Tyson Turns to Vegan Foods As It Seeks to Disrupt Itself

In the news today, Tyson food There poultry subsidiary has been ordered to pay a two million dollar fine for discharges from a Southwest Missouri plant that caused a fish kill um and the company. The Arkansas based company said that it was taking full responsibility for what it described as an unfortunate mistake. And here to tell us more about the company right now is Tom Hayes. He is the president and the chief executive of Tyson Foods and he joins us here in our eleven three studios. Tom,

thank you very much for being with us. I referenced that that news item, but I also wanted to reference the fact that you actually took responsibility for the mistake. That may not be something that major corporations do. They typically will pay a fine, and that's the last to hear of it. I want if you could describe this but also in the context of taking responsibility, because I also want to note that you have taken on the pledge to cut greenhouse gas emissions by thirty percent by sure. Yeah,

thanks for having me. You know, our strategy of Tyson is sustainably feed the world with the fastest growing protein brands. But with that comes a lot of responsibility. We know that the population is going to be you know whatever, the estimates are nine and a half billion people by and we have to be a part of the solution. So absolutely, when there are things that go wrong in our system, we will own them. We don't want them

to go wrong, but sometimes we will. Got a big system and we are focused on how we can do better. So we've got a big continue improvement program. You know, we're transitioning from a company that has a heritage and poultry to really a modern food company, so that comes with a lot of agility changes and things that are focused on sustainability, making sure that we can, you know, not only do the things we can do for our shareholders to make money, but also do in a way

that everybody on our team can be proud of. And we can have a positive impact Tom modern food company. What exactly does that mean? I mean, what's sort of the next step for Tyson? So I think of four things when I think of modern food company. Firstly that I mentioned is sustainability. The second is transparency. You know, there's not a lot of trust with big food and so we need to become more transparent. Uh. Certainly, as it relates to agility that I talked about, it's hard

for big companies and necessarily move quickly. A lot of small food companies are really good at that. We are working that agility into everything that we're doing. And then finally, just the whole idea of being relevant that is something that we have to consistently be with our consumers. So we do spend a lot of money on brand building innovation.

We've got business models that are large, big brands three billion dollars, three one billion dollar brands, and we have small brands were really cultivating to be more relevant for consumers today. All right, just to put it into some numbers, right, thirty five million chickens, nearly half a million pigs, a hundred and thirty thousand cattle a week. Right, this is big.

You also have stopped using the antibiotics and chickens. You've also said that you've got this line of antibiotic free pork, but you've also made an investment in a company that's based in Memphis, and I wonder if you could tell us about this because this is not anything really to do with what you think of when you think of meat. So excellent question. Those business models. I talked about one of our ways that we are going to grow the companies by investing in some new emerging models, uh, and

simultaneously thinking about ways that we can disrupt ourselves. So there are plenty of opportunities for companies to be disrupted. We want to disrupt ourselves. So that investment you're talking about is Memphis Meats actually based in Chicago, but they have the Memphis Meats brand, and what they are doing is taking cells from animals, so not raising and then harvesting animals, taking cells and essentially culturing those into a

meat alternative. So it's very interesting technology. It's still very nascent. But we're also investing in companies like Beyond Meat so plant based protein, introducing our own lines of plant based protein. So it requires a lot of different solutions to be sustainably feeding the world. And those are just some of

the examples that we're entering into. Tom You also said in a presentation last week UH that Tyson is planning to cut greenhouse gas emissions by thirty So if you think about the stages UH in one and two, those areas of our food production, what we control within our house, basically,

those are pretty easy for us to get to. The things that are different culled are the things that are really what are UM phase three, which is we're not vertically integrated and cattle and not vertically integrated but for a small amount on pork or hugs. So we have to work with cattleman and you know, producers to make a big change in the system. And so that's where the majority that will come from is sort of getting after those those UM emissions, and particularly i'd say as

it relates to cattle. You have also been kind of reshaping the company when it comes to what businesses you want to be in and what businesses you don't want to be in. For example, I believe like frozen some of the frozen food businesses are you going to sell some give us an idea of the kinds of lines that you'd like to sell. Maybe it's the what is it the frozen I can't remember frozen food assets. It has to do with the at some of it's on the block, right, this is the Van's Foods that business.

