Ukraine Rebuilding Even as Russian Aggression Continues

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. You know. As the Russian War in Ukraine continues on now in its seventh week, I couldn't help but being drawn back to the early March cover story of Bloomberg Business Week, one in which Bloomberg's Mark Champion wrote about Vladimir Putin and how after a quick victory did not seem likely, that his endgame seemed to be reducing Ukraine to rubble, and as we

see the destruction that grows every day, that endgames seems inevitable. Meantime, Ukraine President Voladimir Zelensky on CBS is sixty minutes last night about what NATO nations have done so far for his country. I just want to say that for your support and support first of all for people, because all the people, all the nations, first of all, they push their leaders. It's not about it's not only about your country,

it's about our country, it's about all the world. That was President of Ukraine Voladimir Zelinsky on sixty minutes yesterday. Let's get now to a crucial voice. You've heard her on our air waves before. We're talking about Natalie Darresco. She's former Ukraine finance minister. She served in that position from She was born here in the US, but she spent her after her twenties. After she was educated here,

she moved back to Ukraine and lived there. She's now executive director of the Financial Oversight and Management Board for Puerto Rico. She joins us now on the phone from San Juan, Puerto Rico. Natalie, good to have you back with us. How are you, Thank you, TIV, thank you for having me. Hey. Well, you know it's been a few weeks since we've gotten to speak with you, and I just want to start with getting an understanding of what you're hearing for your friends who are on the

ground in Ukraine. You spent so many years of your life there and you, you know, presumably continue to talk to folks there. What are you hearing? Absolutely, I have in touch all the time. I guess it's really important to note that with all of the news of the horrendous atrocities um and the impending what appears to be massive invasion in the East, 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 have 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 can. And so what you're seeing is this kind of response to the horrors and the tragedies with even greater courage and intent to we build, we knew and normalize, and so I think it's it's it's an amazing combination 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 to 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 here 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. Well, that's

what I wanted to ask you. And I was listening to the Ukrainian president on sixty minutes last night, and I'm just is there he can't give in on anything, Like I'm thinking if there are talks or peace talks, they've already given in right Ukraine. You were there with Crimea and the Carimean peninsula. So at this point, can the Ukrainian presidents 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 and sometime in the future. 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 Dunbas. 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's an enormous country.

It doesn't require any more territory for its population or for its economy. This is not about territory. And um, I think the course 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 different out of 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 piece is always welcome, but the first thing to focus on is not the talks and the outcome of the talks. The first thing needs 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. Natalie Darresco stand stand by, because we're gonna come back with you. We're gonna do some news and then we're gonna come back with the former Ukraine finance minister. She served in that role from sixteen. She's executive director of the Financial Oversight and Management Board for Puerto Rico. Joining us from San Juan in Puerto Rico.

We're talking Natalie Darresco. Yeah, curious to as the Austrian chancellor meeting with President Putin, who are the global leaders that he might listen to in this situation. This is Bloomberg. You're listening to Bloomberg Business Week with Carol Masser and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. All right, want to get back to our guest with us is Natalie Jarresco, former Ukraine Minister of Finance. That was from twenties sixteen. As we remind you, during that initial Russian

invasion and occupation of Ukraine. She's also the executive director of the Financial Oversight and Management Board for Puerto Rico. And you might recall we mention this too, that she was the subject of a Bloomberg Business Week story back in It was entitled the American Woman who stands between Putin and Ukraine. She's still with us on the phone from San Juan, Puerto Rico. Hey, Natalie, does anybody anymore stand between the world and Vladimir Putin? Well, Carol, what's

a good question, Um, does anyone standing between? I think that 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 UN votes, and they are continuing to trade with Russia. They're continuing to buy Russian oil, They're continuing to avoid

applying any sanctions. I think closer to home, to be frank with you, I'm disappointed that so many companies, so many American companies, companies like City and Mars and Coke Industries refused to boycott the Russian market, continue to make announcements that they feel they have a need to continue serving the Russian people in the Russian market at a time when their tax revenues are going directly into financing

this war. And I think that it's it's it's harmful, it's pitiful, especially when US taxpayers are being asked to contribute to fighting the war and defending Natalie. Do you think the sanctions work? And I asked that looking at the data we got a couple of weeks ago that show how high Putin's approval rating is now more in a recent poll, do the sanctions seemed to be working? I think the sanctions are working, but we don't have enough of them. So the sanctions worked to crimp the

