WEBVTT - Bloomberg Wall Street Week: Greenspan, Palmisano and Johnson 0:00:00.160 --> 0:00:03.360 This is Bloomberg Wall Street Week. What's the state of 0:00:03.400 --> 0:00:06.360 corporate governance? The deficit is a real issue. The US 0:00:06.400 --> 0:00:09.800 economy continues to send mixed signals to the financial stories 0:00:09.800 --> 0:00:12.680 that cheap our world fed action to con concerns over 0:00:12.760 --> 0:00:16.240 dollar liquidity and encouraging China data. The five hundred wealthiest 0:00:16.239 --> 0:00:18.360 people in the world. Through the eyes of the most 0:00:18.480 --> 0:00:22.520 influential voices Larry Summers, the former Treasury Secretary, Star CEO, 0:00:22.640 --> 0:00:26.360 Kevin Johnson sec Chairman j Clayton. Bloomberg wool Street Week 0:00:26.480 --> 0:00:30.960 with David Weston from Bloomberg Radio Science gave us some hope. 0:00:31.520 --> 0:00:35.640 The economic numbers they gave us none. This is Bloomberg 0:00:35.680 --> 0:00:39.640 Wall Street Week. I'm David Weston. Welcome back. Equity markets 0:00:39.640 --> 0:00:42.839 held up pretty well this week, although below the surface 0:00:43.000 --> 0:00:45.440 there are clearly some winners and some losers who are 0:00:45.440 --> 0:00:48.080 emerging and judging for what we saw this week, big 0:00:48.120 --> 0:00:50.720 tech is tending to come out on top. That's something 0:00:50.720 --> 0:00:53.680 we talked with Wall Street Week contributor Sam Paulmisano about. 0:00:53.920 --> 0:00:57.480 He is the former CEO of IBM. It's interesting, Dave, 0:00:57.520 --> 0:00:59.360 if you watch what's going on. I mean, the guys 0:00:59.440 --> 0:01:02.440 that are well position into the pandemic are continuing to 0:01:02.520 --> 0:01:05.720 do well, especially those that are providing services like you 0:01:05.720 --> 0:01:10.000 were mentioning connectivity in business as well as to the individual, 0:01:10.040 --> 0:01:12.160 and we all connect with our families that way. In 0:01:12.160 --> 0:01:17.720 this environment, issues associated with the entertainment in the home 0:01:17.800 --> 0:01:20.280 and those kinds of things facilitating that. And you see 0:01:20.280 --> 0:01:23.160 that also in the large tech companies, especially those that 0:01:23.200 --> 0:01:26.200 are have other business models, but also like YouTube with 0:01:26.319 --> 0:01:29.920 part of Google, etcetera, etcetera. Alphabet now, so fundamentally, you know, 0:01:29.959 --> 0:01:31.679 you see a lot of that going on. I think 0:01:31.720 --> 0:01:35.559 that the broader trend long term for tech is how 0:01:35.800 --> 0:01:40.480 behavior is changing and how tech isn't facilitating that change. 0:01:40.959 --> 0:01:45.080 There's some classic examples. One I think that leaps off 0:01:45.120 --> 0:01:49.320 the charts is telemedicine. I mean telling medicine obviously uses 0:01:49.360 --> 0:01:53.240 the connectivity technology, whether that be web bacs or zoom 0:01:53.360 --> 0:01:55.640 or whatever it happens to be, but fundamentally, at the 0:01:55.720 --> 0:01:57.520 end of the day, it's a whole different web of 0:01:57.520 --> 0:02:00.320 practicing medicine. Now, this has been around for a while, 0:02:00.400 --> 0:02:02.720 and their companies like Hell that I've known quite well, 0:02:03.040 --> 0:02:05.320 have been around, but as soon as it was approved 0:02:05.360 --> 0:02:08.679 from a payment perspective, the insurance companies in medicare, etcetera. 0:02:09.120 --> 0:02:12.560 These now approaches have lit up. Now that the point 0:02:12.560 --> 0:02:14.480 of that is that people will get used to that. 0:02:14.840 --> 0:02:16.680 And if you have the option of not going to 0:02:16.720 --> 0:02:19.919 the doctor's office and waiting and waiting in the reception 0:02:20.000 --> 0:02:22.040 area for as you know, a very long time sometimes 0:02:22.080 --> 0:02:25.440 because things happen, uh, you'll that could be attracted to you. 0:02:25.520 --> 0:02:27.440 It doesn't mean you'll never go see a doctor again, 0:02:27.480 --> 0:02:30.880 but it could be an attractive alternative. Uh. You look 0:02:30.880 --> 0:02:32.520 at things that are going on in commerce. Of course, 0:02:32.560 --> 0:02:35.320 everybody talks about the big commerce player being Amazon, and 0:02:35.360 --> 0:02:37.880 what they've been able to do in non prescription drugs 0:02:37.960 --> 0:02:40.640 is like a ninefold growth, if I'm not mistaken. But 0:02:40.720 --> 0:02:43.680 even small small groceries, small retailers and the stuff at 0:02:43.760 --> 0:02:46.480 least in our environment are using things like insta cart 0:02:46.760 --> 0:02:49.040 you can order and deliver everything to the home. So 0:02:49.400 --> 0:02:52.799 all those patterns are going to continue to expand. Tele 0:02:52.960 --> 0:02:57.239 medicine touched with payments, e commerce, those sorted down to 0:02:57.280 --> 0:02:59.960 the small retailers, while grocers those kinds of things I've 0:03:00.120 --> 0:03:02.840 leave that the consumer will change and as a result 0:03:02.880 --> 0:03:06.320 of the consumer changing their consumption patterns, it creates opportunities 0:03:06.320 --> 0:03:08.480 for big tech. Sam talk to us as the former 0:03:08.520 --> 0:03:10.760 head of a big public company as well, about the 0:03:10.880 --> 0:03:13.280 role of a public company in this In this world, 0:03:13.320 --> 0:03:15.320 we now have the government handing out a lot of money, 0:03:15.480 --> 0:03:18.160 sometimes in exchange for equity. At the same time, some 0:03:18.200 --> 0:03:21.639 companies are becoming criticized if they're not socially responsible. Is 0:03:21.680 --> 0:03:23.760 e s G more important than ever? First of all, 0:03:23.800 --> 0:03:27.119 I'll start with e s G or social responsibility. Connecting 0:03:27.120 --> 0:03:31.200 to your society was always fundamentally important. We can argue 0:03:31.240 --> 0:03:34.080 about the extent that people did that or not did that. 0:03:34.120 --> 0:03:37.840 We could talk about the pressure of short term investment, etcetera, etcetera, 0:03:37.880 --> 0:03:40.720 But fundamentally it's it's it was strategically important to your 0:03:40.760 --> 0:03:43.760 brand because if you do things that are valuable to 0:03:43.880 --> 0:03:47.520 your individual customers or to society, your brand will be enhanced, 0:03:47.560 --> 0:03:49.520 Your value will be created that will show up in 0:03:49.520 --> 0:03:51.720 your shareholder price as well. So I think it's always 0:03:51.720 --> 0:03:55.360 been important. I believe, quite honestly, large companies that have 0:03:55.360 --> 0:03:58.640 been extremely responsible. If you look at what people are doing, 0:03:58.720 --> 0:04:01.840 whether it's three AM or whether it's going on in biotech. 0:04:01.880 --> 0:04:03.840 You just heard about talking about Gilead, what they've been 0:04:03.880 --> 0:04:05.640 able to do in a very short period of time 0:04:05.720 --> 0:04:08.720 as well. You talk about what other guys are doing 0:04:08.760 --> 0:04:11.160 to help in the pandemic. Even the energy companies that 0:04:11.160 --> 0:04:15.360 are constantly maligned, you know from sustainability activists and those 0:04:15.400 --> 0:04:18.279 sorts of things, turned over their chemical facilities to produce 0:04:18.320 --> 0:04:21.240 the chemicals that go into the products such as PPE 0:04:21.279 --> 0:04:23.960 and those kinds of things. So and automotive with four 0:04:24.040 --> 0:04:26.480 GM and ventilators, all those things. I mean, those guys 0:04:26.480 --> 0:04:29.360 have been phenomenally responsible. So I believe that you know 0:04:29.520 --> 0:04:32.080 that kind of behavior. When you get into a crisis, 0:04:32.520 --> 0:04:35.120 big companies are stepping up. I mean yeah, I mean 0:04:35.880 --> 0:04:39.599 there's there's no business case to justify some of these 0:04:39.640 --> 0:04:42.080 things in this environment, which we do all do understand, 0:04:42.400 --> 0:04:46.080 but fundamentally they're doing the responsible thing. You even see 0:04:46.120 --> 0:04:49.119 some creative things in small companies. Uh there's a small 0:04:49.160 --> 0:04:51.839 little company in Connecticut in New York. It's actually created 0:04:51.839 --> 0:04:54.839 the platform and technology that allows people to get back 0:04:54.839 --> 0:04:56.920 to work faster. I mean I won't go take it 