US, China Reach TikTok ‘Consensus,’ Setting Up Trump-Xi Call

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3:21Some headlines already coming out today, including social media posts from President Trump, who said he would speak with Chinese leader Xi Jinping on Friday. All this following talks between negotiators that resulted in a framework deal to keep ByteDance's TikTok app running in the U.S. So where is this all important trade and geopolitical relationship? really. We're going to head to the Bloomberg Washington, D.C. News Bureau and bring in White House reporter Skylar Woodhouse, who joins us from there. Skylar, where is the U.S. and China in these talks? What's the status as it stands right now?

3:54Yeah, Tim, I mean, I think what we're seeing right now, you know, this is just sort of the next step in sort of the China-U.S. saga around their talks from everything from tariffs to obviously what we're seeing with TikTok. And with TikTok, this is something, you know, that President Trump has talked about for quite some time now. And it's something he definitely wants to see come together. I mean, during the campaign, he talked about how with younger voters on TikTok, it sort of helped amplify his momentum. So, you know, he would like to see this deal come together. And as we look forward to what, September to October next month, with the two leaders potentially heading to the APEC summit, I mean, I think we'll have to see if this deal ultimately comes together.

4:33But one thing we did not quite hear from today with the talk was we saw the movement around TikTok, but we're still looking to see what those details might be. Yeah, I mean, devil in the details. But maybe everybody has always said to us, you have to try not to complicate it, right? So none of this stuff happens easily. And so it's going to be a lot of talks before we start to get kind of the final terms, if you will. So is it progressing? Can we say it's progressing? I think when you think of the Trump administration, there's usually a lot of meetings, a lot of, conversations that are being had.

5:06I think it's fair to say things are moving forward and moving in the right step. But I think any time when talking about the Trump administration, you always have to sort of err on a side of caution just because things can change so quickly. Something could change at this very second. You just never know. So even though things appear to be moving forward, still always proceed with a little bit of caution there. One thing that Carol and I have talked about quite a bit, Skylar, is just the question of TikTok and And why that seems like such an important issue or why it is such an important issue.

5:37We understand the huge user base, certainly. We understand the power that the app has. But when you think about it from the perspective of Washington, D.C. and maybe from the perspective of China, using this as a bargaining chip, what is that context? No, absolutely. I mean, I mentioned this about President Trump is, you could say he's a fan of the app in terms of how the engagement is with younger voters. But then separately, I mean, I think it ties into what the president has sort of been trying to do during his second term, which is sort of, you know, establish the U.S. And basically, if he's able to get the U.S.

6:15more involved in TikTok and have it be less, you know, Chinese owned, you know, that's a win for him, especially given how massive the TikTok platform is. if he's able to basically say that, you know, TikTok in the U.S. are more aligned than TikTok in China, the president might see that as a win in U.S. dominance. Hey, one thing I, though, want to get to, and I think Tim mentioned it, you know, China ruled that or maybe we anyway, it's part of the backdrop. We've been talking about it. We have been. China ruled that NVIDIA violated anti-monopoly laws with a high profile 2020 deal. So that is seen as ratcheting up the pressure on D.C.

6:52during the sensitive trade negotiations, Skylar. Is China just negotiating, showing leverage? Like, I know TikTok's important. NVIDIA is really important, certainly, to the United States and AI. So I'm just trying to put that piece into the puzzle and how it explains what's going on here between U.S. and China. No, absolutely, Carol. I mean, I think it's very interesting to sort of take a step back and just sort of lay out that, you know, it's interesting that the agreement sort of came while the U.S. and China were meeting in Madrid. So I think that just sort of highlights the importance there.

7:27I mean, it's still, you know, to be seen on if, you know, this is China using this as leverage, but, I mean, it definitely could impact tariff talks. So, you know, we heard from Jameson Greer earlier today in Madrid saying, you know, that, you know, a potential extension could come in November. But, I mean, still a lot going on in this space, especially around AI and chips and all that stuff. So it will be interesting to see sort of what this investigation and how it wraps into everything going forward. And how it wraps into what's expected is a chat between President Trump and President Xi on Friday.

