This is Bloomberg Business Week. I'm Carole Masser and I'm Bloomberg Quick Takes Tim Stanovk. We're here every day bringing you the latest news from the world to business and finance, plus technology, politics, economics, all purtnising the power of Business Week reporters and editors, not to mention our journalists and analyst in more than one twenty countries. You can download Bloomberg Business Week and iTunes, SoundCloud, or Bloomberg dot Com.
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. Here back with what's going on and just talk about some of the big macro stories that are going on in the world. But also in the luxury auto industry is Stefan Vinkelman. He is chairman and CEO of Lamborghini, and he's with us in our interactive broker studio right here in New York City. How are you. I'm very good, Thank you, I say
lightly um. There is so much going on in the world that I am always curious Tim and I are when it comes to whether it's luxury automobiles or the luxury space in general, how it impacts your buyers, whether it's the war in Ukraine, whether it's supply chain constraints, volatility in the financial markets. Been a crazy first quarter. What what jumps out? I can tell you that since two and a half 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. Is that typical? This is before let's say, beforeies 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 in our face where we have five six days of view of what is happening and we are not losing any production at I mean, so this is for us pretty
pretty okay. Then it's clear stock market did anything slow down that first quarter because of the molty No, as we speak, I have to tell you, and I'm unable to make let's say, a forecast for the year 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 they are more people with the money at their disposal in comparison to a decade ago, so the the words is increasing and they're
more benefiting forments. We have a very young customer base and they're very proud of owning a LAMBORGINI. We have to keep the promise of always delivering dream cards. This is par amount for this suc because of inflationary pressures supply chain. You mentioned the chip shortage, labor casts, all the inflationary pressures that we see happening around the world right now. How much have you had to race prices so far? We have not, let's say, transfer the cost
of of the material cost 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 will need to wait for a year for a Lamborghini, they're probably willing to pay more more from 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 they 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 chain it? 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 geopolitical 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 sell 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 of the order bank or that 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 after the war. 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 now, I'm sure about that. We know the incredibly some incredibly wealthy oligarchs in Russia have had sanctions and posted down 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 cards. Have you been approached but not to my knowledge, but we have We have our dada's all partners worldwide, So at time being I don't see that there's anybody all right, the hard parts over. 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, Frank you speaking, I don't know, because once the war is going to be over, that 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 we are we will be aligned on what the government is going
to tell us. But does it make you nervous? Because it does feel like it's a new Russia right now. But this was something which nobody was expecting and U, or at least very few people were expecting. And I think that this is something which in in the twenty first century or something which should not happen. Therefore, we will see. But okay, it's a pity. It's a pity also for the Russian customers in my opinion, Yeah, yeah, absolutely,
in Russian citizens and certainly the Ukrainian citizens. Hey, okay, hard part over, So tell us why you're in New York. We do have the New York Orders show you guys have a global debut. Tell us what's coming up? Yes, on Friday there will be UM the view of the new version of a Hurakan. It's called Hurakan Technica. Um. It's a perfect bridge between let's say the weeks the
two week stremes. We have not the Evil, which is a really drive cary and d ST which is the closest to a race car we have done on the Ura Can. So this is a perfect mix of driving pleasure, lifestyle. It's a world car, right, It's a broadcast which is very easy and very good also to drive on the racetract. So it's like which is a new front and new rear, real real seering, more down force, less drag, more holespower. So it's like, which is very easy and fun to drive.
