A negative picture for the u. K. And labor economics does not necessarily tally with whats happening. We are getting some details on whats happening in the u. S. Housing market. We are dealing with that. This is a month on month number. Last month it bounced back strongly. This month the market was a 16. 6 number and we are ahead of expectation. Yearoveryear, we have seen this out of the come back. The last time it was at 10. 4 and we were expecting 2. 2 on that number. Expecting 12. 7. This is more positive. Alix but can we sustain it if we dont get sustained stimulus . Coming up, kevin johnson, the starbucks ceo will be joining us. And patrick will be talking about the tech hearings and what he has to say area to say. Peter is joining us now, nothing is expected today, but what can say to reassure markets that they are all in . Ritika not expecting a whole lot, peter not affecting a whole lot, but i think that the press conference will be important, certainly powell will have to address the economy. And theyre going to have to reassure folks that the fed will be there. They begin to get a bit of modification with some of the guidance. They have been telling us for some time that the current stance of policy will remain until things are on track to achieving their objectives. Towardsa bit of an edge ,etting a firm recommendation and folks are generally in favor of more clarity. And in favor of going to outcomebased guidance. In that direction would not be that surprised. Guy the curve has started to flatten, do you expect the curve to continue to flatten . Did you expect the fed to go further down that curve . They are obviously ammitted to continuing largescale asset purchase, and we could even step that up. As we begin to shift from the emergency market liquidity towards aiming towards beginning to get back to economic recovery. Colleague, matt, put out an interesting piece on how much the Balance Sheet purchases could pick up. And in order to achieve the kind of fed stimulus that we will be as much if we dont get as we are anticipating on fiscal funds, and certainly the news out of washington has not been only. Would putof action pressure on a longerterm. Issue on whether or not we go to some sort of yield curve, but i dont expect that to be much beyond the short end. Alix that piece was really great and staggering when you think about the numbers. The fall andake of real yield . Typically Inflation Expectations are rising. How much farther can they arrive rise when the growth is so sluggish . Peter its going to be a long tough slog to get back up to 2 , given the weakness in the economy over much of the next year. Been wayrecovery has below normal levels of activity and this will keep downward pressure on prices. Limit to how far real yields can fall because of the rise in inflation. And the fed has more work to do in terms of purchases. Peter, theres a growing criticism of the fed and the way that it is fact acting, powell has tried to address this in Previous Press conferences, but the language is becoming harder and harder. Would the fed look difference different if we saw democrats delivering a sweep in november . So much thes only fed can do. The fed is not a Fiscal Agency its primary lover is through financial conditions. And it the economy going by easing financial conditions and thats increasing asset values which obviously from the standpoint of income and Wealth Distribution may have some impacts. But its more important to get the economy going and get jobs notng the not then the then not. So the fed will increase face increasing pressure if politics and washington move decidedly in the direction of being antipolicies that raise asset values and wealth. What you are raising is a fiscal question. In the u. S. Government can move towards redistribution and thats outside the fed. Guy you have hit the nail on the head at the beginning, at the moment they are and this is where the rubber meets the road. Us, andu for joining tune in later today for our special coverage, the fed decides. Thats coming up. Up,bucks shares are going and the company has reported positive sales. We will hear from kevin johnson, hes coming up shortly. This is bloomberg. Im david westin. Starbucks shares are on their way up. This after a report that they were bottoming out on sales, they are still expected to be down between 12 and 17 sent. We welcome kevin johnson. Great to talk with you again. You are heading back in the right direction, give us the sense of your trajectory. . Hen are we going to be there kevin we have all been through a lot over the last six months and this pandemic has unfolded around the world. Certainly at starbucks we set three simple principles to guide our decision. The first is to prioritize our theth and wellbeing, second is to support government and local health officials. The third is to show up. As you recall in the month of april, we closed all of our stores with the exception of drivethrus so that we could share safety with our customers. We also had economic certainty. Them even if they were staying at home and not working, and that in addition to serving our frontline wealth care workers, we think those are good longterm investments because they build trust with our partners and the communities we serve. Stores, we to reopen have been driving the recovery. We saw that accelerate. Certainly what customers are looking for now is experiences that are safe, familiar, and convenient. Optimized to provide those whether its for drivethru, mobile order, pick up. Now we are introducing curbside service. We are seeing this recovery unfolding and we are in a good position to drive the recovery. And i still want to be the kid in the back of the car about when are we going to get there. If things keep going the way they are going, lets go forward. Do you think you will be on a pace . States, wehe united saw this being back to where it was compared to a year ago. And that that would happen in the first half of our fiscal year, giving march of 2021. In china its a quarter earlier. Every month we see continued improvement. July got accelerated we are introducing curbside services, 702,000 stores. We are getting more input on how to and that will drive the recovery. Been in chinae for a long time and its ahead in terms of recovery. In the United States we have had some flareups, more