1 00:00:02,640 --> 00:00:05,360 Speaker 1: Welcome to the Bloomberg Penl Podcast. I'm Paul swing you. 2 00:00:05,360 --> 00:00:07,760 Speaker 1: Along with my co host Lisa Brahmas. Each day we 3 00:00:07,880 --> 00:00:10,440 Speaker 1: bring you the most noteworthy and useful interviews for you 4 00:00:10,560 --> 00:00:12,640 Speaker 1: and your money. Whether at the grocery store or the 5 00:00:12,680 --> 00:00:16,000 Speaker 1: trading floor. Find a Bloomberg Penl podcast on Apple podcast 6 00:00:16,160 --> 00:00:18,080 Speaker 1: or wherever you listen to podcasts, as well as at 7 00:00:18,079 --> 00:00:22,360 Speaker 1: Bloomberg dot Com. We talked about the lack of coherence 8 00:00:22,520 --> 00:00:24,799 Speaker 1: in markets. We're seeing that across the board at a 9 00:00:24,880 --> 00:00:29,440 Speaker 1: time when America's cities are dealing with the unrest, the 10 00:00:29,480 --> 00:00:31,160 Speaker 1: likes of which we have not seen since the late 11 00:00:31,240 --> 00:00:35,519 Speaker 1: nineties sixties. We also see split fates among corporate America, 12 00:00:35,600 --> 00:00:38,640 Speaker 1: with the haves and the have nots, the haves being 13 00:00:38,680 --> 00:00:42,040 Speaker 1: able to borrow virtually for free, and the have nots 14 00:00:42,159 --> 00:00:44,960 Speaker 1: going bankrupt. Joining us right now is Molly Smith, the 15 00:00:45,000 --> 00:00:48,680 Speaker 1: corporate finance reporter for Bloomberg News, the latest Amazon dot 16 00:00:48,760 --> 00:00:52,760 Speaker 1: Com borrowing money basically for free for three years. I 17 00:00:52,800 --> 00:00:57,080 Speaker 1: mean really, I'm paying what twenty basis points above treasuries 18 00:00:57,240 --> 00:01:00,440 Speaker 1: to borrow this amount of money? Molly, what do we 19 00:01:00,480 --> 00:01:04,680 Speaker 1: know so far about this amount? So this is Amazon 20 00:01:04,720 --> 00:01:07,360 Speaker 1: actually set a few records yesterday, not just on the 21 00:01:07,440 --> 00:01:10,280 Speaker 1: three year, also for seven, ten, and forty year debt 22 00:01:10,880 --> 00:01:14,400 Speaker 1: that these premiums are just mean, I feel weird calling 23 00:01:14,400 --> 00:01:16,840 Speaker 1: it a premium. There's hardly one of any there. This 24 00:01:16,920 --> 00:01:20,040 Speaker 1: is more or less a treasury bond, or perhaps even 25 00:01:20,160 --> 00:01:24,240 Speaker 1: less in some cases. So it's uh, it's pretty impressive 26 00:01:24,280 --> 00:01:27,240 Speaker 1: to see how Amazon was able to do this yesterday. 27 00:01:27,240 --> 00:01:29,520 Speaker 1: But again, like you said, so just really speak to 28 00:01:29,560 --> 00:01:33,280 Speaker 1: the divide in the market right now that Amazon Convertual 29 00:01:33,520 --> 00:01:36,560 Speaker 1: can borrow for basically nothing, while you know, there are 30 00:01:36,560 --> 00:01:38,919 Speaker 1: so many companies that don't have any bond market access 31 00:01:38,959 --> 00:01:41,840 Speaker 1: at all right now. So Molly, you have a great 32 00:01:41,920 --> 00:01:44,759 Speaker 1: chart in your article kind of looking at the high 33 00:01:44,840 --> 00:01:47,680 Speaker 1: grade barring costs, and it's almost back to where it 34 00:01:47,800 --> 00:01:51,720 Speaker 1: was pre pandemic. Is this just simply the market saying, 35 00:01:52,520 --> 00:01:56,200 Speaker 1: you know, the Federal Reserve has our back here very much. 36 00:01:56,240 --> 00:01:58,640 Speaker 1: So yes, so we can think that said for not 37 00:01:58,760 --> 00:02:01,760 Speaker 1: only the rally here in spreads, which is the reflection 38 00:02:01,800 --> 00:02:04,480 Speaker 1: of the demand and the secondary market, but also for 39 00:02:04,520 --> 00:02:06,960 Speaker 1: all the issuance we've seen in the primary market that 40 00:02:07,400 --> 00:02:11,040 Speaker 1: last week we hit the one trillion dollar annual issue, 41 00:02:11,080 --> 00:02:14,040 Speaker 1: and for the fastest rate ever last year. We didn't 42 00:02:14,040 --> 00:02:17,240 Speaker 1: get through that until November. So, uh, the said has 43 00:02:17,240 --> 00:02:20,160 Speaker 1: been there for both supply and demand, and it's really 44 00:02:20,200 --> 00:02:23,639 Speaker 1: just opened up a ton of issuance on this Matthew rally. 45 00:02:23,800 --> 00:02:28,680 Speaker 1: So the trillion dollars that investment grade corporate corporations have 46 00:02:28,800 --> 00:02:31,680 Speaker 1: borrowed in the first couple of months of the year, 47 00:02:32,000 --> 00:02:34,720 Speaker 1: I'm wondering what people think. Is this to continue or 48 00:02:34,840 --> 00:02:39,440 Speaker 1: is this just basically the largest best capitalized companies creating 49 00:02:39,520 --> 00:02:43,720 Speaker 1: war stashes of cash just in case things deteriorate. So 50 00:02:43,760 --> 00:02:45,920 Speaker 1: it's a lot of that, a lot of companies, like 51 00:02:46,000 --> 00:02:49,000 Speaker 1: you said, capitalizing on these low interest rates. It's also 52 00:02:49,040 --> 00:02:51,799 Speaker 1: been a lot of companies that genuinely do need the 53 00:02:51,880 --> 00:02:55,640 Speaker 1: money and are still investment grade rated, like Carnival and 54 00:02:55,720 --> 00:03:00,000 Speaker 1: Marriott UM hardly a borrower of an Amazon kind of status, 55 00:03:00,040 --> 00:03:03,160 Speaker 1: but nonetheless are still rated investment grade and that they've 56 00:03:03,200 --> 00:03:06,120 Speaker 1: come to the market as well. But uh, most strategies 57 00:03:06,200 --> 00:03:08,680 Speaker 1: are seeing that this is going to slow down a 58 00:03:08,680 --> 00:03:10,800 Speaker 1: lot in the second half of the year. That so 59 00:03:10,919 --> 00:03:14,359 Speaker 1: much of what we've seen largely been pulled forward from 60 00:03:14,360 --> 00:03:16,560 Speaker 1: what would have been uh in the second half of 61 00:03:16,560 --> 00:03:19,480 Speaker 1: the year. So we're probably going to see issuance slow 62 00:03:19,520 --> 00:03:22,360 Speaker 1: down some say, I think of America maybe even just 63 00:03:22,400 --> 00:03:25,000 Speaker 1: two hundred billion dollars of issuance in the last six 64 00:03:25,040 --> 00:03:28,639 Speaker 1: months smally in terms of use of proceeds, are most 65 00:03:28,639 --> 00:03:32,640 Speaker 1: companies here refinancing existing debt or are they just as 66 00:03:32,639 --> 00:03:35,960 Speaker 1: at least with steching, you know, taking down debt bolstering 67 00:03:36,000 --> 00:03:38,840 Speaker 1: up putting cash on their balance sheet. Here, it's a 68 00:03:38,840 --> 00:03:41,280 Speaker 1: little bit of both. So we've seen a ton of 69 00:03:41,320 --> 00:03:47,240 Speaker 1: companies to liability management exercises in UH in tandem with 70 00:03:47,320 --> 00:03:51,280 Speaker 1: these bond offerings, so they'll issue new debts hopefully and 71 00:03:51,440 --> 00:03:55,360 Speaker 1: use those proceeds to take out debt that's coming up 72 00:03:55,640 --> 00:03:58,800 Speaker 1: in UH in new in upcoming years. So we've seen 73 00:03:58,840 --> 00:04:02,760 Speaker 1: a lot of those concurrent bond offerings and tender offers together. 