May 27, 2025 • 39 mins
Watch Carol and Tim LIVE every day on YouTube: http://bit.ly/3vTiACF.
Wall Street kicked off the week with a rally in stocks as consumer confidence rebounded sharply while the US and the European Union sped up trade talks. A global surge in bonds also helped sentiment.
As equities halted a four-day slide, the S&P 500 climbed 2%. Nvidia Corp. paced gains in megacaps ahead of its results. Treasuries got a boost, pushing the 30-year yield below 5% on signs Japan will be ready to calm jittery debt markets. The moves in the US extended after a sale of two-year notes was met with solid bidding metrics. The dollar rose against all developed-market currencies.
President Donald Trump noted he was encouraged the EU is speeding up negotiations on trade, days after he said the bloc would face 50% tariffs if they fail to reach a deal with the US. Trump extended a deadline for those taxes to take effect to July 9 after a call with European Commission President Ursula von der Leyen.
Today's show features:
- Meghan Robson, Head of US Credit Strategy for BNP Paribas
- Bloomberg News Managing Editor for Global Consumer Tech Mark Gurman
- Bloomberg News Managing Editor for Deals Liana Baker
- Nate Rempe, President and Chief Executive Officer of Omaha Steaks
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Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio News. This is Bloomberg Business
Weekdaily reporting from the magazine that helps global leaders stay
ahead with insight on the people, companies, and trends shaping
today's complex economy. Plus global business, finance and tech news
(00:23):
as it happens. The Bloomberg Business Week Daily Podcast with
Carol Masser and Tim Steneveek on Bloomberg Radio.
Speaker 2 (00:32):
Let's go to the market moves that we're seeing. We
mentioned what we saw in the equity market, more than
two percent on the S and P five hundred and
of the Nasdaq composite. But what about how investors are
feeling about credit and the US credit markets. For a
strategy call on that, we bring in Megan Robson, head
of US Credit Strategy for BNP Powry Bush. She joins
us here in the studio. Megan, we're seeing yields lower
(00:54):
across the curve right now. You and your team, though,
are pretty cautious when it comes to credit markets. What
specifically are you concerned about?
Speaker 3 (01:02):
First of all, thank you, thank you for having me.
We do have a bit of a more cautious view.
So we've seen a pretty vicious rally since the pause
and the tariffs with China, and two things have let
that continue. One is positioning, So investors heading into the
liberation day and right following, we're very underweight credit, so
(01:25):
once we got this positive catalyst with China, they felt
a need to catch up and to add to risk,
and that's really pushed spreads tighter. The second element is
the data. So far credit has not had to see
any bad data, so we're just sort of in this
great area where data doesn't reflect the tariff reality yet.
But eventually, we do think heading into the summer, some
(01:47):
of the data will soften and credit spreads will start
to drift wider.
Speaker 4 (01:51):
What's top of mind for you and your team. I
think it was interesting. We were all trying to make sense.
I think coming in this morning, there was it seemed
like the easing on EU US tariff are at least
trade tensions so news out of Japan. Trying to understand
and I would love for you to roll that in
because I feel like, you know, the world is watching
global bond markets, especially the longer end of the curve,
and just you know, kind of nervous about some of
(02:14):
the demographic and other major trends.
Speaker 3 (02:17):
Talk to me about Japan. What do we need to
know about that? So it's you know, you're spot on.
I think this is very top of mind for investors.
If we see a further sell off in rates, a
further sell off in the long end of the curve,
not just in the US, but but with Japan, if
it's if it's a global phenomenon, do investors, foreign investors
start to sell US credit. It's a it's definitely a concern.
(02:38):
So far, we don't have evidence of that. So we
just got the treasury data for March. Investors actually added
to the corporate market. We'll see what happens in April.
But for now, this yield, tire treasure yield, tire spreads tighter,
has been the dominant dynamic so far.
Speaker 5 (02:55):
What's the thing that you and your team worry about
longer term? If this sticks, we.
Speaker 3 (02:58):
Worry about We're right at the precipice of treasury yields
around this four to fifty level. If we go higher
from here, and it's driven by inflation expectations, So if
tariffs start to really feed through the expectations that inflation
could go higher, the Fed's hands are tied in. The
FED does not cut rates this year. That's what our
base case is. Then I think higher rates could start
(03:20):
to be a challenge for credit and we could see
that correlation flip.
Speaker 2 (03:24):
You know, I was thinking about this because we're starting
to get some very strange soft and hard data. On
the one hand, people like Torsten Slock are emailing US
charts that say, hey, we're not seeing a rebound when
it comes to trade between the US and China.
Speaker 6 (03:37):
Despite the pause.
Speaker 2 (03:38):
On the other hand, we get consumer confidence numbers like
we got a little earlier today that show a sharp
rebound in the way the consumers are thinking about the
economy thanks to that pause.
Speaker 6 (03:47):
Yes from the president.
Speaker 2 (03:49):
How is this all playing into the macro economy because
this is kind of uncharted territory for a lot of US.
Speaker 3 (03:56):
It's definitely uncharted territory. Our thesis is that some of
the SAW data will start to feed through into corporate earnings.
And we've done a lot of a lot of regression
work looking back in time. When we've seen drops of sentiment,
business sentiment, consumer sentiment three to six months out, you
typically do see capex rollover, ibadah start to roll over
(04:18):
into negative growth territory. So I think one interesting data
point we got from first quarter capex growth was actually
negative year over year for corporates, So even with just
the tail end of tariff impact, companies started to spend
less just given the uncertainty in the environment.
Speaker 5 (04:35):
I mean that's a really good point, Like is it.
Speaker 4 (04:38):
I feel like we have an increasing you know, narrative
voice that says, watch the second half, like these tariff concerns,
because we are going to go into no matter what,
a higher tariff environment. Maybe not as onerous as we've
heard initially from the Trump administration, but it's going to
I mean.
Speaker 6 (04:53):
We're there already.
Speaker 2 (04:54):
We're like yeah, and so I'm not seeing it necessarily
play out.
Speaker 4 (04:58):
And that's what I'm saying, Like the data second half
of the year, we'll start to see.
Speaker 3 (05:01):
That, I think exactly to your point. I mean, we'll
have tariffs that are roughly five times what they were
pre Trump and that has to have an impact on
prices on demand, and you know, one place we can
watch continue to watch as the lower end consumer. We
think that tariffs, in combination with some of the fiscal
policy that we're seeing cuts to things like food stamps,
(05:21):
you could really see that segment start to struggle even more.
But for now, investors are happy to focus on bulish elements.
They're happy to focus on deregulation, happy to focus on
potential potential potential tax cuts, and only that we've seen
tariff relief, it.
Speaker 2 (05:40):
Does still seem like, I mean, on the earnings front,
and I know we're talking credit here, but I can't
help but think we're at the tailhead of earning season.
Carol reminds us that we have in Vidia tomorrow, which
is like the moment we've all been waiting for for.
You know, you can go and pick through different reports
and get the impact on tariffs, and some of them
you'll see, certainly retail getting hammered for a lot of reasons.
(06:00):
And we can talk a little bit about Target or Walmart,
different animals there.
Speaker 6 (06:04):
But when it comes to.
Speaker 2 (06:06):
Big picture, like the tech players basically said, everything is
kind of fine for us. It's like a really a
tale of two different types of companies that are weathering this.
Speaker 3 (06:15):
It's very much sector dependent, and I think the market
has rewarded companies that have talked about their strategies to
sort of deglobalize and you know, diversify their supply chain.
So I think that that you'll see companies during first
quarter that just stocked up their inventories and said, you know,
this is our strategy for tariffs. We're penalized in the
(06:37):
credit market. Whereas those that said, you know, we've been
thinking about this for a few years. We have you know,
we have done some on shoring. Those types of companies
have done much better.
Speaker 4 (06:47):
You know, I'm going to do a little Tom Keane,
YOU'RBA and Economics from Brown University, NBA from Columbia Cfachardholder.
But I just think about you know, you have, you know,
have experienced the investment banking world looking at kind of
all the markets and how they interplay with one another,
and I just this market in time. Is it an
interesting one, is it a pivotal one?
Speaker 5 (07:09):
How or is it TBD? We're not quite sure yet.
Speaker 3 (07:12):
I think it's one of these moments where we're waiting
for the data to unfold. Even you know, you hear
from companies, we didn't get much in the way of guidance.
We heard mostly just tariff.
Speaker 5 (07:22):
Map options in terms of the way forward.
Speaker 3 (07:26):
In different different scenarios. So I think it definitely, you know,
to your point, is uncharted. Territory in terms of what
we're looking at in the months ahead.
Speaker 5 (07:37):
So where do you go in the treasure Like, what's
your favorite kind of Yeah, So.
Speaker 3 (07:40):
In credit, we do like mid quality in the high
old space, so its single bees. We think that's a
spot that can still outperform in investment grade. In line
with our discussion about the rates curve, we like staying
more in the belly of the curve, so five to
ten year kind of avoiding that long end of the
curve where you could see spreads, spreads move wider if
(08:00):
we do see a further sell off in the treasury market.
Speaker 5 (08:03):
All right, cool stuff, perfect, guest, Thank you so much.
Speaker 7 (08:05):
Thank you for joining me.
Speaker 2 (08:06):
Megan robson Ahead of you US Credit Strategy for a
BNP Powrybacker.
Speaker 1 (08:10):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to five eas during
Listen on Applecarplay and Android Auto with the Bloomberg Business app,
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Speaker 2 (08:24):
The Apple Shares today snapping an eight day losing streak.
Hire right now to the tune of two point six percent.
We got tariffs, we got Tim Cook, we got Johnny
Ive needless to say, there's a lot of pressure on
the company, a lot that Tim Cook has to focus on.
We were dying to talk to him on Friday, but
he was out of the office. Mark German is Bloomberg
(08:45):
News Managing editor for Global Consumer Tech. He joins us
from the Los Angeles bureau of Bloomberg News.
Speaker 6 (08:51):
Mark, I want to you.
