Loading summary
Transcript147 lines
- [00:00]
Scarlet Fu
The FIFA World Cup 26 is coming to North America. Get closer to where business meets the beautiful game with a hospitality package featuring premium seats and entertainment. Get closer to wins on and off the pitch. Register interest@hospitality.FIFA.com Interest okay, I have 30.
- [00:18]
Jen Bartashis
Seconds to explain Canva and that's impossible.
- [00:20]
Michael Halen
But here's a glimpse.
- [00:21]
Jen Bartashis
Canva can take your presentations to another level. With Canva Video you can generate awesome.
- [00:27]
Michael Halen
Videos with one prompt.
- [00:28]
Jen Bartashis
Canva Docs lets you create stunning visual documents, report plans, whatever magic write can write in your voice using AI and Canva sheets make spreadsheets people will actually like. Canva lets you bring your big ideas to life as fast as you can think of them. Put imagination to work@canva.com.
- [00:49]
Mandeep Singh
Did my card go through?
- [00:51]
Scarlet Fu
Oh no.
- [00:52]
Paul Sweeney
Your small business depends on its Internet.
- [00:54]
Scarlet Fu
So switch to Verizon business and you.
- [00:56]
Paul Sweeney
Could get LTE Business Internet starting at.
- [00:58]
Scarlet Fu
$39 a month when paired with select Business Mobile plans.
- [01:01]
Paul Sweeney
That's unlimited data for unlimited There we go. Get the Internet you need at the price you want.
- [01:07]
Scarlet Fu
Verizon Business Starting price for lte Business Internet 25 Mbps Unlimited Data Plan with select Verizon Business Smartphone plan.
- [01:15]
Mandeep Singh
Savings terms apply.
- [01:20]
Scarlet Fu
Bloomberg Audio Studios Podcasts Radio News this is Bloomberg Intelligence with Scarlet Fu and Paul Sweeney.
- [01:31]
Paul Sweeney
How do you think the Fed is looking at tariffs? The uncertainty of tariffs?
- [01:35]
Scarlet Fu
Let's take a look at the sectors and how they perform.
- [01:37]
Paul Sweeney
A lot of investors getting whipsawed every.
- [01:39]
Scarlet Fu
Day by news events, breaking market headlines and corporate news from across the globe. Could we see a market disruption, a market event?
- [01:47]
Paul Sweeney
People just too exuberant out there?
- [01:49]
Scarlet Fu
You see some so called low quality stocks driving this short term rally. Bloomberg Intelligence with Scarlet Fu and Paul Sweeney on Bloomberg Radio, YouTube and Bloomberg.
- [01:58]
Paul Sweeney
Originals on today's Bloomberg Intelligence show we dig inside the big business stories impacting Wall street and the global markets Each.
- [02:05]
Scarlet Fu
And every week we provide in depth research and data on some the 2000 companies in 130 industries that our analysts cover worldwide.
- [02:12]
Paul Sweeney
Today we'll look at why Wall Street's biggest banks reported quarterly earnings that surpassed almost all analysts expectations.
- [02:17]
Scarlet Fu
Plus a look at how the tech company Oracle will commit to the widespread use of AMD chips.
- [02:22]
Paul Sweeney
But first we begin with some big news in the tech sector because this.
- [02:25]
Scarlet Fu
Week the AI research and development company OpenAI signed a multi year agreement with Broadcom. It is to collaborate on custom chips and networking equipment.
- [02:34]
Paul Sweeney
The plan is to add 10 gigawatts worth of AI data center capacity with the companies beginning to deploy Racks of service containing the gear.
- [02:41]
Scarlet Fu
In 2026, OpenAI will design the hardware and work with Broadcom to develop it.
- [02:45]
Paul Sweeney
For more, we were joined by Mandeep Singh, Bloomberg Intelligence Senior Tech industry analyst. We first asked Mandeep first take on the latest deal.
- [02:52]
Mandeep Singh
Look, OpenAI is going after adding as much compute capacity as they can, and they did. First 10 gigawatts with Nvidia, 6 gigawatts with AMD, and now 10 gigawatts with Broadcom. And the difference here is with Broadcom they get to use their own chips. Nvidia and AMD are what we call merchant silicon. I mean, that's basically generalized chips where you can deploy the workload you want, whether it's from OpenAI or Microsoft or any other vendor. In the case of custom silicon, which is what Broadcom does, a company like OpenAI or Google, Google makes up almost, you know, 50% plus of Broadcom's AI revenue. So Google has their chip called TPUS. They use it for everything run on Google's platform, whether it's YouTube, whether it's AI, whether it's Cloud, everything inside Google's run on their TPU. So OpenAI's strategy here is to use an approach which is similar to Google TPUs because it saves you a lot of money. I mean, imagine an Nvidia AI chip costs you 30 grand. A custom silicon that Broadcom is making for Google costs you six grand. That's the cost differential we are talking about. And it's not because Nvidia has to spend 30 grand to make that chip. They have a 75% gross margin on the chip that they're selling to the customers. So Nvidia's cost is also low, but they mark up the price of their silicon. Same thing with amd. In the case of Google, they are going directly to Broadcom to make that chip at a far lower price. And it's for their own use, which is why they don't have to pay the markup to Nvidia or amd. And that's why having your custom silicon strategy is so good, because it really saves you. So one gigawatt with Nvidia silicon would cost you about 40 to 50 billion. One gigawatt with a Broadcom open air silicon would cost you 25 to 30 billion. So we are talking about, you know, 30 to 40% cost differential and it's huge. I mean, in the context of what these guys are trying to do, you.
