Coca-Cola CEO: 'We try to be more than a soda company'

Coca-Cola CEO: ‘We try to be more than a soda company’

Coca-Cola is getting a $5 billion shot of caffeine.

The company has agreed to buy coffee chain Costa Coffee from UK drinks and hotels group Whitbread for £3.9 billion ($5.1 billion).

Costa has nearly 4,000 stores across 32 countries. It will give Coca-Cola (KO) “a strong coffee platform across parts of Europe, Asia Pacific, the Middle East and Africa, with the opportunity for additional expansion,” Coca-Cola said in a statement.

Besides its thousands of retail stores, Costa Coffee also has smaller on-the-go outlets called Costa Express, a roastery and for-home coffee products.

Whitbread, which acquired Costa in 1995, said it will use proceeds from the sale of the coffee business to expand its other big brand, Premier Inn hotels.

The deal still needs to get approval from shareholders and regulators, and is expected to be completed in the first half of 2019, the companies said.

Buying Costa puts Coke in direct competition with Starbucks (SBUX) and several other global coffee brands.

Earlier this year, Nestle (NSRGF) and Starbucks agreed a $7.2 billion global coffee alliance, which will see Nestle market, sell and distribute Starbucks products outside its stores worldwide. JAB, the Luxembourg-based holding company that owns brands like Krispy Kreme and Peet’s Coffee, bought UK sandwich and coffee chain Pret A Manger in May.

Another of JAB’s coffee brands, Keurig, merged its business with one of Coca-Cola’s domestic competitors — Dr Pepper Snapple — in January.

“Hot beverages is one of the few segments of the total beverage landscape where Coca-Cola does not have a global brand,” Coca-Cola CEO James Quincy said Friday. “Costa gives us access to this market with a strong coffee platform.”

Competition is heating up in other areas, too. Coca-Cola’s chief rival Pepsi (PEP) announced earlier this month that it would buy Israeli DIY seltzer company SodaStream for $3.2 billion.

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premarket stocks trading futures

1. Coca-Cola’s coffee bet: Coke is splashing out $5 billion to buy a global coffee store chain. It has agreed to purchase Costa Coffee from UK drinks and hotels group Whitbread.

Costa has nearly 4,000 stores across 32 countries. It will give Coca-Cola (KO) “a strong coffee platform across parts of Europe, Asia Pacific, the Middle East and Africa, with the opportunity for additional expansion,” Coca-Cola said in a statement.

Shares in Whitbread, which had been planning to spin off its coffee business to focus on hotels, soared 15% in early London trading. Coke shares were little changed in premarket trading.

2. Tencent’s tumble: Shares in the world’s top gaming company fell nearly 5% on Friday after China announced plans to limit the number of new online games and restrict the amount of time kids spend playing on electronic devices. The government hopes to reduce nearsightedness among young people.

A huge part of Tencent’s (TCEHY) business comes from China, where it was already facing regulatory hurdles. Its stock has plunged nearly 30% since January, wiping out more than $160 billion in market value.

Tencent has still not gained approval from Chinese authorities to make money from some of its most popular mobile games such as “PlayerUnknown’s Battlegrounds.” Regulators also blocked a game called “Monster Hunter: World” for which big sales were expected.

3. Trade winds: Investors are keeping a close eye on various fronts in the global trade war. President Donald Trump told Bloomberg News on Thursday that the United States and Canada were “close to a deal” on trade but he wasn’t certain it would happen Friday.

“Canada’s going to make a deal at some point. It may be by Friday or it may be within a period of time. I think we’re close to a deal,” Trump said.

Agreement with Canada should pave the way for a rewrite of NAFTA, after the United States and Mexico announced Monday they had reached a preliminary deal.

But investors are worried that a major escalation in the fight between the United States and China may be just around the corner. Citing multiple sources, Bloomberg reported Thursday that Trump was ready to impose tariffs on $200 billion of Chinese imports as soon as next week.

In Europe, UK officials resume Brexit talks with their EU counterparts on Friday. There are just seven months to go before the United Kingdom is due to leave the bloc, and businesses are still fretting about what comes next.

4. Global market overview: Talk of new tariffs on Chinese goods hurt stocks Thursday. The Dow Jones industrial average was down 0.5%, while the S&P 500 was down 0.4% and the Nasdaq was down 0.3%.

Trade war jitters hurt sentiment in Asian markets on Friday, with Hong Kong’s Hang Seng index closing nearly 1% lower. European markets were also retreating in early trading, while US stock futures were little changed.

