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tv   Bloomberg Markets Americas  Bloomberg  July 26, 2019 10:00am-11:00am EDT

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it's 10:00 a.m. in new york, 3:00 p.m. in london, and 30 minutes into the trading session in the united states. i'm vonnie quinn. guy: and i'm guy johnson. welcome to bloomberg markets. vonnie: wrapped up earnings, several technology companies, attractive media companies reporting, sending the s&p 500 monday, ls that having its best day since 2015 after sales rose on forecasts of added users, up almost 10%. investors are really rewarding these companies. not so much amazon.com. investment in one day delivery having an impact on amazon's performance in today's market. , it iss. stocks are up having an effect over here. we do not have as many tech companies, so the effect is less direct. stoxx up .3%.
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the euro is trading lower, we had the ecb yesterday, down .1%. this is the dollar versus the rent, but when it comes to the dollar versus the rand, moody's, the last country to have an -- the last company to have an investment grade on south africa, this investment plan doubles the investment to appropriations to that company, could end up being credit negative. a big move on the south african rand. slowing in the first quarter, but not as much as analysts expected, with the headline number for consumer spending, pushing gd pre-growth -- gdp growth to 2.1%. discuss -- here to discuss is our chief bloomberg u.s. economist. core pce was disappointing, and the deflator as well. >> that definitely tainted the
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report slightly, but what i think is most important at this point, the economy is growing above trend, right? bettercent growth is than the fed's long run estimate of 1.9% growth. if you are growing at that pace, that tells you although there is not strong pressure on the economy, you will see unemployment rates rising lower, maybe not next friday, but over the next couple of orders, and an upward bias to inflation being equal.l else if we have big currency swings like we saw in the first part of the year, that will distort the inflation numbers. if you are growing above trend and the unemployment rate is grinding lower, you will see a bit of an upward bias in the inflation data, so i think this is a healthy read on the economy and also the strength in consumer spending, especially consumers spending on durable goods, in particular. durable goods was up almost 13%
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in the quarter, telling you that households have confidence to make big-ticket purchases, which is confirmed when we look back to q2. we had instability in the equity markets and concerns of political issues, the escalating trade war. nonetheless, consumers kept on spending. guy: carl, consumers kept on spending. you are right. why is the fed going to cut rates next week? carl: the fed is going to cut rates because they need to on invert the yield curve. translating their accommodative stance on monetary policy into the broader economy. they also need to keep pace with central banks around the world who are easing, if the fed does not join that party, the trade weighted dollar will break to record highs. vonnie: that is the concern, net
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exports and inventories subtracted more than 1.5 percentage points from q2 data. does that continue or worsen? carl: that is a great way of framing this, right? q2 gdp and the composition of growth is providing us a template of what gdp growth will look like over the next couple of quarters. it will be a consumer driven profile with very little contribution from business investment. the drags from inventories and exports will fade. we can average what happened in q1 and q2 to get better perspective on that front, but consumers are the only game in town, and that is not unfamiliar territory for this economic cycle during the periods where consumers were punching above their weight class, if you will, with the growth average of cycle.2% in this that is a reasonable expectation for the back half of the year. if the economic time it --
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economic climate improves and businesses are willing to invest and spend, you can see slightly further growth numbers. just depending on consumers will be good enough. guy: carl, the other big number that stands out in this set of data, to me, is the contribution being made by governments. is that sustainable? sustainable, it is if you look at the spending agreements that were recently agreed to at the federal level. that will provide a list, and also, as the economic cycle matures and the unemployment consumerds lower and spending picks up, those sources of revenue for state and local government spending also pick up, so this should be kind of a sustained period where government spending is providing some lift. it will be door by what we are getting from consumers. nonetheless, it will help to some degree. guy: the fate --
