tv Bloomberg Markets Balance of Power Bloomberg April 26, 2019 12:00pm-1:00pm EDT
on the brief today, shaun donovan from washington where japan's shinzo abe is it to meet with president trump entree later today. -- president trump on trade later today. michael mckee new york on the u.s. economy. shawn, let's start with you. what we know about the discussions with japan over trade? shawn: we know both sides want these things to go quickly. they are the first round of talks last week. they meet again this week. the leader shooting down again -- the leaders sitting down again later this afternoon. they want to move ahead with these trade talks and given the uncertainty in the relationship that has been there. for president trump, that is focused on the agricultural sector. a lot of farmers who would like to do a lot more selling to japan and that is something that
has not been happening or has been under threat since he withdrew from the tpp earlier in his administration. david: there's also news on china. we want to come back to you in a moment. in the meantime, let's go to roderigo in madrid. we have elections, what can we expect? probably beese will the most divisive and fragmented we have seen in spain since the late 1970's. there are questions about what the outcome will be. the big expectation everybody has is that it will probably be a surge of the right but not .nough to topple the left what we have to see is how those coalitions will be formed. david: is there a chance the current prime minister wife get an outright majority and will not have to have a coalition? roderigo: so far, nothing has indicated he will be able to govern by himself. he will probably be the front-runner, the person with
the most votes, but it seems unlikely he will have more than 50%. david: thank you so very much, roderigo coming to us from madrid. now let's bring in michael mckee. we have gdp numbers and inflation numbers. did it surprises question -- did it surprise us? did.el: it if you're a politician the white excited, butght be if you're an economist you might not be as excited. we saw the rising inventories and a decline in the trade balance. both of those contributing to growth that are going to go away in the next quarter. they are not considered the healthy type of growth we wanted. consumer spending and business spending weekend. you can see that in this chart which is final sales and gdp. the white line gdp goes up to 3.2%.
the real numbers strip out inventories and trade and is where you get 1.4%, not the kind of numbers you want going forward. david: there is good gdp growth and not so good gdp growth. we also got a read on inflation. michael pond this will matter to the -- michael: this will matter to the fed. quarterly numbers not the monthly numbers that the fed follows. inflation, both poor and headline rolling over, falling off. 1.3% encore. if that were the monthly numbers on a sustained basis, you would hear more talk about fed rate cuts, which is why we saw the reaction in the bond market. we got underlying growth and inflation falling with oil prices starting to rise. we are likely to see that turnaround. it is something that has caught the markets attention. david: the market does not need much encouragement to talk about cuts. many thanks to bloomberg's mike mckee. let's go back to washington.
also news out of china with president xi addressing the one belt, one road issue, but it addition to that addressing things that may affect the trade deal with united states. >> we will work harder to ensure the implementation of opening up policies. honoring a promise carries the weight of gold. we are committed to implementing bilateral and multilateral trading agreements with other , a binding mechanism for honoring international agreements will be put in place. >> david: it is hard to listen to that and i think of some of the issues president trump has raised. it is not like he's saying i will stick with any agreement we will have. there was ank audience of one for that speech and that was donald trump when he says china will live up to its promises. the gets up to the heart of trump administration's complaint about china and its approach to trade which is that china has
not lived up to its past promises since joining the wto to open up on trade and to address things like industrial subsidies. he went on in that speech to talk about some of those things. that is promising going into a crucial couple of weeks for the talks between the u.s. and china. next week ambassador robert lighthizer and steven mnuchin had to beijing for a couple weeks of talks, and them we have the vice premier coming back the following week to washington. we are in this end game in terms of nailing down a deal. when we will actually get that deal is unclear. yesterday president trump saying he expected a visit from xi jinping sometime soon. david: you point to an important part of the speech. it sounded like putting on the agenda foreign investment, subsidies. has president trump made progress just getting the chinese to admit they need to talk about those things? shawn: absolutely.
