April 29, 2025 • 34 mins
Watch Carol and Tim LIVE every day on YouTube: http://bit.ly/3vTiACF.
Matt Day, Bloomberg Technology Reporter, joins to discuss the latest from Amazon as it dismissed confusion around potential tariff labels on products. Bloomberg US Sports Business Reporter Randall Williams explains why Eli Manning might make a bid for the New York Giants and how he's setting up an investment group for the 10% minority stake. Jennifer Welch, Bloomberg Chief Geo-economics Analyst, sheds light on China's trade-war perspective and how the government is seeking to shape public opinion. Michael Halen, Bloomberg Intelligence Senior Restaurant and Foodservice Analyst reviews Starbucks earnings out after the bell. And we Drive to the Close with Michael Green, Portfolio Manager with Simplify Asset Management.
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Episode Transcript
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Speaker 1 (00:00):
Bloomberg Audio Studios, Podcasts, Radio News.
Speaker 2 (00:08):
This is Bloomberg Business Week Daily reporting from the magazine
that helps global leaders stay ahead with insight on the people, companies,
and trends shaping today's complex economy. Plus global business finance
and tech news as it happens. The Bloomberg Business Week
Daily Podcast with Carol Masser and Tim Steneveek on Bloomberg
(00:31):
Radio Well.
Speaker 3 (00:32):
Amazon said today that it will not display the cost
of US tariffs on products, after the White House blasted
the reported move and President Trump called Jeff Bezos to complain.
The White House earlier Tuesday seized on a brief punch
Bowl News report that Amazon would quote soon begin displaying
the cost of US tariffs on individual products next to
the total listed price. White House Press Secretary of Caroline
(00:55):
Levitt blasting the purported plans.
Speaker 4 (00:58):
I just got off the phone with the President about
am Amazon's announcement. Uh, this is a hostile and political
act by Amazon. It's another reason why we are on
shoring critical supply chains here at home to shore up
our own critical supply chain and boost our own manufacturing.
Speaker 3 (01:14):
That was White House Press Secretary Caroline Levitt earlier today
Matt Day joins us. He's Bloomberg News technology reporter. He
covers Amazon. He's out there in Seattle. Matt, clear this
up for us, what's going on here?
Speaker 5 (01:26):
So Amazon says, there's nothing to see here. What they
say is they do have a program that kind of
like TAMU will ship parcels cross border from China and hunt.
Speaker 3 (01:35):
This is Amazon Hall, Amazon Hall.
Speaker 6 (01:37):
That's right.
Speaker 5 (01:37):
This is a This is kind of a little known
service compared to their retail site. They launched it last year.
So what Amazon says is they were considering for a time,
you know, putting import duty notices on those products. Right,
those products you know today are exempt from from duties.
That's loophole that the Trump administration is playing to close
as soon as this week. TIMU has already you know,
shown customers and shoppers, you know, some version of what
(02:01):
the import duties would be. They were considering doing that.
The report out this morning from punch Bowl that you
referenced earlier didn't make that distinction, and that's what the
White House was responding to. Amazon comes back to us
today and says, you know, listen, we were never thinking
about anything for our wide retail site. They also say
they're not going to implement this for for haul either.
Speaker 7 (02:18):
So Matt, Amazon's response was it directly because they were,
you know, responding to the White House, or does your
reporting show that they really weren't ever planning on doing this.
Speaker 5 (02:33):
It's not clear to us how far along these talks were.
I mean, it is worth noting again that you know,
people have been throwing around screenshots on TIMU for a
couple of weeks now showing that for folks getting things
cross border after the Dominus loophole as they call it,
gets closed, they were showing them duties. So it would
make a whole lot of sense for Amazon to be
considering something like this. We don't know how close it
was to rolling out and to take Amazon that there
(02:54):
were this is not something most shoppers would have seen.
It wouldn't have been on their their main retail site.
Speaker 3 (02:59):
Well, what could show us like, sorry, go ahead, Matt.
Speaker 5 (03:02):
And that definitely looks like they were re spawning to
the White House. You know, Yes, once the you know,
before Seattle was awake this morning, the Press Secretariat you know,
accuse them of a hostile and political act. So they've
definitely had to had to pick up the microphone on
this one.
Speaker 3 (03:13):
Yeah, maybe gets the attention of a certain Jeff Bezos
who spends time in Florida these days. Matt, I'm I'm
wondering specifically about the Deminimus tax and like what consumers
might see as a result of these tariffs going into effect,
Like our prices on Amazon for stuff that we buy
that is imported, how much are those how much are
(03:34):
this price is going to go up?
Speaker 5 (03:36):
It really depends. You know.
Speaker 6 (03:38):
It's Amazon.
Speaker 5 (03:38):
They buy things, and they get things to consumers in
a whole lot of ways, right in addition to the
direct you know, ta Moose style shipments. You know, they're
also a classic big old retailer. They buy in bulk,
you know, just like Target or walmarto home depot. Might
they import things themselves, you know, some things they're sellers
import So it is, it is all a big mess.
You know. We reported that Amazon in some cases has
(03:59):
asked some of its vendors in China to do the
importing themselves, right, which seems sort of a first sort
of negotiating tactic to maybe pressure them into eating some
of this costs. But we just don't know what the
bottom line is going to be. For consumers. There's a
lot of a lot of estimates out there.
Speaker 3 (04:13):
You know what we were speaking earlier with Mike McKee, Emily,
you brought up this idea of looking at container shipments
and ships that are going into the US, Matt. At
this point, are we starting to hear of concerns with
regard to empty you know, quote unquote shelves, empty storefronts
on Amazon as a result of a slowdown in shipments
from China.
Speaker 5 (04:33):
You know, nothing specific to Amazon kind to be on
those broad reports we've all seen about you know, hey, containers,
sailings are way way down from you know, this point
a year ago. I think that's probably still too early
for an Amazon specific story, given that, you know, we
haven't seen the calendar roll into May, which is really
when the first glimpses of this might appear. That's worth
knowing too, that Amazon hasn't said a whole lot about
tariffs one way or the other. They really don't want
(04:54):
to stick their neck out on this, and so that's
that's part of why today was so interesting, is that
they've just they're in the conversation, whether they want to
be or not.
Speaker 1 (05:02):
Matt.
Speaker 7 (05:02):
I'm sure the folks at Amazon today, we're hoping that
we'd all be talking about something else Amazon related, and
that's Project Kuiper. It's their first batch of production satellites
that reach low Earth orbit, and it's a step in
the company's effort to establish a broadcasting Internet connectivity from space.
It sounds a lot like SpaceX. Is it a viable
(05:25):
competitor to SpaceX?
Speaker 5 (05:27):
No, A lot of people are hoping, so, a lot
of businesses have dreams that it's not just going to
be elon Musk's Starlink with an Internet from space outfit.
A lot of government fees as well have banked on
Kuyper Amazon satellite offering coming online at some point. So
this is this is much delayed, but it's welcome news
for the folks at Amazon, and we're plugging away on this.
They got plans to launch something like three thousand more
(05:47):
satellites here in the next few years.
Speaker 3 (05:49):
How far ahead of Amazon is SpaceX right now with starlink?
And also I'm curious about who actually did the launch here,
because Starlink has SpaceX satellites which can do the launching.
Besos of course has Blue Origin, but who got these
satellites into orbit?
Speaker 5 (06:06):
So these ones were sent by United Launch Alliance Workhorse
Boeing Lockheed joint venture that accounts for a ton of
US government business. But you're right, because SpaceX has its
own you know, sort of captive launch arm that is
the most successful rocket launch outfit in the world right now.
They've been able to get out to a huge lead
with their Starlink constellation. You know, they've got more than
seven thousand satellites. I think it is an orbit. You know,
(06:28):
Amazon sitting on twenty seven, so they got a whole
lot of catching up to do just before they're in
the same conversation as Starlink.
Speaker 7 (06:36):
And I know that retail customers like individuals house Cheryl Masser,
Karen Massel's using Starlink, She's got Starlink. So is this
project supposed to also gear towards just regular everyday people
getting Internet connectivity from space from Amazon?
Speaker 5 (06:53):
It will, Yeah, they plan to offer a regular consumer business.
It's going to vary market to market. In some places
you'll be working with a cellular service provider probably, and
others they're going to sell direct to consumers. We don't
know a ton about the business plan, but they've already
kind of showed off the little terminals you can put
on your garage or on top of your house.
Speaker 3 (07:08):
All right, Matt Day, gonna leave it there. Thanks for
clearing all of this up for us. We do appreciate it.
Matt Day covers Amazon. He's out there in Seattle. He's
Bloomberg News technology reporter.
Speaker 2 (07:17):
You're listening to the Bloomberg Business Week podcast. Catch us
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or watch us live on YouTube.
