Bloomberg Businessweek Weekend - April 15th, 2022

edition of Bloomberg Business Week. It was a shortened holiday trading week chuck full of news on inflation and big bank earnings, while the war in Ukraine marked the beginning of its eighth week. With that is our backdrop. Coming up, we're going to hear from the former finance Minister of Ukraine as the Kremlin sees peace talks at a dead end.

Tim also ahead the CEO of Lamborghini on his company's response to that war in Ukraine and the luxury car maker's plan to deal with rising prices and supply chain. Snacks and speaking of cars, our cover story in this week's double issue of Bloomberg Business Week magazine looks at Ford's plan to tackle Tesla's dominance when it comes to electric vehicles. All of that to come. We begin with the ongoing war in Ukraine. Now the Durasco is the

former Ukraine Minister of Finance. She held that post from sixteen during the initial Russian invasion occupation of Ukraine. She currently serves as executive director of Puerto Rico's Financial Oversight and Management Board. She joined us to discuss the future of Ukraine's economy. With Russia reportedly set to ramp up attacks on eastern Ukraine, Ukrainians are actually, you know, facing this with immense courage, and that courage is leading them

to start rebuilding. So even in the towns of Ping and Buscha that have been destroyed recently, the work has begun already to remove debris, to build back the bridge that had been blown up, to restore, rebuild electricity, heat and water. The government is focused on getting planting started.

This is the spring planting season for agriculture. As you know, Ukraine is one of the largest agricultural exporters in the world, and businesses are moving facilities to western Ukraine where the war has not had as much of an impact, and

restarting manufacturing to the extent that they canada. So what you're seeing is this kind of response to the horrors and the tragedies with even greater courage and intent should we build we knew and normalize and so I think it's it's it's an amazing combination of of human dignity encourage. It's like hard to even get your head around that, right, I'm kind of in awe right that they're planning for the future and you know, moving forward, um with so

many questions till yet to be answered. Natalie. I know your focus is, you know, economic and financial situations, but obviously all of that weaves into politics, military, economy, it's all interwoven. Having said that, how do you see this situation overall? Is the West at war with Russia already? Well, I think the important thing, Carol, is that Putin is that war with the West already, and he always has been,

and he's been very clear about it. And so whether or not any of our Western allies believe that they are or not, the fact is that Putin believes he is, and so we are all in this together. This is about his attempt is not only to destroy Ukraine, which is clear a genocide of the Ukrainian people, which he's had published in articles, but it's also about destroying the liberal world order, the democratic world that we all take for granted every day and that enables us to live

in in peace and freedom. And so we are fighting an autocrat who wishes to destroy our system. And that's why, that's why, you know, in the end, it really is up to all of the allies, up to the democratic nations of the world, to support Ukraine in this battle, because Ukraine has to prevail. If Ukraine does not prevail, we as a democratic world do not prevail. At this point, Can the Ukrainian president say, yep, I'm willing to give up this or if he does, is that a loss

for the West overall? And and then it just means we will probably see President Putin come back in another aggressive mood sometime and move in sometime in the future. Well, I think that that's exactly what's happened. We all kind of said, just sit back. After he invaded an illegally annexed Crimea, then he invaded Gunbas. We held them to the line for eight years, but the war continued and it was not enough. Putin's aims are not territorial. Russia

is an enormous country. It doesn't require any more territory force, population or frizz economy, this is not about territory, and um, I think the core thing for Western countries and for

all of us is to enable Ukraine to prevail. And and that you know, that doesn't mean that they shouldn't be diplomatic talks, but it means that we should focus on giving Ukraine the weapons they need to defeat and to prevail in this war, the sanctions to reduce UH, the Russian ability to finance the war, getting our businesses to boycott the Russian economy and not finance this war against Ukraine, and then with that leverage, if in with

that leverage, when they're prevailing, talks can take place and something can be achieved in those diplomatic talks. So be it pieces always welcome. But the first thing to focus on is not the talks and the outcome of the talks. The first thing is to focus on getting Ukraine strong enough to prevail with weapons, sanctions and boycott and then UH and then hoping that that enables talks to be successful. Okay, Natalie, does anybody anymore stand between the world and Vladimir Putin?

Does anyone standing between I think there are those who are trying not to choose, and I think that it's it's it's quite sad if you look at a country like India, one of the largest greatest democracies in the world. Um, they're abstaining on critical Uan votes, and they are continuing to trade with Russia. They're continuing to buy Russian oil. They're continuing to avoid applying any sanctions. That was Natalie Torresco. She's the former Ukraine Minister of Finance. Him. She's got

a fascinating background story. Yes she does. You know. She was born here in the US to Ukrainian parents. She was educated here in the US. After college, she worked for the US government, but then moved to Ukraine and she was working there with a hedge fund for years. So her insight on Ukraine is just incredible. Find out the latest though on the war in Ukraine. Just head to Bloomberg dot com. Coming up next, we're going to turn our attention to the world a big tech and

a big name in the world of Twitter. It's not here's a hint. Well, I'm just gonna tell you it's not Elon Musk. We're actually talking about Jack Dorsey, remember him, Uh, yeah, you know, he and he and Elon Musk starting to see eye to eye when it comes to one thing bitcoin. Right, Yeah, why the ex social media boss is now trying to become bitcoin spiritual leader. You're listening to Bloomberg Business Week. This is Bloomberg. This is Bloomberg Business Week with Carol

Messer and Bloomberg Quick Takes Tim Skinovik from Bloomberg Radio. Alright, for all of you have been listening and watching Bloomberg and reading stories on the Bloomberg terminal. You know that Wall Street investors have complained for years that Jack Dorsey has been unfocused and unsuited to managing publicly traded companies. Well, Dorsey apparently agrees with some of his critics. The CEO of block that's formally known as Square, I follow Square

a lot. Cal It's hard for me to call meta Facebook two or Facebook meta that is, so you can tell. And x CEO of Twitter as of late last year, he's got no intention of focusing though on his duties in the C suite. Instead, he's become obsessed with bitcoins. Just a little bit for more and white Elon Musk's buddy is gazing into the future with laser eyes. We turned to Bloomberg News technology reporter Kurt Wagner, who joined us along with Bloomberg business Week editor Jill Weber. He

is going all in on bitcoin. The artwork and the story is amazing. We get the big red leaser rise. Uh well you know, maybe not not yet though, Um, the implant phase it might still be coming, uh except on Twitter. But but Kurt, what is it? What is it all about? Like? What led to this transformation? I mean obviously he just left Twitter and just not that long ago, and in that time he has gone full bitcoin. Yeah. I think what started this whole idea was sort of

looking at, you know, what comes next for this guy? Right? I mean, he's he's founded these two really successful companies. Um, he's kind of a controversial guy. He's he's sort of Um, despite all the that's been written about him and how prominent he is publicly, he still feels a little misunderstood. Right. And so there was this idea that I was going into this like, Okay, what's the next phase of Jack's life?

