Welcome to Yahoo Finance this morning

brief. With me today, Jack Farley,

co-founder of the Monetary Matters

Network. Jake Connley of Yahoo is still

with us and it is jobs day. So happy.

>> Happy jobs day for all those who

celebrate. Oh my gosh. Um so we saw a

weak jobs report. Well, or you could

call it a mixed jobs report. So just to

run through the numbers and recap them

once again, we saw a drop of 23,000 jobs

in July overall. We also saw downward

revisions for the prior two months. So

they were weaker than they appeared on

the surface. Strength in manufacturing

jobs, however, and also a better than

estimated unemployment rate coming in at

4.1%.

Average hourly earnings not rising as

much as had been anticipated, only

ticking up month overmonth, 0.1%.

the labor force participation rate down

by 61.4%.

And it seems like this was a bit of a

noise I say feel like I say this every

time. It was a noisy report meaning like

there's a lot going on that are

crossurrens that makes it difficult to

get a clear narrative out of this. There

was a big decrease in education jobs of

50,000. Healthcare jobs continue to be

strong. Um

>> government jobs lost

>> government jobs lost but most of that

was from the local the lo on the local

front. Um we also saw um uh leisure jobs

go down after this you know a bit of an

improvement from the world

>> manufacturing

>> right manufacturing that's rised up I

guess some I mean it's a pretty clear

signal is that the the labor force went

down by more than the number of un

unemployed people so the the labor force

is shrinking faster than the actual

amount of jobs. So that is why the

unemployment rate is going down. So

people are fewer people are seeking work

and so yes the amount of people who have

jobs has gone down but what has gone

down by a lot more or somewhat more is

people who are looking for jobs and I

think that this has to do a lot with

immigration net im migration into the

country is basically flat because of you

know policies that we're all aware of

and as a result you need fewer jobs to

have a break even unemployment rate

>> something that Joe Eisenthal called out

on on X this morning is last last year

he says the civilian million labor force

has dropped by about half a million in

the last year among foreignb born

workers. That's right.

>> So in other words, foreignb born people

living in the US are not working as

much. Right. Maybe they're afraid. Maybe

they're getting cut. Maybe they're

>> maybe they're, you know, getting

deported and the numbers in the labor

report haven't caught up with that yet.

There might be some sort of lumpiness in

that kind of data.

>> That's right. Speaking of other data, we

got the Challenger report earlier this

week. Job cuts declining 46% yearonear.

Also ADP showing us that people are

getting a bump in pay for job changers.

There's incentive there, but to your

point, does that really change the

amount of people who are more people

looking for work than it were before?

And that's a bit of a less clear story.

>> Yeah. I mean, and the extrapolation from

all of this seems to be that it makes it

less likely that the Fed will hike rates

in September, but you know, this report

will be superseded by the CPI report

that we're getting. That's right.

>> This coming week, which will be, I

think, fair to say more important than

this report.

>> Probably you could say that like this

data is actually 100% what the feds man

is directly tied to the Fed's mandate

when CPI, you know, they they track PCE,

the different measure of but

>> we can extrapolate PC from CPI to some

extent. So, it seems like that that will

be the thing um that we are also

watching very closely and then Jackson

Hole at the end of the month. Um, as

we've been talking about, the sort of

backdrop for um for this report coming

in today is that stocks have been doing

pretty well. We had a nice little

rebound that sent um the S&P and the Dow

to new highs this week. Best week for

the S&P and the Dow since April. And I

know you have been watching this

closely. Bank of America's Fund Manager

survey shows that there is quite a lot

of bullishness out here uh out there

this morning um that it's so extreme.

it's the highest level since 2021. They

say it's so extreme they see it as a

counter indicator and that you want to

maybe, you know, buy some deep

>> back off a little bit.

>> Yeah, I'll take the other bet of that

other side of that all day because I

think number one, that's what fund

managers are saying. I think their

actual positioning just looking at like

a firm like Vander Research has it as as

like hedge funds and institutional

investors, the type-C would answer that

survey, are moderately bullish, but way

less bullishly positioned like owning

stocks than they were a month ago. and

that there's been a severe unwind and

that in particular retail investors are

very underweight stocks right now and

that

>> unless it's SpaceX

>> unless it's maybe but

>> the ender shows people have been coming

into space retail investors been coming

into space

>> right yes but that that the retail

selling was the last I guess two weeks

ago retail selling was the biggest sorry

one week ago retail selling was the

biggest since March 2020 in re of retail

>> so you think it's a watch what I do not

what I say situation you think

>> for fund managers Yes. And then I think

retail which is driving this market is

is underweight.

>> I mean it's a little confusing though

because at the same time if you look at

ETF fund flows tech fund flows have tech

ETF fund flows have continued to be

positive.

>> Yes. But fund flows into the leverage

ETFs did

>> draw down last last week. So the the

extreme speculation that of people that

arguably like

>> have gone I I would say definitely have

gone too far of like owning

>> the risk appetite pulling back a little

bit.

>> But I mean you've also seen Yeah. I

guess it's a little confusing though

because tech stocks have also increased.

>> That's right.

>> Um so I I don't know. I don't know what

to make of all of this.

>> Well, semis

you had a really as you know obviously

severe draw down in semis from like mid

June until July. So yes, over the past

seven days that's been positive. I guess

eight days now, but we're only eight

days from the you know leverage unwind

from situ situational awareness. I tend

to think that like leverage unwinds are

bullish not bearish.

>> Yeah. Well, Jack, let me ask you this. A

lot of people looked at the situational

awareness situation and said, "This is a

this is a moment of reset. This is kind

of the reset we were looking for for

semis, for big tech, for the

hyperscalers."

Did you take it? Is is that the reset or

is there more to come? Without a doubt,

I would say yes, that is a reset. And I

I think maybe we'll talk about Meta in a

second. So, there are some stocks that

I'm bearish on, but overall, I'm I'm

very be uh excuse me, bullish on

semiconductors. Um SKH Highix just today

said that they're going to spend more

building out a fabrication. So you know

stocks like Lamb Research and the

semifab equipment space is is places

that I uh you know own personally in my

model portfolio that I have for like uh

clients on my Substack. I that's a it's

a big position. So I I would uh yeah

that I'm I'm a firm believer.

>> You know who the the biggest winner of

jobs day today is?

>> Who?

>> The Japanese.

>> Yeah. because we're seeing the yen the

dollar fall off

>> against the Japanese yen which is what

they have been trying to achieve a

little bit of a yen recovery right

>> after the intervention

>> after after the intervention. So and and

so basically we had um this intervention

aided by the US um in the Japanese yen

that had started to work. We had started

to see the yen recover and then it sort

of gave up some of those gains and now I

haven't checked the latest uh yen

pricing but

>> so we're at 15739

about

>> so it's not back

>> we're not where we wanted

>> the high was 15523 short term but um you

know it's sort of that saga between the

US and Japan and there's been a lot of

discussion about it and whether it was

appropriate for a was it appropriate for

the US to intervene. Uh B, was it

appropriate for us to intervene in the

way that we did? There has been some

talk that the way that the Fed was

incorporated into that decision was not

entirely

>> kosher or appropriate or as a whatever

you you know, you had Secretary Bessant

chiming in on on coverage of that. I

know you've been paying a lot of

attention to all of this.

