September 17, 2025 • 19 mins
Watch Scarlet and Paul LIVE every day on YouTube: http://bit.ly/3vTiACF.
Bloomberg Intelligence hosted by Paul Sweeney and Alexis Christoforous
- Mandeep Singh Bloomberg Intelligence Global Head of Technology Research joins to discuss the latest news on Nvidia. China’s internet watchdog has instructed companies including Alibaba Group Holding Ltd. and ByteDance Ltd. to terminate orders for Nvidia Corp.’s RTX Pro 6000D, the Financial Times reported.
-Diana Rosero Pena, Bloomberg Intelligence Consumer Staples Analyst, discusses General Mills recent earnings. General Mills Inc. posted a solid quarter, but kept its outlook in place as the maker of Cheerios cereal called out consumers being cautious from economic uncertainty.
- Matthew Schettenhelm, Bloomberg Intelligence Media Litigation Analyst, on latest news from TikTok. After more than a year of negotiations, the US and China have struck a framework agreement to hive off the US operations of social media platform TikTok to a consortium that includes software giant Oracle Corp.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news. You're listening to the
Bloomberg Intelligence Podcast. Catch us live weekdays at ten am
Eastern on Apple, Cocklay and Android Auto with the Bloomberg
Business App. Listen on demand wherever you get your podcasts,
or watch us live on YouTube.
Speaker 2 (00:23):
Through China reportedly telling its tech companies stop buying Nvidia's
AI chips. You know what, even canceled your existing orders
here too. Talk about it as Man Deep saying, Bloomberg Intelligence,
Global head of Technology Research, joining us here in a
New York studio, Mandy, thanks for being here. Just how
big a blow is this to in Vidia at this
moment in time, given how much of its business is
(00:45):
tied to China.
Speaker 3 (00:46):
Well, if you go back to the guy that Nvidio
gave during their second quarter earnings, they sort of anticipated
this that a lot of the China revenue may not materialize,
even though they said it could be too to five billion,
but the guide was almost de risk that they didn't
include any of that. So from that perspective, it's not
(01:08):
that big of a deal, and I think the stock
reaction validates that. With that being said, they also said
that the China GPU market is almost fifty billion dollar
addressable market and it's growing at almost fifty percent plus
growth rate. So when you factor in, you know, the
multi year investment cycle we are in, and not being
(01:29):
able to sell into China will be a big kind
of factor in terms of if it continues, if it continues,
and look, I think when I look at the biggest
large ANDREID model companies, it's either in the US or
in China, and those are the companies that need the
Invidia chips for training their models. And so from that perspective,
(01:50):
once they move away from Invidia, they're not coming back.
Speaker 4 (01:55):
Isn't this just a political football? And at some point
President Trump and You're going to get together somewhere hashing
all this out, including chips and TikTok and all that stuff.
Speaker 3 (02:05):
It sounds like Nvidia has been caught in that crosshairs
when it comes to the US China deal. And clearly
there is a lot of sensitivity around the use of
their chips when it comes to you know, the data
and how important it is for countries in terms of
(02:27):
just how they're thinking through their AI strategy. So with
that being said, look, I don't think there is an
easy resolution here when it comes to the use of
Nvidia long term for a country like China where clearly
there are tensions, and I don't think even if there
is a deal, the sensitivity around the data is kind
(02:49):
of going back to where it was, you know, a
few years back. That's why we have the TikTok deal
and you know, what we are going through in terms
of by edance having to give up ownership is because
clearly the US doesn't want, you know, the data of
the users to be stored in China or be accessible
(03:09):
in some ways. So from that perspective, I think the
data sensitivity is big, and chips are a big part
of that.
Speaker 2 (03:15):
I'm glad you brought up TikTok, and since we have
you here, I wanted to ask you about that. More
details are now emerging. It looks like there may be
a consortium right including Oracle, Silver Ac and recent Horowitz
that may take over the US operations. But might there
be a bitting more here in any talk as to
how much they're valuing this company.
Speaker 3 (03:36):
So when we did evaluation a few months back, because
this has been in the news, you know, for quite
a while, we thought a good benchmark would be companies
like Xai, Snapchat, Pinterest, Reddit, and so from that perspective,
you know, TikTok Us assets will be valued at somewhere
(03:56):
between forty two fifty billion. In fact, xas last valuation
before you know Xai and ex merged the Twitter portion
of it was valued at around thirty three billion, So
from that perspective, it would be somewhere in that vicinity.
