FDI Showed Substantial Growth in Ireland

You can also listen to our radio show at two pm Eastern Time on Bloomberg Radio or watch us on YouTube search Bloomberg Global News. We actually have a perfect guest to talk about what's going on over in Europe specifically, and and lots more in terms of his own local economy. Nice to have with us, and and actually here in studio is Martin Shanahan. He's the CEO at i D a Ireland. It's Ireland's government agency. They are responsible for the attraction and development of f D. I were talking

about foreign direct investment into that country. So nice to have you in studio with Tim and myself. How are you. I'm good, Thanks Carl. That's great to be back here. With yourself in time. It's been nothing two years that it is here in personal even though I know we've spoken over various platforms in the meantime. Yeah, it's you know, I suppose it's been a bizarre two years and we thought we were just coming out of those bizarre two years and now we're back into a whole new level

of challenge. But but but I'm good. I'm back in traveling and back in in the US here for the week of Evince associated with Saint Patrick's Day. UM, I was down. I get tangled in a parade over the weekend, walking the dogs. I was down in New York Stock Exchange. This morning for Ireland Day, we rang the bell. It was so Yeah, we're very much out on the road doing what we did previously, promoting hardening Ireland as a location for investment. And we want to talk about investments

going in and your economy. Got to ask you that when I think it's prone to talk about what's going on in Europe UM following the Russian invasion subsequent war, do you think and what's the take and the conversations you all are having with political and government leaders, in business leaders um about the responses so far by NATO and the United States against Russia. Have they gone far enough? So? So, I think firstly, and you know, our thoughts are with

the people of Ukraine at this time. This This is you know, first and foremost a humanitarian story exactly, and I suppose Ireland's response has been primarily humanitarian, albeit that we are also obviously together with our European colleagues, EU colleagues, and we've taken sanctions against Russia, as has the US, and you know, those global sanctions are the most severe we've seen for any country, and um, you know, we

hope they will have the desired impact. At the moment in Europe, what we're seeing obviously are the Ukrainian population spilling across borders out of necessity. I think there has been a very warm and generous response from the people of Europe Ireland. Is it a sea change in terms of are we seeing a new geopolitical division in our world potentially going forward longer term? Obviously we hope not.

But but I think that the situation is very challenging clearly, and you know, we will, Ireland will play it's part. We have seen five thousand Ukrainian refugees arrive at our borders in the last two weeks. And again for your guests, Ireland is the furthest away probably a European country, you know, we're on the western edge of Europe. But but but we've taken you know, our our position is that Ukrainians are welcome in Ireland. They can come in. They don't

require visa's paperwork at this point. They can arrive, they will receive all of the supports that Ireland can offer, whether that's healthcare, they will provide with social security numbers, they can work in Ireland immediately, and we will, you know, support and our expectation is we will have many more

in the coming weeks. It is a human hearing crisis, as you mentioned, it's also a crisis with global implications in terms of geopolitical markets, and we're certainly seeing that play out in global markets right now, whether we're talking markets in the United States, in Europe or even other

markets around the world. What about for your job when it comes to attracting foreign direct investment, does it make you at all concerned that the cell of of Ireland is going to be more difficult given its proximity, Given that it's in the you've given that, it's it's proximity to Ukraine. Yeah, so, I mean I think a couple of things. Firstly, and you know, undoubtedly this is has

made probably Europe less attractive for FDI. I think this will also impact on the global flows of foreign direct investment as investors become more cautious and they take time to make decisions. And obviously FDI had already global flows I had already been heavily impacted by the COVID pandemic and are only recovering now from the pre COVID level, so so so that there's going to be a continuation. I think of that caution, then Europe potentially slightly less

attractive than it was. I think within Europe again, Ireland is the supposed to the most geographically distant from you know, Eastern Europe. Well what I think in so far as there was any kind of you know plus here, you know, it just gives us more stability, you know what I meaning that we're not in the direct region. So you know, it was already a really competitive world for foreign direct investment.