>> Well, so what the what the Bessant has

done so far was just basically getting

Europeans to sell their euros to buy

yen, which is totally listed. There's

definitely no rules against it

whatsoever. What he has proposed is to

use a facility at the Federal Reserve uh

called the FEMA repo facility and that

was started in

>> 2020 March 2020 to supply dollars to the

rest of the world. So basically be a

liquidity buffer to the rest of the

world and noted um you know Fed Fed

journalist W at the Wall Street Journal

Nick Timmeros made the point that that

is not what the facility was initially

intended for and I think as a result of

that Bessant like snapped back and said

some pretty nasty things about Nick that

I think are totally uh undeserved and

frankly I was just a little disappointed

not just as secretary but like also just

people saying like on on X don't dunk on

him. Yeah. Yeah. It's very cringe. It be

It's like um they The reason Besson did

this is because he's mad that Nick is

making the case that it's not within the

uh the spirit of the

>> Fed repo repo facility from March 2020.

I actually think that I'm not saying

that Nick is wrong, but I think that the

best in case could be is pretty strong

because there's not that big of a

difference between extending a a loan

for a liquidity reason versus just to

prevent sales of the Treasury market.

>> Yeah. But to your point, then make that

argument on the merits.

>> Don't do what has become the playbook of

this administration and slap back like a

little petulent child.

>> White House something. I mean this is

the playbook, right? Like there is an

argument to be made.

>> Yeah,

>> he could have easily made that argument.

He chose not to do that.

>> Just to clarify for you know how for

people watching the FIMA facility, the

idea here is Japan's the largest foreign

holder of treasuries. If they start

really selling those off to try to buy

dollars, support the yen, do that whole

thing, yields are going to be even more

pressured. The FI facility says, "Look,

don't sell your treasuries. We will just

lend you dollars against it." To your

point, when the Treasury decided to

intervene, they did not sell dollars,

sold euros because the Treasury is in a

really tough spot right now. We're at I

mean, we're below it now. We started

this morning at 521 on the 30. We're now

at like 518. You have to ask how long

that's going to be sustainable for,

especially with the deficit we're

running, especially with everything else

we're seeing in the market. Scott Besson

came out and said, "Look, if the yen

does worse, keeps getting worse, we

could step in again." The worry there is

how far do you push that until you're

really putting too much pressure on

treasuries?

>> And Jack, do you think that they'll that

we'll intervene again? Do you think the

US could?

>> I I I would say if the yen level gets

breached, I would say yes.

>> Yeah.

>> Yeah. I I think that that like Japanese

long-term yields are sufficiently high,

but short-term yields are still too low.

So really what the Bank of Japan needs

to do is raise interest rates. But

there, you know, is extremely

respectful, which I which I like.

Investin is like, I would never tell the

Bank of Japan what to do. You is a

friend. I've known him for 20 years.

Blah blah blah. Um so yeah, I just like

to see some of that respect extended to

a little bit of over

>> How much of this is the uh the trade

deal? How much of this is the trade deal

that got signed last year? Because if

Trump wants Japan to be importing

American goods,

the currency game matters. Yeah. I mean,

the yen is too low. Like, it's it's um

it it's too weak. You know, you could go

to Tokyo now and get, you know, an

excellent sushi meal at probably a third

of the price in New York or half of the

price in New York. It it should be, you

know, 120, 130, something like that. The

question is why? Why isn't it? I think

um I forget who I was talking to but

basically Japanese investors just love

buying US treasuries even when and like

there's a long time when they should

have buy US treasuries because the FX

pickup is like is is good to like after

the the post-hedging returns are better

from investing in the treasuries than

from investing in you know long-term

JGBs. That is not true now. And

actually, I've I've heard that like a

pretty popular hedge fund trade is being

long like basically doing the exact

opposite of being long like the 30 or 40

year JGB yields and then hedging the

dollar risk. Um, so yeah, that like I

would say smart money definitely is

buying JDBs over treasuries.

>> But but I also think and this you know

everyone's everyone talks about this how

like the real benchmark is JGB yield. So

like yeah if the JGB yields goes to 5%

of course that's bearish for treasuries

and every other long duration cuz cuz

the JGB yields is the lowest bond yield

in the world formerly 0% 0.1% negative

1% now you know the 40-year I mean we

could look it up I think it's like 4% so

um that's like kind of kind of the last

domino to fall.

>> Yeah. So let me make a a segue into back

into the hyperscaler in the US side of

this very quickly. I want to get your

take on this. Um, this has been a topic

of discussion on the desk this morning.

There was a guest on Bloomberg

>> who made the argument that he would feel

more comfortable right now buying a

30-year hyperscaler bond than buying a

30-year Treasury.

>> Uh, I would say no way. No way.

>> Um,

>> which is pretty much what

>> which is pretty much what everybody

says.

>> Like what? If you take like a 500year

view, there are frequently like it is

actually the norm that private uh bonds

trade tighter than sovereign bonds. Like

in the case if you want to like lend

money to like if you were like the

Italian king like that's a very risky

venture because it basically is like a

military operation. So you would demand

like I would demand 20%. Whereas like

lending to like the local farm is a lot

less risky. But yeah, in in today's

modern, you know, post gold standard

1971 thing, I think that's um a a little

bit ridiculous. And I think also, who

are you talking about? Like, are you

talking about Microsoft, then I think

they're both super safe, but like Oracle

um is, you know, has for many years been

hovering on the investment grade thing

and is is very uh indebted. So, I would

definitely I would definitely

respectfully disagree with that take.

>> Certainly can't make that argument with

Oracle.

>> Yeah. All right. Well, let's talk about

Meta, another company that is having to

raise a lot of cash and now they have to

pay a lot of cash. Um so a new finding

they have to pay a total of $942

million. This has to do um with a um a

trial that that um was looking into

harms against youth for not having the

adequate protections. This was already

there was already a judgment that they

would have to pay $375 million in civil

penalties. Now this is a $567 million

abatement fund um in New Mexico. I I was

struck by um the drug the judge here in

this case. Um apparently it's the first

time a court has found that a social

media company is a public nuisance. This

is what Bloomberg Law flagged

>> um that has a broad negative effect on

the general public. And indeed the judge

in this case

>> compared this to a factory pumping out

pollution. He wrote, "Just as noxious

pollution produced by the factory can

harm the common public right to

reasonably clean air, the harmful

effects of Meta's platforms on children

do not stay contained by its platforms.

Meta, of course, is going to um appeal

this. Um, but they're facing a bunch of

other lawsuits as well. They recently

lost a high-profile trial in Los Angeles

that a woman had brought. Um the market

has shrugged off these things for years

and I wonder if it's going to be become

harder and harder for them to do so.

>> Well, they shrugged it off because the

business was good. Regardless of the

social good or social bad or are we

violating the social contract, the

business was good. That theory is now I

think a little more under pressure. So

maybe that's the window and this is the

window to can we actually talk about the

effect this is having and where the

responsibility should be placed.

>> That's true. I I think it I still don't

think it really matters for the stock. I

think from a social point of view

>> I mean you the stock which here would

show you're right this morning it's down

all of a third of 1%.

>> Yes. Not much.

>> Uh I do think that you know you you look

at cigarettes you look at alcohol you

look at oil in all three of those areas

gambling like everyone is aware of

negative externalities and no one would

dispute that. I think we're moving

towards a world where in, you know, the

the the majority of people recognize

that is true about social media too

about, you know, impacts on young

people's brains, uh, shortening

attention span, uh, uh, self self-image,

particularly with, you know, young

girls, young young women. So, I I think

that that we're increasingly moving

towards that, um, that world. But that's

not that's not why I'm bearish on Meta,

the stock. I'm I'm bearish just because

I think that they their AI strategy

a a doesn't exist or b exists but is

bad. M

>> well and I think kind of to Jake's point

like that

>> this is how it always goes right you

have all these you know external shocks

for a particular company or external

risks

>> it really usually doesn't matter until

it's material.

