Dealnews, kicking it off with one of the slew of deals, oracle and tiktok. The u. S. Government will undertake a security review of the potential partnership. Treasury secretary Steven Mnuchin said that earlier today and added the deal tiktok would create Tiktok Global and finalists. Joining us now, shelly banjo. Outre waiting for more news of oracle. It still needs approval from the u. S. And beijing. What are the odds this thing actually gets through . Shelley we are far from done. I would say we are just beginning to figure out what will happen. Now the ball is in the Trump Administrations court. Has a set ofktok microsoft, your proposal is not going to fly with us. Were going to go with oracle which provides much more control to keep a lot more control of the companies can previously discussed under a microsoft deal, which would have been outright sale. Trott has been pushing for an outright sale, and many members of the administration had been pushing for an outright sale for many weeks. This is not met. So, is the Trump Administration going to accept that . Guy are we going to get all the details we need by friday friday is the deadline, the 20th. We are waiting to see if we can get it done. At the moment, this looks unbelievably messy. Shelly it was very rare for Steve Mnuchin to come on and confirm they are looking through this and weighing through the proposals that it had received a proposal, you know, this has been the most publicly outright public deal and negotiations i have ever seen. He said were going to look through this, present something and september 20 does remain the deadline. What happens from there is also mark. Tion they can say we dont like this, try again, and we could start the whole process all over again. We know tiktok was in the process of suing the Trump Administration does that stop, what does all this mean . Shelly i think the biggest challenge with this story is that there is not one thing happening. There are a bunch of things happening all at the same time. Many tracks are happening simultaneously. You have what is going on in china. You have what is going on in the u. S. In one instance. You have tictoc, oracle, microsoft, investors. Stakeent parties have a and they are all happening simultaneously. The lawsuit will most likely continue to keep going the executive order still stands. There is another executive order with a deadline in november. All of these things happen in tandem. That is part of why the story has been so confusing to follow. Guy absolutely. Hopefully we get clarity surely as we already indicated. Oracle is currently suspended. Hopefully shelly will come back and give us some insight once we get the news and get more details. For now, to our very much. Lets carry on the conversation and look at this for me series of different angles. Join us with the chinese reaction, william writes. He served as an undersecretary of commerce during the clinton administration. Is it possible, william, to satisfy both beijing and washington with this transaction. It all seems to me to come down to the algorithm, the nuts and bolts of what makes tictoc work tiktok what makestiktok work. The chinese says you cannot have it in the u. S. Says we need to have it to make that for security work. Can you satisfy both parties . William i think it will be difficult for the reason you said. The way the u. S. Has defined the issue is a little bit different. For them, it is a question of access. Government 50 the medassets government can be assured the data is not going to fall into chinese hands, then i think there is a process that prospects this will go through. Had it been a straight sale, this would have been an easier task. It does not appear to be a straight sale. Until we get the details, we cannot know for sure. The question will be who controls the data, where is it going to be stored, where is it going to be kept, and is there any possibility the chinese will be able to access it . The question of the data on the chinese side they want to ok the deal for algorithms, you can argue that is what makes tiktok attractive. This china want this deal to go through . If they wanted to go through badly they would not have done what they did last week with respect to expanding export controls to cover the algorithm. They did not have to do that. That two ways. Et you can interpret them as muscle flexing they wanted to show the United States they are an element in this entire deal as well and they have cards to play, and that is an important one. You can also interpret this to say they are genuinely concerned about protecting the algorithm and acquiring the data. Im inclined to think at this point it is more the former than the latter, but we will have to see how it plays out. Guy i am really confused by this. What makes tiktok take is user data interacting with the algorithm. If one side is saying we want to control the algorithm and the other side is saying we want to control the data, and the venn diagram does not overlap, how does this work . William you need to talk to someone that is more of a technical experts and i am. From the u. S. Point of view, it would be great to acquire the algorithm because that would. Reate a profitable enterprise i think that is why microsoft was interested. From the u. S. Government standpoint, it is a little bit different. Positionuestion of the of the data if they could figure out a way to secure the data, i dont think who controls the algorithm is the most important thing for the u. S. Government. It might be the most important thing for oracle, and well have to see what the terms of the deal are. I do want to bring some breaking deals oracle has confirmed it is part of the tiktok proposal. I want to widen this out behind tok. Eyond oracle and tik what does it tell us about the tech cold war and companies questiono do business mark william it tells us it is accelerating. This u. S. Administration has a definition of National Security than pres administrations have had and the bilateral relationship has been deteriorating for a number of years preceding trump. A lot of it has to do with policies the Chinese