- [05:07]
Scarlet Fu
Know, scale the infrastructure, in addition to that distinction, there's also no investment or stock component to this Open Air Broadcom deal, which makes it different from the deals that it struck with Nvidia and AMD. So I guess my question is how would OpenAI finance these? The purchase or the chips in general?
- [05:26]
Mandeep Singh
And that's a great question because right now they have to do a lot of financing. It's one thing that's a common thread in the Nvidia transaction where even though Nvidia is putting $10 billion in OpenAI, they still have to find the remainder of the money. So if you imagine you know, 40 to $50 billion per gigawatt, 10 gigawatts cost you around 500 billion. Nvidia is already investing up to 100 billion. So they still have to figure out the remainder of 400 billion. In the case of AMD. I mean yes, they are getting some stock, but you still have to figure out the financing for that 300 billion or so. Here it's the same thing. You need the money. And OpenAI's bet is if we keep ramping up our revenue, that is obviously a big source of the funding, we'll do a lot of private deals because we already have the buy in from these big players, whether it's Nvidia or Microsoft and other sovereign providers. And I think it's a lot of scale game right now because once we keep hitting our milestones we'll keep raising more money and that's the hope when it comes to Open Air.
- [06:37]
Paul Sweeney
One name I haven't heard during all this dance between all these tech companies is Apple. Yeah, what's going on there?
- [06:43]
Scarlet Fu
Glaring absence.
- [06:45]
Mandeep Singh
Exactly. I think that's the right way to frame it. And look, at some point I think they are going to go the Broadcom route. Out of the three partnerships that OpenAI has had, a company like Apple will never go for merchant silicon. I mean look at what they have done in their own devices. It's all custom silicon. And that's where if I had to pick a strategy for Apple, it will likely be custom silicon using Broadcom or Marvell or one of these ASIC providers. But the hard thing for them is because they have missed out all the action in the past three years. It's so hard to catch up even if you throw money and you know, your capex dollars. The time is of the essence and the longer they delay this I feel either is Broadcom or a partnership with Google now that antitrust is behind. So they may very well adopt Google's LM across their huge, that will be huge. But I think, you know with the regulatory overhang going away, that could be a very likely strategy.
- [07:47]
Scarlet Fu
Apple has a ton of cash. It can't buy its way to a solution here.
- [07:52]
Mandeep Singh
Who do you buy? I mean, these are all scale players and Broadcom, maybe you could say Marvel is a smaller player, but you need the best and chips. That's why everyone is buying Nvidia, because they have the highest performance per watt. So you can't really get a second or a third player because then you compromise on the performance per watt when the biggest constraint out there is power. So you know, you need the leading player when it comes to the chip side of the equation.
- [08:20]
Scarlet Fu
Our thanks to Mandeep Singh, Bloomberg Intelligence Senior Tech industry analyst.
- [08:24]
Paul Sweeney
We move next to corporate earnings from the pizza chain Domino's.
- [08:27]
Scarlet Fu
Domino's reported better than expected third quarter earnings this week. They were fueled by demand for promotions and the stuffed crust pizza.
- [08:34]
Paul Sweeney
For more, we're joined by Michael Hal, Bloomberg Intelligence senior restaurant and food service analyst.
- [08:38]
Scarlet Fu
We began by asking Michael to break down the latest results.
- [08:41]
Michael Halen
It was a great quarter. I mean, 5.2%, same store sales in the U.S. and everyone knows quick service restaurants have been struggling due to low income consumer weakness. They did it with stuffed crust pizza. They were the only major national pizza chain that did not have stuffed crust pizza. So they added that to the repertoire and this year and that that's boosted sales value. This, this quarter was the best deal ever. $9.99 for any pizza, no matter how many toppings you want on it. Right. So giving people a discount that they really want on an item they really want. And then, you know, doordash, this is the first quarter they were fully rolled out on doordash. And that has really helped them take a chunk of that third party delivery aggregator business, boosting same store sales.
- [09:34]
Scarlet Fu
Okay, that all makes sense. But is that sustainable? Especially the promotions like 999, which definitely sound appealing in this day and age. I mean, these campaigns might drive volume, but at some point don't they erode profitability?
- [09:48]
Michael Halen
Well, I think, you know, what we saw was margins were flat, you know, so to your point, you know, but what management said and what they're right about is that, you know, you, you don't take margin to the bank. You take dollars to the bank. Right. And so they did this 999 deal and they actually ran it longer than expected because franchisees were making so much money off of it. Right. And so, yeah, they're willing to sacrifice a little bit of margin expansion here for that traffic because it's making franchisees happy and that, and that's the key when running, when being a franchisor. So you know, I think this is sustainable, right? They are, they have only a fraction of the third party delivery business, right. But they have a third of the pizza market in the US So that's a huge slug of business that we think is a great opportunity that's going to continue to build over time. You know, Uber Eats, it took them quite some time to build some momentum there. This was just the first quarter of, of being fully rolled out on DoorDash. So we think it's going to have a big, big impact over the next three quarters. But it sounds like it can continue to build stuffed crust pizza, right? This is something that's a permanent menu item. This is not something that is, you know, just a limited time offer that's going to be run for a few weeks, right? And then value, they have a bunch of different value things. They do these boost weeks and they, they have have a tip promotion and so they run different value at different times. But what they've done is been able to like, you know, create a name for themselves and are owning certain type of discounts that they run throughout the year. And so I think that is important for national pizza players. It's a business that's heavily weighted toward low income consumers. And you know, to my point earlier, they're struggling right now.