But you want to buy others? What what kinds of bolt on acquisitions are you're looking for? So we're looking for any time we can a new brand. That's again going back to protein. So the protein is a tail one that we're taking advantage of. Consumers are actively trying

to get into their diet more and more. So it would be assets that either have a brand that we can take advantage of, a new capability, Uh do they move us into a new geography, whether it's internationally or here domestically, and so those are the that's the sort of filters we have. And so it would be companies like we bought with Advanced Pierre, very Protein Centrick. Not necessarily you know a lot of consumer brands, but they have a very strong culture of driving profitable foods in

the marketplace, whether it's branded or unbranded. And so assets like that the ones that we can continue to build our brand portfolio. Those are the important ones. Thank you so much. For joining us. Fascinating to hear how you're trying to disrupt yourselves. Uh, fascinating concept. As the world expands and as more people look to protein filled meat alternatives. Tom Hayes, president and executive officer of Tyson Foods, which is based in Springdale, Arizona, but he joins us here

in our eleven three oh studios. Medical marijuana has been one of the hotter bets in the past few years, and a company that specializes in it is filing the first cannabis related US initial public offering, that is Chronos Group, and the chief executive officer joins us now, Michael Gorenstein. Thank you so much for being here. Michael, can you just give us a sense of why you decided to file this I p O, how much you plan to raise, and what brought you to the US. Sure, thanks for

having me so A big driver was spreading awareness. We've actually been publicly traded in Canada for some time and a lot of American investors have questions about the legality. Everyone's very surprised to hear that there are legal ways to get exposure of the industry and by going through the process with the NASDAC and and starting the trading yesterday. You know, a big big thing for US as being able to help advance things, help explain to people that

there there is a market. There are federally legal avenues where you're able to to invest in the companies that are developing the intellectual property, that are building brands and are are spreading global distribution without having the legal risk that you would otherwise have in the US to find for people what your company does. So really we we do a number of things we look at as a virtual cycle, but ultimately what we're doing is developing global distribution.

So right now we're across Germany, Israel, Canada, Australia, in the Cayman Islands. UH disruptive intellectual property and unlocking the science behind cannabis that really hasn't been there because when you hang on when you say distribution, distribution of what like if I was to go to your company, what exactly how's your company divide it up? In what products or services do you provide? So we directly will ship a number productly of forty three different skews that would

be available if you were to come to us. UH varying ratios of cannabinoids, flower derivative products. We offer a wide range depending on on what the therapeutic areas that you're looking for for helping. So why list in the US?

You know, I think a big part of it is accessing US capital, being able to uh, you know, to get a foothold here, and ultimately we do believe that the US will be federally legal, and for US, it makes a lot of sense to give American investors a chance to get in early because when we come here, we do want that support and we don't want to be sort of the foreign conquerors. We I grew up in the US. Uh. Much much of our management team moved to Canada from the US, and we certainly hope

to keep more people from the US involved. You know, I guess it's sort of hard to distinguish, uh, you know, sort of the legal aspects of marijuana and how it relates to medical versus recreational. And you know, we were talking before about how you focus on medical and yet do you get a lot of investors coming to you and sort of treating you in tandem with alcohol companies and trying to get in on the ground floor, uh for something that will take off on a recreational level,

and how do you sort of deal with that? So we do you know, we have we do have a wholely owned license in British Columbia that will focus exclusively on the recreational market. But we do try to educate people on though, is the medical opportunity is huge and if you look at a few things that might not necessarily come top of mind, you start to understand that. So first, the countries are much more likely to legalize medical before they are recreational. It's just it's a much

easier argument. It's from policy perspective, makes more sense. Uh. And so you've got a global medical market versus just the Canadian recreational market and just off sheer numbers, that's a very big difference. Uh. The second is thematically, there are people that are moving away from from alcohol for some health reasons, but it's not very drastic. And you've seen in states where cannabis and legalized there's a trend. But a much bigger trend is what's going on with opioids.

The opioid epidemic. It's ripping across North America and really across the world. And chronic pain is one of the largest indications that we see for cannabis. So being able to provide UH medicine that doesn't have the same harmful effects is something that we see as a as a big catalyst. And finally, UH insurance coverage is something that we haven't seen in the US. Everyone looked at Colorado to say, well, this wasn't a real industry. UH companies

gonna be profitable until recreational. How are you going to compete with the guy on the corner that's just gonna sell you a bag. If you've got to go to a doctor. Well, Germany there is full insurance coverage and so you're able to go to your doctor and reimburse like a true medicine. So that's part of why our strategy is UH, you know, is being able to target European markets. We have an exclusive distribution agreement with a h three year old pharmaceutical company in Germany and gives

us access to twelve thousand pharmacies. I think the medicinal market is is a very very great opportunity, and we try to educate people and it's a form of social entrepreneurship. You're also doing good. Can you also just educate us and our listeners in you know maybe thirty seconds that there is a very a wide variation of what is available from cannabis. So for example, th HC is one, c b D is another. A lot of acronyms here at th h c V, which is what you're focused on.