I think it's just become more challenging in terms of I suppose the the economic impacts on Ireland though, of the Russian invasion of Ukraine. I think the first thing is, you know, we're not directly exposed. You know, even if I look at our own portfolio of foreign direct investment companies, there are there are eight Russian companies, you know, operating in Ireland. There are very few, if any Ukrainian companies

operating in Ireland, so that direct exposure doesn't exist. But what what will happen, and what is clear is there's going to be indirect impacts. And those indirect impacts are going to come in a number of ways. They're going to come through increased energy prices and we're already seeing that.

And you know, and even though Ireland isn't directly exposed again because we get our gas from the gas field off the shores of Ireland and from the UK, prices in general are going to increase as you know, blind demand issues kick in. We're going to see supply chain issues potentially, and we're already against seeing some of that

coming out of both Russia and Ukraine. Aircraft leasing an issue Ireland, you know, is heavily obviously exposed in aircraft leasing because we have some of the largest aircraft vestors in the world. And and you're going to see so you're gonna see a lot of indirect impacts coming through. We're going to continue along these lines, and we're going to continue with Martin Shanahan, CEO at IDA Ireland. He is in studio with us right here at Bloomberg Headquarters.

This is Bloomberg Business Week, and this is Bloomberg Radio. This is Bloomberg Business Week with Carol Matter in Bloomberg Quick takes him Stan on Bloomberg Radio. We're here with Martin Shanahan. He's CEO at I d A Ireland. This is the agency responsible for really upbringing in for direct investment into the country. He's here in our Interactive Brokers studio. So the global corporate tax rate, you guys have been a haven. Maybe is that the that is not a

fair all right? But the question okay, because of your low global corporate tax rate, you've got Google, Apple, Meta, uh, Facebook, of course, UM, so many I think TikTok has just been has gone into Ireland because of your low global corporate tax rates. I will not use that h word. Um, but you guys last fall are now all in on a global minimum corporate tax rate of now fift It's been twelve and a half percent in Dublin and in Ireland. Um,

why the change. Yeah, the change results because there's a global agreement and you know what you had to do it, didn't you Well, we were the last interet I think, as you know, and because and we wanted certainty. We wanted to certainty about what rate we would be going to and that's why it took so long, because you know, there was wording there which said, you know, at least

fifteen percent. Ireland wanted to know at what rate exactly we would be um setting our rate at, which was whatever the you know, the most competitive rate was going to be. So when true discussions at the o e c D it became apparent that fift was going to be the minimum, and it was became apparent that everybody was going to leave at once. Then that provided the context for Ireland to enter the agreement. And you know, Ireland just to be absolutely Ireland is not a taxhaven.

It never has been a tax We have a competitive rate of taxation to encourage businesses, both Irish business international businesses to be there and and some can, but it would be incorrect and and obviously they have a definition of what that is and and meets Ireland meets none of the crisis definitely brings corporate companies, big corporate companies to you guys, certainly is one of the factors. Undoubtedly, as well as the very high rates of education and talent.

Both are the Irish talent and the talent that we have attracted it from elsewhere, the pro enterprise policies, the stability, so even post you know, it was known all out last year we're likely to go into the agreement, we have continued to see even though we're increasing the rate for companies over seven in frontever absolutely not and in fact, you know, we gained market share of FDN and to Europe during twenty one in the midst of the pandemic.

And that's because again I think, you know, when companies were much more cautious about the investment decisions that are made, they couldn't travel and so on, they decided to go with stability and track record. And you know, we have seventeen hundred companies from across the globe operating in Ireland, many of the global brand names that you have mentioned, but also companies internationalizing for the first time out of the US, out of other countries, and they're choosing Ireland.

