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Big day for a.
Couple of consumer discretionary names. McDonald shares sinking right now, lower by just about five percent of severe coli outreak, likely tied to onions served on the quarter pounders sickened dozens of people in the US, mainly in Colorado and Nebraska, killed one according to the US CDC. Also, Starbucks shares bouncing around. They were down earlier in the session by as much as about three percent, but you know, only
down about one tenth of one percent right now. This after sales plunged for the third quarter in a row. The company pulled it's guidance for twenty twenty five. It calls attention to the scope of the problems facing Brian Nickel, the new CEO over at Starbucks. We got Mike Hayln with us. He's the perfect person to talk about both of these things. He's senior restaurant analyst over at Bloomberg Intelligence.
He joins us from Princeton, New Jersey. I do want to start with with McDonald's, Michael, and get an understanding from you about how widespread this could be and the effect. I mean, I gotta tell you, I know that this is probably every franchise e's worst nightmare to have someone get sick, even if it is three thousand miles away.
Yeah, without a doubt, it's pretty much the worst thing that can happen to a restaurant or a franchise ee.
Yeah, we'll see, you know.
I would expect some more cases to be found, you know, in the coming days and weeks, but.
We'll find out shortly.
You know.
To McDonald's credit, they've historically been as good as it gets operationally, and so hopefully they were able to mitigate this as fast as possible.
And you think about and this is something that we talked about a couple hours ago on BTV, but you think about the blueprint here, I mean Chipotle for example, this obviously having their own issues with the ecoli that weighed on Chipotle for at least five quarters I believe. So how does McDonald's avoid a Chipotle type situation.
Yeah, well, Chapote was a little bit unique because after the initial Ecola outbreak, they had several neuro virus outbreaks, right, and so Chippole also owned all their stores, so there was not only did they suffer a big top line to climb, but it also suffered significant margin contraction.
Also, Chipotle was a.
More difficult problem to solve because food is out in the open behind a sneeze glass, and so it's easier for pathogens to get in. So for all of those reasons, we don't expect the impact on McDonald's to be nearly as deep as Chipotle. You know, they're saying Chapotle seems our shelves are down twenty percent and twenty sixteen and the client to your point, for five straight quarters. But that being said, we still think, you know, consumers are going to be turned off.
By this news.
You know, it was a tragedy.
It's it's it's terrible, and you know, I think it's gonna impact sales and traffic at least for a few quarters.
Here.
It's interesting you say that impacting sales and traffic. I got to give a shout out to Tom Kane. We walk in the studio to give him. There's a bag of McDonald's in the studio waiting for us, So I I you know, he got us some fries. He got us some flet of fish. It's still here. We have not eaten it. It does smell, but it doesn't. It's not holding him back from going to McDonald's here in
New York the next day. Michael and I wonder, you know, if if something happens, something's in the news and it is geographically isolated, does it affect traffic in other parts of the country.
Yeah, we we think we think it is. I mean, listen, Tom's one of a kind. He all so offered me McDonald's on surveillance next time I'm in the city.
So thanks. I'll make good on that, I promise.
Yeah.
No, and I know so I'm looking forward to it. But yeah, no, I think it does. Man, there's there's
this has been all over the news today. Everybody wants to talk about it, you know, and when consumers hear about it, especially the fact that somebody passed away, especially the fact that quarter pounder of cheese is a very popular menu item for McDonald's, I think all of these things add up to some consumer hesitancy in the coming weeks and months, and you know, I think it's going to be up to McDonald's to prove to their customers
and their investor base that they're doing everything they possibly can to make sure that the food they're serving is safe.
Right, is it is?
You know, if it came from the onions, which is it seems like it's most likely. You know, maybe they can grill the onions, or stop putting fresh onions on the burgers, whatever it could be to kind of rectify their situation.
I you know, Katie brings up Chipotle over the last decade. I think of Jack in the Box in the nineteen nineties and what the e coli outbreak, Probably because I'm older, but the outbreak at Jack in the Box and what that did, Michael, I mean, that changed the course of the history of that restaurant.
Yeah, that was a much much deeper decline.
I think there were several casualties in that case, and that really changed the way quicker quick service companies serve their hamburgers.
Right.
