Amazon’s $8B Nvidia chip move and $1B data center pledge: Who’s holding the AI risk?

[music] Welcome to the 8:30 at 8:25. And that's because it's jobs day, right? That's right. My >> house is still very confused. >> Are we getting paid extra for the five minutes? [laughter] >> So, um, we've got the jobs report coming in a few minutes. Um, and so we want to ramp up to that. Um, just to run through the expectations real quick. We are going to be watching the headline number very carefully. 90,000 is the average economist estimate of those who were surveyed by Bloomberg. That would be somewhat of a slowdown from the big 162,000 addition that we saw in August. So looking for some moderation potentially in that number. Average hourly earnings are predicted to have risen 3/10en of a percent month over month and the unemployment rate predicted to hold steady at 4.1%. Those are sort of the big picture numbers that we're going to be watching for here. And guys, I was um pretty struck by looking across economist notes. Everybody's feeling pretty good. >> Everyone everything's fine. >> Yeah. I mean, like, you know, we've been talking a lot lately about the vibes broadly, right? Amongst Americans, amongst, you know, just what people are talking about. Those vibes aren't great, but like economist vibes and what they're seeing in the labor market numbers, >> they're pretty good. >> Yeah. And there's also a sense that coming off the 162,000 jobs we saw last month, the even if we get the consensus, even if we get 90k, which would be a drop of what's that 72,000 jobs, there's still a sense that that's still a healthy print because the break even level is seen as being much lower. So if we get 90, that's still a strong print even if it's not the triple digits we saw last month. >> Now, was was ADP and Challengers okay, too? >> They were fine. They were fine. Ulta was fine. And we know it's not always correlated, but that could be potentially another a decent month. I mean, we're watching obviously revisions, things like that. How bad could August be? There's there's some rumblings that August number is really over sort of inflated and will come back down because of some seasonality issues. >> Not sure exactly how that's calculated, but but we'll see when we Tom Tom Simons over at Jeffre, he had an interesting note and he basically looked back to the middle of last year and he said labor market conditions have gotten a lot better. And so he said this is further evidence that the slowdown in job growth that we saw last year was due to the combined effects of lower immigration flows and tariff driven uncertainty. Um and he said there is evidence that it's hard to break into the labor market for younger workers, but he thinks that that should improve over time. Another interesting note I look at, um Dennis de Busher of 22V Research, he always surveys his clients and says like, "How do you think the market's going to react when we get these numbers?" 53% of his clients say it'll be mixed to negligible, like there won't be much of a reaction. 41% think it'll be risk on. Only 6% think it'll be riskoff, that it'll be a result today that will result in the market and equity selling off. >> Julia, a question for you. You know, back in the old days when we were doing this stuff before, it seemed like the jobs were had more oomph to it, right? And now it's more about CPI and things like that, right? That's been that's been the case for >> quite I mean that's because this is not the thing we're worried about, right? you know, labor market's doing fine. >> Exactly. The jobs market, the jobs report takes on a lot more significance when things pivot on it. But I mean, even the Fed has said >> we're we're not so worried about the [laughter] about the labor market, right? We are worried about inflation. So that's why the inflation reports that's why they do have more weight. >> It's also just worth noting before we get these numbers that uh we see treasuries actually getting a bit of a bid this morning taking some heat off yields. We got a weaker than expected ISM print yesterday. We've also got a series of dovish comments from some of the um members of the Fed, not New York Fed President John Williams, Vice Chair Philip Jefferson, Governor Michelle Bowman, all coming out this week and saying, "Look, things are okay. As long as there's nothing drastic, maybe we have some time to kind of sit back and evaluate." That's certainly lowered the odds in the market that we're going to see a move in October and pushing more likely that if we're going to see another one this year, it's going to be December. It's not going to be, >> right? And the odds are still being priced in of that move in December, but just like more of a sort of deliberate slower pace rather than the I think the word that Williams was used used was urgency that there isn't a lot. >> There's not a ton of urgency. It also saves him some political capital of not having to raise rates right ahead of the midterm election. >> Yeah. And you see mortgage rates going 7.1 7.2. It's like, hey, maybe. >> Exactly. Exactly. >> I mean, we are seeing oil prices come off a little bit this morning and um oil and yields have decoupled a little bit. So, we'll see what that looks like going forward. But, you know, even though we're not paying as much attention to the labor market numbers perhaps as we were in the past because of that backdrop of the of the uh yield market of the Treasury market, you know, it's still going to be important obviously. >> And if we do get another really hot print, that will be more incentive for the Fed to raise at some point this year. >> All right, we should be getting the numbers any second now as we uh await the numbers here. 29,000. So, a much worse number than had been estimated. 29,000 jobs added in September versus the 90,000 estimated. Average hourly earnings slower than estimated at only a tenth of 1%. That is a third of what economists had been predicting. And the unemployment rate ticking up to 4.2%. That is not great news uh on the labor market front. So, we will maybe we're too complacent, guys, going into economist said everything is fine. 4.2% 2% again the unemployment rate the labor force participation rate actually ticking up a little bit 61.8% up 2/10 of 1%. So those are some of the numbers that stand out to me. Um you know again 29,000 a much worse than predicted result for the jobs added last month. We were looking for normalization guys. We're looking for okay it seemed like most of the economists said maybe August was a little bit of an anomaly. Not that things are bad but we'll see some normalization. But it looks like we've seen that and then some. So I know you guys are digging into what we're seeing in the in the report here. >> Yeah. So I just want to go under the hood, look at the sectors here. So we really see the strength in this report from goods producing, private service providing. This is the private sector strength here. We saw the government