74 00:04:03,080 --> 00:04:04,960 Speaker 1: But then there are a lot of companies, like you said, 75 00:04:04,960 --> 00:04:07,480 Speaker 1: all that are just they need the money and they're 76 00:04:07,520 --> 00:04:09,839 Speaker 1: just trying to have the war chest now and who 77 00:04:09,880 --> 00:04:12,400 Speaker 1: knows what's in front of us, So it's a combination 78 00:04:12,440 --> 00:04:15,960 Speaker 1: of both. Molly, the last time Amazon dot Com borrowed 79 00:04:16,000 --> 00:04:18,920 Speaker 1: money was ahead of their acquisition of Whole Foods. Now 80 00:04:19,000 --> 00:04:21,480 Speaker 1: they're raising ten billion dollars at a time when they 81 00:04:21,480 --> 00:04:24,000 Speaker 1: don't exactly need a ton of cash. It's not as 82 00:04:24,040 --> 00:04:27,039 Speaker 1: if their business model is struggling right now. Do we 83 00:04:27,120 --> 00:04:31,640 Speaker 1: have any idea of whether they're planning another acquisition? Uh, 84 00:04:31,880 --> 00:04:34,680 Speaker 1: they could be, and I believe that's what our analysts 85 00:04:34,680 --> 00:04:38,479 Speaker 1: at Bloomberg Intelligence uh speculate could be something that they're 86 00:04:38,520 --> 00:04:43,400 Speaker 1: thinking about. Amazon also did borrow in in um, a 87 00:04:44,080 --> 00:04:47,000 Speaker 1: smaller offering than this one, but like you said, yes, 88 00:04:47,040 --> 00:04:50,479 Speaker 1: they've been a pretty infrequent borrower and the one that's 89 00:04:50,480 --> 00:04:52,919 Speaker 1: really of note was for the Whole Foods acquisition. So 90 00:04:53,480 --> 00:04:55,960 Speaker 1: it's hard to tell beyond what they said is just 91 00:04:56,040 --> 00:04:59,240 Speaker 1: general corporate purposes as far as what this ten billion 92 00:04:59,279 --> 00:05:03,560 Speaker 1: dollars maybe used for. Smally, how far how broad is this? 93 00:05:03,720 --> 00:05:06,559 Speaker 1: Uh you know kind of uh rallying the bond market, 94 00:05:06,920 --> 00:05:09,560 Speaker 1: new insurance market going down in terms of credit quality, 95 00:05:09,560 --> 00:05:12,000 Speaker 1: we're seeing a lot of investment grade issues issuance where 96 00:05:12,000 --> 00:05:14,720 Speaker 1: does it kind of get dicey here for an issuer? 97 00:05:16,160 --> 00:05:18,960 Speaker 1: So the high old market has definitely been open to 98 00:05:19,440 --> 00:05:22,120 Speaker 1: some of those custody or borrowers, like you said, even 99 00:05:22,200 --> 00:05:26,960 Speaker 1: just today we're seeing some the like MGM uh, which 100 00:05:27,000 --> 00:05:30,159 Speaker 1: is actually just the reek connected to the casinos is 101 00:05:30,160 --> 00:05:33,200 Speaker 1: borrowing in the high old market. We also have Sick Goes, 102 00:05:33,240 --> 00:05:37,000 Speaker 1: the US refinery unit of Pita Vesa so and outside 103 00:05:37,000 --> 00:05:38,840 Speaker 1: of that, just more largely, we've seen a lot of 104 00:05:38,839 --> 00:05:42,640 Speaker 1: issuance from hotels, casinos, a lot in the travel leisure 105 00:05:42,680 --> 00:05:47,359 Speaker 1: sector more broadly. That really speaks to those sectors that, um, 106 00:05:47,400 --> 00:05:49,919 Speaker 1: that need the cash right now. They're not looking to 107 00:05:50,000 --> 00:05:52,440 Speaker 1: refinance that, they just need the money wherever they can 108 00:05:52,480 --> 00:05:54,520 Speaker 1: get it from. Although let's be clear, some of the 109 00:05:54,520 --> 00:05:57,800 Speaker 1: lower rated borrowers aren't exactly getting the best deals in 110 00:05:57,839 --> 00:05:59,760 Speaker 1: the world. It's not like they're borrowing for free, right. 111 00:05:59,760 --> 00:06:01,840 Speaker 1: I mean, we've seen them pledge islands. We've seen them, 112 00:06:02,279 --> 00:06:05,760 Speaker 1: you know, pledge cruise ships. We've seen them pledge you know, 113 00:06:05,960 --> 00:06:08,479 Speaker 1: the clothes in their closet. I mean, at a certain point, 114 00:06:09,160 --> 00:06:13,159 Speaker 1: their ability to borrow isn't necessarily testament to a great 115 00:06:13,200 --> 00:06:16,719 Speaker 1: desire for their debt correct, correct, you know. And that's 116 00:06:16,720 --> 00:06:18,640 Speaker 1: a great point at Lisa, And yeah, and that's even 117 00:06:18,720 --> 00:06:20,800 Speaker 1: and that's what's more remarkable, like you said, is that 118 00:06:20,839 --> 00:06:26,960 Speaker 1: these are secured offerings, so there is some physical collateral protection, um, 119 00:06:27,000 --> 00:06:29,360 Speaker 1: you know, like an island in the case of Norwegian. Uh. 120 00:06:29,800 --> 00:06:32,360 Speaker 1: But it's like you said, most of these deals, they're 121 00:06:32,360 --> 00:06:35,440 Speaker 1: coming at double digit interest rates. We've seen some think, 122 00:06:35,640 --> 00:06:37,760 Speaker 1: off the top of my head, up to fourteen percent 123 00:06:38,200 --> 00:06:41,120 Speaker 1: yields on some of these, which was I believe that 124 00:06:41,200 --> 00:06:44,280 Speaker 1: was Landry's, which is the operator of a casino and 125 00:06:44,520 --> 00:06:48,400 Speaker 1: restaurant empire. So we've seen well into the double digit 126 00:06:48,480 --> 00:06:50,880 Speaker 1: interest rates, and like you said, these are hardly coming 127 00:06:50,920 --> 00:06:54,400 Speaker 1: for free for some of the more challenge companies. Molly Smith, 128 00:06:54,400 --> 00:06:56,440 Speaker 1: thanks much for joining us. Molly Smith is a corporate 129 00:06:56,440 --> 00:06:59,080 Speaker 1: finance reporter for Bloomberg News. Brings us up to day 130 00:06:59,160 --> 00:07:00,720 Speaker 1: on what has just been in a short and your 131 00:07:00,880 --> 00:07:03,840 Speaker 1: new issue market, particularly in the investment grade market. Lisa 132 00:07:03,839 --> 00:07:06,719 Speaker 1: a