A host of COVID headlines. Paul um and, as we talked about earlier in the show, the market seemingly brushing off concerns about the delta variant. Yeah, it really is, and I think, you know, definitely some concerns there, but the expect I think the focused least on the near term has been earnings and has been the Federal Reserve, and all of those things are supporting. You know. It's kind of the narrative we've had for a while. Now, well, let's get right to it with Tania Winders, the President
chief executive officer of the Allergy and Asthma Network. It's a nonprofit organization with the mission to end the needless death and suffering due to asthma, allergies, and related conditions through outreach, education, advocacy, and research. Tanya, thanks so much for joining us from Nashville, Tennessee. How you doing today, I'm doing great. Thanks for having me. How is your mission changed in the last sixteen months? Is you're not
just battling allergies and asthma, but COVID as well. Yes, yes, Well, you know, any individuals who's living with a compromised immune system or respiratory system we know has greater complication from COVID, and so over the last sixteen eighteen months, Uh, it has taken center stage for our community, and we have listened to that community and responded accordingly by developing education materials and awareness materials and then taking those to the
most underserved communities. And it seems to meet Tanya from you know, just following this, that this line of the of the pandemic, that it has just exposed the health care inequalities in this country, perhaps even more so, what are you finding as it relates to COVID nineteen the pandemic now it's all about vaccinations. What are you seeing in the communities that you interact with? Well, you're absolutely right.
I mean, so many of these health inequities have existed for decades even longer, and yet COVID shined that spotlight on the health inequities um more evidently. And one of
the ways is even through vaccination rates. So if we go from one that code to another in cities like Atlanta, Shook Hargo, Prince George County, Maryland, UH, literally one zip code away, you can have vaccination rates higher than versus vaccination rates of lower than and and again, so much of that is driven by these factors that are driving health inequity, whether that be poverty, education, access to healthcare, food, insecurity. There are a host of different reasons why health in
equities are occurring. Well, here in New York City, as we've been talking about all day, the city is going to require restaurant patrons to show proof of vaccination. Paul and I were talking about this is whether or not it will be some sort of impetus to get people vaccinate. And I'm wondering when it comes to health inequities, what health officials need to do to make sure that there isn't this disparity. Because the vaccination is there, it's free, how do we get it to these people who who
haven't gotten it yet. Well, this is the shocking thing is that just because it's quote unquote free doesn't mean if people are going to take it man of it. And so we have to establish connection through a trusted
messenger in their community. So whether that be a doctor who looks like them, a nurse who looks like them, perhaps even a pastor and a community center that they feel comfortable going to and trusting um and so that's why we've developed are Not One more life initiative to actually partner with those trusted messengers in each and every
of the high risk communities across ten different cities. So the cities that you're in, what role is the family doctor playing, Because it seems to me one of the most trusted folks in in people's lives would be their family doctor if they have one UM and that if that yeah, so how do you deal with that issue? Right?
So unfortunately, again, so many people do not have a primary care home, they don't have that medical home, that relationship with the position, and so we actually help them to identify uh physicians in the air community that will
accept me patients they could get connected to. But we also provide just a general health screening and a lunghel screening free of charge in places like home depot parking lot or a church parking lot um just to get them to understand at baseline how they're doing with their blood pressure, their blood blue hosts, they're breathing in general, if they have any of those high risk co morbid
conditions that would put them at risk for complication from COVID. Hey, Tanya, One thing that we've been talking about a lot on Bloomberg Business Week has been the way that this pandemic has disproportionately affected people of different demographics in the United States. You mentioned comorbidities and the way people who have those
comorbidities are affected differently by COVID. I wonder if you're optimistic when we get to the other side of this pandemic, finally we will see some sort of large scale change when it comes to the health of Americans because there is that disparity there. So I think, again, we never before have we had a public health crisis that has
lasted for this length of time. Every single night, the headline on the news is the leading story of the pandemic, and so I do think it presents an opportunity for us to really come together and think about how do we fundamentally change our health care delivery system in order to ensure that everyone gets equal access to care. So now is the time, and I certainly think that there are many opportunities for improvement that we can recognize just