lose 17,000 jobs. Drilling more into that private sector data. Where are you seeing the strength? You're seeing that in construction 11,000 jobs positive. You're seeing that in uh where was that number that I'm looking at? manufacturing and durable goods. You're seeing it in healthcare. That's right. We're seeing a bit of a slowdown in health in uh in leisure, which has been a big bump for the last few months, dropping to 10,000 jobs added this month from 37,000 last month. I also do just want to hang on that manufacturing number for a second here. 9,000 jobs added. That is a slowdown from last month's 15,000 jobs. The question there is how much of that is the AI economy, the data center, the factory buildout, the energy equipment. What is that going to do to that manufacturing number over the next few months? >> I mean, the engine has been healthare. That's right. And so, healthcare still saw a gain of 17,000. That's right. But it's a smaller gain. So, it's sort of like that trend is slowing to some extent. So, it's been kind of healthare and what governmentucation education >> and both of those things are moderating to some extent. >> We saw the government lose 17,000 jobs on the month. >> So, yeah, >> we also had some revisions here. Uh so change for July revised down by 31,000 jobs right from from positive 21,000 to negative 10,000 in July right uh change for August revised on not not as much but down 29,000 right so going from 162 to 133,000 jobs so big revision almost 60,000 jobs lower than previous previously reported for those two months. So um >> that's not great. And if the question is is is September going to be revised at some point? We'll see. So we're not exactly sure what's going on here. It doesn't look so great. I mean, we're just we're talking about how it's things okay, everything's fine. Now it's like [snorts] something do we jinx it process? I mean, so so it looks like at least initially from the market reaction, this is sort of the classic bad news is good news kind of situation. We're we are seeing bond yields come down. So, um I haven't checked um the Fed watch in the last minute, but in terms of what's being priced in now for October and December in terms of rate hikes, the yields coming down implies that there is perhaps a little bit less of a chance. And we're seeing stocks uh futures take, as you can see, a little bit of a leg up. >> Yeah, we're hanging at roughly 72% odds that we stay on hold in October. If you look at December, the market is still pricing in roughly 80% odds now. So that's come off a little bit. Obviously, if we'd seen this number be really hot, that probably would have risen. That would have been a much more hawkish tilt. With the more dovish number, you're seeing those odds back off. I do just want to come back to the sectors for a second and point out two trend lines that are looking really interesting. And again, correlation is not causation, but we talk about the AI impact of all of this. Manufacturing was a little change in September, as we said, adding 9,000 jobs, but it's up by 72,000 since a recent low in December 2025. So manufacturing on the rise. Take the other side. >> Financial services and financial activities again little change on the month down 7,000 but employment and financial activities down by 129,000 jobs since a recent peak in May 2025. That is one of those sectors where we've said we're probably going to see some cuts due to AI. A lot of the younger labor force there that could be easily replaced with the modeling capabilities and some of the uh other capabilities of these newer models. That's again correlation is not causation. There's nothing saying that is being driven by AI, but it's going to be something to watch. >> Yeah, most definitely. Um and and something else um I wanted to mention here is that even as we get this slow down to 29,000, the break even rate for job growth is lower than it was. In other words, how many jobs does the US economy need to add in order to keep up its pace of growth? You know, and it's some there's a range. There's a range of estimates. Is 29,000 there? We'll probably talk about this in a moment, but you know, so 29,000 doesn't look great. Is it dire? I think that's debatable. And again, we are seeing those yields come down quite a bit. >> I mean, 29,000 compared to like just historical numbers even during the buying years seems pretty low, right? I mean, it's like, >> you know, usually you want triple triple or you know, triple digit numbers here. 29,000 seems like just seems like it's barely breaking even, right? And something else to mention is if we're getting average hourly earnings that are rising a tenth of 1% or 3% year-over-year, again, both of those numbers are worse than estimated. We know that the concern of Americans right now is not necessarily whether or not they can get a job. It's how much they are spending on everything. And if the pace of earnings is not matching that, that is a problem. >> That is right. >> Four percentage point, right? Basically, we're we're missing here. >> Yeah. Depending on [clears throat] on Yes. how you slice it. Exactly. All right. Well, let's talk much more about all of uh this right now. And I want to bring in Muhammad Alien. He is Alian's chief economic adviser. He's a professor at the Wharton School, longtime uh watcher of jobs and everything else economics. And I'm I'm so delighted to have you here, Muhammad. Um so look at looking at this number. Just give me your first bless reaction when you see a 29,000 print. So weak across the board when it comes to the demand for labor. Um you said the 29,000 print on job creation that's well below the 90,000. Um the downward revisions of almost 60,000s to prior months earnings growth of only 0.1. So the demand side is flashing yellow. The supply side of the labor market is encouraging. We had a pop in labor force participation. something that we've been worried about for quite a long time. And that went up surprisingly to six from 61.6 to 61.8. So good on the supply side, but we got to now keep an eye on the demand side. And and this is going to not just lower yields as you said, but it's also going to put the Fed definitely on hold for October. >> Mohammed, one of the questions here is of course everything going on with treasuries, the runup we've seen in Treasury yields. You're seeing a little bit of relief through last night and into this morning on the ISM numbers, some of the more dovish comments, and then again on this jobs report that's a little weaker than we expected, but it feels to me like there's a lot else going on that's driving the yield story. How much is that actually going to be impacted by these labor numbers versus everything else going on in the economy? >> It's going to be impacted because we've been in what I call overshoot territory. Um, you have to understand the dynamic of the bond market right now. There's a fundamental imbalance between those issuing longerterm bonds, think of hyperscalers, think