this is bloomberg markets. i'm amber kanwar. matt: i'm matt miller. we welcome both our bloomberg and bnn bloomberg audiences. we have a lot to talk about, from carmakers to marijuana to the markets. a lot going on in social media today. let's kick it up with magna, the company $3.8 billion takeover. we will discuss that with the ceo, swamy kotagiri. and we will discuss what cannabis legalization would mean for an industry long crimped by federal restrictions. len tannenbaum is with afc gamma. and shares of snap jump on a blowout second-quarter earnings report. we will look ahead to big tech earnings, giant tech earnings next week. amber, there is a substantial

percentage of the market reporting next week. we are talking about the mega techs that have driven the market for years now. amber: what is so fascinating is when these companies beat, they are trading up, ac chain from when the banks reported last week. they beat expectations but were still down. perhaps tech will show the leadership through this earnings season. certainly showing up on the big board, if you look at the nasdaq, s&p, as well as the dow. in like a lamb, out like a lion. we thought what we thought was the beginning of a selloff on monday, and here we are ending the week with all-time highs. matt: absolutely fascinating what happens in the span of a week. we are all terrified about what the growth outlook looks like on monday, and then we rally up to

at least a new intraday high on the s&p. if we close at these levels come it will be another record. shares of magna fell the most today in a year after it announced it will be acquiring a driver assist company. a $3.8 billion deal. for more on it is the magna ceo, swamy kotagiri. thanks for joining us. why does it look like the market is concerned about this deal? swamy: good afternoon. i cannot comment on the market but i can talk about the excitement we have in executing the strategy that we laid out. one of the pillars of magna's strategy was to accelerate investment in fast-growing areas that are relevant to the car of the future. you have to look at the long-term sustainable shareholder value, and that is where we are focusing.

it is a fast-growing market, they have a great foundation. with the acquisition we are talking about, we are able to offer a complete suite of features to all the oems. that is what we are excited about. amber: one of the reasons that analysts and investors are nervous is because this acquisition will mean a positive buybacks, will not show up in earnings for a couple of years. walk us through what this acquisition buys you that you did not already have or could not do on your own, when it comes to safety and autonomous vehicles. swamy: to answer the first part of the question, we have been consistent in the capital allocation strategy. we said we would employ capital for the growth of the company for the long-term. with any excess cash we have, we would go into the share buybacks.

we have done that and we have adhered to the philosophy five years ago, and here we are again. in terms of looking at the overall foundation that we have, this is really a fast-growing area in the automotive industry. whenever there is a fast-growing area, you are really looking for a platform development that is modular and scalable. once we have this platform in place, the more you can implement at scale, the better synergies you have. with the balance sheet of magna, the technologies we had as a foundation, and what is coming with the acquisition, we believe this will really set us up from a broad customer perspective, from the geographic footprint, the synergies we can bring together from testing, validation, all of these new areas. i think people actually accelerate the proliferation

into the market and profitability. matt: clearly, we have a chip problem, and that is a moving picture. a lot of oems are talking about working directly with chip suppliers. what do you think of that kind of new relationship, is it a problem for tier 1 suppliers like magna? swamy: i don't think it's a problem he would be can only solve the problem by working together through the entire value chain. we are talking about a longer time, not just three or six months. as you know, automotive is a really complex value chain. it is something that we all realize and are all learning. i am really proud of how the industry has addressed it. as you said, the situation is fluid what i don't think it is to the detriment of any tier 1. the whole ecosystem just needs to work together.

amber: speaking of that ecosystem, when do think we are going to get that apple car? swamy: [laughter] i have answered the question before, cannot discuss any customers. i have also said, we are happy to have the ability and capability from design engineering, manufacturing from a broad portfolio. we are always excited to add anyone wanting to work with magna. matt: in full disclosure, i drive a vehicle produced by magna. i'm very happy with it. i'm hoping that you can make an electric version of this all-wheel-drive off-road vehicle. i wonder what your ev plans are like? swamy: i think we are really excited about ev plans. looking at the broad portfolio,

not just the powertrain, but all other product areas in magna are well-positioned to address this. with the acceleration in the ev market, i think we are in looking for a higher addressable market. matt, i am really sure that you are happy with the vehicle you drive. i am not the one to comment on it, i wish i could, but there is a really exciting roadmap. that is all i can say. matt: i am in love with the vehicle i drive. without naming it, i will say there is also at least a two-year waiting list to buy this truck. any thoughts about boosting production? are you having these kinds of waiting list issues with other products? swamy: it is on and off, but we depend on the releases that come from the customers, the strength of the manufacturing dna we have at magna is to have that flex ability.