that is something you hear from both sides of politics in washington. no doubt president trump and his policies have brought the chinese to the table in a way that has not been seen before hand, and very publicly the chinese are doing their best to endorse these changes. changes a lot of economists argue are necessary for the chinese economy, which has its own problems. there is a kind of win-win situation and politics on both sides. once theonald trump trade war wrapped up before the 2020 reelection campaign. if you look at the gdp numbers, there are signs of the draghi effect from the trade -- of the drag effect from the trade wars. weak investment numbers that point to how business is reacting to the uncertainty caused by the trade wars. david: there is no such thing as a free lunch. unitedre some reports states might be willing to give
up some united states with a link of some protection for specific pharmaceuticals. shawn: this will not end with the announcement of a deal. we are hearing that the trump administration has been telling the u.s. pharmaceutical industry it needs to accept something that will not like, which is a shorter protection exclusivity period for biologics which are these next-generation drugs so important to the future of a lot of pharmaceutical companies. it looks like in this deal they may only get eight years of protection. that is something that in the past has caused republicans to rebel in congress and pushed back against trade deals. it is a sign of how complicated these things are and how difficult the politics will get. david: great reporting from washington. now we want to check out the markets with emma chandra. picture for the markets reflecting the mixed
sets of earnings results we've had this morning. , but small gains for the dow jones and s&p 500. that is because we are seeing the likes of ford and amazon outperform after better-than-expected first-quarter results. seeing nasdaq in the red, reflecting more weakness within tech. that is coming from the chip stocks and semiconductors. you can see the stocks at the philadelphia semiconductor index down 1.5%, being weighed down by intel down 10%. that stop having his worst day since 2008. they cut their full-year outlook and investors not liking that. western digital plunging 5.5%. this is after it got a double downgrade. downgraded two notches by baird. the issue there is pulling
nvidia down, also falling more than 5%. all of the chip stocks having a tougher time as we are seeing concern out of that 2019 rebound we have seen in the chip stocks may be overdone. that concern or that pullback we were seeing for the chip stocks and tech in general has been indicated for us by the relative strength index. this showing you that it has been -- this is the s&p 500 tech sectors, you can see that strength has been on the rise. finally, oil is taking a break from its rally, wti down 3.6%. we saw six-month highs earlier in the week for oil in response to exxon falling 2.8%. they had a shocker of a first-quarter earnings, all down to the refining business. david: thanks. vice president biden is now in the race, which should just
power this is "balance of " on bloomberg television. we turn to mark crumpton for first word news. president trump says gas prices are falling because he asked opec to lower energy prices. reportersent spoke to as he left the white house headed for indianapolis. >> the prices are coming down. i called opec and said you have to bring them down. gasoline is coming down. we are doing great. mark: global oil prices have
been rising in the wake of the president's decision to impose sanctions on nations that import iranian oil. mr. trump says allies like saudi arabia will increase their output to make up for shortfalls . theresa may's government is continuing with what she calls difficult exit talks with the opposition labor party. labor officials say the prime minister has refused to compromise. may is running out of time to get a brexit deal through parliament. if she cannot accomplish that in the next few weeks, the u.k. will be forced to date part in european parliament elections that may be toxic for may's conservative party. xi jinping appears to be signaling approval for president trump's trade war demands. in a speech in beijing, president xi addressed a number of reforms the u.s. is focusing on a trade talks. president xi wants to do with state subsidies and allow foreign investment in more sectors. south african president is