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vonnie: the savings rate fell, because the consumer was spending more. is that good, carl? does that predict something down the road? carl: a percent savings rate is impressive for u.s. consumers. so despite the rate coming down a little bit, it is a sign of confidence from households. businesses hunkering down in the second quarter, taking a towardse posture spending on structures and in capital investment and whatnot. we did not see that from consumers. they are spending on durables, they are also willing to ease up on savings, those are both significant signals of economic confidence, and so as we are looking at these potential shocks in the back half of the year, like hard brexit and whatnot, we have to filter it through the lens of how it could impact consumer spending, because that will be the core engine of broader economic growth. vonnie: bottom line, core inflation year-over-year now is 1.5%. carl riccadonna, bloomberg
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markets chief u.s. economist. thank you for joining. a next, starbucks shares get caffeine boost after the chain posted its first global -- best global sales. ceo kevin johnson joins me. this is bloomberg. ♪ me. this is bloomberg. ♪
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bloombergcome to our television and radio audiences, i'm david westin. starbucks reported its best local sales growth in three years. joining me now from seattle is ceo kevin johnson. congratulations. let's start with the the united states. sustained sales are up nicely. what drove that? kevin: our growth at scale agenda we put in place a year ago is about
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writing predictable, sustainable growth. we focused on three things that are driving results today. number one, how we elevate the arians in our stores. much of that, you give credit to 400,000 starbucks partners who wear the green apron. second, new beverages. the nitro cold brew, the refreshers, maki otto's -- macchiattos. is about digital customer relationships. we grew our active rewards members to 17.2 million in the u.s., and those three things are driving traffic growth in the u.s.. on the east hot coast, and you talk about the cold brew. how much of the starbucks beverages are cold versus hot now in the united states? kevin: over 50% of our beverages are cold, and they are in the
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espresso category. i am enjoying a nitro cold brew here today in the store, and we are bringing that to all of our stores in the u.s.. the refreshers have done well, so it is over 50% of those beverages. something else you are doing in the united states and china is delivery. what are the economics of that? to buy a five dollar cup of coffee and get it delivered, that does not sound economical. kevin: delivery falls under the what i call the unique state of convenience. we have mobile ordering, for pickup in our stores, or with starbucks delivers, we can have to you.ered in china, it is done in partnership with alibaba. here, it is done with partnership with uber eats. you find the average ticket is much higher than you would find in a store. people will group different orders or the order from the office or friends, so the
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average ticket is higher. there is a delivery fee charge, and we also pay a bit of a fee to our delivery partner, who is doing it. overall it is enabling a state of convenience for our customers. david: you also had success in china, both in terms of growthore sales and units. 16% growth in the quarter, as i recall. how long can you keep that rate of ruth up in china? -- rate of growth up in china? marketfirst of all, the in china, i am so bullish on it for the long-term. growinglarge and accessible market, it is primarily 18 drinking culture that we are introducing premium arabica coffee too. we will be able to build new stores for a long, long time in china. the same three
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drivers, creating a great customer experience in our stores, beverage innovation, and our digital mobile relationships contributed to that growth in china as well. the same growth that has driven the success of the united states, our team in china, we built starbucks in china for china. we have a great team in china that is driving that, and the results in china were phenomenal. david: and you are using a different approach when it comes to europe. you partnered with nestle, who came out on their earnings call and pointed to you, starbucks, as the reason they did well. how fast is that growing? kevin: the global coffee alliance with nestle is an important part of our strategy. we create the starbucks brand in our stores, and we are over 30,000 stores in az markets around the world, and we create the starbucks brand in those stores. through nestle, we are bringing roasted and ground coffee, whole bean coffee and starbucks to the espresso platforms around the