>> That's right.

>> But if they're vulnerable underneath

because of some of what you're talking

about you know and because they're

burning through free cash then it be

then whether it's that thing or just

because of what you're talking about

>> then it's more fragile. It does feel

like Meta's always been kind of behind

the A-ball, doesn't it? Right. We look

at um what was it? What did they call

the metaverse that kind of never panned

out? They were kind of late on really

getting into the AI frontier game.

>> There's always been a bit of a catch-up.

And so I wonder what that looks like

now.

>> Yeah. The question is why do they need

to do that? Again, I don't I don't mean

to be too negative, but it's like

they've had two wildly successful

things. Number one, creating Facebook

and number two, buying Instagram.

Everything else has not been that

successful. You can make the case about

WhatsApp. I mean, the reality labs loses

>> tons of money. I think probably$20

billion dollars a year they lose. Give

give or take. So, yeah. Oculus not that

successful. I don't know if the the

Kylie glasses are going to be that

popular bands.

>> Yeah. Yeah. Yeah.

>> Um you were shaking your head. I I trust

your your your take on this. You know,

my my sense um is that they're not

really blowing up. Um I I think that

>> right it's still it's an ad company.

>> That's right.

>> That's what it is.

>> It's fundamentally

>> it's a very good ad company. It's a very

effective ad company. Um but you're

right that most of their attempts to

become more than that have not

necessarily worked. Now they're going to

be a Neocloud, too.

>> That's right.

>> It looks like maybe. But they didn't

even give us that many details on that.

>> By the way, do you know what I

discovered yesterday which is crazy like

if if you don't know this this is

probably going to blow your mind as it

did me yesterday. that Rumble, the free

speech platform,

>> they're becoming an AI neocloud

business. They're like, "Yeah, this that

whole social media thing of like you

know, having on uh you know, influencers

and stuff, that's kind of just our side

business. Our real business is building

AI clouds."

>> This feels a little bit like an AI

company.

>> This is like the Long Island iced tea

situation, right? Like this is what it

is. All right. Lastly, today,

>> open AI donut. And by the way, I will be

really mad if they don't call it the

Open AI donut. What is a donut? So, this

is a a Bloomberg report. Apparently,

Mark German not only um gets everything

that Apple is doing device-wise, he's

got he's got the inside track in Open

AI, too. So, um he's reporting that

they're developing OpenAI is developing

this new device. It will be slated for

release in 2027. It'll cost probably

between $300 and $400.

um somehow it will be um like a hockey

puck size but like a donut that you can

carry around with you in your house and

it'll talk to you but it'll also have

moving parts that help give it

personality which sounds terrifying and

>> make it feel like the advent of home

robots

>> like it's listening to you

>> and notably no screen

>> right

>> so kind of like Alexa

>> kind of like Alexa but smaller and

smarter and you can you carry it around

with you And this is the leaning into

the, you know, chat GPT voice, right? I

think there's a lot, there's a growing

amount of people

>> who have started outsourcing their

typing because you can just voice to

open AI and Sam Alman wants the

integration into people's lives. He

wants you to be using the chatbot

>> as your as your confidant, as your

advisor, as your hey, I'm cooking. I

just accidentally put two cups instead

of one and a half cups. What do I do?

Right. There's a there's a wide range.

>> Yeah. And I just peaked around just to

see if you had an Apple. The real the

real play is to get around Apple's total

monopoly on computers. But in you know

the main thing is is iPhone like they

make a hundred billion a year from

services which anytime a business says

services like a lot of sometimes it's

just like basically taking a cut and you

know Apple takes a massive cut. So I

think it is very consensus but I happen

to agree with it the take that like the

the a very safe AI play is just Apple

because they whatever happens they will

get a large cut or significant cut of if

it's anthropic or open AI on the iPhone

on on our computers and that's why you

know Amazon has Alexa Meta has these

glasses OpenAI has the the donut like I

think it is rational to try and fight

that. It is. And by the way, there's a

lawsuit between the two of them because

Apple has sued OpenAI saying that they

stole some of their,

>> you know, IP for construction or design

of a device. I mean, but OpenAI want

they want it, right? They want that

business. They want the device that

you're going to carry around with you.

Um the question is even if they are

working with Johnny IVive I mean you

know Ferrari did too and we saw what

happened there like will you know will

you will it be something that you want

to buy

>> and can lightning strike I mean open AI

is as famous as it is because chat GBT

was a huge success because it's it the

adoption rates were insane can you

strike twice and repeat that now in the

devices space building a device that

people want to buy want to have around

them want to carry around is a very

different than offering them a piece of

software that's really capable.

>> That's right. I mean, and Apple

obviously has an amazing track record of

not just creating one product, but

creating multiple products that are

consistent that people want to buy

>> and almost always knocking out of the

park. There are not that many Apple

products that don't sell well.

>> Well, I think uh the vision pro is kind

of the exception that proves the rule.

So, I agree with you. But yeah,

>> right. Sure. Apple also interesting to

me because among the you know the mag

seven big tech companies they are the

only one that so far has really resisted

saying well we're going to spend hundred

billion dollars on AI.

>> Yeah. Yes.

>> And it they seem to have been at least

somewhat rewarded for that especially as

concerns build around the debt these

companies are issuing all the money

that's getting spent declining free cash

flows. Jack, I'm curious how you're

thinking about how Apple's trying to

position itself right now and maybe

differentiate from the AWS, the Google,

the metas of the world.

>> I think they've got a terrific

franchise. I think it's not going away.

I think they have basically royalties on

on AI as we just talked about. I

wouldn't say I'm bearish on the

hyperscalers other than Meta. I just

think that there's a lot better places

to to invest. Like I say most

semiconductor uh stocks and I this

sounds so toppy but like just looking at

looking at the semiconductor stock it's

not like every single time you look at

an industry it's like oh these companies

I like these companies I don't like.

Like there's very it's very hard to find

um semiconductor companies that are like

not that exciting. I guess maybe Texas

Instruments like the one that make that

the extremely analog stuff.

>> Yeah. That kind of stuff. But

>> but a lot of their businesses have

changed entirely over the past few years

to your point. Um, real quick, would you

buy the Open AI donut?

>> I don't think I would. I also don't

understand why it's not a phone. So, I

have to have my phone and my donut. It's

like,

>> yeah, when you're home, you have the

donut, I guess.

>> Okay. But didn't they say you're going

to try and bring it around with you?

>> Yeah. Carry it around your house. I

don't know if you carry maybe some kind

of It feels too heavy for a necklace.

>> What about you?

>> No, not buying it. Yeah, not buying it.

>> All right. Thanks, guys. Appreciate it.

Have a great weekend. All right. Opening

bid is next. Brian Saz's got you for the

next half hour.

Heat. Heat.

Heat.

Heat.

Heat.

Heat.

Down.

Down.

Heat. Heat.

Heat. Heat.

Ah.

A summer shocker. The July jobs report

showed a surprise 23,000 drop in the

number of jobs. Downward revisions to

May and June saw 103,000

jobs wiped from their prior tallies.

Don't be so quick to think this bad

report, and it is bad, means a rate hike

is off the table from the Kevin Walsh le

Federal Reserve. The reality is we could

now be chilling in the stagflation zone.

But here's what we have heard on the

jobs front this week on opening bid. A

little bit of everything from AI agents

taking gigs to humanoids working

alongside humans in factories.

>> We think this is a a fundamental shift.