financial system. Uh, the problem is that we haven't done enough, and so we've We've sanctioned a handful of banks. We've removed a handful of the banks off the swift system, but not all three hundred. I'm of the belief that every day counts and we need to do much broader, much deeper sanctions. I think it's important the export controls are working. You're seeing that in the defense industry in Russia. Some um, some items they're not being able to be

manufactured anymore because they don't have the imported parts. So over time some of the sanctions will work. I think the challenge is that it's not working fast enough, and for for Ukrainians every day thousands of lives and immense destruction. So there's much more we can do in sanctions, not just in the banking sector, but clearly in the energy sector, and that has a lot to do with europe Um

purchasing oil and gas. US europe purchasing oil and gas is the single greatest financing tool of Russia and until that ceases, that that that money continues to be used to keep the Russian economy alive. I mentioned that the Austria Chancellor is meeting with Vladimir Putin. Who if any one or of of global leaders that are out there does have sway with Vladimir Putin, you know, I haven't. I haven't seen anyone to have that kind of sway. I'm always hopeful every conversation, uh, you know, has a

brain of hope. I think President Makhan has faced uh you know, had multiple conversations, a long conversations and got nowhere, not even in the most basic attempts to establish a humanitarian corridor out of Maryupo, a city in the southeast of Ukraine that has been absolutely destroyed and where people are unable to leave safely. UM. So I don't believe that that the Austrian Chancellor will have a greater effect.

It doesn't mean you shouldn't try. Everyone's try, But I don't believe that those conversations are timely right now, in that Putin is not feeling the pressure yet of the sanctions. He's not yet feeling the pressure that he needs to feel in order to take this conversation seriously, What about um President of China Modi of India. Could they have

some sway? Should they have some sway? I would guess the president she had, given the close friendship that he and Putin apparently have, UH, potentially could have that type of effect. And I would hope that the Chinese over time start to see that although they've been more or less supportive of of Putin in this war, that this is not going to help the Chinese, and that now the global economy and the unity that the Western democracies

have shown is something that I don't think they all expected. Uh. And I don't believe that this continued war is good for the global economy. It's certainly not good for food prices. Uh see, it's certainly not good for steel prices, It's not good for a variety of things that both the Chinese and the Indians US should be looking forward and understanding that the cost, the oupen global cost of this war is going to be great for them, not only

for Ukraine. Natalie, we only have thirty seconds left. But about six weeks ago you joined us, and you were optimistic when a lot of people were pessimistic about the Ukrainians defending Kiev. What's the conversation that we're having six weeks from now. Uh, definitely optimistic that Ukraine encourage fighting and Ukrainian forces will prevail. The unfortunate thing is is what the cost will be of that prevailing. But the Ukrainian people are fighting for their very existence and there

is no other route. Thank you so much, Natalie for for joining us. And uh, certainly what you are seeing on the ground, what you're hearing. I think it's remarkable that they're planting. We've talked about, you know, the importance to the grain market right and feeding the world, and that's the important part of their economy and interesting to see to him them kind of moving forward there on that.

You know, I encourage everyone to go back and read that cover story that Juan Natalie Duresco just learning so much about what she's done in Ukraine and her background, really gets a good understanding of what her role was today too. This is Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes. Tim Stinovic on Bloomberg Radio. I

want to get to today's Bloomberg Big Take. It's a story about how, after billions of dollars being spent in a decade of time, going by the Amazon drone delivery programmed him still not off the ground. Yeah. I couldn't put this one down. It's by Spencer Sober, and it is I read it last night. It came out yesterday at five pm, and I read it. You know, I saved it for last night and I stayed up until

the end. Uh and Matt Day wrote this story. Spencer Sober is technology and e commerce reporter at a Bloomberg News. He joins us now on the phone from Seattle. Spencer, I actually remember it like it was yesterday. It was night before Cyber Monday. It was the Sunday after Thanksgiving, Jeff Bezos goes on sixty minutes he does an interview with Charlie Rose and he says, within the next few years, we are going to be able to get drone packages deliver via drones. Yet, Spencer, here we are and it

hasn't happened yet. Yeah, you know what happened? All right? Well? Yeah, I mean, they they spent a lot of money, um, and a big part of the problem is that they they tried to think of the ideal use case, which would be a drone that can go about fifteen miles around trip and carry a payload of about five pounds. So right now they've got a drone design that's about eighty five pounds, which is huge compared to some of