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world. in the last quarter, nestle expanded into six new markets. 16 newon track to get to markets by the end of this next quarter. by having starbucks coffee on the platforms, that opens up an entirely new, addressable market of opportunity or starbucks. i tell you, mark schneider and his team are fantastic. i spent several days with them in june. the partnership is strong and we have plans for the future, and i am very optimistic about where we are going with the global coffee alliance. david: you mentioned your loyalty program, which you read it. explain how that fits into your strategy, and you made an acquisition in bright loom. what does that do for you? what i would describe it as, any modern-day retailer must create an experience in their stores that becomes a customer destination. customers100 million
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visiting our stores every week, starbucks has clearly created a destination in our starbucks stores. we have to extend that experience to a digital mobile relationship with customers. we have invested over the past five years to create what we call the digital flywheel. the foundation of that is our loyalty program. as you pointed out, we enhanced the loyalty program this past quarter and continue to invest in creative features on our mobile app, whether it is pickup in our stores or delivery. the combination of a great mobile app, a great loyalty program and starbucks as a destination fueled a 14% year on year growth in our active rewards members, to 17.2 million. ship isital relation = allowing us to offer things to our customers, driving them to the stores. in aok an equity stake
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new company called bright loom. were created with a software license with certain elements of the digital flywheel from starbucks into bright loom, so we licensed some of our digital flywheels to bright loom and merged those assets. we have a minority stake in brighton, and it will focus on providing cloud-based services to starbucks licensed partners around the world, so they can have a digital flywheel. brightly will open that up to all restaurant merchants in the industry, so we are excited adam broughton and his team at bright loom are going to do to accelerate the pace of innovation when it comes to digital mobile solutions for retail. david: and you have a vantage point into the consumer. the united states, china, we have talked about it globally. there is concern about slowdown in all of those locations in the growth rate. have you seen it? kevin: i was in china last week,
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and you look at the fact that we grew new store footprints by 16% -- those stores are performing well. we are now at 3900 stores in china. -- grew 6%, so engagement with china is healthy. in the u.s., customer engagement doors are at an all-time high. and we hads were up a 7% increase in same-store comparables. so at least from the consumer engagement we are seeing in our stores, both in the u.s. and china, consumer engagement is very healthy. david: once again, kevin, congratulations on the numbers and the stock response. that is kevin johnson, ceo of starbucks joining us from seattle. vonnie: wonderful stuff. bloomberg's david westin, thank you. apple's stock has been gyrating, up .75% now. president donald trump now saying apple will not receive a
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waiver or other relief from tariffs on computer parts manufactured in china. once again, trump says apple will not get tariff relief on parts made in china. this is the tweet -- make them in the usa, no tariffs. up .75%.n, apple stock the markets in general with abigail doolittle. abigail: a risk on tone on this ride a, take a look at the s&p 500 and the nasdaq. the s&p 500 up .5% and the .8%.q up the british pound down, its worst day in almost a week and a half, the week that boris johnson is the new u.k. prime minister, with a big promise to have a hard brexit by the end of october. seeing if you can pressure the pound a little bit on the day. for the stoxx here and the s&p 500, let's go into the bloomberg
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and use the imap to see what is going on. his is also risk on. more sectors are higher, and up top, pretty extraordinary. communication services are leading the way, up about 3%, the best day since january. we will be looking at tech higher financials and a risk on tone from many the surface of what sectors are moving higher. bestunication's high, the day since january. alphabet, twitter, and amazon is dragging a little bit, but 10%, revenue growth of 19% versus the estimate of 17%, and speaking of president trump and tweets, he also tweeted that there may or may not be national security concerns with regard to google and the relationship with china. find outis, we will about it. i seriously hope not -- not affecting the share, though. twitter added 5 million users, but amazon, not so much. costsprofits missed on
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associated with one-day shipping. and we have been tracking the 10 year bund. the 10 day chart, down most of these days. losing six basis point. moving up yesterday on the less dovish tone than expected, but today we have german bunds rallying once again with the yield near record lows. guy? guy: this week has been fascinating if you are a bund watcher. btp's as well, a 20 point range yesterday.