Speaker 2 (08:51):
Know we thought of you on Friday because of the
President's US post to social media that said that kind
of predict to believe what we've been talking about, the
fact that US bound iPhones being made in India is
not being made in the United States. The President not
happy about that. I just want to get the view
from you one more time about how you think that
(09:14):
Apple is going to navigate a situation such as the
short of building the iPhone here in the US.
Speaker 8 (09:21):
Tim, it feels like groundhog Day almost every day here.
It does where Trump comes out and says something related
to him being unhappy that the iPhone is not produced
in the US, and I come on here and I
say the exact same thing I said a week ago,
which is the iPhone cannot be produced in the US.
I don't anticipate that happening in the next decade. I
(09:43):
don't anticipate that happening during the period in which Donald
Trump is in office. It's just not feasible. Such a
switch would take years. Such a switch would increase costs.
In fact, that twenty five percent tariff that Apple might
be getting because they don't make the iPhone in the US,
that's a steal compared to what they would have to
pay financially and in so many other areas of their
(10:06):
business to relocate production of the iPhone from Asia to
the US. So Apple's getting a good deal here. I
would say, not that they should have to pay that tariff.
That's not up to meet to decide, but looking at
the financials, it's not a bad price to pay. The
other thing I'll say on this topic is we've seen
a bevy of analysts and others chime in over the
last few days repeating the same ideas about what an
(10:28):
iPhone would cost if it were built in the US.
Let me tell you this, they don't know how much
it would cost. Even Tim Cook doesn't know for sure
how much it would cost, because until you're making those
devices at scale, until you figured out exactly how you're
going to build them in the US. You don't know
what it's going to cost to build them in the US,
So someone might throw out three thousand dollars, five thousand dollars.
Speaker 6 (10:50):
Who knows.
Speaker 8 (10:52):
There's no way to know.
Speaker 6 (10:52):
We don't know.
Speaker 2 (10:53):
I do want to point out that even though the
post on social media Friday morning specifically called that Apple,
the President was asked in the Oval Office later in
the day whether or not would apply to other companies
that make these electronics outside of the US mark and
he did essentially say, yeah, it would apply to everybody.
So then Samsung would get hit by this as well.
So it's not just Apple. Certainly Apple's the focus, but
(11:17):
it's every handset maker that would face this challenge too.
Speaker 8 (11:21):
This is actually a really important point, and it's I
think much more important than anyone has realized. When Apple
was able to bypass tariffs during the first administration, the
way they did that is Tim Cook argued, I'm told
to Donald Trump that all that would be happening here
is an America based company, right Apples based in Coupertino
would be getting destroyed right on tariffs, whereas Samsung and
(11:42):
others who are Apple competitors based in Korea and China
and elsewhere would just run free. Right, And so what
you have to understand is Donald Trump is their responding.
That's Donald Trump's response to Tim Cook saying, Oh, don't worry, Tim,
I'm going to do this to everyone. So everyone is
going to feel the same pain that you're going to feel.
Speaker 4 (12:02):
How angry is Tim Cook right now? Right he was
at the administrative idea.
Speaker 8 (12:06):
Well, my sense of how angry Tim Cook is right
now is the same sense that people have who are
saying how much an iPhone built in the US is
going to cost. I have no idea how angry it is.
I'm sure he's not pleased. I'm sure he's dealing with
a lot, but I don't know exactly how angry he is.
I would guess that he realizes that the twenty five
(12:26):
percent tariff in the grand scheme of things could actually
be a lot worse.
Speaker 4 (12:30):
Well, what I'm curious too, though, Mark, is does he
have still the ability to like pick up the phone
call Donald Trump the president? Sure, and really talked to
him and having open conversation back and forth. Yeah, I
guess I'm trying to get into what the relationship is.
Speaker 8 (12:47):
Yeah, he met with him last week. And then this
happened two days later. So you know, my guess is
that originally Trump wanted a much higher tariff. Originally he
was going to put something closer to what those original
China tariffs may have been, and they sort of work
together to whittle it down something like that twenty five percent.
Because in my view, that twenty five percent is pretty good.
Like I said, that's cheaper than what it would cost
(13:10):
Apple to actually relocate production, right, And so really it's
a loss, but it's sort of a wipe your hands moment.
It's kind of a win for Apple at the same
time too. And you know, the day is still young.
We have till the end of June for this to
actually come into practice. You can bet there's going to
be a lot of lobbying, a lot of negotiation, a
lot of things between now and then that get Apple
(13:33):
a lower percentage. And as we've talked about before, I
think there are levers Apple is going to pull to
make it seem like they are doing more in the US.
Trump needs something from Tim Cook. He can get something
from Tim Cook. He can take something from Cook, take
it to his base, take it to him ever, and
show that I got Tim Cook to fold. I got
Tim Cook to do something in the US. No one
(13:54):
else has been able to do that.
Speaker 6 (13:55):
Right.
Speaker 8 (13:55):
The question is, what is that something. We've talked about
different things here. We've talked about pasckaging, We've talked about
final assembly of more components, we talked about more R
and D. So far, all they've announced is AI servers, which,
by the way, it's sort of they're not really building
them here. They're sort of doing final assembly, some exterior
packaging and whatnot in terms of the metal frames that
(14:17):
go around the service. We're not doing a ton But Apple,
will I promise you this they will come up with
something this year right to make it seem like they've
moved something significant in order to get that tear produced
or removed.
Speaker 6 (14:29):
I mean, you'll see.
Speaker 4 (14:30):
Is there anything smart in terms of a conversation mark
that we can think that you know, Trump understands this
is a massive company, you know, often trading places with
Nvidia being the world's largest market cap company.
Speaker 5 (14:41):
But there's a lot of headlines.
Speaker 4 (14:43):
You know, We've got what the journal is saying, bad
year for Cook keeps getting worse.
Speaker 5 (14:47):
You've got the time saying text Trump whisper Tim.
Speaker 4 (14:49):
Cook as quiet as his influence fades, and you are
on it and the team are on Apple in terms
of the things that are coming at the company from
multiple you.
Speaker 5 (14:58):
Know avenues, I mean, I don't know.
Speaker 4 (15:01):
Ultimately, do we have to be worried about kind of
the future of the outlook for this massive company and
really important company.
Speaker 9 (15:08):
Yeah.
Speaker 8 (15:08):
As I wrote empower on four weeks ago, well before
that Wall Street Journal story, they're taking it from multiple
angles right now. Tariffs, competition issues in many parts of
the world. You have the innovation question. You have this
partnership between open ai and Johnny Ive. You have app
developers who are unhappy, and obviously the app developer business
(15:29):
is a big business for Apple. App business alone is
twenty billion, right. You have the Google Search deal falling apart.
So right now is a critical juncture for Apple. It's
one of the most trying periods in the company's history.
The silver lining is that the fundamental story is still good.
People are still subscribing to services, people are still buying iPhones.
Speaker 10 (15:49):
Right.
Speaker 8 (15:50):
But you think about the future, You think about what
is really the future product of this company, and that
answer is a lot less clear. And I think one
smash hit changes the whole narrative.
Speaker 2 (16:00):
Hey, Mark, we only have a minute and a half left,
but I want to hit the lead of your power
On column from Sunday, and it's all about Johnny Ive
and Sam Altman and the big news last week. And
I've been wanting to talk to you to ask you
the simple question, what does this reflect about Apple?
Speaker 8 (16:19):
Well, Apple no longer was a place conducive to Johnny
Ive and his desires for how a company should be
run or how central design should be to the company's processes. Obviously,
Apple had their own concerns with Johnny Ive as much
as Johnny I've had concerns with Apple, right, But it
was an unfortunate parting of the ways on both sides
(16:40):
so to speak. That led to a point where he
had to find another company, another soulmate so to speak,
that he wanted to partner up with to marry his
design with the underlying technology. And he ended up finding
a company in Open Ai that is the one company
that has the technology that could really jet it send
what Apple is offering here. Right, It's not like he's
(17:02):
teamed up with Samsung or Google or Meta. He's teamed
up with the company that has the most exciting technology
in the world, A company that Apple executives have already
acknowledged has the goods to potentially upend the company's flagship
phone business.
Speaker 6 (17:16):
Right.
Speaker 8 (17:17):
That's why it's pretty scary in particular. Now nobody says this, Johnny,
I've OpenAI partnership is going to be a massive success.
In my opinion, I think it will be successful, and
they're going to come up with cool things. I don't
think immediately though, it's going to destroy the iPhone. But
this is a massive wake up call and should send
California sized earthquakes down Apple spines for them to figure
(17:38):
out what that next big product is to really compete
in this new age of AI hardware.
Speaker 4 (17:43):
Happy Tuesday, Apple, Mark Garvin, thank you so much. He's
Bloomberg Newsmaging editor.
Speaker 5 (17:48):
For Global Consumer Tech out there on the West Coast.
Speaker 1 (17:52):
This is the Bloomberg Business Week Daily Podcast. Listen live
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Just say Alexa Play Bloomberg eleven thirty.
Speaker 4 (18:10):
Salesforce agreeing to buy Informatica for about eight billion dollars.
Sealing the deal at a software for a minut had
seen its year's plunged by as much as fifty nine
percent since the company's first talks failed last year, and
Tim safe to say our team was on it and
broke it.
Speaker 5 (18:24):
We were talked about this what lead Friday.
Speaker 2 (18:26):
Yeah, you actually had to change your gainers on Friday
because you added I believe it was Informatica to the
Salesforce also moved on the news. Leonna Baker is Bloomberg
News Managing editor of the Deal team. She joins us
here in the Bloomberg Business Week studio. As we know,
thanks to your reporting over the last year and your
team's reporting, this is a deal that Salesforce has been
trying to get done for quite a while, kind of
(18:48):
taking advantage of a decline in the company stock price
to do it now.
Speaker 9 (18:52):
No, patience has definitely paid off a little bit for
Mark Benioff, maybe by two billion, because that's what he
saved by waiting a little bit.
Speaker 3 (19:00):
For sure.
Speaker 7 (19:01):
Carol mentioned that it's a done deal.
