Burgers. Is a fights, lacroix became the market darling of sparkling water but it is losing ground. Jason joel weber is with us. Joel we wanted to do this story in a summer issue. It is the zeitgeist of summer. One thing that has happened is consumers have shifted away from soda and embraced sparkling waters. Lacroix has really encapsulated that and it boomed. Thisng riding enthusiasm. All of a sudden it has gotten competitive. Taylor we learned a lot about their competitors, mainly pepsi and cocacola. Joel they are owned by National Beverage and that is a big part of their portfolio. But going against cocacola or pepsi, once they opened their war chest and looked at sparkling water, they can say we know how to put that in a can. Jason that is coming in from the top, then you have craft movement. Weve seen it in beer and food, now it is sparkling water. Joel it is what they introduced the marketplace. Lacroix basically invented the category and rejuvenated it, and they are met on both sides. Taylor we learned as well about the founder and ceo, what is he like . Joel this is a person who came into his own and saw an opportunity, then has ridden this bloom. He is idiosyncratic. To say the least. Jason a lot of great anecdotes. We will hear more on that later on. Thank you so much. We turn now from bubbles to recessions. Taylor after the yield curve inverted, it did spark warnings of a looming recession. I wonder, does an inverted yield curve mean recession is coming . That is what it has historically meant. Records going back to the 19th century, it is a reliable precursor of recession. Does it mean that this time . While, there are a couple things. The yield curve inverted briefly, then stopped inverting and came back again. It is an often on kind of thing. Off and on kind of thing. But more importantly, the yield curve does not mean what it used to mean. That is because even in normal times it is flatter than it used to be. It is flat to start with. It is more likely a tick down into inversion. Jason talk about this in the broader economic landscape. One thing we saw and talked a 10 a time about on the radio show is a concern we may be talking ourselves into recession at a time when things are going well. Bloomberg had the ceo of bank of america saying that, echoing franklin roosevelt, the only thing we have to fear about recession is fearing recession. And i think thats a good point. Jim polson said the same thing, he is optimistic and yet he is helping the fed will cut a half percentage point in september just to get ahead of the recession talk. Taylor when we talk about the yield curve, you know inflation more than anyone else. Is that part of what is driving that curve flatter . The yield curve is reflecting not just the actual outlook for inflation, but the uncertainty about the inflation outlook. If you think inflation will be 2 , but in the back of your mind it might jump to 4 , you will pay less for a longterm bond and make its yield higher. Whereas if you are confident that inflation is not a problem, if you are worried about deflation with 16 trillion of negative yielding debt around the world, it might be that we want a lower yield. Jason thoughtprovoking as always. Coming up, two peas in a pod. Sort of like us. Will Boris Johnson try to out trump trump in france at the g7 summit . Taylor we break down the health care debate. This is Bloomberg Businessweek. Jason welcome back to Bloomberg Businessweek. I am jason kelly. Taylor i am taylor riggs. Join us every day on the radio. Starting at 2 p. M. Wall street time. Show by up on our daily losing to our podcast on Apple Podcast and soundcloud. Jason find us online at businessweek. Com and our mobile app. In this weeks International Cover story, President Trump and other World Leaders are set to meet in france to discuss major global challenges at this years g7 summit. I spoke with the executive editor and bureau chief craig gordon on what to expect. The most interesting thing we will be watching for, the sitdown between donald trump and Boris Johnson. Talk about two peas in a pod. This is johnsons first g7 since becoming Prime Minister. They are likeminded and have the same politics. We will be seeing if johnson tries to outshine donald trump who tries to make a big figure at these events. He is making a trip to europe and will meet the rest of the g7, that will be what everyone is watching. Trump, johnson, the throwdown. How does it go . Jason keep me honest here. In one of the g7s, that is the famous moment where trump literally elbowed somebody out of the way. The g7 has been lively as of late. It was officially a nato summit it was attached to g7. He pushed aside the Prime Minister of montenegro who later said the president should be in the front row, not me. Ok. Ke, well, ok the g7 last year was where they signed a communique, and the famous picture of merkel glaring at him. Trump gets on air force one to fly home and tweets, i withdraw my support for the communique because he was mad at justin trudeau. These tend to be moments of high drama. There are only seven of them, and they are in a room and take up a lot of oxygen. On the substantive side, what great timing, the World Economy is starting to slow down and germany teetering on recession, the u. S. Still has strong numbers. What a great time to get the leaders of the seven most important economies together to talk about it. Will they do anything to solve it or put stimulus in there . We do not think so. This may be a squandered opportunity. Can they do anything to put the brakes on this slowdown in the Global Economy . Jason europe, it is safe to say, has had a complicated relationship with President Trump. And there is a great story about this relationship between macron and merkel. Macron is the host of this, and Angela Merkel outgoing to a large