0:04:56.960 --> 0:04:59.200 through all the details, but basically it certifies your test 0:04:59.200 --> 0:05:01.680 results in your hell and whether you're working in the 0:05:01.680 --> 0:05:03.720 work or you're going into a restaurant for that matter, 0:05:03.760 --> 0:05:06.279 or you and I in the studio again, it'll say, hey, 0:05:06.320 --> 0:05:10.360 Sam's technically healthy. He's passed all these tests, and it's 0:05:10.400 --> 0:05:12.039 on his phone, and you let him in and he 0:05:12.080 --> 0:05:13.479 goes on and we can do this again like we 0:05:13.560 --> 0:05:15.680 used to do it live in your studio. Sam, You've 0:05:15.680 --> 0:05:17.440 had a lot of experience with supply chains and a 0:05:17.440 --> 0:05:20.520 lot of experience with China. Do you anticipate that one 0:05:20.560 --> 0:05:22.840 of the consequences of this pandemic when we come out 0:05:22.839 --> 0:05:24.640 of it, which we will at some point, will be 0:05:24.680 --> 0:05:27.520 some permanent changes in our relations are business relations with 0:05:27.600 --> 0:05:30.400 China and for that matter, and extended supply chains around 0:05:30.440 --> 0:05:34.640 the world. Supply chains should have been designed for resiliency. 0:05:34.800 --> 0:05:37.080 By that, I mean you have multiple alternatives. So you 0:05:37.120 --> 0:05:39.560 weren't you weren't you didn't have a major component in 0:05:39.640 --> 0:05:42.839 one geography wherever it happened to be, so you could 0:05:42.880 --> 0:05:44.880 read balance. If a crisis occurred, that could have been 0:05:44.920 --> 0:05:46.760 a tsunami, it could be whether it could be lots 0:05:46.760 --> 0:05:49.280 of things, it could have been a military action, and 0:05:49.400 --> 0:05:51.920 we all designed our supply chains so if those events 0:05:51.920 --> 0:05:54.640 occurred on the global basis, you could readjust if you 0:05:54.680 --> 0:05:56.960 look at the companies that have not been as impacted 0:05:56.960 --> 0:05:59.400 as dramatically by this. They're the ones that had a 0:05:59.480 --> 0:06:03.240 I'll called resilient balance supply chain. What's good at what's 0:06:03.320 --> 0:06:06.400 driving the changes to the supply chain, quite honestly, David, 0:06:06.880 --> 0:06:09.760 is the fact that technology more so than low cost. 0:06:10.360 --> 0:06:13.480 Uh So, therefore, which drove it up until I'd say 0:06:13.560 --> 0:06:16.960 maybe ten years ago was cost. Where do you locate 0:06:17.000 --> 0:06:18.920 for costs? And you see that over the world, Yes, 0:06:18.960 --> 0:06:22.279 a lot with the China. China became the manufacturing hub 0:06:22.279 --> 0:06:24.640 of the world, There's no doubt about it. However, that 0:06:24.720 --> 0:06:28.120 was more of a cost driven scenario. It started with 0:06:28.160 --> 0:06:31.120 the trade negotiations, but fundamentally people were looking at this 0:06:31.200 --> 0:06:33.159 thing and say, look, I need to have flexibility in 0:06:33.200 --> 0:06:35.520 my supply chain. I also want to be close to 0:06:35.560 --> 0:06:37.880 the market so I could respond quickly. That was Wall 0:06:37.920 --> 0:06:42.000 Street Week contributor Sam Paulmisano coming up on Wall Street Week. 0:06:42.440 --> 0:06:44.760 China is two months ahead of the United States in 0:06:44.800 --> 0:06:48.600 dealing with the coronavirus, and Starbucks is seeing both sides. 0:06:49.120 --> 0:06:52.440 We talked with CEO Kevin Johnson about what their experience 0:06:52.440 --> 0:06:55.120 in China taught them about getting back to business in 0:06:55.160 --> 0:06:58.760 the United States. That's next on Wall Street Week on Bloomberg. 