7:58All right, we're going to leave it there. Skylar, thanks so much. Skylar Woodhouse. She is Bloomberg, Washington, D.C. News Bureau, White House reporter joining us there from the nation's capital. Stay with us. More from Bloomberg Business Week Daily coming up after this.

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10:38This product is not intended to diagnose, treat, cure, or prevent any disease. You're listening to the Bloomberg Business Week Daily Podcast. Catch us live weekday afternoons from 2 to 5 p.m. Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business App. Or watch us live on YouTube. Bill Dudley, former New York Fed president and Bloomberg opinion columnist, discussed the outlook for this week's Fed policy decision and the future path of interest rates. Right along with everybody else, I expect a quarter point cut. It's baked in the cake. I'd be surprised if it did anything else.

11:09There'll be guidance because they're going to publish the summary of economic projections, which shows their interest rate outlook for the rest of the year and into 2026 and 2027. And I think the big debate there is, do they show one more cut after September or do they show two more cuts? And I think it's going to be a very close call between those two outcomes. I'm actually expecting very few descents on the side of no rate cuts, maybe zero or one. The other side of the equation is are we going to get 50 people supporting a 50 basis point rate cut? I think the only person I'm expecting there perhaps is Steve Moran if he gets confirmed and is sitting on the FOMC on Wednesday afternoon.

11:47There you have it. Former New York Fed President Bill Dudley, who was a Bloomberg opinion columnist earlier today on Bloomberg surveillance on Bloomberg television. Carol, we had a great guest with a view on this week's Fed decision. We do indeed. Great to have with us a former Bloomberg colleague, now senior U.S. economist for the conference board, Yelena Shaleteva, joining us from Long Island. Yelena, so good to have you back here with us. Do you agree with former New York Fed president Bill Dudley? Well, on certain points, yes. And I guess everybody seems to agree that we're going to have a 25 basis point cut tomorrow.

12:21So I guess the most exciting thing to watch will be to see who's going to be at the meeting and not what they do. Right. Yeah. I think, you know, in terms of dissents, we actually could see a little bit more of difference in opinions. And, you know, if Stephen Myron is going to participate in the meeting, he may actually descend on the dovish side in favor of cutting rates even more than 25 basis points. Or we could see a hawkish descent. That is quite possible. I think, you know, the previous summary of economic projections showed 3.5 percent forecast for core PCE this year. So if some of these participants still think that inflation is going to rise as much, they may also descend on the hawkish side.

13:19So it will be definitely a very interesting meeting, and we will see how many cuts they will price in. I totally agree with Bill Dudley that that is probably going to be the most interesting thing to see how many cuts in the dot plot. Well, let's take a step back and just want to get from you your view of the U.S. economy right now. Carol and I've spent quite a bit of time over the last few weeks talking about the tension between the Fed's dual mandates when it comes to stable prices and maximum employment, giving the cracks that are starting to show in the labor market. What do you think is more important for the Fed to focus on at tomorrow's meeting and then toward the end of the year?

13:56totally uh i think that's uh that's exactly the thing that we are watching so now the uh the mandate is pretty tricky to uh to follow right so there are the two goals are in conflict and uh we'll we actually think that inflation will rise so we think that uh inflation will rise above three percent in terms of pce towards the end of the year due to tariffs but we also see a significant slowdown in economic growth the economy has already slowed quite significantly in the first half of the year growth uh really uh fell below two percent if you average it up uh q1 and q2 so So don't be fooled by 3.3 percent GDP growth in the second quarter.

14:47So it's due to gyrations in imports ahead of tariffs. So and we do see that the economy will slow further in the second half of the year below one percent, quite frankly. So we spend quite a lot of time. So, Yelena, is deflation or recession or how are you potentially seeing it? It's too, like, these words are very dramatic. We don't, you know, expect either. So, staxlation is really inflation getting out of hand and inflation expectations getting out of hand. We don't project that. So, we do see a pickup in inflation and slowdown in economic growth, but not to such a degree that also we forecast a recession.

15:36No. We do think that there will be a significant slowdown, but growth will probably remain positive. And that will be very tricky to read in economic data. So one of the things I'm just curious is President Donald Trump, even today, predicted a big cut from the Federal Reserve this week ahead of the meeting. And we know he has been for a while since he really came into the into the White House for the second term, talking a lot about the Fed, the composition to the Fed, what Jake Powell should be doing. Is that input from the president, you know, how is it maybe impacting or maybe more so politicizing the U.S.