Speaker 3 (07:33):
Let's chift gears a little bit and talk sports and
sports business. Because former New York Giants quarterback Eli Manning
is putting together an investment group to bid for a
piece of the NFL team. That's according to people with
knowledge of the matter. Randa Williams is part of the
team with the Scoop. He's US sports business reporter. He
joins us here in the Bloomberg Business Week studio Randall.
Eli wants a piece of the Giants.
Speaker 8 (07:54):
What do we know exactly that? I mean, he's putting
together a group. He's long express interest. He said it
on NBC earlier this year. He's told me privately, he
said it publicly. And there's one team that Eli was
going to own. It's going to be the team to
do plays for.
Speaker 9 (08:08):
How much money is this worth?
Speaker 7 (08:10):
Like?
Speaker 9 (08:10):
What give us a sense of the numbers that we're
talking here?
Speaker 6 (08:13):
So I think we don't know right now.
Speaker 8 (08:15):
But if you look at the previous two transactions, or
two of the three transactions that the NFL had, the
Philadelphia Eagles are valued at eight three Philadelphia is obviously
smaller than New York, and then the Miami Dolphins were
valued at eight to one when Aries and Joe Sie
bought a piece of it. So when you think of
it in that aspect, I would imagine that the Giants
could go for more. But also when these teams are
(08:36):
being sold sometimes owners have a little bit of soft
spot in their heart for former players. They're like, all right,
i'll sell you a little bit less and we'll have
to see.
Speaker 3 (08:43):
They are also business people though, I mean we're talking
about the Mara family and the Tish family. Yeah, where
would this piece of the asset actually come from? Would
it come from the Mara family, would come from the
Tish family. With a little bit of each kind of
give way here.
Speaker 8 (09:00):
From my understanding they're selling ten percent total, that could
be five to five. But that's what makes the most sense.
When the Tish family bought fifty percent some years ago.
I believe in nineteen ninety one they bought fifty percent,
So if it's ten, I would imagine that it's five
to five.
Speaker 6 (09:14):
But I'm not.
Speaker 3 (09:15):
So sure that ten percent numbers. For a reason though, right,
it's this new rule that allows private equity to buy
a piece.
Speaker 8 (09:21):
Yeah, most of the teams that are considering selling steaks
start at ten.
Speaker 6 (09:25):
Now.
Speaker 8 (09:25):
The Buffalo Bills sold ten to Arcdols and then they
sold another ten to limited partners. Joe Side bought three
percent and an Ares bought another three So we're seeing
these NFL teams shed small pieces of steaks, and they're
not controlling steaks. A lot of times. These partners are
coming in. I mean, like, I'm happy to own a
piece of the team. It's a prideful thing, and you know,
the teams move on from there.
Speaker 7 (09:44):
What's the precedent here for former sports players bidding for
you know, their own their own teams.
Speaker 6 (09:51):
There's been a lot of them recently. I mean when.
Speaker 8 (09:55):
Rob Penner brought the Denver Broncos. Lewis Hamilton was part
of that group. You have Venus and Serena Williams, who
are sort of like the original former athlete owners. You have,
of course, Dominique Dawes and the Atlanta Falcons, Tom Brady
and the Raiders along with Richard Seymour.
Speaker 6 (10:09):
You have Vince.
Speaker 8 (10:11):
Carter, Tracy McGrady and Josie Altador with the Buffalo Bills.
So there's a little bit of a precedent here. But
Eli and the Giants would obviously be a big deal
because they have not had much success lately.
Speaker 3 (10:21):
In general, are the controlling owners using this as an
opportunity and I don't mean the Tisch families of the
Morrow families right now, but when they sell a piece
such as this, are they using this as an opportunity
to kind of gain on the asset appreciation that we've
seen in recent years and get some cash as a
result of that.
Speaker 6 (10:38):
It really depends on the group.
Speaker 8 (10:39):
There are some owners who are using this money towards stadium,
stadium development and training facilities. There's other owners who have
secession issues. I'm not so sure that the Marraw family
or the Tisch family have either one of those they
could just be looking to add owners. If you look
at what Mark Davis did with Tom Brady, tom Brady's
helping along with the football operations thing, he's not. I mean,
(11:00):
the Raiders have a brand new stadium. They have no
need for that specifically, But Mark Davis is trying to
have more success. So you bring in the greatest quarterback
of all time, and surely Tom Brady's going to help
with that.
Speaker 6 (11:10):
Eli won two Super Bowls. Maybe this will look something similar.
Speaker 9 (11:13):
That's what I wanted to ask about.
Speaker 7 (11:14):
What would you expect Eli Manning's plans to be here
as an owner.
Speaker 9 (11:19):
Would it be more just to.
Speaker 7 (11:20):
Earn an investment return or to actually get involved with
the operations of the team.
Speaker 8 (11:25):
Well, if you're a limited partner, I think that the
NFL's business has proven to be invincible in some aspects.
I mean, when you think about the Super Bowl that
just happened, it had one hundred and twenty seven million viewers,
and that was a blowout game. At one point it
was forty to six, and that's the pinnacle of things.
So the business of the Giants is going to continue
to grow. But for Eli, as far as his role
with the Giants, that's going to have to be negotiated
(11:47):
with the Damar and Tisch family, these limited partners. It
depends on how sensitive a controlling owner is. Sometimes these
owners will be like, yes, absolutely, help me. I have
no idea what I'm doing. But La Mar and Tisch
family have won two Super Bowls in a life last
twenty years and four in the last thirty or forty.
I think their first super Bowl was in eighty seven,
so they've had some success.
Speaker 3 (12:07):
We only have like ten seconds, but the business of
sports doing in general doing very well, as we've seen
other assets move lower in the last few months.
Speaker 6 (12:15):
Absolutely, sports is fun.
Speaker 3 (12:16):
Okay, everything's fine. You've heard it from Randa Williams, US
Sports business for now. That's the caveat. He's US Sports
business reporter. Check out his reporting and the team's reporting
on the Bloomberg terminal, and of course, at Bloomberg dot com.
Speaker 2 (12:30):
This is the Bloomberg Business Week Podcast. Listen live each
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Auto with the Bloomberg Business app. You can also listen
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just Say Alexa played Bloomberg eleven thirty.
Speaker 3 (12:49):
We'll let shift gears and talk about what's going on
in China, because Shijinping has faced growing skepticism and discontent
within China due to strict COVID lockdowns, a slowing economy,
and a time hacks on entrepreneurs. Now Donald Trump has
handed him a gift to rally support at home an
external enemy. Jennifer Welch is chief geoeconomics analyst for Bloomberg Economics.
(13:12):
She joins us here in their New York studio for
Bloomberg Business Week. It's the Bloomberg Interactive Brookers Studio. Jennifer,
good to see you. We've been trying to get an
understanding about what's happening on the ground in China. I
had the I've been there once. It was pre pandemic,
it was twenty nineteen. I believe there was this view
that during the pandemic the COVID lockdowns, sentiment among Chinese
(13:36):
locals was very low. There was the property crisis. There
is the property crisis, and suddenly fast forward to you know,
close to halfway through twenty twenty five, we're seeing incredible
developments when it comes to evs in China. We're seeing
an essential silence when it comes to negotiations with President
(13:57):
Donald Trump. What is the environment right now now in
terms of how the Chinese consumers doing and the power
that chijin Ping.
Speaker 10 (14:08):
Has well, I think all of the challenges that you
laid out are still there. There's still the property bubble
that they're dealing with, There's still the weakend sentiment, there's
still the sort of overhanging of the COVID pandemic lockdowns
and recovering sentiment and animal spirits.
Speaker 9 (14:22):
All of that is still very much there.
Speaker 10 (14:24):
But I think what has lit a fire under Chinese
people's sort of sense of consumer sentiment and economic nationalism
has been this trade war with the United States. And
it's been kind of conveniently time from Beijing's perspective to
kind of distract attention from those problems and really draw
a lot of unity around this idea of standing strong
(14:44):
in the face of this US trade war and these
massive tariffs.
Speaker 7 (14:48):
Talk a little bit more about just what makes Chinese
consumers manufacturers excited in this environment, What is there to
rally around.
Speaker 10 (14:59):
I think it's US excitement so much as in Chinese
you would say true cool or eating bitter, like being
prepared to kind of dig their heels in and hold
out in the face of what they see is US
aggression in the form of this trade wark. Right from
Beijing's perspective, from the Chinese people's perspective, they didn't do anything.
The US just kept ratcheting up terrace, and now we're
at unprecedented high levels. I think people are sober about
(15:21):
the fact that this is going to cause a lot
of economic pain at home, especially at a time of
economic weakness for China. But at the same time, they're
not willing to kind of engage with the idea of
looking weak in the face of that. And so that's
what I think, is this rally around the flag phenomenon
that we're seeing and that the piece talked about.
Speaker 3 (15:41):
One question that I still don't know the answer to
is who has the cards in this negotiation. On the
one hand, the US consumer is incredibly powerful, and no
question China wants access to the consumer. Speaking of that
we love to buy things, those things often come from China.