- [11:36]
Paul Sweeney
So Mike, explain the economics or explain the strategy of using these third party delivery folks like Uber Eats or DoorDash. What changed for Domino's? For example, why would they not use them but then make the decision to use them?
- [11:51]
Michael Halen
Yeah, great question. So you know, at first it was really about the cost. Right. And you know, years ago third party delivery companies were charging 30% plus Domino's number one. They waited till the prices came down. Also, their business is really just using the marketplace. They're still using their own delivery drivers. And so they're able to use DoorDash only for their marketplace and pay a much, much lower vig to the company for the listing. Right. And so they were the last of all the major pizza players and QSR names. They were the final holdout. A big part of it was they were just so big in delivery and they didn't want to cannibalize the margin on that business. But what we're seeing is a really drive transactions. This quarter we saw positive same store sales growth with carryout as well as delivery. They saw same store sales growth with every income cohort. It was a very strong Quarter across the board.
- [12:52]
Scarlet Fu
You can count on people to not want to get off their couch and always order in and that's guaranteed money.
- [12:57]
Paul Sweeney
The only offspring that's still on my dole is my last guy who's in college and he knows he has to call me or text me.
- [13:04]
Scarlet Fu
Does he?
- [13:05]
Paul Sweeney
To get pre approval to use any third party deliveries Because I hate that cost. Yeah.
- [13:10]
Scarlet Fu
I mean well as Gen Xers and older, you know, the thought of paying out extra for someone to deliver food.
- [13:15]
Paul Sweeney
To is just so I haven't heard from them in like six months on this.
- [13:18]
Scarlet Fu
That's good progress. So Michael, is Domino's attracting higher income consumers who are perhaps trading down and looking for those deals like the 999 pizza. And I wonder how much more market share they can pick up that way.
- [13:33]
Michael Halen
Well, same store sales to your point did grow with higher income consumers. They didn't talk about whether that's a trade down. Naturally though you will see that from increasing your third party delivery sales. Right. Because those customers tend to skew younger and skew more affluent. So we do know that's credit card. Yeah, exactly.
- [13:55]
Paul Sweeney
Our thanks to Michael Halen, Bloomberg Intelligence Senior restaurant and food service Analyst.
- [13:59]
Scarlet Fu
Coming up, a look at how the luxury goods maker LVMH unexpectedly returned to sales growth last quarter.
- [14:04]
Paul Sweeney
You're listening to Bloomberg Intelligence on Bloomberg Radio providing in depth research and data on 2,000 companies in 130 industries.
- [14:11]
Scarlet Fu
You can access Bloomberg Intelligence via Bigo on the terminal. I'm Scarlet Fu.
- [14:15]
Paul Sweeney
And I'm Paul Sweeney. This is Bloomberg.
- [14:20]
Scarlet Fu
The FIFA World Cup 26 is coming to North America next summer. It's the ultimate celebration of sports and culture and an opportunity to elevate your company. Get closer to where business meets the beat beautiful game with a premium hospitality package. Build partnerships in the best seats and suites. Achieve goals over world class food and beverage. Get closer to wins on and off the pitch. Register interest@hospitality.FIFA.com interest.
- [14:46]
Public Investing Advertiser
You're thoughtful about where your money goes. You've got your core holdings, some recurring crypto buys, maybe even a few strategic options plays on the side. The point is you're engaged with your investments and public gets that. That's why they built an investing platform for those who take it seriously. On public. You can put together a multi asset portfolio for the long haul. Stocks, bonds, options, crypto. It's all there. Plus an industry leading 3.8% APY high yield cash account. Switch to the platform built for those who take investing stake seriously. Go to public.com and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com paid for by public Investing. All investing involves the risk of loss, including loss of principal. Brokerage services for U.S. listed registered securities, options and bonds in a self directed account are offered by Public Investing Inc. Member FINRA and SIPC. Crypto trading provided by Backed Crypto Solutions, LLC. Complete disclosures available at public.com disclosures Introducing.
- [15:47]
Scarlet Fu
The all new Adobe Acrobat Studio now with AI powered PDF spaces do more with PDFs than you ever thought possible. Need AI to turn 100 pages of market research into 5 insights with a click. Do that with Acrobat. Need templates for a sales proposal that'll close that deal. Do that with Acrobat. Need an AI specialist to tailor the tone of your market report to sound real smart in real time. Do that with the all new Adobe Acrobat Studio. Learn more@adobe.com do that with Acrobat. This is Bloomberg Intelligence with Scarlet Fu and Paul Sweeney on Bloomberg Radio.