We think that there will eventually be

billions of agents providing work and

labor and they'll be able to be

orchestrated and integrated within a

firm and across firm boundaries. We want

our employees to have the superpowers of

fleets of agents that they can use

themselves to amplify their own

capabilities. So, this is a this is an

opportunity to multiply the capabilities

of a firm and of of humans themselves.

As we look a couple years out, I think

we're two years away from having ROI on

humanoids in a warehouse. Uh, and I

think that will happen uh in in 2829.

We're focused on the cobots today,

20,000 deployed. What we find is that

our associates really love working with

robots.

>> The implementation of AI is not about

killing jobs. That was the fear. Of

course, I think where we're headed is

that AI will enhance the productivity of

uh of existing employees. Hence the low

higher low fire uh situation.

>> Uh no offense to Steve I I don't agree

with him there. Uh I think AI is taking

human jobs. All right. On the opening

bid round table with Jaws report hot

takes Amber Fairbanks uh impacts asset

management portfolio manager of US large

cap strategy and YI senior reporters

Brooke Depal and Nzay. Good to see you

all. Uh Amber how bad is this report?

I I mean it's obviously not great from a

jobs perspective, but I think if you

look at the private sector that was up.

It was really from the government jobs

and this has evolved a number

monthtomonth. So in terms of what it

does to the stock market, it's actually

probably a positive and that it reduces

the probability of a rate rise in

September.

>> So do you think all you think rate hikes

are off the table this year because of

this report?

>> Certainly in September. Um I would say

December is still a question mark. I I

think there's still again a lot of

volatility in this number. We want to

understand a trend more than just

month-to-month.

>> Brooke, uh, this certainly puts Kevin

Walsh, new Fed chair, in a hot in the

hot seat even more than, uh, he already

was.

>> It absolutely does. And we were all

looking at polymarket odds this morning

on the likelihood, as Amber was just

pointing out, of a rate hike, which was

the expectations heading into that

September meeting. And now we saw the

odds of that, according to investors,

fall down to 34%

of them think that we're going to have a

rate hike in September. The odds do

increase for October and December. But I

think all eyes now will be even more so

on that inflation print on Tuesday. We

do expect inflation to jump

year-over-year, up 3.4%.

And of course, we're still in this

environment where in the background,

we're not sure what's happening with

that conflict with Iran exactly. We're

hearing of negotiations that certainly

has been providing green shoots for this

market, but there's still so much

volatility and this report though today

definitely does give the Fed a bit more

breathing room there.

>> And what do you see in the bond market

off this report?

>> Yeah, I've been taking a look at yields

and they have been easing. You're

looking at the 2-year that's down to

4.17. You're looking at the 10-year and

the 30-year that are also lower. So, as

um Brooke was mentioning, this certainly

does give the Fed a little bit of

breathing room as far as a rate hike and

the market is sort of signaling that as

well. Remember that the long uh yield

bonds are really important because they

signify uh lending rates, uh mortgages,

uh credit also. So, for when you're

holding debt, if that those yields are

going lower, then that's beneficiary for

those holding debt. And of course, this

is a debt laden market and you've got a

lot of debt when you're talking about AI

and everything else and part of the

reason why you're seeing stocks going

higher today.

>> Brooke, you made some great points on uh

our TikTok live uh this morning right

after the jobs report on on

construction. And I look at some of

these construction numbers and I can't

help but to think like this is a

reflection of this AI buildout in this

country which which is certainly good.

>> I mean certainly if you think about the

tea leaves there it certainly could be.

We saw 22,000 jobs added in construction

during the month of July. I was actually

reading a friend of the show, Ben Eman's

note this morning, and he had said in

this note that over the next 18 to 36

months, we could see 1,000 to 2,000

construction workers is typically how

much these data centers will employ in

order to have these buildouts, he said,

on top of dozens of specialized

subcontractors and continuous longchain

procurement of workers. Of course, at

the end of the day though, the permanent

staff you mentioned was only about 50 to

150 people who will actually be at these

data centers for daily operations. But

in the next 18 to 36 months, this

construction, which is typically not as

strong as what we're seeing now,

typically in the past has only added

about 11,000 jobs per month. Now we're

seeing this major jump of 22,000 jobs.

Amber, uh, you know, as we zoom out on a

report like this, is the reality that

look, AI agents, they're starting to

proliferate inside of companies. This,

is this the first jobs report that we

have to realize that there are

fundamental shifts happening inside of

corporate America where hiring is just

not continuing at the pace it was

because of the spread of AI. I

>> I think that's definitely a risk. I

mean, I think if you look at what AI is

supposed to do, it's supposed to improve

productivity. So, it really should need

kind of that input from humans still.

But I I think there are jobs that AI can

certainly replace and potentially that's

something that we're starting to see

here. I would say we have to look in it

and see a couple months more of this

type of data to be really concerned. But

I do think that's the big risk of AI is

that it starts to take jobs and those

people who aren't trained to have higher

jobs. I mean that's a big problem

>> after a report like this. Amber, what

what could be a good investing strategy?

It's strange. I mean the report is bad

then it fuels potential rate cut notions

out there but then at the same time it

could remove a rate hike from the table

like this is a really confusing report.

>> Yeah it is. I think you know we have to

worry about the consumer after a report

like this. Obviously the consumer's held

up fairly well year to date but at some

point you're going to have high

inflation. You have job losses. What

does that do to consumer spending? So I

think that that's a big concern. I mean,

I think AI is still an attractive trade

and that it's a transition, a big

technological transition. But I I do

think that we have to be a little bit

more picky than the market has been with

regards to AI trades and really

understanding those companies who are

benefiting from a fundamental

perspective, not just who benefit from a

narrative perspective.

>> And I can't say I'm surprised that the

NASDAQ is getting some strength. Uh, and

I think it certainly has to do with with

this bond market. You know, you get some

relief in the bond market. You don't get

that rate hike. This is a could be a

good classic setup to return to some of

these tech names, whether it's the

hyperscalers, whether it's a company

like SanDisk, Micron that have been

obliterated this summer. Those are the

names you go back to.

>> 100%. And if you take a look at the

hyperscalers, they have really led these

markets to all-time highs recently for

the S&P 500, by the way. And if you look

at a five a day chart, you're looking at

Nvidia that's up 10% over the last five

days. Microsoft that earlier this year

totally got clobbered up 8%. You're also

looking at semiconductor stocks like

Broadcom that's higher. Intel is higher

today. So certainly the fact that you

are seeing the market telegraphing well

perhaps the Fed is not going to hike at

least. Uh perhaps they will hold rates

steady which is what some firms on Wall

Street are anticipating. That's bullish

for stocks. Brooke, uh, uh, Amber

mentioned, uh, the consumer, and we got

a lot of reads on the consumer this

week. Uh, McDonald's, same store sales

were disappointing. You had Wendy's come

out this morning. Their same store sales

fell 7%. And you see this jobs report,

and you can't help but to think the

K-shaped economy in this country is

alive and well, or alive and ugly, I

should say, because nobody wants to see

that.

>> I think what's interesting is not only

did we get these fast food facing

companies, but we also got uh company

reports from furniture companies as

well. And what we have seen was

companies like Harvard's uh our house

restoration hardware hardware William

Sonoma all do really well. Of course

those cater to a more affluent customer.

Then you have these fast food companies

that are known for value and steep you

know lowpriced meals under $3, the $5

biggie bags over at uh Wendy's. And this

is these are companies that are now

underperforming. And I think this just

goes to show the stress that those

lowincome consumers are under. We

continue to see gas prices hover above

$4. That has not changed. We're still

sitting around 406. And so the consumers

are clearly showing up in different

places. But at the same time, Bob's

Discount Furniture CEO did tell me over

the phone that that highincome consumer

making 100,000 to 150,000 is actually

still looking to Bob's and shopping

across all price points. So, this just

goes to show that we still have this

extremely valueconscious consumer that's

heading out and shopping and this could

have implications heading into the

holiday season, Brian.