And every single person I talked to was just like one word bitcoin, right, Like he is just fully invested, Um, he's emotionally invested. I got the sense that that was maybe even why he left Twitter, was that he was just no longer interested kind of dealing with the headache of running that company, and he was like, why would I do this when I could be doing bitcoin instead? And so this whole kind of, um, you know, focus

on bitcoin started to really materialize. And then as I started talking to people about why he was in the bitcoin I feel like that's where it all started to fit into place. Here. It just fits a lot of the things that he truly cares about, um And and you know, it's just he's he's become the face of this kind of movement, and I just find it really interesting. And you we said bitcoin, full bitcoin, but not full crypto, right, Why why is he so for for full bitcoin but

maybe not the rest of the landscape, that's right? Yeah, he In fact, he tweeted I don't like cryptocurrencies, which is kind of funny, right because he's the face of probably the most prominent one. But um, you know, for him, one of the things that's so appealing to bitcoin is this idea of real decentralization. Right, there is no company

that controls bitcoin, it's not regulated by the government. These are all things that he is believe it or not, against even though he was just recently the CEO of two publicly traded companies. Is just very against this idea of authority and power being controlled by any one person or company. And so I think that appeals to him

with Bitcoin in particular. And I think what he sees as a lot of these other cryptos are being backed by you know, venture capitalist and recent Horwitz been the most famous one, and he sees this idea of like, hey, people think these things are decentralized, but really they're being controlled by all the same vcs and power brokers that kind of control the Internet today, right, And so that's why he's so focused on just this bitcoint thing, and he kind of feuds with a lot of the people

who are invested in in type you know, Web three type technology. Yeah, I do. I do particularly like the you know that that part of the narrative, right, the idea that people in Silicon Valley, who you know, from an outsider's perspective, would for years be aligned, are disagreeing on this point when it comes to Jack Dorsey and Square though the company now known as Block, how does he make this happen at Block when it comes to Bitcoin, Yeah, I mean, bitcoin has kind of been infused into all

of the different parts of the business, right for everything from cash App, which is like the main it's sort of like a Venmo competitor where you can send money to people, you can also buy stocks, but you can also buy bitcoin. And there was over ten billion dollars with a bitcoin purchased through cash app and last year alone,

and so that's kind of the consumer element. And then they have these teams internally that are working on all kinds of different bitcoin technologies, right, like making it easier for someone to convert their fiat currency, their US dollar into bitcoin, for example. And so I think when it came down to it again, having talked to so many people work for him, I think he's sitting here, He's like, Okay, here's my passion. Right. Bitcoin is the thing that I

just truly love. It doesn't really fit into Twitter all that much. It's not you know, yes, there are elements of it that could eventually move to social media, but it doesn't fit naturally in the way that it does with block with a financial services company. And so I think for him, you know, when it ultimately came down to, all right, where do I want to spend my time. I think that's one of the reasons Block one out. Kurt.

I just have to say, first of all, I love the pictures of Dorsey two thousand nine vere the beer, because it's quite a transformation. Having said that, is bitcoin going to be his downfall or you know, a great new awakening for him? Because I've got to think, as you write about some of the activists, they've just got

to be watching closely totally. Well. I think he saved himself a little bit by leaving Twitter right because it became clear that this was we we described in the story as his side hustle, and I think it was starting to cause problems for people at Twitter, especially because there maybe the business wasn't quite as successful, and so all of a sudden you look around and say, well, why is Jackson and all his time doing this other thing? Um that's a problem. Now at block block has been

doing better. So up until now, you know, he hasn't really been forced to choose. And again, because he's incorporating bitcoins so much into the business, I wonder if that buys him a little bit of wiggle room to really

focus on this. But I think, you know, long term, this is what makes it so fascinating, right, is that all the people we spoke to were really like, the one thing Jack is great at is predicting the future, right, Like he's not really necessarily gonna be a great manager on a day to day basis, is not going to give you great directives on a day to day basis, But he looks five years in the future and he can see things that we can't and right now he sees bitcoin. So I find that story just so so good.

Like there's this line that you have having a chief executive offer officer who's ambivalent about being chief and not crazy about executing comes to a serious trade trade off based on you know, you had so many interviews like talk to us more about Jack Dorsey as as aloof manager and if you can mention the birds, that'd be great. Yeah, well,

the I'll start with the birds. You know. He part of why the uh you know that this took such had such so much success that Twitter is that there was this perception that Jack wasn't really focused, right, not really paying attention to his job and um, and that he wanted to work from Africa you may recall for six months and that happened right before the pandemic. He never got to go because of the pandemic, but he

still kind of worked remote for the entire pandemic. And he was in Hawaii a lot, and there were chickens in the background of his video calls. He was on a Goldman Sachs call and there were you know, songbirds chirping in the background. So like he still gets to kind of go and like live this life where he wherever he wants to and lead that way. That was Bloomberg News Technology reporter Kurt Wagner, along with Bloomberg Business