To forty nine companies invested in Ireland last year, to be fair, and I'll give you this that in an environment that we are in today, where you realize you can be in a market and things can change pretty pretty rapidly, you do look for stability. Stability in terms

of setting up your international operations. Yeah, to that end, Martin, I'm wondering about what you need to go out and sell to potential investors who are thinking and considering Ireland now that the tax rate that there is parody and one from one country to another. You talked about education, you talked about skill level, but but what is the number one selling point right now, and that there is

parody on the tax level. The number one conversation that we are having with clients, and this has been the case, I would say for at least five years, it's talent, talent, talent, talent. It is those companies and those countries that can attract, retain and grow talent are the ones that are going

to be such. I have to jump in here, Carol and I were part of a Bloomberg Live event last week work Shifting, where we focused on the future of work, and the theme was how difficult it is to attract and retain talent here in the United States in a post COVID world. How would you characterize it in Ireland right now? Is it tough for companies to attract and retain that talent? There are talent challenges everywhere. I would say relatively, our Land does very well because of that

education system I mentioned earlier. You know, we have really high participation rates in third level. We have really tried to align the output from our education system with the needs of enterprise. But crucially we have remained open and welcoming. Say immigrate, are you gout? You guys are welcoming. Yes, absolutely so, your full mobility within the European Union. And then you can where the skills aren't available within the European Union, you can bring in a talent from outside

of the European Union. That is, you know, the a key selling point Martin. How does the economic global economic environment look. We've just got about forty seconds. Yeah, it looks very challenging and uncertain, to be honest, I mean it has been a very challenging two years, we were just I suppose, seeing some stability and across the globe economically,

we were seeing those global FDI flows recover. And obviously the recent developments in Eastern Europe have certainly, um you know, created a whole new level of challenge which we weren't dealing with up to that. Is there any talk of recession or is there talk about recession in your home countries?

You look at at the moment at predictions are for about five percent growth this year, So elsewhere do you get Listen, I think we're in un chartered territory at the moment, so I you know, I think most recent predictions from kind of the international institutions are sowing still positivity for European Union. But let's be honest, you know,

everything could change in coming weeks. We're very serious and watching what's going on in Ukraine, but every once in a while we need something on a little bit of a lighter, lighter fair And I gotta say, I was walking around in my hometown and ran into a St. Patty's Day parade. You are actually headed to the White House, are you are? Your Your group is yes. So this week every year you know, we're we're, we're. You know, there's a huge governmental presence in the US and indeed

across the globe bringing the Irish message. I mean this year that the plan was very much a celebrity, celebratory message. I think post COVID it would be the first time two years exactly. This is the first time in two years. Having said that, somewhat tempered obviously given what's happening in Ukraine.

So it is a message I think, still a celebratory message after two years of of COVID where Ireland came through that, you know, I think it relatively well, but also solidarity with Ukraine obviously in the context where we find yourself. We will be down in d C later

in the week. Uh. Normally the Prime Minister of the Theater gets to meet with President of the Day and President Biden has again UM will again host at such a meeting on Thursday, so the theatock will meet with them and I will be in the White House for the traditional Shamrock reception. What's the message that you're hoping to get across that day. Yeah, I think the focus on on Thursday is likely to be on on three things.

Undoubtedly Ukraine and developments. There will be I think on the on the agenda, very high on the agenda, the very strong bonds between Ireland and the US, and you know how we continue to build them. I mean they are extraordinary strong. And then Todly braggit in the Northern Protine call. I think it's likely to come up with one. Are you gonna have corn, beef and cabin listen, We'll have to see. I'm just saying, Martin Shanahan, safe travels. We always appreciate that you make time for us. He

is the CEO at i D A Ireland. Here on Bloomberg Radio, you're listening to Bloomberg Business Week with Carol Masser and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. So this next story, it is one of the most right on the Bloomberg. It's also the Bloomberg Big Take, and it is in the upcoming new issue of Bloomberg Business Week. It'll be out later this week. It's really the story everyone is and needs to read. It's about the eighteen minutes of trading chaosk to him that broke

the nickel market. Makes me think of the tin crisis of the mid nineteen eighties. I don't know about you guys, unforgettable moment exactly that ten crisis that I knew so little about, and I read Jack Farchis story in Business Week. You're hearing Joe Webber, editor at Bloomberg business Week. He's with us in the Bloomberg Interactive Broker studio. Jack Varchie

is senior Energy and Commodities reporter for Bloomberg News. He joins us on the phone from London in all seriousness, Joel, Um, that's a superlative that I think last week and this week we were using and are using because of how big of a crisis this was, Yes, and basically remains. You know, a week ago the nickel market basically came to to an utter and complete halt um that basically remains.