>> So true, Brooke. All right, big thanks

to my round table here. I really

appreciate it. Good stuff. All right,

there's more to assessing the health of

the labor market than obsessing over the

monthly non-farm payrolls report. I put

out a rant on my Instagram account on

this uh this morning. Go check it out.

This is especially true now given how

fast AI is being deployed at companies

and how that is reinventing the

workforce. Ben Zwag is the CEO of

Revelio Labs. He's carefully tracking

AI's impact on job uh on the job market

through a host of measures. Uh good to

see you here. Um look, I really enjoyed

your research and like I was just

talking about in my with my prior

guests, uh I really think this was the

first report where you got a reality

check on how AI is impacting labor.

>> Yeah, I mean it was certainly negative.

I don't know how much I would attribute

to AI per se. I think in the in the AI

exposed sectors, we're still seeing

layoffs be pretty flat. I mean, the

majority of layoffs are actually in

manufacturing which aren't touching AI

at all. Um, so I don't know how much we

can attribute the the aggregate numbers

to AI. Although below the surface, I

think we can see some signal of AI.

>> What are those signals you are seeing in

your data? uh in terms of the impact.

>> So I I think the most pernitious impact

of AI today, not to say, you know,

anything about what it might have in the

future, but at least what we're seeing

today is not so much that it's it's

driving declines in demand for labor. I

think actually the opposite's going on

where the adopting firms are actually

hiring a little bit more for now. What's

what's really happening that's dangerous

is that um the search and match process

is very broken. It's hard to find a job.

it's hard for employers to evaluate

candidates when everyone's applying to a

thousand jobs a minute using AI. So the

actual search and match is, you know,

full of more friction than ever. So, so

that I think is contributing to the low

hire, lowfire market. And what we're

seeing now is it takes actually five job

postings to result in a hire where it

was actually pre- AI it was kind of

stable around one.

>> Ben, how's the ghosting trend looking?

>> Pretty bad. A lot of ghosting going on.

Um, I mean it was it was uh it was kind

of at its peak a few months ago, but

ghosting is still a pretty big

phenomenon where it's just, you know, it

it's um it's kind of, you know, it's

hard to it's hard to basically like

match with people and engage with them

when you don't really know who's real,

who's a bot, what's AI, you know, what's

what's behind the scenes. So, it's it's

pretty it's pretty it's pretty bad out

there. Is it is the ghosting trend been

more reflective of we have a pool of

labor that just doesn't have the skill

to live in this AI world or these

companies they just have they're

uncertain more so than they were 6

months ago and they're just not going to

hire these humans?

>> I actually think it's neither. So so I

don't think it's it's a it's a pool of

labor that that's becoming an issue. I I

think there is some uncertainty that

that companies have about who to hire.

So that is that is still the case. I

think young people especially are are

negatively affected by that. But I I do

think that the the primary culprit is

the difficulty of finding good

candidates. And so I think it's more

about a match problem rather than an

imbalance problem favoring the supply

side or the demand side. I think they're

actually relatively balanced, but the

the search and match process is is very

unhealthy.

>> And I want to get your take on this. My

producer gave me this uh new piece of

research before I came on, printed it

out, and I'm going to read it to you. I

want want to get your take on it. Uh it

says this. It's from Bank of America.

Kevin Walsh's communication strategy

poses key challenges. No forward

guidance. The market will signal uh

still incorporate Fed expectations. No

reaction function. The resulting

uncertainty in policy works like a tax

on the economy. Is Kevin Walsh taxing

our economy?

>> So it's very Greenspanesque in a way

where where you know he he would be very

tight lipped and not want to share that

much. I don't think it's a major tax on

our economy. I think I think forward

guidance has been net positive. Um but

you know potentially you get very fast

reactions. So I think we will see more

spikiness um in in how in how people

react to Fed policy. Um personally I'm

not so bothered by that. I don't think

it's it's majorly important. I think you

know we'll see a little bit more stock

market pertabbations but I think in the

aggregate health of the economy I don't

see it being a huge deal. But after this

jobs type of jobs report, Ben, isn't

this, you know, a good backdrop for Fed

members to speak out or are we just

going to see Walsh and, you know, his

team say nothing and just let the market

interpret a negative print on jobs the

way it sees fit?

>> Yeah, I mean, it's a weird report

because it could really go either way. I

mean, we're seeing weakness in the labor

market and high inflation. I think you

could you could make the case in any

direction. So, I I think, you know, it's

it's tough to say like what how he'll

take this. Um so it really it really is

quite ambiguous. Now whether we get some

signal on on intention now or later I

mean we'll get it at some point. So I

think the market for sure likes some

certainty but I think we're also seeing

a lot of a lot of uncertainty from other

areas. So Fed policy's one you know the

war is another uh AI is a big one. So,

you know, am amid the the sea of

uncertainty, Fed policy is another one,

but also is going to be quite reactive

to what happens to oil prices, um what

happens to, you know, um employment

dynamics that are that are the result of

AI. So, I think there there's a slight

advantage in just kind of waiting to see

because there's a lot happening that

could um that could sort of get itself

figured out uh that really have nothing

to do with kind of like net job growth

and and inflation numbers. It could, you

know, we we could have a totally

different situation if, you know, um if

the war kind of winds down. So, there's

some advantage in um in not being too

reactive, I'd say.

>> Ben, good to see you. Appreciate you

hopping on this morning. Have a good

weekend.

>> Likewise.

>> All right. Coming up, I put a spotlight

on the Coffee Wars. Dutch Bros. CEO

Christine Baron joins me next.

Hey, hey, hey.

Heat.

Hey, Heat.

Heat. Heat.

Somewhat of a surprise reaction to the

latest earnings report out of Dutch

Bros. The stock was drilled by 18%

despite the company beating estimates

and putting up a solid 8.3% comparable

sales gain. There may be some concern on

guidance and how the company will handle

a coming energy drink push by

McDonald's. Not helping sentiment is a

revitalized Starbucks uh putting up big

sales gains. But let's hear from more

from Dutch Bros. CEO Christine Baron.

Y'all find here as well. Good to see you

all here on this Friday. Christine, um

how is how has this quarter started for

Dutch Bros? I'm trying to understand how

the how the market uh perceived your

quarter.

Yeah. So, we had a fantastic quarter. We

grew revenue at 30 32% year-over-year.

Adjusted EBIDA up 28% and as you shared,

our company operated same shop sales

were above 8%. So, really, really strong

quarter. This was uh the second quarter

in a row that we were able to raise our

guidance uh for the year. Started out

the year at a 3 to five guide and are

now at a five to six guide. Christine,

it seems like investors though were

still focused in on that on that outlook

for the year even though what we had

seen is that they said that same sort of

sales shops growing between 5 to 6%

maybe just wasn't enough. And so why be

conservative? Because that seems to be

the word that a lot of investors are

using here.

>> Look, we feel really good about what

we're projecting for the rest of the

year. As we look throughout the year, we

had an incredibly strong 2025. So this

was our eighth consecutive quarter of

transaction growth. And as we look out

over the year, we're actually very

thoughtful about how we forecast our

numbers. Uh we look at how the trends

are coming out of the year. And so

really the back half of the year is just

uh looking at how strong the end of 2025

was.

>> Miss energy refreshers. I mean Brian,

I'm dying to try these. I feel like

these are so you just got to open one of

these.