- [16:26]
Paul Sweeney
Return next to US Bank Earnings this.
- [16:28]
Scarlet Fu
Week Wall Street's biggest banks reported third quarter earnings that surpassed almost all analysts estimates.
- [16:33]
Paul Sweeney
They included Goldman Sachs, bank of America, Morgan Stanley, JPMorgan Chase and Wells Fargo. The results were driven by deals, investment banking and market volatility.
- [16:40]
Scarlet Fu
For a closer look at bank of America and Morgan Stanley, we were joined by Alison Williams, Bloomberg Intelligence Senior analyst for global banks and asset managers.
- [16:48]
Paul Sweeney
We first asked Alison what made of Morgan Stanley's quarterly results.
- [16:51]
Alison Williams
Obviously it's a strong environment for equities especially. The third quarter was a very strong environment. We hit records multiple times, including in the end of September. We had new records earlier this quarter. But you know, as we know, when you manage a team, when you have that strong environment, you want people that are going to take advantage of it. And I mean equities trading really jumping. We saw and we saw strong growth actually at JP Morgan and Morgan Stanley. Goldman trailing a bit, so raising maybe some questions about what happened there. But also equity fees, Morgan Stanley doing well and then the wealth business, I mean that's really the focus for investors. Those flows really strong.
- [17:33]
Scarlet Fu
Yeah, wealth management net revenue of 8.23 billion. It was estimated to increase 7% to 7.78 billion. So that was a big, big beat. And this is the part of the business that Morgan Stanley has really been focused on to to kind of separate it from Goldman Sachs because this is the steady eddy business where it's fee generated, it's recurring. You're not dictated by the whims of the market and volatility and anything that could happen in any quarter.
- [17:58]
Alison Williams
Right. So yeah. So to your point the wealth and asset management tends to be more favored by investors because it does tend to be more of a recurring revenue model. You know obviously if the, if the market goes down 20% or up 20% that has an impact on fees. But it's not comparable to something like the underwriting or transact the pure transactional business. Recall the pandemic when things completely shut down. I mean granted they recovered but, but that, but the fact of the matter is like it's less volatility, more recurring revenue. Investors like that fee income and they like sort of the relative stability of that business.
- [18:40]
Scarlet Fu
So one thing that really jumped out at me Alison when I was looking at the earnings is the fact that all the banks provision for credit losses. JP Morgan set aside more than what analysts thought it would set aside. Goldman Sachs set aside less. Morgan Stanley was estimated to have set aside 97 million. It ended up setting aside 00 for bad losses, bad loan losses. What does that say they did?
- [19:02]
Alison Williams
And I mean for Morgan Stanley lending is such a small part of their business. It's the least out of all the banks. So if you're going to see zero, you would see it there. But the one question we do have which I think will become clear as we see many of the other banks report is you know we're seeing a very strong consumer at these big banks. But is there differentiation in terms of the high end consumer or lower income consumer? A lot of these banks, you know the focus really is on the higher end consumer, JP Morgan, they're despite a lot of the headline figure or headlines that came out from Jamie's comments. We look at the credit card business and the credit trends in that business. Super strong. Their charge off rate they actually guided down because they had to because the delinquencies are coming in, you know, so much lower. We know that JP Morgan really focuses on that Sapphire card, that high end card. So they are seeing a strong consumer. But will we see something different when we see some of the other card companies report?
- [20:03]
Paul Sweeney
You know when you think about it, the drivers of the investment banking business are pretty darn simple. Listen to chief executive, Chief Financial Officer Alastair Borthwick. Here's what he told analysts on Wednesday. Quote, we've seen more certainty now around trade and tariffs and around taxes as well. It's allowed our client base to make longer term decisions. That's reflected in our investment banking activity. Yeah, it's as simple as that. But Again, it's hard to predict kind of what those macro trends are going to be switching gears to the bank of America, their bankers did really well, not that that's a surprise, but they put us in a big growth rate.
- [20:37]
Alison Williams
They did. And you know, to your point, Paul, I mean you've, you've been in this business, right? So the having clarity is generally helpful for the investment banking business. That's why we did see sort of a fall off mid year. But what we've heard from the banks and their bankers is that, look, clients are beginning to accept that there is some level of uncertainty they'll have to deal with. It's not going away necessarily anytime soon. So if you need to come to market, now is probably a good time. And by the way, record equity prices, Fed cutting rates, you know, those are also helpful in bringing some of those deals to market. Bank of America, by the way, talking about their backlog up very strongly for the fourth quarter. So this momentum into this next quarter is likely to show up again in the, in the fourth quarter results.
- [21:26]
Scarlet Fu
So for bank of America, it feels like investors were singularly focused on the net interest income number because it had not done so well just a year ago. And bank of America was really focused on improving that. This was a big beat on the NII number here and they actually guided higher for the fourth quarter. The bank is going to hold its first investor day, I think since 2011 next month. How does this set up bank of America for this investor day?