We don't know exactly how that's gonna end yet, um, But you know, for me, like all of a sudden, like we published a big nickel feature like a month ago, wasn't a month ago, It seems like forever. Uh. And that one was obviously about this huge scandal involving Singapore, right, and now we have a tycoon in China all wrapped up in this one jack, Who who is he? And

what are the stakes here? His name is san Juanda and I'm sorry I probably miss brounced that, uh, but he is the owner of a company called Singshan uh and and in many ways he's quite an impressive figure. Um, you know, starting out from from pretty much nothing, he built this company, Tingshan into what is now by far the world's largest producer of both nickel and stainless steel.

And he's really introduced some technologies and some techniques that have pretty pretty much revolutionized both the nickel and the stainless steel market. Um. But the issue that's that's that's come along is that the last few weeks he found himself with this big short position in the nickel market, and he's been squeezed and squeeze to a point where his his short covering and his bank short covering has caused the nickel price despike two in a little over

twenty four hours. And the thing is we care about it. I mean, it really caught all of our attention because this is a commodity that, as you write, touches the entire global economy. It's important. Yeah, that's right. I mean, you know, we talk about short squeezes, and I think everyone remembers, you know, the stories about Game Stop and

that kind of thing last year. But it's a bit different when you have a short squeeze in a commodity than in an equity, because this means the price of nicol going up, and nicol is in stainless steel, and stainless steel is in all of our homes. You know. I'm pretty sure that all of you there have cutlery in your cutlery drawer that's made of stainless steel, and

lots of other things in the white goods around your house. Um. It's also crucial for electric vehicles because an awful lot of the batteries that are using electric vehicles contain a lot of nickel. The London Medical Exchange, the London Metal Exchange, excuse me, is an integral part treatment a well, and the metal exchange might after and and that's a that's a big question is the future Jack, as I read in your piece of the London Medal Exchange, Um, how

does it play into the story and its status after this? Yeah, I think it's very uncertain. I mean, the big thing that has caught a lot of people's attention more than just the twice volatility, which is really extraordinary. I mean, it's hard to overstate, you know, you don't see commodity prices moving two d in twenty four hours. I think it's probably the most extreme moves that I've seen in my career, and that most of the people, including some

of an awful lot older than me, has seen there. Um. But the thing that has really caused a lot of controversy is that after the price moved on Tuesday morning, in this period, there's eighteen minutes that we write about in the piece, um from you know, around fifty houses of the time all the way out to a hundred dollars of the time in the space of a few minutes. Uh, the MMY suspended trading in exchange, and then they decided to cancel those trades that took place on the Tuesday mornings.

That's about four billion dollars worth of trade that they're just canceled. Um. Now, there's an awful lot of investors, heads funds, uh they wanted to play as golden facts among them who are very cross about this and have been complaining to the ELLEMY and saying you can't just

can't do that. You know, if you want an exchange and people trade, you can't decide that then as the fact, just the cancel of trade and a lot of people saying that they might no longer trade on the enemy after this, because how can you have faith that you can trade on the exchange and your contract will be honored if the exchange can come along and cancel it

after the fact. And obviously, Jack, one of the things that makes this different is that there's a physical element to how how Nickel trades, right, um, So so talk to us about your reporting uh today actually right, because we think there may be a way out of this yet. Yeah, we've moved We've moved forward quite a bit today, I think, um in terms of beginning to see how the situation might be resolved and we might begin to see the

me Nicol market reopen. Um. So Mr Shang of seeing Shan has reached a deal with m with his banks, with the banks that which he held his his short bet in Nickel led by JP Morgan, that they will give him a standstill so they won't ask him to

pay up his margin calls. They won't make any further margin calls on whom um they're putting together alone facility for him and essentially to allow him to hold on to this short position not to be squeezed any further um and they're hoping that the price will then go down to a more normal level. And uh, these billions of dollars of losses that he's sitting on at the moment, applied to fifty valgy dollars, nickel will then get much smaller.