>> They're uh under 100 calories. They have

antioxidants, electrolytes. How big is

this potential opportunity here and was

that a key driver during the second

quarter?

>> Yeah, mist is a key driver during the

second quarter, but more importantly,

it's really important to our leadership

in the energy market. So, we are the

category creator of customized energy.

Uh we have a very very strong rebel

platform. It has historically

represented about a quarter of our

sales, our energy drinks. And adding

Mist to that platform really allows us

to expand. And we saw just that in the

quarter. We saw Energy play an even

bigger role in our business uh than it

did the year prior.

>> Christina, how how do you plan to

respond to McDonald's uh who's coming

out with a some form of Red Bull drink

with a lot of caffeine, a lot of fizz?

>> Yeah. So, I think what we do every day

is we focus on our teams and our teams

focus on our customers. So for Dutch

Bros, it's not just about the drink,

it's also about the service. We are the

customer service leader across the

industry. Our broistas make our

customers days just a little bit

brighter uh when they come through that

drive-thru. So for us, it is a focus on

customizing those drinks, getting them

just right for our customers, but most

importantly that interaction uh that our

customers have with our broistas. This

has been an interesting month or so,

Christine. And as a veteran of this

space, maybe you can weigh in on this.

Uh salad issue over at Taco Bell. You've

got now jalapenos over at Kadobo and

Chipotle. Now, I understand you don't

sell lettuce wraps at at Dutch Bros. I

get it, but have you used this

opportunity to double down on on safety

operations inside the company? What have

you told your team?

>> Yeah, so we are always looking at food

safety, always really thoughtful about

food safety. Um, I do think fresh

produce is a different area. uh than

than what we serve and um so you know we

do focus on it quite quite uh a lot but

at the same time we do not serve any

fresh produce.

>> Speaking of food though you guys are

rolling out this food program and that's

really ramped up during the second

quarter. Where is that at now? What can

you tell us? Where can we expect it to

go from here? Because I'm so curious

just exactly will be on that menu at the

end of the day.

>> Yeah. So with our food program we saw a

real opportunity in the market. So our

business has historically been a third

morning, a third midday and a third

afternoon. And when you look at the

morning day part for others, it really

provides almost 50% of their sales. So

when you look across the market, that

morning day part is a really important

day part. And breakfast sandwiches, uh,

proteinbased items are really an

important part of that morning day part.

So, we saw an opportunity that customers

were sharing with us. I love your drinks

the most, but I will sometimes go

somewhere else to grab a breakfast

sandwich in the morning uh because you

don't have them. And so, it was a really

important thing that our customers were

telling us and we are seeing just that.

We have food in uh 750 shops uh as of

the end of uh Q2 and are incredibly

pleased with the results that we're

seeing and we're seeing just that. Our

customers now are able to get their

favorite beverage with their favorite

new food.

>> So once again, speaking of food, I mean

you guys are also acquiring the

locations of Salad and Go. Now for those

of you who don't know, Salad and Go was

a drive-thru salad chain. I actually

tried it when I was visiting you guys

out in Arizona. The majority of those

locations that you're taking over are in

Arizona and Nevada from what I

understand. So why buy more drive-thrus

in a market that you're already pretty

penetrated in?

>> Yeah. So, we're really just getting

started as we expand across the country

and that includes further penetrating

markets that we're already strong in.

Uh, so we see long lines uh really

throughout the system even in places

where we already have a lot of shops and

for our customers uh we want them to be

able to get through our lines quickly.

We want to be able to serve them uh

really well. And the beverage market is

actually quite convenience- driven. And

so we really want uh as we drink our

beverages, we want something that's

close to our home. We want something

that's on our commute on the way to

work. And so what we are always trying

to do is just make Dutch Bros more

convenient for our customers.

>> Christine, um maybe you can make this

one boil this one down uh and in simple

terms for um for the investors that

watch this. Why is Dutch Bros able to

put up an 8.3% comp? At the same time,

Behemoth Starbucks is back putting up

very large numbers. Its stock price is

at a record high. Is it that Starbucks

restaurants are not near Dutch Bros or

what is going on there?

>> Yeah, so as we look at the industry

right now, the beverage industry is

incredibly strong. I think that uh

customers are seeking out different

types of beverage occasions. we have

really grown that afternoon day part as

we have grown across the country and

really maybe added uh another beverage

occasion uh to what customers are

already doing. I think the love for

customization and being able to create

drinks yourself is something that's

really helpful as well. And you know I

think if you look at those comp numbers

those are comp numbers for same shop

sales. So we are growing our company

operate at same shop sales at above 8%.

If you look at our overall revenue

growth, it's at 32%. So, both of those

numbers are actually quite important.

That overall revenue growth is showing

not only are we growing our same shop

sales, but as we open new stores and

make it more convenient for our

customers to go to those stores, we are

still growing um our same shop sales.

>> All right. Well, good luck this quarter,

Christine and Brooke. Good to see you

both. Talk to you soon. All right. I

will have a new Drop My Power Players

podcast out on Monday, and it's a

special one. I sit down with Airbnb

co-founder and CEO Brian Chesy, fresh

off his better thanex expected quarter.

We not only talk about the future of

Airbnb, but also how he's thinking about

the future of AI. This is the fastest

we've been growing in years. I mean, I

think a really simple way to think about

it is last year our revenue grew 10%.

This quarter alone was 17%. It's really,

really hard for a big company to

accelerate growth. The second thing is

AI is the best thing that ever happened

to Airbnb. You know, I think there's

there's going to be some winners and

losers. Um, I think mostly AI is going

to be good for most companies and we are

one of those companies that really

benefits.

Heat. Heat. N.

Heat. Heat.

Hey, hey, hey.

Welcome. Welcome to market catalyst. I'm

Julie Hyman. 30 minutes into the US

trading day. Let's take a look at the

major averages on this jobs day. We had

a kind of a mixed jobs report. On the

negative side, a drop of 23,000 jobs

last month and revisions downward for

the couple of prior months. Um also um

seeing a tick down in the labor force

participation rate and not as strong on

the average hourly earnings growth which

is positive or negative depending on how

you look at it and whether what you're

watching in terms of inflation or how

much you're earning. Uh the unemployment

rate though ticking down to 4.1%. All of

that equaling higher stocks at least

marginally today depending on where you

look. The Dow right now up about 100

points about 210 of 1%. the S&P 500 up

about 4/10en of 1% and the NASDAQ

composite up 8/10en of 1%. Also wanted

to see on how this is playing in the

bond market and there we are seeing the

clear perception that this jobs report

implies that the Fed might have a little

bit more room before it has to move on

interest rates. So we're seeing right

now the 10-year yield down to 4.62%.

Still a pretty elevated level, but not

where it was and not seeing that move

higher. The 30-year yield at 5.19%.

We are also closely watching and

continuing to watch the action between

the dollar and the Japanese yen after

the US assisted intervention that we had

seen in that currency. So this is the

dollar yen. So this is the yen rising

versus the US dollar. If you look at the

five-day chart here, we had seen the

dollar going up versus the yen. So now

that is reversing, which is what the

Japanese and the US for that matter want

to happen right now. So that's something

and a relationship we continue to watch.

I also wanted to mention what we have

seen on the week here. Um so here's a

5-day chart of the S&P 500 setting up

for the best week at least since April.