Speaker 9 (19:03):
But actually it still needs regulatory approval, so nothing is
certain in that respect. We'll keep following it, analysts are
saying there's some overlap in what the company, what Informatica
does with what salesforce and own, so that's something to
keep an eye on over the next few years.
Speaker 2 (19:17):
Is there real risk there when it comes to this
administration's regulatory I mean, look, look what's happened with Media
M and A for example, I think it was last
week or even the week before that that Verizon deal
was able to close. After Verizon scrub the DEI stuff
from its company, they were able to get frontier. Is
that an issue with a deal such as this?
Speaker 6 (19:38):
This is it going to get political?
Speaker 7 (19:39):
In this environment? It's just so unpredictable.
Speaker 9 (19:42):
It's hard to say what deals are getting done because
they're you know, so different than traditionally what anti trust
authorities have looked at. We do know there is some overlap,
so we you know, need to take that seriously. I'm
not sure what Mark Benioff's relationship is with the administration.
Speaker 7 (19:58):
You know, these are all big questions.
Speaker 11 (20:00):
So they've been working on this for over a year
and then some maybe finally get everybody to say let's
do this, and yet there's still some major obstacles or
is there.
Speaker 9 (20:11):
We can't say at this point we don't have the reporting,
but I have noticed that some research channels are saying, hey,
you know, look at this overlap. Salesforce owns a company
called MuleSoft that they buy a couple of years ago.
I was also a large acquisition for them, and apparently
there is some overlap with Informatica. These companies are kind
of like in the guts of you know, data management,
(20:32):
and from what I understand, they're kind of the picks
and shovels of AI, things that are very important that
are happening in the background, under the surface, that you know,
help with the adoption of AI. So that's why this
is important for Salesforce.
Speaker 5 (20:44):
I mean, get the stock I felt.
Speaker 4 (20:45):
Look at Informatica, right it was up what twenty eight
percent of its highs on Friday, finished the day up
about seventeen percents right now up another six and a
half percent.
Speaker 5 (20:53):
It's training it twenty four and change.
Speaker 4 (20:54):
So it's not like investors are hammering it and say, wait,
this doesn't think I don't think this is going to happen.
Speaker 9 (21:01):
That's a great point, but it's still trading below the
twenty five is share bet a.
Speaker 5 (21:04):
Buck or so, why does Salesforce want to do this?
Speaker 9 (21:08):
Right? So, I think it's back to what I was
saying about the picks and shovels play on AI. Salesforce
has rolled out sort of an agent force. It's their
AI agent business, and from what I've read, this Informatica
product could help power that, and Salesforce is looking for
(21:29):
some integrantic growth to help, you know, help the adoption
of that, which there's a lot you have to do
with the data to clean it up before you roll
it out to your customers. So I'm sure there's a
strategy behind this, but it is tricky when we're dealing
with these companies that are more you know, B to
B in the.
Speaker 7 (21:49):
Guts of technology totally. It's been around a long time Informatica.
Speaker 2 (21:53):
Salesforce is a really inquisitive company. I mean some of
the you mentioned MuleSoft, but Slack is one of the
companies that it acquired in recent years. Is it bought
Tableau as well? Demand where is another one? I mean
the list goes on and on. What exactly is Salesforce
trying to become through buying all of these companies?
Speaker 9 (22:11):
Mark Benioff has always loved acquisitions. He had to pump
the brakes for a year or two. There was a
swarm of activist investors. You might recall that we're saying, hey,
wait a second, you know, let's maybe slow down some
of these deals. Maybe they didn't all fit together. We
also broke in the last fall, Salesforce did something called
owen or own backup an Israeli company that had bought
(22:31):
from one point nine billions. So they had been doing
tucking acquisitions. But I'd say this is sort of Bennios
returned to the bigger ticket items. Obviously not as big
as Slack as you mentioned, but it's up there, not
as big as Tableaux, but definitely one of the largest lately.
And it seems like the appetites there and shareholders don't
seem to mind it, does it.
Speaker 4 (22:50):
Another company that either competes with Salesforce or Informatica are
looking at this saying we've got to now do anything,
Like I'm just curious about this space. You're talking with
your tea, you know, in terms of tech and just
m and a. Is there anybody who's like, all right, now,
we've got to do something.
Speaker 9 (23:05):
So we've reported that Cloud Software Group which used to
be known as Citrix that they were also interested in Informatica,
So we'll be watching them. They're privately held the result
of a take private, but it's a very large company
even though it's private, so I'm curious what they might acquire.
The CEO of that company used to be the CFO
at Broadcom, and that's just one to watch.
Speaker 7 (23:28):
That could get acquisitive. So that's what I'll be following.
Speaker 9 (23:30):
In terms of the public the trade of targets, I
can't really speculate on, you know, what's the next company
to buy that's going to be the next Informatica. But
it does have private equity ownership, so that's something to
look at whenever you see them in your shareholder roster.
Speaker 6 (23:43):
What does it do.
Speaker 2 (23:43):
What is an acquisition or a potential acquisition such as
this tell you about the deal's landscape right now? And
also what does your reporting tell you about the deal's landscape,
Because as Carol reminds us all the time, this was
supposed to be the year of the deal, and what
happened was we saw a lot of m and a
put on hold back in March in April over concerned
with the markets and with tariff uncertainty, some of that
(24:04):
concern has gone away, and we've seen indeed some of
those companies that have pulled their IPOs actually come out
and have pretty successful IPOs.
Speaker 6 (24:12):
What about in the M and A space and in
the deal space, what do you see?
Speaker 9 (24:14):
There's no doubt that it's a great sign that coming
off a holiday weekend you see a takeover Tuesday, some
flashy headline number with an acquirer. So we need more
of these deals to help us get closer to that
year of the deal that you mentioned. So definitely a
good sign, but we do need to see more of
these happen.
Speaker 5 (24:32):
I mean, is the pipeline pretty heavy? Like, you know,
it's funny.
Speaker 4 (24:35):
I just feel like the last coal of years, you know,
whether it's private equity, private credit, like all of these
guys are just kind of waiting for stuff to pick up.
Is there a lot of stuff in the pipeline waiting
for I don't know, the administration to kind of calm
down and that level of uncertainty to see what the
regulatory environment get an idea of that, Like what is it?
Speaker 9 (24:54):
This deal came at a funny time because it was
a revived deal it happened a year ago. We also
saw a Google Whiz, you know, a month or two ago.
That was another revived deal. So it seems like deal
makers are dusting off their playbooks and say, hey, let's
see what we were looking at a few years ago.
Maybe you know, now's the time to transact. So no
deal ever dies, as we say in M and A circles,
(25:18):
that's really funny.
Speaker 5 (25:19):
Occasionally, right, occasionally, and then they.
Speaker 6 (25:21):
Come back like this one.
Speaker 9 (25:23):
Yeah, the US steel it comes back, right. You know,
all these deals you know, never quite you know, get buried.
Speaker 4 (25:30):
So is there anything in terms of a time, like
you said the one thing, I know, I said done deal,
but I just I guess I just kind of based
off of a year, and you know, looking at the
share price, what do we wait for if there's going
to be some kind of regulatory review of that process,
is it the next couple of weeks or what is that?
Speaker 7 (25:46):
It could be pretty lengthy.
Speaker 9 (25:48):
I'd say regulatory approval could take a while, so yeah,
it could be a slog. We'll see what the company say.
I believe Salesforce has earnings tomorrow, so maybe we'll get
a little more color on.
Speaker 2 (25:58):
That, you know, I want to go back to something
that you talked about at the start of our conversation,
and that was the fact that it's not necessarily a
done deal. And I asked about the politics of this,
and we see this happening with M and A and
media right now because the FCC is an organization that
in some cases does approve or or or you know,
prohibit companies from actually merging to one another. Is there
(26:20):
any indication to you that when it comes to M
and A like this, we could also see some political
elements get thrown in here.
Speaker 9 (26:30):
I mentioned that Bennioff's relationship with the White House could
come into play, but I don't have the reporting to
back that up. It's just something to look into.
Speaker 6 (26:38):
Don't remember, Carol, if he was at the inaugurate.
Speaker 7 (26:41):
I don't think so.
Speaker 5 (26:42):
I don't think he will, yes.
Speaker 2 (26:43):
And as our reporting will show later, just because exactly
that's what I was going to say, even.
Speaker 5 (26:51):
Seems to well, we'll find out right TBD. Leanna, thank
you so much.
Speaker 4 (26:56):
Certainly a story we've been following since you guys broke
it on Friday. Leanna Baker, she's Bloomberg News Managing editor
of the Deals team, joining us here in studio.
Speaker 1 (27:04):
You're listening to the Bloomberg Business Week Daily podcast. Catch
us live weekday afternoons from two to five Easter and
listen on Applecarplay and Android Otto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 2 (27:19):
Well, this weekend was the unofficial start to summer. Perhaps
you were one of the millions of people who took
to the grill.
Speaker 5 (27:24):
Nope, you weren't. And we went out for dinner.
Speaker 6 (27:27):
It was a little chilly in New York.
Speaker 8 (27:29):
Chilly.
Speaker 2 (27:29):
Its yeah. Oh we were grilling on Saturday. Oh yeah, yeah.
Nate rmpy hopes you were grilling in Omaha steak or several.
He's president and CEO of the privately held company more
than one hundred years old. The company is Nate joins
us from Omaha. Nate, good to have you with us.
It's good to have you on the program. We've been
excited to speak to you about a range of topics.
(27:50):
I want to start just with the fact that you're
privately held here more than a century old. We don't
have a lot of numbers to go on. We are Bloomberg.
We need some context here. What can you tell us
about the business US sales, what direction.
Speaker 6 (28:02):
They've been going in. What can you share with us?
Speaker 10 (28:05):
You bet? First off, in Omaha, we grill no matter
the weather.
Speaker 6 (28:08):
Okay, let's get to now get that.
Speaker 10 (28:10):
Right out right out of the shoots.