I think prior to the Jack in the Box insistance, you know, medium burger served medium was kind of common. Now there's no pink in any of the burgers you're getting in QSR right now, and that's because of that. So there's been you know, advances in food safety, and you know, I'm sure this is gonna force McDonald's to kind of improve their food safety measures and you know, in the hopes that this never happens again. But this is just part of the business, and it's constantly the
one of the biggest risks. You know, most of the CEOs I talked to, you know, if I asked them what keeps them up at night, it's usually food safety. Right It's something that you know, they do their best to control, but sometimes you know, it can still you know, thinks can still happen.
So McDonald's of course facing a test here. Sure is currently down about four point eight percent. I also want to talk about Starbucks. Of course, Sure's they're pretty much flat right now. They had been down by more than three percent earlier. Of course, the news from yesterday pulling its forecast for Starbucks. Of course, this under Brian Nichol's leadership here, and I guess the fact that they pulled
the forecast wasn't too surprising. Michael, you think about the problems that are facing this chain, and I would imagine that Nichols here just wants to have a clean slate.
Yeah, one hundred percent. Yeah, nobody cares about this news.
This is old news.
Brian Nichols just started a month ago. And you know, any any good CEO is going to do this.
They're gonna withdraw annual or long term guidance to give their their initiatives time to to kind of take take hold, right And so, you know, they're moving aggressively. You know, they've made some significant management changes. They have a new head of China, they have a new chief brand officer.
You know, he Brian Nichols visiting stores and uh, you know, has seems to have a good idea about how they can improve the barista experience, how they can improve on the on the speed of service for the customers, and things of that nature. So yeah, they're listening. They're moving fast, and that's really what's most important in this story right now.
What is the biggest challenge that Brian Nichol has to overcome at Starbucks to get more people through the doors and buying more coffee.
Yeah, no, I think it's that operational piece is going to be the first thing, you know, they're they're gonna you know, listen, Happy baristas provide a good experience for the customer. Customer has a good experience, they're more likely to come back, So that's going to be.
A huge part of it. Price is a concern.
I'd expect some work to be done on the strategic pricing front, which Chipotle was fantastic at, and then from there it's going to be improving on the marketing. Starbucks historically has not spent a lot on marketing. They've only marketed to their loyalty members. The Starbucks are rewards members, and now Brian Nichol's gonna spend a little bit more.
He's going to market to people everyone.
Not just their rewards members, and that should lead to a bump in sales and traffic.
Mike Kalin and Bloomberg Intelligence, good to see you. Thanks so much for joining us from Princeton this afternoon. Katie. You don't need to be persuaded to go.
I know, it was like spending on marketing. They have me locked in. I spent five dollars and like seventy nine cents there every single morning.
Okay, you're not part of the problem. You're part of the solution.
You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from two to five pm Eastern Listen on Apple card Play and then Bright Auto with a Bloomberg Business at or wan't just live on YouTube.
So we got our eye on shares of Boeing their lower by just about a percent off of the lows of the day. Shares were under pressure even though investors were already prepared for lackluster results after the company provided a preview earlier this month, we hear from Boeing five
billion dollars in accounting charges. Revenue of seventeen point eight billion dollars fell short of analysts estimates, negative free cash flow of two billion dollars in the quarter, bringing the total it's burned through so far this year to ten point two billion dollars. For more, we bring in George Ferguson. He's Bloomberg Intelligence senior Aerospace, Defense and Airlines analysts. He
joins us from Bloomberg Intelligence headquarters in Princeton, New Jersey. George, did we learn anything new in this report about the tough task that Kelly Ortberg has ahead of him? And turning around the planemaker. I think we did I think the most interesting or I don't know. I guess I think of it as interesting. But maybe concerning thing we heard from the during the report was that Boeing expects cash burn next year as well for the entire year.
It sounded like they expect most of it in the first half, and they'd expect some of the cash generation to turn around by the second half, but still be negative on the year.
I was a little bit surprised by that. I thought that the turnaround could be sooner. They might be sandbagging us a little bit.
But I think cash is a really important part of this story right now, and that's concerning.
Yeah.
Absolutely, And I mean you think about this quarter, and you think about Kelly Orberg his first report as CEO. Is it fair to say this is just let's throw everything out there, let's put every bad number that we can out there right now, because I mean, it doesn't seem like there's really any bright spots here.
Yeah. I think there was a little bit of that.