Who has the power here?
Speaker 10 (16:00):
I think in a sense everybody loses. I think it's
a question is that's not good in time frames right?
You know, for example, from the US perspective, those prices
are going to start to hit a pretty dramatic spike
once the stockpiling and other kind of advanced efforts that
we saw ahead of these tarifts coming into play start
to run out, and now companies have to deal with
the tariffs themselves, right. I think the other question is
(16:23):
a political question, right. Of Again, from China's perspective, they
didn't start this trade war. They're on the kind of
receiving end of it, and that's allowing them to dig
their heels in a little bit. I think a lot
of Americans feel like, sure, we knew President Trump was
going to do tarifts at some point. He was talking
about that pretty frankly on the campaign trail. This isn't
necessarily the trade war that Americans wanted, right, and on
(16:46):
your largest source of goods, right. And I think the
pain when it starts to hit in a month or
two from now, when those stockpiles run out, then the
key question is who has sort of the political will
to withstand that economic need. But to be clear, the
economic paying for China is going to be very tough,
especially if the US is successful and convincing other countries
not to let those Chinese goods just flow through other markets.
Speaker 7 (17:09):
So what is the Chinese government's role here, I guess
in shaping public opinion within China.
Speaker 10 (17:16):
So we saw the propaganda machine going to overdrive pretty
soon after Liberation Day, facing in two fronts, the internal front,
building up that China national sentiment, which again they had
a little bit of an easy role to play in
that because the people were already predisposed to being upset
at the United States, but also externally taking advantage of
Liberation Day tariffs to say to the rest of the world,
(17:37):
the US is not a reliable partner. Work with us,
don't work with the US to counter US, and let's
join up on sides. Now, I think that effort's going
to be a lot more difficult in this ninety day pause,
where if I'm Vietnam, I'm enjoying right now a pretty
good tariff differential with China.
Speaker 3 (17:53):
When you were saying external pr I thought you were
going to talk about those videos that went viral of
like the AYI generated Americans actually making things.
Speaker 10 (18:00):
There's that there's the sort of like peace in our
time video saw.
Speaker 6 (18:04):
This, Yeah, everybody saw this.
Speaker 7 (18:05):
Very overweight people like making Yes, they've got a very
effective AI video generation scheme over.
Speaker 3 (18:12):
There, Hey, you got to run. We really appreciate you
staying late to hang out with us. Jennifer Welch's chief
geoeconomics analyst for Bloomberg Economics, strening us here in the
Bloomberg Interactive Brokers studio.
Speaker 2 (18:22):
You're listening to the Bloomberg Business Week Podcast. Catch us
live weekday afternoons from two to five pm Eastern. Listen
on Apple CarPlay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 3 (18:38):
Starbucks quarterly sales felt one percent in the quarter that
ended March thirtieth, that missed estimates. They've declined, shares of
declining about seven percent so far this year. Brian Nickel,
he hasn't quite been there a year. You know him
from Chipotle, you know him from Young Brands.
Speaker 6 (18:51):
He's there.
Speaker 3 (18:52):
The company has quote real momentum, he says, with its
turnaround plan and expects to return to business to growth
despite current financial results not refctm progress formorrow. Let's bring
in Bloomberg Intelligence's senior restaurant in food service analyst, Michael Halen.
He joins us from New Jersey. Michael good to have
you with us this afternoon. You've had a few minutes
to dig into these Starbucks results. Where is Starbucks in
(19:16):
its turnaround?
Speaker 11 (19:20):
We were kind of hoping they'd be a little bit
further along here in the United States, US Same Star
sales definitely disappointed in the corner quarter. You know, in
their defense, it was the coldest January on record. I'm
sure there were store closures due to the snow in February,
and I probably saw some sort of recovery in March.
(19:41):
But yeah, US Same Star sales came in a little
bit weaker. On the positive side, China in the International
both did a little bit better. International probably is in
the biggest concern and something they're tackling second right. US
has really been the focus thus far far in Brian
(20:03):
nichols tenure, China and international is something we expect them
to topple later this year.
Speaker 7 (20:12):
Bloomberg's Daniella sar Tory is writing that these earners reports
highlight how hard the coffee chain will have to work
to regain lost ground.
Speaker 9 (20:23):
Who are they losing ground to right now?
Speaker 11 (20:27):
You know, that's a great question. You know, there's a
lot of speculation that it's too you know, some of
these fast growing chains like Dutch Bros. And Seven Brew,
they're also most likely losing some some business to people
just brewing coffee at home. People are working from home
more often, right and you know when, and they're looking
(20:48):
to save money because you know, low income consumers especially
because you know while it's are strapped.
Speaker 7 (20:55):
I mean, one of the biggest I feel like personal
finance tips that you here is make your coffee at home.
Speaker 9 (21:02):
Whether or not that actually there's builds wealth.
Speaker 3 (21:05):
That is something that we hurt a lot and now
a lot of people like to throw water on it.
Barry Ridholtz, who has the Masters in Business podcast here,
he's got a whole part of his book where he's like,
just ignore that.
Speaker 9 (21:14):
Just buy the coffee.
Speaker 3 (21:15):
Yeah, that's what it's called. It's called buy the blank coffee.
That's literally what it's called. That's so funny.
Speaker 9 (21:20):
But it is interesting that potentially people are pulling back because.
Speaker 6 (21:23):
It adds up. It does add up.
Speaker 3 (21:24):
Yeah, well how much is it the average not the
average ticket price necessarily, but what are people spending at
Starbucks right now?
Speaker 11 (21:33):
Yeah? I don't I don't have those numbers for you,
but listen, it's you know when you're on the go,
when you're working in an office and you need to
stop on your way, right, if you're in a rush,
it's a lot easier to stop at Starbucks than it
is to make it yourself. Starbucks is working really hard
to improve the operations to get customers through the store
(21:54):
and through the drive through much faster.
Speaker 6 (21:57):
Right.
Speaker 11 (21:57):
That was really a big part of their issues. I
would say most of their issues that they've had under
the previous management team were self inflicted. It wasn't because
of Dutch bros. And people making coffee at home. It's
because the service suffered significantly.
Speaker 6 (22:13):
Right.
Speaker 11 (22:14):
The speed of service, it was just way too long.
The sequencing of orders both in the store and for
mobile orders didn't make any sense. There was no real
sequencing based on location for the mobile app, which is
just mind blowing. So first and first out kind of queue,
no matter how far away a customer was from a
(22:37):
particular store, right. And so these are all things that
management is working hard to improve on to get customers
to come back, because it's, for the most part, it's
a convenience occasion, right. Brian Nicol definitely wants people to
stay in the stores more and linger and they're doing
that by you know, bringing back ceramic cups and offering
free refills, right, But a large bulk of their customers,
(23:00):
I'd say a large majority of their customers really want
to be in and out quick, right. It's a convenience type.
The cage and speed of service is powermount and that's
that's really been the primary focus since Brian Nickel came
on board.
Speaker 3 (23:14):
What's the China story here, Michael, Because earlier in our
program we spoke with Jennifer Welch at Bloomberg Economics, she's
chief geoeconomics analyst, and she spoke about nationalism in China
in the midst of this trade war that we're seeing.
In twenty twenty four, China accounted for about eight point
three percent of Starbucks's total revenue. Is that a number
(23:36):
we expect to see grow because for years Starbucks the
China was the growth story for Starbucks. But you know
that was years ago. Now they got luck In and
so many other homegrown brands there people can want to
support Starbucks.
Speaker 11 (23:50):
Yeah, Listen, that's you know, a big reason why Starbucks
has probably underperformed their restaurant peers over the last few weeks.
Since the tariff announcements were made because of their exposure
to China, because their stores are company owned in China, right,
so there is a risk here. There is definitely a
risk of you know, boycott's. The Chinese government has done
(24:14):
it before the US retail companies. There's no reason why
it couldn't happen with Starbucks. We're not saying it's going
to happen. But what was once seen as a strength
owning their stores in China, I think is now being
looked upon as maybe, you know, a bigger risk. And
so you know, it also comes at a bad time
because Starbucks was thinking about franchising that business, selling that
(24:36):
China business to a partner and just collect royalties on it.
Speaker 6 (24:40):
Right.
Speaker 11 (24:40):
But with all of the tariff drama, you know, I
think it's buyers aren't necessarily lining up to pay a
premium for that business. So the timing is kind of tough.
But I would say that's the number one concern about
this company. That's why it's down about twenty I think
about twenty four percent from its hies just you know,
(25:01):
earlier this year. And the other concern would be coffee prices.
Speaker 6 (25:04):
Right, So the tariff.
Speaker 11 (25:05):
Drama has caused a lot of commodity deflation over the
last three four weeks, but we haven't seen that with
coffee prices. Coffee prices remain elevated, and that's definitely a concern.