Government is pursuing. It is not necessarily what the u. S. Government is doing. We are more concerned about National Security we have a broader definition of what that means, particularly when it comes to communications technology. Go back to the whole huawei episode, which is also a securityrelated episode. If you are in the ict sector, i think this is going to get worse and i think youre going to hear more conversation about decoupling in a range of areas and a range of companies. Specific,being more data appears to me to be increasingly the narrative, and the lack of access to u. S. Data by Chinese Companies seems to be becoming an increasingly large part of the security conversation. How gated do you think the twocom the infrastructure worlds are going to become . If data does not pass between are we dealing with the a completeinter, breakdown of what was once a global phenomena . William that is what a lot of us are afraid of and i think right now that is the most likely outcome. You have to throw in europe. Europe is proving to an aggressive regulator on privacy with respect to privacy rules. You are talking about splintering, not just into two parts, but into three, or perhaps more parts as governments seek to control their data. Moving in states is that direction. China has always been there. Europe has been moving in that direction, too. So, i think from a standpoint of global business, that is not good because it leads to fragmentation of the internet and further fragmentation of digital trade. Im sorry to say that seems to be the way we are going. Thank you so much. Again, to reiterate, oracle has confirmed they are part of b proposal. Ktok another merger nvidia. That is next. This is bloomberg. The u. S. Ambassador to china is retiring to hit the cap will trail. He is stepping down next month. Over the weekend, President Trump said he would be returning to campaign. Senator joni ernst is an Iowa Republican close reelection battle could help determine who controls the senate. The death toll has said 35 in western wildfires burning from california to washington state. Thousands of homes and other buildings have been destroyed. Tens of thousands of people have fled their homes. Firefighters could have another problem this week. Is due to low moisture and i went. Said to defend allegations it cheated on emission rules. The eta the epa and the Justice Department are set to announce the assessment judgment today. Settlement today. I am up to good cap. This is bloomberg. Ritika gupta. This is bloomberg. Deal ino the largest chip history, giving the u. S. Company control everything that controls data centers. Senior analyst. Needs approval from the u. K. , china, and the u. S. To go through. What are the odds and gets all of that approval . It is tricky to go through from a complexity standpoint. We have a chipmaker that is mine and intellectual property maker, distributor, the fact that many of its peers turned into competitors it creates a complicated environment for sure. It is great for nvidia to be very clear. They get a shot in the arm from an r d investment perspective, but the regulatory hurdles will be an interesting one, even without the u. S. China trade relationship. This is going to take it to a whole different level. Guy how is this going to change the landscape for chip design and chip manufacturers . Why would an alternative chip manufacturer want to buy licenses owned by nvidia . Nvidia says the intellectual property Business Model will stay as is. Going of that, nvidia is to be able to license its graphic processing capability, which is used in ai Building Blocks, through the distribution arm distribution model. On paper, arm customers have the option to continue business with ,he arm model as is additionally have the opportunity, if you make, to buy nvidia Building Blocks and have chipmakers. Other from a competitive perspective, obviously, nvidia is going to have access to the roadmap potentially early, and that is the concerning factor. If you step back and look at the alternative, really there is none. If you look at the chip landscape, the arm ecosystem is widely used in everything from smartphones to tablets to network processors, etc. So, in order to create a competitive, alternative platform, it is going to take a very long time, and arm has done that pretty well over the last few decades. Thank you very much indeed, anand srinivasan. Coming up, grocery demand remaining high people staying home and they are cooking there, but kroger is feeling profit pressure. We will speak to the ceo next. This is bloomberg. I am guy from london, johnson. Kailey leinz is in new york. Lets talk about groceries to the remain for groceries in maine strong. With people stuck at home, and restaurants operating at the minute capacity, kroger benefiting from the situation with sales rising in the last quarter. New pressure on profitability disappointed wall street. Joining us now is the kroger ceo rodney mcmullen. Nice to see you. Thanks for taking time to join us today. I am curious as to what you are seeing you are in touch with the consumer. We have seen a tough year. A lot of people forced to stay at home. I am wondering what you are seen as we prepare for the autumn, fall, and into winter. What are you anticipating . Case counts are climbing all around the world . All around the world. Rodney i am proud of our associates and what our customers are telling us is they are learning how to cook again and they are enjoying cooking as a family. All of those things are things that we think will be trends that will happen even when we get through covid, and with our associates there serving our customers, we think those things together will be really important, and when families he does a family, they stay as a family, and everything we can do to support that is good for us and good for the customer as well. Kailey what gives you the confidence that is going to continue, rodney . You give a forecast above expectations, but many peers have been reluctant to do that what gives you the confidence to issue not just a forecast, but a fairly strong one . Rodney it is two things