than what we have seen in china. What is the threat to the recovery with things like whats going on in california and texas and arizona. Kevin china has also had that. If you look at beijing, there flareup, we have built store protocols and the operating capabilities for us to dialup the experience. And we can dial it back, if we need to dial back in a certain market while the mitigation is taking place. What we have done is that we have built the store protocols into the fabric of how we run the company. , and is a flareup in miami we can still say open and serve customer safety but we can constrain some things. As the curve flattens we can dialup. We are doing that in 32,000 stores. And its working. We built the capability to navigate in a covid world until there is a vaccine and more therapeutics. We have done all of that in the last three to four months. We had done it in 82 markets around the world. David and youre building a lot of drivethrus and curbside. Are we witnessing a longerterm strategic pivot . Is it a place where you go and gather like a cafe . I dont see this as a strategic kevin i dont see this as a pivot away from where people want to sit and be part of a community. I think its complementary. Ourre covid, 80 of customer they were including beverage to go. 20 would stay and sit in the complementing that thirdplace experience, we did this seven to eight years ago with drivethru, and we did it with mobile order for pickup. Now we are building a smaller format called starbucks pickup, in china it is called starbucks now. An can think about them in urban core market, similar to a suburban market where we have storethrus, every pickup is within a three to five minute walk, with seating in the cafe. Occasion and i want to sit in a starbucks, you can do that. If you want a safe, convenient, familiar experience, you can goes the pickup store. We are blending these nor format to create a network. They are serving the different needs that our customers have. Its not a pivot away. I view it as complementary. Are you seeing a change in the pattern of when people come to starbucks and what they get . People were going to the office and a lot of people are working from home. In bloomberg theres a starbucks downstairs and we might grab one on the way up and we dont have as many people working here anymore, does that change the Business Model . Kevin it has changed the pattern. The morning peak in the United States, really a lot of that was on their way to work or to school, they will stop by starbucks on their way in. Home, whatork from we have seen is continued improvement, but we are seeing some of those occasions shifting to later in the morning, instead of 730 to 930 they might shift to 1030. Seeing those same customers having multiple visits. They might come back for afternoon occasions. These are all of the things we monitor around customer behavior. That is what informed us on the initiative that we are and we are watching that, and are adapting rapidly. That is helping to fuel the recovery, and that is helping us to position for the longterm initiative. Is there an upside . The priority we have on our focus and food links to our planet positive agenda. We are introducing more beverage and food items that are plantbased, whether its oat impossible sausage breakfast sandwich in the u. S. And beyond meat in china and canada. Significantlya higher ticket. Because people are working from home and are not in a hurry, they are vying for the entire family. We have seen some decline in transactions but we are seeing a lot of that made up by a bigger ticket. Thats a positive trend. Thats kevin johnson. This is bloomberg. Ritika we have a look at the biggest stories in the news. Ge says there are early signs of improvement in its jet engine , and they posted doubledigit declines for industrial businesses. Boeing has a debut of a new plane and it is revamping the production of its commercial liner. They will not be shipped until 2022. There is pared production of a streamliner for the fourth straight quarter. Selling energy assets, and they have been discussing a perfect price purchase price. The deal would have the company with the debt, thats your business flash. Alix thank you. This is really key for occidental, they gave a target of two years to have 10 to 15 million in asset sales. Key after purchasing more expensively anadarko. They are selling a bunch of assets and this will be quite meaningful, this puts them well above 70 . Guy i would be interested to know if there were other potential buyers of this asset and its interesting, they are also buying in africa. And in opec member falling by the wayside to a certain degree. There is a potential petroleum impact i think they have to go above and beyond and to see these assets will be of interest to others. And we know that there is a famous battle, and he was really upset by the deal. There are now three seats on the board, theres a relatively good relationship. We have not heard that much, so if you can get these asset sales, that might calm him down a little bit. Whats also key is doing well in execution. They have these wells, but they have the Great Technology that reduces the cost a lot and they need to do it quickly. That way they can prove that it this was always going to be high. There was always going to be a situation where they have to dispose of assets. This may silence the critics. And its fascinating to see how , even ass are shifting you have laid it out, which makes sense, which works in a world where we are going to see oil prices staying lower for longer. Would you have done the deal if you knew what you knew . Guy alix its a big point. Exxon has not had a right down. To ularly when it comes , how long can they be behind that . Im not sure. Guy absolutely. We go from one extreme to another, from old to new industries. We are previewing an antitrust alan. G with thats coming up next. This is bloomberg. Hike Simon Pagenaud takes the lead at the indy 500 coming to the green flag, racing at daytona. Theyre off. In the kentucky derby. Rory mcllroy is a two time champion at east lake. Touchdown only mahomes. The big events are back and xfinity is your home for the return of live sports. Welcome to camp tonsafun on xfinity its summer camp, but in your living room. Learn how to draw with a minions expert. How to