of the government, and those buying them. Um, there's been a reduction in the reliable buyers. The reliable buyers being the Gulf countries, being China, being Norway, being Japan, they've stepped back for their own domestic reasons. So that imbalance has gotten filled up by hedge funds and that has given volatility to a market that I think overshot on the way up and this print is going is going to mean that it's you're going to see quite a retracement in yields for now. But the fundamental issue is the imbalance between those wanting to borrow and those willing to provide money. >> Hey Muhammad, it's Pros here. So with that imbalance you're talking about, do you think that B it's kind of an attractive entry point for bonds now given the fact that yields are so so high right now or you think no there's still some weight wait time here. So it depends on your appetite for volatility. Look people haven't seen these level of absolute yields. They haven't seen these levels of real yields. You you're being paid significantly positive in real yields. Yesterday you could buy elongated tips at over 3%, meaning guaranteed 3% return over inflation. We haven't seen this for decades. So I can see some people pulling money out of the stock market, putting it in bonds, but the professionals will wait. You you want you want to wash out all the sort of speculative elements that that have entered that market in size. Muhammad, um, at least part of the increase in yields is probably because people have been optimistic about the US economy, right? Um, does this report, I know it's just one report, I know not to get too excited about just one thing, but put it together with some of the other numbers we've gotten recently. I is there any um, sort of threat to that narrative that the US is going great, that that economic growth is strong? So you're right about the excitement about economic activity in the US and you see this in relative yields. Um the gap between the US 10year and the German 10year. So both of them are viewed as ultra safe went all the way up to 174 basis points and it just shows you that people were betting on better US growth compared to Germany. Um th this employment report isn't going to dent fundamentally the view because the main driver is coming from AI spending as you know and this should not impact AI spending. It will it will make people think twice about the second engine and it is so it's weaker than the first engine but the second engine which is lower income households consumption. you know, low-income households are under tremendous affordability pressure. The earnings numbers weren't great this morning 0.1 and add to that the mortgage issues and concerns about refinancing. So, it will somehow dampen, if you like, that second engine, but most of the growth is coming from that first engine. And that first engine is insensitive to lots of things, be it interest rates, be the job report. it has it's living in its own world right now funded by very happy markets to fund it. >> Um I want to linger on that on the lower income question though for a moment because of course the other thing that is surprising in this report is that average hourly earnings growth which is much less than had been estimated. I don't remember the last time we had I'll have to go back and look to see when we had a a miss of that magnitude or an increase that small uh month overmonth in average hourly earnings. And you know, Muhammad, we've been talking long enough. I've been doing this long enough. I understand that the upper side of the K, so to speak, or higher income, middle to higher income Americans are the ones driving the spending. But how do you think about the effect um you know, in the big picture of those lower inome Americans who are feeling that stress and psychologically even the higher income Americans, they might be spending, but they're not happy about it, right? In some cases. So, I've been worried about the lower inome households um for quite a while and it seems that they are taking one shot after the other and the question is how long can they remain resilient. What we've seen happen is they're using more and more debt. We've seen credit card balances go up. We've seen other debt go up. Um and I do worry I worry about what high interest rates are doing to car loans. And it's not just an economic worry. It's a social and political worry as well. Upper income have the stock market and we are very near record highs and they have the wealth effect which lower inome households do not have. So I worry a lot less about the upper inome households and I worry quite a bit about the lower income households. Muhammad, one of the dynamics we're watching with AI is the split between job growth or loss and uh productivity in the economy. The argument that you might lose some jobs, but you're going to make up for it in the economic gain and the economic productivity you see. How are you thinking about that balance uh right now and what you've been seeing in the last few months? So if we get things right and I'm going to come back to what I mean if with by if we get things right but if we get things right the labor enhancement side of AI is going to be much more powerful than labor displacement side of AI. So we will get higher productivity and we should limit the hit to employment. Now what do I mean if we get things right? We need two things which we're not seeing by the way. The first thing is adoption, deep adoption. Um there's a recent study by Google called Atlas that shows you adoption has been broad but very shallow. So we need much deeper adoption by companies and governments. And the second thing we need is the ability to mitigate the risks involved. Now, I don't go as far as in the big debate between abundance and extinction, but I do think there are a number of risks that need to be mitigated, and we're just starting to do so. So, as long as we get adoption deeper and better risk mitigation, the labor enhancement side will far outweigh the labor displacement side. >> I want to get your take on on the the the risk side. So, we see our part from Egan Jones talking about how the title call it it's over. basically saying that AI disruption has basically completely disrupted the the economy already, meaning that, you know, screen jobs have been the most disrupted. Uh people who sell expertise by the hour are the most disrupted. How do you feel about that? Do you think we're we're not there, but how do I think you you're saying we're not there yet, but what do you think about that that take? >> So, so we're not there yet. We're not seeing it either in the overall employment numbers, nor are we seeing it in the sector employment numbers. Will we get there? Look, there will be some displacement, but overall the labor enhancement should be much much stronger and the productivity increase should be much stronger. Look, I focus on adoption. Are we getting proper adoption? And the answer is no, not yet. Hopefully, we'll get it, but