the rival things out there that are significantly smaller. But they needed that to pack a sufficient battery and sufficient you know, with sufficient power to fly that distance and carry that payload. And what's happened is that they had to go with this tricky design that kind of fluctuates between going up and down like a helicopter and going forward like an airplane, and they just had a really

difficult time nailing that design. And one of the things we highlighted in the story was a really bad brush fire last summer that happened after one of these things malfunctioned. And then they're supposed to be different safety mechanisms that

kick in after a motor failure. But this thing has six propellers on it, and one of the motors conked out and it couldn't recuperate it recuperate from that, and it, you know, carremed a hundred and sixty feet down from the sky and crashed into the ground and ignited this big brush fire. And this is at a time when Amazon is trying to prove to the Federal Aviation Administration that these things are safe. So, um, yeah, there's still

still a long way off, a long way off. And we know there's a lot of competition because Amazon is not the only one looking to put drones into the sky. Let's bring in Bloomberg Business Week editor Joe Webber here in our interactive broker studio. Uh, what's up to out for you here? Well, you know, I just think it's it is one of those great corporate dramas that you have to be curious about because it's Amazon, and like anything happening inside the Amazon Uh, you know, executive suites

is interesting. But that competition that Carol mentioned Spencer, who who are the other competitors who are attempting to crack this or who already have even Well, you have a ton of startups. Uh, you also have Google, you know Google's wing Um, you have ups Walmart. There's a lot of deepocketive rivals poking at this and and in fairness

to Amazon, we have to look at the capabilities. So some of the startups and things are looking at maybe like a a function where it's on a hospital campus or a corporate campus or a college campus, you know, where there might be less risk of going over um, you know, uninformed participants where which would happen in more of a public setting. But there's just a lot of

people looking at at the potential use cases. And what Amazon is doing is being the most ambitious and saying we want to be able to deliver as many people using this technology as possible and deliver the widest variety of products as possible. So how does the f feel about all this? Well, they haven't commented specifically on what's happened with Amazon. They certainly had some reports and what

was telling was the in the brushwire crash. They did question the airworthiness of this, of this vehicle that Amazon's put together, this pound um drone with with six propellers,

because because so many things failed. You know, you generally planes are designed to be able to still maneuver after something fails and still safely land after something fails, and this thing was just a complete breakdown of all of those all of those systems, which was alarming to the f a A. And so that is a big setback because basically the the f a A, they they're learning

from industry right now. They're looking at all the different folks that are conducting tests, and they're assessing the safetiness of all of the different vehicles and and as they're assured, then they'll gradually let these things be tested in more populous areas. But as it stands, Amazon still relegated to UH to the boonies. You know, it's doing tests out in eastern Oregon where you know, which is largely agricultural areas surrounding this this airport in a in a very

sterile environment. What did you learn about Amazon's commitment to this moving forward? Because the business opportunity spencer, as you write, is absolutely huge. What it could do is essentially eliminate the need for paying delivery drivers and get consumers getting their their packages within thirty minutes or less in much of the country. Yeah, I mean that's the big commitment is uh. Bezos in particular has always been after this notion of making Amazon is as convenient as a quick

trip to the store. And depending on where you live it, uh, it still doesn't meet that. You know, I I live in the suburbs of Seattle, and I've got a Target, and I've actually got two Targets and two Walmarts in a costco, all within a fifteen and drive, you know, so, so ordering on Amazon is still taking longer to get that item if I can find it at a store nearby. This is the answer to that. And uh, you know, if you can get it down to down to thirty minutes.

But again it's a question of, um, how broadly it can be deploted, deployed, because the only thing that justifies this investment, it's not a worthwhile investment if you can deliver something to a farmer here and there. You know, you need to be able to deploy this in densely populated suburban areas and potentially even cities, and that's the only way it makes sense. And so that's the uh, you know, the big question right now is will that

ever happen? Spencer, You guys UM did an investigation thorough internal documents, government reports. What was the takeaway? Do you feel from the conversations and the stuff that you read that you do feel like Amazon is valuing maybe production over safety here. Well, that's the feeling of many of the people who are on the front lines doing these tests.