- [21:52]
Alison Williams
So I think they are set up well for the investor day. And keep in mind, investor day will be focused, I think on the long term trends. We have gotten some management changes, some announcements related to succession planning and I think, you know, Brian Moynihan has done a great job with the bank. I think the investor day is really going to be focused on, you know, what is the look forward. And AI is something that we've heard a little bit about. Bank of America talking about that this quarter, Goldman Sachs bringing out their 3.0 program. Morgan Stanley actually had been talking about that with their cuts last year. How is AI going to contribute to the structural profitability of bank of America? You know, so cyclical, some very strong trends this quarter. Structural. They've done a good job. But what is next for the bank?
- [22:41]
Paul Sweeney
I mean, I just forgot how big bank of America is. And they made, they grew through so many acquisitions. 213,000 employees, it's got a market cap of almost $400 billion. They seem like they've got the right mix of assets at this point.
- [22:56]
Alison Williams
Yeah. So to your point, they did grow a lot through acquisitions under prior management. And I think, you know, what Brian Moynihan has come in and said was they're really going to focus on organic growth. They focus on the strategy, responsible lending. There's some noise around that when times are good, right? Because everyone says, well, are you being too conservative? But then when times are bad, that is really helpful to managing the downside. And that's one of the things that I think can give investors comfort as we worry about recession. Risk invests in the coming quarters Our.
- [23:30]
Scarlet Fu
Thanks to Alison Williams, Bloomberg Intelligence Senior Analyst for global banks and asset managers.
- [23:35]
Paul Sweeney
We move next to earnings from the luxury goods maker lvmh.
- [23:38]
Scarlet Fu
This week LVMH reported third quarter earnings that beat analysts estimates in all five business units after two quarters of declines. The rise in revenue and China sales also suggest that the slump in luxury demand might be easing.
- [23:50]
Paul Sweeney
For more on this, we were joined by Deb Aiken, Bloomberg Intelligence Luxury goods analyst.
- [23:54]
Scarlet Fu
We began by asking Deb for her take on LVMH's results and whether it signals that luxury is back.
- [24:00]
Deb Aiken
Really a very big sentiment indicator. The comments from the company were more positive than the market anticipated. When we look at the numbers in terms of the organic sales growth, the market expected around -1. We came in at +1. But it's about the sequential improvement from Q2 to Q3 and the fact that all five of the business units improved versus Q2 and more than that. China is mid to high single digit growth versus a year ago. The US is robust. Europe is doing the same as it did across the board, doing okay but missing out on tourism and Asia X. Japan is positive. We know 4Q us will face a bit more of a difficult comp after the spend in last year beyond the election and the Trump win But into the first half of 2026, the market is looking positive and it certainly rallied the whole of the sector this morning and this afternoon.
- [25:01]
Paul Sweeney
Hey Deb, what's the correlation between luxury spending and just kind of the broader stock market around the world? Because markets are really performing well. How does that correlate to just luxury spending?
- [25:13]
Deb Aiken
The big thing on luxury spend has been that the very high end has done well. So Hermes, Brunello, Cuccinelli, where they work with a restricted volume operating model, they've done well in terms of their top line growth. But when I think about an lvmh, you know, given how big they are, they need a big volume there. Even with Some pricing to manage growth in this category. And instead what we saw last year and the beginning of this year was maybe a little bit of trading down. So brands like Tapestries, Coach, Ralph Lauren, they became really so popular, not only in the US but more on a globalized basis too. And so the view has been that the sentiment around the share prices has very much been opposed and opposite to what's been happening on the stock market. But with the exception of the mid range and the mid range have done better because the view in the investor mindset has been that the luxury buyer will trade down. They've done that in some brands, but not all brands in some categories. Not all categories. And generally we expect the biggest and the best to come back first.
- [26:28]
Scarlet Fu
What about LVMH's wines and spirits division? We've been hearing from Constellation Brands and other spirits companies that, you know, there's been this massive shift in consumer tastes away from alcohol. Certainly the younger generation. Does that affect a company like lvmh?
- [26:43]
Deb Aiken
So a different kind of thing. With lvmh, I think at the very high end we had some US weakness. So they operate in wines, fine wines, high end Champagnes, Cognacs and others. Champagne is doing well and is back to growth in the US Rose wine is doing very, very well. But some of the spirit side is still struggling a little bit. And I think that's because we've seen some trading down. So we had China very heavily stocked and the US not so solid through the first half of the year. But there are signs of that coming back. If I look at the numbers on the Q3 for wines and spirits, they're at plus one and they were at minus four for Q2 and minus nine for Q1. So it seems as though inventory is leveled out and we're starting to see some selling.
- [27:37]
Paul Sweeney
Deb, I, I learned from you long ago when looking at luxury, you have to also pay attention to what's happening in China and the Chinese consumer. Are the Chinese spending either in China or are they traveling to the London, Paris, New York, Milan type thing? What are you seeing?
- [27:53]
Deb Aiken
Yeah, we're still seeing a lot of the spend. We're getting mid to high single digit growth in that Q3 from LVMH is on localized spending. We are seeing pockets of growth on the tourism side. So there is a more positive view and mix linked into the commentary from these results. But overall we are still absolutely missing Asian tourists, Chinese tourists from Europe, and also in Europe, we're missing the strength of the dollar. Having swung over last year with U.S. purchases here and you are seeing some but not as many in terms of full recovery versus 2019. There's growth year on year, but not versus 2019 into the US either. When it comes to the Chinese tourist, we used to say a third of luxury goods just over were on the were from the Chinese cohort and that would include on land and traveling, right? And we still think there's a way for that to go, but certainly on land and locally they're doing better than they were.
