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George Schultze 2_Track1

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And so, to explain more about the government shutdown in USA, and its impact on the markets, we have live from New York, George Shultze founder and CEO of Shultze Asset Management. Hello and welcome George. First, let me ask you about the democrats position towards a solution to the budget so do you think they are taking advantage of the government shutdown and the budget situation to put pressure on republicans on certain files like immigrants or health insurance files? Yes, we have entered now our third day of government shutdown in the US. and what will happen is they will offer compromises like having an appropriation bill for 2 years as the military expenditure and budget will change as you know, Immigration issues also affected discussion of budget. The Republican considers that democrats has the majority of members in comparison to the small group of people that are affected by immigrants issue. It's possible to that the congress will change roles and increase its 51% vote requirements, this could happen George, do you think the shutdown today is different with Trump in the office? Would it have been different with Obama, Clinton, Bush, Reagan or any former presidents when we witnessed a government shutdown? Yes, we had 18 government shutdowns since 1977 and the average duration for a US shutdown was 10 days but it's important to know that essential services won't be shut for example, law enforcement and military services are both kept and mandatory programs too that were agreed upon by the government like health care and social insurance expenditure, are not affected. Without a saying, this affects the markets but in this year's shutdown, it will be the lowest impact Okay George, what do you think is the worst case scenario in that case? Is it that the shutdown continues longer or there are worse scenarios or maybe other circumstances that may have a role and make the situation harder for the current US administration? So it's possible that it goes on for a number of days but what our audience should know is that US economy is big, 19 trillion USD, and so we have 147-170 billion employees, and 27 million are government employees. So even if all government services shutdown for a few weeks the whole impact on the US net economy will be limited. As I mentioned previously, most of the cases that we witnessed a shutdown the government offered compromises, and reopened its facilities in less than 10 days. We consider this is already happening, we heard today the political comments in which everyone is looking for a settlement, and likely we are going to have one, if we don't reach a settlement... this may continue to February, and then the congress will change the rates where they decrease it from 60% to 51%. This is unlikely but it's considerable, and the point is to resume work in Washington DC. The US president is a republican, and they control the congress but a lack of consensus might rise. And it's mainly because this 61% in the congress but the bigger wider impact on US economy will be very little. We saw an increase in stocks, and an increase in fixed income dividends, good growth, more tax reforms were passed. Generally, US economy is doing good, we even expect stock increase as we move forward in US. So George, this means you are not changing your strategies... of investment or trade in Schultze Asset Management? I think that's right, passive management in an environment like this where we witness change in taxes and also change in different sectors where we might suffer losses due to tax bills change, due... to the taxes implied on foreign income, If we compare that to energy sector where we see a huge decrease in interest rates and ability to expand even in digging operations, this will strengthen and boost US economy as we move forward, and so we think that the current administration approach is going to be better this year than past years. Too many changes to US economy and this latest partial shutdown, which wasn't expected by most. The main trend in US economy leans towards that fixed income and its dividends aren't promising, with interest rate hike compared to decreasing quantitative easing and turning to quantitative reform on one hand, on the other hand, we have an environment that encourages tax depreciation, and steering away from organizational inflexibility. Yes, we will witness such change even on structural level. And in the next 10 days, we will even see a change in appropriations bills, which will lead to an increase in the markets Thanks to George Schultze, he is the CEO and founder of Schultze Asset Management.

Video Details

Duration: 6 minutes and 39 seconds
Country: Andorra
Language: Arabic
License: Dotsub - Standard License
Genre: None
Views: 20
Posted by: wskolnick on Mar 5, 2018

George Schultze 2_Track1

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