we're not getting it yet. And we need a lot better risk mitigation. Um, you need what in game theory you call a cooperative game where different stakeholders come together and manage these risks. It's starting to happen, but we need it accelerated. >> Well, and there's also the question of the gap, which you just alluded to and which we've tal talked about before, that gap in adoption, which is also the gap between the spending and the revenue growth, right? And there's been a a handful of new reports lately that kind of try to quantify that gap between the spending and what they need to make. And it's not just a a monetary gap, it's a time gap, too, right? because there's a a lag in adoption, but there's also a lag in innovation related to the technology as it moves. Um, and so how how's that how's that lag going? And what's your level of confidence that it's going to catch up soon enough so that we don't have some kind of disruption because of the gap? >> Julie, thank you very much for bringing up the gap because it plays at two levels. It plays at the level of individual companies. when can they monetize um all the investments that they're spending a lot of money on and borrowing a ton to give you a feel for what's at stake. Last year their bond issuance was about 200 billion. This year hypers scaled bond issuance could be up to a trillion. So they are borrowing a lot of money, spending a lot of money and there's a question of how quickly will they be able to monetize that. It's also playing at the macro level. We're seeing the demand effects first, which is why the Atlanta Fed GDP now estimate was at 3.7 for last quarter. And we're not going to see the supply effect till later. And the Fed has to navigate this this mistiming um on it. Again, whether how quickly that time is compressed is about adoption and mitigating risk. Um it's not about invention. The frontier labs are doing amazing things and going further and further. The the problem is that we not we haven't even adopted two generations ago, one generation ago um to move the productivity needles. So so keep an eye on how deep this adoption is and we finally getting good measures of this like the Atlas study out of Google. >> Muhammad, I want to hang on the Fed for just a second to your comments you just made. One of the things we saw kind of bubble up in commentary around the hike we got in September was the idea that the Fed doesn't typically hike or cut in singles. Typically, you're going to set off a cycle where you see two or three or four moves. The market is pricing in several hikes to come through 2027, even if we don't get it in October. Is that the right approach for the Fed to be taking right now? Is policy too loose? >> Okay, so you're absolutely right. I mean after the Fed hiked the market immediately priced in an additional hike and as of yesterday the market was was pricing in three and a half hikes in this cycle um in addition to the hike we've had. Whether we get that or not um let me try to distinguish between what should happen and what's likely to happen. What should happen is monetary policy should not be the only game in town. This is a role for fiscal policy. And fiscal policy needs to act for two reasons. One, it's ridiculous that we're running a 6% of GDP deficit with unemployment at 4.2. That deficit should be much lower. Second, we need to make room in the bond market for the hyperscalers and who's the main borrower from the bond market is the government. So the argument is for fiscal policy that that's what should happen. What's likely to happen is a small repeat of the early 80s where fiscal doesn't move, doesn't adjust, monetary carries too much of the burden and you end up with two things. One is you overly sacrifice the housing market and the car loan market which impacts of course the lower income households. And the second thing that ends up is you end up with a strong dollar. So I I worry that we're going to get too much monetary, too many hikes, too few fiscal policy measures, and then we're going to have to deal with this very uneven economy and an even more pronounced K. That's the risk right now in the macro policy mix. >> Muhammad, um so glad that you could take some time to join us this morning. Really appreciate your perspective. >> Thank you. Um, you know, kind of turning to something that might be tangentially related to the economy and consumers is is Nike, right? Nike stock is getting slammed here. Shares sort of tumbling pre-market. Kind of a weak report here, but talking about job cuts going to save about$2 and half billion dollars with the restructurings. This comes after they post a disappointing outlook for fiscal 2027. Nike expects high singledigit revenue decline this year, worse than the 2 and a half% that the street expected. Uh and the sales will be Nike's lowest total since fiscal year May 2020. I mean this is not this is an ugly report. >> It is an ugly report and the analyst big question following this report is was this a clearing of the death decks for um there's a new you know the the CEO has been in place for a little while. David Denin who's a CFO is relatively new. He came over from Fizer and as Simeon Seagull of Guggenheim put it this morning um the questions remain when guidance cuts will represent the band-aid rip versus slow beat bleed right so was this enough to completely sort of derisk like we cleared it they have a um an analyst day investor day in a couple of weeks so what is it the commentary look like going into >> seems like to me this is a clearing of the decks here with with this massive of a cut to your your revenue growth I mean going from I mean almost like triple right I mean it's just seems like >> then things have to start to get better around. Right. Right. So, this is the band-aid ripoff. Like things are bad. It's going to get bad this year, but then we see potentially, you know, in in in 24 months, you might see more new Jordan and sportsware stuff coming up, which is a long time from now, but that's what they're thinking, right? It's like this is a multi-year thing. >> Yeah. In in uh following off your point on Simeon Seagull over Guggenheim, I want to read another bit from his note, which I think is indicative of where a lot of Wall Street sits right now. Though it is certainly not easy and certainly has not been correct. >> Yes, >> we maintain our buy rating amid increasingly negative sentiment in a potentially emerging catalyst path. However, there is also the sentiment that this is the kind of quarter you would see out of a turnaround CEO maybe two to three quarters in not two years down the line. >> And so I don't know, is Elliot Hill worried about job security right now? >> It's a good question. And I mean they are, you know, they're still executing on this long like they're they're still clearing out Jordan inventory. I know >> which is kind of astonishing. The Caitlyn Clark, which we talked about yesterday, the new Caitlyn Clark shoes sell out, right? >> One sold