year today hitting that trillion dollar mark, uh, the 133 00:07:06,760 --> 00:07:10,560 Speaker 1: earliest on record just recently. So again, if you need 134 00:07:10,680 --> 00:07:13,960 Speaker 1: cash in your investment grade rated uh, boy, now is 135 00:07:14,000 --> 00:07:16,800 Speaker 1: the time. Yeah. I can just already hear people saying 136 00:07:16,920 --> 00:07:20,360 Speaker 1: bur like the cash printing machine that the Federal Reserve 137 00:07:20,600 --> 00:07:23,160 Speaker 1: is making. I mean, that's essentially what a lot of 138 00:07:23,160 --> 00:07:26,040 Speaker 1: people are attributing this to. Given how much the Feds 139 00:07:26,080 --> 00:07:29,040 Speaker 1: actions stepping in saying that they're going to buy corporate 140 00:07:29,080 --> 00:07:33,000 Speaker 1: debt for the first time in its history, pushing down 141 00:07:33,280 --> 00:07:36,560 Speaker 1: yields considerably near their all time lows now for investment 142 00:07:36,600 --> 00:07:39,680 Speaker 1: grade companies. Still, however, the question in my mind is 143 00:07:40,120 --> 00:07:43,920 Speaker 1: at what point do investors start to price in the 144 00:07:43,960 --> 00:07:46,560 Speaker 1: fact that the FEDS actions will not prevent certain companies 145 00:07:46,560 --> 00:07:49,560 Speaker 1: from going bankrupt? Yeah? Absolutely, Looking at just the ten 146 00:07:49,640 --> 00:07:51,800 Speaker 1: year yield on the treasures right now, the it's down 147 00:07:51,800 --> 00:07:54,080 Speaker 1: three thirty seconds, pushing to yield up just slightly to 148 00:07:54,640 --> 00:07:58,120 Speaker 1: uh point six. Let's call it point six on the 149 00:07:58,160 --> 00:08:05,400 Speaker 1: tenure treasure just extraordin. We have been wondering about the 150 00:08:05,520 --> 00:08:08,040 Speaker 1: disparities that we have been seeing in the job market, 151 00:08:08,200 --> 00:08:10,120 Speaker 1: with some of the job losses in the wake of 152 00:08:10,120 --> 00:08:15,600 Speaker 1: the coronavirus hammering the Black and Latino communities disproportionately. This 153 00:08:15,800 --> 00:08:18,560 Speaker 1: just has come to the fore as the unrest in 154 00:08:18,600 --> 00:08:22,000 Speaker 1: America cities gets harder and harder to combat. Joining us 155 00:08:22,080 --> 00:08:25,120 Speaker 1: right now is John Stroyer, chief executive officer of Calvert 156 00:08:25,200 --> 00:08:28,840 Speaker 1: Research and Management. I want to know from your perspective, 157 00:08:28,880 --> 00:08:33,120 Speaker 1: you say that ending racism is the responsibility of corporations. 158 00:08:33,240 --> 00:08:36,079 Speaker 1: Why do you say that? Thanks for having me on 159 00:08:36,320 --> 00:08:40,880 Speaker 1: and and certainly we've given corporations a significant amount of 160 00:08:40,960 --> 00:08:45,800 Speaker 1: power in the United States. They inform innumerable social and 161 00:08:46,040 --> 00:08:50,320 Speaker 1: environmental outcomes. So as a result of having that power, 162 00:08:50,640 --> 00:08:54,040 Speaker 1: which has been something they've acquired over time, they have 163 00:08:54,120 --> 00:08:59,839 Speaker 1: a responsibility to help solve these types of issues. Additionally, 164 00:09:00,440 --> 00:09:04,680 Speaker 1: their ability to take action and to drive positive social 165 00:09:04,800 --> 00:09:09,320 Speaker 1: change is a significant driver for their brand value and 166 00:09:09,360 --> 00:09:13,080 Speaker 1: their attractiveness and reputation as a provider of products and 167 00:09:13,120 --> 00:09:19,760 Speaker 1: services as also as an employer. So they have that responsibility, 168 00:09:19,880 --> 00:09:22,280 Speaker 1: they've taken it, and they've got to take action to 169 00:09:22,360 --> 00:09:25,640 Speaker 1: help solve this. John, how about the counter argument that 170 00:09:25,679 --> 00:09:31,360 Speaker 1: the responsibility of a company is to maximize shareholder profits. Well, 171 00:09:31,400 --> 00:09:33,800 Speaker 1: I think there's a tie in here, because you know, 172 00:09:34,080 --> 00:09:38,160 Speaker 1: society that is destabilized as results of civil and rest, 173 00:09:38,760 --> 00:09:46,040 Speaker 1: which is an outcome of excessive inequality GDP, is suboptimal. 174 00:09:46,480 --> 00:09:50,760 Speaker 1: So I do think that companies working to solve this 175 00:09:50,840 --> 00:09:54,920 Speaker 1: problem will be able to see a benefit to long 176 00:09:55,080 --> 00:09:59,200 Speaker 1: term value creation. I don't really think there's a conflict here, 177 00:09:59,679 --> 00:10:02,160 Speaker 1: although markets may disagree, and I'm thinking of Facebook and 178 00:10:02,200 --> 00:10:05,960 Speaker 1: Twitter in particular, and not necessarily on the racism question, 179 00:10:06,040 --> 00:10:09,400 Speaker 1: but certainly on interfering and sort of making a judgment 180 00:10:09,480 --> 00:10:13,040 Speaker 1: call when it comes to how people are using their platforms. 181 00:10:13,080 --> 00:10:16,480 Speaker 1: Facebook aired on the side of not really interfering, and 182 00:10:16,480 --> 00:10:19,440 Speaker 1: Twitter has loved a number of labels with warnings on 183 00:10:19,480 --> 00:10:23,160 Speaker 1: it for a number of different leaders recently including President Trump. 184 00:10:23,600 --> 00:10:26,959 Speaker 1: How can this not necessarily be what we're looking at 185 00:10:27,080 --> 00:10:30,120 Speaker 1: longer term in terms of the benefit and attractions and interfering, 186 00:10:30,120 --> 00:10:32,320 Speaker 1: because right now it seems like Facebook is one and 187 00:10:32,360 --> 00:10:36,600 Speaker 1: Twitter is lost. Well, certainly in the short term, anything 188 00:10:36,679 --> 00:10:40,280 Speaker 1: can happen with with security prices. UM. What we think 189 00:10:40,320 --> 00:10:43,960 Speaker 1: about is long term value creation and what happens over 190 00:10:44,000 --> 00:10:47,320 Speaker 1: a slightly longer time period. And I think it also 191 00:10:47,360 --> 00:10:51,960 Speaker 1: extends well beyond social media. UM. Two companies that are 192 00:10:52,000 --> 00:10:55,880 Speaker 1: doing business in in in every community. And I'm not 193 00:10:55,920 --> 00:10:58,520 Speaker 1: sure that you know Twitter has won or lost or 194 00:10:58,559 --> 00:11:02,640 Speaker 1: Facebook and Water loss. It's way too soon to tell. So, John, 195 00:11:02,760 --> 00:11:05,840 Speaker 1: this discussion, your argument per