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5. Argentina’s agony: Emerging market turmoil added to the downbeat mood Thursday. Argentina’s central bank jacked up its key interest rate by 15 points to 60% and said it would leave the rate at least that high until December as the country seeks a way to stop the collapse of the Argentine peso.

The Turkish lira, which has also plunged this year, steadied slightly on Friday after reports that the government had taken steps to encourage people to keep their savings in the currency.

6. Earnings and economics: India, the world’s fastest growing major economy, is due to release GDP figures for the quarter ended June 30 at around 8a ET. Economists expect growth to have ticked down to 7.6% from 7.7% the previous quarter.

China’s official purchasing managers’ index edged up slightly in August, according to a survey published Friday, suggesting the country’s huge manufacturing sector performed slightly better than expected despite the trade war.

Furniture retailer Big Lots (BIG) plans to release earnings before the open Friday.

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7. Coming this week:

Friday — Eurozone unemployment data released for July

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It would be a “very poor idea” for Apple Inc. to invest in Tesla Inc., Berkshire Hathaway Inc. Chief Executive and legendary investor Warren Buffett told Fox Business on Thursday.

Buffett also issued an indirect, mild rebuke to Tesla Chief Executive Elon Musk during an interview broadcast Thursday, saying in regards to Musk’s “funding secured” tweet that while anyone can misspeak, “if you misspeak, you correct it immediately.”

“I’d support whatever Tim Cook does, but I think it’d be a very poor idea to get in the auto business.”


Warren Buffett

And If you have a stock “trading like crazy,” minutes later “you say I misspoke when I said ‘funding secured,’ I meant to say I really think I can get funding, something of the sort,” Buffett said.

Musk last week backtracked on plans to take Tesla

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 private, a proposal aired Aug. 7 through the now infamous “funding secured” tweet, which has ignited scrutiny from the Securities and Exchange Commission.

Buffett’s Berkshire Hathaway

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BRK.B, -0.72%

 has added to its Apple holdings recently, and Buffett told CNBC also on Thursday he had bought “just a little” more of Apple

AAPL, +0.92%

 stock.

When asked whether he’d support Apple buying Tesla, Buffett offered his support but was skeptical.

“I’d support whatever Tim Cook does, but I think it’d be a very poor idea to get in the auto business,” Buffett said.

Opinion: Now would be the time for Apple to buy Tesla, and kick Musk out of the driver’s seat

Selling cars is “not an easy business,” with plenty of competition, no first-mover advantage, and you win one year and lose the next, he said. “It does not give you a permanent advantage,” Buffett said.

Berkshire is a major investor in Chinese electric vehicle company Byd Co. Ltd.

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If you listen closely, you’ll hear gold investors whispering that “it’s an ill wind that blows no good.” That’s because, while September may be the worst month of the calendar for stocks, it’s the best month for gold.

Since it began trading freely in the U.S. in the early 1970s, gold bullion

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 has produced an average gain of 2.1% in September. The comparable monthly average for all non-September months is 0.6%. (See chart.)


This difference is significant at the 90% confidence level that some statisticians use when determining if a pattern is real — though not at the more stringent 95% confidence level.

To the extent the future will be like the past, therefore, September may finally bring some good news to long-beleaguered gold bugs. You may recall that I wrote about gold’s monthly seasonal patterns last May, pointing out that gold’s seasonal tendencies would be negative through the end of August. Since that column was written, gold has fallen by about 10%.

To be sure, as I wrote recently when discussing the stock market’s negative September seasonalities, statistics alone are not a sufficient reason to bet on a pattern’s persisting. Another prerequisite is that there exist a plausible theory for why the statistical pattern should exist in the first place.

Unlike the situation for stocks’ September seaonalities, there does appear to be a plausible explanation for gold’s September seasonality. Three, in fact.

I say this on the basis of a study by Dirk Baur, a professor of accounting and finance at the University of Western Australia business school. He discussed three possible explanations for what he termed gold’s autumn effect: “Hedging demand by investors in anticipation of the ‘Halloween effect’ in the stock market; wedding season gold jewelry demand in India, and negative investor sentiment due to shorter daylight time.”

A couple of crucial qualifications are in order. First, Baur also found that gold’s returns are more volatile in the autumn than in other seasons of the year. So on a risk-adjusted basis it may simply be that gold’s higher autumn returns are compensation for the additional volatility.

Second, these results are based on averages, and not every September is positive for gold. Last year, gold bullion lost 2.2%. So even if you believe the future will be like the past, there’s no guarantee that gold will do well this coming month.

