonna be a debate about that, UM, about whether or not this was Boeing's responsibility or the airline's responsibility.

But I totally agree. I've heard from a number of pilots in the industry who are concerned that Boeing sort of soft pedaled the training pilot needed to get the transition to the MAX because they want to make the Energy, which is the previous version, and the MAX looked like very similar airplanes in an airline suite, and they want to minimize the training between the two. So Georgia this early stage age, is there any sense of the exposure

to Boeing. Yeah, you know, we're always we're always sort of quite sensitive about that, given lives are lost here. But um, I mean airline crashes happen an occasion. They don't they don't put those companies out of business. You know, I think that attorneys will probably sit down and think about how much every life on the airplane is worth. It. Sort of hate to get juma commists, but you could find five or ten million dollars a person could be

a liability. Bowing may have some insurance policies to help cover some of that. It's nothing that would am Bowling is ten billion dollars in the bounty. I think it's nothing that would that would put the company out of business. Well, it doesn't have to be putting the company out of the business. I mean it's the biggest uh, it's the biggest share in in in the Dow Index. I mean,

it just has to go down a substantial mouth. There's also a question, of course, reputational risk as well as whether a nation like China, which accounted the orders I believe of this new seven thirties seven uh, if they could use this as an excuse to reduce the number of aircraft that they order from Boeing for whatever reason, whether it be that they want to reduce their exposure

to US companies or what have you. I think there could be agreed at least I think there's there's the potential that some of that could be going on in the backdrop, because I would note that the largest operator the airplane is Southwest. They fly thirty four of them by my last count. They're flying them every day. They're working fine in the fleet, um, you know, and I would say the US and Europe, we haven't seen any of those regulators come in and try to temporarily ground

the airplane. So it seems to me like the biggest, the most safe markets in the world have been the airplane is good to go and so yeah, because there may be a little bit negotiation behind the scenes here from from airlines in Indonesia or in China that might give them some legal room to take some orders off the book it. Frankly, I think the Chinese probably need the airplane flow to to grow their their airline industry

as much as they want to. Um. Look, there's only I think, you know, I looked there's probably thirty orst flying inside of China right now, So it's not it's not a huge ask for them to pull them out of the fleet temporarily, you know. So I don't think it's Um, I don't know that they're going to shut off the pipeline and Boeing, but they may use it too. So so in in the U S. Here have we yet heard for the fa A about whether they want to temporarily ground these planes. So I've heard nothing at

at this stage. Um. You know, look, we just we went to the Indonesia crash, and I would remind everybody that the Indonesia crash the Lion Air crash. I think what we've learned so far was that an angle of attack indicator wasn't properly maintained and the pilot wasn't fully trained on how to shut off this nose over computer control, so I wouldn't see anything from that would lead me to believe that the FED would want to restrict flights

for this, the seven thirty seven Max. And look, they've been looking at that data since the Lion air crash occurred, like the FAE has been looking at that and they haven't ground the airplane. So again I think that we won't see a grounding out of this crash. George Ferguson,

thank you so much for being with us. George Ferguson, Bloomberg Intelligence, Senior Aerospace defense an airline analyst, talking of course about the tragic Boeing Max UH crash which took the lives of nearly two hundred people crashed in Ethiopia. You're listening to Bloomberg Markets with Lisa Ramo, Eds and Paul Sweeney on Bloomberg Radio. First, Linton just walked into our Interactive Broker Studios in a fantastic food as he should because his company, Canopy Growth shares up more than

seventy scent so far just this year. They have been absolutely on a tear. We are talking marijuana, and we are talking of course the company uh that Constellation Brands bought a share of and that last week. And as a business partnership with television personality and lifestyle authority Martha Stewart very much the Rage one of the biggest and arguably most ambitious kidnabis companies in the United States. Bruce joining us here as the CEO here in our eleven

three oh studio. So Bruce, first, I just want to start with the Martha Stewart Association here. What is the business partnership exactly? Just please explain. Yeah, no, and I thought that bringing was great. You didn't actually use any pot puns. I thought you're going to talk about the stock high or something. So that was I think that's been tired. It's you know, I'm going to give that a T shirt, a T shirt to anyone who can come up with a new one of those. And I don't.