And here will he will be able to make money from his business producing nicols stainless and loans that could allow element nicol market to reopen at some point in the coming days. We still don't know when that's gonna happen. All Right, We're gonna have to leave it. There are a lot in this story. It really helps explain what happened, and I mean it was something that happened with a

lot of superlatives that we talked about last week. Our thanks to Bloomberg New Senior Energy and Commodities reporter Jack Forcie, and of course, our thanks to Joel Webber, editor of Bloomberg Business Week. This is Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio.

A lot of stories in China today. We've talked about the panic selling that we're seeing gripping Chinese stocks, the biggest plunge since OH eight, widespread lockdowns in China due to COVID infections, how they could affect half of the country's GDP. Also questions about the relationship between China and Russia. And then of course an interesting weekend column, his Saturday column by Andy Brown. Yeah, and really really fascinating one.

Andy Brown is editorial director at the Bloomberg New Economy. He's what isn't the Bloomberg Interactive at Broker Studio. Andy, When I started this, uh, this piece, I had no idea where it was gonna go. H. South Korea, Yeah, this is this is a big one. Why do we need to keep an eye on South Korea when it comes to a new front in the Cold War? Well, because South Korea is the key ally of the United States in Asia, and they've got a new president uns yule and Um. He is a China hook. And on

the campaign trail, he made two promises. Firstly that he was going to align his foreign policy much more closely with Japan and with the United States. And secondly suggested that he would try to seek full membership of the Quad, which links the United States, India, Japan, and Australia. And the common thread in all these and other regional endeavors

in Asia is resistance to China. And the question now becomes, We've seen the beginning of a full fledged Cold War in Europe with pitting NATO against against Russia, and are we going to see a second front in Asia? So, for for the South Korean government, it's much more about China than it is about North Korea. UH, it's about both UH. And for the United States and its allies in Asia, there are clearly a number of security threats.

North Korea and it's new and it's nuclear weapons are a immediate doomsday threat to South Korea and North Asia. Indeed now increasingly as they produce I C B m's threat to the mainland United States as well. But China is very very much a part of the equation too.

So as you watch what's going on right now in Ukraine, and we're also trying to figure out where China is on all of this, do you think that we are beginning to see kind of the world divided up in a very different way and a longer term, no doubt about it. Well, certainly Europeans are starting to think about an authoritarian axis anchored in the west by by in Moscow,

and in the east in Beijing. And there are clear parallels between what's happening in Europe and what's now happening in Asia, which is that democracies and middle size countries are standing up to authoritarians and saying, you know, no, we're not going to be pushed around, We're going to be defending our freedoms. Can China afford because who buys all of the Chinese goods folks in the US? Right, Like overwhelmingly it's an expert. So can China afford to

keep its relationship with Russia? Like what's how do you feel? Like? It's such a tricky one that they're straddling and increasingly that's what happens when you straddle right, Like it's like at some point you've even got to jump to a side, right exactly. And uh, And they are eventually sooner actually rather than later, going to have to make a decision.

But look, you know, clearly from an economic perspective, they can't afford to lose Europe, which is clearly a massive market but also a source of technology, and same with the United States. On the other hand, there worldview is very much aligned with Russia, where you have two autocrats who are trying to remake the world. Putin is trying to redraw the map of Europe and she Jimping is

trying to do the same thing. Uh In Asian and as they say, Middle Powers are pushing back increasingly vigorously. But shi Jingping has fair to say, a lot more leverage. I mean, it is the second biggest economy in the world, and like Carol said, the United States and much of the quote unquote Western world is inextricably bound due to supply chains and you know where we get our our goods from. Yeah, well, I think that was always the assumption.