real quickly thirty seconds here, what's working? What are you guys finding it's working well? Well? You know what's working well is what we call hand to hand combat on this where we actually go into these high risk communities and have these trusted messengers approach people in you know, these high traffic areas and have the conversations, why aren't you being vaccinated? What is your greatest health concern? Do
you have a primary care for position? Even engaging in that conversation in a casual way and getting the dialogue around the importance of vaccination and primary care part of the program. Tania Winder is President and Chief Executive Officer of the Allergy and Asthma Network, joining us live from Nashville, Tennessee. All right, Tim, So, I have four kids in that eighteen to twenty nine demographic, and all four kids have been vaccinated, and quite frankly, they didn't have a choice
and they wanted to anyway. And so if they had a choice, do you think they would have not gotten back to No, No, none of them would. They all paid attention in science class. So, but apparently the Sweeney clan maybe a little bit of an outlier for that demo. Let's get the story. Rebecca Torrence works for with the US Healthcare Team for Bloomberg new She is in Lovely Durham, North Carolina at home of my Duke Blue Devils. Rebecca, thanks so much for joining us here. What's going on
with the young folks? Um? Is it just simply saying I'm young, I'm strong, I don't need it. Yeah, that's it's interest of what we're seeing. Um. There's only about fifty four percent of the population at twenty four that have received one dose of the vaccine at least, and that's compared with seventy of the total poculation. And you know,
kind of what we're seeing is with older demographics. Um, when you cut through the misinformation about the vaccine, the health risks posed by these stars are significant enough to convince most of them to get the shot. But since the beginning of the beginning of the pandemic, we've seeing this messaging targeted at younger groups that they don't really face these same risks, UM, and that continues to impede
progress on getting that group vaccinated. Essentially, they were told at the begining of the pandemic that this is something that affects the elderly worst. And Paul and I were talking about this during the break and he reminded me that young people were at the end of the line when the vaccine became available. So was it a messaging error from the beginning that's leading to this? Yeah, that
is what some people are saying. Um, it seems like, you know, um, with the delta varia and especially, we're seeing those risks increase. But because we haven't gotten that messaging really until now, Um, young adults just simply aren't picking up on it. Um. And we are seeing hospitalizations increased in that age group as well. But because that rate is so low compared to some older demographics, UM, they seem to still think that that risk is low enough.
Um that you know, they simply don't need to take the chance, as some would say, to get the shot. Um, despite effect that obviously the risk of getting the vaccine are also incredibly low. Yeah, and I guess you know, one of the challenges, Rebecca is going to be messaging and communication because the younger folks rely more on social media perhaps than some of the older demographics, and that's unfortunately where a lot of misinformation is To what extent
is that a factor? Yeah? Absolutely, Um, there's a lot of misinformation being spread on TikTok and Instagram especially, UM, and officials are targeting those platforms in particular as they try to spread UM messaging to this demographic to get them vaccinated. UM. But I think more and more what you're going to see, UM is and what we're seeing for other genographics as well. UM as UH these pushes on social media. UM. You know, it's difficult to prove
how effective they are. Is that we're seeing mandates more and more across the country. UM. There are well over six hundred colleges that we know of, UM that are acquiring vacuations in some form for their students. And UM I think that you know, we're going to see these institutions start to clamp down on these issues where messaging
on these platforms just simply can't fill those gaps. Yeah, you know, I know through my involvement with Duke University and know the last spring they made the decision two the kids had to be vaccinated. UM. What are you hearing from universities and from students is or pushback on that. There certainly has been some pushback. UM. There is a group at Virginia Attack in particular, that has gained a lot of UH traction across the states. UM in terms
of signature is on a petition to oppose the vaccine mandate. Um, but colleges are pushing forward and saying that they'll di enroll anyone from the small semester and get vaccinated, And so we'll have to, UM, you know, keep an eye out for um how students either comply with these regulations or or attempt to evade them in some way. UM. But you know we'll see that effect UM in the next couple of weeks or so, as students start with trining to campus. May Rebecca, just in the last thirty seconds.