0:07:03.960 --> 0:07:08.200 This is Bloomberg Will Street Week with David Weston from 0:07:08.279 --> 0:07:11.400 Bloomberg Radio. Businesses in the United States have been closed 0:07:11.400 --> 0:07:14.600 for about seven weeks now, but in China it's been 0:07:14.640 --> 0:07:17.760 closer to fifteen weeks, and China is well on its 0:07:17.800 --> 0:07:21.040 way back in many of its businesses. Starbucks has seen 0:07:21.080 --> 0:07:24.200 it in both places, and we talked with Starbucks CEO 0:07:24.320 --> 0:07:27.400 and president Kevin Johnson about what they learned in China 0:07:27.840 --> 0:07:29.640 that might help us get back to business here in 0:07:29.680 --> 0:07:32.800 the United States. We started working on the COVID nineteam 0:07:32.800 --> 0:07:36.080 response in China in mid January, and so we're now 0:07:36.080 --> 0:07:38.960 in week fifteen in China, and we've learned some very 0:07:39.000 --> 0:07:41.560 important things from that experience. You know. The first is 0:07:41.640 --> 0:07:45.080 that there are phases that everyone, every market around the 0:07:45.120 --> 0:07:48.000 world goes through. And the first phase, you know, we 0:07:48.000 --> 0:07:50.120 we really refer to that as sort of the mitigate 0:07:50.160 --> 0:07:53.240 and contain phase, and that's that period lasted for three 0:07:53.280 --> 0:07:56.880 weeks in China where uh people were asked to shelter 0:07:56.960 --> 0:08:00.640 at home, businesses were shut down, social distancing all with 0:08:00.720 --> 0:08:04.160 the focus on how to flatten the curve and slow 0:08:04.440 --> 0:08:08.280 the spread of the virus. Coming out of the mitigating 0:08:08.280 --> 0:08:10.880 contained phase in China, we then transition into a phase 0:08:10.880 --> 0:08:14.040 that we call monitor and adapt. And monitor and adapt 0:08:14.040 --> 0:08:17.040 basically means we begin to reopen stores, but we reopened 0:08:17.080 --> 0:08:22.440 them with different store protocols, you know, amplifying safety. Oftentimes 0:08:22.480 --> 0:08:25.960 it's for mobile order for pickup only UH and and 0:08:26.000 --> 0:08:27.960 we did that in China, while at the same time 0:08:27.960 --> 0:08:31.200 we monitor the number of COVID cases that that that 0:08:31.320 --> 0:08:35.680 might pop up in certain in cities around China and UH. 0:08:35.760 --> 0:08:38.200 In the US here we are now just coming out 0:08:38.240 --> 0:08:40.560 of the mitigating contained phase. We've been in that for 0:08:40.600 --> 0:08:43.679 six weeks now in the US, and as we transition 0:08:44.000 --> 0:08:46.400 into this monitor and adapt phase, you know, we plan 0:08:46.520 --> 0:08:51.760 to open reopen over our Starbucks stores by early June. 0:08:51.760 --> 0:08:54.080 In fact, next week, the majority of those stores in 0:08:54.080 --> 0:08:58.160 the United States will reopen, and we will reopen using 0:08:58.200 --> 0:09:01.280 safety protocols that we developed in China and have adapted 0:09:01.280 --> 0:09:04.120 for the US. We'll reopen in a way that provides 0:09:04.160 --> 0:09:08.320 our customers a safe, familiar, and convenient experience. And so 0:09:08.400 --> 0:09:11.200 we're excited for next week. Many of our Starbucks partners 0:09:11.200 --> 0:09:13.800 are referring to it as homecoming week. Because they too, 0:09:13.840 --> 0:09:16.520 like all of us, have been sheltering at home, and 0:09:16.520 --> 0:09:18.640 we're ready to to to get out and do something, 0:09:18.640 --> 0:09:21.400 but do something that's safe and responsible. And that's the 0:09:21.440 --> 0:09:23.760 balance that we work to strike in this monitor and 0:09:23.800 --> 0:09:26.240 adapt phase. As you say, Kevin, as you came back 0:09:26.320 --> 0:09:28.240 online and you have the vast majority of your stores 0:09:28.240 --> 0:09:30.199 now in China back up and running, as I understand 0:09:30.320 --> 0:09:33.000 you have modified your hours, modified how many people can 0:09:33.000 --> 0:09:35.360 be there. I see that the same store sales, even 0:09:35.360 --> 0:09:37.760 though you have almost all the stores open, are down somewhat. 0:09:37.800 --> 0:09:40.240 Can you tell how much of that is just reluctance 0:09:40.280 --> 0:09:42.040 on the part of consumers to come back out and 0:09:42.040 --> 0:09:44.280 buy things, as opposed to just having fewer people in 0:09:44.320 --> 0:09:47.400 the stores and shorter hours. Yeah, it's a combination of 0:09:47.559 --> 0:09:49.760 all of those things, David, and I can't I can't 0:09:49.760 --> 0:09:52.080 necessarily attribute it to anyone, although I do know that 0:09:52.360 --> 0:09:55.679 you know in our store protocols, for example, UH, in China, 0:09:55.800 --> 0:09:59.120 you know most stores are not open for