It's not like US companies could isolate China the way it isolated Russia. That's right. And the assumption I think that China has always made is that, you know, it's market is so big that Western countries and Western companies could never afford to to to sacrifice that that gives

them enormously rich. And indeed it does, but I'm sure they will have been very surprised to have seen in Europe how countries like Germany, like Switzerland are prepared to sacrifice, make pay deep, deep economic costs in order to stand up for their freedom and liberties, or to see another Asian country like South Korea right like increasingly, it's interesting the pushback against China, where I think, I don't know whether there's it. A few years ago, everybody would be

much more fearful to do so. Is that fair or not necessarily? Well, yes, and the pushback is coming as China becomes more and more assertive in the region. There's countries I mean, in a sense what Ukraine has allowed people to look into the future and see the potential for conflict in Asia um with of course Taiwan being the prime target of of China's efforts to redraw them

map of Asia. But you have We've talked with you about this, and you say, we shouldn't assume that what's happening with Russia Ukraine that the same would happen with China to Wan. Taiwan not immediately, so it's timing for several very good reasons, at least that an invasion of Taiwan is an enormously more complex and costly endeavored than

a land invasion of of Ukraine. Plus, of course it would blow up the global economy because Taiwan and southern China generally, that part of the Western Pacific is where all the high tech supply chains intersect. What's the what's the tight rope that Shijin Ping has to to walk right now, especially at a time when COVID is leading to the shutdown of entire provinces and in Carol's been talking about this for weeks. At this point, the decline and value of equities and company is listed in China

has just dropped. It's all it's all going wrong for she jumping now that it looks as though Omi crown may have started to break out. You know, have thousands of cases in China, and if that breaks out into the general population, with a vaccine that doesn't work very well against omikron, and with a population that has almost no natural immunity, it could be a it would be a real disaster. Um As you say, the economy is

turning south, it's slowing quite rapidly. A lot of this is self inflicted, She jimpin cracking down on big tech as well as going after the reigning and the access is in the property market. And now on top of all this, you have Ukraine, which is going to of course is increasing dramatically increasing inflation around the world through energy and through food. Ukraine is China's bread basket. Well, this is what's interesting. I know I message you last week.

Was it the second in command stepping down or planning to retire in China? And I asked you, is this significant? And I'm not going to say his name because I'll Chinese premier this is lately le Ka Chan, thank you, And I asked you, is this significant and what does

this mean for President G's future? Well, he made this remark as he's stepping down, where he says, you know, we really must keep the door open, open door policy, which made you sort of think does he know something that we don't, because it's very clear that what part of China's response to what's happening in the Ukraine is to harden its own economy against sanctions, to look inward, to become more dependent on its own technology, uh and to retreat and that that is going to accelerate a

trend that we've been seeing in China for the last two or three years. Do we you know the headline that crossed about um the potential or that that Russia asked China to help it out in terms of military Do you have a take on that? Do you have a thought on that? China has got a very big, momentous decision to take. Is it going to go all the way with Putin? Is it going to follow him regardless of what he does, how many atrocities he commits,

how many cities he flattens in Ukraine? Or is China going to be in some way part of the solution. They're never going to abandon Russia. There's certainly not going to talk their certainly not going to be prepared to see Putin toppled in Russia. That would be a terrible signal,

of course for she jumping himself. But are they going to be part of the solution in terms of things like providing humanitarian aid to Ukrainian refugees or indeed to help in a mediation role, although I'm highly skeptical that they're in a position to do that. Which route do you think they'll take? Andy? I really don't know, because so much of it is this, This decision is increasingly occurring in the mind of one person in China, and that is She Jin Ping, and we don't have insights

into how he's thinking. Um. If I had to, if I would say that the chances of China deciding that it's going to go all in and become a peacemaker in in in the conflict UM is actually quite small. Okay. I know I ask you this a lot when we have our discussions, but I do think about our audience and and and in terms of how the plays out for investors who are listening because I am curious about the new world order in terms of companies pulling out of Russia, and would they at some point maybe start