And that's where there's tension. Is there's people and in offices who earn the most money, um, and have goals that they have to make and they're you know, cracking the whip. And then there are people out on the front lines who are conducting these tests and seeing these things crashing down, and a lot of them are just saying, look, I would not want this thing flying over my house or my children, um. And and some concerns there and they, I mean, they it's the point they even like, we'll

bring their vehicles and duck into their cars. Uh. You know, they have their their cars on standby just in case they need something to to take cover in. And they you know, those are alarming things for something that, um, they're trying to get more approval to do testing more closer to people and be on the line of site of of drone operators and that sort of thing. That it's, uh, it's still a long way off. What do you most look forward to getting delivered by drone really quickly? I nothing.

I like to how eighty five pounds flying around me air. I'm a little a little caustious to Spencer. Thank you. Spencer Soaper, technology and e commerce reporter at Bloomberg News. Check out his stories of Bloomberg Big Take in our thanks to Jill Webber, editor of Bloomberg business Week. This is Bloomberg business Week. You're listening to Bloomberg Radio. You're listening to Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. So we've been

watching shares of Tesla. Let me just bring them. Well, they were down pre market on this news you were. They're still down about four A few things. We had Tesla exporting just sixty cars produced at the shang Hi factory. That was in March, a record low, A strong domestic demands sucked up most of the output. And then, of course you have what is a most read on the Bloomberg about Elon muss saying thanks no thanks to a Twitter board seat, Yeah, rejecting that offer to a join

the board in a surprise twice. So a week ago we were talking about him buying more than nine percent of outstanding shares of Twitter, and a week later a lot has changed. Let's get into it with Dana Hole, technology reporter at Bloomberg. Here she joins us on the phone from our San Francisco bureau. Okay, Dana, the plot pickens. Uh, this is never a dull moment in your world, whether it's Tesla, Twitter, or Elon Musk or all of the above. Um, what does Elon Musk? What can he do with Twitter

now that he is no longer? Uh? I don't want to say on the board, but like a candidate for the board, or we know he's not joining the board now. Well, now maybe that's a better way to put it. Now he can buy a lot more shares. I mean there was a you know, so when he was offered the board seat, there was a cap in place where he could know he couldn't buy more than fourteen point nine percent. Now that he's not joining the board, I mean, there's no limit to him of buying and buying additional shares.

So it's led a lot of speculation like what is Elon doing? Is he going to do like a hostile takeover? Like what you know, I mean, we would we would love to know. We're trying to, you know, very eager to get to the bottom of what exactly happened. And it's the whole timing of everything was just so strange. It's like he'd closes the stage in the sec filoting, he's offered a board seat, you know, and then late last night, the CEO of Twitter says, well, actually he's

not joining the board. But then if he went to Twitter's website, they already had him listed as a board member. And it's like, did he just not want to go through the training to be a board member? Did he? You know, bristled the idea of a background check, Like the whole wording of the state was very odd. Okay, so you know, and I look at the rich go on the Bloomberg terminal. Elon Musk is the wealthiest person in the world. He's got an net worth of two

sixty point one billion dollars. Just today, with Tesla's decline in stock price, he's worth seven point five billion dollars less. Does he care about his investment in monetary value or is he just having fun here because he has so much money he could literally afford to buy all of Twitter and do whatever he wants with it. I mean, yeah, I think that he's got you know, he's got a lot of money and he has He is very interested in the media. I mean he always has been. He is,

you know, he reads a lot. He is the most active, one of the most of users of the service. He jokes around about having a news site called Pravada. You know, he you know, I mean he's he's like, he's you know, I think he's he's genuinely interested in this. But why what led to the turnaround about like thanks but no thanks? Um? I don't really understand what happened there, Like did he

just you know, was he just board? I mean, did he just sort of decided like, actually, I'm really busy writing my other four companies or like or or was there such an uproar within Twitter that that that they were going to make it tougher for him? I don't really know, We don't really know exactly what happened, but but this certainly paves the way for him to continue to be an influence. I mean, you know, he's not encumbered by a board seed. He could just be an

activist shareholder. Well, you know what exactly happened, Danna, It's that he actually now wants to get into mining and refining lithium and all that good stuff. I mean, how do you What I left talking about you is you're someone who has covered him for a long time and seeing his trajectory and the growth of him and things coming out and or him saying things and trying kind of weed through to find out what sticks and what doesn't. How do you kind of determine what sticks and what

doesn't in this environment right now? I mean, that's it is. It is a challenge because you know, I know as much as everyone else does in terms of like, you know, there's sort of what he tweets and then there's what he says. So for example, I think what's fascinating is he spent the whole weekend tweeting about his plans for Twitter, you know, the Blue Service and they should turn the