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past the hour. larry kudlow has been speaking over the past few minutes and moving markets. couple of comments driving the market moves. the first one is that he is saying that the white house rules out any form of currency intervention. we are seeing, as you can see, a tick up in the bloomberg dollar index, and running over just a touch. there has been some speculation that sits side-by-side with the president the text that presidents attacks on jerome powell, that this is a lever that the president would pull. he has made comments about other countries come in his mind, using currency intervention or
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currency manipulation. larry kudlow making it clear that to his mind, them -- the white house will not be pursuing this. he said he should -- the markets should also not expect any grand trade due to talks taking place in china. i do not think expectations were particularly high on that front. larry kudlow is speaking right now, making comments on this. i'm not sure if we can listen in to what he is saying. if we can, that would be fantastic. here we go. last year to 2.5%. one, does this show that tax cuts or maybe not as excess will and the economy -- successful and the economy not as hot as the administration has been saying, and second, do you still believe gdp for 2019 will hit 3% or above? >> i like what we see for the
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second half, because as we cross over to the third quarter, we are almost to july, pretty big numbers in retail sales. that continues the consumer boom . as far as the business side, very strong increases in what durablel core capex, goods excluding aircraft. i like that, and i think we are in pretty good shape for the second half of the year. regarding the first part, look -- in terms of the historic revisions, we are at 2.7% or 2017 and 2018, and that is a bit lower than 3%, i get that. on the other hand, the prior administration, their performance was 1.9% annually, so we are running 40%, 42% above that trend line. and i want to add to that -- by the way, i think the pickup in the trend, there is a big difference between 2.7% and 1.9%
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, is actually come in fact, because of lower taxes and rollback of regulations and the opening of the energy sector, and the trade reform. i think the policies have been working. the differential is over 40%. but i wants to at one point -- we -- i wants to add one point -- we have faced severe monetary tightening, we have had seven rate hikes. that is taught. is a miracle it that we have done as well as we have done. if you look at the numbers today, the fourth quarter change 1.5%. deflator was about if we get some monetary shifts as the market is predicting, i think that will help the whole story. [inaudible] >> i wouldn't say we want. we made our views clear on that subject. i would say the bond market itself is predicting at least
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three rate cuts right now. >> what evidence do you have that other countries are lower ing their currencies? >> manipulating. we have looked at it. the treasuries have put out reports, they have watchlists. that is their work there, but we keep a pretty sharp eye on it. to be clear, the president wants a steady dollar and the dominant currently -- in the dominant currency in the world, but i'm not here to make charges or indictments. i would refer you to the treasury department on that score. our dollar is dependable and reliable. >> [inaudible] >> they are talking. that is all i am going to say. they are talking. i do not want to get into any details at all. axiom, it is always
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better to talk. would stating that apple not get waivers from tariffs? >> yes. >> what are you referring to their? -- there? >> apple has properties in china, and i'm very friendly with mr. cook. i meet with him a lot, the president meets with him a lot, and we would like to see the apple operations move. it is up to mr. cook and apples business -- apple's business. i knew there was talk that they would be moving some production facilities to texas. if they do that, that is a good thing, but that is our preference, yes or. >> so is he officially denying apple's request? >> he said what he said. >> write, i want to make sure -- >> he said what he said. that is the president. >> you are not necessarily a political person. [inaudible]
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4% and 5% growth? >> look, i don't want to look at it politically. these policies have done well in the past and they are doing well right now. i hate to say it -- during the kennedy years we had over 4% growth after his tax cut. during the reagan years, we had growth after his tax cut. we have not gotten there in the past few years, i agree. we have had to face some severe monetary tightening, which has been a drag. as that has remedied -- i am not here to outguess the fed, they are going to do what they will do, they are independent, but we are seeing much faster growth. i have been around for a while and promoted these policies a lot, and we are not breaking any news here. think we could achieve 4% growth, i do.
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i would not give up on the current cycle. other questions? >> what about the next round of china talks? >> i have talked so much about that on the air. next week, they meet in shanghai. that is a good thing. i do not want to second-guess the talks. i know that our team, secretary mnuchin, ambassador lighthizer will put forth the view, we would like to go back to where we were last may where we did not have an agreement, but we seemed to be about 90% of the way. yard line,he seven the long-suffering giants fan, sometimes you do not get in from the seven -- i get that, but perhaps they will go back because they had made good strides. not deals, mind you. the issues are still on the table. they are very important.