Who's this for? You mentioned were wheel steering. I've never driven a car with rear wheel steering. A lot of the super sports cars yes about acceleration longitudinal performance, but this is something which in my opinions, are given. It's much more about the lateral acceleration, how you get into the corner, out of the corner. The way to power ratio, the breaking, so the handling in one word, which is
part of how we define performance. And therefore the real reseeing is enabling you and and different types of speed to be more performing. The reaction time is less. Well, Lamborghini, you know it goes hand in hand in terms of design, innovation, speed, performance. Um, how is it your customer in particular, what is it they increasingly want, especially as the auto industry, whether it's through e v S and so on and so forth,
it is changing. So they want to buy into a brand which is including So there's something which they want to be part of their loyal right they're loyal to. One is the brands or events. In a very easy words, it's about sustainability more and more, it's about digitalization. These are the main things which people look into. And due to the fact that our customer base is becoming younger and younger, we are forecasting that by five we will
we have seventy of our customers younger than forty in Russia. Sorry, in China for example, we already have an average h so we have very young customers. I just want to know, did Matt Miller give you a hard time about a campaign. Ev you got to hear the roar of the engine. Did he do it? No? Yeah, somehow, somehow he would ask, But I convinced him that this could be still a good time for us. You are such a good sport and we wish you well and good luck with the launch.
Stefan Fie Colman he of course as chairman CEO of Lamborghini, and we are delighted have had him here in our studio on this Tuesday. You're listening to Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. Let's not go to Leona Baker. We've talked a lot in the past well week, Carol about what exactly Twitter is going to look like under Elon Musk. Who knows, but now it's not necessarily under Elon Musk.
He is the largest individual shareholder with more than nine percent stake in the company. But what could he do to Twitter exactly? And so that's what our deals team looked at. Specifically, let's get that story from Blueberg News deal team reporter and leader, I should say leader, Leanna Baker. She joins us via zoom in New York City, Leanna, good to have you here with us. Uh day doesn't go by without some kind of reporting on what Ellen
is up to, especially when it comes to Twitter. Uh So tell us what you guys set out to do and what you thought about it in terms of what a Twitter takeover how it might work. So usually my team is trying to find out about takeovers that we know are going to happen. This is sort of a theoretical exercise to understand if Elon Musk wanted to buy Twitter,
how would you do it? So there's a few ways. Um. One way is that you can keep a quiet shares of the company, because you mentioned that he's already the largest individual shareholder, so why could be not, you know, by even bigger chunks of the company. One thing we looked at is that that's a possibility, but Twitter calways put in a poison pill to prevent Mosk or any
shareholder from getting an even bigger steak. That's so old school, right, That is so old school, it feels it's true, but poison bills are still used a lot when there is a big shareholder trying to kind of get control of a company by acquiring shares in the open market. Twitter we've heard hasn't done one yet, but it's something they're you know, monitoring to see if they might need to to pull that maneuver. Another way that Musk could try
to buy the company is doing a tender offer. This seems sort of unlikely, but what this would mean is that he would um put out a statement saying if any share olds the Twitter want to sell to me with this price, UM, you know, please go ahead. This uh would also be pretty hard from us because you have to get a certain amount of shareholders on board, usually more than Another thing he could do is what he tried to do a few years ago with the
funding secured story tablot take privates that ever happened. He could go to the regular route of working with investment bankers and trying to get square to the Negli. That's something I want to talk to you about, Leona, because we had Mandy singing here a week ago Monday, and that was this was before we even found out that he would be offered a board seed and then were
not rejecting that board seed. And he mentioned silver Lake is a potential partner UH that could team up potentially with Elon Musk to actually make a play for the company. How would that work? Like UM already put in a billion dollars in Twitter, and they have a board seat. Their post CEO, E Jun Survant puts on the board, so really also had a history with Musk. They were one of the names that Mosk had spoken to about
the potential test like take private that never happened. That said, it would be pretty tough for them to maybe partner with Moss because the silver Lake is now associated with the board and Musk rejected the board seat. So we don't know if there's any tension there. I don't want be speculating, but certainly that is a private actuality partner that believes in in Twitter. So it's something to think
about a side pool for. Like there's so many private equity firms out there that are always looking at opportunities. So we're trying to keep it up in mind, Hey just got thirty seconds, So there's like when all of a said and done, there's just a chance he just sells it all and walks away right just quickly. That seems like a really good option for him. UM personally, I just think bus might be too busy to be pulling off a huge emin a deal a farm twitter
would still take a lot of time and focus. And he has so many other projects and public companies he's evolved in so uh. But if he were to sell his steak, he probably used to work with an investment bank. It's such a big steak you have to sell them the block trade. So we're looking at all these options, and he's still gonna work out that human robots so like, you know, that might just take up too much of
his time. Hey what about self driving robot? Or there's the boring hole that we need in all our major cities and the neink Long can we go just naming other things that Elon Musk is working. Oh my god, Leanna Baker, thank you so much. Steals Team leader U Bloomberg News via zoom in New York City. You're listening to Bloomberg Business Week with Carol Messer and Bloomberg Quick
Takes Tim Stinovic on Bloomberg Radio. This is Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. All right, SPACs heard of them? Yeah, I have? You know, you don't hear hibout as much in two as you did in late uh. These special purpose acquisition companies continue to the very much be part of our market conversations, are also part of the conversation when it comes to concerns that are on the radar
of regulators. This story Bloomberg Big Take, and it's also in the upcoming new issue of Bloomberg business Week. The story by Noah boo Hire and Matt Robinson. Noah's a finance reporter for Bloomberg News. He joins us on the phone from Seattle. Joel Webber is editor at Bloomberg Business Week.