trying to restore confidence in his nation's government following the corruption filled tenure of his presence at her -- of his predecessor. the president fired prosecutors and located in taking bribes. he was appointed president 14 months ago when the ruling party forst jacob zuma to step down. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. crumpton. this is bloomberg. david? david: the founder of starbucks, howard schultz, maybe ready for his next challenge, running for the present of the united states. he says he is still thinking about it but has put together what looks like a political campaign staff and is on a listening tour. here to tell us what he is hearing and what mr. schulz is his chief spokesperson, coming to us from washington. thank you for much for joining us. howard schultz has said he has not decided yet. what will it take to make them
decide? does joe biden getting in the race make it less likely, because it is probably receive -- broadly perceived that joe biden is a moderate like howard schultz. erin: joe biden getting into the race does not change howard schultz's calculus at all. we'll see what the democratic primary will look at and how this shakes out during the democratic debates over the summer. it seems that all of the energy in the democratic primary is moving to the left. joe biden is a moderate. i do not know that he will be able to survive the democratic primary process. we will have to see how that shakes out. howard schultz is traveling the country and will be looking to in thet we are seeing polls, whether or not he should run. i do not think he will be making that decision until later this summer. david: talk about that red state point. democrats have criticized howard
schultz coming in as an independent because it would take away from democrats, not republicans. it would ensure donald trump gets reelected. erin: he spent five days in texas in march, he has gone to kansas and arizona and utah. to win the presidency you have to take electoral votes away from the winner. he has to win some red state if you were to win. that is where he is starting. he is talking to moderate republicans and never trumpers who would never vote for donald trump. that is where he has to start the building blocks of a coalition. i know democrats have been upset, but they have to think part of what it would take for a howard schultz victory, and would take winning over republicans first. david: they lost my microphone,
i got it back. let's talk about that victory. assuming he does decide to get into the race, what would it take for him to win? his name recognition is not high. we all know starbucks, a lot of people do not know howard schultz. erin: he has not gone into the race just yet, and if he got in it would be months away. once you get into the race things change, news coverage changes, he is not a candidate yet so he has knocked on the name recognition or the coverage. there is a very heavy advertising component, so i am sure if he decides to get into the race, the name recognition level will change. david: one of the things people do to break out of the pack, because there is a big pack, just on the democrat side, is have distinctive policy positions. from someard democratic candidates on distinctive policy positions. is there a position that would define howard schultz if he decided to run? erin: he is talking a lot about
the $22 trillion national debt and what he would do to bring that down. he is not ruled out any policy positions because he is studying those things and trying to come up with solutions. he is going to talk about entitlements. that is a huge driver of the debt and he wants to come up with positions and policies that would reduce that debt. i think you will hear a lot more about that. you are not hearing that from the democrats. most of the democrats are talking about medicare for all. what that would add to our national debt, maybe $32 trillion more, he is not talking about that. medicare for all would actually hurt rural hospitals. howard schultz wants to talk to americans all over the country, including rural areas. david: there is one specific point -- it appears howard schultz is not enthusiastic about medicare for all. we do not hear the deficit issue on either side of the aisle. let's talk about specifics on
the agenda. where is he on immigration? erin: he wants to see comprehensive immigration solution. 2013, there were senate bills for comprehensive immigration reform and none of those passed. the partyen because that control the senate was different than the president and nobody wanted to give other side of victory. you want to have a comprehensive immigration reform solution that is both top on border security but also allows dreamers to stay in have a path to citizenship. david: the green new deal is getting a lot of attention. where is he on that. erin: does not supported. it is not realistic. people are tuning into climate change and what is going on with that issue. we need to come up with realistic solutions and the green new deal is not one of them. it is great that we are talking about them. we have to come up with something realistic. david: he is on a listening tour and listening to a lot of people.