se, seems to fit into 196 00:11:05,840 --> 00:11:09,120 Speaker 1: the E s G kind of discussion environmental, social and 197 00:11:09,160 --> 00:11:12,440 Speaker 1: governance that a lot more investors are paying attention to 198 00:11:12,559 --> 00:11:15,720 Speaker 1: in their securities analysis. How do you think this fits 199 00:11:15,720 --> 00:11:19,400 Speaker 1: into kind of E s G and overall analysis? Well, 200 00:11:19,400 --> 00:11:25,480 Speaker 1: companies today UM are all striving to prove their capabilities 201 00:11:25,520 --> 00:11:29,280 Speaker 1: on diversity and inclusion, whether that's t E s G 202 00:11:29,440 --> 00:11:33,360 Speaker 1: investors or whether that's to the workplace of today in 203 00:11:33,400 --> 00:11:36,920 Speaker 1: the future. So this is uh. This is a square 204 00:11:36,960 --> 00:11:41,760 Speaker 1: on E s G issue, and investors and asset owners 205 00:11:42,240 --> 00:11:47,040 Speaker 1: really expect companies to provide the necessary information so we 206 00:11:47,080 --> 00:11:50,040 Speaker 1: know how they're really doing. And let me relate this 207 00:11:50,200 --> 00:11:54,880 Speaker 1: to financial returns. Today, the demographics of the country that 208 00:11:55,080 --> 00:11:59,280 Speaker 1: really shifted and changed. We have a much larger Black population, 209 00:11:59,280 --> 00:12:03,920 Speaker 1: of much larger Hispanic population, and educational attainment across the 210 00:12:03,960 --> 00:12:08,560 Speaker 1: board in minority groups is going up. So we want 211 00:12:08,720 --> 00:12:12,000 Speaker 1: companies to be able to draw from a broad labor pool. 212 00:12:12,160 --> 00:12:15,480 Speaker 1: We want companies to be able to achieve the benefits 213 00:12:15,520 --> 00:12:19,920 Speaker 1: of diversity and inclusion. From an E s G investor's perspective, though, 214 00:12:20,280 --> 00:12:24,240 Speaker 1: we need data from companies to really assess how they're 215 00:12:24,280 --> 00:12:28,080 Speaker 1: doing and for companies to be able to be attractive 216 00:12:28,600 --> 00:12:33,120 Speaker 1: workplaces for Blacks, Force band X, for Asians, for all 217 00:12:33,200 --> 00:12:36,200 Speaker 1: people of color, and for everybody. They have to do 218 00:12:36,360 --> 00:12:40,520 Speaker 1: a good job helping to actually use their voice and 219 00:12:40,640 --> 00:12:44,080 Speaker 1: solve these larger social issues. So it's a square on 220 00:12:44,280 --> 00:12:47,760 Speaker 1: E s G issue. By the way, I think the 221 00:12:47,840 --> 00:12:51,000 Speaker 1: E s G investing community needs to do a lot 222 00:12:51,080 --> 00:12:55,079 Speaker 1: more to push companies to help solve these problems and 223 00:12:55,440 --> 00:12:59,160 Speaker 1: provide us the data that we need to know what 224 00:12:59,280 --> 00:13:04,280 Speaker 1: outcomes are really achieving through these diversity and inclusion programs. John, 225 00:13:04,559 --> 00:13:07,720 Speaker 1: your position a top Calvert Research Management which was acquired 226 00:13:07,720 --> 00:13:10,440 Speaker 1: by eat Advance and overseas nearly twenty billion dollars with 227 00:13:10,480 --> 00:13:13,959 Speaker 1: this focus on E s G is admirable, and I 228 00:13:14,000 --> 00:13:15,760 Speaker 1: would love to see some of the things that you're 229 00:13:15,760 --> 00:13:18,559 Speaker 1: talking about come to fruition. What are you looking for 230 00:13:19,040 --> 00:13:23,800 Speaker 1: with respect to corporations steps that are meaningful towards ending racism? 231 00:13:23,800 --> 00:13:28,240 Speaker 1: What can they actually do well? Racism is tied up 232 00:13:28,280 --> 00:13:33,959 Speaker 1: with inequality, and inequality in this country is deeply embedded 233 00:13:34,200 --> 00:13:38,960 Speaker 1: and starts with inequality of opportunity at every level. So 234 00:13:39,160 --> 00:13:41,920 Speaker 1: there are a number of things that companies are responsible 235 00:13:42,000 --> 00:13:46,839 Speaker 1: for doing. And they said a first thing is disclosure, 236 00:13:46,880 --> 00:13:51,640 Speaker 1: providing us the real information about the demographics of their workplace, 237 00:13:52,000 --> 00:13:55,439 Speaker 1: who has what jobs, so that we know how well 238 00:13:55,520 --> 00:14:00,640 Speaker 1: the company is doing there. Next, creating attractive training and 239 00:14:00,679 --> 00:14:06,200 Speaker 1: development programs for people of color and for um people 240 00:14:06,200 --> 00:14:10,720 Speaker 1: who have not had those opportunities in the educational system 241 00:14:10,920 --> 00:14:14,880 Speaker 1: is critical. Being able to develop talent across the board 242 00:14:15,160 --> 00:14:19,480 Speaker 1: is essential UM. I think also working with the educational 243 00:14:19,520 --> 00:14:23,280 Speaker 1: system in the communities where these companies draw from and 244 00:14:23,360 --> 00:14:28,440 Speaker 1: helping to create equal opportunity in the educational system is 245 00:14:28,480 --> 00:14:31,400 Speaker 1: also critical. And if you think about it, companies in 246 00:14:31,440 --> 00:14:37,720 Speaker 1: America need to have a well educated workforce across every demographic. 247 00:14:38,120 --> 00:14:41,000 Speaker 1: So there are a number of things that companies need 248 00:14:41,120 --> 00:14:45,360 Speaker 1: to do in order to secure their place in the 249 00:14:45,440 --> 00:14:49,480 Speaker 1: labor market and to help improve the workforce. So it 250 00:14:49,520 --> 00:14:51,520 Speaker 1: isn't just what they should do, it's what they need 251 00:14:51,560 --> 00:14:53,920 Speaker 1: to do. Hey, John, thanks so much for joining us. 252 00:14:53,960 --> 00:14:57,840 Speaker 1: We appreciate that John Strayer uh CEO of Calvert Research 253 00:14:57,920 --> 00:15:00,680 Speaker 1: and Management with that nineteen billion dollar dollars in assets 254 00:15:00,720 --> 00:15:03,440 Speaker 1: on the management based in Bethesda, talking about racism and 255 00:15:03,480 --> 00:15:06,280 Speaker 1: the role that corporations have Lisa, and it kind of 256 00:15:06,280 --> 00:15:08,160 Speaker 1: goes back to that E s G discussion, is we 257 00:15:08,200 --> 00:15:11,600 Speaker 1: think about UM companies holistically and their impact on their environment. 