extent. This is been more of an uneasy alliance. Thats right. Going back to Boris Johnson, these summits tend to the six versus one, one being donald trump. Name your topic, it usually six versus one. You could have five versus two. Trump and johnson may make common cause on some issues. Within the five or six unified european leaders, big fractures. Macron wants to be the king of europe, and Angela Merkel does not like that. They sparred over that but held it together on the rand. Trump has pulled out of it. Boris johnson is not a fan of it although he reaffirmed support for it. Merkel and macron have held together. Even there, it is kind of framing. Fraying. France and germany would love to do more business with iran. Trump tends to be the main storyline, so you have intriguing subplot. Where does abe fit in . Is there turmoil in italy overshadowing the meeting . To, will be fun to watch, especially the european unity that they have held together, i do not think they will do it a third time. Jason you mentioned brexit, that will be top of mind. Will Boris Johnson start to negotiate in public with the eu leaders about what the elements are . We seem to be heading for a no deal brexit, and that is coming up at the end of october. That next deadline. Much like the seven most important people talking about the economy, you also have the same to talk about exit. Brexit. As an american watching from afar, it feels like the u. K. Leaders are playing like it pair of threes, but they act like they had a royal flush. I dont really understand and europeans, you get the sense, a kind of tired of this conversation. Boris is not offering them anything different. It does look like crashing out. They will have a chance to talk about it, but hard to see substantive progress being made. Taylor turning to politics in the u. S. , on the campaign trail democrats are in a heated debate about how to do achieve their goal of universal health coverage. Jason here is our reporter in washington. They have coalesced around a basic principle they want universal health care coverage. The United States is not there yet, but in terms of how to get there, there are differing opinions and deep divisions ranging from the idea of singlepayer health care where the government is the only insurance company, that is supported by Bernie Sanders and elizabeth warren. Then the more moderate democrats want to make substantial changes. Joe biden supports adding to obamacare, also known as the aca, a governmentrun insurance option that people can look at the menu of private plans or if they want a public option. That is the debate now, and it has sparked intense rivalries and intense battling as they try to convince voters they have their finger on the pulse of what to do. Taylor from your conversations and reporting on the ground, what plans seem most likely to go forward . There are different answers. And there are different answers to them. The splashiest one is medicare for all. That is the Bernie Sanders singlepayer plan. That faces daunting obstacles in congress. Even if democrats win a wave of assuming they have the house and senate and white house, it is highly unlikely to get through because democrats oppose it as well. On the joe biden side you have the public option that obama tried to get into thousand 910, in 2009 and 2010. This will be difficult because it faces a 60 vote threshold in the senate where republicans could block it, and based on my reporting, they have no intentions of going along with that. Even the most modest democratic proposals face difficulties in congress. And not to mention, a Health Industry that is determined to kill them. They do not want a government run option to compete with private insurers because they would have to lower cost to compete. They are working to kill this thing. Jason still to come, protests in hong kong, what is underneath this era of rage. Taylor plus, how hong kong businesses are caught in the crosshairs. This is Bloomberg Businessweek. Jason welcome back to Bloomberg Businessweek. I am jason kelly. Taylor i am taylor riggs. You can also listen to us on the radio. Jason in london on dab digital. It through the bloomberg and through the Bloomberg Business app. Taylor in this weeks economic section, all eyes are on hong in june hong kong. In june, demonstrations were triggered by a government proposal that would allow china to extradite those accused of crime. The protests include a broader set of demands. Jason what is behind the antigovernment protests that continue to rock that city . The protesters have limited their specific demands to Political Goals like universal suffrage. But feeding into this anger and unrest is growing inequality in hong kong, and the sense that you do not have equal opportunity. This is a place that has had huge divisions between the haves and havenots. There was always the possibility are could would one of those people who strikes at rich, a lot of people dont feel that anymore. Taylor one of the Key Statistics that stuck out to me, hong kong comes back to the property market, and median property prices have climbed 21 times median household income. People can barely afford their homes. I think people do not understand what that means. We have this great graphic. London and San Francisco are under 10 of those ratios, and we think of those as pricey. People live in these gerrymandered subdivided apartments. We interviewed some of them and there have been some young people who have good jobs. Youth unemployment is not an issue. People are thinking about moving to taiwan and other places where they have more opportunity. Jason what happens next . Protests aside, what are the economic challenges that could change or not change in the near term . Carrie lam, the chief executive of hong kong, has to think about what she can do to appease