headquarters into a homeless shelter. And then we find out late late Sunday night that he actually turned the board seat down on Saturday. And now he's deleted some of those tweets about Twitter. So, like the whole TikTok on the timing of all of this, I just fascinated as to what what sort of led him to turn down a seat then continue to kind of criticize the platform then delete the tweets, like I mean, and I don't really know. I mean, it's not like I'm talking to

him on the phone. I mean, so give the ring um. But I just think it's like, you know, this is a man who has a wide variety of interests and he hyperfixates and but then he also moves on and you know it's like flavor of the month. So I mean, so that he's always been had his hand in many different pots and like this is just another one. And I think that his wealth and his um, I mean,

he's definitely empire building for sure. Well, Dan, I'm seeing a lot of tweets today from Twitter employees who have been holding back with how they felt about it. In some primity prominent ones sort of reading a sigh of relief here. Can you explain what's going on internally on Twitter? Yeah, I mean I think what you're seeing people saying publicly is that they, you know, they're relieved that he's not joining the board. That he would have had a real

impact on their culture. And you know that the Twitter culture is kind of unique, and how do you absorb a big personality like Ellen. I mean, he's you know, he would dominate no matter what. And um, so I think that maybe some police who didn't feel didn't feel comfortable speaking publicly about him being appointed to the board or or uh, you know, nominated for the board, are

now kind of saying publicly that they're glad it's not happening. Hey, just quickly, twenty seconds the news out of China the cars produced at the Shanghai factory. Just really quickly. What do we need to know? Well, the Shaka factory is so closed as far as I know, because of this COVID lockdown. So I think, um, it'll be really interesting to see how that impacts production in the quarter that we're currently in. Alright, good stuff as always, Danna, Thank you,

Danna Hall. She is technology put up Bloomberg News on the phone from our San Francisco bureau. As we mentioned, watching shares of Twitter just one of the kind of big tech if you will, names under pressure stocks down about four three seven cents a share. Stock is down about seven percent so far this year. You are listening to Bloomberg Radio. Yeah, but you let me drive, all right? Please? Right? I want to dry good question this drive to the

clothes on Bloomberg Radio. All right. I'm just gonna say, if Monday is any example, we're gonna be like wrecked by the time we get to Thursday. It's a short and holiday week. But you and I are both like you know, so the the exchanges are closed on Friday. That's why we're not here on Friday. But a lot of people, including my wife, who works for the city, don't have the day off. Well that's what happens when

you work in anything connected to the financial market. Yeah, sorry, wife, Yeah, hello, But here's here's why that's notable, because I feel like she has so many other days off that I don't get. Well, it's a market. I always think at the beginning of the year, I'm always like, okay, now what our market days? Market holidays are like the bare minimum? I mean she works for the city, so she gets quite a few more holidays, but not this one exactly. All right, folks,

we are hovering near a lowers. You hear Charlie Pellett talk about it. We really have seen uh, kind of some selling here into the clothes. You've got about nine minutes left in the trading session. It's a week that's gonna be chock full of economic news. We've talked about it a lot. That's cp I print tomorrow. It is

expected to be a rough one. But as our Bloomberg Economics team have been writing, Tim, you and I've been talking about it, We've read it, uh that this could maybe be peak inflation, and then maybe we start to see inflations start to normalize. I think certainly a lot of whatever that is, we welcome that news. Let's see what our next guest has to think about it. Megan Hornaman is chief investment officer at Verden's Capital at Advisors.

Megan joins us on the access line from Hunt Valley, Maryland. Megan, how are you. I'm great, how are you? We're doing well? Thanks a lot um markets not doing so well today. I've seen quite a bit of selling into the clothes here, and I'm wondering how you're reading into it. I think your prior guests also mentioned that that there is a lot of economic data coming out this week, not just different c p I p p I reports, but also keep in mind retail sales will be out later this week.

You combine that with an ECB meeting as well, and then the kickoff to earning season, there's a lot for investors to digest right now. Well, they've been kind of whips all this quarter to start anyway, Megan, earning season is definitely on your mind. We were reading through your research, Um,

how can that? And our Gina Martin Adams of Bloomberg Intelligence, who follows the equity markets, she too has been talking about earnings estimates, how they've been going up for the first quarter but also the second quarter and third quarter, and that how this could really be, you know, certainly maybe a game change or when it comes to sentiment, what are your expectations for earnings as they get underway?