258 00:15:11,880 --> 00:15:13,600 Speaker 1: It also goes to some of the comments that we've 259 00:15:13,640 --> 00:15:16,360 Speaker 1: heard out of the chief executives from everyone from City 260 00:15:16,360 --> 00:15:19,640 Speaker 1: Group to JP Morgan to black Rock in response to 261 00:15:19,680 --> 00:15:23,600 Speaker 1: the protests really coming out in solidarity with the cause, 262 00:15:23,760 --> 00:15:30,360 Speaker 1: certainly not the violence, but the cause. Then everything that's 263 00:15:30,360 --> 00:15:33,120 Speaker 1: been going on, Paul, we have not discussed one area 264 00:15:33,160 --> 00:15:35,040 Speaker 1: of the market that was super hot a couple of 265 00:15:35,080 --> 00:15:38,280 Speaker 1: years ago, and that is the crypto assets sector, and 266 00:15:38,360 --> 00:15:41,800 Speaker 1: it has actually been on fire, with Bitcoin rallying above 267 00:15:41,840 --> 00:15:45,840 Speaker 1: ten thousand dollars once again and it has gained forty 268 00:15:46,080 --> 00:15:49,080 Speaker 1: percent more than that so far this year. Let's talk 269 00:15:49,120 --> 00:15:52,520 Speaker 1: about digital gold with maltolm Demers, chief strategy officer with 270 00:15:52,560 --> 00:15:55,200 Speaker 1: coin Shares Group, which has about seven fifty million dollars 271 00:15:55,240 --> 00:15:58,000 Speaker 1: in the digital space, joining us from London, Maltham, thank 272 00:15:58,000 --> 00:15:59,920 Speaker 1: you so much for being with us. Can you talk 273 00:16:00,120 --> 00:16:03,720 Speaker 1: about bitcoin and it's use or just a crypto assets 274 00:16:03,720 --> 00:16:08,520 Speaker 1: sector in general. It's use is digital gold right now, absolutely, 275 00:16:08,560 --> 00:16:11,840 Speaker 1: and thanks for having me on. So it's really interesting 276 00:16:11,880 --> 00:16:14,760 Speaker 1: to be living in this time right now. Bitcoin with 277 00:16:14,880 --> 00:16:18,040 Speaker 1: a product of the last financial crisis. As some of 278 00:16:18,080 --> 00:16:19,760 Speaker 1: us who been the been in the space for a 279 00:16:19,800 --> 00:16:23,760 Speaker 1: while they know, the Bitcoin white paper was written in 280 00:16:23,760 --> 00:16:26,800 Speaker 1: two thousand nine and the network launched in two thousand ten. 281 00:16:27,280 --> 00:16:31,520 Speaker 1: We're now eleven years into sort of the Bitcoin story 282 00:16:32,000 --> 00:16:34,920 Speaker 1: and we're seeing bitcoin really come of age. And mature 283 00:16:35,120 --> 00:16:38,920 Speaker 1: in this financial crisis we're going through right now, particularly 284 00:16:38,920 --> 00:16:41,520 Speaker 1: as we've seen over the last three months, a lot 285 00:16:41,600 --> 00:16:45,000 Speaker 1: of risk, a lot of uncertainty, and investors really starting 286 00:16:45,040 --> 00:16:49,080 Speaker 1: to look at the investing landscape and reevaluating how they 287 00:16:49,080 --> 00:16:53,360 Speaker 1: want to be allocated going into the next year and beyond. 288 00:16:53,840 --> 00:16:57,680 Speaker 1: So the investment community obviously still has a lot of 289 00:16:57,760 --> 00:17:01,400 Speaker 1: mixed views on bitcoin. Some and assement firms and investment 290 00:17:01,440 --> 00:17:04,640 Speaker 1: managers have made big strides into the sector and are 291 00:17:04,680 --> 00:17:08,160 Speaker 1: offering products and services to their clients. Where one example, 292 00:17:08,280 --> 00:17:11,320 Speaker 1: we come from the commodity space as a team that 293 00:17:11,400 --> 00:17:13,639 Speaker 1: have been in the digital assets space for the last 294 00:17:13,680 --> 00:17:18,840 Speaker 1: seven years now. Other firms, most notably Goldman's wealth management team, 295 00:17:18,880 --> 00:17:22,040 Speaker 1: have been less than hot on crypto assets. But one 296 00:17:22,080 --> 00:17:26,479 Speaker 1: thing is sure, every investor is talking about bitcoin, getting 297 00:17:26,480 --> 00:17:29,679 Speaker 1: smart on crypto assets and starting to develop a perceptive 298 00:17:29,760 --> 00:17:33,080 Speaker 1: and really trying to figure out where bitcoin might fit 299 00:17:33,160 --> 00:17:37,159 Speaker 1: into their portfolio going forward. So it's an exciting time. 300 00:17:37,680 --> 00:17:41,240 Speaker 1: It's been a really wild time, and we're really excited 301 00:17:41,280 --> 00:17:47,000 Speaker 1: about the intelligent conversation we see developing around bitcoin, digital assets, 302 00:17:47,040 --> 00:17:50,080 Speaker 1: and this technology more broadly. So, maltime you mentioned the 303 00:17:50,080 --> 00:17:52,160 Speaker 1: Golden Report, I remember when I came out and caused 304 00:17:52,200 --> 00:17:54,520 Speaker 1: some waves here sometize what Goldman was saying there and 305 00:17:54,560 --> 00:17:59,120 Speaker 1: whether kind of what if you agree or disagree with them? Absolutely, 306 00:17:59,400 --> 00:18:01,960 Speaker 1: so it's import to know. UM. The report was issued 307 00:18:02,000 --> 00:18:05,560 Speaker 1: by one of Goldman's chief investment officers, who has been 308 00:18:05,800 --> 00:18:08,480 Speaker 1: an analyst of a lot of different trends in the 309 00:18:08,520 --> 00:18:11,480 Speaker 1: investing space UM, and I think it was an interesting 310 00:18:11,520 --> 00:18:14,880 Speaker 1: summary because it really used what's happening in macro markets 311 00:18:14,960 --> 00:18:17,480 Speaker 1: was happening in gold as a way to flame why 312 00:18:17,520 --> 00:18:20,919 Speaker 1: they felt bitcoin was not a great investment, UM, not 313 00:18:21,040 --> 00:18:24,320 Speaker 1: a great long term value investments for investors. The way 314 00:18:24,400 --> 00:18:28,360 Speaker 1: they described bitcoin, which I think was an interesting characterization. 315 00:18:28,880 --> 00:18:32,200 Speaker 1: They talked a lot about issues pertaining to money laundering, 316 00:18:32,560 --> 00:18:35,280 Speaker 1: and as we know, Goldman has itself been dealing with 317 00:18:35,320 --> 00:18:38,720 Speaker 1: a number of issues related to money launderings following the 318 00:18:38,760 --> 00:18:41,960 Speaker 1: fallout of the one MDB scandal and the other aspects. 