I'm your finance executive editor Brian Singer, taking a look at a live shot of opening bells on Wall Street on this summer Wednesday morning. And be micro ringing the bell at the New York Stock Exchange. The GO Project, an educational nonprofit, getting things popping over there at the NASDAQ and Times Square. It's Federal Reserve interest rate decision day with a side of earnings season madness. The Federal Reserve is widely expected to leave interest rates unchanged at its meeting today. Fed Chair Jerome Powell under tough scrutiny from President Trump, who's demanding rate cuts, will undertake arguably his most important press conference leading the institution with reporters after the Fed decision. Sprinkling in earnings results from Microsoft and Meta after the close, and it's shaping up to be quite the day in markets. Now, Opening Bid is all about serving up investing analysis you need to know to unleash the power of your portfolio. We're digging into what's really moving stocks, giving you the unbeatable context to make decisions with all that money in your portfolio. Let's check in and see what's moving or what areas are hot or not in the markets ahead of this Fed decision. Brooke Depal is at the NASDAQ for us. Brooke,
Good morning, Brian. Markets opening roughly flat here as investors really try to digest a few key things that are happening. One, President Trump announced that a deal has been reached with India to put in a 25% tariff. In addition to that, we are expected to hear from the Federal Reserve meeting today that they do intend to hold rates steady there. Also, we heard that GDP grew about 3% in the second quarter. But as we make way into the day, you do see the NASDAQ moving up about 2/10 of a percent as Meta and Microsoft are set to report after today's market close. Now, keep in mind, Meta and Microsoft have had quite the run since those April lows. Both stocks are up more than 30%. And all eyes will be on earnings and guidance when it comes to these two key tech giants. Stuart Kaiser from Citi saying in a note this morning that the biggest immediate risk to equity markets is these large cap tech earnings. Now, I also want to take a look at the US dollar that has been moving higher over these past few days as these trade deals have gone into effect. So certainly keep a lookout on that. We are seeing it up 6/10 of a percent at the open. The 10-year yields also moving higher largely based upon the Fed meeting that once again is expected to happen this afternoon. And also keep your eye on gold. That's something we've been tracking over these past few months and really year to date as that has steadily risen because of investors seeking out a safe haven. That would be one to watch especially as we're getting more calls on the street that gold could hit 4,000 by year end.
All right. Thanks. So, Brooke, really appreciate it. All right, to tell two stories for Starbucks in the wake of its latest earnings report. One of those stories is a coffee giant still battling through the early stages of a turnaround and sales and profits being under pressure in the process. The other story are signs that actions put into place to turn the business around are slowly starting to work. Joining me now is the leader pulling the levers on all those actions, Starbucks chairman and CEO Brian Niccol. Brian, always nice to see you and get some time with you here. So you called out some positive things on the earnings call last night. I think that's where the stock is taking its cue from. Transactions seem to have stabilized towards the end of the quarter. The business at college campuses has been gaining momentum. Sales up double digits. But my question to you is this, Brian, why is it taking perhaps longer than expected for these positive indications and your turnaround actions to show up, I guess, more clearly in the top and bottom lines?
Yeah. Hey Brian, good to be with you. You know, here's what I would tell you. When I got here about 10 months ago, we said we were going to get going on this back to Starbucks strategy, which really is founded first and foremost on resetting our operating platform. Unfortunately, I think there were some choices made before me that really set us back on our ability to create that great customer connection between our barista and customer and provide the type of customer service that the Starbucks brand frankly is known for and should be known for. And so that's really why we created the Green Apron service model. It's all around basically providing the right labor in store so that our partners have the right amount of time to execute the task that they need to execute and then also be able to give the customer service and that connection to our customers that we want to provide. And also as a part of this, we had to bring some order to mobile order. We had to make sure that we were staffed and deployed correctly for the drive-thru. So, you know, look, I'm really proud of where we are and the fact that actually during our pilot across 1,500 stores we saw tremendous progress on both the order to mobile order, the ability to be deployed correctly, the ability to provide the right customer service experience, which gave us the confidence to say rather than just doing this across a couple thousand stores, we're going to put it across all our stores. And that's really what I was referencing in the call, which is hey, that's what has us ahead of schedule is getting the operating foundation back in place. Getting back to being a world-class customer service company and really setting up the expectation that you're going to have the ability to have the community experience you want in our cafes and the connection that you want with our baristas. And I think with that strong foundation, it sets us up nicely then to start innovating correctly across our business, you know, whether it's in tech, menu, or the rewards program. Brian, your to-do list at Starbucks, it's long. You got to get the mobile ordering right. You got to bring lines down the store. You got to keep the workers happy in locations. You're also trying to reinvent what these stores look like. But at the end of the day, are the challenges deeper to overcome at Starbucks than when you first signed on?