Speaker 12 (28:12):
So we are one hundred and seven, almost one hundred
and eight years old, born and raised in Omaha, Nebraska.
We're pushing upwards past six hundred million in top line revenue,
about two thousand employees, and we spike up to about
six thousand during the holidays when when we provide America
(28:32):
you know the best gift, which is Omaha steaks fula mignon.
Speaker 2 (28:36):
So where is the beef coming from? Because on your
website I noticed you do have a section sort of
the higher end stuff that is imported from Japan. It
seems like other than that, is it all from the
United States.
Speaker 12 (28:50):
It's actually Wagoo is not our wagon is not important
from Japan.
Speaker 10 (28:53):
Actually we actually call.
Speaker 12 (28:54):
It wangis oh Okay, which is largely in the United States.
Most of the wagu consumed is a is a sort
of a hybrid between an angus and the wagon.
Speaker 2 (29:05):
So forgive me, is it still considered wagu if it's
not from Japan?
Speaker 9 (29:09):
Oh?
Speaker 12 (29:09):
Yeah, Yeah, for sure, just because of the of the breed.
You sort of interbred that with the with the angus
to get a more Americanized version of that. But our
beef comes from the heartland. I mean, I'm talking to
you from Omaha, Nebraska. This is beef country. And you know,
on the top of mind lately, you know, has been
(29:30):
the topics of terrorists. And when you source all of
your beef from the US right in the center of
the country, you know, you can really have a competitive
advantage in protecting your customers from the impacts of things
like terras and Oma steakes. Given the fact that we're
one hundred years old, is super vertically integrated. So from
the you know, sourcing of the raw material, through manufacturing, packaging,
(29:55):
marketing it all the way through fulfillment and logistics. You know,
we control that at every step in the process, and
that gives us a couple benefits. One is that customer
experience can be very controlled. Sure that we have an
absolute fabulous experience from not just from first bite, but
(30:16):
all the way backing up to you know, the shopping experience,
the marketing experience, exploring what products you might want to
enjoy from Omaha steaks all the way through to when
that cooler shows up perfectly frozen with ice still in
the package.
Speaker 4 (30:30):
All right, Nan, I got to ask you because I
feel like every time we go out for dinner, you
want to buy I'm using steak broadly, but there's obviously
different kinds of cuts and so on and so forth.
But it's expensive. You're talking thirty five, forty, fifty sixty.
Why is it so expensive? And I was just looking,
you know, beef prices have gone up again this year,
(30:53):
are there up? So what's going on in the beef market.
Speaker 12 (30:57):
Yeah, it's largely it's it's pretty simple, Carol, kind of
supply and demand. So consumer demand has really kind of
stayed strong despite you know, all what's happening around us
in the macro environment, macroeconomic environment. Cattle supply has dropped,
in fact, will be about four million head lower in
(31:22):
this year versus twenty twenty two, and thus.
Speaker 10 (31:26):
You know, price is sort of increasing.
Speaker 12 (31:28):
So you know, all those factors are really what's behind
the price of meat increasing because you know, the cost
of food has been increasing for quite some time. It's
not just you know kind of this you know, very
recent event and going out to dinner when you told me,
you know, you go out for a stake. You know,
(31:49):
I think if you think back to twenty twenty, you know,
one of the things that we learned as a country
is how great it was to have dinner at home
with family, and that you know, when you do that,
that doesn't mean that the experience or the.
Speaker 10 (32:03):
Quality has to drop, right, And.
Speaker 12 (32:06):
What I'm arguing is that I can bring the quality
and the guidance and the experience of the best steakhouse
in America to your kitchen, and you can do it
without waiting in line, without driving, without tips, you know,
without well, you know, maybe variable service, and you can
(32:28):
be the hero in the kitchen as opposed to the stake, right.
Speaker 6 (32:32):
As long as you don't overcook it, which has happened,
do you know?
Speaker 10 (32:35):
It depends? I mean, you know, we say it a lot.
Speaker 2 (32:39):
Well, you know, to Carol's point, beef prices recently, just
in the last few days, reached a record high in April.
How much of your price has gone up over.
Speaker 6 (32:49):
The last year.
Speaker 12 (32:51):
Actually, we have held our price as static for about
three years. And again we're doing that because we're able
to control and I can't really overstate how important it
is to control the controllables. I mean, you know, when
you're operating a large business, things that come at you
from the sides that cause impact to costs or ultimately
(33:12):
what drive consumer price up. So we've been able to
really control our controllables and offer that benefit to our customers.
Speaker 10 (33:20):
Now there are.
Speaker 12 (33:21):
Really, there really are a number of things that America
can do to manage their costs of protein. It's like
anything else in economics. You know, there's a trade down opportunity.
So if you were maybe used to having a Tuesday
night filet mignon, we've seen some Americans go to.
Speaker 10 (33:40):
The Top Surloin. I happen to love the Top Surloin.
Speaker 12 (33:43):
I think it's an underappreciated, maybe under loved steak.
Speaker 10 (33:47):
It's a Tuesday night steak.
Speaker 12 (33:49):
It's beefy, it's it's you know, it's very healthy, more lean,
And so there is a trade down happening there because
protein really is an important component to our diet and
as a Keith cornerstone and maintaining a healthy diet, and
so trading down is one of them. Like I said,
eating at home is another, you know, investing in products
that you know have that high quality, But still that
(34:12):
experience at home can be a great one.
Speaker 9 (34:13):
All right.
Speaker 10 (34:14):
First of all, quick, go ahead.
Speaker 4 (34:16):
I'm just say full disclosure, we cook a lot at home,
so it's not like I'm meeting out.
Speaker 5 (34:19):
All the time.
Speaker 4 (34:19):
I'm just kind of blown away by the costs on menus.
But the same thing even when we you know, pie.
Speaker 5 (34:26):
You know, it's just kind of expensive. Why are herds down?
Speaker 4 (34:29):
You said four herds in the US are down by
four million heads, lower than twenty twenty two.
Speaker 5 (34:35):
Why is that?
Speaker 10 (34:36):
Is there not the layer number factors? Yeah, number of factors, Carol.
Speaker 12 (34:40):
Things like drought, you know, the the environment which the
cattle are being raised certainly affects the size of the herd.
Speaker 8 (34:47):
Right.
Speaker 12 (34:48):
But another phenomenon that's really interesting that I think you'll
also find interesting is something called heifer retention. So when
demand for beef is high, there is motivat to harvest
the female animal as opposed to leverage that animal to
generate more herd.
Speaker 10 (35:08):
And over the.
Speaker 12 (35:09):
Last number of years that has been happening. And so
as hepper retention drops, the number of cabs entering the
market or entering the environment drops as well, so the
build of the herd doesn't really happen over time, and
we've been dealing with that reduction over the last number
of years, which is a contributing factor.
Speaker 10 (35:30):
To supply Nate price.
Speaker 12 (35:32):
Nate.
Speaker 2 (35:32):
You also, it's not just it's known for stakes, but
you guys also do chicken and pork, seafood, You do desserts, wine, gifts.
Some of your seafood is imported from outside of the US. Correct,
it is, yes, So how have you been you know,
like Argentinian shrimp for example, how have you been able
to control prices there? You say, controlling the controllable is
(35:53):
what's important. But how much are you getting hit with
tariffs on that stuff?
Speaker 10 (35:57):
There's a little bit of that there.
Speaker 12 (35:58):
I tell you one of the benefit you get from
being a multi decade business is we have multi decade
supplier relationships and so you know, we can have conversations
with them and we can talk frankly about the fact
that you know the Omaha steaks and you know inter
supplier name here. This is about the long term. We've
(36:19):
been sourcing from you for twenty to thirty years. Help
us overcome this blip, and a lot of times we
find that our suppliers will step up and help us
keep those costs in check. Yeah, and largely I think
you know we've we've done a pretty good job. My
team has done a fabulous job of anticipating the impact
to tear us there.
Speaker 4 (36:38):
All right, while we have you, can we talk about
Nick and Kate or should I call it Nate?
Speaker 10 (36:42):
Sure?
Speaker 5 (36:43):
Tell us about Certified Tender.
Speaker 4 (36:45):
It was a romance novel. I believe it started as
an April Fool's Joe.
Speaker 6 (36:49):
What are you talking about?
Speaker 7 (36:51):
I have to tell you.
Speaker 4 (36:52):
We were kind of reading there's a great article that
kind of put it all together. We're reading some of
it out loud in the newsroom. This seems like it
was an idea that really took off, just got about
a minute or so left here.
Speaker 5 (37:06):
How successful did this turn out to be and how
did it come about?
Speaker 10 (37:10):
It was so fun.
Speaker 12 (37:11):
We've done April Fool's events over the last number of years.
But we had a super talented copywriter internally that agreed
to take on writing Certified Tenders. So it was literally
written by a copywriter here at Omaha Steaks named Michael.
Speaker 10 (37:29):
And I don't know.
Speaker 12 (37:30):
If you have the opportunity to read it, you totally should.
It's got some fun Easter eggs in the book that
talk about the history of Omaha Steaks. You know, some
of the names and some of the dates and things
correlate with the history of the company. And it just
blew up. I mean, the book looks great, you know,
the content and the creative it's just a neat, fun
(37:51):
way to engage with our customers. And I think, you know,
it sort of speaks to the culture and the innovation
and the desire to have fun.
Speaker 4 (38:00):
How that meet Cute Collection because this was a promotional
material for Meat Eat Meat Cute Collection ninety nine Bucks
date Night themed box Filet Mignon fries cab Cabernet Sauvignon
twenty seconds left here.
Speaker 5 (38:15):
How successful are those?
Speaker 12 (38:17):
Hugely successful? I mean it's who doesn't want to have
a date night? I mean it's the perfect date night.
You have some wine, some great Omaha steaks. The filet
that we provide our customers is unmatched. It's literally certified tender.
Speaker 10 (38:31):
By the USTA. So it's about the lost tender steak.
You can buy and then you curl up with a
good book.
Speaker 12 (38:37):
And that book just happens to be by the company
that provided the stake in the wine.