out the initial colorways >> in the normal sizes. Yes, you can still get them in size 14 15 that you and I would wear. But um >> which I said to you for the true basketball players who are 7 feet tall, >> but Julie, you also you also shared a note, too. And they have they have a basically a sell rating and a $25 price target talking about how >> we believe management is likely set the bar low enough for fiscal 2027. >> Visibility into recover in sales and EPS remains low. The new again the new sports run and join lines unlikely to hit the market for another 12 to 24 months. So again, you know, reiterate oursel basically saying that it's going to take a while uh before this even improves. >> But will the board and will shareholders give Elliot Hill that much time after he's already had two years? Uh maybe I mean it you know if he's if they still feel that he's executing on the strategy maybe it just feels like the the problem that he h was dealing with was much yeah more acute than than you know than they anticipated >> right if they believe in his vision and they they'll give him time because there there's also you you fire him now there's another two-year process to get some other guy ramped up. So it's like you believe in his vision you believe in the board is is confident in him then they'll say we'll stick it out. I mean, so the board doesn't get fired, right? [laughter] So, they don't care, you know? I mean, they care about the company, but it's like, give them their chance. We'll see. >> I mean, it's interesting when you think about how reliant they are on the stuff that hasn't been working. Like, I that same Beimo note from um Kelly Crapo said that sportsware in Jordan is 63% of total revenues. Um, as opposed to performance, which is like the sport, you know, the stuff you actually wear for sports. Right. And it it's so like the story of this brand is so fascinating to me because it was so hot for so long and it seemed like it could do no wrong and everybody was wearing Nike and Nike was everywhere and it was cool even though it was ubiquitous and then it passed over from being too ubiquitous and not as cool anymore. >> It was like they missed the athleisure uh thing with with with Lulu back in the day and then they got back in street wear and they got back in sort of like the hypey sort of nature of like sneaker culture and that became huge and then that overshot. Now you kept people trying, they can't resell. And then now it's more about higherend athleisure, right? Or higher end athletic wear. >> And if you are a specialist, you're going to go to somewhere like on who's producing stuff at a higher price point. Yes. But arguably at a higher quality level and a more targeted quality level. >> I got to say the teens on the streets in New York City. >> They don't like on >> They're still wearing They're still wearing Dunks. >> They don't like on. >> They don't like on. I'm seeing they're still wearing Air Force. You see Sambas, but you see Jordans a lot, right? Like so so that but but I guess to your point it's about the value of it like and how much they're selling. >> Samba Birkenstock Crocs. >> I have a picture from [laughter] >> Yeah. We got to put that up on the big board behind you uh tomorrow. >> All right. I know we got to run everybody. >> Let's take a break. >> All right. You take a break. [laughter] We're going to talk about diesel prices with Jake next. >> Got to catch our breath. Yeah. This is this is um [music] Finn's collection. >> [music] [music] [music] >> Heat [music] up [music] [music] here. [music] >> [music] [music] [music] >> Heat. [music] Heat. N. Heat. Heat. >> [music] [music] >> Down. Down. >> [music] [music] >> Take a look. [music] >> [music] [music] >> Hey, hey, hey. [music] >> [music] >> Hey, [music] hey, hey. >> [music] >> Hey, hey, hey. >> [music] [music] [music] [music] >> How's the >> Welcome back to the 8:30 where we have oil prices dropping. Uh Brent trading back under $100 at about 99 right now. WTI here in the US trading below 90 at about 89. But all eyes are not really on the crude prices. They are on diesel and gasoline and the refined products where prices are still soaring or still at all-time highs. And the real focus right now is on diesel. The White House has been discussing a potential diesel export ban. But in the last few days, President Trump has somewhat shifted his stance away from what the White House could do to what European nations could do. >> Uh, one of his critiques has been that the the IEA releases that happened earlier in the war of crude, the US led that. Now we've seen our stocks going low. And so he's saying to the European leaders, look, it's your time to pony up. >> And they seem to be listening. >> And they seem to be listening to some degree. So the White House has requested a release of 100 million barrels of just diesel. uh the the EU led really by France has come back with a counter says we'll do 50 crude 50 diesel. The interesting wrinkle here is that the US um strategic reserves are mostly crude oil and a little bit of products >> in the in the EU that's the other way around. Their strategic reserves are much more heavy on products. >> The critique of the um of the compromise 50 crude 50 diesel is that even if you put more crude on the market you don't have the refining capacity to turn it into diesel. Yeah, >> nothing's been agreed to yet. The block has said that they're going to move as one and that they won't do anything without coordination with the IEA. >> And why don't they want to release more diesel or more refined product >> because they don't see this as a pricing problem that they need to address for the US? This is a supply problem for them. One of the biggest storylines here is what's going to happen in Iran after the midterms where President Trump has threatened to ramp up his campaign which could then threaten supplies all over again. Europe wants to hold on to its stocks so it doesn't It's not caught flatooted when the US lands ground troops in the US >> has gone crazy there. >> They have gone even crazier. They are even higher. >> Isn't it also the fact like why are we throwing you a bone trump? Like you've been you've been after us with tariffs and calling us bad names. We're not bad partners. Why should we help you by releasing our strategic reserves and we don't think there's a problem yet. >> But here here's the we want to keep it in reserve. >> Here's the trade-off though. President Trump has threatened that if they don't release their own stocks, he will put in a diesel export ban here. The US has become a huge global supplier of diesel, including to Europe. If the US closes off its diesel exports, European prices push even higher at a moment where several European countries, notably France, are having major fiscal problems, >> right? >> All of that compounds. And so now the EU is kind of stuck between a rock and a hard place of do you gamble on the White House problem in front of you or do you gamble on the potential