give us a timetable on whether we would hear from howard schultz as to whether he would run are not? erin: the later end of the summer. many thanks to erin mcpike coming to us from washington. still ahead, ford is our company in the crosshairs as it announces it is subject to a criminal investigation of remissions. the stock is not reacting the way you might think. this is bloomberg. ♪
david: ford is our stock of the hour. the automaker having its best day in a decade. shares trading at their highest since july of last year. emma chandra is euros more. i guess the answer is if you want your shares to go up, you should get a criminal investigation. emma: that happened with facebook. we shop -- we saw the shares
rising. they drop reflate when we heard the doj was launching this investigation, but they have just gone higher throughout the session. that investigation is do with boards emission testing -- with ford's emission testing process. it said it had taken a flawed approach. the issue is how ford estimates fuel efficiency and the way it does this is with regard to how it estimates road load, which is industry jargon which relates to factors like friction and aerodynamics and things like that. david: i had to learn that when they test these things they do not take them on the road. they have machines that they hook them up to. emma: if you hook them up to machines you can adjust them and they do not accurately reflect what real road conditions are like. is not the criminal investigation driving up for stocks, what is it? erin: it is the better-than-expected first-quarter earnings. they are back to being a $10
stock and trading above its average analyst price target. earnings-per-share and auto revenues beat estimates. earnings-per-share came in at $.44, way above the estimate of $.26. all of it seems to be in north america, pickups and suvs doing really well and a lot of people seeing this as the company turning a corner. by north america, particularly f-150 pickup trucks . at the same time, they did not do as badly in china as they had been doing and they did better in europe. they have a long way to go, but they are making turnaround outside the united states. emma: they are making turnaround , with china not as badly as they had been. million china versus a loss in the same time last year. a chart showing how chinese car shares have slumped the last 10 quarters, consecutive falling carstairs. it is of a slump there.
trying to grapple with the fact that its fleet is aging in china. the good news focused on north america. david: europe has also weighed them down. they have an $11 billion turnaround plan, much of which is in europe. they have a long way to go in europe but they're making some progress. emma: they are making some progress in europe. as you said there is a long way to go. it is a big part of that turnaround. we saw they did make progress in this corner and expect to make further progress through the year. david: what i find interesting about ford's wonderful the carnce is overall, market seems to be soft, both in the united states and globally. they are fighting the market, at least at the moment. emma: they are fighting the market as everyone is concerned about falling car sales that will happen elsewhere. we are also seeing a big shift in the auto market anyway.
we talked frequently about tesla on the show when we look at how they are trying to move into this new era of electric vehicles and autonomous driving. that is interesting. as they are doing these turnarounds they are making different partnerships. david: exactly, even for announcing $500 million in an electric truck manufacturer to try to get themselves going. emma: that is the future. david: emma chandra thank you so much. terrific job. he ran as a democrat in a red state. we will talk to former senator joe donnelly about what he learned and what lessons democrat should use in 2020. if you have a bloomberg terminal, check out gtv . this is bloomberg. ♪
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indianapolis addressing the national rifle association. the nra was pivotal in mr. trump's victory in 2016. before leaving the white house today, the president tweeted the nra is "getting stronger and stronger and doing some great and important work." back againsthing president from zero and sanctions. the country says it is working on a plan to ever the sanctions, designed to keep it from trading with iran. the u.s. announced it will not really waivers for countries including china, turkey, and india to purchase iranian oil without facing wide ranging penalties. president has seen opinion polls move in his favor since on calling or early elections. he will find out if his gamble pays on sunday when spain votes. sanchez hopes to reach a majority in parliament but without the catalan separatists who helped to put him in power last year. the second powerful cyclone to destroy mozambique in six weeks
have killed at least three people, ripped off routes, and dumped heavy rain on the country. the united nations is warning a massive flooding ahead. cyclone kenneth packed that stormsowerful hit the island last week. global news 24 hours a day, on-air, and @tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i'm mark crumpton. this is bloomberg. thank you. joe donnelly served in the u.s. senate, representing indiana, winning as a democrat and a republican state. the seat tohe lost a republican rival in 2018. now he and former north dakota senator heidi heitkamp have some ideas about how democrats can do better. from long him today