Speaker 4 (38:43):
All right, come back, come back, We got to continue
this conversation. Nate Rempe, Presidency of Omaha Steaks.
Speaker 1 (38:51):
This is the Bloomberg Business Week Daily podcast, available on Apple, Spotify,
and anywhere else you get your podcasts. Lizen Live weekday
afternoons from two to five pm Eastern, on Bloomberg dot com,
the iHeartRadio app, tune In, and the Bloomberg Business App.
You can also watch us live every weekday on YouTube
(39:12):
and always on the Bloomberg terminal
Bloomberg Audio Studios, Podcasts, radio News. This is Bloomberg Business
Weekdaily reporting from the magazine that helps global leaders stay
ahead with insight on the people, companies, and trends shaping
today's complex economy. Plus global business, finance and tech news
(00:23):
as it happens. The Bloomberg Business Week Daily Podcast with
Carol Masser and Tim Steneveek on Bloomberg Radio.
Speaker 2 (00:32):
Let's go to the market moves that we're seeing. We
mentioned what we saw in the equity market, more than
two percent on the S and P five hundred and
of the Nasdaq composite. But what about how investors are
feeling about credit and the US credit markets. For a
strategy call on that, we bring in Megan Robson, head
of US Credit Strategy for BNP Powry Bush. She joins
us here in the studio. Megan, we're seeing yields lower
(00:54):
across the curve right now. You and your team, though,
are pretty cautious when it comes to credit markets. What
specifically are you concerned about?
Speaker 3 (01:02):
First of all, thank you, thank you for having me.
We do have a bit of a more cautious view.
So we've seen a pretty vicious rally since the pause
and the tariffs with China, and two things have let
that continue. One is positioning, So investors heading into the
liberation day and right following, we're very underweight credit, so
(01:25):
once we got this positive catalyst with China, they felt
a need to catch up and to add to risk,
and that's really pushed spreads tighter. The second element is
the data. So far credit has not had to see
any bad data, so we're just sort of in this
great area where data doesn't reflect the tariff reality yet.
But eventually, we do think heading into the summer, some
(01:47):
of the data will soften and credit spreads will start
to drift wider.
Speaker 4 (01:51):
What's top of mind for you and your team. I
think it was interesting. We were all trying to make sense.
I think coming in this morning, there was it seemed
like the easing on EU US tariff are at least
trade tensions so news out of Japan. Trying to understand
and I would love for you to roll that in
because I feel like, you know, the world is watching
global bond markets, especially the longer end of the curve,
and just you know, kind of nervous about some of
(02:14):
the demographic and other major trends.
Speaker 3 (02:17):
Talk to me about Japan. What do we need to
know about that? So it's you know, you're spot on.
I think this is very top of mind for investors.
If we see a further sell off in rates, a
further sell off in the long end of the curve,
not just in the US, but but with Japan, if
it's if it's a global phenomenon, do investors, foreign investors
start to sell US credit. It's a it's definitely a concern.
(02:38):
So far, we don't have evidence of that. So we
just got the treasury data for March. Investors actually added
to the corporate market. We'll see what happens in April.
But for now, this yield, tire treasure yield, tire spreads tighter,
has been the dominant dynamic so far.
Speaker 5 (02:55):
What's the thing that you and your team worry about
longer term? If this sticks, we.
Speaker 3 (02:58):
Worry about We're right at the precipice of treasury yields
around this four to fifty level. If we go higher
from here, and it's driven by inflation expectations, So if
tariffs start to really feed through the expectations that inflation
could go higher, the Fed's hands are tied in. The
FED does not cut rates this year. That's what our
base case is. Then I think higher rates could start
(03:20):
to be a challenge for credit and we could see
that correlation flip.
Speaker 2 (03:24):
You know, I was thinking about this because we're starting
to get some very strange soft and hard data. On
the one hand, people like Torsten Slock are emailing US
charts that say, hey, we're not seeing a rebound when
it comes to trade between the US and China.
Speaker 6 (03:37):
Despite the pause.
Speaker 2 (03:38):
On the other hand, we get consumer confidence numbers like
we got a little earlier today that show a sharp
rebound in the way the consumers are thinking about the
economy thanks to that pause.
Speaker 6 (03:47):
Yes from the president.
Speaker 2 (03:49):
How is this all playing into the macro economy because
this is kind of uncharted territory for a lot of US.
Speaker 3 (03:56):
It's definitely uncharted territory. Our thesis is that some of
the SAW data will start to feed through into corporate earnings.
And we've done a lot of a lot of regression
work looking back in time. When we've seen drops of sentiment,
business sentiment, consumer sentiment three to six months out, you
typically do see capex rollover, ibadah start to roll over
(04:18):
into negative growth territory. So I think one interesting data
point we got from first quarter capex growth was actually
negative year over year for corporates, So even with just
the tail end of tariff impact, companies started to spend
less just given the uncertainty in the environment.
Speaker 5 (04:35):
I mean that's a really good point, Like is it.
Speaker 4 (04:38):
I feel like we have an increasing you know, narrative
voice that says, watch the second half, like these tariff concerns,
because we are going to go into no matter what,
a higher tariff environment. Maybe not as onerous as we've
heard initially from the Trump administration, but it's going to
I mean.
Speaker 6 (04:53):
We're there already.
Speaker 2 (04:54):
We're like yeah, and so I'm not seeing it necessarily
play out.
Speaker 4 (04:58):
And that's what I'm saying, Like the data second half
of the year, we'll start to see.
Speaker 3 (05:01):
That, I think exactly to your point. I mean, we'll
have tariffs that are roughly five times what they were
pre Trump and that has to have an impact on
prices on demand, and you know, one place we can
watch continue to watch as the lower end consumer. We
think that tariffs, in combination with some of the fiscal
policy that we're seeing cuts to things like food stamps,
(05:21):
you could really see that segment start to struggle even more.
But for now, investors are happy to focus on bulish elements.
They're happy to focus on deregulation, happy to focus on
potential potential potential tax cuts, and only that we've seen
tariff relief, it.
Speaker 2 (05:40):
Does still seem like, I mean, on the earnings front,
and I know we're talking credit here, but I can't
help but think we're at the tailhead of earning season.
Carol reminds us that we have in Vidia tomorrow, which
is like the moment we've all been waiting for for.
You know, you can go and pick through different reports
and get the impact on tariffs, and some of them
you'll see, certainly retail getting hammered for a lot of reasons.
(06:00):
And we can talk a little bit about Target or Walmart,
different animals there.
Speaker 6 (06:04):
But when it comes to.
Speaker 2 (06:06):
Big picture, like the tech players basically said, everything is
kind of fine for us. It's like a really a
tale of two different types of companies that are weathering this.
Speaker 3 (06:15):
It's very much sector dependent, and I think the market
has rewarded companies that have talked about their strategies to
sort of deglobalize and you know, diversify their supply chain.
So I think that that you'll see companies during first
quarter that just stocked up their inventories and said, you know,
this is our strategy for tariffs. We're penalized in the
(06:37):
credit market. Whereas those that said, you know, we've been
thinking about this for a few years. We have you know,
we have done some on shoring. Those types of companies
have done much better.
Speaker 4 (06:47):
You know, I'm going to do a little Tom Keane,
YOU'RBA and Economics from Brown University, NBA from Columbia Cfachardholder.
But I just think about you know, you have, you know,
have experienced the investment banking world looking at kind of
all the markets and how they interplay with one another,
and I just this market in time. Is it an
interesting one, is it a pivotal one?
Speaker 5 (07:09):
How or is it TBD? We're not quite sure yet.
Speaker 3 (07:12):
I think it's one of these moments where we're waiting
for the data to unfold. Even you know, you hear
from companies, we didn't get much in the way of guidance.
We heard mostly just tariff.
Speaker 5 (07:22):
Map options in terms of the way forward.
Speaker 3 (07:26):
In different different scenarios. So I think it definitely, you know,
to your point, is uncharted. Territory in terms of what
we're looking at in the months ahead.
Speaker 5 (07:37):
So where do you go in the treasure Like, what's
your favorite kind of Yeah, So.
Speaker 3 (07:40):
In credit, we do like mid quality in the high
old space, so its single bees. We think that's a
spot that can still outperform in investment grade. In line
with our discussion about the rates curve, we like staying
more in the belly of the curve, so five to
ten year kind of avoiding that long end of the
curve where you could see spreads, spreads move wider if
(08:00):
we do see a further sell off in the treasury market.
Speaker 5 (08:03):
All right, cool stuff, perfect, guest, Thank you so much.
Speaker 7 (08:05):
Thank you for joining me.
Speaker 2 (08:06):
Megan robson Ahead of you US Credit Strategy for a
BNP Powrybacker.
Speaker 1 (08:10):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to five eas during
Listen on Applecarplay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 2 (08:24):
The Apple Shares today snapping an eight day losing streak.
Hire right now to the tune of two point six percent.
We got tariffs, we got Tim Cook, we got Johnny
Ive needless to say, there's a lot of pressure on
the company, a lot that Tim Cook has to focus on.
We were dying to talk to him on Friday, but
he was out of the office. Mark German is Bloomberg
(08:45):
News Managing editor for Global Consumer Tech. He joins us
from the Los Angeles bureau of Bloomberg News.
Speaker 6 (08:51):
Mark, I want to you.
Speaker 2 (08:51):
Know we thought of you on Friday because of the
President's US post to social media that said that kind
of predict to believe what we've been talking about, the
fact that US bound iPhones being made in India is
not being made in the United States. The President not
happy about that. I just want to get the view
from you one more time about how you think that
(09:14):
Apple is going to navigate a situation such as the
short of building the iPhone here in the US.
Speaker 8 (09:21):
Tim, it feels like groundhog Day almost every day here.
It does where Trump comes out and says something related
to him being unhappy that the iPhone is not produced
in the US, and I come on here and I
say the exact same thing I said a week ago,
which is the iPhone cannot be produced in the US.