That's true of the S&P. It is through

true of the Dow as well, which is up

almost 3% on the week. Of the NASDAQ,

it's the best since early uh May. So,

we're definitely seeing strength across

the board. Specifically, the comeback in

tech has been notable. So, if we take it

on over to our heat maps and look at the

NASDAQ 100, here's the 5-day look of the

NASDAQ 100. Nvidia up 11% this week,

Microsoft up 8% this week, Broadcom up

9% this week, SpaceX with a comeback of

12% this week. even with its lockup

expiration beginning, but it's been a

volatile week for that one. Meta up 6%

on the week. You get the idea. We have

mostly seen a comeback. Alphabet

obviously an exception to that. And then

in semiconductors, we have also seen a

comeback with the exception of SanDisk.

We've seen a lot of buying come back

into that group. On the sector front, on

the weak, energy and utilities weak, but

tech and materials strong, those are the

ones that have outperformed this week.

Getting back to today real quick, we've

got energy stocks lower once again.

Consumer discretionary the best

performers. So that's what we've seen

today. That's what we've seen on the

week. We continue to watch earnings even

though we're creeping towards the end of

earning season. So let's zero in on one

company reporting. That's Lyft. The ride

share company uh after it reported its

shares jumping. It beat bookings

expectations did miss on income

estimates. the strength in bookings in

part due to strong demand for premium

rides as well as growth in European

markets. And joining us for more, David

Richer, Lyft CEO. Good to see you again,

David, as always to talk after the

numbers. Hey, so you saw that uh strong

bookings number 30 million active riders

I think is where what you guys got to.

So talk to me about where you guys are

seeing the most strength there in terms

of markets, types of rides, what where

did you see that that growth being

driven?

>> So it was really across the board and I

think this is sort of a testimony to how

ride share and in particular is becoming

such an important part of so many

people's lives. So as you mentioned 30.5

million active riders, that's an

all-time record. We're on track for a

billion rides this year. And I think

what what it really says is so many

people are looking at their options and

saying, you know what, this is actually

just a better and easier way to get

around and that keeps driving our

topline growth because of our customer

obsession and driving profitability as

well.

>> Um I'm curious about the the gap between

the bookings growth and that the speed

of the ride count growing. You know,

there's a differential there. Is it

because people are spending more when

they are riding? What's going on there?

>> Yeah, a couple different things. And

you're right. So bookings are growing a

little faster than rides. So, some of it

is just sort of a technical issue.

There's certain things that count for

bookings, like for example, our

advertising business that doesn't count

for rides, but you're also seeing, and

you mentioned this in the opening,

people are taking higherend rides, you

know, black and extra comfort and so

forth. It's actually some of our fastest

growing kind of ride modes. And I think

what it tells you is, you know, people

don't mind sort of splurging, you know,

and it's kind of interesting. I think

people sort of think, oh gosh, there's

some people who only take, you know,

maybe lift black, other people who only

take, you know, lift weight and save.

That's not the way the the real world

works. the real world. You know,

sometimes people are in a rush or

sometimes people are sort of want to

treat themselves or maybe going to a

business meeting. We're seeing a lot of

business travel increase and so they'll

take a nicer ride. Other times people

will say, you know what, I got a little

extra time. I'm not in a big rush. I'll

take weight and save. You know,

consumers are pretty smart and I think

that's part of what's driving um our

overall growth and in particular the

kind of topline growth a little faster

is those tend to be more expensive rides

and that tends to sort of drive the top

line up a little faster.

>> Yeah. And David, um, I didn't realize

this. In full in full disclosure, you

guys have a luxury ride business you

bought at the end of last year called

TBR Global Cha Chauring.

>> Chauffeurring. Why can't I say the word

chauffeuring?

>> Excuse me. Um, so that talk me through

how that's been performing and are you

guys going to I mean, is that going to

be continue to be called that with a

word for some reason I can't say or or

is that going to be rebranded lift at

some point? we'll work on it, see if we

can come up with a different word. It's

a great business. So, yeah, TBR is a

company that really focuses on very very

high-end transportation. You know, the

type of thing where maybe if you're a

CEO and you're doing um you know, a

non-deal road show, it's sort of a

technical term for going out and trying

to raise money or tell your investors

how they're doing. That's going to be a

TBR ride. Um so, super super high-end. I

will admit, it's funny, I don't actually

take them very often myself, but I did

actually take it at 5:00 this morning,

West Coast time, because I had to be in

another interview. and they're very very

reliable, extremely high service. Um, so

yeah, so how does that service work? It

is really kind of a sort of a

specialized thing, but the reason we

bought it is because it it sets such a

high bar for service that then the whole

company, the all of Lyft can learn from

that and really kind of level up our

service level, which obviously is part

of our real value proposition. And as I

mentioned with business rides, that's

business travel is an area of huge

growth. You know, it turns out that the

whole we're never going to do face tof

face meetings thing. That turns out to

be wrong. It turns out people really

like getting out and doing sales

meetings or conversations with customers

and so forth. And so it's really helping

drive kind of the top end of our

business, particularly for uh executive

level travel.

>> You know, David, as we talk about the

sort of um menu of different types of

rides that that folks have access to

through Lyft,

>> it it makes me want to get you to weigh

in on the whole K-shaped economy debate

and sort of the prism that you're seeing

it through, which is the prism of Lyft.

And you know, how what do you think is

happening there? Yeah, a couple of

things. You know, as I said before, I

don't think it's sort of a tale of two

cities really. I really don't. I think

the the dominant thing for us, and it

might make our our perspective,

therefore, a little different from

others, is, you know, we do a billion

rides, which is wonderful, but remember,

people ride 160 billion times a year in

their own private car. And so, I think

to a certain extent, you're seeing a

real shift from that to to ride share.

And that kind of dominates um everything

else. Everything else is kind of small

uh in comparison to that. I think

another interesting thing and we we

might have talked about this a little

bit before is consumers are smart you

know so they're no matter where you are

everybody likes a deal so no matter

where you are on sort of the

socioeconomic ladder everyone likes a

deal so I'll give you some examples

people are really good at doing

something I call rewards maxing okay we

might have talked about this before

again it's like you know I maybe I take

a business ride to the airport and I do

it on my company's dime people literally

do this and then they get points or cash

back in Lip's case and then they spend

it on their private rides And when they

do on the private ride, often they're

upgrading to a nicer car. So, you know

what I mean? It's not the K-shaped

economy. I understand the concept, of

course, and it's it is real in the macro

sense, but what we tend to see is more

people moving up and down and really

trying to use all the tools from Black

to Extra Comfort to Priority Pickup to,

you know, Door Dash linked to United

linked to Built Link to Alaska and

trying to figure out a way to make the

most of their money.

>> Interesting. Um, the other thing that

you and I have talked about a lot is

autonomous driving. Um, and you guys,

um, now have a partnership in Nashville

with Whimo, but I believe you guys have

sort of more management of that depot,

if I understand it correctly. Can you

walk me through how that works and and

how it works not just for you guys, but

how it works for riders in Nashville?

>> Sure. Yeah. And it's really interesting.

Let's let's peel back a little bit

because it's going to be such a big part

of not just our business, but frankly,

of society over the next 5 to 10 years.

So, in Nashville, which is where we're

starting with Whimo, it's a great great

partnership. Um, we just took over depot

operations there. Okay. So, what does

that mean? That's what you're referring

to. Somebody's got to keep these ABS

cleaned, charged, maintained, and we've

been doing that for years and years

through a subsidiary called Flex Drive.

So, we just took over one depot. We're

actually expanding into a new

purpose-built depot. It is 82,000 square

ft, right? That's like one and a half

football fields. And that's what's going

to keep these hundreds of cars on the

road. and we're responsible for that. We

get paid for that by Whimo and we're

responsible for keeping those cars

ready. In addition, later this year,

riders will have the opportunity to get

matched with a Whimo on the Lyft

platform. And that's that's new for us.