we have been able to meet the needs with the chip shortage and all of the other supply chain issues we are having. there is a lot of up and down, and that is the challenge. how do we shift from one platform to the other and keep everything going. that is the name of the game. we are happy to keep everything moving with the customers. matt: thanks for joining us. hope we can get you back on the program soon. swamy kotagiri, ceo of magna. while we are talking about cars, general motors is recalling 2017 to 2019 models of the chevy volt, battery powered car, for the second time in less than a year. this comes after two previous vehicles that had been repaired caught fire. gm will repair these vehicles after identifying the simultaneous presence of two manufacturing defects in the same battery cell.

i have to say, these kinds of recalls happen all the time, if you follow the car industry, like i do. you will see recall headlines almost every single day. gm shares are down on this a little because investors want to see the big manufacturers get ev right. amber: i think if i draw parallels between your last comment and the car you drive and the story, i don't think this is the car that you would drive. you are right, there are fires with combustion engines, accidents, but because of the push for electric vehicles and autonomous driving is so new, it seems like these stories are amplified because there is so much more pressure on getting it right. matt: even if you have a big v8, it is easier to extinguish a fire in that than in battery cells. but that is an issue that manufacturers are addressing. let's get the first word news

with mark crumpton. mark: thomas parikh and u.s. prosecutors have reached an agreement on a bail package that would allow the founder of colony capital and donald trump ally to be freed ahead of a trial on charges that he illegally lobbied for the united arab emirates. the deal was reached ahead of a bail hearing was set for today in los angeles and will court. italian prime minister mario draghi's cabinet has decided what a so-called green pass will be required to dine indoors or enter crowded venues, such as theaters, stadiums, gyms, or museums. the passes are given to people who have been given one shot, have recovered from covid-19, or have tested negative in the last 48 hours. >> the green pass is not an arbitrary matter. it is a condition to keep economic activity open. even in the definition of the parameters the choice was to go

normally with many regions in the yellow zone because they would have exceeded the previous parameters, or to introduce the green pass and change the parameters to keep the region in the white zone, but with the green pass. mark: the new rules will be in effect starting august 6. in major league baseball, the cleveland indians will have a new name starting next season. they will be called the guardians. last year, the team said it would review the name it had had for more than a century. it had already stopped using the chief wahoo mascot after long-standing criticism. baseballs other team with a native american name, the atlanta braves, have resisted changing their names. global news 24 hours a day, on-air, and on bloomberg quicktake, powered by more than 2700 journalists and analysts in over 120 countries. i'm mark crumpton. this is bloomberg.

matt: this is bloomberg markets. i'm matt miller. the u.s. cannabis industry is eagerly awaiting the possibility of federal legalization. it may have hit another setback as critics piled onto the latest bill from chuck schumer. with legalization uncertain, those like afc gamma have emerged to provide capital for the industry unable to access through traditional channels. the ceo of afc gamma joins us now, alongside ed hammond. len tannenbaum, thank you for joining us.

i cannot quite decide, is legalization going to be a good thing for you? longer-term, it gives the business huge growth potential, or is it maybe not because you have more opportunities now the harder it is for these businesses to get money from traditional outlets? len: afc gamma lens money to cannabis company, cash flow, real estate. we support the company's growth cycle. we lend to dispensaries, verticals, cultivation. all of that activity still has to happen here in the state of new york when they get their act in order and they start to build up, $3 billion of demand, a third equity, sale back, and the third is lenders like us. the demand for capital is so high. they need a lot of money to come to the market. what does legalization look like? first of all, it is not happening anytime soon.

you see the schumer bill has issues. i think he also realizes cross-border transactions are not good for the state of new york. new york will recognize a lot of tax revenue from the cultivators, testing. matt: the whole industry down to the retailers. i actually just walked into my first dispensary. normally i'm in berlin, and they don't even know how to smoke pot there. i walked into my first dispensary here in lexington in midtown, next to bloomberg. this is pretty mainstream corporate america. ed: good way to spend their lunch break. matt: i didn't buy anything. i was curious. ed: i'm interested. as this opens up and more lenders want to get in, what does that look like? will we see the big banks getting in, some combination of firms like yours and traditional finance to support this?