16:19Central Bank? I know we can say they're not going to be political, but it's hard to kind of ignore all of that's been said in the pressure and possibly changing the composition as a result of President Trump. Well, it's a very good point, Carol. And, you know, obviously we all watching what is happening with the Fed and how it affects Fed independence. I think the Fed and each and every participant in that meeting will actually try to make as much effort as they possibly can to really address this in a very nonpartisan, nonpolitical way. Looking at the data, looking at the same data we'll all look at and just come up with the best possible projection and solution for how they see the economy will evolve.

17:12And we have to listen to them and really believe that's what's happening. I think, yes, the recent news are very important because they draw attention to what is happening with the Fed. But what's happening inside of the Fed and at that meeting will be solely focused on the economy. That's what I truly think. Yelena, just 20 seconds. What would change your view on saying that the U.S. is not necessarily at risk of negative growth in the near future? Consumers. Consumers, you know, spending, keep spending. And that's really an upside risk to the economy. But unfortunately, I think that consumers, you know, kind of like spending here and there, but they're getting tired of all this high prices.

18:01All I'm going to say is my daughter who, yeah, she's been a consumer for a long time, but now that she's starting to have her own job in her own place and do her own consuming, it's just like, why is everything so expensive, mom? And I'm like, yeah. You know, you don't have to cut her off, Carol. You don't have to. There is a point. You don't have to. Love her incredibly. The bank of mom and dad. It doesn't have to close. Are they never cut? I mean, my dad was giving me gas money until I was well beyond than I should have. Yelena, thank you so much. Yelena Shalateva, senior U.S. economist for the conference board.

18:32This is the Bloomberg Business Week Daily Podcast. Listen live each weekday starting at 2 p.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station. Just say, Alexa, play Bloomberg 1130. Tesla shares earlier in the session up as much as 7.5%, giving back some of those gains up 3.3 % right now. Still good enough, Carol, for a gainer for you. Yeah, absolutely. If you want. It's on my list. OK, good. It's on my list. Well, the reason why we're watching it and talking about it, investors are buying it, is because Elon Musk responded to an unprecedented pay proposal from Tesla's board by buying about a billion dollars worth of shares.

19:12It's a lot of shares. Is it a lot for Elon, though? I don't know. Probably not if you're going to have a trillion dollar pay package. We'll pose the question to Max Chafkin. He's Bloomberg Businessweek senior reporter. He is co-host of the Everybody's a Business podcast. He's the author of The Contrarian, Peter Thiel and Silicon Valley's Pursuit of Power. He does it all. He joins us in the Bloomberg Interactive Brokers studio. Billion dollars? Is that a lot for Elon? I haven't looked at how much his net worth has moved. I'm not sure if our Bloomberg Billionaires list has updated it yet, but it will go up because Tesla's stock has gone up in response to this buy.

19:45So maybe it ends up paying for itself, essentially. I'm just imagining a snake eating its own tail with how this works. There's a little bit of that with Elon Musk. I mean, this is a - He's the wealthiest person in the world. The index has not been updated today, but as of the last update,$418.6 billion is his net worth. Yeah. I mean, the stock, it operates, although Tesla has this very large, very good business in selling cars, the Tesla stock kind of operates a little bit like a meme stock. It moves around a lot. You know, 5 % gain, which is where we were earlier in the day, I guess even a little higher, maybe 7%.

20:21That's a big move for most companies. It's not the biggest move in the world. for Tesla, where you often see these wild swings. And often the wild swings are really just about things that Elon Musk has said. If he gets on Twitter and says something really positive about self-driving cars or about the Optimist robot, that can sometimes be enough because you have retail traders. Remember, this is a company with a very large retail shareholder base. They respond to that. And what we've seen over the last week, not just this purchase of shares on the open market, which is a big deal. I mean, a billion dollars, a billion dollars, that's no joke, especially given that Elon Musk has spent a lot of time over the last couple of years essentially borrowing against Twitter and buying other things and spending time in Washington and buying X and so on.