island. >> thank you for having me today. david: i want to put up a chart that illustrates the guts of what you are talking about, and 2000,lly, going back to the republicans won the presidency but the democrats won the majority by a small margin. the margin on the popular went up and the electoral college went down. if you projected out to 2020, it gets even worse. winningconcerned about the popular vote and losing the electoral college. in placesu are seeing like pennsylvania, wisconsin, michigan, the election was determined in 2016, for instance, in michigan, by 10,000 votes. if you run up the score in california and new york, it does not make it simpler to win the presidency. you have to appeal to everybody across the country, have to have
a message that includes everyone, and that is what we are trying to do. david: let's talk about that message specifically. we can put up a map that shows the states you are targeting, including my home state of michigan. are there issues that will appeal to the rule areas that will also work on a national level, in the traditional blue states? joe: sure. a big part of it is infrastructure. laces like your home state of communities,rural just across from my home state of indiana, we desperately need broadband in the communities out there, so children don't need to go to the grandparents to do homework. so that small businessman on his farm can do his work. in terms of health care, our rural hospitals are in trouble. we have to make sure they can get affordable health care. these are really important things. int happens is, for instance
2016, democrats were not always in these communities to spread that message. said, folks been don't care how much you know, unless they know how much you care. city,ces like traverse muskegon, holland, michigan, wisconsin, fond du lac, sheboygan, pennsylvania, altoona, johnstown. if you are not willing to go there and talk to people about their faith, family, community, they will not listen to your ideas on health care. david: democrats are in leadership right now in the house of representatives and i don't hear very much about things that would appeal to these kinds of cities. i am here more about the mother report. do the people across the country really care about what gets done with the mueller report? joe: this is a question that i often say to folks in washington. indiana,ink farmers in in sullivan county, care more
about the fact that prices have gone down 50% in many cases, that their income has gone down 50% in the last five years, or the mueller report? it is easy, name on a fix on the tariff problems we have. they want to know that when we work on climate change, that we bring them in as part of the discussion. no one wants to be better stewards of the land and the farmers who live on it. when we reach out to them and make them a part of our tent, then in places like michigan, where you lost the election by 11,000 votes in the presidential in 2016, when we reach out to everybody in the state, you cannot help but win. which take tariffs, obviously is a lot of concern to people, whether auto in michigan or ohio, farmers in indiana, illinois. what is the democratic message on that? i'm not sure i know, then we what president
trump is doing. joe: you have to give people a reason to believe in what you are talking about. we can fix the steel tariff problem that is out there. that is something that we have needed to work on for a long time. but we can also work with the chinese to get a conclusion to the tariff situation we have. , their prices were $10.60 a few years ago, now in the neighborhood of $8.50. to tell them, we will get this fixed, it is at the top of the list do this. we want to make sure also, for your family, you know that that formal be able to pass to the next generation, that you can make your notes. that is why this tariff situation is so critical. at 2020, and look we have so many of them on the democratic side, do any of them get what you are talking about? vice president biden yesterday
said he would run. does he understand what you are talking about, that visceral sense of what is happening in the rural areas, upper midwest? joe: he does. i have been with him in parts of my state, other areas. he is from scranton originally. he knows working families who goes to the mill, auto plant, who go out and make sure their farm succeeds for another year. he gets that. there is a reason he is called middle-class joe. he comes from our kind of communities and understands our kind of communities. david: we have been talking largely about the general election, not the primaries. are those two different races? will the message that will prevail in the center in the general election differ from what will get the base out in the primaries? joe: i saw a statistic yesterday that was interesting. it broke down the democratic primary voters in two different
categories. moderate was 35%, conservative, 17%. that is about 52%. what you'll find is, what primary voters what to do is make sure they can put someone in place who can beat president trump. they are concerned about our foreign policy, concerned about things like infrastructure and climate change. what was mentioned earlier, they are concerned about the debt as well. the goal is how do we get somebody who can deal with these issues in a forceful way, be able to work in the primary system to move to the top, and then be able to beat president trump. i don't think for primary voters it will be so much about extreme ideology, as it is about, give a solution that make our lives better. put us in a position where we can have a change in the white house. david: terrific to have you on. joe donnelly, former senator from indiana. saysg up, president xi