Week editor Joel Weber. Still ahead on Bloomberg Business Week, how rising interest rates and market volatility are affecting New York City's luxury housing market. Find out who's buying and

how much they're shelling out. This is Bloomberg Broadcasting from the financial capital of the world, Bloomberg You Love Them Frio in New York to Washington, d C. Bloomberg to Boston, Bloomberg one oh six one does San Francisco, Bloomberg nine sixty to the Country Sirius xm Chado one nineteen and around the globe, the Bloomberg Business app and Bloomberg Radio dot com. This is Bloomberg Business Week, all right, So a big story and a lot of our conversations focused

on inflation. What the Fed is going to do? That was all this past week. And with the Fed set to pick up the pace of interest rate hikes this year, home buyers can expect to feel the squeeze. Yet tim people stopping for housing in New York City don't seem too concerned. Barbara Fox is president of the Fox Residential Group. It's a small boutique brokerage firm that specializes in the sale of upscale residential properties in Manhattan. And she says, well, business,

it's pretty darn good. Actually, the market is just on fire right now. And as a real estate professional, we move fast when the market is so good. It's um, it's really amazing. We're having the problem. The biggest problem we're having right now is um supply. I mean that all of the supply has been absorbed, not all of it, but much of it has been absorbed. And um, it's just it's pushing the prices higher again. And it's really like a crazy market. So who's buying and how are

they buying? Is it all cash deals? Well, that's the interesting thing. You know, Manhattan is its own animal. And I think about half of all of our deals are all cash deals. So that means that's good news. And in in that it the higher interest rates which are sure to come will not particularly affect us. And UM. Also, I've we found that when the stock market is mushy or whatever you called it, UM, the real estate market

UM tends to be really good. UM, in that people use that as an investment vehicle rout than the stock market. So right now there are a lot of things pointing very positively in the direction of investment in real estate. So back to that, who's buying and is it all cash deals? Sorry? UM, who's buying? Americans are buying. I just UM spent the day showing apartments to somebody from Texas and somebody that's moving in from California. And there

are a lot of Americans around. I'm not seeing a lot of foreign investors, UM, even though I think that there's gonna be there's gonna be a lot more coming forward UM in the future. UM, and they are UM by and large, the big ticket items, particularly are all cash deals. Hey, Barbara, I mentioned you've been doing this for decades. You created Fox Residential Group back in is

a boutique real estate firm. You've seen a lot of cycles when it comes to real estate in New York City, and I'm wondering what happens after you start to see a market this hot. Are you seeing any warning signs right now? What comes next? When does the market cooled down? Or is this time different? Well, it's interesting. I don't know whether it's different yet, but I'm sure we'll find out. But what what happens is that our market has historically

been very cyclical with regard to the seasons. Spring is usually a very hot market, falls a hot market, the dead of summer, July and August are pretty slow. But in the last last year, for example, one of our biggest months the whole year was July. So yeah, it's just everything is has sort of you know, topsy turvy

now and we don't really know where it's going. I UM, I think that with the interest rates increasing at this point, um, I think that people are going to try to get into the market now as as soon as possible because they know that they're going to be The people that are borrowing are going to want to be able to get the lowest interest rate possible and um, and that may be a little bit of an impetus for people to buy now in the next six months to a year,

don't you think though, for the deals that aren't all cash, the stuff that could be maybe sub three million, sub two and a half million, are those going to get hit by rising rising interest rates? I think they're ultimately they will be hit if the interest rates go up considerably. But you know, it's New York is very strange, and that we get used to things, and we will get used to the higher interest rates. I was in the business when the interest rates are eighteen percent and we

were selling like crazy. So you know, it's that that everybody gets accustomed to the rising interest rates and they and they adjust to it. And it's just like the extra taxes that we have to pay on the sale of real estate. Um. You know, it looks terrible in their first instituting these these sees, but um, everybody gets used to it and they just pay it. What has the pandemic? How has the pandemic impacted your market? It's

had a huge im pack. A lot of people did leave the city and a lot of people left the city left their old departments and sold their old departments and then bought Toyota tears in the city. And I see we're seeing a lot of that right now. And that was Barbara Fox. She's president of the Fox Residential Group. You're listening to Bloomberg Business Week. Coming up next, the new president of the New York Stock Exchange on technology

as a literal hedge against market volatility. Yeah, we've just seen a tad amount of volatility this year, to say the least. Yeah, wild quarter. Yeah, absolutely, This is Bloomberg. You're listening to Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes. Tim Stinovik from Bloomberg Radio were the three trillion dollars were raised from bond and equity values in the first quarter, as the Fiddle Reserve raised interest rates for the first time since Tim, it was a lot. Yeah.

It was a quarter when we saw the NASDAC one hundred and the Russell two thousand, each with bear market declines of also one in which the portfolio model fell for the first time in two years. A lot of investors. It was the first time I saw a lot of volatility. It was everywhere and that was top of mine at the recent Bloomberg Live Wealth Summit, where I caught up with the President of the New York Stock Exchange Group, Lynn Martin and Katherine Keating, CEO of Investor Solutions and

Wealth Management at B and Y. Melon. Yeah, So volatility obviously is driven by uncertainty, and I think it's fair to say that with the worst global health crisis in a hundred years, with the first serious ground or in Europe in eighty years, with the worst inflation in forty years, and the tightest labor market any of us I think I've ever seen, there's a lot of uncertainty out there, and so you know, you focus on what you think will guide you going for word, and so what do

we really focus on. We focus first and foremost on inflation and interest rates. Interest rates are the foundation for valuing all financial assets. We focus clearly on geopolitics. We did not anticipate event in February. Normally a geopolitical event, markets tend to respond, you know, tend to go down and then rebound very quickly. That's what happened after nine eleven UM And actually you did see the market, but it was a tough quarter but it was a better

March UM than February. Um. We look at confidence, right, because what causes recessions, it's behavior. So we look at CEO confidence, consumer confidence, and we see that in a in a relatively mid to high range but coming down, but coming down. So we watched that. And then the last thing we look for, and you sort of inted at it with commodity markets is um. You know, we look for where where could the leverage in this system? You know, when Russia defaulted in there was leverage in

the system. It turned out it was leverage currency bets. In two thousand and eight, there was leverage in the system. It and out um that it was in mortgages. You know, do we see that kind of leverage in the system. Not necessarily, but what are we watching closely to your comments, commodities, commodities, commodities and then leverage matters because that's what tends to lead to a you know, more dramatic decline. Right, Solynn, come on in on this. The volatility that we saw

in the first quarter. Yeah, I mean someone knew her seat. I uh, it's really volatile. Time to take this seat. And I mean I look at it from just the intra day swings, UM, the day on day swings. And then I also look at from the perspective of messaging that's hitting our platform. I mean, we had our top five messaging days ever happened this past quarter UM and you're talking about half a trillion messages a day that we processed across all of our platforms, which is unbelievable

when you think about it. And when you really saw that was when you saw you know, the point swings intra day in the SMP or or some of the other markets. It's it. It feels though the market though, is starting to come to grips with the volatility. They're starting to take a position that perhaps the FED is going to do what it's been telegraphing it's going to do. I think maybe the FED raising a quarter basis points in March gave the market a bit of confidence to

trust what was being forecasted there. So we do see volatility starting to abate. And from my perspective, I have to look at it from two different perspectives. I gotta look at it from our markets, but I also have

to look at from the I p O pipeline UM. Yeah, and volatility as you can, as you can imagine, when there's a lot of uncertainty and markets volatility is going to weigh on those companies who are looking to go public because you know, they're a bit cautious about bringing their companies to market at a time when they can

have these huge intra day and day on day swing. Um. A big indicator that the CEOs that I'm talking to who are planning to come to market that they're looking at is the VIX and how that is starting to behave. When you see it go a below twenty, that's when the CEOs that are in our pipeline are like, yeah, maybe I can now start to think about coming to market.