Right They pushed Triple seven certification and first deliveries back twenty twenty six, which is another year out. That was a large portion of the charge at commercial airplane. You know, I'm sure that there's to you know, judging some of these things, trying to figure out what's when they can they absolutely deliver it by and I think Triple seven
might fall in that in that category. Uh, And so that you know, they push it out and take a charge and maybe if things go better than they expect, they'll have a certification prior to that and deliveries prior to that. So I do feel like there was a little bit of that going on inside this earnings report.
He also sent a message to employees today. It said, quote, it will take time to return bowing to its former legacy, but with the right focus in culture, we can be an iconic company, an aerospace leader. Once again, the old adage, if it's not Boeing, I'm not going now it's printed on T shirts that that Boeing sells. Pilots were known to say that, George, do you believe that Boeing can get back to what it once was?
I do, And I think, you know, because of the duopoly, they absolutely have a window. You know, they pointed out they have a half a trillion dollar backlog. You know, we knew this before the call. But because of the duopoly, Airbus has not been able to make much, uh, you know, much headway against them because the supply chains are so intertwined and they're having similar just not as bad a problem with their supply chain. Absolutely, if they turn around
the quality deliver like they used to. Uh, there's plenty of core customers that are still in their camp, companies like you know, airlines like Ryanair, Southwest Alaska. These are these are high quality customers to have, so they absolutely have the opportunity to become that you know, that that great you know, look, I think Airbus is great as well, but that great aircraft commercial aircraft manufacturer.
But this is the time, right, they got to get the union back. They have the vote tonight.
They got to get a union back into the into the factories building airplanes, and they got to bring the union back somewhat happy. Right, you can't make them entirely happy. I think they've got a decent deal on the on the table for them. But when you bring them back, you've got to have them happy and motivated to build quality airplanes because that's the only way to make the company successful going forward.
And George, you know, well, the reason why their customers are so loyal is because, I mean, it's Boeing and it's air Bus. It's interesting, though, you had Embraer's CEO on Bloomberg Television. I believe it was last week.
He was on our show too last week.
No kidding, Well, I only watched the TV first.
You should watch the I will.
I'll go back. What I know from the TV I go on was that he hinted at, you know, a seven thirty seven rival, that maybe they would think about a new jet to rival the seven thirty seven. That was in the TV interview. But anyway, George, the question I have to you, I mean, is this a duopoly that could be broken into? Or is it just is it Boeing, is it Airbus? And that for the foreseeable future is the only game in town.
So I would say it is a duopoly will be broken into. I don't think it'll be Embryer. I think it'll be Comac. The C nine one nine, the Chinese manufacturer. They do have a narrow body flying in fleets in China. There's about eight of them in fleets right now, most of them with China Eastern. They don't get the same hours per day as of Boeing or Airbus. Narrowbody gets it. They're just they have to work on some of their sustainment. They're not building them as fast as Boeing and Airbus,
but they've built them. They're in fleets, and they can count on a very robust domestic market. They can count on getting the Chinese airlines to buy that airplane. And so I think they're breaking in now and one day they will be a competitor. It won't be probably in the US and European markets anytime soon, but they they'll be a competitor in the developing world and they'll be absolutely a major part of fleets in China over time.
Would that be because of the FAA and regulators here in the US and then the European counterpart to the fa as well, or do you see them not approving the see nine one nine.
So it's already, you know, the European regulators are already looking at the airplane. And so what I see is I think the regulators are going to take a very close look at these airplanes and make sure they feel really comfortable about them before they let them into markets. And so you know, I think that means they've got,
you know, a more protracted approval process. And then I think once you get past that approval process, I think the other second challenge inside the US and Europe will be acceptance of that of that Chinese airplane, right I think.
Look, I think in time probably will happen.
But my guess is you won't see it for over a decade in the US, maybe less in Europe, because I think.
It's just going to take some time.
It's going to take some time. Of course, we're talking about earnings chiefly. That's how we started the conversation. That's only one part of it. George. Of course, a lot of excitement coming this afternoon, this evening when it comes to Boeing of course, that highly anticipated labor vote. How are you expecting it to go? And how high are the stakes right now?