But with that being said, you know, given the geopolitical
(04:19):
aspects involved in this deal, Oracle seems to be the
one entity that will likely be involved in buying the
assets because it's running the TikTok back in infrastructure right now,
So I can't imagine this deal happening without Oracle. The
private equity players are silver Lake and Clearly and recent
Horowitz and look, I mean, this would be among their
(04:42):
biggest deals. Even if you think about that forty to
fifty billion sort of transaction value, it will be quite huge.
So I do think, you know, it's a valuable asset.
But because of the geopolitical nature of this, there may
not be a an entity among the Max seven players
that would try and bid for.
Speaker 4 (05:03):
To pick up political football, right ye, yeah, exactly, So,
I mean, but part of a deal. If this thing
were to be spun out as a separate company, you'd
have to ask all these little TikTokers out there to
download a new app and all that kind of stuff
that perceived to be a potential problem. Or is that not.
Speaker 3 (05:19):
Actually, if you had asked me that question one year back,
I would have said yes. But now with generative AI,
a lot of the systems are being rewritten. So when
I think about TikTok's algorithm advantage, I feel it's somewhat
offset by the fact that we have got all these
new generative AI based recommendation tools and new things that
(05:42):
are out there that companies that are looking to develop
new AI apps are doing that natively using lllms. So
if somebody was to rewrite the algorithm, they could do
that now with all the LLLM tools that are available.
That wasn't the case one or two years back, when
TikTok really had an advantage with their algorithm. I think
(06:03):
that's been somewhat offset.
Speaker 2 (06:05):
I'm a little confused. I don't know if you have
any clarity on this, But say you're an influencer. Influencer
who gets a lot of income from TikTok. Right, a
lot of people do. If you have to download the
new app, do all of your followers come along too?
Is it just basically your your account but on a
new app.
Speaker 3 (06:19):
In essence, that's true, and you get all the social graphs.
It's just the recommendation algorithm changes. And guess what. Google
Search changes their algorithm so many times in a year.
They change their algorithm a lot, So what's the big
deal if the algorithm changes, Look, it will impact the
creators and how they're used to monetizing it. Wants a
(06:41):
recommendation algorithm changes, but meta has changed it. Google Search
changes it, So I don't think it will be that
big of a deal. And that's why I think they
are going in that direction where either they license the
algorithm from by Dance or they rewrite their own algorithm,
and I think both should be acceptable solutions.
Speaker 4 (07:00):
All right, here's the one I have to do. Every
time I see it, My AI is going to kill Google.
I'm not clicking on the links, Dude. If I put
in a search query into Google, Google AI serves me
up exactly what I want. I don't have to click.
How's that changing their model? I'm not clicking.
Speaker 3 (07:17):
So you're right, the ten blue links has definitely changed.
So the relevance of maybe in addition to AI overviews,
the top two links has increased. And so because generative
AI drives more engagement that you are going to ask
a follow up question in addition to your first query.
So instead of showing you ten blue links at once,
(07:39):
they'll show you two blue links in the first one,
two blue links in the follow up query. And even
though you are interacting with the Google page a lot
more than going to the publisher website, they will show
you the top two links and charge more for those
links to the advertisers. So clearly the model is changing
and the algorithm is changing, but they seem to be adopting.
Speaker 5 (08:00):
Go stay with us.
Speaker 4 (08:01):
More from Bloomberg Intelligence coming up after this.
Speaker 1 (08:07):
You're listening to the Bloomberg Intelligence podcast. Catch us live
weekdays at ten am Eastern on Apple, Coarclay and Android
Auto with the Bloomberg Business app. Listen on demand wherever
you get your podcasts, or watch us live on YouTube.
Speaker 4 (08:21):
We're still looking at some earnings, even though it is
a FED day. General Mills is one of them. I
put out the Bloomberg Intelligence research, which is awesome. Now
I'm going down this rabbit hole where you can get
the earnings model for all these companies that the Bloomberg
Intelligence and also put together right there on the terminal.
I'm going down this rabbit hole. I'm changing scenarios and
changing margins and all this kind of stuff to see
(08:41):
how the earnings are. So let's get back to it though,
Jano Roseide opinion. She covers a lot of these consumer
stocks for Bloomberg Intelligence. Yan I talked to us about
General Mills here. How were their earnings recently?
Speaker 5 (08:53):
They were mainly in line with expectations.