So when we ended the quarter just around correct correct, I think a couple of weeks ago was the first time that we saw a dip below So having a lot of conversations with those companies that we know are part of our pipeline, one thing I thought about in terms of the first quarter, there's volatility and there's chaos. Right, We've seen chaos in the financial markets. I mean, let's

go back to the financial crisis. Other times where you really felt like, oh my god, this system is coming in done It's an important distinction because I think about these things. It functioned right absolutely, and I think about two years ago, in particular, when you had the pandemic, when we trigg gird in the US equity markets, the market wide circuit breakers, which are a halt when the SMP dips below seven and then reopens and further dips, we had to halt the market four times. Right during

that period. We haven't had to halt the market. This is just the market finding its footing um. And you know, our job as an infrastructure provider, as a marketplace is during times like this, we need to remain open. We need to have orderly trading. We need to have efficient trading because we need buyers to meet sellers, sellers to

meet buyers, and to do so in an efficient fashion. Kevin, come on in on this, because I do wonder like, was all of a sudden everybody again getting to this point of chaos versus volatility, where all the clients and be in my milk, you know what, calling up and saying I want cash only, No, And in fact, what you know, what you see is that there wasn't chaos

in the markets. It was actually a very interesting kind of leveling quarter, because it almost didn't matter whether you are a hundred percent in you know stocks the SMP five hundred, or a hundred percent in bonds. Your portfolio probably lost about five percent. That's not chaos that actually

it was. It was a combination of the two which did have the same right and so what was unusual about the quarter, um was it was such a tough quarter in the bond market, right because you had interest rates rising so quickly, and then you had something that typically doesn't happen. You had spreads widen at a time when the economy is actually doing quite well. Right. Spreads usually widen when the economy is not doing well. But you had both of those at a time that you

didn't have enough um. You know, your the rates were so low, you didn't have any deal to protect you. So we we we think that is beginning to start to reverse UM in this quarter. But you know, everybody is pretty much of the same position at the end of the quarter most likely, you know, your portfolios were down about five percent, and given all of these big

uncertain issues out there, that's actually a very resilient outcome. Well, this is what I want to ask you about some of the volatility triggers, like we mentioned them, geo political tensions, China versus the US, China versus the world, you know, inflation, inverted yield curves, innovation disrupting itself. You guys have been moving increasingly into whether it's the crypto world, the n f T world, UM, what among what some might considered

volatility triggers kind of concern you the most, Catherine. So it's it's the things that I mentioned earlier, right, we we we can't control any of these things, UM, but I think that there is a path to a soft landing from all of this, and the path probably includes a couple of things. Obviously it's the FED tightening rates, but not too much. It is UM companies doing what companies do, which is managing through this uncertainty. We have,

you know, company profit margins at all time highs. We've seen a tremendous spike in productivity over the over the pandemic. That helps corporate results. And it's we need consumers to do what consumers do. And there's there's an expression high prices are the cure for high prices to a certain extent of what we need the consumers to do is shift a bit how they've been spending, which is on on goods, right, all the things that people did to work from home and renovate their homes and all of that,

and shift a little bit to services. Um, And then I think there is a path to a soft landing UM from this. Yeah, I would agree with that. Um. You know, this is not the first time there has been volatility to your point earlier in markets and uncertainty in markets, and markets are resilient. And our markets in the US are the envy of global markets, given the access, given the investor protections they provide, given the types of companies,

and the transparency that those companies provide when they are public. Right. So we've been here before, UM, and we've been here under less of a crisis, if you will. This is not the financial crisis. It's not you know, uh, the pandemic, the start of the pandemic when there was a tremendous

amounty of saranty uncomfortable it did. And volatility doesn't necessarily mean negative returns, right, think the average into your correction of the SMP you know since the eighties is about one thing I want to ask you, though we talk about like inflation. There is a generation of investors that

don't necessarily understand high inflation or parents. Yeah, exactly. We did actually a Twitter poll and I want to bring it up for everybody because we asked on inflation, can the U S return to two percent inflation without a recession? And as you can see from the results, an overwhelmingly response of no. On the se you all agree with that? Yes? Do you agree with that? Len? Do you agree with that?

It's interesting how sentiment tends to drive markets though, too, and I think that is a new phenomena that you've seen with social media and how that perception may be driving different things in market's, different market behavior as opposed to you know, fundamental submarket. I aways come back to fundamentals of economies and as the economy does the economy have a capacity for growth, and this economy does have a capacity for growth. However, sentiment has become a very

important driver of of what you see in markets. That's New York Stock Exchange President Lynn Martin along with Katherine Keating, she's CEO of Investors Solutions and Wealth Management at b n Y Melon for the full conversation and all of the panels from the Bloomberg Wealth Summit. Head on over to Bloomberg Live dot com and that ups up our first hour of the weekend edition of Bloomberg Business Week from Bloomberg Radio. I'm Carol Masser and I'm Tim Stanovic.

Ahead in our next hour, we are talking cars and we are talking wine, but who not together of course, our cover story on Ford's plan to challenge Tesla's ev dominance, and the CEO of Lamborghini on the luxury automaker's record year and its newest ride. And then Tim, We've got a fourth generation Argentine Vitner on the perfect mail back wines for any occasion. What I loved about the conversation, First of all, she was doing it from our car.