Of course with a big bank starting this week, so the the estimates are for the growth to slow considerably compared to what we saw last year. But that's okay. Um, typically earnings to end up beating by you know, three to five percent, so we think it can be a solid earning season. But this is really the point where investors can also just get back to fundamentals. The first quarter and even starting off, you know, the past couple of weeks, we've seen sentiment really tested by a complete

pivot by the Federal Reserve. Um. We've also seen the war in Russian Ukraine not ending, inflation and issue. So we have to get back to the fundamentals and actually listen to the CEOs of what they're seeing on the grounds as far as the future about corporate earning. Okay, so what specifically are you going to be looking to hear from CEOs? I always like you learn hearing from the banks because they have such a good idea of

how the economy is. They have all that real time data that shows credit card spend and what their customers are purchasing. What do you look for specifically, Yes, So from the bank perspective, we we've already seen consumer credit rise.

Last week we saw one of the biggest jumps on record and consumer credit, so we know that consumers are starting to feel the paine of higher prices and they are turning to credit card debt, so you get that indication from financials, and will also look to see what kind of losses they take from any exposure to Russian businesses as well. But some of the more important things that we're going to look at is regarding the supply chain or company seeing any thawing in that, because there

have been some initial signs them. Economic data that we've seen with some optimism that we might see a turnaround here in the second half of this year cannot help because that can also maybe helpily be some of the inflation pressures. So we'll look from that perspective as well. What's unusual in the market trade for you right now? Unusual? I think right now we're seeing that energy prices have

really come down quite a bit. You're seeing oil prices come down significantly, but you're not seeing that also coincide with a decline in inflation expectations. So there's some disconnect there just from the economic standpoint, And what does that tell you? You You know, there's a little disconnects. It's funny. I was reading something uh In earlier about just kind of various disconnects within the market, whether it's between what bonds and the stock market are telling you and and

other things. When we do have kind of disconnections in our financial markets, is it just kind of a sign of uncertainty, We're just planning, not quite sure what comes next. Well, yes, it can be a sign of speculation. But I do think if ultimately things revert to where they needed they should be. So I do think that if energy prices continue to come under pressure, that you will see some

of the inflation expectations pull back. Right now, there's a lot of information this week that will get and more indication to see where we are in inflation. Your prior guests had mentioned that we might be get into the peak growth levels. I do think we will see peak growth levels this year, but we will be settling into a more higher inflationary environment. So you what you used to be careful of how you're exposed in your portfolios, making sure that you're looking at those areas that aren't

overly priced right now. That's the one thing that we would recommend investors to do. Uh specific names or or or sectors that you can give us, at least in the short term. I think one thing that you have to look at, and this this very high period of uncertainty is are you position the true way that you want to be. So some of the areas that have been really beat up. Look at some of these, you know, this small cap area, the mid cap area, the international area.

These have significantly lagged actually the large cap value side of the market this year. Look at those. Make sure that your asset allocation is in line with where you want to be, because I would guess that the majority of these areas are out of line. So it may be a good time maybe sell some of those managers or areas that have done so well to bring them back in line with where your asset allocations should be, and maybe buying some those really beaten down areas of

the market. What about fixed income, What's what's the smart play right now? You gotta stay short and defensive with this income. I mean, that's the only thing from a duration standpoint. And we have some some weakness in the credit markets and investment grade and high yield, but not enough to warrant really taking some sort of a tactical move there. Eventually yields will rise enough that they'll start to compete with some of the returns in the equity market.

I just don't think we're there right now. So for now, stay defensive, sure term floating grain instruments, and then just keep an eye on credit to see if that does present some opportunities. Okay, Uh, Carol mentioned the CPI. We get the number tomorrow? Is this the peak for inflation? Do we get it from March? I think that you know, whether it's mortar well, I think we still probably have a couple of our minds. I mean maybe and with with some so i'd surprise. Remember, we're not really rolling

off the energy yet. That's what second half of the year story. But I do think in the second half of this year that we'll be looking at very different your your growth numbers. Yeah, that's what lorretta meister Mester said, maybe later this year and certainly into next year, that maybe we start to see kind of a more like two percent number, that magic number. Big difference from where

we are. Hey, we gotta run. Megan Horneman, thank you so much, Chief investment officer at the wealth advisory and multi family office firm Verdon's Capital, on the phone from Hunt Valley, Maryland. 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 search Bloomberg Global News