Well, I think the stakes are really high because I think I think the sooner you bring the employees back into the into the factories, the sooner you can crank up, you know, the supply chain, the flow of the factories and start getting airplanes built. The longer you let that lapse, the harder it is to start that engine again. And so I think you've been out. They've been out a little bit over a month now. It's not terrible, but if you keep going here, I think you run some
risk of problems, more problems in the supply chain. What do I think about the you know, the deal on the table. It's very close. I think Boeing will get an approval. I think that there might be some machinists that thought maybe they deserve forty set instead of thirty five. They didn't give the pension, but they sweetened up four to one k. I think with a bonus and some better matching. It seems very close. And again, the machinists
have been out for a month. I think they've got a good, good probability of getting the deal done tonight. I guess we'll see how much machinists have saved up prior to the striking.
Yeah, George, if they do get it done tonight, how quickly can those workers be back?
I mean, on the call we heard you know it will take you know, more than a month or so to get things really rolling again. But I think you'll get people back in fact, okay quickly. I don't know why you can't add them back by the end of the week.
So let's say Boeming is able to overcome this hurdle that is seems to be the closest one in its path. What's next, What's the next thing it has to jump through in order to get back to firing on all cylinders.
Well, again, I think you got to restart the supply chain. And you know, Kelly Orperg indicated today not going to rush through that process. It's more port and they do it right, then do it fast.
I agree.
I think they'll have to make sure they have the quality controls in place. He talked about some training as well, So I think it's really sort of getting that factory started in a stabilized way so they could feel really good about the quality. Then they're going to have to turn their sights to bringing Spirit into the bowling fold
next year, although they're already well deep into that. I think managing some of the definitely managing the quality that's coming out of Spirit, and those two things will be key to getting seven thirty seven rolling, and then getting rid of those old airplanes that they've already built, destined for China or India. They just got to get them tidied up because they built them a bunch of years ago configured for the customer that's ultimately to take them
and get them out the door. That'll kill a lot of the lag they've had in some of their financials as they're trying to manage airplanes already built but sitting on ramps.
I think those are key to the commercial business getting it moving.
George ferguson Bloomberg Intelligence, senior Aerospace, Defense and Airlines analysts, joining us from Bihead Orders in Princeton, New Jersey.
This is Bloomberg BusinessWeek with Carol Messer and Tim Steneveek on Bloomberg Radio and Television.
It is Bloomberg Business Week. That's Katie Graefeld in for Carol Master. I'm Tim Stenebeck and would you like to hear what would you like to hear about on Bloomberg Radio. Help make shows like ours even better by talking to our Bloomberg audience survey visit YouTube dot com slash Bloomberg Podcasts. Click the link in our profile or community section to take the survey. It's hosted by our partners at Material. You can fill it out now at YouTube dot com
slash Bloomberg Podcasts. Well, we love talking transit here on Bloomberg Business Week, we often talk about planes, trains, automobiles.
Yeah, you know, we got a great movie, great most Steve Martin, fantastic.
John Candy, can't forget about him.
Classic.
One thing we don't talk a lot about, though, is buses, especially inner city bus, taking a bus from one city in the US to another city. A lot of people in the US rely on this type of transport. Last year, people in the US are can estimated fifty million trips on intercity buses. This according to widely cited data from Joseph Schweiderman over at DePaul University. This is the bread and butter of our next guest. Kai Boyson is CEO of Flicks North America. It operates Flicks Bus and Greyhound
in the US, as well as Greyhound in Mexico. Kai joins us here in the Bloomberg Business Week studio. Just give our audience an update on the where the revenue comes from. Like, is Greyhound bigger than Flicks Bus here in the US. Just give us an idea of the breakdown there. Okay.
Flick North America is the mothership company here in the US, and it operates two largest bus companies, one is flix Bus and the other one is Greyhound. Approximately two thirds is Greyhound and one third is flix Bus. And what we do is we continue to grow that business for both prints as Flicks North America, and the growth is mostly coming on the flicks bus site.
Would you consider it's given that the growth is mostly coming on the flicks bus side, would you consider a rebrand of Greyhound to flex bus.
This is a possibility, but this is not our agenda right now. Right now, we leverage those two brands and they have great value in both brands. So we are enjoying the Greyhound brand in a way that it's an iconic brand in the US. It's so well known and on the Flick side is such a strong brand. It attracts none users to the industry and both different purposes and working conflmentially so well.
And you used to have bolt Bus as well, right you think about Greyhound. Everyone knows Greyhound. Both bus also had a following because you know it was cheaper, it was easy. But you shut that down right to focus more on Greyhound, correct.