I don't anticipate that happening in the next decade. I
(09:43):
don't anticipate that happening during the period in which Donald
Trump is in office. It's just not feasible. Such a
switch would take years. Such a switch would increase costs.
In fact, that twenty five percent tariff that Apple might
be getting because they don't make the iPhone in the US,
that's a steal compared to what they would have to
pay financially and in so many other areas of their
(10:06):
business to relocate production of the iPhone from Asia to
the US. So Apple's getting a good deal here. I
would say, not that they should have to pay that tariff.
That's not up to meet to decide, but looking at
the financials, it's not a bad price to pay. The
other thing I'll say on this topic is we've seen
a bevy of analysts and others chime in over the
last few days repeating the same ideas about what an
(10:28):
iPhone would cost if it were built in the US.
Let me tell you this, they don't know how much
it would cost. Even Tim Cook doesn't know for sure
how much it would cost, because until you're making those
devices at scale, until you figured out exactly how you're
going to build them in the US. You don't know
what it's going to cost to build them in the US,
So someone might throw out three thousand dollars, five thousand dollars.
Speaker 6 (10:50):
Who knows.
Speaker 8 (10:52):
There's no way to know.
Speaker 6 (10:52):
We don't know.
Speaker 2 (10:53):
I do want to point out that even though the
post on social media Friday morning specifically called that Apple,
the President was asked in the Oval Office later in
the day whether or not would apply to other companies
that make these electronics outside of the US mark and
he did essentially say, yeah, it would apply to everybody.
So then Samsung would get hit by this as well.
So it's not just Apple. Certainly Apple's the focus, but
(11:17):
it's every handset maker that would face this challenge too.
Speaker 8 (11:21):
This is actually a really important point, and it's I
think much more important than anyone has realized. When Apple
was able to bypass tariffs during the first administration, the
way they did that is Tim Cook argued, I'm told
to Donald Trump that all that would be happening here
is an America based company, right Apples based in Coupertino
would be getting destroyed right on tariffs, whereas Samsung and
(11:42):
others who are Apple competitors based in Korea and China
and elsewhere would just run free. Right, And so what
you have to understand is Donald Trump is their responding.
That's Donald Trump's response to Tim Cook saying, Oh, don't worry, Tim,
I'm going to do this to everyone. So everyone is
going to feel the same pain that you're going to feel.
Speaker 4 (12:02):
How angry is Tim Cook right now? Right he was
at the administrative idea.
Speaker 8 (12:06):
Well, my sense of how angry Tim Cook is right
now is the same sense that people have who are
saying how much an iPhone built in the US is
going to cost. I have no idea how angry it is.
I'm sure he's not pleased. I'm sure he's dealing with
a lot, but I don't know exactly how angry he is.
I would guess that he realizes that the twenty five
(12:26):
percent tariff in the grand scheme of things could actually
be a lot worse.
Speaker 4 (12:30):
Well, what I'm curious too, though, Mark, is does he
have still the ability to like pick up the phone
call Donald Trump the president? Sure, and really talked to
him and having open conversation back and forth. Yeah, I
guess I'm trying to get into what the relationship is.
Speaker 8 (12:47):
Yeah, he met with him last week. And then this
happened two days later. So you know, my guess is
that originally Trump wanted a much higher tariff. Originally he
was going to put something closer to what those original
China tariffs may have been, and they sort of work
together to whittle it down something like that twenty five percent.
Because in my view, that twenty five percent is pretty good.
Like I said, that's cheaper than what it would cost
(13:10):
Apple to actually relocate production, right, And so really it's
a loss, but it's sort of a wipe your hands moment.
It's kind of a win for Apple at the same
time too. And you know, the day is still young.
We have till the end of June for this to
actually come into practice. You can bet there's going to
be a lot of lobbying, a lot of negotiation, a
lot of things between now and then that get Apple
(13:33):
a lower percentage. And as we've talked about before, I
think there are levers Apple is going to pull to
make it seem like they are doing more in the US.
Trump needs something from Tim Cook. He can get something
from Tim Cook. He can take something from Cook, take
it to his base, take it to him ever, and
show that I got Tim Cook to fold. I got
Tim Cook to do something in the US. No one
(13:54):
else has been able to do that.
Speaker 6 (13:55):
Right.
Speaker 8 (13:55):
The question is, what is that something. We've talked about
different things here. We've talked about pasckaging, We've talked about
final assembly of more components, we talked about more R
and D. So far, all they've announced is AI servers, which,
by the way, it's sort of they're not really building
them here. They're sort of doing final assembly, some exterior
packaging and whatnot in terms of the metal frames that
(14:17):
go around the service. We're not doing a ton But Apple,
will I promise you this they will come up with
something this year right to make it seem like they've
moved something significant in order to get that tear produced
or removed.
Speaker 6 (14:29):
I mean, you'll see.
Speaker 4 (14:30):
Is there anything smart in terms of a conversation mark
that we can think that you know, Trump understands this
is a massive company, you know, often trading places with
Nvidia being the world's largest market cap company.
Speaker 5 (14:41):
But there's a lot of headlines.
Speaker 4 (14:43):
You know, We've got what the journal is saying, bad
year for Cook keeps getting worse.
Speaker 5 (14:47):
You've got the time saying text Trump whisper Tim.
Speaker 4 (14:49):
Cook as quiet as his influence fades, and you are
on it and the team are on Apple in terms
of the things that are coming at the company from
multiple you.
Speaker 5 (14:58):
Know avenues, I mean, I don't know.
Speaker 4 (15:01):
Ultimately, do we have to be worried about kind of
the future of the outlook for this massive company and
really important company.
Speaker 9 (15:08):
Yeah.
Speaker 8 (15:08):
As I wrote empower on four weeks ago, well before
that Wall Street Journal story, they're taking it from multiple
angles right now. Tariffs, competition issues in many parts of
the world. You have the innovation question. You have this
partnership between open ai and Johnny Ive. You have app
developers who are unhappy, and obviously the app developer business
(15:29):
is a big business for Apple. App business alone is
twenty billion, right. You have the Google Search deal falling apart.
So right now is a critical juncture for Apple. It's
one of the most trying periods in the company's history.
The silver lining is that the fundamental story is still good.
People are still subscribing to services, people are still buying iPhones.
Speaker 10 (15:49):
Right.
Speaker 8 (15:50):
But you think about the future, You think about what
is really the future product of this company, and that
answer is a lot less clear. And I think one
smash hit changes the whole narrative.
Speaker 2 (16:00):
Hey, Mark, we only have a minute and a half left,
but I want to hit the lead of your power
On column from Sunday, and it's all about Johnny Ive
and Sam Altman and the big news last week. And
I've been wanting to talk to you to ask you
the simple question, what does this reflect about Apple?
Speaker 8 (16:19):
Well, Apple no longer was a place conducive to Johnny
Ive and his desires for how a company should be
run or how central design should be to the company's processes. Obviously,
Apple had their own concerns with Johnny Ive as much
as Johnny I've had concerns with Apple, right, But it
was an unfortunate parting of the ways on both sides
(16:40):
so to speak. That led to a point where he
had to find another company, another soulmate so to speak,
that he wanted to partner up with to marry his
design with the underlying technology. And he ended up finding
a company in Open Ai that is the one company
that has the technology that could really jet it send
what Apple is offering here. Right, It's not like he's
(17:02):
teamed up with Samsung or Google or Meta. He's teamed
up with the company that has the most exciting technology
in the world, A company that Apple executives have already
acknowledged has the goods to potentially upend the company's flagship
phone business.
Speaker 6 (17:16):
Right.
Speaker 8 (17:17):
That's why it's pretty scary in particular. Now nobody says this, Johnny,
I've OpenAI partnership is going to be a massive success.
In my opinion, I think it will be successful, and
they're going to come up with cool things. I don't
think immediately though, it's going to destroy the iPhone. But
this is a massive wake up call and should send
California sized earthquakes down Apple spines for them to figure
(17:38):
out what that next big product is to really compete
in this new age of AI hardware.
Speaker 4 (17:43):
Happy Tuesday, Apple, Mark Garvin, thank you so much. He's
Bloomberg Newsmaging editor.
Speaker 5 (17:48):
For Global Consumer Tech out there on the West Coast.
Speaker 1 (17:52):
This is the Bloomberg Business Week Daily Podcast. Listen live
each weekday starting at two pm Eastern on Applecarflay, and
Android with the Bloomberg Business App. You can also listen
live on Amazon Alexa from our flagship New York station,
Just say Alexa Play Bloomberg eleven thirty.
Speaker 4 (18:10):
Salesforce agreeing to buy Informatica for about eight billion dollars.
Sealing the deal at a software for a minut had
seen its year's plunged by as much as fifty nine
percent since the company's first talks failed last year, and
Tim safe to say our team was on it and
broke it.
Speaker 5 (18:24):
We were talked about this what lead Friday.
Speaker 2 (18:26):
Yeah, you actually had to change your gainers on Friday
because you added I believe it was Informatica to the
Salesforce also moved on the news. Leonna Baker is Bloomberg
News Managing editor of the Deal team. She joins us
here in the Bloomberg Business Week studio. As we know,
thanks to your reporting over the last year and your
team's reporting, this is a deal that Salesforce has been
trying to get done for quite a while, kind of
(18:48):
taking advantage of a decline in the company stock price
to do it now.
Speaker 9 (18:52):
No, patience has definitely paid off a little bit for
Mark Benioff, maybe by two billion, because that's what he
saved by waiting a little bit.
Speaker 3 (19:00):
For sure.
Speaker 7 (19:01):
Carol mentioned that it's a done deal.
Speaker 9 (19:03):
But actually it still needs regulatory approval, so nothing is
certain in that respect. We'll keep following it, analysts are
saying there's some overlap in what the company, what Informatica
does with what salesforce and own, so that's something to
keep an eye on over the next few years.
Speaker 2 (19:17):
Is there real risk there when it comes to this
administration's regulatory I mean, look, look what's happened with Media
M and A for example, I think it was last
week or even the week before that that Verizon deal
was able to close. After Verizon scrub the DEI stuff
from its company, they were able to get frontier. Is
that an issue with a deal such as this?