21:05So, refocusing on Tesla, shareholders are going to like that. And the other thing that I think these retail investors who really like Elon Musk care about is this pay package. It simultaneously, from their point of view, ensures that Elon Musk is going to be locked up at this company for a long time. It also kind of creates a goal that is really audacious. And that's something that can maybe help justify the valuation being where it is, which is, you know, it's very, if you compare it to like other car companies, Tesla, you know, has a much greater valuation. So maybe different, it's a different planet, but people would say it's a different animal.

21:41It's not a car company. But anyway, this, this maybe goes, would go some way towards justifying that valuation or even growing it further because it includes huge sales goals for Tesla's automotive business, which has been snaginating, of course, over the last year or so, as well as goals around self-driving cars, as well as Optimus and so on. If he really were to get there, I think most investors would say, yeah, it's worth the potential trillion dollars that we have agreed to pay him. I mean, it's a company with a$1.3 trillion market cap and expected revenues, the latest number, the annual figure, we're talking about maybe$93 billion.

22:20So, you know, price to sales. I don't know. I just kind of think about it. I mean, I get the connection. I mean, Tesla without an Elon is not going to be Tesla, right? It is. That's true. And I think, and that is what's so interesting about what's been happening since the beginning of the Trump presidency, and maybe even a little bit before that, where you have on one hand, you could make a really strong argument that some of Elon Musk's actions in Washington or the things he's putting on his X page, the kind of associations with various polarizing figures, which we even saw over the weekend at this rally in the UK, that that is hurting the company's business.

22:58On the other hand, if you were to remove Elon Musk, if the board were to say, you know, that's it, we've had enough Elon Musk, we need to replace you, that would instantly, I think most people believe, most investors, including bulls and bears, the stock would fall because this company is really a bet on this one guy, you know, warts and all. Well, warts and all. Yet he's got we always talk about SpaceX having leaders, right, that are really key in what that company does. Yet the visionary, is it safe to say, Max, is really Elon or is it a group of people that are the visionaries? I think Tesla and SpaceX are really two different animals, because as you said, SpaceX has this kind of deputy in Gwen Shotwell.

23:41He's the president of the company who has relationships with important customers, especially government customers, and a business that is just sort of more stable in terms of selling launches to the U.S. government. We've talked a lot on this show and elsewhere, of course, about how dominant SpaceX's position in the launch market. Tesla's a little bit different, right? There are lots of car makers who are bringing out really good electric cars right now. There are Chinese companies with great autonomous vehicle packages. So there's real competition. And we've seen sales go all over the place. And yet there is this kind of crazy out there vision of Tesla as a massive robotics company.

24:22And so it's just much more, I think, a speculative bet than SpaceX is for the investors who are putting money into this thing. And look, SpaceX is still a private company. We don't know what's going to happen. Maybe they spin off Starlink. Who knows? We'll have to stay tuned to see what happens there. But Max, when it comes to SpaceX and Tesla, Elon Musk's pay package as it relates to Tesla, is it a loss for SpaceX? You said Gwen Shotwell's really the glue that holds it together, but Elon is the one who wants to colonize Mars. Well, if you watch the interview or listen to the interview that Bloomberg did last week with Tesla's chair, Robin Denholm, you heard her say that they're fine with him working at other companies.

25:01There's nothing in this pay package saying you need to spend more time at Tesla relative to SpaceX than you were before. To reach the benchmarks that would pay him a trillion dollars or achieve that trillion dollar payday, one would imagine that he would have to spend more time. It really just doesn't sound like that's the plan. I mean, the plan seems to be they're going to stick with what they're doing, which is develop, you know, from at least that's that's the story they're telling. I agree with you. And I think if you talk to bears, especially, they're going to say, look, this plan, these goals are out of this world.

25:32They're crazy. It's going to be very, very hard for this to happen without some some crazy things happening, but probably both internally and externally. The Elon position, the Tesla position is things are growing great. We're we're we're transitioning rapidly to autonomous cars. And before you know it, the robot future, there's not only at least in my reading of this pay package, no requirement that he like spends less time at these other companies. There's really nothing stopping him from his kind of political activity, at least as a poster. There is this line about winding down his activities.