I mean it was a successful and kind of initiative done in the past. But when Flix board Greyhound, the decision was two brands are good and enough, so we decided to shut down both bus.
I am curious about just the bus industry in general, because you know, we think about BoltBus. I also wrote Megabus a lot in college, and I believe that their parent company filed for bankruptcy in June, So it seems like a tough industry to be And just give us a feel of the competitive landscape and what differentiates you.
Okay, Flix is here to transform the long distance post truggle in the United States, and what is really critical is to make long distance pos trugle top of mind for anyone constring long distance truggle. And it all starts with customers effectively, and we need to make sure that we deliver a pleasant experience for any Flicks journey and then they come back to us, they recommend to their friends and family, and then we grow the business. That's
what we are focusing right now. And as we do that, what we see as Flicks North America is ridership is going up so a year after year and making good progress. But as we do that, what is really important to underline, we're improving the customer experience every day, every week. It's important for us.
Can you talk about that, because my understanding is that over the last few decades we've seen a decline in the number of these greyhound bus depots, so there are fewer areas where people can get on and off a bus and in effect making it less convenient for people. How do you use technology? What are you doing to combat that?
Okay, infrastructure and boss terms are integral part actually of our offering. You're right, and we need to think about holistically in the United States when it comes to infrastructure. Nuts is it kind of as an integrated transportation network, not in silos. Airlines, railways, intercity bus, local transit, subways. We should think about as one, and intercity bus is
an integral part of it. And to make it work, we need to bring all these different modes of transports into intermodels so that one can actually connect from one to another swiftly, and more importantly, they have the freedom to choose which one they want to go with depending on their expectations and the budget.
Of course, sounds great. The problem is we live in America and this was a place not necessarily built for mass transit.
In some occasions, you're right, But if you look at Los Angeles Union Station. This is a wonderful example of an intermodel working perfectly well for all mods of transport. If you go to New York now, if you go to Boston South Station, we've got great examples. What we need to do more repeat those examples and do better actually in other cities and states of the United States.
And we only have about thirty seconds left with you, but talk to us quickly about EVS and whether or not that's integrated into your fleet.
Sustainability is a core value of Flix. What we're doing on the EV side is we're looking at the technology, we're looking at the infrastructure. When it is a success for the customer, we'll actually deploy it. Right now, we're doing pilots and tests, working with all stakeholders, talking about what is the best technology and what is the best infrastructure to make it commercially viable. When it is ready, we'll embrace it fully.
Hi boysen CEO Flix North America operates Flix Bus and Greyhound here in the US, as well as Greyhound in Mexico. Thanks so much for joining us on Bloomberg Business Week.
You're listening to the Bloomberg Business Week podcast. Listen live each weekday starting at two pm Eastern on applecar Play and Android Auto with the Bloomberg Business ad. You can also listen live on Amazon Alexa from our flagship New York station just say Alexa playing Bloomberg eleven thirty.
Well, our next guest is the COO and head of business of the publicly traded enterprise work management platform Asana. We've got one hundred and fifty thousand customers in two hundred countries and territories. Companies include AT and T Mobile, excuse me, Amazon, Roche and more. Maybe ATNT that's one of my gainers today, by the way. Nice, yeah, pretty good, right, yeah, it's on my mind. We got with us Ann Romandi, who is head of a business and COO over at Asana.
She joins us from New York and lots of news on your company this week. You got this new tool that helps people integrate AI without using code, an update to your survey about how people are working in this day and age. But first, Asana's got a footprint all over the world, and you've got a view into what's happening in terms of what people are spending money on. How is business around the world right now? What are you hearing from customers.
Yeah, thanks for having me on around the world.
What we're hearing from customers, it's probably themes that you're also hearing. They are focused on how both growth in this environment, how do they manage growth in a really measured, thoughtful way.
Cost management is really critical, and.
Our customers continue to be really concerned about employee engagement and productivity. And I think there's a new theme that we're seeing emerging, which is customers want to be much more intentional and thoughtful about their technology investment. In fact, a lot of our largest customers are feeling like, oh, there's some technology bloat, and so how do they make better more intentional just so their employees can be more productive and can collaborate more seamlessly together.