build an indoor Obstacle Course plus. Whatever shes doing. And me, jade cattapreta. The host of es the soup camp tonsafun. Its like summer camp, but minus the poison ivy. Unless you own poison ivy. In which case, why . Just say summer camp into your xfinity voice remote to join. London, i am guy. This is bloomberg markets. In around 90 minutes, the ceos of the major u. S. Tech companies will be facing lawmakers. Testifying on issues. , he hasus now is alan been in the vc business for 40 plus years and helped build and Grow Companies like apple. What do you expect today . Performancect a come i dont know if you call it theatrical or political performance, but each of these Key Executives making their own presentation say you hear onesided extrapolation. The questioning is very short, fiveminute each asking questions, you cannot get a lot of depth there. To hear theyed have to a cameo. This is a subject that needs a lot more than a half day of. Uestioning the representative has been working on this for the past year and there are a lot of issues to cover, each has a different element of the commercial spectrum they are involved with and have done their own and become behemoths in their own area. I think the questioning and the investigation by the committee is probably several years too , this is clearly a pregnant issue. The way these companies have control of our lives. They i dont i dont think theyset out to do it but got there because of their enormous accumulation of data. Alix and they all have their own specific thing they are really big on that congress could have a problem with. App developers, amazon is the products they make using data of what is selling. Advertising. Unlike facebook buying out competitors. What do you think is the easiest to legislate . Alan thats the problem. Im glad i dont have to chart. In my humble opinion, the data is the key issue in every one of these. Thats the thread that goes across these accounts. Its the fact that their data gets bigger and bigger by the second, and they know more about us, where we are going, what we are biting what we are buying. They know everything. That data is a powerful tool. To cross channels to be able to use that data. Though they claim they dont and i dont frankly believe them. Im not there on the inside. Theres no way they are isolating the data that they are theyetting the bed its know so much about everything and google in terms of every search you make, they have so much information that helps them with any Generic Product they make, and in every case, the way to look at it, we are based on lowering raising prices. 1800s andthe late 1900s, the railroads and the Oil Companies set out to raise prices. In this case, our trust laws are out of date. These are companies that are not necessarily raising prices, its competitors who are really effective. S a different kind of guy how do you limit their growth . They are huge and gators of data and also new and innovative they create that generically within their own business . Also when they see Good Technology where they have the financial firepower as a result of the financial prices, they also have cash on the Balance Sheet. Is this the way that we look to limit future growth. Growth . Yes i know. I think we have to deal with what they have already. Bought a company that specifically is designed to identify companies for acquisition, they got another tool. There is no limit. Therethat im not wrong, was a Company Called brain waves. And maybe im wrong in terms of what it does, but the name of it scared me. Theres facial recognition, brain recognition. How we use our keyboards, where a go, we have to figure out way to make the information they moregeneric generically available so others get the same benefit. Im not saying give it away for free, but some method of doing that. ,therwise they have your way im not necessarily in favor of breaking up the company. Otherwise these behemoths are just going to get more behemoths the. Behemothy. Alix and you are launching a new fund, what kind of industries are you looking to support . Alan we announced a new fund, we have that global company. And its dealing with wellness. They were very focused on the wellness area. Thinking about what i was doing next because i have a lot more energy than most people even at this stage. I want to do some nelson i became fascinated with the high and the older segment of our population here and in europe and in china and together and we formed the fund which will invest in products, services, experiences, and technology. And where do you cut it off . I dont know. Or 50, we want to encourage say you made and it in the toy business or the Home Construction business you made it in the Technology World then you want to do it again in your 60s instead of retiring, think about something new and we want to invest in older on, look, im 85 and i started my last company at 72. Anyone who is 55 or 60, they have a similar business. They could easily attract younger people, these are the people with battle scars and the rolodex is to start a new business. To start a news business. Most invest in young we want to invest in Products Services and technology which includes and includes health and wellness. There are so many things that people start needing when they get to a certain stage. And its unrelated to chronic illnesses or anything else. When you get older you do things differently. You travel to different places, your whole life changes. We are very excited, and even before we ask even before we started we were seeing companies all over the lace with a lot of startups. And we are hoping to get other fund started. Its a good idea. This area could use more funds. Make you are right, you technology for older people, its really ingenious. We would like to get you back to talk about how you are thinking about it and why the investments are good. It was wonderful to catch up with you. Stay with bloomberg. We had the congressional hearing on big tech starting up new 12 00 in new york. Saw a 10 million barrel draw but you did not see the inventories pick up. They are using the oil and turning it into product and thats building its own. Much. Not really doing this is bloomberg. Alix this is bloomberg, markets. There is a report a better than expected earnings. But weakening sales are touching the revenue. This