He's with this in the Bloomberg Interactive Broker's studio. Joel, what did your team, the team at Bloomberg Business Week find when they crunched the data when it came to perhaps interesting activity in SPACs before a SPAC goes and acquires a company, well in ongoing propaganda for a return to office stories. Um. No, it was in New York last weekend. We rubbed shoulders and he was like, Hey, I've been working on this back thing. You should you
guys should take a look at it. And we looked at it and we're like, oh, this is really interesting. So the way that UM spack works is there's something called a stock warrant that gets basically issued in advance of a SPACK happening, and it gives holders the right to buy shares at a specific price. And when Noah started digging into that data, he found some interesting stuff.
Right now, Yeah, UM, you know, as you mentioned there, there are these warrants out there that are that are traded UM ahead of time, and and they're they're interesting to look at because they're pretty volatile. They tend to spike on deal news. UM. And the reason we even started poking around this is that several months ago there were some some well timed trades in the warrant of the SPAC that that uh that is UM merging with Donald Trump's media platform. And we know that regulators were
poking around that one. So we asked the question, like how common was this there there there you know, literally been hundreds of SPACs that have I POD in recent years and and and um you know, hundreds that have announced or completed mergers and and so we started looking back through the data and UM, we're looking particularly for instances when UM the volume of warrant trading spiked uh in in in the days and weeks ahead of a merger announcement. Now, UM, I should say that there are
a lot of really benign reasons for that. UM. A lot of these merger talks leak early in the press, which is a which is a good reason for for why trading would pick up UM. But a lot of the spikes in trading that we uncovered, UH weren't so easily explained, And so the story was really about that. And as we started poking around, we realized that you know, we weren't the only ones who who who found this
kind of activity interesting. UM. We understand that the sec UM and other regulators are are examining trades ahead of these the all announcements to figure out if if the trades were based at all on inside information. Well, and one of the it looks like inquiries by regulators includes dwack, which I just love to say, and that is a dwack one more time. It's like walking into a door or it happens to be a spack connected to former
President Donald Trump. Tell us about that. Yeah, so what happened there is UM, the warrants for for that spack started started UM trading freely. I believe it was late September of last year, very shortly after they started trading. There was just a pronounced pop in in the volume of those warrants UM. And then about two three weeks later, the merger gets announced and the value of those warrants just stores I think they were, you know, before the deal,
we're under fifty cents apiece. They eventually climbed to more than thirty seven dollars each. They've moderated some, but but the potential was there for someone to uh make a very quick and hafty UM profit. Now we don't no one has alleged wrongdoing in that case. We don't know UM what the outcome of the SEC and FINRA's information requests is going to be, but we know they are interested.