- [28:59]
Paul Sweeney
Our thanks to Deb Aiken, Bloomberg Intelligence Luxury Goods Analyst Coming up, a look.
- [29:03]
Scarlet Fu
At why the global snacking company Kellanova is adding a jolt of protein to its biggest snack.
- [29:08]
Paul Sweeney
You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in depth research and data on 2000 companies and 130 industries.
- [29:14]
Scarlet Fu
You can access Bloomberg Intelligence via bigo on the terminal.
- [29:17]
Paul Sweeney
I'm Scarlet Fu and I'm Paul Sweeney. This is Bloomberg.
- [29:25]
Public Investing Advertiser
You're thoughtful about where your money goes. You've got your core holdings, some recurring crypto buys, maybe even a few strategic options plays on the side. The point is, you're engaged with your investment and Public gets that. That's why they built an investing platform for those who take it seriously. On public, you can put together a multi asset portfolio for the long haul. Stocks, bonds, options, crypto. It's all there plus an industry leading 3.8% APY high yield cash account. Switch to the platform built for those who take investing seriously. Go to public.com and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com paid for by Public Investing. All investing involves the risk of loss, including loss of principal. Brokerage services for U.S. listed registered securities options and bonds in a self directed account are offered by Public Investing Inc. Member Finran SIPC crypto trading provided by Bakkt Crypto Solutions LLC. Complete disclosures available@public.com disclosure introducing the all.
- [30:26]
Scarlet Fu
New Adobe Acrobat Studio now with AI powered PDF spaces. Do more with PDFs than you ever thought possible. Need AI to turn 100 pages of market research into 5 insights with a click? Do that with Acrobat. Need templates for a sales proposal that'll close that deal. Do that with Acrobat. Need an AI specialist to tailor the tone of your market report to sound real smart in real time? Do that with the all new Adobe Acrobat Studio. Learn more@adobe.com do that with Acrobat. How can you free your team from time consuming office tasks? Amazon Business Empowers leaders to not only streamline purchasing, but better support their teams. Smart business buying tools enable buyers to find and purchase items fast so they can focus on strategy and growth. It's time to free up your teams and focus on your future. Learn more about the technology insights and Support available@AmazonBusiness.com this is Bloomberg Intelligence with Scarlet Fu and Paul Sweeney on Bloomberg Radio.
- [31:30]
Paul Sweeney
We move now to news from the consumer goods sector because this week the.
- [31:33]
Scarlet Fu
Global snacking company Kellanova announced it'll offer a version of Pop Tarts with higher protein content. This will begin in November.
- [31:39]
Paul Sweeney
The news comes as companies start to add protein to food with hopes of luring shoppers who've moved away from highly processed products.
- [31:45]
Scarlet Fu
In other news, the retail giant Walmart announced a partnership with AI research company OpenAI. This deal would allow shoppers to browse and purchase its products on the AI chatbot ChatGPT.
- [31:55]
Paul Sweeney
For more on all of this, we're joined by Jen Bartashis, Bloomberg Intelligence Senior Retail analyst.
- [32:00]
Scarlet Fu
We began by asking Jen for her take on Kellanova's protein boost.
- [32:04]
Jen Bartashis
Really what we're seeing is a lot of these packaged food companies are tapping into this protein trend. It's something that consumers are really looking for. And at the end of the day, when it comes to PepsiCo or it comes to Kellanova, this is really about making people feel marginally better about eating food that is bad for them.
- [32:20]
Deb Aiken
Right?
- [32:21]
Jen Bartashis
Let's, let's just be honest about it, right? So, you know, when you put protein on the package, people feel like even if they're making a bad choice, it's not as bad as it could have been. And that's really what's behind this.
- [32:32]
Scarlet Fu
It's like the equivalent of vanity sizing at retailers. Right. You know, you're actually a size 6, but we're going to tell you you're a size 2, so you feel better and buy more clothes. Is this as simple, Jen, as just adding protein powder on top of the Kellogg's Pop Tarts? Excuse me, Kellanova Pop Tarts.
- [32:49]
Jen Bartashis
Yes. So, so what they've done is they've, they've added protein into the, the pastry part of the Pop Tart and that changes the texture and the taste just a little bit. But what's really interesting is the consumer trend behind it. You know, we ran a proprietary protein study back in the middle of the summer, and what we saw was that almost 40% of consumers eat something with protein enhanced, whether it's a snack or a beverage on a weekly basis. And, you know, at least 38% said that they've, they're eating more protein enhanced products in the last three months. So clearly there's a consumer uptake, there's interest in this and that's what these companies are really tapping into.
- [33:28]
Paul Sweeney
Do I want more protein? Do I need more protein?
- [33:30]
Scarlet Fu
I'm eating more egg whites. But that's because it's available at work. What are you doing?
- [33:34]
Paul Sweeney
I don't know. Using the same thing I've always done.
- [33:37]
Scarlet Fu
Your goldfish do not have extra protein on them.
- [33:39]
Paul Sweeney
Goldfish do not have extra protein.