319 00:18:42,040 --> 00:18:44,600 Speaker 1: That was interesting is in this report they not only 320 00:18:44,640 --> 00:18:48,480 Speaker 1: mentioned that they felt bitcoin was really just purely speculative 321 00:18:48,560 --> 00:18:52,520 Speaker 1: and not really fundamental value investment, they also made a 322 00:18:52,600 --> 00:18:55,280 Speaker 1: similar assessment of gold, where they stated they did not 323 00:18:55,440 --> 00:18:59,760 Speaker 1: feel that gold was a significant investment opportunity for investors, 324 00:19:00,119 --> 00:19:02,560 Speaker 1: and as we look at what's happened to those, both 325 00:19:02,560 --> 00:19:05,320 Speaker 1: the price Schoold and the price of bitcoin, I think 326 00:19:05,359 --> 00:19:08,639 Speaker 1: here is an interesting instance where the market certainly is 327 00:19:08,680 --> 00:19:13,560 Speaker 1: indicating it's not in agreement with that particular assessment. But then, 328 00:19:14,600 --> 00:19:16,879 Speaker 1: to be fair, though, I think they're not alone in 329 00:19:16,960 --> 00:19:19,639 Speaker 1: saying that right there especially, I mean, I leave gold decide, 330 00:19:19,640 --> 00:19:22,199 Speaker 1: But when it comes to crypto assets, Colman sacs Uh 331 00:19:22,359 --> 00:19:25,119 Speaker 1: certainly has plenty of company and saying it's a speculative asset. 332 00:19:25,160 --> 00:19:27,560 Speaker 1: Considering the fact that people are not using it the 333 00:19:27,600 --> 00:19:31,400 Speaker 1: way that they would another currency, what's the counter argument 334 00:19:31,720 --> 00:19:35,080 Speaker 1: to why this has staying power in a way that 335 00:19:35,160 --> 00:19:39,400 Speaker 1: goes beyond what some people are saying. Sure, I think 336 00:19:39,400 --> 00:19:42,320 Speaker 1: there's been a lot of great rebuttals written by the 337 00:19:42,400 --> 00:19:45,720 Speaker 1: industry that use a great set of data. I think 338 00:19:46,040 --> 00:19:48,159 Speaker 1: there's a lot of evidence to the contrary, and we 339 00:19:48,280 --> 00:19:50,800 Speaker 1: have coined share and a lot of time surfacing that 340 00:19:50,960 --> 00:19:54,119 Speaker 1: data and sharing it with our investors, our clients in 341 00:19:54,119 --> 00:19:56,160 Speaker 1: the market. But I think there are a few key 342 00:19:56,200 --> 00:19:59,000 Speaker 1: trends here on bitcoin is being used and the way 343 00:19:59,040 --> 00:20:01,960 Speaker 1: it's being used by people. It's being used as a 344 00:20:02,000 --> 00:20:05,199 Speaker 1: hedge against inflation and as a long term store values. 345 00:20:05,560 --> 00:20:08,399 Speaker 1: There are more people than ever that whold bitcoin in 346 00:20:08,440 --> 00:20:12,159 Speaker 1: their investment accounts, whether that's through a structured product like 347 00:20:12,200 --> 00:20:16,360 Speaker 1: our xbt provider products or the gray Scale GBTC products. 348 00:20:16,400 --> 00:20:19,080 Speaker 1: Here in the US, there are a lot of bitcoin 349 00:20:19,119 --> 00:20:22,520 Speaker 1: wallets that have been created and that number continues to increase. 350 00:20:23,080 --> 00:20:26,240 Speaker 1: The bitcoin that's held in those wallets of staying dormant, 351 00:20:26,280 --> 00:20:29,640 Speaker 1: meaning people aren't speculating on it, they're really holding it. 352 00:20:30,119 --> 00:20:33,320 Speaker 1: And then most importantly, we've seen just a tremendous number 353 00:20:33,359 --> 00:20:36,880 Speaker 1: of inflows into bitcoin over the last two months alone. 354 00:20:37,320 --> 00:20:41,480 Speaker 1: One interesting fact over the last two months, the demand 355 00:20:41,560 --> 00:20:46,000 Speaker 1: for bitcoin has outpaced its supply. Uh So, as you know, 356 00:20:46,320 --> 00:20:50,359 Speaker 1: bitcoin has a daily production of new bitcoins through an 357 00:20:50,359 --> 00:20:53,640 Speaker 1: activity is called mining. And in the last two months alone, 358 00:20:53,680 --> 00:20:57,280 Speaker 1: the amount of investor demands for bitcoin through things like 359 00:20:57,359 --> 00:21:00,880 Speaker 1: squares cash app, Gray Scales, GBTC product US, and our 360 00:21:01,040 --> 00:21:04,720 Speaker 1: XPT Provider products, which is an exchange traded product, there 361 00:21:04,760 --> 00:21:07,720 Speaker 1: has been a hundred and fifty per cent demand for 362 00:21:07,920 --> 00:21:11,280 Speaker 1: bitcoin that exceeds the supply being produced, which to me, 363 00:21:11,520 --> 00:21:15,760 Speaker 1: again is a very bullish indicator. We're also seeing investors 364 00:21:15,880 --> 00:21:18,760 Speaker 1: on the trading side, taking a lot of interest. H 365 00:21:18,800 --> 00:21:22,719 Speaker 1: The Ciene Bitcoin futures contrast broke all time high in 366 00:21:22,760 --> 00:21:25,200 Speaker 1: the last month in terms of outstanding up an interest 367 00:21:25,240 --> 00:21:27,439 Speaker 1: on the platform, and at the end of May we 368 00:21:27,480 --> 00:21:29,840 Speaker 1: saw one day where we had over a billion dollars 369 00:21:29,840 --> 00:21:32,280 Speaker 1: of traded volume, which is an all time high for 370 00:21:32,320 --> 00:21:35,760 Speaker 1: that particular product. Meltem thank you so much for joining us. 371 00:21:35,800 --> 00:21:38,520 Speaker 1: Meltem demere she's a chief strategy officer for coin Shares 372 00:21:38,520 --> 00:21:41,760 Speaker 1: group of seven million dollars in digits in the digital space, 373 00:21:41,800 --> 00:21:45,040 Speaker 1: based in London, giving us the latest on Bitcoin which 374 00:21:45,160 --> 00:21:49,000 Speaker 1: is rolling as Lisa mentioned earlier, and all things in 375 00:21:49,040 --> 00:21:53,320 Speaker 1: the crypto space. Trying to get greater credibility in financial markets. 376 00:21:53,359 --> 00:21:55,439 Speaker 1: It looks like they're having some success. Looking at the 377 00:21:55,440 --> 00:22:00,919 Speaker 1: price of bitcoin, busy, busy, moreing here. We're taking a 378 00:22:00,960 --> 00:22:04,920 Speaker 1: look here at an interesting story that we are seeing 379 00:22:04,920 --> 00:22:08,520 Speaker 1: from Bloomberg Business Week about private equity firms. They've been 380 00:22:08,520 --> 00:22:11,760 Speaker 1: really big investors in the hospital business, and they've also 381 00:22:11,880 --> 00:22:15,600 Speaker 1: been beneficiaries of some of the bailout money. David Kaczynski, 382 00:22:16,000 --> 00:22:18,840 Speaker 1: Bloomberg Business Week reporter, joins us. David, thanks so much 383 00:22:18,920 --> 00:22:23,520 Speaker 1: for joining us. I think he's getting up right now. 384 00:22:23,560 --> 00:22:25,840 Speaker 1: But it really is an interesting focal point because private 385 00:22:25,880 --> 00:22:28,359 Speaker 1: equity was sort of carved out of a lot of 386 00:22:28,400 --> 00:22:31,800 Speaker 1: the programs passed by the federal government, with them saying 387 00:22:32,119 --> 00:22:35,080 Speaker 1: that they