seating. They're 0:09:59.160 --> 0:10:02.439 open for customer was to come in for takeaway in China, 0:10:02.559 --> 0:10:05.800 and some stores have limited seating so that we can 0:10:05.880 --> 0:10:09.319 enforce social distancing. UH. And one of the differences between 0:10:09.400 --> 0:10:12.960 China and the US. In the US pre COVID, over 0:10:13.720 --> 0:10:16.880 of our customer occasions in the US were for takeaway 0:10:16.960 --> 0:10:20.440 or to go, and so, uh, the US consumer was 0:10:20.559 --> 0:10:23.120 much more sort of on the go, and so we 0:10:23.200 --> 0:10:25.559 think opening in the US, we're going to get a 0:10:25.720 --> 0:10:29.600 very significant result. But the positive news is every week 0:10:29.640 --> 0:10:32.720 we see continuous improvement in China as we monitor and adapt. 0:10:32.800 --> 0:10:35.040 We turned the dial up slowly and start to open 0:10:35.040 --> 0:10:38.520 limited seating, open other services. And now as we begin 0:10:38.600 --> 0:10:41.200 that path in the US, we're very optimistic that uh, 0:10:41.480 --> 0:10:43.240 you know, by the end of the end of May, 0:10:43.280 --> 0:10:45.520 early June, you know, we're gonna have a much better 0:10:45.559 --> 0:10:48.880 perspective on how quickly this is going to recover. Kevin, 0:10:48.880 --> 0:10:50.960 do you have any projections on how the overall state 0:10:50.960 --> 0:10:54.000 of the economy and the employment situation might affect the 0:10:54.200 --> 0:10:56.240 consumers coming back to Starbucks stories, but right here in 0:10:56.240 --> 0:10:58.880 the United States, we now know officially we are intercession. 0:10:59.040 --> 0:11:01.439 It's going to get worse. Is this something that really 0:11:01.440 --> 0:11:05.040 could put pressure downward pressure on your volume? Well, you know, certainly, Starbucks, 0:11:05.080 --> 0:11:07.600 we've we've gone through recessions in the past, and if 0:11:07.679 --> 0:11:11.640 the past is an indicator of of of how customers behave. Uh. 0:11:11.679 --> 0:11:12.839 You know, we think we're going to be in a 0:11:12.960 --> 0:11:15.320 very very strong position. We work to have a premium 0:11:15.320 --> 0:11:19.480 experience uh and build long term loyal customers and you 0:11:19.480 --> 0:11:21.880 know what we offer as an affordable luxury and even 0:11:21.880 --> 0:11:25.400 in times uh you know of a recession. Uh, you know, 0:11:25.840 --> 0:11:28.760 customers are looking for something to uplift the every day 0:11:28.840 --> 0:11:31.760 and if it's if it's their daily Starbucks, or maybe 0:11:32.320 --> 0:11:35.160 they cut back a little bit, but there's an affinity 0:11:35.200 --> 0:11:38.680 that customers have for Starbucks and we work hard to 0:11:38.800 --> 0:11:41.400 earn that loyalty and that trust, and and that's what 0:11:41.520 --> 0:11:44.600 has carried us through recessions in the past. But I 0:11:44.640 --> 0:11:48.400 think competitively, we we understand that we differentiate by by 0:11:48.559 --> 0:11:50.439 the work that we do to create a great customer 0:11:50.440 --> 0:11:53.840 experience in our stores through the beverage innovation and through 0:11:53.840 --> 0:11:57.760 those digital customer relationships. And that model was working pre COVID. 0:11:57.800 --> 0:12:00.480 In fact, the first part of this UH this quarter 0:12:00.559 --> 0:12:02.920 in the United States, we were posting an eight comp 0:12:03.240 --> 0:12:06.840 with four percent growth and transaction. And so going through COVID, 0:12:06.840 --> 0:12:11.319 being responsible, thoughtful, focusing on that safe, familiar, convenient experience, 0:12:11.400 --> 0:12:13.760 we think that's going to become the on ramp, and 0:12:13.800 --> 0:12:16.120 then as we go forward, we're going to continue to 0:12:16.240 --> 0:12:19.360 do everything we can to provide that great experience to customers. 