these movements. That potentially is a problem for the people and hong kong who became rich from property, and that is almost every important billionaire in the territory. Because the island has a system it inherited from British Colonial rule where land is leased for long periods of time from the government, it has constrained supply and driven up prices. I do not think we will see a wholesale dismantling of the system, but the government has been toying with the idea of taking back some of the land they have given to developers who have not developed it. Jason theyre both of these stories in this whole section, we are reminded of the economic might and importance of hong kong in the broader world. This is not an isolated story. No, the founder of the biggest conglomerate in hong kong, almost half of that companys revenues come from europe, and this week they bought a restaurant in the u. K. That is one thing, it will hurt less if the government moves against the conglomerates now then it would have been 20 years ago, because they have become so diversified. Taylor this brings us nicely to another story, some of the sort of the hong kong billionaires, some of the Property Developers walking that fine line between needing help from beijing but not wanting to distract the protests. How are they walking that line . They have stopped short of backing lamb lam, instead backing her call for calm. Important. They are economically it hurts them. There was a forecast recently saying that hong kongs gdp will be shaved by 0. 3 this year, and property prices could fall 10 in 912 months because of the protests because it is hitting economic production. Tourists are not visiting. Stores are having to shut down along the routes of the demonstration. Jason the protests present a new reality for businesses as well. Taylor in this weeks business section, the cautionary tale of chinas crackdown on Cathay Pacific. Here is our editor. They are caught in the middle, and it is a lesson for other companies who do business in china about the dangers of being caught in this tugofwar. Tussle. Squire is the company who has a big stake in Cathay Pacific. It is an old british Trading House that has been in china since the 1800s, so it knows its way around and has different businesses. River travel, shipping, whatever, big business. It owns cocacola franchises in 11 provinces. And the city of shanghai, thats a big deal. They also own 45 of cathay. Ats company was really good knowing how to play the game in china. When the handover came in the 90s they decided the way to stick around was sell a piece of company to china to stay in beijings good graces. If anybody gets pushed out, usually the connected companies dont. They did that, and today they own 45 of Cathay Pacific, and air china owns 30 . That supposedly will keep you safe. The issue, however, when the protests came up, a lot of cathay employees were sympathetic, and that has sent the government off the rails, and they have used all the pressure that they can to make sure the company behaves. They came in and said, all the employees who participated should be banned from working in china. All of your employees who go in our airspace, you have to provide their names. You will also have a safety inspection. The thing is they know how to make it difficult to do business if you do not do business the right way. It is also a sign that china says you can play in our markets but you play by our rules. Taylor forcing the resignation of the Cathay Pacific chairman is one sign they sent that you have to play by our rules. It is a strong sign, but is it enough . One paper is saying they should do more because they have renegade employees. This is showing other companies that do business in hong kong, it is part of china and do not forget that. We have seen other companies pulled into this, Luxury Brands that had tshirts and apparel that suggested hong kong was its own country. They have been forced to apologize. There is a lot of backandforth, and on the opposite side of that, companies that have gone out of their way to say we think the government is great. Like hsbc. Then the protesters say hsbc has gone too far and is defending the government against demonstrators, and that has gotten them in trouble in the local market. What puts you in this weird position if you are a company, whether you are falling behind beijing but do business in hong kong then the locals are angry , at you. Jason still ahead, troubled waters. Its this weeks cover. Taylor plus, battling it out to make the best plantbased burgers. We size up the competition. Jason this is Bloomberg Businessweek. Jason welcome back to Bloomberg Businessweek. I am jason kelly. Taylor and i am taylor riggs. Still ahead, in the year that saw ipos from uber, lyft, and pinterest, the breakout star is a Company Making fake burgers. A look at beyond meat and the growing industry. Jason plus, a former Venture Capitalist bridging personal and professional wellness. I sat down with the founder of reset on how her new studio helps new yorkers go from burnout to balance. Taylor and how ralph russo has become the choice for billionaires and royals around the world. Jason but first, this weeks cover story is lacroix. Its colorful cans of bubbly used to fly off the shelves but today it is struggling in a crowded market. Shareholders are concerned about corporate mismanagement. Lacroix is the brand of sparkling water that most people have known and loved for many years. For the past three years, the brand has essentially had a lock on the market. For sparkling water as a major brand. In recent years in the past year and a half, there have been a number of competitors from the biggest soft drink companies in the world like coke and pepsi. They have introduced their own sparkling waters to compete, and as a result,