do not want these firms to be beneficiaries, 388 00:22:35,119 --> 00:22:37,800 Speaker 1: and yet they have been such huge investors in the 389 00:22:37,840 --> 00:22:41,040 Speaker 1: healthcare industry and hospitals in particular, that there's been an 390 00:22:41,119 --> 00:22:45,480 Speaker 1: extra emphasis Paul on on on how to parse out 391 00:22:45,640 --> 00:22:49,200 Speaker 1: the healthcare considerations with the efforts on the part of 392 00:22:49,280 --> 00:22:52,320 Speaker 1: lawmakers and others to keep money away from private equity. Yeah, 393 00:22:52,320 --> 00:22:56,359 Speaker 1: so let's welcome David and David Kozski. Bloomberg business Week reported, David, 394 00:22:56,359 --> 00:22:58,199 Speaker 1: thanks so much for joining us here. Lisa and I 395 00:22:58,240 --> 00:23:02,399 Speaker 1: were just talking about your story here. Private equity really 396 00:23:02,440 --> 00:23:06,280 Speaker 1: investing in the hospital business and they've received some bailout money. 397 00:23:06,400 --> 00:23:08,480 Speaker 1: Give us a sense of kind of the scope and 398 00:23:08,680 --> 00:23:11,920 Speaker 1: scale of this, Well, well, the scope is still being 399 00:23:12,240 --> 00:23:15,359 Speaker 1: we're still kind of digging through the numbers. Um. You know, 400 00:23:15,440 --> 00:23:19,119 Speaker 1: there was concern when the administration and amongst some lawmakers 401 00:23:19,160 --> 00:23:21,679 Speaker 1: about private equity not getting bailout money and trying to 402 00:23:21,680 --> 00:23:26,320 Speaker 1: target that money towards the needier healthcare companies. However, we 403 00:23:26,440 --> 00:23:28,960 Speaker 1: found there's this tranch of loans. It was a hundred 404 00:23:28,960 --> 00:23:34,120 Speaker 1: billion dollars in uh interest free loans that hhs UM 405 00:23:34,119 --> 00:23:37,440 Speaker 1: decided to give out in late March and early April, 406 00:23:37,920 --> 00:23:40,680 Speaker 1: and well none of it wouldet went directly to private 407 00:23:40,680 --> 00:23:45,320 Speaker 1: equity companies. UM. The portfolio medical care companies they owned 408 00:23:45,560 --> 00:23:48,840 Speaker 1: got more than one point five billion dollars. So can 409 00:23:48,920 --> 00:23:50,960 Speaker 1: you walk us through how they managed to get this 410 00:23:51,119 --> 00:23:55,240 Speaker 1: where the money went, especially given some of the sentiment 411 00:23:55,320 --> 00:23:57,280 Speaker 1: that you talked about trying to keep money away from 412 00:23:57,560 --> 00:24:01,879 Speaker 1: private equity back firms. Well, all the big boys got it, 413 00:24:01,920 --> 00:24:06,840 Speaker 1: you know, Apollo Global, KKR, UM, Cerebrius, UH, you know 414 00:24:06,920 --> 00:24:11,760 Speaker 1: those those UM private equity firms have been buying huge 415 00:24:11,800 --> 00:24:15,560 Speaker 1: stakes in medical care companies and in physicians staffing companies 416 00:24:15,920 --> 00:24:18,480 Speaker 1: over the past few years. UM, and it was easy 417 00:24:18,560 --> 00:24:20,760 Speaker 1: for them to get it. UM. You know. Hhs I 418 00:24:20,960 --> 00:24:24,800 Speaker 1: interviewed them of Verma, who is the administrator of CMS, 419 00:24:24,840 --> 00:24:28,360 Speaker 1: which is the eight the Health and Human Services department 420 00:24:28,440 --> 00:24:30,960 Speaker 1: that the administer the loans, and she said they didn't 421 00:24:31,000 --> 00:24:34,600 Speaker 1: ask who the who the ultimate owners are anyone who 422 00:24:34,600 --> 00:24:37,880 Speaker 1: wanted money and said, hey, we're gonna be losing UM 423 00:24:38,000 --> 00:24:41,200 Speaker 1: We're gonna be losing uh some income because of the 424 00:24:41,240 --> 00:24:44,520 Speaker 1: elective surgery being banned during the COVID crisis. You just 425 00:24:44,560 --> 00:24:47,959 Speaker 1: put an application and they FEDS would send them, um, 426 00:24:48,000 --> 00:24:51,240 Speaker 1: you know, in some cases hundreds of millions of dollars 427 00:24:51,240 --> 00:24:55,160 Speaker 1: to the subsidiaries of the private equity firms. David, I'm 428 00:24:55,160 --> 00:24:57,879 Speaker 1: curious there has been an emphasis by private equity firms 429 00:24:57,960 --> 00:25:03,800 Speaker 1: to take stakes in hospitals that provide lucrative, lucrative operations 430 00:25:03,840 --> 00:25:06,560 Speaker 1: such as the elective procedures that have been put on 431 00:25:06,640 --> 00:25:10,040 Speaker 1: halt by the pandemic. Has this been one of the 432 00:25:10,080 --> 00:25:12,879 Speaker 1: main sources of hurt at a time when hospitals are 433 00:25:12,880 --> 00:25:15,800 Speaker 1: there at the very epicenter of treating and caring for 434 00:25:15,840 --> 00:25:17,520 Speaker 1: a lot of the people out there who are struggling 435 00:25:17,560 --> 00:25:21,760 Speaker 1: with the effects of COVID. Yeah, you know, elective surgery 436 00:25:21,760 --> 00:25:24,399 Speaker 1: as a profit center for every uh, you know, for 437 00:25:24,480 --> 00:25:28,080 Speaker 1: most medical providers. UM, you know. But what's interesting about 438 00:25:28,119 --> 00:25:30,639 Speaker 1: this is that, you know, it also hurts some of 439 00:25:30,640 --> 00:25:33,359 Speaker 1: the safety net hospitals, you know, the ones who deal 440 00:25:33,840 --> 00:25:37,080 Speaker 1: with you know, who don't have the billions of dollars 441 00:25:37,080 --> 00:25:41,120 Speaker 1: in cash reserve that Apollo does or that KKR does. Um. 442 00:25:41,200 --> 00:25:44,440 Speaker 1: So some of these safety net hospitals actually were unable 443 00:25:44,480 --> 00:25:47,080 Speaker 1: to apply because the money was gone so many that 444 00:25:47,320 --> 00:25:51,160 Speaker 1: so many of the big UM for profit UM hospital 445 00:25:51,200 --> 00:25:54,000 Speaker 1: companies UM, the corporate owns and the and the private 446 00:25:54,040 --> 00:25:56,760 Speaker 1: equities got in there, got all the money and they 447 00:25:56,760 --> 00:26:01,320 Speaker 1: struggling providers weren't able to get money in time. So, 448 00:26:01,800 --> 00:26:05,919 Speaker 1: UM it is a problem. And unfortunately HHS didn't do 449 00:26:06,119 --> 00:26:08,119 Speaker 1: much to target the money towards those who needed it 450 00:26:08,200 --> 00:26:12,320 Speaker 1: the most. So how have they done just overall in 451 00:26:12,359 --> 00:26:16,680 Speaker 1: the hospital business of private equity firms? You know, UM, 452 00:26:17,200 --> 