They buy forward and they lock in supply right, so
they may be okay for the next couple of quarters,
but further down the wrong line. If coffee prices stay elevated,
(25:27):
that's gonna hurt margin.
Speaker 3 (25:28):
Just twenty seconds. Coffee prices also include tariff implications.
Speaker 11 (25:34):
Michael, it could we're you know, we're gonna hear more
on the call. I'm sure, but I can't give you
a number on that just yet.
Speaker 3 (25:43):
Hey, appreciate you joining us. We're gonna let you go
and go jump on that call. Michael Halen is Bloomberg Intelligence,
is senior restaurant and food service analysts joining us from
New Jersey.
Speaker 4 (25:56):
Yeah, I bet you let me drive.
Speaker 3 (25:57):
Oh no, no, no, no, This is not a who's.
Speaker 2 (26:00):
Gone to j honey, Please, I'll do the graveled excuse.
Speaker 6 (26:05):
Wait, I want to try.
Speaker 11 (26:06):
It's good question time.
Speaker 1 (26:13):
This is the drive to the clothes Punks A musing
well on Bloomberg Radio.
Speaker 3 (26:21):
It is Bloomberg Business Week We just got an update
from Bill Maloney and Charlie pell at the S and
P five hundred, up six tens of one percent, but
off its best levels of the day, up more than
Emily what is it, seven and a half percent in
the last six days, it's been.
Speaker 9 (26:35):
It's been a run of risk on.
Speaker 7 (26:36):
As Eric Leaner said, at least in the short term,
investors are riding the momentum upwards, even if there are
risks building in the background that maybe will come to
fruition later on once we get more certainty about.
Speaker 3 (26:50):
Tariff's Well, curious about some of those risks that Michael
Green has his eyes on. He's portfolio manager over its
Simplify Asset Management. He joins us out there in California. Hey, Michael,
you've got an interesting note that you sent to our
producers ahead of ahead of this conversation, and it makes
me think of something that Emily brought up earlier, and
that's alternative data. Because you're saying that real time indicators
(27:13):
of business activity like trucking are slowing rapidly. What are
you seeing out there, Well.
Speaker 6 (27:20):
That's absolutely what we are seeing.
Speaker 12 (27:21):
We are seeing forward looking metrics, things like railcar bookings,
things like trucking indicators. Those are weakening very rapidly. We're
already seeing ports slowing down in particularly Los Angeles, which
is going to be the first to feel the impact
associated with the Chinese tariffs. That's the first destination that
you hit. It takes longer to get to the East
(27:41):
coast locations. We're absolutely seeing something that looks very similar
to the initial COVID shutdown, in which basically activity just came.
Speaker 6 (27:49):
To a grinding halt.
Speaker 12 (27:51):
The key difference this time around is, unlike the COVID events,
in which we knew that going outside and being in
physical proximity to other people meant that we were potentially
putting our lives at risk, We're not seeing that type
of slowdown of economic activity. It's just this slow rumbling
boil that's effectively occurring underneath the surface that is painfully apparent.
(28:12):
It's a little bit more like the stage of COVID
where we were watching the events in Italy or in
China and beginning to think is this possibly going.
Speaker 6 (28:20):
To make it here?
Speaker 7 (28:21):
So how do you square that kind of like bubbling
of alternative data that looks concerning with the fact that,
as Tim had mentioned, the s and P five hundred
is up something like seven percent over the last just
few days. Here, we really have had a risk on moment.
Does that all make sense in the context of what
the data is telling.
Speaker 12 (28:41):
You, Well, it doesn't make sense in the context of
what that data is telling us, But it makes perfect
sense in the context of another alternate data set, which
is just the very simple observation that very few people
have lost their jobs yet. And so if this economic
slow down persists, if we do see the impact of
this carry through, we are likely to see that show.
Speaker 6 (29:01):
Up as job losses.
Speaker 12 (29:03):
But for the past five years, most businesses have struggled
to attract and retain qualified employees. That means that if
something like tariffs that could be removed with a tweet
or a speech are revoked, they're terrified that they're going
to wake up and suddenly find that they are back
behind the eight ball and they are faced with not
enough employees to meet the potential rebound in the economy
(29:26):
that could occur. That's causing basically companies and they're planning
departments to freeze and say, well, let's try to reduce
hours a little bit. We saw clear evidence of that
in the Dallas Fed Manufacturing Survey. I think it was
yesterday in which we're seeing the expect the expectation for
hours begin to fall if this persists, if it does
(29:47):
actually manifest, And again, unlike the COVID experience, this time
there's not the sense of national emergency.
Speaker 6 (29:53):
There's not the sense that this is a unifying event.
Speaker 12 (29:56):
Instead, this very much feels like it's a fracturing event,
or half the power population is saying I told you so,
and the other half of the population is saying, well,
we had to do this.
Speaker 6 (30:06):
You know, under these.
Speaker 12 (30:07):
Conditions, we're looking at a situation where that stimulus is
likely to arrive much later, and only after we've begun
to see the impact of it.
Speaker 6 (30:17):
If people start to lose their jobs.
Speaker 12 (30:19):
Then their contributions to four oh one k's begin to decline,
Then their contributions to their iras begin to decline. Then
they begin to tap into their four oh one k's
or iras for additional spending power. We're starting to see
the first elements of that, but it really has not
hidden in a meaningful fashion yet. And this is one
of the paradoxes of a passive dominated world. All that
(30:39):
matters is do people have jobs and are they contributing
to their four oh one k's.
Speaker 3 (30:43):
The answer so far is yes, And yet I am
seeing over the last seven days the S and P
five hundred and five point two percent over the last
seven trading sessions.
Speaker 6 (30:53):
Yeah.
Speaker 12 (30:54):
Well, the simple answer is is that people still have
their jobs, They're still contributing to their four oh one k's,
and anyone who is trying to trade in advance of
this has already sold.
Speaker 6 (31:02):
Right.
Speaker 12 (31:02):
We've seen the d risking from Europe. We've seen the
d risking from systematic strategies like CTAs or vault targeting funds.
We've seen the active managers move to rapidly de risk
their portfolios. This is particularly true in the hedge fund community.
Once they've sold, they've got nothing left to sell, so
(31:22):
the pressure on the market then becomes upwards.
Speaker 7 (31:25):
Mike, have you made any recent portfolio changes in light
of the tariffs post Liberation Day? Have you added any
specific hedges or taken risk off the table.
Speaker 12 (31:39):
Well, we were fortunate in being positioned for this, so
we actually saw this as a COVID like event that
was unlikely to lead to a slow and gradual decline
and said it was likely to manifest itself very much
on the event, and so we were fortunate in the
high Yield Fund that iron that carries credit hedge protection,
to have positioned ourselves well ahead of this event that
(32:02):
allowed us during the event to actually re risk. And
now we're in the process again of putting back on hedges,
positioning ourselves for what we think will be the second
leg down on this.
Speaker 6 (32:13):
Now that could be wrong, right, we could see a
reversal of tariff policy.
Speaker 12 (32:18):
But it does very much feel like significant damage has
been done and that will ultimately have to be reflected
in the flow dynamics.
Speaker 6 (32:25):
That I was referring to before.
Speaker 12 (32:26):
As I start to add back hedges, I'm sure other
people are doing something similar.
Speaker 6 (32:31):
Whether they are re risking and contributing.
Speaker 12 (32:33):
To that rally, or whether they are taking this opportunity
to add back hedges is their individual choice. But the
simple reality is that we've seen much of that impact already,
and so I'm looking to actually reduce risk.
Speaker 6 (32:48):
As the month comes to a close, I.
Speaker 7 (32:51):
Have to ask about bitcoin because it's doing so well
over the last few days.
Speaker 9 (32:57):
It's up ninety five thousand.
Speaker 7 (32:59):
Now, is that a hedge that people are using or
people using bitcoin now as a safe haven.
Speaker 12 (33:06):
Well, that certainly is the dialogue, right, that's the narrative
associated with bitcoin. The reality of bitcoin is the same
reality that exists for any financial asset. If people buy it,
you have to find people willing to sell it. If
they are less willing to sell it, the price will
move higher. That is what we are seeing with bitcoin.
Just like we've seen a return to buying of stocks
(33:28):
once the selling was done, we largely have seen a
reversal of the outward flows in bitcoin. We've seen positive
inflows into the ETFs and other avenues in which people
buy it, and that obviously creates a self fulfilling mechanism. Right,
we're on the radio talking about is bitcoin a flight
to safety instrument? I'm sure somebody out there is suddenly
now looking at the screen and saying, gosh, it might
(33:50):
be maybe I should buy some bitcoin. If it were
to start to fall, that process would likely reverse itself
and you would see the flows reverse, and ultimately the
price would fall to reflect that. Bitcoin is just a
fantastic illustration of the inelasticity in markets that I often
highlight in my writings and in my speeches.
Speaker 3 (34:09):
Hey, we appreciate you taking the time to join us today.