- [33:42]
Jen Bartashis
Neither of you are on GLP1 drugs. Right. But protein is a big solution for people who are on those drugs because you tend to lose muscle mass as a side effect of those drugs. And so as the uptake of GLP1 goes up, there's more and more demand for these protein enhanced products.
- [33:58]
Paul Sweeney
There you go. That's what I needed. Okay, now I'm at a cocktail party and I need to sound smart on proteins. Now I got my.
- [34:04]
Scarlet Fu
But apparently fiber is the new protein. And jen, didn't the PepsiCo CEO say something about this?
- [34:10]
Jen Bartashis
Yeah, you know, whether it's anything that helps kind of enhance the product. So when you talk about Doritos so they have additional milk protein being added, you know, higher fiber products, all of these things are things that people, the average consumer perceives as having a health or wellness benefit. And people are trying in small steps to be a little bit better about their health.
- [34:32]
Paul Sweeney
All right, let's get to another story I thought was really interesting. Walmart partners with Open Air to offer shopping on chat GPT. This sounds like a natural. What's going on here, Jen?
- [34:45]
Jen Bartashis
Yeah, this is an interesting move, but I think it really illustrates sort of that trend of what's happening across retail in general. Walmart's really been very good about doing experimentation and kind of checking out what the opportunities are, whether it comes to social media and social commerce particularly. And this latest partnership with, with OpenAI, this really does tap into that as well. Now social spending is still very small in terms of the overall percentage of what retailers are achieving. But it's important to be present and I think that's what's most notable about this announcement.
- [35:21]
Scarlet Fu
What is social spending and how do the numbers differ from, from normal shopping through Walmart's website or going into Walmart's actual stores?
- [35:32]
Jen Bartashis
Yeah, so social commerce is when you're on a platform, whether it's on ChatGPT now or whether it's on TikTok or whether it's on Facebook or any of the social media platforms and you have the ability to add to cart and buy. Now that's social commerce, but it's still a tiny, tiny fraction of the overall e commerce that happens for these companies. So while it's important in terms of their showing that they're present and that they're aware of new technologies, it's not going to move the needle with regards to their overall e commerce sales or their overall business mix at this point.
- [36:06]
Paul Sweeney
Jen, we've got a little bit more data, a little bit more time as it relates to tariffs. What's your best guess as to what your packaged food companies, your retailers, how are they kind of segmenting the tariffs before maybe passing along something to the consumer?
- [36:23]
Jen Bartashis
Yeah, it's a complicated situation, Paul, and really what's happening is where they can find alternative sourcing. A lot of companies have been trying to do that. There are some companies in packaged food where that's not as easy. So I would take McCormick as an example, where a lot of spices you can't produce domestically or you can't source domestically, and then it becomes a question of, of how do you negotiate with partners. Do you find alternative countries of origin that maybe have slightly lower tariff levels? And it's also a lot of effort right now is going into finding efficiencies that can help offset those costs so that they can absorb some of that cost and not have to pass it on to consumers. Ultimately, most of the companies we're talking to are saying that where needed, they will very strategically pass price through, but they're trying to avoid uniform unilateral price increase just due to tariffs.
- [37:14]
Scarlet Fu
How much of this work has been done, what you just described? And I guess I wonder how much of it will be covered in the earnings calls this quarter.
- [37:23]
Jen Bartashis
I think it will be definitely a topic of the earnings calls this quarter, but when we had tariffs back in 2018, a lot of companies started the process of identifying other options for sourcing. So. So there's probably been more progress made than people would recognize because it didn't just start this year. And so it's been sort of a gradual shift. And once they have those plans in place, they can sort of accelerate that. And then the focus really is on efficiencies. And that's where the technology comes back into play, where it helps them be better with regards to their sourcing, their negotiations, and really in terms of understanding what, what products they actually need to carry and which products they could perhaps suspend or discontinue.
- [38:08]
Paul Sweeney
Our thanks to Jen Bartashis Bloomberg Intelligence Senior Retail Analyst we move next to.
- [38:13]
Scarlet Fu
News in the tech sector.
- [38:14]
Paul Sweeney
This week we heard that the chipmaker Advanced Micro Devices received a major order from Oracle for its new AI chips. This announcement is part of a frenzy of deals by big tech and AI companies.
- [38:24]
Scarlet Fu
And in other news, the cloud based software company Salesforce expanded its partnership with OpenAI. This will allow companies to access Salesforce's Agentforce app in ChatGPT, enabling instant checkout in its commerce platform.
- [38:36]
Paul Sweeney
For more, we're joined by Anurag Rana, Bloomberg Intelligence Technology Analyst we first asked Anurag if the recent deal between AMD and Oracle is unusual.
- [38:44]
Anurag Rana
The slight unusual part is that the AMD chip seems to be doing at parity at what Nvidia chips are for this particular case. Now, I do not know what kind of workloads Oracle will put on it, so you really can't do an apples to apples comparison. But the story at this point is Oracle has a massive backlog of orders and it needs to invest money to get them converted into revenue. They need to open more data centers or rent out more data centers. They need to buy more chips, buy more hardware and combine all that together and eventually then they're going to get paid for all that stuff. So they're going anywhere they can find chips right now. And you know, it seems that AMD is their next stop, so there are.