She was pulled over. That's what you loved about the conversation. She's gonna tell you what I loved about. Okay, she got into the history, which I really loved about. Now back wines where they came from. I know what you loved is that we actually stand. Yeah. I love that we were drinking. Why we can do that, We're allowed

to do it. This is Bloomberg. This is Bloomberg Business Week Inside from the reporters and editors who bring you America's most trusted business magazine, plus global business, finance and tech news as it happened, Sloomberg Business Week with Carol

Messier and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. Hi, everyone plenty ahead in our second hour of the weekend edition of Bloomberg Business Week, including Tim, We're kicking into hike or when it comes to the auto industry from the Lamborghini CEO talking delivery hurdles, to the team from Kelly Blue Book on the New York Auto Show and what shoppers are really buying right that show is underway.

Let's start though, with our cover story. It's about the new electrified version of the Ford F one fifty truck, as the auto giant looks to re engineer the footy or smash success of its gas powered version. This has been such an important car truck, I should say to Ford. Keith Notton is the person who wrote that story. He's auto reporter for Bloomberg News. He joins us on the phone from Detroit. Keith, I have one very simple question,

just to get out of the way. In the beginning, A Frank who would have thought that a Franc would be such a selling point for this vehicle. Please explain, and not just a Franc, but a mega power front to be clear. Okay, thank you, thank you as you saying the story. Ford went all Texas on it, and they have this thirteen cubic foot gaping maw that you can put two sets the golf clubs in. It has it literally has a built in ice chest with a drain so that you can do something called front gating.

As uh Ford's top marketing executive said, you can have a party on both ends. All right. Jill Weber is with us editor of in our Business Week, Um, do you have a fronk? I do have a front? Yeah, I have a Tesla. So I'll admit that that I do have a fronk. Um, it might not be as as large as the one that's gonna be in the F one fifty. And you know, when Keith and I first started talking about this story, I just thought, I think this is a We talked about business strategy stories

a lot of Business Week. This is like a textbook one, right, Like Tesla proved has proven over over a decade now that the future is going to be electric vehicles and and now comes the rest of the world trying to play catch up to that idea, and and along comes forward with basically the best selling vehicle in America. Americans love trucks. They there's no truck they love more than F one fifty that fe like an economy all by itself. And now comes the time, the moment where Ford's gonna

bet the house and electrify that flagship iconic product. Right. So, so it's it's about the front. The fronts cute, but oh my god, it is so much bigger than the front right like like, and the stakes for this thing couldn't be any higher for Ford, right um. Jim Farley, the CEO, called this about the company moment. He said, does this keep us up at night? You bet you?

Because this is this is the ball game, because Americans don't really despite testless success, Americans don't really buy electric vehicles. Only about three of US sales where electric vehicles last year last year. The rate is much higher in Europe and very high in China. But this is the one that could change that because it is the ultimate mainstream vehicle. If Ford can convince particularly traditional truckers to embrace electrification, then it goes main mainstream. Is it fair, Keith at

this point? Is it too early to call it a success? I mean, the pre orders are pretty much off the charts, and what what Ford had to do in order to accommodate that in terms of product. Yeah, they really weren't prepared for the success of this truck. They introduced it last May and this very flashy ceremony in front of Forts World headquarters in Dullborn, Michigan, and then immediately just

the reservations were just off the chart. So they reached almost two hundred thousand before for It had to stop taking them. They have doubled factory capacity twice. They originally planned to build forty thou year. Now they have the capability to build a hundred and fifty thousand a year. And let's not forget they got a big PR push from President Biden who drove the truck, floored it on the recommendation of the CEO. He said, mash the throttle and uh and then when Joe got done, he said,

this sucker is quick. Um, so you've got uh huge PR win organic PR that comes from the President United States doing that. Uh. The other thing that you know, Keith, it really is going to be. I think a pr advantage is um the fact that they're rolling this thing out effectively at scale, right, um, and how does that compare to the rest of um, uh the electric truck

uh kind of category? Right? Because really what Ford is going for here is not only is it the flagship category, but like, how much of the electric category electric truck category can it? See? Right? Ford really has essentially a first mover advantage here. Instead of like Electric building a brand new electric truck from the ground up, they went back and they kind of retrofitted the existing Efflent fifty. The cab, the shape, the design. It will all look

very familiar, but that's part of the strategy. They want to keep it familiar so these traditionalists will buy into it. And the only other trucks on the market right now are the relatively low selling UM Rivian R one t from the startup Rivian U, which starts at around eighty thou dollars a year, or eighty thousand dollars rather, I should say. And and then GM has its new electric comer out and that's a six figure trucks, so those

are small volume trucks. Ford's truck starts just below forty dollars. It's basically in the same price range as a regular gas fire truck, so they're really going for high volume. And you know, Chevy, the Chevy Silverado, which is one of the primary competitors, is still a year out testless cyber truck that's gotten so much buzz. And we've actually introduced before the Ford Ethellent fifty Lightning that's still a

year away. And we don't even know when the RAM is coming, which is the other big selling pickup truck in the United States. So Ford has sort of open road ahead of itself to to sort of seize the market. That was Bloomberg News auto reporter Keith Noton and the editor of the magazine, Joel Webber. You're listening to Bloomberg Business Week. Coming up, we're going to stay with cars and what's hot at the auto show in New York City.

This is Bloomberg. This is Bloomberg Business Week with Carol Masser and Bloomberg Quick Takes Tim Stinovik from Bloomberg Radio. The New York International Auto Show was back this week. It's going for the next couple of weeks. It was shut down though, like so much over the past two years because of the COVID pandemic. Tim We've got a couple more conversations about the global auto industry, and that's

over the next half hour or so. First up one with Stefan Winkelman, chairman and CEO of automobile Lamborghini, who dropped by to talk about navigating through today's volatile environment and how long you're going to have to wait to get your hands on that Lambeau. Gotta be patient. People are willing to wait. Though it's a Lambeau. I get that. I can tell you that since twent alve years we are in crisis more more or less the pandemic than

the chip shortage now the war in Ukraine. What I can tell you, and which is for us very surprising, that already in the second part of the market, our type of market was coming back stronger than expected. And as we speak, we are selling every day more cars that we are able to produce. So we have an order bank which is longer than one year of waiting time.

This is before let's say, before twenties or before the pandemic, it was between six seven, eight, maximum nine months, depending on the model and on the launches and now this is very good and healthy for a company like ours, but that the market came back so strong and so sudden, this was unexpected. The short that the chip shortage for us, being part of the Volkswan Group was less an issue.