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theft, forced to transfer of technology, the ownership, the cyber interference, the ande and -- tariff nontariff trade barriers, it is all there. -- we expected that the chinese will make good on their promises to purchase large scale purchases of american agriculture. we expect that. that is a strong expectation on our part. somethinga favorable out of the chinese department ministry of commerce. we will see if they follow through. yes. obviously this is going to be put on further. where do you see the administration's expectations now? >> we have been working well
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with the democrats, speaker pelosi, my judgment and others have been very accommodating to ambassador lighthizer and that is a good sign. he has been meeting on the hill with democrats and republicans rea you are p -republicans. you are part right about the calendar. we are hoping in september she will give us the green light. don't want to i make a political legislative forecast -- and not my lane. is a vote,, if there i am optimistic it will pass. speaking,udlow talking about a wide range of subjects relating to the economy. let me give you a few details to recap. basically saying he will keep a sharp eye on other countries and their currency manipulation, he reinforced that word. the president is encouraging tim cook to move operations back to
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the u.s. the president making reference to this a little earlier on as well. he is saying you should not give up on the economic cycle. as of today, this is the longest economic cycle u.s. has enjoyed. no granted deal in chinese next week, but he does expect the chinese to fulfill their promises of purchasing large-scale agriculture. let's get an update. >> hundreds of protesters staged a sit in at hong kong's airport terminal today. they dressed in black and chanted slogans including free hong kong. demonstrators are calling for democratic reforms, the dissolution of the current legislature, an investigation into alleged police to brutality. house democrats expected to
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unleash a lawsuit today. all grand jury testimony was redacted from mueller's report and withheld by the justice department. jerry nadler says that democrats will go to court again next week hoping to enforce their subpoena compelling white house former counsel don mcgann to testify. the u.n. human rights chief says the world's most powerful nation is turning a blind eye to the syrian crisis. the international community has responded with a quote, "collective shrug." the un's as the last 10 days alone, more than 100 civilians including children have been killed. global news, 24 hours a day on air and @tiktoc on twitter powered by more than 2,700 journalists and analysts in over 120 countries. i am kailey leinz. this is bloomberg. vonnie: thank you. thee management beating
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heat with second-quarter earnings. joining us now is waste management ceo, thank you for joining. characterizes what you do as collecting and compounding cash these days. [laughter] vonnie: talk to us about your forecast for the future and what pricing will be like. good rightg looks now, particularly at the disposal sites. recycling is the one exception, recycle prices are down 33%. some of that is that china has gone away as our biggest customer. they were buying 30% of what we put out of our recycle plants. now they are buying 2%. overall, the economy looks good and we have a few leading indicators for our numbers with particularly commercial business and construction demolition. those look good. vonnie: why has china decreased the amount of buys? jim: i think it is coincidence.
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china does not like the contamination that comes through the recycle stream and i cannot fault them for that. it comes from us. we are not sure what goes into the trash versus the recycle, so the material we have been putting over there has been contaminated and china would rather it be cleaner. vonnie: we will get to that any moment because you have all sorts of innovations going on when it comes to trying to clean up trash. jim: exactly. vonnie: you are number one. you are buying number four advanced disposal, tell us how it is going. goingight now, we are through a doj approval process. process is really tied up between attorneys and the doj. we think that will close sometime in the first quarter or early second quarter of next year. it is an excellent acquisition for us. they bring a big group of customers to us, so we bring
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technology and focus on people. vonnie: and petra waste as well which is building up. back to advanced disposal, will --backs be degreasing decreasing in coming quarters thanks to this acquisition, $180 million in the first and second quarters. does that go down? jim: and that when idea was just to offset delusion. we will taper that off significantly. last year, we are close to $1 billion earned in buybacks. it will be basically the $180 million this year. we will restart buybacks sometime a year after the close of ads. you do more macro risks, have exposure to commodity prices. what is your outlook? jim: i wish i could be more optimistic. they are at 25 year lows from what we sell out of the back of the plant things like cardboard and mixed papers you what we
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-- and mixed papers. what we are doing is called a recycling plant of the future. it processes differently. i am not sure that i see commodity prices returning to norms. vonnie: you have 21% more market share and 50% more revenue than your nearest competitor, but you are continuing to spend on r&d, on innovation. one of those partnerships is with starbucks. you are trying to figure out how to effectively recycle. tell us about other partnerships that might be in the works. do with that has to people is technology with caterpillar. we are testing a remote operations of heavy equipment. one of our landfills and denver, colorado, caterpillar has done mind sites, but not on a landfill. so imagine it remotely operating a piece of heavy equipment as opposed to sitting on the site.