White House problem post November? >> Well, and all of that said because of this proposal, oil prices are down this >> they are down. They are down. >> So that you know that's >> but again we've seen >> a signal for what we could see if if they do finalize that. >> But this is the disconnect. We've seen crude pull back. Crude is getting to the market. There's some really good research out this week from Goldman Sachs and JP Morgan. I wrote about this for us earlier in the week. Both of those banks are estimating that crude oil flows through the straight of Hormuz and then out uh the wider Persian Gulf exports >> have recovered to about 97 98% of pre-war levels. They're basically back where they were in 2025. Crude oils getting out of the Middle East. >> The problem is on the product side, right? >> Products have only recovered to about 2/3 of their pre-war levels of export. And yes, the crude's moving, but if the refineries around the world are running at full capacity, which is true, you can't create more diesel, you can't fix the supply problem, >> right? And this also comes back to what we were discussing earlier with higher costs here in the US, right? At a time when you're only seeing average hourly earnings go up a smidge, right? And you're seeing inflation where it is for most consumer products. >> And you've got the diesel issue, you know, flowing through to agriculture and to >> shipping to retail. And it should be noted that yes, diesel's kind of the workhorse field of the economy. But just think about the visibility for Americans of gasoline prices at a moment where wages are not ticking up as fast as they >> were thought to be. Now you're looking at what, a five handle on gasoline some parts of the country, a six handle in some parts of the country. That's a tough pill to swallow. >> And then you've also got, you know, other refined products, things like air, >> jet fuel, marine fuel for for commercial shipping. All of that's under pressure. It's not really a solution, the EU is again caught in a really bad place. Do we do we gamble on the devil we know or the devil we don't? >> One upside of those higher oil prices, more EV sales. >> Yeah. So Tesla Q3 deliveries are out right now. 486,500ish uh deliveries there, topping estimates of 463. uh just slightly below last year at 497 which was considered a big quarter because there was a huge ramp up of EV sales before the expiration of the federal tax credit. Uh Tesla said it produced 464 uh,000 vehicles in the quarter as well and deployed 13.7 gawatts of energy storage products which is uh I can't I don't I don't have the comp here but that's uh looks pretty good. Uh they also said they're going to uh release earnings on October 21st after the bell. So, uh, pretty big beat here from from the point of view of the of Wall Street sort of consensus on on deliveries. Uh, we've been hearing that, like you mentioned, Julie, is this an effect of high gas prices? Is this the effect of of of people feeling that pinch and wanting to go electric? >> Is it the effect of FSD? We're hearing a lot of people talking about the latest FSD is very good, and we're seeing more and more people uh, adopt the technology. we're going to get that full sort of uh subscriber number when we see Q3 results, but we've seen that number grow over over time. And I have I have to say that I think there is a there is an effect there of people saying this is a technology that other cars don't have. >> Yeah. I mean the other thing so if you look at again just to reiterate that number 486,532 the record that we saw last year at this time was what 497,000. That was because the tax credit was about to expire, right? And so there was a rush of buyers. So the fact that it's about 10,000 below that without that effect, >> right, >> is quite interesting. Like it like it means that demand is indeed pretty darn >> demand has come back from lows we saw. >> But this is also a global number too, right? So it's not just us, it's everywhere. We've seen bigger adoption in some other places. You're also seeing a lot of uh improvement in Europe, which was hit by both Model Y changeover and a lot of Elon Musk's sort of, you know, uh we don't like that guy attitude, right? And that's that's sort of maybe dissipating a little bit. You're seeing that recover. You're seeing China as a big export hub to other markets. Maybe that's what's helping. Uh we never get to remember we never get that full breakdown of of global sort of of where these deliveries are going until later outside companies do that. But seems like a pretty good quarter for them. I'm not sure what the stock is doing here, but >> it's up a little bit. Yeah. But it's not a huge bomb. You know, it's interesting because the sentiment um according to analysts has kind of changed. Bloomberg just ran an interesting story. The the sell ratings are about 13% of analyst recommendations they say on Tesla now, which is the lowest since 2023, since April of 2023, which is quite interesting that the sentiment, it's not that the sentiment is like getting hugely better, it's just getting a little less worse. Part of that, the stock has pulled back. It's recovered a little bit, but it's pulled back a lot this year. Um, they also note that Colin Langan at Wells Fargo, who had been a bear on the stock, is no longer at the bank. And so, they've suspended coverage. So, that's one sell rating that isn't [laughter] that isn't in the calculus anymore. >> Yeah. I mean, the stock is down 22% this year, not including the pre-market move. So, uh, there was some way to come up, but maybe that's why you're seeing more buys here just as a value thing, not a value. I I suppose pro the next catalyst here really could be that Roadster debut that got delayed. >> Yeah, I mean that's probably a mini catalyst. It's you might be interested more in technology. It's more about what's happening at Optus. We have not seen the version three yet, >> right? >> It's supposed to come out this summer. Um the robo taxi sort of ramp up is happening ever so slowly. Cyber cabs are coming out, but then there's a lot of Nitsa issues with that. So, uh, some hangover here with with the the future AI type products, but I think there's, you know, there's there's there's there is enthusiasm for that amongst the big Tesla bulls. And I think we're maybe we'll see and but this this delivery number of the actual business that makes money is a good thing >> because that other stuff even if they come out with it's not going to make money in any kind of meaningful way. >> Not like Teslas make money >> and and the company is is spending and investing a lot more too. Recently in a filing, the company said it had lined up 30 billion of new loans and credit lines to invest in all of that. >> Exactly. They said they haven't tapped those yet, but they presumably will once Optimus and more cyber caps get get cranked out. >> Have we heard any updates on a potential tie-up between SpaceX and Tesla and just kind of where that