0:12:19.360 --> 0:12:21.640 And in the past that has gotten us through recessions 0:12:21.640 --> 0:12:24.600 and I think that's gonna that's gonna play out through 0:12:24.600 --> 0:12:26.679 this one as well. Kevin, you have any sense at 0:12:26.720 --> 0:12:29.480 this point what what might be permanent or long term 0:12:29.559 --> 0:12:32.680 changes in Starbucks business, For example, percentage of digital orders, 0:12:32.880 --> 0:12:35.440 percentage of takeouts. You said it was already high in 0:12:35.440 --> 0:12:37.800 the United States, But are we facing a world where 0:12:37.800 --> 0:12:40.400 maybe we won't have any sit down in Starbucks stores. Well, 0:12:40.400 --> 0:12:42.600 I don't think it's gonna be that extreme, but certainly 0:12:42.720 --> 0:12:45.920 right now, what customers are going to look for safe, familiar, 0:12:45.920 --> 0:12:48.319 and convenient. And you know, we've all been sheltering in 0:12:48.360 --> 0:12:50.640 our homes for six weeks. We've got a little stir crazy. 0:12:50.679 --> 0:12:53.079 People want to get out and do something, but they 0:12:53.120 --> 0:12:55.560 want to be responsible. They don't want to, you know, 0:12:55.640 --> 0:12:58.840 create an unsafe situation or do things that create sort 0:12:58.880 --> 0:13:02.360 of reignite the spread of the virus. And so that's 0:13:02.360 --> 0:13:06.160 what we've tuned these initial experiences for. But longer term, 0:13:06.360 --> 0:13:08.079 you know, you think about you know, once we get 0:13:08.080 --> 0:13:10.960 a vaccine and treatments for this, then I think consumer 0:13:11.040 --> 0:13:15.040 behavior can start to adapt even more. And it'll take time. 0:13:15.280 --> 0:13:17.959 You know, the effect in this experience of COVID nineteam 0:13:17.960 --> 0:13:20.400 will affect all of us for the rest of our lifetimes. 0:13:20.880 --> 0:13:23.840 But the fact is that as human beings, we have 0:13:23.920 --> 0:13:27.760 this natural gravitational pull to interact with other humans, and 0:13:27.880 --> 0:13:30.560 so the need state of community and feeling a part 0:13:30.559 --> 0:13:33.040 of the community really is what the third place is about. 0:13:33.160 --> 0:13:36.840 It's a mindset and UH and and people people have 0:13:37.040 --> 0:13:40.280 that inherent in them as just part of humanity. And 0:13:40.360 --> 0:13:42.760 so as we focus on being safe and familiar and 0:13:42.760 --> 0:13:45.200 convenient coming out of this, we're gonna slowly open up 0:13:45.240 --> 0:13:48.680 stores and uh provide the opportunity for customers to connect 0:13:48.720 --> 0:13:51.080 with one another in a in a safe and social 0:13:51.120 --> 0:13:54.480 distance way. But I think, uh, you know, I think 0:13:54.559 --> 0:13:58.440 long term the Starbucks third Place is going to be 0:13:58.520 --> 0:14:01.640 as relevant as ever. It's just gonna take time. So 0:14:01.760 --> 0:14:03.920 as a last question, Kevin, talk about the long term 0:14:03.960 --> 0:14:07.480 about growth for Starbucks in this new world. Where do 0:14:07.520 --> 0:14:09.319 you see growth? And let me be a very specific. 0:14:09.320 --> 0:14:10.600 You and I have talked in the past about how 0:14:10.600 --> 0:14:12.559 many stories you're opening in China. Is it gonna be 0:14:12.600 --> 0:14:14.680 fewer stories you're opening in China? I saw luck and 0:14:14.760 --> 0:14:17.120 is really having some trouble. Can you take market share there? Well, 0:14:17.200 --> 0:14:19.280 you know, I think we've been taking market share, you know, 0:14:19.360 --> 0:14:22.600 throughout this entire period and Uh, but what's important is 0:14:22.600 --> 0:14:24.880 we've been in China for for over twenty years now, David, 0:14:25.400 --> 0:14:28.240 and throughout that twenty year period, we have worked to 0:14:28.600 --> 0:14:32.640 establish an admired and trusted brand UH in a way 0:14:32.680 --> 0:14:36.080 that resonates with our with our Chinese customers. And and 0:14:36.120 --> 0:14:39.120 that's by showing respect to the Chinese culture. It's it's 0:14:39.200 --> 0:14:41.640 it's designing stores that are that are that are appropriate, 0:14:41.640 --> 0:14:46.119 that that have you know, artwork and built by local craftsmen. 0:14:46.640 --> 0:14:49.760 And our our partners in China are fantastic. They create 0:14:49.840 --> 0:14:54.480 that magical Starbucks experience. That was Starbucks President CEO Kevin Johnson. 