Speaker 6 (08:58):
It wasn't that much of a surprise, but still, you know,
the stock is a little bit on the south side.
People expected better news than what they disclosed.
Speaker 2 (09:09):
Yeah, I mean North America sales came under pressure. What
was the drag there?
Speaker 6 (09:14):
It was mainly on volume. We expected volume declines but
not to the magnitude that they did. It was down
four percent on organic on the organic part, so obviously
consumers are still trading down. They are mentioning that, you know,
about eight eight brands of theirs. It was positive, but
(09:36):
it's still it wasn't enough for the whole segment two
to pull through what.
Speaker 4 (09:41):
Are they doing or what are they saying about tariffs
and the impact on their costs versus maybe what they're
trying to pass along to customers.
Speaker 6 (09:48):
So they are upsetting some of the costs with cost
savings it's usually going to be. They expected to be
about one to two percent of cogs this year, which
is a little bit lower than and for example, Campbell's
expected they expected around four percent.
Speaker 5 (10:04):
So you know, they're not they're they do not want
to raise prices.
Speaker 6 (10:10):
They want to be competitive because obviously volume growth is
not happening.
Speaker 2 (10:14):
So yeah, I mean, they're getting competition from more folks.
I mean, on the one hand, they're they're benefiting from
the fact that more people are eating at home, right,
but yet when we're going to the supermarket, more people
are choosing those private label brands.
Speaker 5 (10:26):
Correct, So do they do they talk.
Speaker 2 (10:27):
About that at all on the earnings call, And what's
their sort of you know, plan of attack there?
Speaker 6 (10:31):
Yeah, So they're increasing marketing, They're they're hoping for innovation.
Speaker 4 (10:37):
Uh.
Speaker 6 (10:37):
They mentioned that twenty five percent of sales growth will
come in North America retail will probably come from innovation
this year. And this is what all everybody's trying to
get to the problem is. And that was mentioned on
the call as well, was that even the price increases
are not as significant as it used to be, they're
still high. So on a on a in a basket size,
(11:01):
you're still paying a lot more than the used to
two years ago.
Speaker 4 (11:05):
Talk to us about store brands versus kind of the
the brands we all grew up with. Here, tell us
how that's changed over time. Our store brands are becoming
a bigger, bigger part of the average cart.
Speaker 6 (11:15):
Yes, well, retailers are investing more on their private label.
It allows them to bring people into the store. Some
of the brands.
Speaker 5 (11:24):
Are have a cult following. I will say, hello, Costco.
Speaker 6 (11:28):
So exactly, so people are going to the store to
buy that particular brand. They're more profitable than national brands,
so obviously they're still incentive for retailers to deploy some
of that some of their own brand.
Speaker 2 (11:45):
I think some people think it cheek to buy private label, right, Well,
we're at like a badge of Honor's certainly.
Speaker 4 (11:51):
I was shocked at the price differential.
Speaker 2 (11:53):
Yeah, because they have that pricing power right These stores
to you know, make their products a lot more attractive,
really quick, blue Buffalo, it's their food. I was surprised
to see that that that was not a leader for them.
Speaker 6 (12:04):
Yeah, so Wilderness was not is not doing as well
as they are hoping. Dog food in general has been
ahead wind, not only for them but also for the
overall industry. Cat food seems to be the leading indicator here,
which is surprising.
Speaker 2 (12:24):
But cat food is outpacing dog food.
Speaker 5 (12:26):
Yes, correct, We have seen this for the past year.
Speaker 3 (12:30):
Going on.
Speaker 2 (12:33):
John Tucker, how to chime.
Speaker 4 (12:36):
Food.
Speaker 6 (12:36):
Well, there seems to be a growth in the cat
population more than the dog population.
Speaker 4 (12:42):
Wow. Interesting?
Speaker 3 (12:43):
What have we had?
Speaker 4 (12:44):
A good retail sales number yesterday, better than expected. Are
your companies the consumer protus companies? What are they saying
about the consumer? Yeah?
Speaker 6 (12:51):
Like I said, they're looking for value. They're still seeing
their budget as a whole rather than the price increase
or decrease. They're looking for price cuts wherever they can,
and they're willing to trade down for it.
Speaker 4 (13:07):
Stay with us more from Bloomberg Intelligence coming up after this.
