B (4:26)

That's right. Before the show I was telling you about a feature I recently saw in Public and I've been digging into crypto lately and I discovered that on Public, along with stocks, options and bonds, you can also trade crypto. Lots of tools to build and manage your wealth. They have over 40 cryptocurrencies including Bitcoin, Ethereum, Dogecoin and more.

A (4:45)

And if you have questions about your investments, Public has Alpha, an AI powered research assistant that can help you find the answers you're looking for. Find your account in minutes or less. Get started at public.com brewmarkets that's public.com.

B (4:57)

BrewMarkets paid for by Public Investing. Full disclosure in Podcast Description well, this.

A (5:02)

Week marks the one year anniversary of Brian Nicholl taking over the job of CEO at Starbucks. He was brought in to turn the chain around after several consecutive quarters of declining sales. And since it is back to school time, John and I took a field trip to our local Manhattan Starbucks to, to witness the turnaround for ourselves and give nickel a grade. So let's go back to why Brian Nicholl was brought in and I think it's really worth digging into his track record as a leader of a public company. He'd previously led Taco Bell for six years in the roles of chief Marketing officer, President and then CEO. And he presided over a successful turnaround at Chipotle after that. And it's worth just touching on what he did there. He actually, John wrote an article in the Harvard Business review in 2021 in the first person laying out how he really got into that initial phase of figuring out what was wrong with Chipotle and what he did to fix it. Now he talks about how he'd admire Chipotle from afar for many years. And in November 2020 17, when Chipotle announced it was looking for a new leader, it had come off the back of a whole series of issues. E. Coli outbreaks, do you remember this? Oh yeah, Salmonella outbreaks. Terrible headlines. And really had just fallen behind when it came to operations and digital strategy and marketing. Three years after Brian Nicholl joined a CEO, the company joined the Fortune 500. It had grown its digital sales, it had launched a rewards program that now has nearly 25 million members. And I don't know if you remember this, but I, I do recall in Covid, Chipotle was being held up as one of these restaurant chains that had figured out how to get online ordering under control and actually use it as a tool to completely change its position and get more market share during the pandemic. That's right.

B (6:45)

You can make a digital order and then pick it up. And what they were calling contactless pickup. And so they were on the vangu of that.

A (6:51)

Yeah, and the drive thru as well. So they really figured that out. Now just again, just to focus on what Brian Nichols done in the past, what he was very famous for doing at Chipotle was actually going into restaurant restaurants, spending time on the ground, really observing firsthand customers lining up, waiting. Are they being served on time? And he wrote in this article again for the Harvard Business Review on that sort of tour, his listening tour, to figure out what was going on. He said, quote, customers were lined up, however, the lines weren't moving very quickly. When we reached the front where the team members were assembling our food, it was Obvious that they could benefit from additional training and guidance. The restaurant managers seemed a little overwhelmed. I read this today in preparation for this conversation. John and I had deja vu. You could literally take that language, change the name of the company, and that was Starbucks. Before Brian Nicholl joined.

B (7:43)

Absolutely. And his whole plan was to go back to Starbucks. That was his whole thing where he said, what made Starbucks successful in the first place? It brought this coffee house hang, this vibe where people could relax and have coffee. And there were things like the baristas would write your name on the cup. And they had gotten rid of a lot of those things. In the meantime, they had gotten rid of the condiment bar. And he said, let's bring it back so you can have your own milk. And even that they were charging for non dairy creamers. And he said, no, we're going to, we're not going to charge you anymore. And his goal was to not wait more than four minutes for your order to be placed. And so those are all the part of the back to Starbucks. And also his focus was on North America because I didn't realize this, but China is Starbucks second biggest market. But he has sort of been indicating that Starbucks is looking for a partner to take over their China footprint. Some people might say looking for a buyout, but he's focused on the North.

A (8:41)

America piece of it. So that sets the stage. Right, so we've got Brian Nicholl, Rockstar CEO in his past life, so beloved at Chipotle that when he announced he was leaving to go to Starbucks, Chipotle's stock dropped 12% on the announcement. Starbucks, in contrast, popped up. Chipotle's loss was meant to be Starbucks gain. He's now been in the seat for a year. And so John and I met at Starbucks to try and figure out two things. Number one, from the consumer perspective, from our lived experience, how are we seeing an improvement in Starbucks? And then number two, how would the market grade Starbucks now? How's it doing? So let's start with how we think our local Starbucks is doing. And I have a prop for those of you listening and can't see it. I'm waving my Starbucks cup, my takeout cup in front of the camera because you're gonna see why in a moment. There's some activity. I haven't quite unpacked here yet.

B (9:33)

That's right, because we were looking at Brian's back to Starbucks and one of them was that your name would be written on the cup, going back to how they used to do it. Now you have a sticker on that.

A (9:43)

Cup with my name on it.

B (9:46)

And there appears to be maybe written in pen in great cursive. What does it say?