It's also new for Whimo. They have their

own app, but this will be the first time

that they open up their full supply uh

to a company like Lyft. And we're super

super excited about that. We're holding

ourselves to a really high standard.

We're still kind of in early days of

testing and so forth and so on. So,

it'll be later this year that that rolls

out. But we think that two-pronged

approach is a really strong one,

particularly when you add up it with the

lift drivers because then you get the

best of both worlds. You can get the

opportunity to be matched for the Whimo

or get a ride with a lift driver, uh,

depending on, you know, what works

better.

>> Um, finally, David, I want to ask you

about acquisitions. You guys have been

making some buys. You bought a couple of

Irish taxi dispatchers. You bought a

Spanish bike share service. Um, so

adding on to the to the various services

you have, what what else is coming down

the pike? or do you feel like you still

want to add?

>> Yeah, I mean what you're sort of

describing is what we talk about is our

up and out strategy. So up means as you

say that the TBRs, the chauffeur systems

and so forth trying to kind of move up

in that way. And then out means

overseas. So every one of those

acquisitions was an overseas acquisition

just almost exactly a year ago. We

bought Free Now, which is an overseas

European kind of taxi aggregator and

that's going super well growing

organically. And I was actually just in

Barcelona a couple weeks ago myself

testing out the service. you can now

order it on Lyft um in beta. Anyway, so

that's kind of on track and then we're

sort of, you know, filling those out

with some other acquisitions as you say,

a couple of small ones in Ireland to

kind of strengthen our position there.

Uh and a bike one that allows us to be

kind of a stronger bike operator

primarily in Spain. Nothing more to

report right now beyond that, but as as

you we we're really transforming oursel

into a global company and this is kind

of all part of the all part of the

equation.

>> Okay, stay tuned. In other words, David,

thank you very much. Good to see you.

>> Always a pleasure, Julie. Thanks.

>> Coming up, the CEO of DraftKings on that

company's latest results. You're

watching Market Catalyst. We'll be right

back.

Heat.

Heat.

Hey,

down.

DraftKings reported second quarter

revenue that missed Wall Street's

expectations. The betting company is

blaming results from the World Cup and

the NBA finals which favored the

customer. It's also pointing to an

increased marketing spend as it aims to

lure new customers. All of that said,

the shares are higher now. Monthly

players did rise by 9% to 3.6 million.

Let's talk more about these results with

Jason Robbins, DraftKings co-founder and

CEO. Good to see you, Jason. So, uh, the

games didn't necessarily go your way in

this last quarter, which happens. Um, I

am curious about that customer

acquisition spend. Um, how you thought

about sort of ratcheting that up and

whether you feel like you got a return

on that investment even though it cost

you in the quarter?

Well, we we saw enormous customer

acquisition the quarter. Uh we mentioned

this on the call. We had about a 10%

higher than expected spend, but we saw

25% lower tax. Um so, you know, with

that type of environment, it made sense

to invest a little deeper. But really,

that wasn't the major impact for the

quarter. The real impact was when you

acquire a lot of new customers, you get

new customer promotions that cause uh

short-term, you know, and before you pay

it back. Um, so really was less about

the marketing spend. That was only about

a 10% increase. The other thing is you

mentioned the outcomes. We did see some

customer-friendly outcomes particularly

with the World Cup in Q2, but that

turned around in July. Um, so as we sort

of see over the course of a season,

certainly over the course of a year,

these things tend to kind of normalize

to the means. But obviously quarter to

quarter, you can have a little bit of

variance there.

>> And Jason, speaking of the full year,

what kind of visibility do you guys have

on the business for the full year?

because I noticed you didn't you didn't

do anything on the forecast front as far

as I'm aware. Um so what can you tell us

even some color on what you're expecting

for the full year?

>> Well, we maintained our guide and that's

on the basis of we expect to do about a

billion dollars in adjusted IBITa on the

core what we call the core business.

That's our you know basically everything

besides predictions. Uh and then

predictions we've said we expect to

invest about two to 300 million and so

we maintained our guide. Uh core

business is firing. We had an enormous

July. Uh even after the World Cup ended,

we had a 20% year-over-year increase in

handle for the rest of the month. So, uh

right now feels like there's a ton of

momentum and we're really gaining steam

in the core and it looks as healthy as

it's ever been. So, uh we're really

encouraged by that and feel good about

the guy. But, uh obviously we want to

invest a little bit in predictions too.

So, we decided to keep guide in the same

place.

>> And I want to get to predictions in a

moment. Before I do, I do want to ask

you about the World Cup since that was

obviously such a big event for you guys,

for the country, for sports fans, etc.

Um, you talked about this a little bit

on the call, but for those who weren't

listening, talk to me about the impact

of the World Cup, not just during the

World Cup, but you know, does that

sustainably bring in customers for you

guys, do you think?

>> Absolutely. I mean, we've seen that I

mentioned July. I mean, the reason July

has been on fire uh after the World Cup

has been because those customers have

continued to engage with baseball and

other products. So, obviously with

football coming up in just a month's

time, lots more opportunity for us to

continue to engage those customers. So,

really excited to see that. Sometimes,

you're right, you don't know when you

have a big event like that. Are you

going to see people come in and just bet

on the World Cup and then, you know,

disappear? And that was not the case

here. they they've been sticking around

and um that's why we've seen such a

strong July after the World Cup ended.

>> Okay, so let's get to those prediction

markets. I I believe you guys now have

600,000 customers for your prediction

markets uh product. You've talked in the

past about sort of wanting to be sort of

deliberate and somewhat conservative

about about rolling those out. Uh where

are you now that you've reached that

sort of critical mass and where do you

think the growth goes from here?

>> Well, the more time we we get the

better. It allows us to develop a better

product. It allows us to hone uh our

messaging and all the different

components that that really you need to

be successful here and we really feel

like all of that is starting to come

together. Uh a few months ago uh we

launched the first incarnation of our

super app. Uh we are nearing our third

milestone release in August which is

going to be you know basically the

completion of all the pre-NFL work uh

that we wanted to do on the super app.

So very excited about that. Uh, as I

mentioned, we saw really, really strong

customer acquisition costs in the

quarter despite uh, increasing our spend

a little bit. We ended up with 25% lower

than expected CS. Um, so we're

encouraged to see that. Um, so I'm

expecting big things this fall. I think

we're going to add millions of new

predictions customers. I think that

600,000 number is going to go to the

several millions. Um, so I think it's

going to be an enormous fall for us and

I'm really excited to see what happens.

>> How do you think about who those

customers are? Are they existing

customers? Is there any cannibalization?

Are they doing sports betting and doing

prediction? How is all of that playing

out?

>> Well, these are largely new customers or

customers that are just engaging with

predictions because we're offering uh

our sports predictions product only in

the states that we don't have legal

sports betting. We do have other types

of predictions markets like elections

and things like that uh in a broader

state footprint. But for the sports

side, which is where the vast majority

of the volume is, we only offer those in

the states that we don't have a legal

sportsbook product in. So, uh, I think

for those reasons, we we really are

seeing a very similar customer profile

to what we see in our OSB states. Uh,

and we're not really seeing much

overlap. I mean, do people do travel, so

we do sometimes have people that go to a

state that does have, uh, sports betting

and make a sports bet and then go to a

state that has predictions and do that,

but that that's not a huge number. uh

most people tend to play in the state

that they live in.

>> Um you've talked a little bit before

about international expansion that you

guys are not anxious to do it, but it

feels like maybe you've maybe you've

softened a little bit on that point

through the years. I don't know. You

tell me, Jason, how are you thinking