What about when it comes to Vecto i Q Acquisition corporations purchase of the EV maker Nicola, because that shows how quickly, as you write, investors can profit. Yeah. Look, that's that's an example we call out in the story UM. And you know what we we found there is that there was there was a pickup and warrant trading about two weeks prior to that UM merger getting announced. And uh, you know, the warrants quickly went um from under a
dollar to more than more than four dollars. They later you know, as as the deal got closer to completion, rose significantly higher. And so really the question here, what what what all of this raises is you know, how leaky were these deals? And we're people who were involved in them, um doing enough to safeguard the material non public information? UM. Insider trading cases are extremely hard for
regulators to prove. Uh, but um, you know, the data is is suggestive of you know, a potential for people to be trading on inside information. And one of the bits of reporting that I thought was interesting is, uh, you too. You spoke to a professor at New York University School of Law who has written a ton about spacks,
Michael oldreg Uh what did he have to say? Because there's the law firm component who's working on spots but SPACs but uh, and you know, obviously lawyers are going to be a key part of this, but not every law firm is top tier, right, yeah, I mean SPACs historically we're we're a bit of a backwater in the financial world. So UM, the companies that were big in this at the outset were not not your um, you know,
most well known firms. Um. That professor you know said, a lot of these these law firms we're taking um uh this business on sort of a you know, uh, they were turning through a lot of these deals and um. The question is whether you know folks didn't dot the i's and crossed the teas and um. You know there's there's a lot bigger firms that are the deal with M and A more frequently, probably have more controls and
um rules around how information gets shared. And and his point was really just this is a world that that that didn't attract the you know, most top flight law firms. So maybe there was a potential that things weren't done right. You know, just in the last thirty seconds that we have with you, iswy one. Was that the peak when it comes to SPACs at least in this cycle or are they kind of a thing for the rear view
mirror right now? Yeah, I'm glad you raised that. So UM look uh, yes there was a burst of this in one as as time went on, you saw, um you see in the data less of a pop um when these deals get announced. UM. So to the extent this was happening, you know, I think it was. It was something that that that may have happened a while ago, and um, but it takes a while for regulators to dig into this stuff. Remember that cover that we did the But there you go, there you go, dack. That's
all I'm gonna say. Jill Weber, editor of Business Week and Nobu hire financial porter at Bloomberg News. Check out the story. This is Bloomberg. I'm yeah, but you let me drive. Oh no, no, no, who's right? Please? I want to drive. It's a good question. This is the Drive to the Clothes on Bloomberg Radio. All right, just about ten minutes left in today's trading session. It's been
an interesting day. We of course got that CPI print, that core number coming in a little bit light, and initially we saw some enthusiasm uh and risk on trade when it comes to the equity markets, but that is not the story. Now we are seeing equities just as we heard from Charlie, just off our loads of the session. So let's talk about the markets. Let's get into it. Veronica willis investment strategy analyst at Wells Fargo Investment Institute. She joined us on the phone from St. Louis, Veronica.
How are you. I'm doing well, how are you guys? We're doing okay. It's been it's been a kind of a wild figure. Yeah. UM, I do want to talk a little bit about what's what's going on with the markets, because well, if we look at the SMP five, we're pretty much at levels that we were last at back in mid March, depending on where you look March sevent or so. I'm wondering how you explained the volatility that
we've been seeing. I think there's a lot of volatility around what's going on with inflation, a lot of volatility related to geopolitics, and you know, we're off of those loads from you know, the worst of the correction in the SMP five hundred, and you know, we're really seeing
some confusion around this inflation data that's come out. You know, the headline numbers were a little bit worse than what we were expecting, but then looking at the core CPI, UM some encouraging data there, just in terms of you know, could this be the peak with energy prices a little bit lower than what we've seen last month, and so could we expect maybe next month some releasing that inflation number, and I think the market is taking all of this
information into consideration and that's why we're seeing a lot of volatility here. I feel like there's just so many unknowns. There was a great column that I read on the Bloomberg today and basically it just said, when it comes to the FED, you know understand that they there's no clear voyance from the Federal Reserve. Don't expect it. They are going to take each meeting, look at the situation in front of them, and make a decision based on that.