Just describe if you cantata top leve level of you what people need them to understand. Yeah, so a lot of the misconception about cannabis. You do hear people always tell you they've had different effects that you know, makes them tired, it wakes them up and makes them laugh, makes them scared, cures cancer, cure as headaches. The analogy there would be if I were to tell you, hey, you know pills are really good for making you sleep well? What's inside of the pill. So cannabis is you can

think of it as a vessel. But depending on the different genetics, there over a hundred different cannabinoids. There are thousands of turpenes, and these work together synergistically to create an entourage effect. So what the actual type of cannabis is, what the cannabinoids are, is very very important to what effect you'll get. Just really really really quick. Our opioids more expensive that are used for pain killing than be cannaboid, uh,

than the cannabis product in general. Yes, they are. I just say that there's a recent study we were talking about this offtline that was just published in the European Journal of Internal Medicine that the Israeli researchers have said that the efficacy of cannabis for cancer patients helps those avoid their opioid dependency even before it starts. Thanks very much for being with us. Michael Gorenstein is the chief executive of a Chrono, a group, and yes they are

trading in the United States. We got some data overnight out of China showing that a gauge of demand for factory made goods in the nation fell the most in five years, much more than any economist survey by Bloomberg had expected. Here to help us understand how much we ought to pay attention to this is Leland Miller, chief executive officer of China beige Book International in New York, and he joins us here in the studios. Leland, thank you so much for being here. So what did you

make of this read? Well, not much uh February data. When you when you're talking about January in February and China you've got the lunar New year, which means that any comparison either between those two months or between January February and the years before are are hard and any any real conclusions about so we don't think that February means much. Is there some expectation of a slowdown particularly in manufacturing this year? Sure was the fifty one to

fifty uh noticeable drop? Not really should be worried about February data regardless, Not really so. I think people have been watching for a slowdown in China and so they took note of this. But this is the trepidation the market seems to be seemed to be feeling that that's not warranted yet Leland, what's the big deal right now with China? Is it tariffs on things like aluminum foil? Is it steal tariffs? What's going on and what should

investors really be paying attention to? That's see, that's a great question, and I don't think people are asking this enough. They see the headlines on stealing aluminium tariffs and I think, well, this this is gonna just crush China. Well, it won't

be good for China. But but while we will be dealing in the coming weeks with stealing aluminium tariffs and whether President Trump is really gonna go big on them, the real question for China is the intellectual property theft UH investor gaistion Section three oh one and whatever tariffs they do on that. Now that's been backtracked a little bit behind the scenes. It's still moving through UH the

inter agency process. But if scenario worst worst case scenario is that President Trump decides he's gonna he's gonna make a big move before the midterms, puts sectoral tariffs on say consumer electronics, something giant like that, and you have absolutely justifiable use of the term trade war. That is a big, big deal. It doesn't mean it's gonna happen, but the worst case scenario is an all out, big

time trade war. What do you hear from people who are close to who are involved in these negotiations, Well, that the administration is having a very very difficult time coming to consensus on this um. You know, you read this in the media, but it's the reality behind the scenes.

So one of the reasons that you don't have a two thirty two announcement yet is that there's the president wants to do something big on stealing aluminium being the stealings to steal it aluminium tariffs, right, he wants to do something big. Uh. But at the same time, almost everyone's administration, every cabin official except a few uh as, entire National Economic Council think that this this the still aluminum tariffs, these global tariffs in a non targeted way

would be an awful idea. Similarly, section three oh one, the president wants to go big. Other people are saying, look, this is potentially problematic. Sorry, that's the intellectual property theft uh tariffs uh. And and so there's this desire by the president to go big, and his even inside the Trump White House, there's a desire to tamp this down because they realize that this could get out of control. And as a result, you've had this in action because

there's an inability to come to consensus. This will end sometime soon because you have deadlines on some of these endings soon the steel aluminum terrorists, for instance, had to be done by mid April or the authority goes away just to go back to this intellectual property thing. In the worst case scenario for consumer how does this show up. Does this mean someone's iPhone becomes more expensive? Does this

mean you can't afford the via television? Tell us the detail right, So you have first order effects and then you have second and third order effects. So the first order effect. In the worst case scenario, which of course is not our baseline scenario right now, the President decides to go big on consumer electronics and says We're going

to put a large tariff on everything coming out of China. Yes, consumers will feel the brunt to that, but I think the bigger brunt will be the second thord or effects. First of all, China will retaliate. They'll start nail, you know, hammering our farmers, soybean exports, et cetera. At the same time, businesses operating in China will have a very difficult time.