0:14:54.840 --> 0:14:58.000 Coming up, We've talked with our Wall Street contributor and 0:14:58.200 --> 0:15:02.280 senior executive editor for Economic It's at Bloomberg, Stephanie Flanders, 0:15:02.320 --> 0:15:05.680 about just how bad those European numbers are. That's next 0:15:05.720 --> 0:15:13.960 on Wall Street Week on Bloomberg. This is Bloomberg Wall 0:15:14.040 --> 0:15:18.480 Street Week with David Western from Bloomberg Radio. The economic 0:15:18.560 --> 0:15:22.320 numbers kept coming in worse this week, and the central bankers, well, 0:15:22.440 --> 0:15:25.160 they were listening. We talked with our Wall Street Week 0:15:25.200 --> 0:15:30.320 contributor and Senior executive editor for Economics at Bloomberg, Stephanie Flanders, 0:15:30.360 --> 0:15:33.720 about just how bad those European numbers are. I am 0:15:33.760 --> 0:15:36.240 a little bit assured in the funny kind of way 0:15:36.280 --> 0:15:39.680 by these numbers, which obviously relate to the first quarter, 0:15:39.760 --> 0:15:42.400 so not even before we had some of the biggest 0:15:42.400 --> 0:15:46.600 lockdown measures in some of the economies, because it suggests 0:15:46.640 --> 0:15:49.200 that we have a handle on how this is affecting 0:15:49.200 --> 0:15:52.520 the economy. It's not much of a silver lining, but actually, 0:15:52.880 --> 0:15:55.680 our economist at Bloomberg Economics we have been looking at 0:15:55.680 --> 0:15:59.040 more high frequency data and looking at some data that 0:15:59.080 --> 0:16:01.960 the French Ship School together on the impact of lockdown, 0:16:02.400 --> 0:16:05.720 and our numbers were a bit bigger than the consensus, 0:16:05.760 --> 0:16:07.600 and they've been kind of borne out by this. So 0:16:08.000 --> 0:16:10.360 not not to gloat, but at least it suggests that 0:16:10.400 --> 0:16:12.920 we have a handle on what the second quarter is 0:16:12.960 --> 0:16:15.280 going to look like, what the impact of these broader 0:16:15.320 --> 0:16:18.120 lockdowns is going to be, and we might also start 0:16:18.160 --> 0:16:22.280 to take some heart from the high frequency numbers. We're looking, 0:16:22.320 --> 0:16:26.280 for example at Germany where electricity usage is starting to 0:16:26.280 --> 0:16:29.480 pick back up. You know, we are starting to see 0:16:29.520 --> 0:16:33.480 some benefits from that slow move away from total lockdown, 0:16:33.560 --> 0:16:36.520 but of course the big picture is still a historic 0:16:36.600 --> 0:16:40.600 decline Stefinitely. You have a handle perhaps on the numbers 0:16:40.640 --> 0:16:42.640 and how bad they're like to get. Do we have 0:16:42.720 --> 0:16:44.360 a handle on what needs to be done about it. 0:16:44.400 --> 0:16:45.760 We had the e c V come out and make 0:16:45.840 --> 0:16:47.880 some changes today to try to help things. At the 0:16:47.920 --> 0:16:50.480 same time, Animal Guard said we really need a coordinated 0:16:50.520 --> 0:16:52.880 fiscal stimulus. I think it's fair to say that both 0:16:52.880 --> 0:16:55.400 the United States ever in Europe, the first responses we 0:16:55.480 --> 0:16:57.600 have to supply a fact I have to really protect 0:16:57.640 --> 0:17:00.000 the supply side. But how do we get the demand 0:17:00.040 --> 0:17:02.240 and going in well, all the consumers having sat home 0:17:02.280 --> 0:17:05.840 for so long and frankly being concerned about their health. Yeah, 0:17:05.840 --> 0:17:08.359 and we've seen that as you know, and Mohan, some 0:17:08.440 --> 0:17:11.080 of the places that have had, you know, a removal 0:17:11.119 --> 0:17:13.399 of the supply side shock if you're like, you know, 0:17:13.440 --> 0:17:15.840 people are going to work there in the factories, but 0:17:15.960 --> 0:17:18.360 the demands not coming back. People are not going back 0:17:18.400 --> 0:17:20.840 to restaurants and not going out suspense of course that 0:17:21.000 --> 0:17:24.360 is a worry, and I think the fiscal programs so far, 0:17:24.400 --> 0:17:28.600 the national policies have been all about keeping the economy 0:17:28.720 --> 0:17:32.760 and suspended animation, keeping jobs in place, and they've been 0:17:32.840 --> 0:17:35.640 quite successful at that, I think, probably more successful than 0:17:35.680 --> 0:17:38.840 the stakes. But where