Still, even with these qualifications, many gold investors are no doubt are relieved that the seasonal winds are finally blowing in a more positive direction.

For more information, including descriptions of the Hulbert Sentiment Indices, go to The Hulbert Financial Digest or email mark@hulbertratings.com .  Create an email alert for Mark Hulbert’s MarketWatch columns here (requires sign-in).

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Buzz keeps building about the potential for a “no-deal Brexit,” meaning a disorderly departure from the European Union by the United Kingdom, without an agreement on future trade relations.

British stocks haven’t suffered a major hit due to the hubbub, even as analysts warn of the potential for severe economic disruption. However, fears about the breakup may start to grow as investors return from a late-August U.K. holiday and Labor Day in the U.S., according to one smart strategist.

“This is going to get quite nasty quite quickly after everybody comes back from the holidays,” says Helen Thomas, CEO and founder of Blonde Money, a macroeconomic consultant in London. “I have been calling for September as the first big wobble, and then I think it really picks up into the end of the year.”

Thomas views a no-deal Brexit as the most likely outcome, and she sees U.K. equity benchmarks slumping in coming months as uncertainty rises. Brexit, with an agreement or not, is slated to occur March 29, or nearly three years after Brits voted to leave Europe’s big trade bloc.

The mid-cap FTSE 250

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could fall about 13% from recent levels to 18,000, Thomas says. The FTSE 100

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— not the best national barometer because its components generate most of their revenue abroad — could drop roughly 10% to 6,800, she adds. Banks and other financial firms could be whacked hard, as could consumer stocks, according to Thomas. Defense companies and some other traditionally resilient sectors might see less selling.

“Part of the reason that ‘no deal’ is quite possible is that there are a number of different stages” to the process of reaching agreement, Thomas says. A failure could come because U.K. and EU negotiators hit an impasse, or because the U.K. or EU parliaments refuse to back a deal, she says. It’s also troubling that the governing Conservative Party, headed by Prime Minister Theresa May, “can’t agree with itself” on its Brexit position, while the opposition Labour Party’s stance isn’t clear either, Thomas adds. And the autumn could provide stumbling blocks due to EU summits and annual conferences for the U.K.’s political parties.

Read more: Gear up for a no-deal Brexit: 5 areas investors should watch

And see: A top London startup’s CEO flags the biggest Brexit threat to his industry

Investors think the British “might be a bit awkward sometimes, but we’re sort of sensible, economic, rationale people,” Thomas says. “We have benefited from that kind of ‘rationality dividend,’ and it’s only just beginning to start to shift.”

Some analysts don’t want to count out this rationality. ING strategists, for example, recently said they were “slightly uncomfortable” betting on more drops for the Brexit-battered pound

GBPUSD, +0.0538%

. “While the perceived odds of a no-deal are high, this may be partly due to political games and posturing,” they wrote.

“The calculation seems to be: ‘It’s a lot of noise. They’ll come to an agreement,’” says Thomas, who has worked in U.K. politics as well as for State Street and other big financial institutions. “My calculation is: There’s a lot of noise. That means we cannot come to an agreement, and therefore the market will have a significant shift in pricing.”

The Blonde Money strategist is hardly alone in expecting a no-deal Brexit. In early August, the U.K.’s international trade secretary, Liam Fox, gave a 60% chance that the country will crash out of the EU, and a recent KPMG poll of Brits found 54% viewed that scenario as likely.

To be sure, this might end up being a good time to start wading into the British pound, given the EU’s tendency to reach eleventh-hour deals, as some suggested in a Barron’s column a month ago. The EU’s top Brexit negotiator, Michel Barnier, offered an olive branch Wednesday, suggesting an agreement was possible. But this also could be the calm before a market storm.

This report also appears at barrons.com.

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Shares of Lululemon Athletica jumped more than 7 percent in after-hours trading Thursday after the athletic apparel retailer reported second-quarter earnings and sales that topped analysts’ expectations, boosted by e-commerce sales growth of nearly 50 percent.

The company also raised its profit and sales outlook for the full year.

This earnings report is the first for new CEO Calvin McDonald, who joined Lululemon from LVMH’s Sephora makeup business. McDonald replaced Laurent Potdevin, who resigned earlier this year after falling “short of [Lululemon’s] standards of conduct,” the company said at the time.

On a call with analysts and investors Thursday afternoon, McDonald said Lululemon will continue to expand its men’s business and outerwear category, which includes more big-ticket items. The push into men’s is expected to be a big growth driver for Lululemon moving forward, according to industry analysts.