And if that means being more aggressive as a FED, they'll do it. If it means backing off because they're concerned about either doing too much or the economic data starts to come undone that's we're going to get is that how we need to kind of think about it. That understand the FED is going to be doing this
in real time. Absolutely, the FED takes into consideration everything that's going on with the economy, everything that's going on with inflation, and they're being very transparent with us and letting us know exactly what they're thinking and what they're path forward that they see at that moment. Is each time that the notes come out each time that they have a meeting, and so I think that that transparency
from the feed is a very good thing. The FET knows what's going on with the economy, and they know what they have to do, and they've told us, you know, what their plans are each step of the way. But
plans don't mean anything. It doesn't matter until they set it down right at the FED Reserve the day of a meeting and say okay, where are we absolutely and you know, as of now, we're thinking that there's going to be a fifty basis point rate hike in May, maybe another fifty in June, but of course all of that can change. A lot can happen between now and May. Well, let's talk about where you should be deploying money right now,
at least in your opinion. Thanks for the notes that you sent before, and to our producer Paul Brent Brennan who who got these to US um US large cap in US mid cap over US small cap. Why is that? So?
We think that right now we're in that portion of the economic cycle where we're shifting from kind of mid to late cycle, and that's where we think that large and mid cap can really shine over something like small cap that's more cyclical, that tends to do better in that earlier part of the economic cycle when we're seeing
that stronger economic growth. The large and MidCap stocks are higher quality, so we're expecting to see a little bit more return on equity there in those spaces as opposed to something like small cap, which, as I said, is a little bit more cyclical, and certainly with um better expectation for US box over international stocks, just you stemmed in our expectation for US economic growth to be the
outperformer on the global stage. Ravonica. It's a big week for the big bank earnings, right, and we're all going to be all over them starting tomorrow. UM. I've been looking at the KBW Bank index. It's down about another one point four percent today, down eleven percent year today,
but down from the January high. I find that a little perplexing considering the move up in rates, which we've all been saying as soon as we start to see moving up in rates, this is going to be good for the net interest margin at all of these big banks. What do you make of the pressure that we're seeing in those big bank names, UM, I think that expectations are that earnings might be a little bit underwhelming for
the first quarter. We have seen a move up in rates, but it wasn't widespread throughout the entire first quarters, so we might not start to see that benefit for financials until the second quarter comes out. And so I think that's what we're seeing right now in this data that um, there could be some disappointments in those first quarter earnings for these banks. UM. So I think that's what the markets watching out for. Is it already priced in now?
Then at this point, considering how much pressure has been on these names, I would think that it's been priced ben But the market is pretty unpredictable. Um, they're looking very closely at what the what they're expecting the banks to come out with. We'll see some earnings tomorrow to see what that picture really looks like. What about picture of the economy. One of the reasons we love talking or hearing from the banks is because we get a
good take on their read on the economy. Sometimes, uh, and I'm wondering what we should be looking for from the banks when it comes to their commentary around that. Well, I think right now, looking at the US we're expecting two point six p m GDP growth, which is a little bit higher than average but pretty close to an average economic growth, but much lower than the high growth
that we've seen. We're looking very closely at signs that are signaling a slowdown in that economic growth in the US, but not expecting a recession this year for the US. Outside of the US a little bit next Sorry, what about next year in the US? UM next year in the US that the risks that there might be a recession are rising. UM, we haven't made an official call on whether or not they're will be your recession, but
it's something in consideration with move higher in rates. But thet you pretty much has no choice to do with what's going on with inflation, and it'll be really key to see whether or not they can orchestrate this soft landing UM to give us a better sense of what might happen in three with economic growth. All Right, we're gonna leave it on that note. Covered a lot of ground.
Thank you, Veronica Willis. She is investment strategy analyst at Wells Fargo Investment Institute, joining us on the phone from St. Louis. Thanks for listening to Bloomberg Business Week. Download the podcast on iTunes, SoundCloud, or Bloomberg dot com, and you can also listen to our radio show at two pm Eastern on Bloomberg Radio or watch us on YouTube. Sarah to Bloomberg Global News