david: you are watching "balance of power." i'm david westin. every discussion about global growth in global business comes down to u.s.-china trade. peter rodriguez is joining us today from the jones graduate school of business at rice university. let's talk about where we are in the china negotiations right now. we heard from president xi overnight, in which he gave a speech about one belt, one road, but many thought he was talking to president trump, saying we
will abide by the agreements, maybe subsidies on the table, intellectual property, foreign investment. orthat a major step forward the chinese to recognize they have to address those issues? peter: i think it was a clear signal to president trump and the administration. it is a warming sign and that is positive. the chinese know, to go further in trade with any nation, they have to be open about talking about these issues, international properties, state subsidies, even bringing to the table questions about currency manipulation. it has all been talked about before, we have all had that discussion, but this was a warm welcome that says let's keep talking. the challenge is, they can afford to be patient. there is no great sense of urgency. trade negotiations in particular are stubbornly slow. i suspect this is a good sign but not a sign that something is truly imminent. it might be. so far, it was a positive step
forward for the two nations. david: we have a long way to go, i'm sure it will not be a straight path. at the same time, whether one agrees with president trump's approach or not, -- this is not a political question --does he deserve question for getting their attention? he came out overnight, responding to joe biden, he is just not tough enough to deal with the chinese. whether vice president biden is or not, does it take somebody as forceful, some would say belligerent as president trump to get their attention? peter: i don't think so. the chinese are very sensitive to making their deals. when you have the largest customer in the world, the u.s., largest producer in the world, china, there is a mutual dependence. nevertheless, you always have to play your cards partly. always have to be somewhat aggressive and be willing to walk away. that, a good trade negotiator should follow the
steps, but i don't think they needed to be quite that tough. david: far from clear that this would be resolved, in the sense that it is gone. how much are we seeing in the tensions between the countries right now is inherent in the number two power taking over a number one power in the world? peter: it is probably a dynamic we have been witnessing for a decade, and probably will for a decade more. it will become more tense. our countries are more comparable year-by-year. we know china's ambition is not merely to be the manufacturing powerhouse of the world, which they have been for so long, but to assume the right opposition in their mind of being the producer of intellectual property, r&d, the center of global finance, and everything. , will forolds that quite a while, but that wraps up the attention. it gets more to the heart of the u.s. economy and its strategy. the usmca,s turn to
which is still pending in congress. not clear what it will get ratified. many economists say nafta has been good for the u.s. economy, not just ask a car and canada's economy. where did the message get lost to the american people? if you poll a lot of american people, they don't seem to believe that. peter: i think in part, we all remember ross perot talking about the giant sucking sound from the south. you cannot equate that with the job loss and the general period of this investment in the center of the economy, disinvestment and manufacturing, and a migration from the u.s. so that job loss and that increased economic anxiety, growing inequality, was all coupled with nafta. 25 years. i think it has been unquestionably good for the u.s. economy, has created quite a few jobs, stabilized mexico in the way that was good for the u.s., not just for them, but that is
in part where the message got lost. if americans felt like they were living better and better, -- they were not living better and better under nafta, there was a scapegoat. go to corruption. as u.s. companies go around the world, european companies as well, there is a lot of corruption solicited. not a new problem. what did you find about the effect on the companies who engage in this behavior? companies always face big challenges, always confronted with the challenge of corruption. there is always a market for influence in any country you go into. sometimes it is formalized, sometimes informal. often succumb to the pressure that i'm either going to win locally, keep the jobs i came to create, or i'm going to lose because i'm held to the fcpa. our research shows managers under too much pressure to come
quickly, and they need license to fail. if they don't, they will succumb, act in their best interest in their mind, shareholders, the people they work for day to day. that is a significant problem all problems face. it is not really going away, it is an evergreen problem, and will remain so. david: let's turn to the question of diversity, an issue for the country, financial institutions, wall street, corporations. something you have been identified with. as i understand you're are the first latino dean at rice university. congratulations. we areyou see where right now, specifically with respect to financial institutions, banks, corporations, with diversity? peter: at the entry level we have made a lot of progress. you never see the stark disparity that you want saw. that is across gender, sexuality.