I don't think I handle any T shirts. But this is a real business. We can move away from the puns to this is real business. Well, what's happened is people needed puns when it was uncomfortable. Now what it is is more than Curry City. It's a real business, which is why you're gonna name like Martha Stewart coming by. And what Martha saw is about three years ago. First

we associated with Snoop and it was his request. He reached to us because he saw us doing brand right Tweed, and then we worked with him for about two and a half years and we got to know Martha, and Martha's on ramp is really about wellness health advising us and how we could actually focus on animal care products which would incorporate CBD, and where we can do all that work in America's right here in New York State, because New York State figured out when the Farm Act passed,

how to create state level regulations that are very welcoming to business. And I, as a business, don't need a tax break. I need good policy. And so it kind of makes me show up without having my hand out because I just want to get to work. That was a very subtle tag at Amazon. Did I do that? Was that? If I was subtle in any way, I apologize for being subtled. So interesting, I said, your business is all in Canada? Now, is that right? No? So what wait? It's starting Canada? But um I can as

a proud Canadian. Canada is a very good place to be from and if you stay there, there's only thirty six million of US. So we started there using the public policy research, intellectual property development, and now we're in more than a dozen countries any place that it's federally legal. So in the US, in the US, we're only pursuing CBD where it's governed federally. Butt in Germany to define CBD. So, CBD is one of the two primary measured ingredients in

both cannabis and in hemp. And what CBD is associated with is like neurological commings. So if you think of a Parkinson's patient, they have money symptoms, one of them shaking. CBD appears to be effective and diminishing the shaking. But if they need to deal with pain anxiety, maybe they need THHD. So CBD comes principally from hemp. Hemp looks like marijuana. It's a big plant. But when you do it in the US the right way, as it's going to happen. Now you extract the CBD, you end up

with this protein which is very digestible. So now we're getting this protein available and you end up with a fiber that could be very disruptive or impactful on places that do cotton, and so there's a whole bunch of things that happened when you let the government create a policy so you can actually not break a lot and

use a plant, all right. So there's a lot of optimism around cannabis and the entire industry around it, and certainly that's been reflected in the amount that your shares of Search can it be shares up nearly six hundred percent since the end of two thousand and sixteen. A lot of people have been saying that there is a bubble in pot stocks. I'm wondering, do you think are you concerned about how much your stocks have gone up given the fact that there is still so much uncertainty

about the policy level of marijuana. Yeah, I would say my concern is more for the portfolio stocks in the sector than our specifically. Right. So, we have a lot of capital. We're using that capital to do a lot of research. We have over a hundred and forty patent families that we put together. We've got a huge facility that we're just finishing construction that will launch the first

real beverages driven by cannabis. So don't think beer, think tweet, tonic um think very low dosage, no calories, always standard, reasonably easy to sit and experience, versus have a drink and wait forty minutes. So this is gonna be you know, that kind of impact. So what you're having is a company that's creating a lot of depth of value when prohibition ends and patents can be made. But then you have a lot of folks who feel this could be a terrific get rich scheme, and so there's a lot

of announcements. I think the way I like determine is there are several businesses in this sector and a whole bunch of companies. Um, so investors should be cautious to find the business and the company. Well, Bruce, how about just just crossing the Bloomberg terminal? This morning was headlined that Harvest Health and Recreation is acquiring closely held Verronto Holdings for about fifty million dollars in the largest U S pot deal. Uh. Do you expect more consolidation in

the cannabis business. Yeah, I think there's gonna be two things. There's gonna be disintegration. So a whole bunch of companies that are just throwing stuff around aren't gonna be bought, they're going to disappear. Those would be the really sad ones, and then there's going to be some consolidation. And the reason for that is, um, we're running clinical trials. We're chatting off fair about, you know, having five long term care facility elders who will be on cannabis as an

alternate to a lot of the other medicines. Running these trials creates intellectual property, but it's also a burden. And if you're a little company or you're gonna plan how we are really dominant three years from now, not likely. So that's where you're gonna see consolidation. Interesting, Bruce, thank you very much. Bruce Litton, Founder, chairman and CEO of Cannopy Growth Corporation Simple c G c g C based in Smith Falls, Ontario, but joining us here in a

Bloomberg eleven three oh studios. We can talk about this industry all day. We honestly, I find it so interesting. Thanks for listening to the Bloomberg P and L podcast. You can subscribe and listen to interviews at Apple Podcasts or whatever podcast platform you prefer. Paul Sweeney, I'm on Twitter at pt Sweeney. I'm Lisa Abram woy It's I'm on Twitter at Lisa abram Woyds one before the podcast, you can always catch us worldwide on Bloomberg Radio speaking