len: i think you'll see a lot of alternative lenders in the space. state banks. you are already seeing that, by the way. when i collect my loans, we get wires, like a normal lender. none is legally listed on u.s. exchanges. we think a couple will be. and none at scale. if we can grow fast enough and differentiate, build that moat about what we do with our customers, that's important. but we need more lending in the space. i hope safe act passes next year. matt: what is safe act? len: there is this whole idea of legalization, but the first step is something called safe act. it will make visa and mastercard possible at the stores. it will give more armor for our pickups. less cash, higher transactions, and more state banks. cbd is legal. we were talking off-camera about

how it maybe helps you sleep. bank of america, wells fargo, will not lend to cbd companies. ed: how important is it to move the industry into greenfield stuff, versus taking a significant partner in equity, illegal or black-market cannabis? len: a couple weeks ago, i was surprised to see an article where they confiscated $1.2 billion of illegal weed grown by the cartels in california. that is the first real shutdown of the black-market i have seen. that is $5 billion over the course of a year. if the black-market starts shutting down, who gets the benefit of that $5 billion? legal licensed operators. who gets the benefits of that? the states that regulate them. there is a nice trip without affecting shutting down the black-market. if the market is 25 billion dollars, maybe the total market is six to billion dollars when

you think about the gray and black market. amber: you mentioned the lack of marijuana starts on u.s. exchanges. they are listed in my neck of the wind in canada. what they want access to capital, they go out and raise equity. although a lot of these pot stocks have rolled over. does that make them turn to you more frequently? when you do see a rollover in sentiment in the public markets and how they are treating it, whether it is a canadian or u.s. producer, is that good for your business? len: it is the same thing when i ran business develop companies to start. if middle-market banks did not lend, my business got better. we really do hope that they recover. some are great operators that have great business plans. imagine if a stock was listed in the new york stock exchange or nasdaq, going from $40 million in ebitda to much higher,

which are those multiple straight at? very defensible market positions and they own their real estate. i really do think there is value. you have to be careful when you invest in the markets, but you really have to look at the growth cycle and the growth prospects of these companies. matt: thank you so much for coming in, len. always a pleasure to talk with you and a truly fascinating industry that you have gotten into. i will remind people, you didn't start in the weed business. ed, always good to have you on the program. coming up on this program, shares of snap rally after beating second quarter revenue estimates. we will discuss the company's outlook next in stock of the hour. this is bloomberg. ♪

amber: this is bloomberg markets. i'm amber kanwar. one of the stocks we have our eyes on, shares of snap hitting an all-time high after blowing past expectations. let's bring in dave wilson for some insight. i guess this was a big surprise to everybody just how fast ad revenue could recover here. dave: absolutely. consider the company had an adjusted profit in their latest quarter, when analysts were expecting a loss. net loss was 45% narrower than analysts expected on average of bloomberg surveys. the number of daily average users ahead of projections. on top of that, you have the ceo talking about what he calls stabilization and early recovery in snapchat's story.

that is how we got to know the site, those stories that disappear in 24 hours. it is not just snap responding to the results. you certainly see it in its peers as well. twitter had numbers out yesterday that went well not only for the second quarter but also third-quarter sales forecast beating estimates. we get the results from facebook next week, so as we go through those, there is sales growth galore at snap. the company is looking for 60% growth this quarter, which is really in line with what we have seen. matt: i cannot believe, snap is like a100 $25 billion company. i still do understand how it works twitter i get. the big behemoths are coming next week. dave: absolutely. when you talk about big tech, facebook is one of them. their results are wednesday. we have tesla on monday.

apple and microsoft, alphabet on tuesday. thursday, amazon.com. you could throw a few other companies into the mix, but you are talking about a quarter of the s&p 500. matt: something like $6 trillion worth of market cap. thank you so much for joining us, dave wilson. for amber kanwar, i'm matt miller. have a fantastic weekend and a fantastic maternity break, amber. great working with you and i hope you have a great break with your new offspring. this is bloomberg. ♪

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mark: i am mark crumpton with bloomberg's first word news. the european agency has cleared the moderna covid-19 shop for

children 12 to 17. the injection will begin to kids in two doses. they are pushing to inoculate as many young people as possible before schools reopen. tom vilsack tells bloomberg there should be relief on the way for americans who are paying more for some groceries these days. >> the overall inflation rate is not that much higher than it normally is. there are certain items in the grocery store that folks may see for a time with increased costs. we think this will even out as we begin to recover and get supply and demand in better balance. i think we will see a moderation of inflation. mark: secretary vilsack also says the infrastructure deal lawmakers are working on his prickly important to the u.s. agriculture industry. the state of mississippi has