we wanted to be as transparent as we could and let investors understand how we are seeing the next couple of quarters and the future, and also, in terms of 2021. So, we were just trying to be transparent and be as helpful as we could. And, obviously, when we look at behavior, customers are large,ing basketsize or huge increase in digital business, all of those things, and people are continuing to like to cook and bake, and our Research Tells Us they are actually enjoying it. You think, rodney why are you so certain this behavior will carry on postpandemic . Seems to be suggesting other sectors pentup demand, people want to go out, socialize why will he be at home making when the opportunity presents itself . Once there is a vaccine . Rodney from our perspective, talking to customers, people enjoy doing things is the insight and what everything suggests. Got does not mean they will not go out to restaurants marble we do not expect they will go out as frequent as they did before. If you look at markets where the covid incident incidence rates are lower, we still see similar behavior in terms of the amount of money people are spending in stores. Now, they will have smaller baskets and, more frequently when covid rates are lower, but still, the overall number is pretty similar to where low covid rates and high covid rates. Kailey lets talk about where they are getting the groceries you saw Digital Sales up 127 last quarter. That is remarkable, but how do you see yourself competing the Online Grocery space versus the likes of amazon or walmart, and what will that do for your margins . Rodney 4s, you look at your competitors, and you learn from them, and we are focused on what do our customers want and what do our customers need from us . Our customers tell us they love our fresh products. We do a really good job. If you look at digital, it is just another way of providing that. What we find, other than customers that are at risk, they still come into the store, they just do not come in as frequently and it is the combination of a seamless experience where customers can engage with us, they can do pickup or delivery, and we try to be that anywhere we can. The thing that is special about associates, be our their friendly service, and the freshness of products, and both of those, together along with using data to help customers stretch their budget it is that combination together that we offer and the reason why customers like coming to kroger. Guy are you going to ultimately, though, have going to have to figure out ways of providing less interaction between your people and your customers . It is interesting, there are reports, and it is prevalent here in europe people are not using cash anymore. They dont want to touch things. They dont want to interact with people during this phase. How do you marry those things up having great staff and consumerfacing people, and concern among your customers that they want to get the shop done, to excuse the phrase, as cleanly as possible . Rodney what we do strive to do is let the customer engage however they want to engage with us. We the customer pay have digital anyway you want to engage with us you can. If a customer does not want to engage with somebody, they dont have to. They still get the fresh products. But we really do strive to let the customers decide how they want to engage with us, and if you look at our digital business, you know, i always tell people job one is make sure we keep the customer. Over time we continue to learn how to be profitable with that customer and if you look at early next year we will open a couple of facilities, which guides, i know you are guy, i know you are familiar with. Kailey lets talk about that those automated warehouses how do you see that positioning kroger for longterm growth . Rodney if you look at digital business, as you mentioned before, it was up over 100 , and we will find that we will be able to use facilities that are efficient and effective for certain customers and there will be a combination of a bigger facility, smaller, local facilities in our stores both in terms of pickup and delivery shed andore and a physically going into a store it is the combination of all of those together that will create the seamless experience for the customer. Kailey are you saying guy are you seeing food Price Inflation there is evidence food Price Inflation is starting to pick up. Do you think those numbers are going to increase . They seem to be during the pandemic. Do you think the higher inflation rate within food will stay with us postpandemic . Rodney if you look at inflation, meat would be an area where we had significant inflation in the first and second quarters. Our projections would indicate significantly lower meet inflation in the Third Quarter and beyond. There are plenty of products in the supply chain. It is about having the plants not being able to operate and for the most part they are back on stream. If you look in other areas of inflation, we would see limited as we as you look out next of a you are assuming half percent to 1 inflation, which is more traditionally what we have historically had. Howey terms of pricing, will, if we do not get another stimulus package in the u. S. Which is looking unlikely, how does that increase impact prices and Pricing Power . Rodney our assumption is it does not happen. If you look in the u. S. , it would be helpful. When you look at customer behavior, you certainly see customers stretching their budget and paying attention to snapthey get paychecks and payments, and things like that. It is also one of the reasons why throughout the pandemic every week we have continued to do promotions. We continue to invest in price. We did not pass through all the inflation we incurred, especially in meat, and all of those things together, just trying to help our customers be able to stretch their budget. We also waived our pickup fee on digital. All those things together we are trying to do our part to help our customers budget go just a smidgen further. People stocking up right now . I am curious as to consumer trends. Where are we you talk about the big basket