We got to have you back soon. Michael Greeney's portfolio
manager over at Simplify Asset Management.
Speaker 1 (34:18):
This is the Bloomberg Business Weekdaily podcast, available on Apple, Spotify,
and anywhere else you get your podcasts. Listen live weekday
afternoons from two to five pm Eastern on Bloomberg dot com,
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You can also watch us live every weekday on YouTube
(34:39):
and always on the Bloomberg terminal
Bloomberg Audio Studios, Podcasts, Radio News.
Speaker 2 (00:08):
This is Bloomberg Business Week Daily reporting from the magazine
that helps global leaders stay ahead with insight on the people, companies,
and trends shaping today's complex economy. Plus global business finance
and tech news as it happens. The Bloomberg Business Week
Daily Podcast with Carol Masser and Tim Steneveek on Bloomberg
(00:31):
Radio Well.
Speaker 3 (00:32):
Amazon said today that it will not display the cost
of US tariffs on products, after the White House blasted
the reported move and President Trump called Jeff Bezos to complain.
The White House earlier Tuesday seized on a brief punch
Bowl News report that Amazon would quote soon begin displaying
the cost of US tariffs on individual products next to
the total listed price. White House Press Secretary of Caroline
(00:55):
Levitt blasting the purported plans.
Speaker 4 (00:58):
I just got off the phone with the President about
am Amazon's announcement. Uh, this is a hostile and political
act by Amazon. It's another reason why we are on
shoring critical supply chains here at home to shore up
our own critical supply chain and boost our own manufacturing.
Speaker 3 (01:14):
That was White House Press Secretary Caroline Levitt earlier today
Matt Day joins us. He's Bloomberg News technology reporter. He
covers Amazon. He's out there in Seattle. Matt, clear this
up for us, what's going on here?
Speaker 5 (01:26):
So Amazon says, there's nothing to see here. What they
say is they do have a program that kind of
like TAMU will ship parcels cross border from China and hunt.
Speaker 3 (01:35):
This is Amazon Hall, Amazon Hall.
Speaker 6 (01:37):
That's right.
Speaker 5 (01:37):
This is a This is kind of a little known
service compared to their retail site. They launched it last year.
So what Amazon says is they were considering for a time,
you know, putting import duty notices on those products. Right,
those products you know today are exempt from from duties.
That's loophole that the Trump administration is playing to close
as soon as this week. TIMU has already you know,
shown customers and shoppers, you know, some version of what
(02:01):
the import duties would be. They were considering doing that.
The report out this morning from punch Bowl that you
referenced earlier didn't make that distinction, and that's what the
White House was responding to. Amazon comes back to us
today and says, you know, listen, we were never thinking
about anything for our wide retail site. They also say
they're not going to implement this for for haul either.
Speaker 7 (02:18):
So Matt, Amazon's response was it directly because they were,
you know, responding to the White House, or does your
reporting show that they really weren't ever planning on doing this.
Speaker 5 (02:33):
It's not clear to us how far along these talks were.
I mean, it is worth noting again that you know,
people have been throwing around screenshots on TIMU for a
couple of weeks now showing that for folks getting things
cross border after the Dominus loophole as they call it,
gets closed, they were showing them duties. So it would
make a whole lot of sense for Amazon to be
considering something like this. We don't know how close it
was to rolling out and to take Amazon that there
(02:54):
were this is not something most shoppers would have seen.
It wouldn't have been on their their main retail site.
Speaker 3 (02:59):
Well, what could show us like, sorry, go ahead, Matt.
Speaker 5 (03:02):
And that definitely looks like they were re spawning to
the White House. You know, Yes, once the you know,
before Seattle was awake this morning, the Press Secretariat you know,
accuse them of a hostile and political act. So they've
definitely had to had to pick up the microphone on
this one.
Speaker 3 (03:13):
Yeah, maybe gets the attention of a certain Jeff Bezos
who spends time in Florida these days. Matt, I'm I'm
wondering specifically about the Deminimus tax and like what consumers
might see as a result of these tariffs going into effect,
Like our prices on Amazon for stuff that we buy
that is imported, how much are those how much are
(03:34):
this price is going to go up?
Speaker 5 (03:36):
It really depends. You know.
Speaker 6 (03:38):
It's Amazon.
Speaker 5 (03:38):
They buy things, and they get things to consumers in
a whole lot of ways, right in addition to the
direct you know, ta Moose style shipments. You know, they're
also a classic big old retailer. They buy in bulk,
you know, just like Target or walmarto home depot. Might
they import things themselves, you know, some things they're sellers
import So it is, it is all a big mess.
You know. We reported that Amazon in some cases has
(03:59):
asked some of its vendors in China to do the
importing themselves, right, which seems sort of a first sort
of negotiating tactic to maybe pressure them into eating some
of this costs. But we just don't know what the
bottom line is going to be. For consumers. There's a
lot of a lot of estimates out there.
Speaker 3 (04:13):
You know what we were speaking earlier with Mike McKee, Emily,
you brought up this idea of looking at container shipments
and ships that are going into the US, Matt. At
this point, are we starting to hear of concerns with
regard to empty you know, quote unquote shelves, empty storefronts
on Amazon as a result of a slowdown in shipments
from China.
Speaker 5 (04:33):
You know, nothing specific to Amazon kind to be on
those broad reports we've all seen about you know, hey, containers,
sailings are way way down from you know, this point
a year ago. I think that's probably still too early
for an Amazon specific story, given that, you know, we
haven't seen the calendar roll into May, which is really
when the first glimpses of this might appear. That's worth
knowing too, that Amazon hasn't said a whole lot about
tariffs one way or the other. They really don't want
(04:54):
to stick their neck out on this, and so that's
that's part of why today was so interesting, is that
they've just they're in the conversation, whether they want to
be or not.
Speaker 1 (05:02):
Matt.
Speaker 7 (05:02):
I'm sure the folks at Amazon today, we're hoping that
we'd all be talking about something else Amazon related, and
that's Project Kuiper. It's their first batch of production satellites
that reach low Earth orbit, and it's a step in
the company's effort to establish a broadcasting Internet connectivity from space.
It sounds a lot like SpaceX. Is it a viable
(05:25):
competitor to SpaceX?
Speaker 5 (05:27):
No, A lot of people are hoping, so, a lot
of businesses have dreams that it's not just going to
be elon Musk's Starlink with an Internet from space outfit.
A lot of government fees as well have banked on
Kuyper Amazon satellite offering coming online at some point. So
this is this is much delayed, but it's welcome news
for the folks at Amazon, and we're plugging away on this.
They got plans to launch something like three thousand more
(05:47):
satellites here in the next few years.
Speaker 3 (05:49):
How far ahead of Amazon is SpaceX right now with starlink?
And also I'm curious about who actually did the launch here,
because Starlink has SpaceX satellites which can do the launching.
Besos of course has Blue Origin, but who got these
satellites into orbit?
Speaker 5 (06:06):
So these ones were sent by United Launch Alliance Workhorse
Boeing Lockheed joint venture that accounts for a ton of
US government business. But you're right, because SpaceX has its
own you know, sort of captive launch arm that is
the most successful rocket launch outfit in the world right now.
They've been able to get out to a huge lead
with their Starlink constellation. You know, they've got more than
seven thousand satellites. I think it is an orbit. You know,
(06:28):
Amazon sitting on twenty seven, so they got a whole
lot of catching up to do just before they're in
the same conversation as Starlink.
Speaker 7 (06:36):
And I know that retail customers like individuals house Cheryl Masser,
Karen Massel's using Starlink, She's got Starlink. So is this
project supposed to also gear towards just regular everyday people
getting Internet connectivity from space from Amazon?
Speaker 5 (06:53):
It will, Yeah, they plan to offer a regular consumer business.
It's going to vary market to market. In some places
you'll be working with a cellular service provider probably, and
others they're going to sell direct to consumers. We don't
know a ton about the business plan, but they've already
kind of showed off the little terminals you can put
on your garage or on top of your house.
Speaker 3 (07:08):
All right, Matt Day, gonna leave it there. Thanks for
clearing all of this up for us. We do appreciate it.
Matt Day covers Amazon. He's out there in Seattle. He's
Bloomberg News technology reporter.
Speaker 2 (07:17):
You're listening to the Bloomberg Business Week podcast. Catch us
live weekday afternoons from two to five pm Eastern. Listen
on Apple CarPlay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 3 (07:33):
Let's chift gears a little bit and talk sports and
sports business. Because former New York Giants quarterback Eli Manning
is putting together an investment group to bid for a
piece of the NFL team. That's according to people with
knowledge of the matter. Randa Williams is part of the
team with the Scoop. He's US sports business reporter. He
joins us here in the Bloomberg Business Week studio Randall.
Eli wants a piece of the Giants.