A (9:50)

Well, this is. Right. So Starbucks was known for writing nice messages on cups. It made people feel loved and a sense of belonging and it felt sort of handcrafted and artisanal. So my Starbucks cup today says enjoy in it. It looks like it's pen. I'm licking my finger and I'm putting it on top of the, on top of the marker. And it's very suspicious to me that the ink is not moving. So I don't know if it's printed on there, if they pre print it. Did they write it?

B (10:15)

And mine says stay amazing. And they don't even know me. Like how would they know that I started amazing or that I should stay that way? So a little suspicious, but otherwise our order went through quickly. It was two minutes.

A (10:26)

Yeah.

B (10:26)

And thank you for buying my coffee.

A (10:28)

You're welcome.

B (10:28)

And they had the condiment bar out there and so we saw a lot of the things. Unfortunately, I don't know if this is because it's Manhattan. There was. The trash was not taken out and I'm not going to narc on any specific location, but it was a little, a little run down. And also there wasn't a place to sit because the coffee house hang means lots of people sitting on their laptops, including us today.

A (10:50)

It is kind of amazing that Starbucks was at the forefront of literally the coffeehouse culture. So much so that there are radio stations named after it. That's how Zeitgeist do this. So let's talk about what the market thinks about this. Our experience was. I would rate our store experience. Personally, I thought it sort of a B. I don't know about you B, but in terms of the market's perspective, let's talk about the numbers. We did see that in the first three full quarters of Nichols tenure at Starbucks, same store sales actually fell. So, you know, there hasn't been a victory lap or a win yet when it comes to top line performance, when it comes to managing the employee force, again, a bit of a mixed bag. There has been growing cries for unionization amongst baristas. So it suggests that there's a little bit of unrest that still needs to play out. On the other hand, Nicole, the CEO did say recently that as a result of doubling paid parental leave, as a result of committing to promoting internally TR talent, that the amount of employee retention has gone up, that turnover is down, and that folks are really leaning into completing their shifts as a result of being sort of happier and feeling taken care of at work. Now, Brian Nicholl again was paid $100 million annually roughly in terms of the total package that he got to come to Starbucks. And unlike everyone else, he's called back into the office. He also gets to work from home. There's a jet at his disposal. A nearly 5,000 square foot office was built for him near his home in Newport Beach. The stock of Starbucks. Now this is the market speaking. The stock price we've just brought up the share price down over 10% in the past year. And so here is another way in which we look at how the market grades performance. I've just pulled up. What are the analysts saying? So when you take a look at the Wall street analysts, their recommendations are as follows. About half of them are rating the Starbucks stock a hold or a sell. So the jury's really out here. When you look at the analyst price targets, they average at about $100 shares trading today at about 83 bucks a share. A low end scenario here of 73. A high end scenario here of 115. Again, it's hanging in the balance. And I thought it was just worth honing in on. Two specific research reports that I took a look at over the course of this week. Number one, Goldman Sachs research said there were some early indicators of improvement in the quarter. It said service speeds of less than 4 minutes for 80% of in store orders, consistent with John and I my experience today. And also talked about increased traffic growth amongst non Starbucks reward members. So that's really important, particularly as the coffee landscape is getting more competitive in the United States right now, whether it's Dutch brothers or even Taco Bell trying to move into serving coffee. But Morgan Stanley is the one that jumped out of me quote saying narrative is driving the stock. And that is Wall Street's way of saying it's the promise of what's to come. It's what Nichols did in his past life at Chipotle and Taco Bell that is still holding the price where it is not what has been executed on so far. So we are going to absolutely keep watching this to see what happens in year two. John, how would you rate Nichols performance so far?

B (13:51)

I'm going to rate this on a curve because it's such a difficult turnaround for a public company. But based on our experience, B minus.

A (13:58)

B minus or I'm going to give him a B, I think he's an A player, a bit of a B performance so far, we need to see some wins. It has been a year, Year two, hoping to see a bit more progress. These things do take time. Well, let's take a quick break. And when we come back, fear and greed in the markets. How do we measure it? John, we have a question from the audience. That's right.

B (14:17)

Jenna in Austin wrote, Anne, I keep hearing references to a fear index called the vix. I don't understand what this means. Can you help me?

A (14:24)