Speaker 6 (19:38):
This is it going to get political?
Speaker 7 (19:39):
In this environment? It's just so unpredictable.
Speaker 9 (19:42):
It's hard to say what deals are getting done because
they're you know, so different than traditionally what anti trust
authorities have looked at. We do know there is some overlap,
so we you know, need to take that seriously. I'm
not sure what Mark Benioff's relationship is with the administration.
Speaker 7 (19:58):
You know, these are all big questions.
Speaker 11 (20:00):
So they've been working on this for over a year
and then some maybe finally get everybody to say let's
do this, and yet there's still some major obstacles or
is there.
Speaker 9 (20:11):
We can't say at this point we don't have the reporting,
but I have noticed that some research channels are saying, hey,
you know, look at this overlap. Salesforce owns a company
called MuleSoft that they buy a couple of years ago.
I was also a large acquisition for them, and apparently
there is some overlap with Informatica. These companies are kind
of like in the guts of you know, data management,
(20:32):
and from what I understand, they're kind of the picks
and shovels of AI, things that are very important that
are happening in the background, under the surface, that you know,
help with the adoption of AI. So that's why this
is important for Salesforce.
Speaker 5 (20:44):
I mean, get the stock I felt.
Speaker 4 (20:45):
Look at Informatica, right it was up what twenty eight
percent of its highs on Friday, finished the day up
about seventeen percents right now up another six and a
half percent.
Speaker 5 (20:53):
It's training it twenty four and change.
Speaker 4 (20:54):
So it's not like investors are hammering it and say, wait,
this doesn't think I don't think this is going to happen.
Speaker 9 (21:01):
That's a great point, but it's still trading below the
twenty five is share bet a.
Speaker 5 (21:04):
Buck or so, why does Salesforce want to do this?
Speaker 9 (21:08):
Right? So, I think it's back to what I was
saying about the picks and shovels play on AI. Salesforce
has rolled out sort of an agent force. It's their
AI agent business, and from what I've read, this Informatica
product could help power that, and Salesforce is looking for
(21:29):
some integrantic growth to help, you know, help the adoption
of that, which there's a lot you have to do
with the data to clean it up before you roll
it out to your customers. So I'm sure there's a
strategy behind this, but it is tricky when we're dealing
with these companies that are more you know, B to
B in the.
Speaker 7 (21:49):
Guts of technology totally. It's been around a long time Informatica.
Speaker 2 (21:53):
Salesforce is a really inquisitive company. I mean some of
the you mentioned MuleSoft, but Slack is one of the
companies that it acquired in recent years. Is it bought
Tableau as well? Demand where is another one? I mean
the list goes on and on. What exactly is Salesforce
trying to become through buying all of these companies?
Speaker 9 (22:11):
Mark Benioff has always loved acquisitions. He had to pump
the brakes for a year or two. There was a
swarm of activist investors. You might recall that we're saying, hey,
wait a second, you know, let's maybe slow down some
of these deals. Maybe they didn't all fit together. We
also broke in the last fall, Salesforce did something called
owen or own backup an Israeli company that had bought
(22:31):
from one point nine billions. So they had been doing
tucking acquisitions. But I'd say this is sort of Bennios
returned to the bigger ticket items. Obviously not as big
as Slack as you mentioned, but it's up there, not
as big as Tableaux, but definitely one of the largest lately.
And it seems like the appetites there and shareholders don't
seem to mind it, does it.
Speaker 4 (22:50):
Another company that either competes with Salesforce or Informatica are
looking at this saying we've got to now do anything,
Like I'm just curious about this space. You're talking with
your tea, you know, in terms of tech and just
m and a. Is there anybody who's like, all right, now,
we've got to do something.
Speaker 9 (23:05):
So we've reported that Cloud Software Group which used to
be known as Citrix that they were also interested in Informatica,
So we'll be watching them. They're privately held the result
of a take private, but it's a very large company
even though it's private, so I'm curious what they might acquire.
The CEO of that company used to be the CFO
at Broadcom, and that's just one to watch.
Speaker 7 (23:28):
That could get acquisitive. So that's what I'll be following.
Speaker 9 (23:30):
In terms of the public the trade of targets, I
can't really speculate on, you know, what's the next company
to buy that's going to be the next Informatica. But
it does have private equity ownership, so that's something to
look at whenever you see them in your shareholder roster.
Speaker 6 (23:43):
What does it do.
Speaker 2 (23:43):
What is an acquisition or a potential acquisition such as
this tell you about the deal's landscape right now? And
also what does your reporting tell you about the deal's landscape,
Because as Carol reminds us all the time, this was
supposed to be the year of the deal, and what
happened was we saw a lot of m and a
put on hold back in March in April over concerned
with the markets and with tariff uncertainty, some of that
(24:04):
concern has gone away, and we've seen indeed some of
those companies that have pulled their IPOs actually come out
and have pretty successful IPOs.
Speaker 6 (24:12):
What about in the M and A space and in
the deal space, what do you see?
Speaker 9 (24:14):
There's no doubt that it's a great sign that coming
off a holiday weekend you see a takeover Tuesday, some
flashy headline number with an acquirer. So we need more
of these deals to help us get closer to that
year of the deal that you mentioned. So definitely a
good sign, but we do need to see more of
these happen.
Speaker 5 (24:32):
I mean, is the pipeline pretty heavy? Like, you know,
it's funny.
Speaker 4 (24:35):
I just feel like the last coal of years, you know,
whether it's private equity, private credit, like all of these
guys are just kind of waiting for stuff to pick up.
Is there a lot of stuff in the pipeline waiting
for I don't know, the administration to kind of calm
down and that level of uncertainty to see what the
regulatory environment get an idea of that, Like what is it?
Speaker 9 (24:54):
This deal came at a funny time because it was
a revived deal it happened a year ago. We also
saw a Google Whiz, you know, a month or two ago.
That was another revived deal. So it seems like deal
makers are dusting off their playbooks and say, hey, let's
see what we were looking at a few years ago.
Maybe you know, now's the time to transact. So no
deal ever dies, as we say in M and A circles,
(25:18):
that's really funny.
Speaker 5 (25:19):
Occasionally, right, occasionally, and then they.
Speaker 6 (25:21):
Come back like this one.
Speaker 9 (25:23):
Yeah, the US steel it comes back, right. You know,
all these deals you know, never quite you know, get buried.
Speaker 4 (25:30):
So is there anything in terms of a time, like
you said the one thing, I know, I said done deal,
but I just I guess I just kind of based
off of a year, and you know, looking at the
share price, what do we wait for if there's going
to be some kind of regulatory review of that process,
is it the next couple of weeks or what is that?
Speaker 7 (25:46):
It could be pretty lengthy.
Speaker 9 (25:48):
I'd say regulatory approval could take a while, so yeah,
it could be a slog. We'll see what the company say.
I believe Salesforce has earnings tomorrow, so maybe we'll get
a little more color on.
Speaker 2 (25:58):
That, you know, I want to go back to something
that you talked about at the start of our conversation,
and that was the fact that it's not necessarily a
done deal. And I asked about the politics of this,
and we see this happening with M and A and
media right now because the FCC is an organization that
in some cases does approve or or or you know,
prohibit companies from actually merging to one another. Is there
(26:20):
any indication to you that when it comes to M
and A like this, we could also see some political
elements get thrown in here.
Speaker 9 (26:30):
I mentioned that Bennioff's relationship with the White House could
come into play, but I don't have the reporting to
back that up. It's just something to look into.
Speaker 6 (26:38):
Don't remember, Carol, if he was at the inaugurate.
Speaker 7 (26:41):
I don't think so.
Speaker 5 (26:42):
I don't think he will, yes.
Speaker 2 (26:43):
And as our reporting will show later, just because exactly
that's what I was going to say, even.
Speaker 5 (26:51):
Seems to well, we'll find out right TBD. Leanna, thank
you so much.
Speaker 4 (26:56):
Certainly a story we've been following since you guys broke
it on Friday. Leanna Baker, she's Bloomberg News Managing editor
of the Deals team, joining us here in studio.
Speaker 1 (27:04):
You're listening to the Bloomberg Business Week Daily podcast. Catch
us live weekday afternoons from two to five Easter and
listen on Applecarplay and Android Otto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 2 (27:19):
Well, this weekend was the unofficial start to summer. Perhaps
you were one of the millions of people who took
to the grill.
Speaker 5 (27:24):
Nope, you weren't. And we went out for dinner.
Speaker 6 (27:27):
It was a little chilly in New York.
Speaker 8 (27:29):
Chilly.
Speaker 2 (27:29):
Its yeah. Oh we were grilling on Saturday. Oh yeah, yeah.
Nate rmpy hopes you were grilling in Omaha steak or several.
He's president and CEO of the privately held company more
than one hundred years old. The company is Nate joins
us from Omaha. Nate, good to have you with us.
It's good to have you on the program. We've been
excited to speak to you about a range of topics.
(27:50):
I want to start just with the fact that you're
privately held here more than a century old. We don't
have a lot of numbers to go on. We are Bloomberg.
We need some context here. What can you tell us
about the business US sales, what direction.
Speaker 6 (28:02):
They've been going in. What can you share with us?
Speaker 10 (28:05):
You bet? First off, in Omaha, we grill no matter
the weather.
Speaker 6 (28:08):
Okay, let's get to now get that.
Speaker 10 (28:10):
Right out right out of the shoots.
Speaker 12 (28:12):
So we are one hundred and seven, almost one hundred
and eight years old, born and raised in Omaha, Nebraska.
We're pushing upwards past six hundred million in top line revenue,
about two thousand employees, and we spike up to about
six thousand during the holidays when when we provide America
(28:32):
you know the best gift, which is Omaha steaks fula mignon.
Speaker 2 (28:36):
So where is the beef coming from? Because on your
website I noticed you do have a section sort of
the higher end stuff that is imported from Japan. It
seems like other than that, is it all from the
United States.