How are we seeing with this most recent round of the virus? How are we how are we seeing that manifest in younger people who are unvaccinated? Are there an increasing share of people who are sick with the delta variant? Right? Yes, absolutely, UM. You know it's it's difficult to get exact date on
this for that population. UM, but we are hearing from doctors across the country, UM that this population is getting more sick and getting thicker faster than we have been seeing UM with others trains of the virus, and so UM. You know, despite the fact that the population make things that they have a low risk, it seems that that risk may be increasing, and so you know, this is a real problem that a lot of health care officials are trying to target right now, Well, we really appreciate
you joining us and taking the time. But he check out her story available in the terminal at Bloomberg dot com as well. That's Rebecca Torren. She works with the US healthcare team for Bloomberg News. Joining us live from Durham, North Carolina. As I mentioned earlier, there is a new sheriff on Wall Street and his name is Gary Gensler. He's a Chairman of Securities and Exchange Commission, and he's taking a hard look and turning his aim towards the
crypto space. And in a video posted on Twitter earlier, SEC Chair Gary Ginser, he does tell investors in cryptocurrencies to be careful what they invest in. Let's take a lesson to those currently are considering investing in crypto. Please remember not only are they highly spent with avastic class, but there are also significant gaps in the investor protection afforded to you. Those SEC Chair Gary Ginsler, and we have a Bloomberg's story on Mr Gensler looking at crypto.
Let's bring in Pat Regner. He's Markets and Finance edator for Bloomberg Business Week, joining us in our Bloomberg Interactive Broker studio and Ben Bain, financial regulations reporter for Bloomberg News. He's down studios in Washington. Pat, fascinating story here. What are you and Ben taking away from some initial remarks by Mr Gensler about how he's going to take a look and and and potentially regulating crypto. I mean, it looks to us like he's welighing down sort of a
blueprint of what is actually going to be regulated. Uh. You know, Ben and Rob Schmidt in reporting this, one of the things that was a big theme of their conversation is just exactly what does uh the SEC regulate, what's in its purview, what's in others regulators perview, and what uh sort of so far hasn't been established is regulated at all? And and um, Ben, I think you can speak to this. It looks like he's really trying to expand the reach of his his agency. Yeah, that's right.
I mean I think the big takeaway is that he thinks that there's a clear test out there already for whether something is a security and it it works for a cryptocurrency. The same way it works for whether something as a stock or an investment contract. But he thinks that this new technology, the blockchain and everything that goes along with it, does raise some new issues, and he pointed to some specific gaps he mentioned, specifically trading platforms
he has. He says he's asked Congress to maybe grant some new authorities to the SEC or some other federal agency that would allow them to really focus on these crypto exchanges, because they're not like anything that's really ever been around before, um in the sense that you have some of them which are basically people lending crypto back and forth to each other, and others them which which look a lot more like a classic exchange. So he's definitely got as as Pat said, he's kind of laid
the blueprint for what's a pretty comprehensive framework. I think, Ben, what exactly does Gensler inc about cryptocurrencies? Because as you and Robert Schmidt right, this is a guy who actually had twenty nine hours of a blockchain and money course that he developed that a m I T. I mean, what exactly does he think of crypto I think what we took away from the conversation was that he's of two minds. One is that when it comes to the technology,
he's fascinated by it, He's interested in it. He says, it's something to the effect if he leaned into it when he was teaching a course, isn't it for three years, which, by the way, I've gotten millions of views online these courses he gave on the subject. That's one area. On the other hand, he really kept coming back to the idea that now as chair of the SEC, he's focused on protecting investors, and he referred to this space as
the wild West. He doesn't think that there really is the sufficient level of protection that people need, and he said he's gonna level everything that the SEC SEC has to get it there. So, um, he's already got at least seven different areas or initiatives kind of underway, looking at everything from some of these initial coin offerings to
how to handle custody to a bitcoin ETF. Potentially eventually, the SEC is kind of already churning and trying to kind of put something together that he thinks it is going to fill the gaps that are existed. You know, one thing that was really striking to me in this story is that a lot of people have been very in the crypto industry have been very excited about him being at the SEC because he knows so much about it.