to think about pulling out of China. Um, what is your thoughts when it comes to the investment audience and how they see it or how they should be thinking about it. Well, clearly, the stakes in China are exponentially higher. The Chinese economy is ten times bigger than the Russian economy. The Chinese human market is the most important market in the world. Is a rule of thumb, half of everything sold in the world is sold in China. Nevertheless, companies

too are responsible answerable. Two different stakeholders and I think China will have been very surprised and quite shocked at seeing the exodus of all of these big brands from from from Russia, even though sure it's much easier for them to exit, nevertheless also costly. All right, well, this is why you're Saturday newsletter is a must read. Andy, thank you so much, so much going on, and we really appreciate it. Our editorial director for Bloomberg New Economy

joining us in studio. Yeah, but you let me drive? No, no, no no, who's going home? I'll I want to drive? Its good question? Drive is the drive to the globe? On Bloomberg Radio, Mike, folks, just about two minutes left, really eleven minutes left in today's trading session. We are just bouncing around. Are loads of the session, as Charlie mentioned, slight gain in the Dow Jones Industrial average, but a lot of pressure on those tech names NASDAC really that

underperformer down one point nine percent. Great to have with us, Sarah Ponzac, she's senior wealth strategy associated over at UBS Private Wealth Management Management, a former Bloomberg News and Media colleague. Our friend. Also, yeah, part of the family. I think we're going to say easily. She is on the phone from Lord of Now Florida. Sarah, it is so great to have you here with that's how are you. I'm doing well. It's so great to be back with you.

And yes, definitely, uh still part of the family. I'm glad to hear that. That's so good to hear, Sarah. Yeah, we love having you. Hey, help us make sense of what's going on here. I mean, at one point today the S and P five hundred hit a level that we last saw in May of Um, we're watching stocks fall to new lows and China as well. Um, how do you take it all in, Sarah? So, the market is certainly dealing with a lot of cross currents top of mine. Right now, you have investors in markets focus

on the geo political stress between Russia and Ukraine. And on top of all of that, it is that week which we know has been coming for quite a long time now, but the Federal Reserve is expected to raise interest rates for the first time, and we see that rippling through the markets once again today. I mean, you see the NAZAC, for example, back in a bear market, down more than we see tex stocks and high value

Asian companies really taking the brunt of the selling. But to your question of how do you make sense of

it all? How do you take it all in? And this is something that we've been really reminding our clients of because if you zoomed out and you look at the past couple of years, ever since March when when COVID really said markets crashing and then they just came right back up, we've all been spoiled and we've all been made to feel as though markets only trend in one direction when we all know the reality is it's

not true. And there's a statistic that that we've really been gravitating too lately, and and that is if you actually look at the SMP five hundreds average intra year decline going back for decades, that amount is actually a decline of four The SMP five hundred hasn't even fallen that amount. That's here. Granted we're very close to that number, but we haven't quite hit that yet. And if you actually look at history, okay, well then what's happened after that?

Do we continue to fall? Usually eighty percent of those years the index actually ended higher. So it just goes to show that volatility is very uncomfortable doesn't feel normal when you're in the midst of it, especially after the past couple of years, but that can help the cut it in perspective that you know, you can't have award

without risk. Yeah, the interesting part is right, and we've talked a lot about you know this, Sarah, that in um an environment, especially when the Fed starts to raise rates, typically that ends up being good for stocks. The problem is the outliers. We just talked with um Martin Shatahan over in Ireland, who's responsible for bringing in foreign direct

investment into his his country. Nobody had this on their radar, that the that in terms of the Russian invasion into Ukraine and the amount of volatility and now questions about the outlook for the rest of the year, like all of a sudden, We've really got to figure out how this this changes things, How does that factor in? What are the questions that you know your clients over at

e b S are are asking. You're absolutely right, this muddy is the outlook because not only do we have a federal reserve that is now going to be increasing interest rates, but at the same time, when we think about the Russian invasion of Ukraine, that has major implications for global growth. That has major implications for the inflation outlook. And we all know at this point that the Federal