00:26:20,040 Speaker 1: I think they're they're in the past ten years, they've 453 00:26:20,080 --> 00:26:21,560 Speaker 1: made a lot of money. I think in the last 454 00:26:21,640 --> 00:26:24,320 Speaker 1: year or so, there's been some problem with KKR and 455 00:26:24,359 --> 00:26:27,919 Speaker 1: black Stone because they're under fire for the surprise billing 456 00:26:28,000 --> 00:26:33,840 Speaker 1: scandal UM or surprise building issue where the staff um 457 00:26:33,960 --> 00:26:37,600 Speaker 1: network in network emergency rooms and surgical centers with out 458 00:26:37,600 --> 00:26:40,240 Speaker 1: of staff out of network doctors. So if you go 459 00:26:40,280 --> 00:26:43,639 Speaker 1: and get a surgery, may think you're covered for the room, 460 00:26:43,680 --> 00:26:45,720 Speaker 1: but you'll later get a surprise bill for you know, 461 00:26:45,800 --> 00:26:48,560 Speaker 1: sometimes tens of thousands of dollars from the surgeon who 462 00:26:48,600 --> 00:26:51,240 Speaker 1: was out of network. There's been such a public outcry 463 00:26:51,280 --> 00:26:54,320 Speaker 1: about that that Congress has been pushing to ban it, 464 00:26:54,760 --> 00:26:59,440 Speaker 1: and KKR and Blackstone, who are the two biggest um 465 00:26:59,560 --> 00:27:03,560 Speaker 1: UH companies. They own Team Health and Envision, which are 466 00:27:03,560 --> 00:27:05,119 Speaker 1: the companies which are at the center of this. They 467 00:27:05,200 --> 00:27:07,960 Speaker 1: spent millions of dollars trying to fight that off UM 468 00:27:08,040 --> 00:27:10,320 Speaker 1: that they have been struggling because there is a sense 469 00:27:10,359 --> 00:27:12,920 Speaker 1: that the public outcry is going is going to UM 470 00:27:13,040 --> 00:27:15,720 Speaker 1: lead to a restriction on that. But overall they've made 471 00:27:16,400 --> 00:27:20,000 Speaker 1: UM it's been a hugely profitable sector for private equity. 472 00:27:20,119 --> 00:27:23,880 Speaker 1: We're speaking with David Kochanski, reporter for Bloomberg business Week, 473 00:27:23,880 --> 00:27:27,000 Speaker 1: and David just sort of tie this all together. Why 474 00:27:27,240 --> 00:27:31,560 Speaker 1: is there so much opposition to private equity among hospital ownerships. 475 00:27:31,840 --> 00:27:34,600 Speaker 1: I'm just trying to figure out whether they have acted 476 00:27:34,760 --> 00:27:38,600 Speaker 1: worse than any other hospital operator or investor given the 477 00:27:38,640 --> 00:27:42,720 Speaker 1: fact that these issues have been considered endemic throughout the 478 00:27:42,840 --> 00:27:47,720 Speaker 1: entire industry. Well, I think it's hard to paint things 479 00:27:47,760 --> 00:27:50,320 Speaker 1: with a broad brush UM, but I do think if 480 00:27:50,359 --> 00:27:54,439 Speaker 1: you look at the actions of the individual companies, some 481 00:27:54,520 --> 00:27:57,040 Speaker 1: of them have been at the forefront of the biggest 482 00:27:57,640 --> 00:28:01,600 Speaker 1: UM and what are considered the most predatory UM actions 483 00:28:01,640 --> 00:28:05,800 Speaker 1: like the like this surprise billing UH situation. UM. We 484 00:28:05,880 --> 00:28:09,560 Speaker 1: also mentioned Cerebraus, which owned which got tens of millions 485 00:28:09,560 --> 00:28:12,760 Speaker 1: of dollars in UM low interest loans. You know they 486 00:28:12,800 --> 00:28:16,200 Speaker 1: have bought UH. There's a hospital in eastern Pennsylvania that 487 00:28:16,400 --> 00:28:18,840 Speaker 1: they have been trying to sell and in the middle 488 00:28:18,840 --> 00:28:21,119 Speaker 1: of the COVID crisis they threatened to close it down 489 00:28:21,200 --> 00:28:24,320 Speaker 1: unless they were given millions of dollars from the government 490 00:28:24,359 --> 00:28:28,800 Speaker 1: of Pennsylvania. UM. So there isn't there is a sense that, well, 491 00:28:29,119 --> 00:28:33,040 Speaker 1: you know that the healthcare UH system in the US 492 00:28:33,080 --> 00:28:37,880 Speaker 1: has been UM, you know, been costs of reason above 493 00:28:37,920 --> 00:28:41,080 Speaker 1: the costs of inflation for years, that private equity has 494 00:28:41,280 --> 00:28:46,920 Speaker 1: in some instances used more um hard hardball tactics in 495 00:28:47,000 --> 00:28:50,280 Speaker 1: terms of billing and in terms of suing low income 496 00:28:50,320 --> 00:28:54,280 Speaker 1: people who can't pay the bills. Yeah, Davidki, thank you 497 00:28:54,320 --> 00:28:56,720 Speaker 1: so much for being with US reporter for Bloomberg Business 498 00:28:56,720 --> 00:29:00,240 Speaker 1: Week talking about a story about private equities involved meant 499 00:29:00,280 --> 00:29:03,000 Speaker 1: with the hospital system and the receiving of some of 500 00:29:03,000 --> 00:29:05,840 Speaker 1: the bailout money that the US has provided, even though 501 00:29:05,880 --> 00:29:08,800 Speaker 1: there was a whole effort to have private equity firms 502 00:29:08,840 --> 00:29:11,560 Speaker 1: not benefit from that. But Paul really highlighting one of 503 00:29:11,560 --> 00:29:15,080 Speaker 1: the key flashpoints heading into the election and beyond, which 504 00:29:15,160 --> 00:29:17,960 Speaker 1: is the rise of private equity, the rise of the alternative, 505 00:29:18,000 --> 00:29:23,120 Speaker 1: alternative investment community, where in some ways the lending the 506 00:29:23,240 --> 00:29:26,680 Speaker 1: risk the shadow banking system has expanded as the traditional 507 00:29:26,720 --> 00:29:29,760 Speaker 1: investment banks continue to pull back in terms of size 508 00:29:29,840 --> 00:29:32,960 Speaker 1: and risk taking. So a lot of questions going forward 509 00:29:33,000 --> 00:29:35,800 Speaker 1: about how that will be translated into policy as well 510 00:29:35,800 --> 00:29:39,920 Speaker 1: as some of the political backdrop. Thanks for listening to 511 00:29:39,920 --> 00:29:42,360 Speaker 1: the Bloomberg P and L podcast. You can subscribe and 512 00:29:42,360 --> 00:29:45,520 Speaker 1: listen to interviews at Apple Podcasts or whatever podcast platform 513 00:29:45,560 --> 00:29:48,680 Speaker 1: you prefer. Paul Sweeney, I'm on Twitter at pt Sweeney. 514 00:29:48,720 --> 00:29:51,000 Speaker 1: I'm Lisa abram Woyds. I'm on Twitter at Lisa A. 515 00:29:51,000 --> 00:29:53,800 Speaker 1: Bramwoit's one before the podcast. You can always catch us 516 00:29:53,920 --> 00:29:55,480 Speaker 1: worldwide on Bloomberg Radio.