And I think the presumption from some people has been, oh, you know, because we understand Uh they're thinking, is that because we understand that being unregulated is core to this, if someone else understands what we're doing, he's going to have light touch regulation. And I think, you know, bless your heart for thinking that if somebody understands your industry
very well, they're not going to want to regulate it. Yeah, and Ben, you know, one of the issues that you point out, and it's just an a vexing one, is kind of, you know, who does regulate what? It feels like I might be kind of a regular regulatory kind of land grab here between the SEC, the CFTC, and whatever new groups Congress may create. This Gainster feel like
the SEC is the proper and primary regulatory body. He didn't go that far to say that the SEC should have say over at all, but what he did say is that when you look across the crypto universe right now, and taking Bitcoin out of that, there's all of these tokens that exist in the world, and a majority of those,
in his eyes are securities. And because their securities, that means that they fall under the SEC's remit and that means that if they're out there and not registering and not trading with the SEC's rules, then they're potentially in
violation um of those rules. And what's really gonna we're gonna see now is how he's going to deal with that, because he's basically laid out the fact, much like his predecessor Jay Clayton did, that this space is existing and kind of this gray area for some, but for others it's actually quite clear. Something if you're raising money for a project and hoping to make more money off of it, that looks a lot like securities to to a regulator like like Gary Ginsler. So we're gonna see what he's
gonna do about it now. Hey Ben, this is not the only thing that is this priority at the SEC, even though it gets a lot of attention. You do note that he's got close to fifty non crypto policy reviews. What's a timeline for any sort of SEC action and and and how would you characterize it as a priority given that he's also focused on U day trading and game Stop and r K goss and and more. Yeah, I mean, I don't think he didn't give us, you know,
a timeframe per se. But while all of those things are certainly priorities, and when you think about all the things that the SEC does, I mean, there are there are areas that touch a lot more people than than Crypto does, no doubt, and those are going to be things that he's going to have to deal with first, um for sure. But he also didn't teach, you know, three years of classes on any of those other things.
So when we were talking to him, we came away with the impression and this is something he's not just thought about extensively, but but he cares about it. I mean, I think he he really seems to have decided that this is something he wants to to get right and he wants to put the energy into. Even if it's not, um, you know, necessarily the biggest market at this point, he clearly thinks it's important. Well, it's a fantastic piece. You can read it now on the Bloomberg and at Bloomberg
dot com. That's Ben Bain, financial regulations reporter for Bloomberg News. He joins US live from studios in Washington. Also with us pat Rickneer, Markets and Finance editor for Bloomberg Business Week, live in the Bloomberg Interactive Broker Studio. It's also Today's Big Take. You can access it at the Bloomberg Terminal and at Bloomberg dot com. This is Bloomberg Business Week with Carol Masser and Bloomberg Quick Takes Tim Stinovan on
Bloomberg Radio. Alright, Bloomberg Business Week brought to you by SEI. Crises and challenges highlight the power of partnership and character work for the common good One Community. Se I go to s e I C dot com slash banks so. Earlier today, State Attorney General Leticia James said that Governor Andrew Cuomo engaged in quote unwanted groping and kissing of current and former state employees, as well as women outside of state government. Governor Cuomo, though, was defiant in his
response to a state report. Uh he denied reports that he created a climate of fear in his office and violated federal and state laws. He did in a press conference this afternoon. Jointing is now as Marty Shanker, Editor at Large for Bloomberg News he's live with us in the Bloomberg Interactive Broker studio. Marty does. Does Governor Cuomo survived this politically? Well, that really does remain to be seen.
You know, if you think back the Access Hollywood tapes we thought would doom the candidacy of Donald Trump, and he became president. So in this political environment, nothing is for sure, all right, So let's walk down the path of it resignation. Judging from the press conference game today, it didn't sound like he's in any mood to resign.
What's your take there, Well, it was what struck out stuck out to me was the sharply produced i mean interspersing photos of himself, um right at the exact time he was speaking in that statement. He was well prepared for this moment um and he is gives no signal that he's going to voluntarily step aside. We knew that the state Attorney General was looking into these claims. Was there anything in that report that was particularly surprising two
us Or to Cuomo? I would imagine not um. The only there were a couple of new allegations, including one about a state trooper on his female state trooper on his secure Aty Force um. But broadly speaking, most of this was in the public domain. UM. Andrew Cuomo did cooperate with the investigation, and his comments are well reflected in it, and he again denies most of these things ever happened. Alright, Albany politics are a world onto its own.
What do you believe there's support for impeachment of Governor Cuomo? Well, I think they're you know, they're well on the way of an impeachment investigation. This report will add to the evidence that they have, have collected and will collect. The question is, though the Democratic leadership, and they are in firm control, have the will to try and remove Governor Cuomo.