Speaker 1 (13:13):
You're listening to the Bloomberg Intelligence podcast. Catch us live
weekdays at ten am Eastern on Applecarplay and Android Auto
with the Bloomberg Business App, listen on demand wherever you
get your podcasts, or watch us live on YouTube.
Speaker 2 (13:27):
More details are emerging now on the US China TikTok deal.
We know it is an app that nearly half the
country has one hundred and seventy million Americans. What might
that deal look like? What are some of the hurdles.
Let's bring in Matthew schettenhaulm Bloomberg Intelligence media litigation analyst.
He is joining us from Washington, d C. So Matthew
just tell us sort of where do things stand right now?
(13:49):
We know that there might be this consortium that would
take over the US TikTok, but might there be other
bidders here?
Speaker 3 (13:57):
Yeah?
Speaker 7 (13:58):
So I think we're finally seeing progus here for the
first time. As you know that the Congress passed this
law last year, the Supreme Court upheld it in January.
It was supposed to take effect and effectively ban TikTok
on January nineteenth, and President Trump has granted extension after
extension to prevent that from happening. I think this is
(14:20):
the first sign of real progress. It sounds like there
are you know, two or three bidders involved. And the
potential framework for a deal that potentially could be announced
as early as tomorrow.
Speaker 4 (14:36):
Well, you know, I think, well, I certainly forgot that
TikTok passed the law and says, hey, you either got
to divest this thing or shut it down. I mean,
Congress is involved here. So whatever deal eventually gets done,
it has to kind of a huge of those requirements
by Congress, doesn't.
Speaker 7 (14:52):
Yeah, I mean that's right. This isn't This is not
the way the law typically works usually, you know, Congress
passes the law, that law is still on the book
looks and as of January nineteenth, TikTok is supposed to
be banned, and yet it's continued to operate because President
Trump's Department of Justice has sent letters basically saying don't
(15:12):
worry about it. So that raises the question how much
is the law going to matter with respect to this deal?
Because Congress specifically addressed what sort of divestiture should happen
under this arrangement. One of those terms says that byte
dance can't control the new entity. I think they can.
They can address that by keeping Byteedance's interest below twenty
(15:34):
percent in the new entity. But the second one might
be trickier, and that goes to the operation of the algorithm,
which is TikTok's secret sauce. The law that Congress passed
said that there can be no operational relationship, no cooperation
between byte Dance and any new entity. And that's going
(15:57):
to be the really interesting thing to watch as these
deal terms come out. How are they addressing the algorithm
going forward and how will that change TikTok as we
know it?
Speaker 2 (16:08):
And Matthew, one of the stipulations I read is that
the US government would have a seat on the company's board.
This is not common, right, I mean this usually see
this when the government has to come in an emergency situations,
maybe there's a sponsored bailout like we saw during the
two thousand and eight financial crisis with some of the
insurers and the auto companies.
Speaker 5 (16:25):
Do you think if the US.
Speaker 2 (16:27):
Gets a seat on the board, it gets a seat
on the board, you know, forever. It's not a temporary situation.
Speaker 7 (16:33):
All of this is is sort of unprecedented, so you know,
it's possible that this is sort of just a temporary solution.
It's also possible that it lasts longer than that. We're
sort of making it up as we go here in
terms of the law, and so it's very difficult to
(16:53):
say exactly what shape a deal like that takes and
how long any of it endures.
Speaker 4 (17:00):
So what are next steps here, matt from your perspective.
Speaker 7 (17:03):
Yeah, so yesterday President Trump again issued an extension. The
law was set to again take effect and effectively ban TikTok.
His extension extends it through the middle of December, and
so that gives some breathing room now to make this
deal happen. Of course, he could just kick it, kick
(17:23):
it down the road again if the deal doesn't happen.
So it sounds though, like there are there's real progress
on a framework for a deal, and so I think
we should learn more details about it tomorrow and the
day after and potential for a deal that actually resolves
this issue and is a genuine divestiture from byteedance as
(17:45):
Congress intended. This may end up actually working out as
Congress intended it to work at the end of the day.
Speaker 2 (17:50):
Matthew, I think you hit it earlier when you were
talking about the algorithm being, you know, the special sauce,
the most lucrative part of any deal. To be clear,
do we know. I mean, the US would not be
out right buying this algorithm, may be licensing it at
the end of the day, right.