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it changes the definition of the job. it is exciting. vonnie: you have plenty of other innovations which might give you advantage. can you give us insight into any of those? jim: i mentioned the recycling plant of the future and that ultimately changes the recycling business. we are the only ones really doing that. we are using robotics as somewhat of a plunger as opposed to a terminator robot. it picks up material you tell it to pick up. it changes the recycle stream and makes it much cleaner which is part of the problem with low prices today. the stream has been to contaminated. vonnie: you have talked to other acquisitions. you are still looking for acquisitions, can you give us insight into where? jim: we have historically looked for talk and acquisitions in -- theen acquisitions in permian basin, that is the majority of where the drilling in the u.s. is. we will continue to look at
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places like that. coreof the tuck ins are solid waste talk -- tuck ins. businesses are affecting your business in terms of hiring, industrial waste, and visibility in the future? jim: industrial jobs are hard to find these days. with unemployment being as low as it is, it means that we really have to focus on people. one of the things i have talked about in terms of cultural change at waste management's people first. part of that is that i truly have a sincere interest of folks working in wtm, but part of it is safe -- self-serving in a company cents. we will have a hard time attracting employees. vonnie: have you noticed a change in tone since the tariff wars and trade war's took off? am: i guess it is not really
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change in tone, but they are interested in having a recycled commodity that is clean. as a society, been producing a clean commodity stream. sure if it is a tone related to tariff discussions. vonnie: congratulations. looking forward to seeing what you will do in the quarters to come. that is jim fish, waste management ceo. guy: coming up, surprises as you girls flock microblogging. shares are trading sharply higher as our alphabet shares. we will discuss it. this is bloomberg. ♪
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johnsonlondon, i am don -- guy johnson. vonnie: in new york, i am vonnie quinn. this is bloomberg markets. sales,e is higher on it but amazon, under pressure as the company warns that growth will come at a cost. joining us is bloomberg's dave wilson. the story of two groups of tech companies. what can we say about the sector in general? is amazon now not just a tech company but a growth company? there is a common thread. dave: companies are doing what they are known for. amazon over the years has been known for investing a whole lot and its business. it has been that way in the past few quarters so much but it is coming back to before. alphabet, the owner of google, it is all about growth and advertising. growth and advertising is picking up.
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then you think about twitter, it is all about users. what is interesting as they got away from the monthly average user statistics, the one that had shown that they had been struggling the last few quarters. on daily active users where there has been growth all along but it is picking up now and that is working and benefits of twitter in terms of results. guy: i am trying to understand alphabet. q1, big drop in the shares, big drop and disappointment. q2, things turn around and everybody is happy. was q1 the blip or is q2? dave: that will be the ultimate question down the line. theably, you say that first quarter was a blip if you put in the context of history. what does the business look like going forward with the digital advertising dollar -- that is more of an open question.
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for now, you are looking at stocks -- and i say stocks because alphabet has two publicly traded classes both in the s&p 500, we are talking the biggest gains in four years so clearly, they have taken the positive from these results and they are anticipating more to come. vonnie: amazon has been trading in a little bit of a range past 12 months. higher is push it ostensibly doing the right thing, sending money to get faster shipping times and so on? dave: that is always a challenge when you make these kinds of investments. at some point, they have to pay off down the line. clearly, we are not there yet. when you get to this spending stage, it raises the question of whether the investment is going to work down the line. that is something you have to look at. you also have to look at the internet the
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business, cloud computing, that growth slowed up a bit in the latest quarter. you have to ask if the increased competition is going to affect their performance down the line. guy: bigger picture. -- the s&p's are trading around records again. widee context of the earnings season, is this earnings season one to give this market momentum to get through fresh or record highs and beyond? dave: it is really going to come down to what do people take away and terms of the prospects for the second half and into next year. simply because, at the moment it is a matter of whether the s&p 500 is going to skirt a decline in earnings which happened in the first quarter. when they were looking for earnings to be down and they ultimately rose, we may well be headed that way again in the second quarter but there is the anticipation that you get a pickup late in the year and into next year.