In the context of him denying any of this happened, You're also getting Nancy Pelosi and Chuck Schumer and Kristen Gillibrand all calling for his resignation, and it looks like Joe Biden's going to do that late today. Does that matter? Though probably not not to Andrew Cuomo. I mean he um, as you saw us firmly said, Look, this is not about me. This is about the people that stead in New York and I want to continue to do the job for them. What's the next I guess what's the
next domino here? What's the next mile post that we should be looking for in terms of how this may go. Well, you would have to look at the legislature, the Assembly and see how they move forward on the impeachment, investigation and trial, and if they start setting firm deadlines for witnesses and for um uh an actual procedure in the Assembly,
that would be the next step. And the gubnatorial election in any indication that if he doesn't resign, if he's not removed from office, he perhaps would be challenged by somebody who could actually unseat him. Yeah, I think that's quite possible. You know, in a poll in early July showed fully two thirds of New York voters don't want Andrew Cuomo to run again. Um that said, his name recognition and a reservoir of goodwill would make him a formidable candidate for governor in my In my view, what's
the sense of timing here? I mean, is this something that's gonna drag on or or or can in fact the Assembly move quickly? It's gonna drag on, I mean, And you know, it's important to remember that these charges in the laws that were broken or civil laws, not criminal laws. So there will probably be people pursuing similar civil suits against Cuomo, but he is, you know, not charged with any criminal conduct. He mentioned those civil suits
in his press conference today. What should we be be looking for in terms of who's suing him and what they could actually uncover? Well, I'm a result of them. Yeah, he talked about it, and he said that he welcomes his chance in open court to uh get to the truth. Doesn't sound like he wants in any way to settle those claims. So this will drag on. I mean, the courts, even in non COVID times work very slowly, and now
it would be you know, painfully slow. Is Mario Cuomo just kind of a product of his time, maybe, and just maybe in his mind he doesn't think he's doing anything wrong, And that seems to be one of the avenues that that we're hearing that he just doesn't really think what he does. He's a form of affection, for lack of a better word, is in fact, you know,
taken a different way by some of these women. Well, Andrew Cuomo is clearly a product of his family environment that included the former governor, a very close knit Italian family from Queens. You know, I do think the culture has changed from the environment he grew up in. And whether Andrew cuomo Is has has been able to keep up with that change in climate um is a really
good question. But you know, to Paul's point, those moments of his response, that those images that were interspliced at the exact moments where he was describing his own behavior, seemed to show that in his mind, things that he did that he was referring to were part of his normal,
everyday behavior. Things that he did. Yeah, and that was his clear strategy, that the investigators misinterpreted his actions, that they were extremely common, that he's a warm person, that he does it hundreds of times, and no one ever said anything except when these allegations surface. So he was speaking to the public there and trying to tap into the goodwill he generated with his COVID response and for his almost eight years as governor UH. It remains to
be seen whether that's going to work. It certainly does. Marty Shankar as editor at Large at Bloomberg News. He's with us live in the Bloomberg Interactive Broker's studio. Marty thinks so much. I think the big question is what comes next for him, And obviously it doesn't seem like he's in any hurry to uh resigned. And again his tone was defiant today and very clear, and uh, he
certainly got that across. So something that happened to me in my own world in the last year Paul has been that several friends have left New York City and gone to the suburbs. One did it much sooner than the other, the other one they both bought in White Plains, had the toughest time finding a place. They were getting outbid every weekend by people going all cash. Uh, all young families who wanted to leave New York City and get more spaces. More and more people are working from home. Yeah,
it's just extraordinary. We you know, we just sold our our home in North Jersey and it sold very quickly and it just confirmed the really really strong market out there for residents for sellers. Yes, it's a right time to be a sellable. Well, let's get right to it with Stephanie Malio's realtor and founding agent at Compass Real Estate in Short Hills, New Jersey. She joins us on the phone, not from New Jersey today, but from Maryland.