We were lucky because we have small manufacturers or low volumes, high margins, so we got a priority line from from the Volkswan Group. And now the war in Ukraine, for sure, we we put our um operations on hold in Russia, so we stopped it. And we have an important supplier in the in the West Ukraine, so we had stopping goals and production for the Huracan, which is one of

our models. But now we are let's say, on a in our face where we have five six days of view of what is happening, and we are not losing any production at timing, So this is for us pretty pretty okay. Then it's clear stock market did anything slow down on that first quarter because of the no as we speak, I have to tell you and I'm unable to make let's say, a forecast for the year twenty two, but as we speak, there is no slowing down on the request for our cars, and this is very positive.

We have also to say that there are more people with the money at their disposal in compar Ariazon to a decade ago. So the the words is increasing and they're more benefiting moments. We have a very young customer base and they're very proud of owning a Lamborini. We have to keep the promise of always delivering dream cars. This is a part amount for this because of inflationary

pressures supply chain. You mentioned the chip shortage, labor costs, all the inflationary pressures that we see happening around the world right now. How much have you had to raise prices so far? We have not, let's say, drunks for the cost of of the material colls, roll materials to customers. We have a price increase between one and two per cent, which is not something which is unusual. Why haven't you

Why haven't you passed that along? If the consumers willing to wait for a year for a Lamborghini, they're probably willing to pay more five more for the Let's say, if if this is going to continue, there is a further increase on the materials, certainly we are we will be forced to do so. At time being, we have it under control, and I'm happy to say so. But for the future, as I said that, it's very difficult

to to make a forecast uh the future. So the new models, they will have higher material cost due to hybridizations or batteries and combustion engines together, so there will be a slight price increase, but only due to that. How is the supply chainel although impacting your roll out this year? Right, You've got a bunch of new models coming. Um is any of that being impacted now a time

being not. It's clear that it's early to speak about the new geo political situation because today we are not in the new normal, so we have to wait until the conflict is over and what is going to happen. For sure, we are acting global, so we are a company which is only good when we are able to worldwide. So we have high investments, little volumes, so we cannot flood one market and think that this is the the idea of the future, so we have to act global.

On the other hand, acting global means also that our supply chain. We cannot just say that we stay in one country. So we will see how this is going to happen. Also, the pandemic with all the logistic chain was messed up and it took a lot of time to go back to normal. So we have to see how this is going to be once uh, yeah, there is a new normal in place. You did suspend sales to Russia. Correct, Um, how much of an impact is

that for you guys? But luckily we can divert the production or the order bank or the cars which we are going to produce or we wanted to produce for Russia into other markets, so we have no losses and the due to the fact that we have this long order bank, we don't have a negative impact. Will you stay out of Russia? We will see after that. It was as I said, it's very difficult now to make a forecast about what the geo political situation is going

to be. The longer the wall last, and more difficult it would be to go back. No, I'm sure about that. We know the incredibly some incredibly wealthy oligarchs in Russia have had sanctions imposed on them, not by the interest the United States, but the UK and the European Union as well. If they were to approach you in another country to buy a vehicle, would you sell them a vehicle?

But we have a list, a blacklist of people and this is part of the business we had also before and there are all some of these guys on the list and we will not sell them cars. Have you been approached but not to my knowledge, but we have we have all did as all partners worldwide. So at time being, I don't see that there is anybody alright, the hard parts over Well, I got one more question. Uh, it's similar to what Carol was asking. You know right

now you suspended you've suspended vehicle sales in Russia. What would have to happen for you to start vehicle sales in Russia up again? Frankie speaking, I don't know, because once the war is going to be older, there will be a new situation and we have to see how the European Union, because we are part of the union. European Union is going to react in terms of sanctions and we will be we will be aligned on what the government is going to tell us. That's Deefan Binkelman,

chairman and CEO of Lamborghini. We're staying with cars next to Bloomberg Business Week, driving around a track at the New York International Auto Show with the cars that seemed

to be dominating this year's show that's coming up. This is Bloomberg broadcasting from the financial capital of the World, Bloomberg eleven Frio in New York to Washington, d C. Bloomberg to Boston, Bloomberg one oh six one does in from this go Bloomberg NIXT to the country Sirius xm Chado one nine team and around the globe the Bloomberg Business app and Bloomberg Radio dot Com. This is Bloomberg

Business Week. As we've been talking about the New York International Auto Show often running this weekend for the first time in two years, things though, tim are a little bit different this year. Michael Museo, video manager at Cox Automotive and Kelly blue Book follows all Things Cars. He joined us in our studio just after walking the floor at the Javit Center. So when years past, you know, you'd walk to different areas of the auto show and it was just wall after wall of so many booths

of static vehicles. And they've kind of changed that. So if you go downstairs, now they've got a track and you can get and you can ride in the vehicles even upstairs. I know, I know, indoor vehicles and this is what you can do when you have electric cars. You I was gonna say, are these internal combustion engines that are inside the Javits Center. There are not. Um, this is part of the electric vehicle revolution wherein you can have vehicles and not asphyxiate yourself while hurring around

the Auto show. Well, Mica talked to us about this EVS. We've been talking about it for years. But what's different is it is this the first time the show has done that, you know, that focus on EVS and especially driving. This is a new thing, and really that's precipitated by a couple of different things. Item number one is that there's just more vehicles available. There's really his proliferation right now. UM. I can tell because when I go in new vehicle launchers,

I drive all the new stuff. There's a lot more electric happening. In fact, if you go upstairs over to the hun Day booth, they have dedicated a large section of that area to an experience. We can ride in their new Ionic five electric cars and I, in fact, I drove the Ionic five recently and it's super cool. It's a really neat okay one thing, it's one thing to be seeing these things at the auto show. It's another thing to actually put a deposit down and wait

for that electric vehicle to arrive. Because my dad is still waiting for his MOCKI it has been months at this point. In fact, he's actually gotten some very interesting emails from Ford about updates when it comes to basically, we have no idea when you're getting your car. As a Bronco owner, I'm familiar with those kinds of updates. But um, yeah, so that it really keys into one of the big issues right now with electric cars and

anything electrified, even hybrids. They are the ones with the tightest constraints in terms of supply, and so there's a lot of interest in electric cars right now. There's huge demand and they just cannot meet that demand. Is that because of what's going on brought more broadly with supply chains or something specific to evs? And and I also do wonder about manufacturers being very careful. I'm thinking about just in time, inventory and all that good stuff, making

sure that they're not overproducing. Yeah, I think there are a couple of different dynamics at play. I mean, just you know, getting the production up to speed for these new kinds of vehicles is a challenge in and of itself. And then if you think about the vehicles like the one I was driving the hunt On five are also

drove the Kya e V six recently. Um, part of being an electric car is not just being electrified, but it's also looking electrified and giving electrified experience and having big screens and um advanced technology and driver assist system and all of that stuff requires those microchips that are still in such short supply. Okay, so when do we start to see you actually be able to buy an e V and get it? When does this supply chain start to welk in the showroom get the car? It?