So if you're Bowing, if your Apple, if you're any of these other companies that are trying to make inroads, you're in big trouble because the Chinese will either react immediately or you will have this cloud of uncertainty hanging over you for the for the foreseeable future. Are there any estimates for how much China's GDP will get reduced if there is some sort of trade war, the question is is will will any reduction GDP ever get acknowledged by the government. So maybe this will be without any

loss of GDP for the all right, fair enough. But the reason why I asked, though, is because people say, you know, if China catches a cold, the emerging markets get the flu. UH. People look at this as a bell weather of one of the hottest trades UH, you know, in the past few years. So you know what's going to be the bleed out effect of a trade war. So again, if you have this worst case scenario, UM, you will have a substantial drop in GDP UM the

Chinese UH. You can talk about the Chinese economy being more and more reliant on its own consumers internally, but that just hasn't happened yet. You know, you're still seeing these enormous trade flows UM and and and that's the way they wanted. And so if you have a problem with UH, with with trade, and you have the US clamping down and China clamping down back, you will have a problem in China. You will have a problem in

emerging markets. And UM's it's a little bit hard hard to quantify because you can't believe the GDP figures, but you would certainly have something at least as serious as what happened at the end of two fifteen early in terms of in terms of an economic crisis, Leland, what books or journals would you recommend that people read if they want to educate themselves more deeply in how China

really works. You know, it's getting harder and harder because if you if you saw the the announcement the Chinese are banning like the letter N, the words shameless and all these other other things. Um, you know, it's it's getting hold hold. Maybe people don't know about Hell's help, what happened well, and and and the other. The last few weeks, the censorship has been ramping up even more

than in the norm. And if you're seeing these almost comical censorship of words from shameless was one of them. There was a handful of other words that are hominem's with leaders names. But the word the letter N was was actually banned because that was supposed to signify uh n is greater than two, which means she's terms were she's new term, lifelong term is is greater than two, it's any equals infinity, whatever it might be. The Chinese

were going overboard with that. It's got a lot of media coverage lately, and it just shows you that getting information out of China is much more difficult now than it was in past years. But I mean, is there something that you could recommend, because I mean, even just to understand the structure of the of the country's politics, the party is actually above the government, right, not anymore now it's all the same, right. Well, that's that's the idea.

I mean, the party, the theory, the party above all. But the more these these things are all merging into this monolithic chi jin Ping uh force. Uh. That's that's what China is now. You know. The mantra is China is, the party is chi Jinping. Is there any economic data that you rely upon that is actually an accurate number coming out of China? We look at everything because everything, uh put some shades, some some flavor into the overall picture.

But the reason we started China Bejing book back in two thousand and ten is we didn't believe this stuff. We thought we had to get it ourselves. So not really, I want to thank you very much for coming in and joining us. Leland Miller Chief exec gtive of China beige Book International. Go ahead and follow them on Twitter at China beige Book. Seems like an increasing number of equity investors have sounded the all clear bell have dived back into equities after the minor hiccup over the past

few weeks. Here to take stock of what investors are looking to do in their stock portfolios. As Scott Wren, senior Global Equity Strategist for the Wells Fargo Investment Institute in St. Louis, he joins us here in our eleven three studios in New York. Scott, thank you so much

for being here. I was just this morning looking at twelve months tea bells and looking at how you can now get two percent yields on that, and I'm wondering, what do you tell your equity investors, your clients with respect to how much money they should be holding in cash right now. Well, Lisa, first of all, it's great to be here. It's been a while since I've been in studio. But you know, as far as our investors and and I think you can generalize this to most

retail investors who that's That's who I'm dealing with. Most of the time, UM, they've been under invested in stocks, they've been sitting on too much cash. Would they love to see five percent CE deals? Sure they would, We probably all would, but you know that's probably not going to happen anytime soon. These these interest rates are a little higher, UM, but when we look out over the course of the next few years, I still think that

stocks are going to be the outperformers there. So UM, you know, our fixed income um UH team has not really started to recommend getting locked in here with these slightly higher rates, but UM, we like stocks order bonds, all right, So do you sell bonds in order to deploy the cash that you might have into equities? Well, I think that that UM for one thing, PIM most of our clients still have cash, so they could just step in and not do anything with their bond portfolio.