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how confident investors are after seeing quarterly results with the scenario as it is laid out is going to play out. that becomes the question in terms of whether stocks get higher from here. vonnie: how healthy is this market? we talk to people a lot that think we might be heading into a downturn in the economy depending on what the fed does and so on, but nobody seems to think the bull market is going to go away. dave: it is fascinating to see the staying power. actually, you look at the chart the other day at the? research -- at bianco research, and all of the growth in the s&p 500 can be traced what happens in s&p 500 earnings. they track each other closely. to the extent that you start to see earnings pick up and they have flattened out in the last few months if you look at the quarter results, that may well be what sustains stocks here. vonnie: we are well above 3000 for the s&p 500 area our thanks
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to bloomberg's dave wilson. he has a chart of the day and if you want to see this, send a message to dwilson@ bloomberg.net. we will get more insight from the tech industry from bob swan. ahead, tensions rising in the middle east. iran firing a ballistic missile. oil is trading lower. this is bloomberg. ♪
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♪ live from new york, i vonnie quinn. guy: from london, i am guy johnson. this is bloomberg markets. it is time for futures and focus. joining us now from cme, phil struble. fires aians
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ballistic missile to test, but it could officially shut down the strait of hormuz and pose a risk the regional economies. oil trades are lower. walk me through it. outlook for crude oil right now is bearish. on the demand structure, mption has been slowing globally. supplies right now are adequate. the u.s., saudi arabia, and russia has increased their production. the u.s. is set to put out pipelines, but if you look at the bullish factors, you have to look further down the road where escalation in military tensions between the u.s. and iran, especially with those pipes of missiles being shot off, they are increasing the geopolitical risk. this is where you have to watch of the straits of hormuz.
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20% of the global oil flows through that on a daily basis. if we do see a shutdown of it, oil futures could shoot up into the triple digits and brent, perhaps even $150. guy: that is a long way from where we are right now. the bloomberg dollar index up six days in advance of the fed next week. looks nailed on now. the dollarould see index back off just a little bit. we are expecting 25 basis points and that is going to be an insurance got. they want to cut 50 but that will come further down the road. you have to be scratching your head if you are the fed especially with the gdp data, 2.1% versus 1.9%. we saw support of durable goods orders here yesterday. economyo suspect the does come back, so the fed may disappoint in their language, but we should see that 25 basis
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points cut. guy: thank you for your time, phil streible joining us from chicago. vonnie: global packets food the hour,ur stock of shares trading at a record after gaining just 3%. emma chandra in london with more. the focus is sales growth it seems. emma: absolutely. sales and margins coming in much better than have been expected. organic revenue growth of 3.9% in the second quarter. that was acceleration of the 3.4% growth in the forest quarter. they had the -- in the first quarter. that was driven by coffee and pet food. they increased their forecast saying that they have reached their forecast and they could see their best year in four years when it comes to sales growth. some analysts and investors are thinking that is conservative. the margins of coming in at four percentage points higher in the
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17.1%. that was better than had been expected. the company saying they could hit their 2020 margin targets at a year early, and that shocked some analysts. ways, the ceo is doing all the right things so it is priced in. many see the guidance as conservative. what are the chances that they get upgraded in terms of guidance and if not, what are the headwinds preventing schnider from doing that? emma: cautious is the watchword. they wanted perhaps to be able to beat the guidance, but there are particular headwinds coming in the second half. one is commodity prices expected to rise and that would impact margins. they are also able to miss prices quite a lot in the first half of the year particularly in the u.s. and as they pushed more premium products and brands. they are also facing some tough
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and investorsysts are seeing some growth. one of the big company stories of the year -- reports next week and on today, they say they want to be a major player. guy: you heard it first. or second. [laughter] guy: emma chandra, thank you. what we have coming up? we will count you down to the european close. we will speak to the global head of foreign-exchange strategy at rbc. i will spoke to her about post ecb and free the fed. that is coming up. this is bloomberg. ♪ hey! i'm bill slowsky jr.,
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excuse me?! what? i don't know your phone number. aw well. he doesn't know our phone number! you have our fax number, obviously... today's xfinity service. simple. easy. awesome. i'll pass. ♪ >> the european trading day in
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london, i am guy johnson. vonnie: and a new yorker, i am vonnie quinn. this is the european close on bloomberg markets. guy: stocks close up by 2% -- the dollar is stronger. the euro is trading down by two times of 1%. the rand also trading lower this afternoon. this troubled power utility in south africa that is causing the government so many problems. u.s., there in the s&p 500 and the indices broadly on earnings up .5%. two of the best performers, alphabet up over 10% after a great quarter, and universal health services is another company that has boosted dividends and buyback program. right

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