stands? >> Uh not not really. I mean still in the whole sort of Musk has talked about it. He's he's has a desire for it reportedly. Uh he says that it'll be addressed at the right time. I can't talk about this in earnings reports and things like that, but you got to imagine there's going to be some kind of shareholder vote at some point. Some I think in that filing, Julie, that they they sort of tweaked some of the language about how uh investors can vote on certain on certain elements of of proposals. I think there's something in there about that. And some analysts are saying this is supposed to open the door potentially for more uh the ability for that merger to >> kind of lay the groundwork. >> Yeah. Interesting. Well, when we talk about spending, I want to take it to um some new reporting that we have on spending on the AI buildout um and sort of the creative financing that we have seen crop up around. Creative is a long word. >> So, the Financial Times is reporting that Amazon wants to shift 8 billion worth of Nvidia chips off its balance sheet and it is exploring how to do so. that it would create, as many of these companies have already done, a specialurpose vehicle that would own those chips. Amazon could lease them back and people, by the way, could invest, outside investors could invest in that special purpose vehicle. And this is becoming increasingly common. what's unusual about this is that Amazon owns the chips and now is looking to make the shift whereas a lot of competitors have made those kinds of structured investments chips that are off balance sheet >> and we see the same thing with data center leases that are being done through joint vehicles and whatnot to keep some of that off off balance sheet as well. A lot of these companies just looking to say how can we make the numbers look healthy? What are the creative ways we can find to do that? This is getting some push back. most notably from Ed Zatron, who is the long term. >> He pushed back against everything. >> I I do think it's it's his take is this. This is the dodgiest and most desperate thing I've seen in the bubble so far. Really scraping the bottom of the barrel. >> However, Amazon's not alone here. >> Exactly. I mean, it's kind of SOP at this point um for these. >> Hear me out, actually. I mean, I've been a I've been a critic of what these these these hypers scales have been doing, but is this that bad? I mean, I don't think it's actually that bad. You're taking the chips that you own, right? And the or the debt that was used to to buy these chips. You're you're you're now putting it into new vehicle. You [snorts] have outside investors coming in getting selling equity, selling new debt, and then Amazon is paying the money, >> right? >> Well, the the one >> for the use of the chips like is this that bad? I don't think it's that bad. >> I would say it's bad in the s only in the sense not about not necessarily only one way that it could be perceived as bad is that we will have less understanding of the risk. Yes, >> because when it's off balance sheet, there's less transparency. >> It's obscuring some of the thing I would say for all of these companies that put the stuff off balance sheet then you're just not sure, you know, there's so much interconnectedness. Is this stuff getting paid on time? Who holds the risk? You know, less about all of that >> because the question is who is owed what and when. And that gets harder and harder to >> as we talk about who's the bag holder that we >> It's clearly it's the people buying the debt of this of this SPV. >> But who are they? >> Who are they? We don't know. It's >> not Amazon. >> Well, they haven't done it yet, so we don't know yet. >> No. No. Here's the problem. Okay, >> this is in my opinion, this is not a really bad off offshoring stuff or offbalance stuff. Is if Amazon was investing on the back end, then yes, that would be that would be some kind of crazy offbalance stuff, right? This is just like we're taking that debt and putting it somewhere else and we're no longer we're no longer owning that debt, right? Maybe they own piece of it, I don't know. But they're saying someone else is gonna take that debt and we're gonna just pay a nice >> nice little coupon there. Nice little lease there. And >> well, you know the other thing that Amazon is spending on >> it's trying to Oh, you guys, we hear you hear a little Brian Sazy. Do you guys hear I hear some voice of God. Amazon is spending a billion dollars um on data like basically to um smooth ruffled feathers. Let's say Matt Garmin, who's the head of Amazon Web Services, is out with a long essay, a 3,000word essay, uh, where he says, "We're going to spend a billion dollars to, um, make commitments in the communities where we're building data centers, um, to help build out, you know, schools or whatever, um, and try to reverse the um, you know, the perception of data centers." He also by the way says no more NDAs like we will not go into a community and ask them to sign non-disclosure agreements which is something I believe good that's good >> I believe isn't that Sachin Dela told that as well something backed off from now some legislators have talked about putting that making that law that you couldn't do this but you know obviously some of these companies are trying to get ahead of that >> I think this is a good I think this is a positive move by Amazon maybe this is even them like front running it being like hey journal write this story about us doing this thing but but yeah I mean they clearly totally understand. It's not just like I don't want this thing spewing CO2 in my in my neighborhood. It's more about like people are saying so this thing can take my job too like it's a double whammy, right? It's it's it's a double whammy of of how it changed my life and also how it makes the quality of my life bad if it's in my neighborhood. So this is a big deal I think this is a good step in the right direction for Amazon to be doing these things. Not like not like I think Amazon is the most like loved company in the world, right? Or in the country. So, I want to pull on your jobs point for a second because I've I've been having increasing conversations with people around this idea that the argument you hear especially from state governors who want the business of the data centers in their states is these will create jobs. These are job creators for the local community. >> And that is true while they are under construction and getting set up. But data centers once they're up and running are very labor um they're they're very labor light. >> And so the question is fine, you created a bunch of jobs. What happens when they disappear? What's funny you mention the community left? >> It's funny you mentioned because a lot of the unions that do electricians, plumbers, construction builders, HVAC, >> they're all positive on do not delay these data centers. But it's almost like you're saying it's almost shortsighted in sense. Okay. Yeah, we got a project take