company is expecting more uncertainty. Isg us now is derek the ceo. Is when you look at the future, what gives you confidence that we will see some stabilization . I would say we have exited the second quarter. If you look at our sales around the world, the developed markets are doing fine, probably better than they did before the crisis. In,s the category we are the question is more effective, because of severe lockdowns. Exit this, it starts to ease, and we see the markets coming back. We see a confirmation and improvement in july. So without any other shockwave going through the system, we seem to be on the rise. We feel that q2 is probably going to be the worst. Has something structurally covid19 . A result of more people are likely to be do young your products, think this goes beyond that, and will it provide longterm structure . There are some structural changes taking place. One thing that i see is more snacking, it has to do with the thishe consumers feeling,elps us in certain categories , iuspect that life at home would assume that until a vaccine is widely available this will continue and that will benefit certain parts. Biscuits and chocolate are benefiting. Shop,e way consumers ecommerce has the big boost, more people than ever have started to buy their groceries online. That is something that is there to stay. You see people buying in the world in food service. Think the consumer will start and theres aile consumerslooming, will start to watch what they spend and they will be looking for value. In general, they do quite ok. Overall, im expecting that we will benefit as long as the can buy our products. We see more going into the traditional trade. My daughter alix my daughter discovered oreos during the pandemic. Emerging markets are typically a sign of strength. Continue to grow, regardless of the macroenvironment . Effecthe moment to the is largely driven by the , this is 30 35 of the trade in latin america was closed at a certain stage. So we cannot say that this is what it will look like from a consuming spender perspective. Going forward we expect that the ,onsumer will feel the effect and for years our strategy has been to offer the product at different price points, so that its affordable for any layer of india, if i think about and its possible for most of the population to. We will have to adapt our portfolio, and launch product weo the lower price range can see the architecture, and we will need to do adaptations. Adaptk we will be able to to it. Guy how do you cut costs and maintain innovation . Its critical to your business as you continue to maintain your own brand. Private label is very small, this is good for our costcutting,e, we have launched a program which is aimed at i would not call it costcutting, but coming out of this crisis stronger. This is largely for this implication of our business. It has to do with moving investments where we see it , in certainference areas we can reduce the costs. Two typical ones are travel or office costs. And also adapting our products to the consumer. I think this is going to have a lot of innovation. Can see their reduction of the costs, but we can still innovate more than enough. And if anything, simplifying things we do better. Are for us. Noticede trend we have is the dollar declining. Analysts are trying to figure term how ithort will thing. A good we have more business outside of the u. S. Then inside of the u. S. So you can see this in nondollars. Overall we are going to benefit from that, this also reflects itself into our cost structure, because some of what we need needs to be nominated and that will help. So the translation of the results are still a benefit. For us its a good thing. Guy we will have to leave it there. Thank you for your time. We appreciate it. This is bloomberg. Its tuesday its a huge day for European Bank reporting. Interesting, the banks come a few months ago, working on the idea that they had done so well with having , arybody working from home ceo is speaking to us and he says he wants everyone back. Theres a real pipit in Company Attitude to bring people back. Tech companies are trying to keep people out, but i think Corporate Culture is really oversight risk in risk oversight. But i think you can understand my management wants people back into the office area Corporate Culture, particularly for a bank with a trading arm is critical. I dont know how you create that with a work at home set up. At a really baselevel, internship, promotions, and you cannot do that from the kitchen table. If you have 60,000 people working from home and wanting to get that back, and there was also a discussion of diversity and inclusion, with banks in particular putting a spotlight on this area hears what would this. Heres what was said. We have to take a special look at rates. The challenge of our black professionals around the world is some in we need to be keenly focused on. We need to move away from statements and get to constructive measures going forward. Thats what we are dedicated to. Ofhave made a number organizational changes and set out a number of programs to really move the issue forward. Will hear this from the major ceos, particularly in the banking sector. You now need to show us something to measure it by. Thats really important, having measurable targets, we have seen this with gender as well, that it has not gone far enough and it needs to be more measurable. I think the bank is at the forefront of this process and needs to be there. I come back to this issue of culture. Culture in your business, and you want something really deliverable, you have to have your people in the same place, make it really clear that the progress has been made. Guy we will talk about that going into detail. Thank you for giving the perspective. Barclays taking a dim view of the u. K. Economy. Our guest will be joining us, this is bloomberg. Our guest will be joining us, this is bloomberg. Your we are counting down to the european close. Nasdaq are uphe by 1 . Wonder whether or not the bigger focus is on the fed. We are likely to see a dovish fed. The nasdaq and struggled over the last 1011 days. It is worth paying attention to. The s p is up. We have had cyclical names out like basf. It is not painting a pretty picture. Gold is flat as we wait for the fed
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