Uh, Brian, I want to bring in Yahoo Finance's Brooke Depal. She's been covering a lot of the operational and turnaround strategies that you've been working on. Brooke, I know you had some questions for Brian.
Absolutely. Brian, I'm curious what exactly the inflection point will be here. What can you tell investors on when US same-store sales growth will return to positive?
Yeah, look, I think you know what I was trying to share with everybody is when you get this operating model in place. You know, what we have seen consistently is we see great progress in the morning day part and then we also see progress throughout the balance of day. And the reason why you have both of those things happening is we're now staffed correctly with the right number of partners deployed in the right positions to then execute that morning peak. The other thing is we're reducing the number of hours with minimum staffing. And so by reducing the number of hours of minimum staffing, we're able to provide better customer service throughout the day. And that's really what this boils down to is people want to get the experience of their Starbucks coffee every single time. And whether that experience is through the drive-thru, mobile order pickup, or in the cafe, we believe those things set a really strong foundation, demonstrate the value of our company and our brand. And then obviously we're going to layer in the additional innovation like the protein platform, you know, reinventing the bake case, this customizable energy that I'm really excited about. So I think it's the culmination of all these things that set us up for consistent, durable growth and that's what we want to get back to doing.
Brian, I'm excited for the protein coffee, but also on the call, you were asked exactly about cup sizes. How are changes coming to cup sizes and how does this play into your overall redo of the US store portfolio?
Yeah. So, what I was referring to, first of all, we're not changing anything as it relates to the grande, the tall, the venti. That is unchanged. What I was referencing is there are certain day parts, certain occasions where it may make sense to have different cup sizes. You know, most recently we did the Cortado, right? And you probably saw with the Cortado that comes in a short cup and it's a great drink. And it provides just a different experience. So, we're going to be smart about the packaging that we provide with both the food and the drink to ensure that people get the exact right experience for what we're trying to provide to the customer.
Brian, of course, what goes into that cup is in fact coffee in many cases. And now coffee, the outlook for coffee prices, first actually coffee prices have already climbed well off the canvas and now you have potential tariffs, very high tariffs into the mix. When will the price of coffee at Starbucks be forced to go much higher because of these tariffs?
You know, look, here's the good news is we are very much diversified in our coffee buying and also the guys do a great job of being smart about what we buy, when we buy, how we hedge it. And so it has minimal impact in the very near term. So we're able to be thoughtful about what we need to do going forward. So obviously we'll continue to keep a close eye on it. It's something that is a big deal to us and we're going to continue to make sure that we navigate it smartly.
Brian, so will you have to raise prices and do you think Starbucks has the ability to do that?
You know, right now we don't have any plans to raise prices and in the future if we find that we need to do something like that, we'll be smart about how we increase those prices.
I do want to bring things over to China. You are looking for a strategic partner there. What is the timeline on that? Like when will we hear more?
Yeah, look, I think we'll continue to keep people updated as we go through the process. I'm delighted with the interest that we've had so far. You know, we have over 20 partners that are interested in the business. The thing that gets me excited is the way these partners are talking about the opportunity for growth in China has me really excited and frankly validates what I believe, which is in the long term, China's going to be a big business. It's going to be a place where the Starbucks brand, I think, continues to be held in high esteem and will continue to grow with thousands more stores. So, I'm delighted about the interest and I'm also looking forward to continuing the process with these interested parties.
Brian, one of your biggest rivals there, Luckin, has now crept into a market that you're reinvesting in here in New York. Luckin stores are opening up here in New York City. What do you make of the competition? And also what have you learned from the competition? It seems like low price and innovation is working overseas.
Yeah, look, I mean my belief is the best way to compete is to be on your offense. And the offense for Starbucks is to provide great craft around our coffee, our drinks, our food in a great place. And fortunately for us, that great place allows for multiple access, right? It's the cafe experience if you want to stay, sit, share that community moment. It's the mobile order pickup. It's the drive-thru. And obviously, we're going to continue to make sure that we've got relevant innovation, and we're going to make sure that we have the right access and the right occasions that people can experience the Starbucks brand. So, you know, I really do believe our best way to compete is to be the best version of Starbucks. And that's what this back to Starbucks strategy is all about, is making sure that we provide customers and partners the best version of Starbucks.
Brian, I want to go back to something you know I asked you at the top. I clearly at the end of the day Starbucks is still in turnaround mode. You got a lot of work left to do here. I mean, when Starbucks is turned around, what do the glory days look like for Starbucks? And assuming you do hit some form of new glory days for the chain, does it look like glory days of yesteryear? You know, the Starbucks that was putting up high single-digit percentage same-store sales growth, industry-leading operating margins that were growing every single quarter. What should investors, I guess, expect to hear from you at that investor day in terms of long-term guidance?