For female shoppers, Lululemon spearheaded a movement toward “athleisure” apparel in the U.S. and has maintained a loyal base of customers for its leggings and yoga gear.

Lululemon continues to see strong traffic at its stores in North America, a market where brands like Nike and Under Armour have been struggling to keep growing of late, hurt by the bankruptcies of Sports Authority and other wholesalers in the U.S. Lululemon also has an aggressive expansion strategy to take its business global, with a heavy emphasis on China.

Net income for the quarter ended July 29 was $95.8 million, or 71 cents per share, compared with $48.7 million, or 36 cents a share, a year ago. Excluding one-time items, Lululemon earned 71 cents a share, while analysts were calling for earnings of 49 cents per share, according to a poll by Thomson Reuters.

Revenue rose to $723.5 million from $581 million a year ago, again ahead of the $668 million expected by analysts.

Sales at Lululemon stores open for at least 12 months were up a staggering 20 percent during the quarter. Analysts were forecasting same-store sales growth of 9.6 percent.

The company said some of its strongest categories were women’s and men’s pants, thanks to new, versatile fabrics that encourage customers to wear those items at work, at the gym and out at dinner. It said its accessories business — for merchandise like water bottles and gym bags — was the strongest in five years.

Looking to the full year, Lululemon now expects to earn between $3.45 and $3.53 a share, compared with a prior range of between $3.10 and $3.18 per share. It said revenue should fall between $3.19 billion and $3.24 billion, up from a prior targeted range of between $3.04 billion and $3.08 billion.

For the third and current quarter, Lululemon is calling for revenue of as much as $730 million, earning between 65 and 67 cents per share.

Lululemon is “clearly taking share from traditional athletic players such as [Under Armour] by having more fashionable quality lifestyle apparel,” B.Riley FBR analyst Susan Anderson told CNBC.

As of Thursday’s market close, Lululemon shares are up about 74 percent so far this year, bringing the retailer’s market cap to about $18.6 billion.

— CNBC’s
Courtney Reagan
contributed to this reporting.

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President Donald Trump said Thursday he would consider linking capital gains taxes to inflation, repeating an idea previously floated by his administration that some see as tantamount to a tax cut for the rich.

The president made the remarks in an interview Thursday with Bloomberg News.

“I’m thinking about it,” Trump said Thursday in the interview.

The idea has been pushed by the White House’s top economic advisor, Larry Kudlow; Treasury Secretary Steven Mnuchin raised the idea earlier this summer. But it has also been considered in prior administrations, including that of George H. W. Bush, which ultimately dropped it.

It would be an estimated $100 billion tax cut that would benefit largely those who own assets such as stocks and real estate. Mnuchin told The New York Times in July that the Treasury was looking at whether it could use regulatory powers to allow for the change. Critics have said Congress would need to approve it.

Indexing to inflation means taxpayers could adjust the initial value of an asset for inflation when selling it, potentially saving a lot of money on long-held assets by reducing the amount of capital gains tax they would need to pay.

The House is getting ready to roll out a new tax bill outlining more tax cuts next month. Bloomberg reported that Kudlow pushed for capital gains indexing to be included in that legislation.

Read the Bloomberg News story here.

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Britain’s Whitbread Plc said on Friday it had agreed to sell coffee chain Costa to Coca Cola for an enterprise value of £3.9 billion ($5.1 billion).

The deal was unanimously agreed by the Whitbread board to be in the best interests of shareholders, the company said in a statement. It acquired the chain in 1995, for £19 million when it had only 39 shops.

James Quincey, the Coca-Cola President and CEO, said that the deal gives his company new capabilities and expertise in coffee.

“Our system can create opportunities to grow the Costa brand worldwide. Hot beverages is one of the few remaining segments of the total beverage landscape where Coca-Cola does not have a global brand,” he said in a statement.

Alison Brittain, the chief of hospitality company Whitbread, called the sale a “unique strategic opportunity to combine the Costa brand with Coca-Cola’s global scale, product and distribution capabilities.” She also reportedly told BBC Radio that she believed the company got a high price for the coffee chain, adding that it was above anything that the firm could have achieved with a demerger.

This story is developing. Please check back for updates.

Correction: A previous headline on this story incorrectly stated the value of Coca-Cola’s deal to buy Costa.

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Google brings new features to Android, Gmail at developer conference

Google brings new features to Android, Gmail at developer conference

Google Assistant has a new trick. El Asistente de Google tiene un nuevo truco.