I'm curious about the competitive landscape here because you know, I know that you have several rivals. For example, some of your rivals have entered into deals to sell themselves for example. Talk to us a little bit about that landscape and how you're trying to differentiate.
Yeah, we see a lot of signs that are actually quite positive.
There's a lot of demand overall for collaborative work management. I think the problem continues to persist of how do you make sure teams and functions are really well aligned. So we really see it as like the more innovation there is in the space, the better overall, because there's greater awareness and greater demand. And then for us, our focus really has been how do we help our customers bring AI directly into the most important workflows and have
AI actually joined a team? You know, a lot of the AI solutions right now are very individual productivity based versus making a whole team function better, and that was a lot of the focus of our announcements and our work innovation event this week in New York.
So talk to us a little about I want to follow on Katie's question about competition. I mean, a good indication of competition is you Google Asana and you get sponsored results like before you get the organic results from you know, Monday, dot Com, Project Tools, dot Ao. I know, there's Trello, I know there's clickup and the like. Who do you, Jira, who do you see as your biggest competitor?
You know, we actually see our biggest competitor as sort of status quo and companies not choosing to have a single platform or actually introduce ways for teams to collaborate. There's still much more collaboration happening in spreadsheets, in documents.
In meetings.
Our report that came out said that over the last two years, employees have actually said that there's more wasted time in meetings than ever before. So while there are many different offerings and we see a lot of them being adopted bottoms up, we do continue to see sort of the biggest competitors like not doing something to give employees a tool that they can really collaborate together cross functionally sticky.
How sticky is asana? Like if somebody signs up for what's churned, how hard is it to keep them on there?
That's a great question.
I think what we see is when used against the most important, most critical business use cases, we are very sticky. And that is why we're applying AI to those workflows and making it easy for non coders to adopt and
really create that. So that's really what we've been focusing on, and also tying it to the highest level of a company's goals and priorities, and so we see when we work the best, it's when goals are tied to portfolios, tied to projects, and then type into the tasks, and so teams and individuals can really see how directly their
work impacts the company's most important goals. And then for executives, as things change and they're responding to the environment and they want to be more agile and they change priorities, they can see that cascade quickly.
Through the organization. So that's when we see that we're the most sticky and we're adding the most value.
And of course this is Bloomberg news. So we have to talk about the stock price a little bit. And I'm curious, what do you think that investors are missing about the message because shares recently hit a record low. I mean, you're to date, your shares are down thirty eight percent. What isn't the market hearing that you would want to get across.
I think what we are.
Focused on is both the near term and then ultimately the long term growth.
I think that some of the things that we've been focused on really are operational efficiency. I think in talking to our investors that matters a lot, and then good healthy growth. So I think for us, the priorities really are we do living for customers, if we can deliver really well consistently for customers. Then I think we'll see that in our result.
I want to get to your state of Work report, the update that you guys have done, the work innovation report, But I also want to talk a little bit about the AI tools that you announced this week, the idea of no code AI integrating AI work into your workflows without actually writing code. Can you explain what that is and how people would be able to use quote unquote AI in their workflows.
Absolutely.
So, what we see that we're building with our AI studio that we just announced is AI as a teammate joining a team. So to break that down more specifically workflows, we think of having four really important parts an intake process.
So think of work requests going back and.
Forth between teams and then really actioning that work, kind of prioritizing, making decisions on that, executing on that work, and then reporting on that work. And so when AI can join that team, it can do a number of
things in that intake process. If a company has standards for it requests, for example, those standards, AI can actually use those standards to evaluate a request, fill in any missing information, maybe go back to the person that submitted it and ask a few more questions and then actually even prioritize that request in a queue. One of our largest customers, morning Star, is using that exactly for it requests.
And then actually the work.
There's a lot of work that AI can actually do and complete, and so if it's part of a workflow and a team, it can go ahead and do the things that oftentimes employees think of as busy work.
And then that reporting part at the.
End, Hey, did you accomplish your goal or your task or your project, and then really reporting on that. AI does a really good job summarizing and reporting and also making recommendations on improvements. And so we want to design it in a way where the people closest to the business and to the workflows can actually build AI into
the processes without needing technical skills. And so we worked with twenty of our largest customers to really design AI studio and implement it into some of their most important workflows and saw really great results. And so that was the announcement this week to introduce it to a much broader customer base.