Thank you, Jenna. Well, yes, we have been living through a lot of uncertainty this year. We've had tariffs, we've had questions about is there an AI bubble, Is there one? Isn't there? And then macro data, whether it's the labor data or it's the outlook for interest rates, there hasn't really been consensus very much until recently. Now, uncertainty often translates into volatile mood moves in the markets, which is why we keep hearing about the vix. That's spelled V I X and it's shorthand for the volatility index. Now, the Chicago Board Options Exchange launched the Vix in 1993 to measure expected stock market volatility over the next 30 days. And it's an important index because it provides a quantifiable, which is hard to do, real time measure of stock market risk and traders sentiment. Now, the VIX is calculated from options prices on the S P500. And a way to think of options is as financial essential contracts that investors can use to protect themselves against swings in the market or to speculate on future moves. We're going to talk a lot more about options in future episodes. Now, when traders start paying more for these contracts, it usually means they expect larger price swings are coming. And the VIX takes all of the options data out there and translates it into a single representative number. A Vix Reading below 20 typically signals calm conditions between 20 and 30 suggests investors are bracing for more uncertainty. And levels above 30 are typically associated with periods of real anxiety. So let's pull up the chart of the VIX for the last 12 months. And you can see here that for most of 2025, it's been sort of below 20. But in April, we got the chart up for those watching on YouTube. For those listening in April, you see this really quick spike up to above 50. And that's when Liberation Day tariffs were announced, coming in at much, much higher the market had expected. Now, anxiety and caution about how those tariffs would be handled is what translated into a big score on the volatility index. Traders were saying, we expect the stock market to bounce around a lot as companies figure out how to deal with this and that translates into their stocks bouncing around. That was the expectation. Now during the pandemic, The Vix hit 82 in March of 2020. And just to give a sense of magnitude, that was up from 14 just one month earlier. Now, I do just want to clarify that the VIX does not predict whether markets will go up or down. It's not what it does. Instead, it measures the level of volatility that traders expect. It's a barometer of sentiment and that's why it's been nicknamed the fear gauge. So what does this mean for us in the real everyday world? Well, the VIX does influence everything from the pricing of insurance products to how much it costs companies to borrow. So when volatility expectations rise, we all do take notice. It can ripple through to retirement accounts, to mutual funds, and even to mortgage rates. And for long term investors, it also serves as a reminder to check that our portfolios can weather sudden swings.

B (17:25)

That's great. And if you have a question for Ann, send an email or Voice memo.

A (17:28)

To brewmarketshoworningbrew.com It's 4pm on the east Coast. There it is, the closing bell. The markets are wrapping up for the day and we don't have a ticker tape, but we're going to throw it over to our human ticker. Our producer, John, thank you.

B (17:42)

The S&P 500 was up a third of a percent today. The NASDAQ finished flat and the Dow was down half a percent. And the VIX ended the day at 15.38. So under that 20 point line, some market headlines. Klarna, the buy now, pay later company saw its shares up 30% today on its stock exchange debut, opening at $52 after pricing the IPO at $40 a share, which valued Klarna at about $15 billion. And during its investor day, Tapestry Brands, whose leather handbags and accessories sell under labels like Coach and Kate Spade, announced it's in line to bear the costs of US import tariffs and plans to buy back $3 billion of its shares by fiscal year 2028. Stock price is up 56% this year, but down 1.5% on today's announcement. And finally the big story. Shares of Oracle were up as much as 40% today after the computer giant raised its outlook for cloud infrastructure sales to $18 billion this fiscal year. These results are showing that demand for AI infrastructure remains strong. Oracle is nearing a trillion dollar valuation. And Oracle's founder Larry Ellison's net worth jumped over $100 billion today, dethroning Elon Musk as the world's wealthiest person. And this is just being reported by the Wall Street Journal, OpenAI has signed a contract to purchase $300 billion in computing power from Oracle over the next five years.

A (19:03)

Extraordinary what happened to the Oracle stock. Absolutely absolute vertical line on that news. And it was interesting just as a thought here, Oracle actually missed on its earnings expectations. So all of the share price response, really a reaction to the outlook and to, you know, that big open AI contract sort of coming in. Just a final thought. Also in the realm of tech and just wanted to touch very briefly on Apple because for those of you who are following the big new product event that launched yesterday, I just wanted to touch on what the market's reaction to that has been. Apple actually closed down 3% today and it seems that that the market is saying it's underwhelmed by the latest generation of the iPhone, which is the iPhone 17. It's meant to be skinnier, it's meant to have a lot more functionality. Now, the reason I bring this up is we've talked on this show before around where Apple sits relative to the rest of the Mag 7 and one of the criticisms that's been levied at Apple has been that it's just not ahead of the game in the eyes of many when it comes to AI. People are waiting for a big AI AI unveil and it didn't come out yesterday. The other criticism that has been levied at Apple by some in the market is that there hasn't been a major product innovation since Steve Jobs was at the helm of the business. And so one of the things that's been happening when you read reports on Apple or you look at commentators and sort of see where they think this is going, there's been a lot of speculation that the pressure may now start to rise on Apple to engage in acquisitions because they need to do something transformational because they're moving too slowly internally. We don't know it's like speculative, but we are absolutely going to keep watching this one. Apple, a massive installed base. I don't see many people switching from iPhones to Androids, for example. So there's still a lot of Runway here. But in terms of really keeping up the rest of its peers in tech, Oracle and other players changing the game in terms of what the art of the possible does look like. That's it, folks, for today's Brew Markets Daily.

B (20:57)

Brew Markets Daily is hosted by Ann Berry and produced by John Croteau, Tarek Abdelatif and Emily Milian. Our technical directors, Uchena Waugh and Brittany Dotako handles audio. And president of Morning Brew Inc. Is Devin Emery.

A (21:09)

Wake up tomorrow with the Morning Brew newsletter and tune in to Neil and Toby on Morning Brew daily. We'll see you back here tomorrow, same time, same place.