But I think, you know, you could argue that if you're locked in in an intermediate type of duration and you don't have any cash, you know, we want to be in stock. So I mean, if if that's your only choice and you do not have any cash, UM, you know, we wouldn't mind lightning up on let's say, high yield bonds. Something like that, and and moving some

of that money into stocks. So, Scott, have you changed any of your preferences within the equity universe over the past few weeks, just as we kind of reassessed the growth picture the yield picture. Well, I would like to say that, you know, this was all skilled, but it was probably a little luck to in the sectors that we have been really leaning toward. UM. In terms of domestic we've been leaning towards industrials and consumer discretionary and

financials and healthcare, and we like those. We had in those for a while, but we like them prior to the change in the tax code, and then when the tax code was changed, we even like them more. So. You know, what we want our clients doing is being assertive. We want them leaning towards these sectors that are going to benefit from a continuation of this expansion, which I think was probably UM drawn out for maybe another year or two couple of years based on the new tax

uh tax reform. But what we don't want our clients doing is getting defensive. There will be some time at some point in the future to get defensive, but we've been underweight staples, underweight utilities. We we like those positions. Um, and we like them more since the new tax code went into effect. Scott. It's interesting that you say we we don't want them to get defensive. It suggests to me that a number of clients have called you saying is it time to get defensive? Is that the case?

That is the case? Lee, So you know, and I think it's safe to say that. Um. You know, when the when the market steadily goes up like it did last year, my phone does not ring frequently. But when the market drops in you know, five or six trading days, my phone rings constantly. And so, um, you know they're they're um, uh, they're concerned. Um, they're fearful. Uh. Initially they were a little fearful that they missed out. Some of them stepped in maybe a little closer to the

top than what they would like. But for the most part, there are clients at on their side, on their hands. So, um, some want to get defensive. We're trying to encourage them not to do that. Scott. I want to steal something from our colleague Tom Keane. The other day he talked about the amount of time that investors spend worrying about whether to get into a market can be something like but when they pushed the panic button to get out, that's something that maybe they spend five or ten percent

at the time. How do you educate someone to flip that equation. I think what we try to do him is is we try to look forward, of course, and we're trying to say, what is the economy going to do? What is inflation going to do? What is the federal Reserve going to do? That's certainly we're focused on those things right now. What are wages going to do? Because

I think that's been a worry for the market. Um So, if the forward outlook is good and and valuations are not stretched, which I don't believe that they are right now, then we want our clients taking advantage of this volatility and and I think you're going to see more downside volatility now do I think we're going to see the two hun day moving average again? And the SMP fund probably not certainly not impossible, but I think we will

probably test a little lower here. You know, we've wanted our clients to have a plan to put the cash to work, and then when you have the opportunity, and one of the hardest things to do is then to get them to pull the trigger and jump in there. You know, it's amazing to me that you've got that many calls because of volatility. Wasn't that extreme, I mean, aside from the VIX, but equities didn't sell off that much,

just really quickly. Does this concern you with respect to investors sentiment and just how judy people could get if say, the market does decline for an extended period of time. It does. And you know, Lisa, when you look back and and uh um, and you say, well gee um. Over the over the last ninety years, the S and P s had a ten percent pullback on average every eleven months. We hadn't had one for two years. It all happened in the course of a very short period

of time. That does uh. That does scare people. And it is a concern because we had a number of clients who were posing up to you know, better things happening in the stock market. We dropped ten percent very quickly, they back away. It makes them nervous. I want to thank you very much for being with us as always. Scott Wren is senior Global equity strategist for Wells Fargo Investment Institute. Thanks for listening to the Bloomberg P and L podcast. You can subscribe and listen to interviews at

Apple Podcasts, SoundCloud, or whatever podcast platform you prefer. I'm pim Fox. I'm on Twitter at pim Fox. I'm on Twitter at Lisa Abramo wits one. Before the podcast, you can always catch us worldwide on Bloomberg Radio