Speaker 7 (18:04):
Yeah, that's what it sounds like from some of the
reporting on the deal. And there's the potential that that
would be consistent with what Congress intended. What the law
bars is an operational relationship and cooperation with respect to
the algorithm. So the work around here may be a
(18:24):
licensing of the technology and saying the US entity gets
to do all the work on that algorithm. But it's
really curious about the details of how that will work
as a practical matter, whether that's consistent with the law,
and maybe the biggest question of all, whether anyone's going
to stand up and insist that the law befollowed.
Speaker 1 (18:44):
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Speaker 4 (19:10):
M
Bloomberg Audio Studios, podcasts, radio news. You're listening to the
Bloomberg Intelligence Podcast. Catch us live weekdays at ten am
Eastern on Apple, Cocklay and Android Auto with the Bloomberg
Business App. Listen on demand wherever you get your podcasts,
or watch us live on YouTube.
Speaker 2 (00:23):
Through China reportedly telling its tech companies stop buying Nvidia's
AI chips. You know what, even canceled your existing orders
here too. Talk about it as Man Deep saying, Bloomberg Intelligence,
Global head of Technology Research, joining us here in a
New York studio, Mandy, thanks for being here. Just how
big a blow is this to in Vidia at this
moment in time, given how much of its business is
(00:45):
tied to China.
Speaker 3 (00:46):
Well, if you go back to the guy that Nvidio
gave during their second quarter earnings, they sort of anticipated
this that a lot of the China revenue may not materialize,
even though they said it could be too to five billion,
but the guide was almost de risk that they didn't
include any of that. So from that perspective, it's not
(01:08):
that big of a deal, and I think the stock
reaction validates that. With that being said, they also said
that the China GPU market is almost fifty billion dollar
addressable market and it's growing at almost fifty percent plus
growth rate. So when you factor in, you know, the
multi year investment cycle we are in, and not being
(01:29):
able to sell into China will be a big kind
of factor in terms of if it continues, if it continues,
and look, I think when I look at the biggest
large ANDREID model companies, it's either in the US or
in China, and those are the companies that need the
Invidia chips for training their models. And so from that perspective,
(01:50):
once they move away from Invidia, they're not coming back.
Speaker 4 (01:55):
Isn't this just a political football? And at some point
President Trump and You're going to get together somewhere hashing
all this out, including chips and TikTok and all that stuff.
Speaker 3 (02:05):
It sounds like Nvidia has been caught in that crosshairs
when it comes to the US China deal. And clearly
there is a lot of sensitivity around the use of
their chips when it comes to you know, the data
and how important it is for countries in terms of
(02:27):
just how they're thinking through their AI strategy. So with
that being said, look, I don't think there is an
easy resolution here when it comes to the use of
Nvidia long term for a country like China where clearly
there are tensions, and I don't think even if there
is a deal, the sensitivity around the data is kind
(02:49):
of going back to where it was, you know, a
few years back. That's why we have the TikTok deal
and you know, what we are going through in terms
of by edance having to give up ownership is because
clearly the US doesn't want, you know, the data of
the users to be stored in China or be accessible
(03:09):
in some ways. So from that perspective, I think the
data sensitivity is big, and chips are a big part
of that.
Speaker 2 (03:15):
I'm glad you brought up TikTok, and since we have
you here, I wanted to ask you about that. More
details are now emerging. It looks like there may be
a consortium right including Oracle, Silver Ac and recent Horowitz
that may take over the US operations. But might there
be a bitting more here in any talk as to
how much they're valuing this company.
Speaker 3 (03:36):
So when we did evaluation a few months back, because
this has been in the news, you know, for quite
a while, we thought a good benchmark would be companies
like Xai, Snapchat, Pinterest, Reddit, and so from that perspective,
you know, TikTok Us assets will be valued at somewhere
(03:56):
between forty two fifty billion. In fact, xas last valuation
before you know Xai and ex merged the Twitter portion
of it was valued at around thirty three billion, So
from that perspective, it would be somewhere in that vicinity.
But with that being said, you know, given the geopolitical
(04:19):
aspects involved in this deal, Oracle seems to be the
one entity that will likely be involved in buying the
assets because it's running the TikTok back in infrastructure right now,
So I can't imagine this deal happening without Oracle. The
private equity players are silver Lake and Clearly and recent
Horowitz and look, I mean, this would be among their
(04:42):
biggest deals. Even if you think about that forty to
fifty billion sort of transaction value, it will be quite huge.
So I do think, you know, it's a valuable asset.
But because of the geopolitical nature of this, there may
not be a an entity among the Max seven players
that would try and bid for.