Can we talk about the productivity theater That phrase is in your report as well? I love this. Twenty two percent say that they sometimes prioritize looking busy over actually completing work, and sixty five percent of workers admit that they perform productivity theater at work.
That's why are you laughing?
It sounds a lot like what I do. It's just okay, delightful, just a meeting for the sake of meeting, and you know, sending around updates that maybe you don't need to be sent out. Talk a little bit about that.
Yeah, we think the underlying trends and why workers feel that way and why that kind of continues to be an issue is again that at an executive or leadership level, it can be hard sometimes to figure out what exactly is going on, who's doing what is it going to be done by when? And so that creates a lot of this productivity theater right asking for status reports, asking for meetings where people are just doing readouts and employees
are exhausted by that. But a lot of that is because there isn't a good single source of truth where you can really rely on it and be asking different questions, not status updates, but actually constructive questions on hey, do we have resources against our most important things? What happens if we shift those resources? How do we help unblock teams where you're actually looking at the same information, the
same data about the work. And so when companies don't have that or teams don't have that, a lot of that busy work in productivity theater is the result, you know what, grab meeting to see what's happening, you know, versus actually looking at what's happening.
What about this idea of disconnection because in your report, it's a fewer than half of workers say they understand how their work contributes to the company's goals forty seven percent nearly two and five thirty eight percent say they don't feel responsible for delivering high quality work. Is this just quiet quitting?
I think what it is is not really being able to tie what they do day to day or week to week to what a company or leadership might say is the most important priorities. You know, too often priorities or objectives are shared out infrequently, or maybe they're on a poster somewhere in an office and then they're sort
of forgotten. Versus when teams are doing their work, they can directly tie that to a company's priorities and actually see how much it matters or doesn't matter to influencing that and then make better decisions and have greater autonomy to make changes and know that that ties directly to an important company initiative. And that's oftentimes because goals or goal setting is done separately. It's not sort of a living,
breathing thing that employees can be. So that's where what we're saying, you know that disconnect that causes that discimpt.
And got to leave it there in Rimandi, head of a business and coo over at asauna joining us from New York.
Bromack.
A journal No how about you let me drive?
Oh no, no, no, no, alright, please, I'll do gravel.
I want to drive.
It's a good question.
This is the drive to the cloth well you don on Bloomberg Radio.
All right, it is that time, Tim Statfeck and Katie Graefeld in for Carol Masser on this Wednesday afternoon. Less than eighteen minutes to go to the close. And if you never want to miss a Bloomberg Business Week story, becoming a subscriber today, you'll unlock deep reporting and analysis from reporters around the world, including unlimited access to BusinessWeek. Check out our offers right now at Bloomberg dot com slash subscribe. Now it is time for us to drive
to the clothes. We're joined right now by Aya Yoshioka, portfolio consulting director at Wealth Enhancement. She's here from Los Angeles. We have like la weather.
I I've brought it with me.
What do you think? Well, I mean, revend, we're basically having a drought here in New York. I am kind of wild.
I hate to tell you, but I leave Thursday and I saw that the weather actually turns.
It's terrible news, you know, Katie and I we we're talking this week about the markets today. And you have an S and P five hundred this year. That's up over twenty percent, up over twenty percent last year by many measures. It's expensive. And the question that I have over and over again is if you're getting new money right now, how are you deploying it at a market that's historically expensive.
You deploy it very carefully, you know, dollar cost averaging is always a great thing. But you know, we get a lot of clients who ask all the time. You know, markets are at all time highs. I'm a little nervous about the upcoming election. Should I just go to cash and wait for the all clear, and I said, you know, I don't know when the last time I ever got
an all clear in the market. There's always something to worry about, and it's really difficult to time both the exit and the re entry into markets.
Some people say impossible.
We think so it's not easy to do.
And the one of the it's only one seat. It feels like we've been talking about this for a month now, but that Goldman Sacks call it from David Coston coming out and saying that their team expects only three percent annualized returns over the next decade, pretty amazing, suck.
That is such a departure, I know from what we've seen in the near past and also in the that is like a fundamental change. I know, you've got me really fun.
I know, well, we had David Coston on Open Interest earlier today and we made the point in that that hasn't happened in the past unless we're talking about it in events such as you know, the financial crisis or literally the Great Depression. But I am curious. I mean, when you pull out your crystal ball and you take a look over the next ten years, I mean, what's the direction of travel? Are we talking about three percent unitalized returns or is it maybe a little bit better?