I mean, it's that's how it used to work with vehicles until you know, until yeah, well yeah, I guess elon when it comes to actually walking into a showroom, been walking out with a car? Right? You're doing that online now with Tesla. Yeah. So the dynamic that we have now is that some dealers will get you a vehicle if you've got a lot of money to spend over M S R p UM. So it really depends on how much you want to spend and how much you're willing to wait, um, but the supply change should

start to open up. Everything I'm hearing is going into three. That's when the microchip short is just going to start to mellow. So it's not like this is a short term dynamic. We are kind of stuck with it. But um, so that kind of leads to an interesting dynamic that we've seen. Cox Automotive we did some research into before you walked in here. I am right now watch my videos. I am always like this, but I love it. I love it. I'm just like, whoa. Now, I'm gonna dial

it back. You guys to be comfortable, go to a hundred. It's cool. What we had noticed in our Cocks Automotive study is that people are willing. Car shoppers are willing to delay their purchase. And I have too great anecdotes for that. So does that mean they're making the order there, ordering their vehicle and waiting until it will arrive. And oftentimes they're doing that just because the vehicles aren't available, or because they can find a dealership that will sell

M S RP. But only if they wait. It's one thing to do that if you're Lamborghini, right, And we talked to Lamborghini CEO Mr Vinkelman yesterday and he said that their time for waiting for a Lamborghini if you're a customer who puts an order and it went from you know, roughly seven to eight months, which is pretty typical for Lamborghini, up to a year at this point. But he's not concerned about people going elsewhere because hey, if you want to Lamborghini, you're gonna wait for Lamborghini.

But does this Can you say the same thing about cars that are more of a commodity, Yes, yes you can. My friend Mary who lives in Denver put in an order like three days oh, for a Toyota rav four Prime. That's her plug in hybrid. She was told it was going to be either eight months to two years, So yeah, people will wait. That's Michael Muzio, video manager at Cox Automotive. Then Kelly Bluebook. You're listening to Bloomberg Business Week still ahead. We wrap up with a history lesson a new book,

and a sampling of some great Blobic wines. Yeah, it's the weekend. This is Bloomberg. You're listening to Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes. Tim Stinovich from Bloomberg Radio. Well, this week, we thought we would wrap up with something fun, really perfect for the weekend. We're going to talk about wine. Hey, that's okay with me. I don't have to save wine for the weekend. You can drink wine other days. Heard that, I've heard that. Well.

We recently had the pleasure to speak with a fourth generation Argentine vintner, physician and author. Her name Laura Kataina Carol. She's managing director at katainas Apata Winery. She's also the author of the book Mall Back Mono More. And we began our discussion by asking about the impact of climate change in Mendoza, that's where her family's business is based. You're seeing a lot of my beck, which is our

signature variety, but we also make many other wines. You know, cavernetsignan, chardonnay, we make you known noir. And what's characteristic about our wines. They're from high altitudes, so they have a long time to ripen, so they're very rich. But because of the long ripening time, they're very smooth. So this is the characteristic of Argentinian wines. All right, And I don't mean to get so serious on you. But I know that we've done a lot of reporting here at Bloomberg and

we've got a lot of time to talk um. But climate change, how is that impacting you guys if at all? Well, for sure, there is warming all over the world, a little less in the southern hemisphere than in the north. But the main thing is that my father he moved most of our vineers to the high altitude regions about thirty years ago, and there is cooler climate here. He was looking for a place to make more mineral, high acidity wines, more age worthy wines, but he also found

this place that is more resilient with climate change. So it is an issue for vineers all over the world that we are in a very good position because of the high altitude and the cool climate at the high altitude. But what are the changes that you have seen over four generations of making wine. I mean there must be some climate changes, right, yeah. Well, you know, the bigger issue in Argentina is not the temperature. It's actually the water.

Because we have the glaciers of the Andes that the native peoples of Argentina created canals to irrigate, and that's why we can have farming that's why we can grow vineyards and orchards. And we are a farming place and there's less and less water from the glacier. So we're working a lot on, you know, how to capture water, how to use less water. That is the bigger issue

for us in Argentina. Water. You know what's interesting too, And I think about the process how technology is increasingly, you know, lower playing a bigger, bigger role in something like when it comes to running a winery or running a vineyard. How has that kind of impacted what you guys do as well? Yes? So, um, you know, there is this vision of wine making as everything is done by hand and people are harvesting by hand, and they're sorting out the grapes and then you're stepping on the

grapes with your feet. I was gonna say, I love Lucy. Right, we all went there, Right, it's a lot more high technic, right, yeah, And there's a lot of these beautiful traditions, um. And my philosophy, you know, I'm a medical doctor, um, and so for me, people are very important, and that's that's one of the issues. A lot of the people want to move to cities. This is happening all over the world and all the wine countries. You know, it's happening

in California and Australia and Europe. And what I say is, let's use technology when it helps us, um stay in better health as people. So for example, a lot of hand harvesting, if you were doing that every year for four months, you would start having severe back problems. So we yeah, so actually some machine harvesting is good. And actually when it rains a lot, you can't harvest by hands. So I'm a big fan of using you know, we use robots to lift big boxes filled with glass. Of

course we should use those robots. We don't want people, you know, injuring their backs. So my view is, let's keep the typicity of the wine, you know, keep the different parcels of different altitudes, of single vineyards. Like the diversity of wine that you see today is is unprecedented. You know, there there's more great wine out there than there ever has been. But let's also take care of the people who work in the vineyards and in the land and use the technology to make their lives better

and that and that's my goal here. What inflationary pressures are you seeing across the industry. Oh you want so. Well. You know, in Argentina we have fifty percent inflation, so I always say, it's not that bad for you in the US. So you know, we're seeing you know, our our importers, they're having to pay more for shipping. It's hard to get the trainers. We're having to pay more for glass. Um. You know, we're having to pay higher salaries.