Speaker 12 (28:50):
It's actually Wagoo is not our wagon is not important
from Japan.
Speaker 10 (28:53):
Actually we actually call.
Speaker 12 (28:54):
It wangis oh Okay, which is largely in the United States.
Most of the wagu consumed is a is a sort
of a hybrid between an angus and the wagon.
Speaker 2 (29:05):
So forgive me, is it still considered wagu if it's
not from Japan?
Speaker 9 (29:09):
Oh?
Speaker 12 (29:09):
Yeah, Yeah, for sure, just because of the of the breed.
You sort of interbred that with the with the angus
to get a more Americanized version of that. But our
beef comes from the heartland. I mean, I'm talking to
you from Omaha, Nebraska. This is beef country. And you know,
on the top of mind lately, you know, has been
(29:30):
the topics of terrorists. And when you source all of
your beef from the US right in the center of
the country, you know, you can really have a competitive
advantage in protecting your customers from the impacts of things
like terras and Oma steakes. Given the fact that we're
one hundred years old, is super vertically integrated. So from
the you know, sourcing of the raw material, through manufacturing, packaging,
(29:55):
marketing it all the way through fulfillment and logistics. You know,
we control that at every step in the process, and
that gives us a couple benefits. One is that customer
experience can be very controlled. Sure that we have an
absolute fabulous experience from not just from first bite, but
(30:16):
all the way backing up to you know, the shopping experience,
the marketing experience, exploring what products you might want to
enjoy from Omaha steaks all the way through to when
that cooler shows up perfectly frozen with ice still in
the package.
Speaker 4 (30:30):
All right, Nan, I got to ask you because I
feel like every time we go out for dinner, you
want to buy I'm using steak broadly, but there's obviously
different kinds of cuts and so on and so forth.
But it's expensive. You're talking thirty five, forty, fifty sixty.
Why is it so expensive? And I was just looking,
you know, beef prices have gone up again this year,
(30:53):
are there up? So what's going on in the beef market.
Speaker 12 (30:57):
Yeah, it's largely it's it's pretty simple, Carol, kind of
supply and demand. So consumer demand has really kind of
stayed strong despite you know, all what's happening around us
in the macro environment, macroeconomic environment. Cattle supply has dropped,
in fact, will be about four million head lower in
(31:22):
this year versus twenty twenty two, and thus.
Speaker 10 (31:26):
You know, price is sort of increasing.
Speaker 12 (31:28):
So you know, all those factors are really what's behind
the price of meat increasing because you know, the cost
of food has been increasing for quite some time. It's
not just you know kind of this you know, very
recent event and going out to dinner when you told me,
you know, you go out for a stake. You know,
(31:49):
I think if you think back to twenty twenty, you know,
one of the things that we learned as a country
is how great it was to have dinner at home
with family, and that you know, when you do that,
that doesn't mean that the experience or the.
Speaker 10 (32:03):
Quality has to drop, right, And.
Speaker 12 (32:06):
What I'm arguing is that I can bring the quality
and the guidance and the experience of the best steakhouse
in America to your kitchen, and you can do it
without waiting in line, without driving, without tips, you know,
without well, you know, maybe variable service, and you can
(32:28):
be the hero in the kitchen as opposed to the stake, right.
Speaker 6 (32:32):
As long as you don't overcook it, which has happened,
do you know?
Speaker 10 (32:35):
It depends? I mean, you know, we say it a lot.
Speaker 2 (32:39):
Well, you know, to Carol's point, beef prices recently, just
in the last few days, reached a record high in April.
How much of your price has gone up over.
Speaker 6 (32:49):
The last year.
Speaker 12 (32:51):
Actually, we have held our price as static for about
three years. And again we're doing that because we're able
to control and I can't really overstate how important it
is to control the controllables. I mean, you know, when
you're operating a large business, things that come at you
from the sides that cause impact to costs or ultimately
(33:12):
what drive consumer price up. So we've been able to
really control our controllables and offer that benefit to our customers.
Speaker 10 (33:20):
Now there are.
Speaker 12 (33:21):
Really, there really are a number of things that America
can do to manage their costs of protein. It's like
anything else in economics. You know, there's a trade down opportunity.
So if you were maybe used to having a Tuesday
night filet mignon, we've seen some Americans go to.
Speaker 10 (33:40):
The Top Surloin. I happen to love the Top Surloin.
Speaker 12 (33:43):
I think it's an underappreciated, maybe under loved steak.
Speaker 10 (33:47):
It's a Tuesday night steak.
Speaker 12 (33:49):
It's beefy, it's it's you know, it's very healthy, more lean,
And so there is a trade down happening there because
protein really is an important component to our diet and
as a Keith cornerstone and maintaining a healthy diet, and
so trading down is one of them. Like I said,
eating at home is another, you know, investing in products
that you know have that high quality, But still that
(34:12):
experience at home can be a great one.
Speaker 9 (34:13):
All right.
Speaker 10 (34:14):
First of all, quick, go ahead.
Speaker 4 (34:16):
I'm just say full disclosure, we cook a lot at home,
so it's not like I'm meeting out.
Speaker 5 (34:19):
All the time.
Speaker 4 (34:19):
I'm just kind of blown away by the costs on menus.
But the same thing even when we you know, pie.
Speaker 5 (34:26):
You know, it's just kind of expensive. Why are herds down?
Speaker 4 (34:29):
You said four herds in the US are down by
four million heads, lower than twenty twenty two.
Speaker 5 (34:35):
Why is that?
Speaker 10 (34:36):
Is there not the layer number factors? Yeah, number of factors, Carol.
Speaker 12 (34:40):
Things like drought, you know, the the environment which the
cattle are being raised certainly affects the size of the herd.
Speaker 8 (34:47):
Right.
Speaker 12 (34:48):
But another phenomenon that's really interesting that I think you'll
also find interesting is something called heifer retention. So when
demand for beef is high, there is motivat to harvest
the female animal as opposed to leverage that animal to
generate more herd.
Speaker 10 (35:08):
And over the.
Speaker 12 (35:09):
Last number of years that has been happening. And so
as hepper retention drops, the number of cabs entering the
market or entering the environment drops as well, so the
build of the herd doesn't really happen over time, and
we've been dealing with that reduction over the last number
of years, which is a contributing factor.
Speaker 10 (35:30):
To supply Nate price.
Speaker 12 (35:32):
Nate.
Speaker 2 (35:32):
You also, it's not just it's known for stakes, but
you guys also do chicken and pork, seafood, You do desserts, wine, gifts.
Some of your seafood is imported from outside of the US. Correct,
it is, yes, So how have you been you know,
like Argentinian shrimp for example, how have you been able
to control prices there? You say, controlling the controllable is
(35:53):
what's important. But how much are you getting hit with
tariffs on that stuff?
Speaker 10 (35:57):
There's a little bit of that there.
Speaker 12 (35:58):
I tell you one of the benefit you get from
being a multi decade business is we have multi decade
supplier relationships and so you know, we can have conversations
with them and we can talk frankly about the fact
that you know the Omaha steaks and you know inter
supplier name here. This is about the long term. We've
(36:19):
been sourcing from you for twenty to thirty years. Help
us overcome this blip, and a lot of times we
find that our suppliers will step up and help us
keep those costs in check. Yeah, and largely I think
you know we've we've done a pretty good job. My
team has done a fabulous job of anticipating the impact
to tear us there.
Speaker 4 (36:38):
All right, while we have you, can we talk about
Nick and Kate or should I call it Nate?
Speaker 10 (36:42):
Sure?
Speaker 5 (36:43):
Tell us about Certified Tender.
Speaker 4 (36:45):
It was a romance novel. I believe it started as
an April Fool's Joe.
Speaker 6 (36:49):
What are you talking about?
Speaker 7 (36:51):
I have to tell you.
Speaker 4 (36:52):
We were kind of reading there's a great article that
kind of put it all together. We're reading some of
it out loud in the newsroom. This seems like it
was an idea that really took off, just got about
a minute or so left here.
Speaker 5 (37:06):
How successful did this turn out to be and how
did it come about?
Speaker 10 (37:10):
It was so fun.
Speaker 12 (37:11):
We've done April Fool's events over the last number of years.
But we had a super talented copywriter internally that agreed
to take on writing Certified Tenders. So it was literally
written by a copywriter here at Omaha Steaks named Michael.
Speaker 10 (37:29):
And I don't know.
Speaker 12 (37:30):
If you have the opportunity to read it, you totally should.
It's got some fun Easter eggs in the book that
talk about the history of Omaha Steaks. You know, some
of the names and some of the dates and things
correlate with the history of the company. And it just
blew up. I mean, the book looks great, you know,
the content and the creative it's just a neat, fun
(37:51):
way to engage with our customers. And I think, you know,
it sort of speaks to the culture and the innovation
and the desire to have fun.
Speaker 4 (38:00):
How that meet Cute Collection because this was a promotional
material for Meat Eat Meat Cute Collection ninety nine Bucks
date Night themed box Filet Mignon fries cab Cabernet Sauvignon
twenty seconds left here.
Speaker 5 (38:15):
How successful are those?
Speaker 12 (38:17):
Hugely successful? I mean it's who doesn't want to have
a date night? I mean it's the perfect date night.
You have some wine, some great Omaha steaks. The filet
that we provide our customers is unmatched. It's literally certified tender.
Speaker 10 (38:31):
By the USTA. So it's about the lost tender steak.
You can buy and then you curl up with a
good book.
Speaker 12 (38:37):
And that book just happens to be by the company
that provided the stake in the wine.
Speaker 4 (38:43):
All right, come back, come back, We got to continue
this conversation. Nate Rempe, Presidency of Omaha Steaks.
Speaker 1 (38:51):
This is the Bloomberg Business Week Daily podcast, available on Apple, Spotify,
and anywhere else you get your podcasts. Lizen Live weekday
afternoons from two to five pm Eastern, on Bloomberg dot com,
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You can also watch us live every weekday on YouTube
(39:12):
and always on the Bloomberg terminal
Hosts And Creators
Tim Stenovec
Carol Massar
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