Speaker 4 (05:03):
To pick up political football, right ye, yeah, exactly, So,
I mean, but part of a deal. If this thing
were to be spun out as a separate company, you'd
have to ask all these little TikTokers out there to
download a new app and all that kind of stuff
that perceived to be a potential problem. Or is that not.
Speaker 3 (05:19):
Actually, if you had asked me that question one year back,
I would have said yes. But now with generative AI,
a lot of the systems are being rewritten. So when
I think about TikTok's algorithm advantage, I feel it's somewhat
offset by the fact that we have got all these
new generative AI based recommendation tools and new things that
(05:42):
are out there that companies that are looking to develop
new AI apps are doing that natively using lllms. So
if somebody was to rewrite the algorithm, they could do
that now with all the LLLM tools that are available.
That wasn't the case one or two years back, when
TikTok really had an advantage with their algorithm. I think
(06:03):
that's been somewhat offset.
Speaker 2 (06:05):
I'm a little confused. I don't know if you have
any clarity on this, But say you're an influencer. Influencer
who gets a lot of income from TikTok. Right, a
lot of people do. If you have to download the
new app, do all of your followers come along too?
Is it just basically your your account but on a
new app.
Speaker 3 (06:19):
In essence, that's true, and you get all the social graphs.
It's just the recommendation algorithm changes. And guess what. Google
Search changes their algorithm so many times in a year.
They change their algorithm a lot, So what's the big
deal if the algorithm changes, Look, it will impact the
creators and how they're used to monetizing it. Wants a
(06:41):
recommendation algorithm changes, but meta has changed it. Google Search
changes it, So I don't think it will be that
big of a deal. And that's why I think they
are going in that direction where either they license the
algorithm from by Dance or they rewrite their own algorithm,
and I think both should be acceptable solutions.
Speaker 4 (07:00):
All right, here's the one I have to do. Every
time I see it, My AI is going to kill Google.
I'm not clicking on the links, Dude. If I put
in a search query into Google, Google AI serves me
up exactly what I want. I don't have to click.
How's that changing their model? I'm not clicking.
Speaker 3 (07:17):
So you're right, the ten blue links has definitely changed.
So the relevance of maybe in addition to AI overviews,
the top two links has increased. And so because generative
AI drives more engagement that you are going to ask
a follow up question in addition to your first query.
So instead of showing you ten blue links at once,
(07:39):
they'll show you two blue links in the first one,
two blue links in the follow up query. And even
though you are interacting with the Google page a lot
more than going to the publisher website, they will show
you the top two links and charge more for those
links to the advertisers. So clearly the model is changing
and the algorithm is changing, but they seem to be adopting.
Speaker 5 (08:00):
Go stay with us.
Speaker 4 (08:01):
More from Bloomberg Intelligence coming up after this.
Speaker 1 (08:07):
You're listening to the Bloomberg Intelligence podcast. Catch us live
weekdays at ten am Eastern on Apple, Coarclay and Android
Auto with the Bloomberg Business app. Listen on demand wherever
you get your podcasts, or watch us live on YouTube.
Speaker 4 (08:21):
We're still looking at some earnings, even though it is
a FED day. General Mills is one of them. I
put out the Bloomberg Intelligence research, which is awesome. Now
I'm going down this rabbit hole where you can get
the earnings model for all these companies that the Bloomberg
Intelligence and also put together right there on the terminal.
I'm going down this rabbit hole. I'm changing scenarios and
changing margins and all this kind of stuff to see
(08:41):
how the earnings are. So let's get back to it though,
Jano Roseide opinion. She covers a lot of these consumer
stocks for Bloomberg Intelligence. Yan I talked to us about
General Mills here. How were their earnings recently?
Speaker 5 (08:53):
They were mainly in line with expectations.
Speaker 6 (08:58):
It wasn't that much of a surprise, but still, you know,
the stock is a little bit on the south side.
People expected better news than what they disclosed.
Speaker 2 (09:09):
Yeah, I mean North America sales came under pressure. What
was the drag there?
Speaker 6 (09:14):
It was mainly on volume. We expected volume declines but
not to the magnitude that they did. It was down
four percent on organic on the organic part, so obviously
consumers are still trading down. They are mentioning that, you know,
about eight eight brands of theirs. It was positive, but
(09:36):
it's still it wasn't enough for the whole segment two
to pull through what.