Stephanie was that a fair character is a of the way that you're seeing the market right now in the suburbs. It absolutely is. I am in New Jersey today as a matter of fact, but that's exactly what we've been experiencing in this area. South Orange, Maplewood, Summit, Livingston, Chatham, all all the counties Essex, Morris Union Counties have all seen a tremendous amount of activity from people's kind of accelerating their timeline on maybe they were going to move
in three to five years and now they're moving right now. So, Stephanie, I want to get essentially kind of some of the drivers here. I guess it's it's some combination of boy historically low interest rates and from in the mortgage market, plus the pandemic, and then the need for space and people rethinking working from home and all of that. So as you talk to your clients, what are you hearing
as the primary driver? Well, for a lot of them, they've been working from home, but if they have kids, they've also been schooling from home, and that is really sort of untenable in a one or two better apartment with two adults arrants working from home and one or two kids going from home. It's just not possible. I mean, it's possible, but it's not fun. One of the challenges though, that comes with such a hot market is the people
who are selling needs somewhere else to go. And I wonder when prices just get so high, as they've continued to climb that people who do want to move somewhere else and already own they are priced out of their own area because prices have gone up so much. That's absolutely happening here. But there's been a huge growth of luxury apartment rentals built in the region. Um, anywhere where you could sort of stick a hundred or two hundred
units in a little funny area. UM, people are building them and here they are they're ready, so UM number of people in certain generations that would never have considered renting because it's just sort of against the law to rent and pay somebody else's mortgage. Um, that mindset has changed quite a bit, especially when the tax laws change and you could no longer write off more than ten tho dollars or your property tax. And in this area, yeah, no,
kidding me too. So they're like, you know, let's just take our money off the table. We'll just rent for a year or two. I was just with somebody today who's scaling down from a four million dollar house in Shorthills, thinking they'll rent for a year and see what happens, and maybe they'll buy something smaller and renovated, or maybe they'll relocate. They don't know, but they like the fact that they can be liquid and act quick when they're ready. Stephanie,
what do you think would or will derail this hot market? Um? Well, interest rates going up doesn't help, but often that stimulates people to act because funny enough is interest rates stay very low or when they're declining, everyone thinks they have all the time in the world to find something, and when they go back up, that's when they realized they missed the bottom and oh they better scramble and get in. So some times having low interest rates doesn't spur activity.
But in this time period with school about to start, anyone with children going into school this year, they want to make sure that because are going to be in a seat, and that's not necessarily guaranteed in the suburbs, but I think a lot of people think there's a better likelihood that they'll be in a seat in a classroom with a live teacher in these kind of areas where schools have always been very highly prized and focused on. Have you mentioned a lot of areas that have been
of interest to a lot of people for years. I'm wondering are there areas now that people should be paying attention to If they get priced out of the Summits and the short Hills is well, a lot of those people are actually moving to Harding Township which is also known as NW Vernon, which is very low taxes and very big properties and large homes because they realized that the need to be close to the community is no longer as important to them, so they're more willing to
go sort of a country route as opposed to the suburbs. Where is someone coming out of Brooklyn or Jersey City, they might not be quite prepared for a fifteen minute drive to civilization a like a supermarket, but for someone who's already lived here, they kind of get it. So if they really don't think they need that, they're willing to make that kind of a trade. And especially you've seen a lot of people who normally would be thinking about scaling down at this point or downsizing we call
it right sizing. But they're thinking, you know, let's go to a bigger place where if our kids right out of college, you have to move back in with us again, there's room for them, and let's have a pool to while we're at it, in the jacuzzy, and maybe even a tennis court. My kids are out of the house and they're staying out of the house, and we downsized, and we top tick. The market is kind of what I keep telling myself Stephanie Malio's Real Turn founding agent,
Compass Real Estate Shorthills, New Jersey Office Journal. Yeah but you let me drive. Oh no, no, no, no no, honey, please out of the right revel. I want to drive ball, Just drive baby, good questions trying. This is the drive to the Globe Commune. Thanks, we'll dry up dawn on Bluebird Radio. All right, just drive the clothes boys looking at this market, driving hard to this close the s
and p up seven tenths of one percent. Another big move Nasac a little bit, the soft going up four tenths of one percent, but still a lot of green on this screen. As the market continues to set new all time highs nearly on a daily basis, but I like talking with our next guest because he looks at things a little bit different. He's not just kind of a what I call meat and potato is kind of equity investors. He looks at distress situations, of event driven situations,
some really interesting stuff. George Schultzy, founder Shultz the Asset Management He joins us on the phone from Rybrook, New York. George, thanks so much for joining us here. I mean, a bunch of us knuckleheads. We just throw money on our four one K and put it into you know, Fidelity Contra fund and and and we look back thirty years later and we think we're, you know, kind of legends. You actually look at some really interesting stuff. What do you look at looking at in the market that seemingly
makes new highs every day? Well, thanks for having me. Yeah. The our main focus here at Shulti Asset Management is we're we observe defaults and distress and defaults are really down a lot this year. The economy is doing pretty well, but a lot of it is due to really what we call extreme monetary and fiscal policies, including the FEDS buying a hundred and twenty billion dollars worth of treasuries
and mortgage backed securities each month. So that's really provided a lot of cheap money UM and because of that, companies are meeting their obligations. In the first half of last year, we saw over a hundred billion of defaults. In the first half of this year, it's only been eight point five billion of defaults, and in July there were no defaults at all. As a result, distress bonds only represent two percent of the High Yield Index right now, and the default rate is very low. It's only at
about one versus what's that? What's that Historically that that number jumps out? I mean, is it typically five percent? Ten percent? Yeah, the long term default rate is about three point six percent UM, so it's really low right now. Last year, uh, distress bonds represented of the US High Yield Index, so we're close to the too. Uh, you
know the historic lows here UM. Interestingly, energy is still the highest defaulting industry of almost six six percent in total UM, so it's it's you know, it's been pretty good times in the in the fixed income industry UM, and you're seeing it with low defaults right now. So what happens when the FED stops what happens when the era of low interest rates and accommodative monetary policy comes to an end. Well, there's really no way to predict.