Speaker 8 (07:54):
What do we know exactly that? I mean, he's putting
together a group. He's long express interest. He said it
on NBC earlier this year. He's told me privately, he
said it publicly. And there's one team that Eli was
going to own. It's going to be the team to
do plays for.
Speaker 9 (08:08):
How much money is this worth?
Speaker 7 (08:10):
Like?
Speaker 9 (08:10):
What give us a sense of the numbers that we're
talking here?
Speaker 6 (08:13):
So I think we don't know right now.
Speaker 8 (08:15):
But if you look at the previous two transactions, or
two of the three transactions that the NFL had, the
Philadelphia Eagles are valued at eight three Philadelphia is obviously
smaller than New York, and then the Miami Dolphins were
valued at eight to one when Aries and Joe Sie
bought a piece of it. So when you think of
it in that aspect, I would imagine that the Giants
could go for more. But also when these teams are
(08:36):
being sold sometimes owners have a little bit of soft
spot in their heart for former players. They're like, all right,
i'll sell you a little bit less and we'll have
to see.
Speaker 3 (08:43):
They are also business people though, I mean we're talking
about the Mara family and the Tish family. Yeah, where
would this piece of the asset actually come from? Would
it come from the Mara family, would come from the
Tish family. With a little bit of each kind of
give way here.
Speaker 8 (09:00):
From my understanding they're selling ten percent total, that could
be five to five. But that's what makes the most sense.
When the Tish family bought fifty percent some years ago.
I believe in nineteen ninety one they bought fifty percent,
So if it's ten, I would imagine that it's five
to five.
Speaker 6 (09:14):
But I'm not.
Speaker 3 (09:15):
So sure that ten percent numbers. For a reason though, right,
it's this new rule that allows private equity to buy
a piece.
Speaker 8 (09:21):
Yeah, most of the teams that are considering selling steaks
start at ten.
Speaker 6 (09:25):
Now.
Speaker 8 (09:25):
The Buffalo Bills sold ten to Arcdols and then they
sold another ten to limited partners. Joe Side bought three
percent and an Ares bought another three So we're seeing
these NFL teams shed small pieces of steaks, and they're
not controlling steaks. A lot of times. These partners are
coming in. I mean, like, I'm happy to own a
piece of the team. It's a prideful thing, and you know,
the teams move on from there.
Speaker 7 (09:44):
What's the precedent here for former sports players bidding for
you know, their own their own teams.
Speaker 6 (09:51):
There's been a lot of them recently. I mean when.
Speaker 8 (09:55):
Rob Penner brought the Denver Broncos. Lewis Hamilton was part
of that group. You have Venus and Serena Williams, who
are sort of like the original former athlete owners. You have,
of course, Dominique Dawes and the Atlanta Falcons, Tom Brady
and the Raiders along with Richard Seymour.
Speaker 6 (10:09):
You have Vince.
Speaker 8 (10:11):
Carter, Tracy McGrady and Josie Altador with the Buffalo Bills.
So there's a little bit of a precedent here. But
Eli and the Giants would obviously be a big deal
because they have not had much success lately.
Speaker 3 (10:21):
In general, are the controlling owners using this as an
opportunity and I don't mean the Tisch families of the
Morrow families right now, but when they sell a piece
such as this, are they using this as an opportunity
to kind of gain on the asset appreciation that we've
seen in recent years and get some cash as a
result of that.
Speaker 6 (10:38):
It really depends on the group.
Speaker 8 (10:39):
There are some owners who are using this money towards stadium,
stadium development and training facilities. There's other owners who have
secession issues. I'm not so sure that the Marraw family
or the Tisch family have either one of those they
could just be looking to add owners. If you look
at what Mark Davis did with Tom Brady, tom Brady's
helping along with the football operations thing, he's not. I mean,
(11:00):
the Raiders have a brand new stadium. They have no
need for that specifically, But Mark Davis is trying to
have more success. So you bring in the greatest quarterback
of all time, and surely Tom Brady's going to help
with that.
Speaker 6 (11:10):
Eli won two Super Bowls. Maybe this will look something similar.
Speaker 9 (11:13):
That's what I wanted to ask about.
Speaker 7 (11:14):
What would you expect Eli Manning's plans to be here
as an owner.
Speaker 9 (11:19):
Would it be more just to.
Speaker 7 (11:20):
Earn an investment return or to actually get involved with
the operations of the team.
Speaker 8 (11:25):
Well, if you're a limited partner, I think that the
NFL's business has proven to be invincible in some aspects.
I mean, when you think about the Super Bowl that
just happened, it had one hundred and twenty seven million viewers,
and that was a blowout game. At one point it
was forty to six, and that's the pinnacle of things.
So the business of the Giants is going to continue
to grow. But for Eli, as far as his role
with the Giants, that's going to have to be negotiated
(11:47):
with the Damar and Tisch family, these limited partners. It
depends on how sensitive a controlling owner is. Sometimes these
owners will be like, yes, absolutely, help me. I have
no idea what I'm doing. But La Mar and Tisch
family have won two Super Bowls in a life last
twenty years and four in the last thirty or forty.
I think their first super Bowl was in eighty seven,
so they've had some success.
Speaker 3 (12:07):
We only have like ten seconds, but the business of
sports doing in general doing very well, as we've seen
other assets move lower in the last few months.
Speaker 6 (12:15):
Absolutely, sports is fun.
Speaker 3 (12:16):
Okay, everything's fine. You've heard it from Randa Williams, US
Sports business for now. That's the caveat. He's US Sports
business reporter. Check out his reporting and the team's reporting
on the Bloomberg terminal, and of course, at Bloomberg dot com.
Speaker 2 (12:30):
This is the Bloomberg Business Week Podcast. Listen live each
weekday starting at two pm Eastern on Applecarplay and Android
Auto with the Bloomberg Business app. You can also listen
live on Amazon Alexa from our flagship New York station,
just Say Alexa played Bloomberg eleven thirty.
Speaker 3 (12:49):
We'll let shift gears and talk about what's going on
in China, because Shijinping has faced growing skepticism and discontent
within China due to strict COVID lockdowns, a slowing economy,
and a time hacks on entrepreneurs. Now Donald Trump has
handed him a gift to rally support at home an
external enemy. Jennifer Welch is chief geoeconomics analyst for Bloomberg Economics.
(13:12):
She joins us here in their New York studio for
Bloomberg Business Week. It's the Bloomberg Interactive Brookers Studio. Jennifer,
good to see you. We've been trying to get an
understanding about what's happening on the ground in China. I
had the I've been there once. It was pre pandemic,
it was twenty nineteen. I believe there was this view
that during the pandemic the COVID lockdowns, sentiment among Chinese
(13:36):
locals was very low. There was the property crisis. There
is the property crisis, and suddenly fast forward to you know,
close to halfway through twenty twenty five, we're seeing incredible
developments when it comes to evs in China. We're seeing
an essential silence when it comes to negotiations with President
(13:57):
Donald Trump. What is the environment right now now in
terms of how the Chinese consumers doing and the power
that chijin Ping.
Speaker 10 (14:08):
Has well, I think all of the challenges that you
laid out are still there. There's still the property bubble
that they're dealing with, There's still the weakend sentiment, there's
still the sort of overhanging of the COVID pandemic lockdowns
and recovering sentiment and animal spirits.
Speaker 9 (14:22):
All of that is still very much there.
Speaker 10 (14:24):
But I think what has lit a fire under Chinese
people's sort of sense of consumer sentiment and economic nationalism
has been this trade war with the United States. And
it's been kind of conveniently time from Beijing's perspective to
kind of distract attention from those problems and really draw
a lot of unity around this idea of standing strong
(14:44):
in the face of this US trade war and these
massive tariffs.
Speaker 7 (14:48):
Talk a little bit more about just what makes Chinese
consumers manufacturers excited in this environment, What is there to
rally around.
Speaker 10 (14:59):
I think it's US excitement so much as in Chinese
you would say true cool or eating bitter, like being
prepared to kind of dig their heels in and hold
out in the face of what they see is US
aggression in the form of this trade wark. Right from
Beijing's perspective, from the Chinese people's perspective, they didn't do anything.
The US just kept ratcheting up terrace, and now we're
at unprecedented high levels. I think people are sober about
(15:21):
the fact that this is going to cause a lot
of economic pain at home, especially at a time of
economic weakness for China. But at the same time, they're
not willing to kind of engage with the idea of
looking weak in the face of that. And so that's
what I think, is this rally around the flag phenomenon
that we're seeing and that the piece talked about.
Speaker 3 (15:41):
One question that I still don't know the answer to
is who has the cards in this negotiation. On the
one hand, the US consumer is incredibly powerful, and no
question China wants access to the consumer. Speaking of that
we love to buy things, those things often come from China.
Who has the power here?
Speaker 10 (16:00):
I think in a sense everybody loses. I think it's
a question is that's not good in time frames right?