Well, my crystal ball tends to be a little cloudy at times. But you know, I think that a lot of it is going to depend on the productivity growth that we get out of AI, Right. That's been the
promise that I think everybody's been talking about. And if we do get real productivity growth similar to what we got back into in the nineties, you're going to get you know, expansion and margins still and I think you can get above that three percent long term growth and then you never know what could happen in terms of what could bring the market down in the short term, right, just like the pandemic did and we had a thirty
percent discount in one month. And so I think there's still a room for a little bit more than just three percent growth over the next decade.
What I don't know, it's like, you think about this from the perspective of how stocks are doing right now, and you know, I got to wonder in terms of geographies, the US has just absolutely ruled over the past decade, and every year we have people come on and say, you know, now it's time for international now it's time for international, and the US just keeps out performing, out performing. How long does that go on for?
It's so tough to say, and it goes against what you're supposed to.
Do with stocks broadly diversified portfolio geographically.
Right, yes, and by low sell high right, that's what you've been told, And it seems like the better strategy has been by high sell higher. And you know, it doesn't seem to be the case with small caps and international as well, that they've just struggled. And valuation is a very poor timing tool. But I think what it does is the diversification in other areas of the market allows you to have an insurance policy in case leadership changes,
and I think that's where we sit right now. Have some exposure so that you have that insurance policy.
I'm curious what you make of the bond market at this juncture, and of course the ripple effect into the stock market. We were talking about the volatility that we've seen at the long end of the treasury curve with Abigail Doolittle a little while earlier. It's just this has been the dynamic for several years at this point. But it is interesting and notable to me that it feels
like the epicenter of volatility is the treasury market. Of all asia classes, it's the bond market that's the most volatile.
I agree.
I think you know, I've been doing this for almost thirty years, and it's really interesting that we're not talking about the vics and we're talking more about the move index instead. And you know, I think it's because we were you know, we've had a decade in which interest rates really didn't move so much and they were anchored
to zero. And now that we actually have real yields and interest rates at a nominal rate that is actually tradable, I think that's why you're seeing some of that volatility, and I think it can continue a little bit.
Okay, I want to go back to the election, because time and time again, day and day out, we have people come on during driving the clothes and say, investers are waiting to see what happens. What are they waiting for?
Waiting for clarity?
They want to know who's going to win.
And I think I can tell you it's going to be one of two people, like I can tell.
You that absolutely. But I think you know, everybody remembers the twenty sixteen experience in which the markets were down what four and a half percent in the after hour because.
They were surprised about a Trump win. Absolutely, I think nobody would be surprised. I don't think anyone would be surprised about anything, given the polls are fifty to fifty. Yes, there's a big Trump trade that's happened in some areas of the market.
Yeah, but I mean so then you.
See DJT sell off if you lose this right exactly, you know, I don't see an impact.
I think people are also afraid that they're not going to know the winner right away because it's so close that but.
We know that we know we're not going to get there. They are all know because we're in this new world.
Yeah, absolutely, And I think that's but they're just scarred from the experience and it's a little bit more emotional for them, and so that just allows them to kind of freeze about everything when it comes to their portfolio.
Feel like everybody's a little stronger now.
Ye.
I mean it is interesting. We talk about the Trump trade, we talk about the Harris trade, but if you look at the vent diagram, right in the middle is the fact that the deficit is going higher no matter what happens, which you.
Could you sound like dad. Yeah, he loves to talk about this.
We text all the time just about this. Okay, anyway, I guess that's not a question, but it is interesting.
There are similarities, No, absolutely, And I think that it goes back to what we were talking about earlier about bond yields, right, and I think you know, an expanding deficit is never really good for bond yields, and so I think bonds are reflecting that.
All right. You know you love to talking about the deficit. I don't think I agree with you. I don't think enough people are talking about this.
Oh my god, Matt Miller never stops talking.
He's right to be talking about this because regardless of you, but regardless of who comes in, if their plans go according to plan, then they're going to spend more money. Yes, so yeah, then you know, we'll see what happened.
We have something to.
Rely on, we do. Ayah, good to see you, Thanks for joining us. Come back next time you're in town. Ia Yoshioka, portfolio consulting director at Wealth Enhancement. Here in the Bloomberg Interactive Broker's Studio.
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