So there are definite inflationary pressures. But I can tell you that it's it's worse for us in Argentina than for you in the US, if that makes it feel any better. You know, it's funny that you said, because we do talk about that that global perspective of like really understanding it. You know, mar Bank is a very very ancient greade, just as old as Peeno Noar. It's actually an older great than Caverney Savignon, for example. It's

been around since the Roman times. It was described by the Romans when they walked to France uh, and then it was very important in the Middle Ages. There was this queen called Eleanor of Aquitaine who brought it from France to England. And then it was also very important in Bordeaux, where all these famous ground crewe wines from

Bordeaux come and it's part of the blend there. But it came to Argentina in the middle of the nineteenth century and now it's more famous from Argentina than from France. It's the variety that the flagship variety of Argentina. And it's known for its very dark color. It used to be called the black wine. Very rich flavor and smooth tannins and um, you know it's it's it's the great that my great grandfather, who came from Italy, first planted in Argentina nineteen o two. That's why I'm the fourth

generation making this wine. And the Catina beck is a high outsuit blend and it might be, you know, our most sold wine in the world, this Gatina. What do you think about it? I really like it. Are you a red whine because I'm a big red wine? Oh yeah, I am too. It's not like I know anything about wine, despite the fact that I grew up in a wine region of California. But I know what I like and this is good Lord. What I will say is I'm

a big Cabernet drinker. Um. And I want to say ten years ago seven years ago started drinking a lot of now Back and I love it. This is really yeah. It has the power of the cabernet, but the smoother tannins and it's just a different thing. I mean, I I also really love cabernet, and we we make a wine that's a blend of Caberney Mavick that I also love. But I think that Mabic on its own is just delicious and it's and it's really easy to pair with

so many different kinds of foods. And that's the thing I think I like about it is I can. I'm not a very traditionalist, like if it's fish, it has to be white, or if it's meat, it has to be red. But I I just like red, so I just drink red with everything. But now Back in particular, I find I can. I can kind of, you know, pair with almost anything, which is which is just nice.

But you know way that is that's because it's it has good acidity because of the high altitude, because it's not too hot, and then it's got these smooth tannins. So even with something that you know has some bitterness or it's it's really fatty, you know, the the smooth tannons of the acidity cut through it. And that's why, you know, I love what you're saying, that that you you compare mabic with almost anything, and that's why. Okay, let's talk price here, Laura. Um, and you should. I'm

just curious bottle of this? Uh this right, Carol? Yes? How much does it run you? So that should be around twenty two dollars? You know. It's funny, Tim and I, Laura, we're talking off air, and I said, I've had some very expensive wine, and you know, I've also had not too expensive wine, and I feel like there's so much out there now, the offerings from vineyards and wineries, and that there's a whole idea that you have to spend a ton of money to get a great bottle of wine.

It's not true. Yeah, well no, I'm we also have you know, a hundred dollar back. But I have to see that I agree with you that you know, for every day, you know, twenty dollars and then you want to age something special occasion, uh large a little bit, you know. Um, I don't know. I if there's one thing I will spend money on its wine. But you know, of course I'm I'm in in the industry. What's wine in shoes? Let's be let's be honest about what matters. Hey,

can we talk about this? Can we talk about this book? It is beautiful and it really is um kind of it's a history, right of mal back. Tell us about this and why you wanted to put this out there? Yeah, so, you know, I felt that people didn't know the history of Maubec. Some people thought maybe it's something new that just showed up, because you know, you didn't see a lot of malbec in the United States twenty years ago, but it's been around for two thousand years. And I

wanted to shout it out. And I also wanted to explain the subtleties of my back from the different veneers, the different kinds of soils. But I wanted to, you know, the winemaker that I've been working with for twenty years. He and I wanted to tell a story that would also be fun to read, because I think a lot of wine books are really boring and it's too much technical information. So it's history, it's something about flavor, but

it's very playful. So he and I are illustrated going back in time and having conversations, and it's a new kind of book. It's an illustrated mixed with some texts, but there's a lot of really also um, you know, important information, but there's a lot of these, you know, more easy to read stuff. And it was reviewed in the New York Times, which is a very big deal in the book world. So I was very pleased about that, and it was a bestseller in Argentina. We already ran

out of the first edition. Laura, who's the book for? Who did you want to write this book for. I wanted the book to be for people who love wine. You know, maybe if you're just getting started and you you know, if you don't know the difference between Caberney sewnon and pino noir, which is perfectly okay not to know that difference, we'll probably you should read you know, Wine for Dummies first, which is actually a great book, by the way, I know, I highly recommend it. I

know the authors. It's actually highly technical, the great book. So maybe read first basic book about wine. But once you already know, okay, I love Savina Blanc, I love my back you know the varieties, you know some of the regions, then this book is for you. It will also teach you how does the producer make decisions during the harv why do you plant the vineyard in one place and not another? And it's written for an audience

that should not be experts. So it's written for a wine lover that knows a little more than nothing about wine. That's Laura Kataina. She's managing director at katainas Abata Winery. Her book mall Beck Mona Moore is out now that wraps up the weekend edition a Bloomberg Business Week from Bloomberg Radio. Thanks so much for joining us. I'm Carol Masser and Tim Stanavk. Be sure to tune into Bloomberg Business Week. It's Monday through Friday, starting at two pm

Wall Street Time on Bloomberg Radio. You can also watch her daily broadcast on YouTube. Just search Bloomberg Global News and check out our Bloomberg Business Week podcast. You can find it at Bloomberg dot com, Apple, or wherever you get your podcasts. Work Business Week is available on newstands now, at Bloomberg dot com, at business week dot com and always on the Bloomberg terminal. You can also see me

on Bloomberg quick Take. It's available at bloomberg dot com, slash qt, and streaming platforms like Roku TV, Apple TV, Samsung TV and more. Have a good weekend. Stay safe everyone. This is Bloomberg.