You know, for example, from the US perspective, those prices
are going to start to hit a pretty dramatic spike
once the stockpiling and other kind of advanced efforts that
we saw ahead of these tarifts coming into play start
to run out, and now companies have to deal with
the tariffs themselves, right. I think the other question is
(16:23):
a political question, right. Of Again, from China's perspective, they
didn't start this trade war. They're on the kind of
receiving end of it, and that's allowing them to dig
their heels in a little bit. I think a lot
of Americans feel like, sure, we knew President Trump was
going to do tarifts at some point. He was talking
about that pretty frankly on the campaign trail. This isn't
necessarily the trade war that Americans wanted, right, and on
(16:46):
your largest source of goods, right. And I think the
pain when it starts to hit in a month or
two from now, when those stockpiles run out, then the
key question is who has sort of the political will
to withstand that economic need. But to be clear, the
economic paying for China is going to be very tough,
especially if the US is successful and convincing other countries
not to let those Chinese goods just flow through other markets.
Speaker 7 (17:09):
So what is the Chinese government's role here, I guess
in shaping public opinion within China.
Speaker 10 (17:16):
So we saw the propaganda machine going to overdrive pretty
soon after Liberation Day, facing in two fronts, the internal front,
building up that China national sentiment, which again they had
a little bit of an easy role to play in
that because the people were already predisposed to being upset
at the United States, but also externally taking advantage of
Liberation Day tariffs to say to the rest of the world,
(17:37):
the US is not a reliable partner. Work with us,
don't work with the US to counter US, and let's
join up on sides. Now, I think that effort's going
to be a lot more difficult in this ninety day pause,
where if I'm Vietnam, I'm enjoying right now a pretty
good tariff differential with China.
Speaker 3 (17:53):
When you were saying external pr I thought you were
going to talk about those videos that went viral of
like the AYI generated Americans actually making things.
Speaker 10 (18:00):
There's that there's the sort of like peace in our
time video saw.
Speaker 6 (18:04):
This, Yeah, everybody saw this.
Speaker 7 (18:05):
Very overweight people like making Yes, they've got a very
effective AI video generation scheme over.
Speaker 3 (18:12):
There, Hey, you got to run. We really appreciate you
staying late to hang out with us. Jennifer Welch's chief
geoeconomics analyst for Bloomberg Economics, strening us here in the
Bloomberg Interactive Brokers studio.
Speaker 2 (18:22):
You're listening to the Bloomberg Business Week Podcast. Catch us
live weekday afternoons from two to five pm Eastern. Listen
on Apple CarPlay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 3 (18:38):
Starbucks quarterly sales felt one percent in the quarter that
ended March thirtieth, that missed estimates. They've declined, shares of
declining about seven percent so far this year. Brian Nickel,
he hasn't quite been there a year. You know him
from Chipotle, you know him from Young Brands.
Speaker 6 (18:51):
He's there.
Speaker 3 (18:52):
The company has quote real momentum, he says, with its
turnaround plan and expects to return to business to growth
despite current financial results not refctm progress formorrow. Let's bring
in Bloomberg Intelligence's senior restaurant in food service analyst, Michael Halen.
He joins us from New Jersey. Michael good to have
you with us this afternoon. You've had a few minutes
to dig into these Starbucks results. Where is Starbucks in
(19:16):
its turnaround?
Speaker 11 (19:20):
We were kind of hoping they'd be a little bit
further along here in the United States, US Same Star
sales definitely disappointed in the corner quarter. You know, in
their defense, it was the coldest January on record. I'm
sure there were store closures due to the snow in February,
and I probably saw some sort of recovery in March.
(19:41):
But yeah, US Same Star sales came in a little
bit weaker. On the positive side, China in the International
both did a little bit better. International probably is in
the biggest concern and something they're tackling second right. US
has really been the focus thus far far in Brian
(20:03):
nichols tenure, China and international is something we expect them
to topple later this year.
Speaker 7 (20:12):
Bloomberg's Daniella sar Tory is writing that these earners reports
highlight how hard the coffee chain will have to work
to regain lost ground.
Speaker 9 (20:23):
Who are they losing ground to right now?
Speaker 11 (20:27):
You know, that's a great question. You know, there's a
lot of speculation that it's too you know, some of
these fast growing chains like Dutch Bros. And Seven Brew,
they're also most likely losing some some business to people
just brewing coffee at home. People are working from home
more often, right and you know when, and they're looking
(20:48):
to save money because you know, low income consumers especially
because you know while it's are strapped.
Speaker 7 (20:55):
I mean, one of the biggest I feel like personal
finance tips that you here is make your coffee at home.
Speaker 9 (21:02):
Whether or not that actually there's builds wealth.
Speaker 3 (21:05):
That is something that we hurt a lot and now
a lot of people like to throw water on it.
Barry Ridholtz, who has the Masters in Business podcast here,
he's got a whole part of his book where he's like,
just ignore that.
Speaker 9 (21:14):
Just buy the coffee.
Speaker 3 (21:15):
Yeah, that's what it's called. It's called buy the blank coffee.
That's literally what it's called. That's so funny.
Speaker 9 (21:20):
But it is interesting that potentially people are pulling back because.
Speaker 6 (21:23):
It adds up. It does add up.
Speaker 3 (21:24):
Yeah, well how much is it the average not the
average ticket price necessarily, but what are people spending at
Starbucks right now?
Speaker 11 (21:33):
Yeah? I don't I don't have those numbers for you,
but listen, it's you know when you're on the go,
when you're working in an office and you need to
stop on your way, right, if you're in a rush,
it's a lot easier to stop at Starbucks than it
is to make it yourself. Starbucks is working really hard
to improve the operations to get customers through the store
(21:54):
and through the drive through much faster.
Speaker 6 (21:57):
Right.
Speaker 11 (21:57):
That was really a big part of their issues. I
would say most of their issues that they've had under
the previous management team were self inflicted. It wasn't because
of Dutch bros. And people making coffee at home. It's
because the service suffered significantly.
Speaker 6 (22:13):
Right.
Speaker 11 (22:14):
The speed of service, it was just way too long.
The sequencing of orders both in the store and for
mobile orders didn't make any sense. There was no real
sequencing based on location for the mobile app, which is
just mind blowing. So first and first out kind of queue,
no matter how far away a customer was from a
(22:37):
particular store, right. And so these are all things that
management is working hard to improve on to get customers
to come back, because it's, for the most part, it's
a convenience occasion, right. Brian Nicol definitely wants people to
stay in the stores more and linger and they're doing
that by you know, bringing back ceramic cups and offering
free refills, right, But a large bulk of their customers,
(23:00):
I'd say a large majority of their customers really want
to be in and out quick, right. It's a convenience type.
The cage and speed of service is powermount and that's
that's really been the primary focus since Brian Nickel came
on board.
Speaker 3 (23:14):
What's the China story here, Michael, Because earlier in our
program we spoke with Jennifer Welch at Bloomberg Economics, she's
chief geoeconomics analyst, and she spoke about nationalism in China
in the midst of this trade war that we're seeing.
In twenty twenty four, China accounted for about eight point
three percent of Starbucks's total revenue. Is that a number
(23:36):
we expect to see grow because for years Starbucks the
China was the growth story for Starbucks. But you know
that was years ago. Now they got luck In and
so many other homegrown brands there people can want to
support Starbucks.
Speaker 11 (23:50):
Yeah, Listen, that's you know, a big reason why Starbucks
has probably underperformed their restaurant peers over the last few weeks.
Since the tariff announcements were made because of their exposure
to China, because their stores are company owned in China, right,
so there is a risk here. There is definitely a
risk of you know, boycott's. The Chinese government has done
(24:14):
it before the US retail companies. There's no reason why
it couldn't happen with Starbucks. We're not saying it's going
to happen. But what was once seen as a strength
owning their stores in China, I think is now being
looked upon as maybe, you know, a bigger risk. And
so you know, it also comes at a bad time
because Starbucks was thinking about franchising that business, selling that
(24:36):
China business to a partner and just collect royalties on it.
Speaker 6 (24:40):
Right.
Speaker 11 (24:40):
But with all of the tariff drama, you know, I
think it's buyers aren't necessarily lining up to pay a
premium for that business. So the timing is kind of tough.
But I would say that's the number one concern about
this company. That's why it's down about twenty I think
about twenty four percent from its hies just you know,
(25:01):
earlier this year. And the other concern would be coffee prices.
Speaker 6 (25:04):
Right, So the tariff.
Speaker 11 (25:05):
Drama has caused a lot of commodity deflation over the
last three four weeks, but we haven't seen that with
coffee prices. Coffee prices remain elevated, and that's definitely a concern.
They buy forward and they lock in supply right, so
they may be okay for the next couple of quarters,
but further down the wrong line. If coffee prices stay elevated,
(25:27):
that's gonna hurt margin.
Speaker 3 (25:28):
Just twenty seconds. Coffee prices also include tariff implications.