but as you go higher and higher, the ranks look less and less diverse. particularly when you get to boards. in some sense, the devil is in the details. if you look at the treatment of women in organizations, you'll find more equity in pay, more equity at entry levels. but the details mean that women are sort of ferreted out of roles, the incentives are harder to see, but they don't make it into the higher responsibility levels. when a hiring board for a new ceo, they say, nobody has enough experience except for the same group of people, no women, no people of color. david: what about the pipeline? if we went to your school and looked at the democratic profile, what does it look like today? peter: about 37% is the women in the school, about 20% underrepresented minorities, african-americans,
latinos. on the women's side, we should be closer to 50/50. for a lot of reasons, i think women look at the job options and they are less attractive to some business fields than men are. david: what about underrepresented minorities? that is still under the national profile. peter: it is. for a highly competitive school, you tend to lose people in the middle. particularly when they look at the cost of schooling. we have to meet them more than halfway, and we do. i think about our pierce said when we do scholarships. there is also the problem that goes back to the one you mentioned earlier. see someone like myself in the top organization succeeding, then i don't even imagine myself in that role, and don't begin on the path. you need the role models to be the pipeline, and we don't have that yet. we have made progress but there is still a lot of progress to be made. david: many thanks to peter
david: this is "balance of power" on bloomberg television. i'm david westin. starbucks already has over 3000 stores in china and is adding a new one every 15 hours. i spoke girl are today with ceo kevin johnson about the company's growth in china and whether they can keep it up. kevin: this quarter in china we grew our storefront footprint by 17%. we are on it had to build 600 new stores in china every year. of the growth we have seen in new stores, those new stores are performing financially better
than prior generations. great reception to the new store grow. addition, our staying store comparable in china accelerated, grew at a 3% annual basis. we are super pleased that we see continued con growth in existing stores, and then you can't lament that with a 70% in new store growth in china. the total transaction growth we are seeing is significant. -- 17 percent in new store growth in china. david: you have a competitor in china now. how is that affecting your business, margins? kevin: we have always had many competitors. since starbucks was founded 48 years ago, now we are over 30,000 stores globally, we've always had a lot of competitors. china is no exception to that. the fact that there is a large market for coffee in china means we expect more competitors to come into that market. certainly for starbucks, we have
been in china for 20 years, and we understand what makes a differentiated experience. the combination of what we do in our stores, the quality of our copies, the handcrafted nature of our beverages, and the connection that our partners make with customers is very important. , weput all of that together have now extended that experience in the stores to a digital mobile relationship. you recall we signed a china digital partnership with alibaba announced last august. the digital reach we are getting in china is significant as that partnership continues to expand. we feel very good about the experience we are creating in our stores, performance of those stores, same-store comparables, and the digital reach. i think we are well-positioned for long-term growth in the market. david: we don't hear as much about europe. tell us about the nestle deal. kevin: our global coffee aligns with nestle is a significant one
because it brings the starbucks brand to food services, fpg channels cp --g channels -- cpg channels, and on other multiple platforms. we announced many starbucks sku's on that platform. nestle is now bringing starbucks to 16 new markets around the world. that will unfold in september. in the next wave, we are going to another 31 new markets. nestle has 5 million points of presence in just about every market in the world. our partnership with them is anchored around coffee, around a common set of values, and it is really leveraging the nestle reach and strength to bring starbucks coffee to retailers, mass merchants, food services, and on the world's most popular single serve platform with nespresso.
david: that was my interview with kevin johnson. when i spoke with him recently, he said there are 100 cities that will be opening a starbucks in china, each one of which will be larger than the city of los angeles. sign up for the bloomberg news politics newsletter. coming up next week, we will be live at the milken institute global conference with some great interviews, including goldman sachs chairman and ceo david solomon. bloomberg users can interact with our charts directly on tv . live from new york, this is bloomberg. ♪
jonathan: from new york city, i'm jonathan ferro. startsrg "real yield" right now. coming up, u.s. gdp delivering a big upside to price, helping all forecast. a headline flattered by an inventory boost fueling doubts the growth verse will be sustainable, providing another lift for treasuries. we begin with a big issue. united states looking like the best house on the block. >> strong growth. >> great gdp, great low inflation. >> bfu