- [39:22]
Scarlet Fu
A couple of threads to pull on there. It feels like AMD is increasingly the number one alternative to Nvidia's chips. We can talk about that in a little bit. But what struck me is that there's no dollar amount disclosed in this deal or partnership or promise. The previous deal that AMD struck with Open Air just said tens of billions of dollars in new revenue. Why are firms keeping it so vague?
- [39:47]
Anurag Rana
Well, because they do not know how many chips they would need at what point, at what capacity. This is a, you know, that's not, you know, it's more so signaling that we are not just truly dependent on Nvidia, we have other options as well. It helps them with navigating of pricing from Nvidia. Also, you know, we know Nvidia chips are getting expensive over the last few years. So that is, there could be one reason. The other thing we don't know is what kind of workloads there are because we know for the absolute best of the best, you, you have to use Nvidia chips. That's what we know. Whether all of that changes in 12 to 18 months, we don't know. But there are other workloads that may not require that amount of, you know, firepower or horsepower, you could say for that you may use, you know, AMD chips or something even more inferior and even.
- [40:34]
Paul Sweeney
Yet another announcement in your space, Anurag Salesforce, a company you've been talking to us about for Many, many years, Salesforce and OpenAI announced an expanded strategic partnership. What's going on there?
- [40:47]
Anurag Rana
Yeah, so for me this is actually a far bigger news and has more ramifications in the long run. If you see what's been happening in the software landscape over the past two years there, the threat is that OpenAI will come and it'll take away basically the businesses of all the application software vendors, whether that's Adobe, Workday, Salesforce, HubSpot, you name it. Because OpenAI has shown capabilities that their model can help out in functions such as finance, human resources, sales automations, et cetera. This integration between the world's biggest CRM software vendor, which is Salesforce, and OpenAI shows that both of them will be working together. And, you know, it'll be easier for enterprises to go inside OpenAI, ChatGPT, ask for what they want that gets connected to the data that resides in Salesforce, makes it very easy for the enterprise customers to do their work as well, rather than just going into Salesforce. So I think this is a bigger news in the long run, but we are all talking about Oracle as well.
- [41:54]
Scarlet Fu
Yeah, OpenAI announces a new deal with someone every day. Paul, this is what you're getting back to. And this really, both of these announcements are the latest in the string of big tech, building more computing infrastructure and meeting this demand, this insatiable demand. I've really lost track of the permutations. Anurag, what worries you about these back and forth announcements and partnerships and, you know, the billions of dollars that may or may not change hands? Do we think that these are just announcements that may not come to fruition if circumstances change, for instance, in the next six months?
- [42:28]
Anurag Rana
See, from a Salesforce point of view, and which is what I was, you know, you would say most of us are worried about also legacy software names. It's a good thing because OpenAI is a new channel of communication with, you know, the rest of the world. If you can integrate your product with them, it kind of saves you from getting disrupted. The question is in the long run, and then we'll find out what happens is will OpenAI have that much level of funding to keep up with all the promises that they have? They have given very high revenue estimates for the next few years, but at the same time, I mean the rest of the bigger tech vendors are not just sleeping at that point. I would say we'll find out whether OpenAI will be able to gain market share from the likes of Microsoft, Apple, Google and Meta or Amazon or this is going to be just an expansion of the overall market.
- [43:20]
Scarlet Fu
Our thanks to Anuragrana Bloomberg Intelligence Technology.
- [43:23]
Paul Sweeney
Analyst it's this week's edition of Bloomberg Intelligence on Bloomberg Radio, providing in depth research and data on 2,000 companies and 130 industries.
- [43:30]
Scarlet Fu
And remember, you can access Bloomberg Intelligence via Bigo on the terminal. I'm Scarlet Fu.
- [43:35]
Paul Sweeney
And I'm Paul Sweeney. Stay with us. Today's top stories and global business headlines are coming up. Right now.
- [43:43]
Scarlet Fu
Every business starts with an idea. How can you go from daydreamer to industry leader? Amazon Business accelerates your journey with smart business buying. Get everything you need to grow in one familiar place. From office supplies to IT essentials and maintenance tools, Amazon Business takes the buying experience you know and love from Amazon plus tools that help you save costs and make insights based decisions ready to bring your visions to life. Learn how@AmazonBusiness.com As a contractor, I don't.
- [44:12]
Paul Sweeney
Pay for materials I don't use so why would I pay for stuff I don't need in my mobile Mobile plan. That's why the new My Biz plan from Verizon Business is so perfect. Now I can choose exactly what I want and I only pay for what.
- [44:23]
Scarlet Fu
I need right now with my biz plan. Get our best price as low as 25 a line. Visit verizon.combusiness to get started today. New lines only. Price per month with five plus lines includes auto pay and paper free billing and promotional discounts, taxes, fees, economic adjustment charge applicable. Add ons prices and terms apply. Guarantee applies to base monthly rate and stated discounts only. Add on prices. Additional offers in November 17, 2025 Hiscock Small Business Insurance knows there is no business like your business. Across America, over 600,000 small businesses from accountants and architects to photographers and yoga instructors, look to Hiscox Insurance for protection. Find flexible coverage that adapts to the needs of your small business with a fast, easy online'@hiscox.com that's his c o x.com there's no business like Small business. Hiscox Small Business Insurance.