Starting today, the voice assistant can speak two languages simultaneously. That means bilingual families can request music, check the weather, control a smart lightbulb and do myriad other things in two tongues without having to change settings each time.

That was a difficult trick to accomplish, and Google Assistant is the first of the major voice assistants to pull it off. That could help Google woo users away from Amazon’s Alexa and Apple’s Siri.

A bilingual digital assistant may seem like no big deal, but more than half the world speaks at least two languages, according to estimates. And studies suggest speaking multiple languages has a positive impact on children’s brain development and social skills.

Amazon has dominated the smart speaker market since creating the category in 2014. The Echo remains the most popular smart speaker in the United States, and two-thirds of the smart-speaker owners talk to Alexa at least once a month, according to eMarketer. Google Home sits firmly in second place with 30% of smart speaker users chatting up a Home each month.

However, flagship smart speakers are but one part of the equation. The voice-based interfaces also run on third-party products like other speakers, in-car systems, and smartphones. Android, the world’s most popular mobile operating system, offers Google Assistant, of course, and you can even access it on an iPhone through the Google iOS app.

Amazon was the first to offer a smart speaker, but Google got the jump on voice recognition technology. It started transcribing voice mails and doing voice searches in 2009, while also making strides in neural networks. Google’s also is investing in voice technology for other products, like its human-imitating Google Duplex phone automation tool.

Bilingual processing marks an important advancement in speech recognition technology, one that Google says it spent years developing, according to a blog post detailing the technical details behind the feature. The first step is being able to detect what language someone is speaking. Google started developing its language identification tool, LangID, in 2013. The system can discern the difference between 2000 pairs of languages, according to Google.

To ensure Assistant offers an immediate reply in the same language as a user’s query, Google Assistant will run two speech recognition systems at once. Its goal is to determine which language you’re speaking as quickly as possible so it can use less processing power. It weighs factors like your musical preferences, how frequently a language is used, and the type of device being used when deciding what language to choose.

When it determines what language is being spoken, the Assistant switches to the regular monolingual process. By the time you’ve stopped saying, “OK Google, turn the Nest to 76 degrees,” it should already know what language you were speaking, what you said, and have begun sending instructions to the thermostat.

The new feature rolls out beginning Thursday. To get started, you must select a second language in settings. It supports English, German, French, Spanish, Italian and Japanese to start, which Google says will cover most of its users who speak multiple languages. It plans on adding more languages are coming later this year.

Google Assistant still won’t be able to parse single commands that combine two languages, though. Each request needs to be entirely in one language.

Google says support for multiple languages has been a highly requested feature, and that it’s not stopping with just two. The company already is working on understanding three or more languages simultaneously.

Amazon declined to say whether it is developing a similar feature.

Bonne chance, Alexa.

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Apple CEO: I use my phone too much

Apple CEO: I use my phone too much

How will Apple follow up its biggest iPhone announcement since the original? Probably with the same device in more colors, but we’ll find out for sure on September 12, according to an invite reporters received Thursday morning.

Most Apple watchers expect the company to unveil a number of new iPhone models and a release date for its next iOS operating system during the event, held at the company’s slick Apple Park headquarters. It could expand the iPhone X design and naming across its entire phone lineup, with more sizes, colors and price points, according to Bloomberg. The Apple Watch and Air Pods could also get a refresh.

The company follows a rhythm with its smartphone announcements, unveiling a major upgrade every other year, and minor updates in off years. Last year, though, it skipped the minor update to mark the device’s 10-year anniversary. Instead of an iPhone 7s, it jumped straight to an iPhone 8 and an iPhone X (for the number ten, not the letter). It remains unclear how the company will handle device naming going forward.

The invitation doesn’t give many hints. Its art, like time, is a flat circle. It says “Gather round” underneath a rose gold colored halo that looks like the rings around Saturn. Or the activity rings on an Apple Watch.

apple gather round invitation
Apple’s fall iPhone event will take place September 12 in Cupertino.

The timing of Apple’s fall announcement has become as predictable as the event itself. Apple has in each of the past six years hosted a press conference in early September to announce a new iPhone.

Tim Cook and other executive pace a stage in crisp business casual wear, while talking excitedly about how the new devices are the best ever. Jony Ive’s voice narrates a video showing some product being made, but not the factory workers making it.

This will be the second press event hosted at Steve Jobs theater, a 1,000-seat underground circular venue topped with a 20-foot high glass and a metallic carbon-fiber roof.

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