Speaker 11 (25:34):
Michael, it could we're you know, we're gonna hear more
on the call. I'm sure, but I can't give you
a number on that just yet.
Speaker 3 (25:43):
Hey, appreciate you joining us. We're gonna let you go
and go jump on that call. Michael Halen is Bloomberg Intelligence,
is senior restaurant and food service analysts joining us from
New Jersey.
Speaker 4 (25:56):
Yeah, I bet you let me drive.
Speaker 3 (25:57):
Oh no, no, no, no, This is not a who's.
Speaker 2 (26:00):
Gone to j honey, Please, I'll do the graveled excuse.
Speaker 6 (26:05):
Wait, I want to try.
Speaker 11 (26:06):
It's good question time.
Speaker 1 (26:13):
This is the drive to the clothes Punks A musing
well on Bloomberg Radio.
Speaker 3 (26:21):
It is Bloomberg Business Week We just got an update
from Bill Maloney and Charlie pell at the S and
P five hundred, up six tens of one percent, but
off its best levels of the day, up more than
Emily what is it, seven and a half percent in
the last six days, it's been.
Speaker 9 (26:35):
It's been a run of risk on.
Speaker 7 (26:36):
As Eric Leaner said, at least in the short term,
investors are riding the momentum upwards, even if there are
risks building in the background that maybe will come to
fruition later on once we get more certainty about.
Speaker 3 (26:50):
Tariff's Well, curious about some of those risks that Michael
Green has his eyes on. He's portfolio manager over its
Simplify Asset Management. He joins us out there in California. Hey, Michael,
you've got an interesting note that you sent to our
producers ahead of ahead of this conversation, and it makes
me think of something that Emily brought up earlier, and
that's alternative data. Because you're saying that real time indicators
(27:13):
of business activity like trucking are slowing rapidly. What are
you seeing out there, Well.
Speaker 6 (27:20):
That's absolutely what we are seeing.
Speaker 12 (27:21):
We are seeing forward looking metrics, things like railcar bookings,
things like trucking indicators. Those are weakening very rapidly. We're
already seeing ports slowing down in particularly Los Angeles, which
is going to be the first to feel the impact
associated with the Chinese tariffs. That's the first destination that
you hit. It takes longer to get to the East
(27:41):
coast locations. We're absolutely seeing something that looks very similar
to the initial COVID shutdown, in which basically activity just came.
Speaker 6 (27:49):
To a grinding halt.
Speaker 12 (27:51):
The key difference this time around is, unlike the COVID events,
in which we knew that going outside and being in
physical proximity to other people meant that we were potentially
putting our lives at risk, We're not seeing that type
of slowdown of economic activity. It's just this slow rumbling
boil that's effectively occurring underneath the surface that is painfully apparent.
(28:12):
It's a little bit more like the stage of COVID
where we were watching the events in Italy or in
China and beginning to think is this possibly going.
Speaker 6 (28:20):
To make it here?
Speaker 7 (28:21):
So how do you square that kind of like bubbling
of alternative data that looks concerning with the fact that,
as Tim had mentioned, the s and P five hundred
is up something like seven percent over the last just
few days. Here, we really have had a risk on moment.
Does that all make sense in the context of what
the data is telling.
Speaker 12 (28:41):
You, Well, it doesn't make sense in the context of
what that data is telling us, But it makes perfect
sense in the context of another alternate data set, which
is just the very simple observation that very few people
have lost their jobs yet. And so if this economic
slow down persists, if we do see the impact of
this carry through, we are likely to see that show.
Speaker 6 (29:01):
Up as job losses.
Speaker 12 (29:03):
But for the past five years, most businesses have struggled
to attract and retain qualified employees. That means that if
something like tariffs that could be removed with a tweet
or a speech are revoked, they're terrified that they're going
to wake up and suddenly find that they are back
behind the eight ball and they are faced with not
enough employees to meet the potential rebound in the economy
(29:26):
that could occur. That's causing basically companies and they're planning
departments to freeze and say, well, let's try to reduce
hours a little bit. We saw clear evidence of that
in the Dallas Fed Manufacturing Survey. I think it was
yesterday in which we're seeing the expect the expectation for
hours begin to fall if this persists, if it does
(29:47):
actually manifest, And again, unlike the COVID experience, this time
there's not the sense of national emergency.
Speaker 6 (29:53):
There's not the sense that this is a unifying event.
Speaker 12 (29:56):
Instead, this very much feels like it's a fracturing event,
or half the power population is saying I told you so,
and the other half of the population is saying, well,
we had to do this.
Speaker 6 (30:06):
You know, under these.
Speaker 12 (30:07):
Conditions, we're looking at a situation where that stimulus is
likely to arrive much later, and only after we've begun
to see the impact of it.
Speaker 6 (30:17):
If people start to lose their jobs.
Speaker 12 (30:19):
Then their contributions to four oh one k's begin to decline,
Then their contributions to their iras begin to decline. Then
they begin to tap into their four oh one k's
or iras for additional spending power. We're starting to see
the first elements of that, but it really has not
hidden in a meaningful fashion yet. And this is one
of the paradoxes of a passive dominated world. All that
(30:39):
matters is do people have jobs and are they contributing
to their four oh one k's.
Speaker 3 (30:43):
The answer so far is yes, And yet I am
seeing over the last seven days the S and P
five hundred and five point two percent over the last
seven trading sessions.
Speaker 6 (30:53):
Yeah.
Speaker 12 (30:54):
Well, the simple answer is is that people still have
their jobs, They're still contributing to their four oh one k's,
and anyone who is trying to trade in advance of
this has already sold.
Speaker 6 (31:02):
Right.
Speaker 12 (31:02):
We've seen the d risking from Europe. We've seen the
d risking from systematic strategies like CTAs or vault targeting funds.
We've seen the active managers move to rapidly de risk
their portfolios. This is particularly true in the hedge fund community.
Once they've sold, they've got nothing left to sell, so
(31:22):
the pressure on the market then becomes upwards.
Speaker 7 (31:25):
Mike, have you made any recent portfolio changes in light
of the tariffs post Liberation Day? Have you added any
specific hedges or taken risk off the table.
Speaker 12 (31:39):
Well, we were fortunate in being positioned for this, so
we actually saw this as a COVID like event that
was unlikely to lead to a slow and gradual decline
and said it was likely to manifest itself very much
on the event, and so we were fortunate in the
high Yield Fund that iron that carries credit hedge protection,
to have positioned ourselves well ahead of this event that
(32:02):
allowed us during the event to actually re risk. And
now we're in the process again of putting back on hedges,
positioning ourselves for what we think will be the second
leg down on this.
Speaker 6 (32:13):
Now that could be wrong, right, we could see a
reversal of tariff policy.
Speaker 12 (32:18):
But it does very much feel like significant damage has
been done and that will ultimately have to be reflected
in the flow dynamics.
Speaker 6 (32:25):
That I was referring to before.
Speaker 12 (32:26):
As I start to add back hedges, I'm sure other
people are doing something similar.
Speaker 6 (32:31):
Whether they are re risking and contributing.
Speaker 12 (32:33):
To that rally, or whether they are taking this opportunity
to add back hedges is their individual choice. But the
simple reality is that we've seen much of that impact already,
and so I'm looking to actually reduce risk.
Speaker 6 (32:48):
As the month comes to a close, I.
Speaker 7 (32:51):
Have to ask about bitcoin because it's doing so well
over the last few days.
Speaker 9 (32:57):
It's up ninety five thousand.
Speaker 7 (32:59):
Now, is that a hedge that people are using or
people using bitcoin now as a safe haven.
Speaker 12 (33:06):
Well, that certainly is the dialogue, right, that's the narrative
associated with bitcoin. The reality of bitcoin is the same
reality that exists for any financial asset. If people buy it,
you have to find people willing to sell it. If
they are less willing to sell it, the price will
move higher. That is what we are seeing with bitcoin.
Just like we've seen a return to buying of stocks
(33:28):
once the selling was done, we largely have seen a
reversal of the outward flows in bitcoin. We've seen positive
inflows into the ETFs and other avenues in which people
buy it, and that obviously creates a self fulfilling mechanism. Right,
we're on the radio talking about is bitcoin a flight
to safety instrument? I'm sure somebody out there is suddenly
now looking at the screen and saying, gosh, it might
(33:50):
be maybe I should buy some bitcoin. If it were
to start to fall, that process would likely reverse itself
and you would see the flows reverse, and ultimately the
price would fall to reflect that. Bitcoin is just a
fantastic illustration of the inelasticity in markets that I often
highlight in my writings and in my speeches.
Speaker 3 (34:09):
Hey, we appreciate you taking the time to join us today.
We got to have you back soon. Michael Greeney's portfolio
manager over at Simplify Asset Management.
Speaker 1 (34:18):
This is the Bloomberg Business Weekdaily podcast, available on Apple, Spotify,
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(34:39):
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