Reserve is so unilaterally focus on inflation. So the concern is that do we see the scenario in which growth against the decline, and yet we still see the Federal Reserve forced the hike interest rates pretty severely because of the inflationary outlook. Now, with that says, though we still do believe that the Federal Reserve can pull this off, we all know they're stuck at a very very difficult

position right now. But right now, if you look at what the markets pricing, the markets pricing about a hundred fifty basis points of interest rates increases this year. Considering the fact that interest rates right now are are set pretty much as low as you can go unless you go negative, monetary policy will still be very accommodated. And I know we've been talking about, Tina, there is no alternative to equities for quite some time now, you know,

it's it's still difficult when you see interest rates. If they rise to between one and two percent, people are still going to need to go out on the risk curve and get income from somewhere and where is that going to be? So at this point we are telling investors to position for a rising interest rates. So if we're talking about fixed income, we would say, maybe look to areas of the market that have a floating rate structure,

so that could be senior loans. Also, if you can handle illiquidity that we've been looking to private credit for example, So these are areas of the market investors or companies that make loans to private companies. They have higher interest rates typically and they are floating. Great those interest rates rise, that doesn't necessarily hurt you quite as much. And on the equity side, we're still fans of large cat value.

Talk about financial energy, conservative expression area industrials for example, so areas of the market that still should benefit relatively in arising the interest rate environment. Well, and when it comes to um the energy markets, I mean we've seen you know, tremendous runs sarah in that area certainly over the last year or so. I mean, it's up already this year, and we get it, we understand why because of the volatility, but really the strains on the energy markets.

Is this a long term play even as we continue to see the world move away from fossil fuel. We know it's going to take time. It really is pretty unbelievable to watch, especially considering the fact that back when I was working with the two of you, we were talking about oil prices going negatives right and rains right. A strange, strange trip. And the way that we look at energy markets is we wouldn't say to completely throw your portfolio allocation out of whack with a long term

energy play. The way we more so see it right now is if you're looking for a type of hedge for your portfolio, what could that hedge be, Well, maybe introducing some energy equities, maybe introducing a broad based commodity strategy for example, that could help act at a hedge. But even the suddenly seen in the past couple of weeks, it is really really difficult to forecast energy prices and if you're caught on the wrong side of that was

too high an allocation, that that could throw you off. Sarah, client comes to you with some new money to deploy. How do you get into the market right now? Do you think that it's the type of environment where you dollar cost average that there is still room to find value. It's going to go lower or do you say this is such a great opportunity what we're seeing right now, it's time to get in. It is a great question.

And I would say if if we're talking about equities right now, we would still say it makes sense the dollar cost average you, especially in the midst of such historic volatility that we're seeing right now, you don't want to throw a really large chunk of cash into the market all at once, so help your self out and dollar cost average in at the same time, though, you don't want a big chunk of cash sitting and well, you don't want to chunk of cash sitting in cash,

I should say when inflation is running at seven point nine percent, highest for forty years, so you know you still need to be invested, but you can moderate your risks by writing out that investment over a period of time. Where don't you want to be? Where don't you want to be? That is a great question. Um, So what I mean, I would say, we're not fans of sitting in cash right now, and just because of inflation right now,

you have no you have no chance whatsoever. Uh. And at the same time, as of right now, we're still not a bistic fan of government credit. We feel like a very diversified core bond allocation. But if we had to really pick one place on the market, we're more so focused right now on areas of the market that that can out perform a mid rising interest rates. All right, We're gonna leave it on that note. It's so great to hear your voice, uh, and so great to have

you joined us. Sarah Han's X, senior wealth strategy associate at UBS Private Wealth Management, of course former colleague here at Bloomberg. She is joining us on the phone from Fort Floaderdale, Florida. We miss her, and we do. I can say that right. Yes, you can come back anytime, and you will. I love looking up there and seeing her on Bloomberg TV too. I agree. I agree. Thanks

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