Speaker 4 (09:41):
Are they doing or what are they saying about tariffs
and the impact on their costs versus maybe what they're
trying to pass along to customers.
Speaker 6 (09:48):
So they are upsetting some of the costs with cost
savings it's usually going to be. They expected to be
about one to two percent of cogs this year, which
is a little bit lower than and for example, Campbell's
expected they expected around four percent.
Speaker 5 (10:04):
So you know, they're not they're they do not want
to raise prices.
Speaker 6 (10:10):
They want to be competitive because obviously volume growth is
not happening.
Speaker 2 (10:14):
So yeah, I mean, they're getting competition from more folks.
I mean, on the one hand, they're they're benefiting from
the fact that more people are eating at home, right,
but yet when we're going to the supermarket, more people
are choosing those private label brands.
Speaker 5 (10:26):
Correct, So do they do they talk.
Speaker 2 (10:27):
About that at all on the earnings call, And what's
their sort of you know, plan of attack there?
Speaker 6 (10:31):
Yeah, So they're increasing marketing, They're they're hoping for innovation.
Speaker 4 (10:37):
Uh.
Speaker 6 (10:37):
They mentioned that twenty five percent of sales growth will
come in North America retail will probably come from innovation
this year. And this is what all everybody's trying to
get to the problem is. And that was mentioned on
the call as well, was that even the price increases
are not as significant as it used to be, they're
still high. So on a on a in a basket size,
(11:01):
you're still paying a lot more than the used to
two years ago.
Speaker 4 (11:05):
Talk to us about store brands versus kind of the
the brands we all grew up with. Here, tell us
how that's changed over time. Our store brands are becoming
a bigger, bigger part of the average cart.
Speaker 6 (11:15):
Yes, well, retailers are investing more on their private label.
It allows them to bring people into the store. Some
of the brands.
Speaker 5 (11:24):
Are have a cult following. I will say, hello, Costco.
Speaker 6 (11:28):
So exactly, so people are going to the store to
buy that particular brand. They're more profitable than national brands,
so obviously they're still incentive for retailers to deploy some
of that some of their own brand.
Speaker 2 (11:45):
I think some people think it cheek to buy private label, right, Well,
we're at like a badge of Honor's certainly.
Speaker 4 (11:51):
I was shocked at the price differential.
Speaker 2 (11:53):
Yeah, because they have that pricing power right These stores
to you know, make their products a lot more attractive,
really quick, blue Buffalo, it's their food. I was surprised
to see that that that was not a leader for them.
Speaker 6 (12:04):
Yeah, so Wilderness was not is not doing as well
as they are hoping. Dog food in general has been
ahead wind, not only for them but also for the
overall industry. Cat food seems to be the leading indicator here,
which is surprising.
Speaker 2 (12:24):
But cat food is outpacing dog food.
Speaker 5 (12:26):
Yes, correct, We have seen this for the past year.
Speaker 3 (12:30):
Going on.
Speaker 2 (12:33):
John Tucker, how to chime.
Speaker 4 (12:36):
Food.
Speaker 6 (12:36):
Well, there seems to be a growth in the cat
population more than the dog population.
Speaker 4 (12:42):
Wow. Interesting?
Speaker 3 (12:43):
What have we had?
Speaker 4 (12:44):
A good retail sales number yesterday, better than expected. Are
your companies the consumer protus companies? What are they saying
about the consumer? Yeah?
Speaker 6 (12:51):
Like I said, they're looking for value. They're still seeing
their budget as a whole rather than the price increase
or decrease. They're looking for price cuts wherever they can,
and they're willing to trade down for it.
Speaker 4 (13:07):
Stay with us more from Bloomberg Intelligence coming up after this.
Speaker 1 (13:13):
You're listening to the Bloomberg Intelligence podcast. Catch us live
weekdays at ten am Eastern on Applecarplay and Android Auto
with the Bloomberg Business App, listen on demand wherever you
get your podcasts, or watch us live on YouTube.
Speaker 2 (13:27):
More details are emerging now on the US China TikTok deal.
We know it is an app that nearly half the
country has one hundred and seventy million Americans. What might
that deal look like? What are some of the hurdles.
Let's bring in Matthew schettenhaulm Bloomberg Intelligence media litigation analyst.
He is joining us from Washington, d C. So Matthew
just tell us sort of where do things stand right now?
(13:49):
We know that there might be this consortium that would
take over the US TikTok, but might there be other
bidders here?