But last time the Fed tried to stop, you had this taper tantrum where there was a dramatic market sell off and that forced the Fed back into qui um. So we think right now the bigger and the bigger risk is really inflation because it'll be very difficult for the Fed to get out of, you know, such accommodative policies, and and you know, the core liery to all this
good news is inflation. Um. We seem to be going from one major crisis to the next, and each time there's a bigger and bigger money printing bail out um. So really the only way to repay all this debt is through monetizing it with with inflation by printing more. All right, So what do you guys at Choltzi do that again? Looking at the distressed market, where do you
go for opportunities? So in our in our approach as tsa management, we looked before, during, and after distress um, and in times like this, when distress is low, when default rates are very low, we focus on those companies that were previously distressed, that were distressed, that had distressed debt, but then restructured that that where the former lenders and bondholders got new equity UM and and many times those companies can be value investment equities UM and sometimes they
they have interesting events that drive them closer and closer to fair value. Give us some examples of those. Well, one large one that uh, you know recently went through distress and still has elements of distress is Pacific Gas and Electric. In just a few days to talk about pg NY, I'm the Californian so followed the company closely. Um and look, it's been in a tough I mean, we could do a whole show on pg NY with it's with regard to the fires and and the bankruptcy.
Yeah yeah, but but the the situation, you know, they're they're still making headlines and you know, you're in wild fire season right now. But really, with the new laws that were passed in California as well as the restructuring that occurred, we think it's positioned much more favorably going forward. And ultimately when they bury all their their lines, that
will ultimately be paid for by Californian citizens. So the company will continue to become a much safer and safer utility going forward, although you'll still see these occasional you know, news stories about you know, terrible events and and and and issues as they transition. And with that usually we think there's a pretty good buying opportunity with the stock. How about do you look at the municipal bomb market thing in areas like Puerto Rico for example, Yeah, so
that's a that's the largest municipal bankruptcy. Ever, Puerto Rico is still winding its way through bankruptcy. We expect that they'll vote on their disclosure statement UM this November and probably you know, most of Puerto Rico will start to emerge from bankruptcy in the first half of next year. There'll be some assing opportunities there as that island continues to recover UM. Unfortunately, the democratic the democratic graphic trends
in Puerto Rico have been very difficult. But I think with all the debt release will be getting with their with the reorganization, will be some new opportunities there as well. So the demographic trend is that just is that people moving out, is that aging, It's both more people moving out though on the island of Puerto Rico, it's a you know, people have been looking for opportunity elsewhere because it's been under such distress for such a long period
of time. Hey, how are you feeling about the health of the economy. We get the jobs report on Friday and there's sort of these competing signals that that we're seeing. Right, We're seeing equity markets continue to climb the record high as we said, though in the fixed income market we see concerns about growth. Uh, and I just wonder how you characterize it. So the economy is doing well, Um, we've really recovered a lot from the dog days of COVID now when the dog days of the summer, I guess.
But you know, going forward, I think most you know economists are expecting near double digit growth into the third quarter. So things are looking pretty good. The question now is, you know, how does the FED get out of supporting the whole market with the d and twenty billion of asset purchases per month. And as they you know, as they try to taper that or wind it down, could there be a market sell off for an impact overall
into the economy. So so What you really need is a transition from all this governmental spend, not just monetary stimulus but also fiscal stimulus with the infrastructure spend that's coming through, and you need to try to convert that back into the private sector um and that'll be interesting to see how that evolves. I think going forward, you know, beyond this year and into next, you know, the comparisons will be more difficult, and uh, you know, with luck though,
we'll continue to see some growth. Yeah, fingers crossed, certainly. George Schulty, it is always great to speak with you. Thank you so much for taking the time, Founder of Chaltz Asset Management. He joins us on the phone, as he always does, from Rye Brook, New York.