they may be missing, and where 0:17:38.920 --> 0:17:41.840 certainly Leguard the European Central Bank will be looking for 0:17:41.960 --> 0:17:45.320 more for governments than from the European Commission. Is that 0:17:45.480 --> 0:17:48.359 piece you're talking about, the spiny list. Once we start 0:17:48.440 --> 0:17:52.560 to see economy slowly moving out of lockdown as we 0:17:52.680 --> 0:17:56.160 now are, what's going to be there to actually stimulate 0:17:56.200 --> 0:18:00.520 economies as opposed to just keeping them keeping them on hold, 0:18:00.600 --> 0:18:02.960 which is effectively what they've been doing for this seriod 0:18:03.040 --> 0:18:06.439 of lockdown. But so many, so much uncertainty about the 0:18:06.480 --> 0:18:10.600 path of that lockdown from here, because we know Germany, 0:18:10.680 --> 0:18:12.879 for example, is starting to see a push back up 0:18:12.880 --> 0:18:15.639 an infection, so other countries are looking and saying, maybe 0:18:15.640 --> 0:18:19.440 we can't follow some Germany's footsteps. So Stephanie to bring 0:18:19.480 --> 0:18:21.000 it back to the United States for a moment and 0:18:21.119 --> 0:18:23.159 compare and contrast. We heard from the FED and the 0:18:23.200 --> 0:18:25.440 FED chair j Pal yesterday, and one of the things 0:18:25.520 --> 0:18:27.800 he said was over the medium term, not just the 0:18:27.800 --> 0:18:30.200 short term. The medium term, we really health challenges, and 0:18:30.240 --> 0:18:32.600 he's suggested even there might be longer turn damage. We 0:18:32.680 --> 0:18:35.000 have had the fiscal stimulus, at least a lot of 0:18:35.000 --> 0:18:37.359 it here in the United States. How can we learn 0:18:37.440 --> 0:18:40.520 from the US experience as it applies to Europe? You know, 0:18:40.560 --> 0:18:42.080 I think it's took me. I mean, I think we 0:18:42.160 --> 0:18:45.640 have seen a thing. If you'd like to have more 0:18:45.720 --> 0:18:48.959 people learning out employment soles and then increase that support 0:18:49.000 --> 0:18:51.480 for people who aren't employed, so we have more double 0:18:51.480 --> 0:18:54.200 acclaimed numbers today from the US. You know, that's been 0:18:54.240 --> 0:18:56.720 if you like the US way, that they've been less 0:18:56.720 --> 0:19:00.119 protective of employment but pushing a lot more money to 0:19:00.240 --> 0:19:03.280 the economy and perhaps getting into businesses as well, though 0:19:03.280 --> 0:19:05.760 we know not some states more than others, So I 0:19:05.800 --> 0:19:07.840 guess there is a lesson there. But the worry that 0:19:07.920 --> 0:19:10.960 said is stating is putting all these people out of work. 0:19:11.000 --> 0:19:13.119 You know, it would be nice to think that a 0:19:13.160 --> 0:19:16.000 lot of this work will immediately spring back. You know, 0:19:16.119 --> 0:19:20.159 big workers, younger workers may be able to be flexible, 0:19:20.480 --> 0:19:23.520 but we know historically once you lose your job, even 0:19:23.680 --> 0:19:26.479 especially if perhaps if you're at the beginning of your career. 0:19:26.880 --> 0:19:29.080 You can have a permanent hit in terms of wages, 0:19:29.119 --> 0:19:31.400 and you can find it permanently harder to get jobs. 0:19:31.400 --> 0:19:34.479 So that's the kind of longer term hits that the 0:19:34.480 --> 0:19:37.800 FED is talking about, and thankfully why they're seeing maybe 0:19:37.920 --> 0:19:40.920 unemployment not getting back in the four or five range 0:19:41.000 --> 0:19:43.919 for several years. And it's a hit that is not 0:19:44.000 --> 0:19:47.479 necessarily evenly distributed. We're seeing dispersion. For example, let's just 0:19:47.520 --> 0:19:50.240 take big tech in the United States. It's doing really, 0:19:50.280 --> 0:19:52.439 really well. We've had earnings out this week are very 0:19:52.480 --> 0:19:54.280 very good. Are you seeing that in Europe as well 0:19:54.320 --> 0:19:56.359 as the United States? In effect, you're seeing some parts 0:19:56.359 --> 0:19:58.119 of the economy that are likely to come back faster 0:19:58.240 --> 0:20:02.560 and better, others are really much more challenged. Yeah, I mean, 0:20:02.560 --> 0:20:04.360