Speaker 3 (13:57):
Yeah?
Speaker 7 (13:58):
So I think we're finally seeing progus here for the
first time. As you know that the Congress passed this
law last year, the Supreme Court upheld it in January.
It was supposed to take effect and effectively ban TikTok
on January nineteenth, and President Trump has granted extension after
extension to prevent that from happening. I think this is
(14:20):
the first sign of real progress. It sounds like there
are you know, two or three bidders involved. And the
potential framework for a deal that potentially could be announced
as early as tomorrow.
Speaker 4 (14:36):
Well, you know, I think, well, I certainly forgot that
TikTok passed the law and says, hey, you either got
to divest this thing or shut it down. I mean,
Congress is involved here. So whatever deal eventually gets done,
it has to kind of a huge of those requirements
by Congress, doesn't.
Speaker 7 (14:52):
Yeah, I mean that's right. This isn't This is not
the way the law typically works usually, you know, Congress
passes the law, that law is still on the book
looks and as of January nineteenth, TikTok is supposed to
be banned, and yet it's continued to operate because President
Trump's Department of Justice has sent letters basically saying don't
(15:12):
worry about it. So that raises the question how much
is the law going to matter with respect to this deal?
Because Congress specifically addressed what sort of divestiture should happen
under this arrangement. One of those terms says that byte
dance can't control the new entity. I think they can.
They can address that by keeping Byteedance's interest below twenty
(15:34):
percent in the new entity. But the second one might
be trickier, and that goes to the operation of the algorithm,
which is TikTok's secret sauce. The law that Congress passed
said that there can be no operational relationship, no cooperation
between byte Dance and any new entity. And that's going
(15:57):
to be the really interesting thing to watch as these
deal terms come out. How are they addressing the algorithm
going forward and how will that change TikTok as we
know it?
Speaker 2 (16:08):
And Matthew, one of the stipulations I read is that
the US government would have a seat on the company's board.
This is not common, right, I mean this usually see
this when the government has to come in an emergency situations,
maybe there's a sponsored bailout like we saw during the
two thousand and eight financial crisis with some of the
insurers and the auto companies.
Speaker 5 (16:25):
Do you think if the US.
Speaker 2 (16:27):
Gets a seat on the board, it gets a seat
on the board, you know, forever. It's not a temporary situation.
Speaker 7 (16:33):
All of this is is sort of unprecedented, so you know,
it's possible that this is sort of just a temporary solution.
It's also possible that it lasts longer than that. We're
sort of making it up as we go here in
terms of the law, and so it's very difficult to
(16:53):
say exactly what shape a deal like that takes and
how long any of it endures.
Speaker 4 (17:00):
So what are next steps here, matt from your perspective.
Speaker 7 (17:03):
Yeah, so yesterday President Trump again issued an extension. The
law was set to again take effect and effectively ban TikTok.
His extension extends it through the middle of December, and
so that gives some breathing room now to make this
deal happen. Of course, he could just kick it, kick
(17:23):
it down the road again if the deal doesn't happen.
So it sounds though, like there are there's real progress
on a framework for a deal, and so I think
we should learn more details about it tomorrow and the
day after and potential for a deal that actually resolves
this issue and is a genuine divestiture from byteedance as
(17:45):
Congress intended. This may end up actually working out as
Congress intended it to work at the end of the day.
Speaker 2 (17:50):
Matthew, I think you hit it earlier when you were
talking about the algorithm being, you know, the special sauce,
the most lucrative part of any deal. To be clear,
do we know. I mean, the US would not be
out right buying this algorithm, may be licensing it at
the end of the day, right.
Speaker 7 (18:04):
Yeah, that's what it sounds like from some of the
reporting on the deal. And there's the potential that that
would be consistent with what Congress intended. What the law
bars is an operational relationship and cooperation with respect to
the algorithm. So the work around here may be a
(18:24):
licensing of the technology and saying the US entity gets
to do all the work on that algorithm. But it's
really curious about the details of how that will work
as a practical matter, whether that's consistent with the law,
and maybe the biggest question of all, whether anyone's going
to stand up and insist that the law befollowed.
Speaker 1 (18:44):
This is the Bloomberg Intelligence podcast, available on Apple, Spotify,
and anywhere else you get your podcasts. Listen live each
weekday ten am to noon 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
and always on the Bloomberg Terminal
Speaker 4 (19:10):
M
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