a couple years to build. What what now? What next? What's next? >> Well, really for the community. >> But isn't it better to have it than not to have it at all? Even if it's just >> temporary that's the if you are like an HVAC worker, of course you want that contract. The question is for the community on the back end where real jobs were not created. >> Right. Exactly. >> I I want I just want to mention something else. I mean like when we talk about data centers and all of the bad um juju and all of the bad sentiment around them, it's really two things. It's one, I don't want a data center in my town. And it's two, I don't want AI at all. Right? And on that latter point, um Derek Thompson is out with an interesting Substack this morning where he he says, yes, like you've got the data center stuff, you've got the extinction stuff. He says, but there's something else that he thinks is underappreciated. >> And it has again to do with how this was sold to us, right? >> And it's actually on the positive side. He he talks about in 2021 Sam Alman talking about that like the price of many kinds of labor is going to fall towards zero. Mark Andre like everybody talking about abundance as a result of AI. AI is going to make everybody's lives better. It's going to make stuff cheaper. >> And guess what? >> Nothing happened. that the opposite has happened. It's not even that nothing has happened. It's that the opposite has happened. >> Everything is more and in fact AI is a part of that story piece is like that's something also that makes people like you feel like you were sold a bill of goods, >> right? >> Um it's going to like do this big thing and it's not really doing that. Now, I don't necessarily know how many people consciously were paying attention to the abundance argument. like regular Americans are paying a lot more attention to uh this has a chance of wiping out humanity than they were to two years ago. You know, bit of a Silicon Valley thing. Yes. Um but sort of in the background and subconsciously people know that they're paying more even as this this thing is happening. >> It's touched on the Egan Jones thing, right? About all these sort of uh jobs that rely upon screen people in front of screens, people professionals going away. Just yesterday, Musk, Elon, Musk, just liked to tweet about how uh a certain AI system was able to duplicate and improve upon the work of of entry- level accountants and accounts, junior accounts, like we don't need that anymore. Passing the test, doing better work. He's like, yay, this is great. >> Most Americans don't feel that way. They think about, well, does that mean I'm next? Or if you're an accountant, I'm definitely next, right? or if you're in college looking at entering the workforce because most of the jobs placed first are the >> I don't want to call the menial labor but the junior jobs where your job where if you were at a consulting firm or at a bank a lot of your job was >> uh presentations powerpoints slide decks um data entry >> if all that can be automated how do you get into a good firm how do you get into a good job >> and now there's this whole thing well anybody can start a company the barriers to entry are so low is the reason that people don't start companies in this country because they don't have the tools. Is that really like you have to have the ideas first, >> right? >> Also, >> and you have to have the risk appetite. >> It's not just that. It's like >> is my healthcare nationalized? >> What am I on retirement? That's right. That's right. >> Um you can't take risks if you if you know you don't have healthcare, you know. >> Right. Right. This is part of the pro problem that we've seen even people like Sam Alman address that we got the messaging wrong. When you potentially overpromise and potentially underdel, that's not going to look good six months down the road. when you're asking the American public to be okay with data centers, to be okay with all this spending, to be okay with a higher inflation rate. >> Well, we got the answer for you, Jake. We can just put data centers in space. >> We can put them in space. Speaking of space, our friend [laughter] Elon Musk, big week for SpaceX and the space sort of sector, right? We had three big launches, right? had earlier. We had Starship go up, deploy some satellites, hit low Earth orbit. Uh the big the big Dragon uh capsule launch there last night. Uh docking with the space station. Uh I believe it was an 8 hour it was an 8 hour trip from from uh Florida to the space station. Uh it's the fastest that that astronauts have ever gone. >> So it was 8 and 1/2ish hours. The previous record was 12 and 1/2 hours. You were cutting a third off that journey. >> Yeah. I mean I mean now look it has to do with the fact that like how the earth spinning where the IS is located whatever. uh a SpaceX employee, one of the one of them one of the big um VPs of the rocket program said that we launched our full quiver into space because they not only did they did they do Starship and Dragon, but they also did this I believe it's not this. They did the they did the the full uh Dragon Heavy, sorry, Dragon Heavy Falcon >> Falcon Heavy Falcon Heavy. Falcon Heavy for the Google AI chips that went into space >> and that's part of a Project Lab satellite and it's going to be testing these chips and see how they do. Yes. Uh the the the TPUs in in space. >> Yes. I mean, which reminds me that like you know, we talk frequently and certainly the SpaceX's of the world talk as though data centers in space are a given. >> Mhm. And like this is a good reminder that like there's a lot that needs to happen between now and deployed data centers in spaceology. And this is the very beginning. You have to see if it even works, >> right? >> And and because heat um dissipates differently in space. They have to figure out how to cool them properly and do it. And you know, it's a science problem that that eventually they can probably solve, but it's not solving. >> It's funny. It's funny. You think, oh, it's it's it's absolute zero degrees in space. Why can't it just cool off immediately? It's like we said there's there is no dissipation at all because the molecules don't move. It just stays and it overheats. So you need radiators to sort of just flush the stuff out. How do you power that in space there? How does that work in space? >> What kind of what's the is it a liquid? Is it air? What do you what do we do? >> And yes, it is extraordinarily expensive, right? So that's the other problem is that like even if you figure out how to do it from a science perspective, it's going to cost a lot. So then you have to bring the cost down. >> You got to figure out the science before the economics. >> And they're and they're and they're heavy, right? These are massive satellites that need to go up in space and you need Starship to bring it up there. >> Some very ambitious targets for how many launches he wants to be doing >> every day. And no one is no one's launching one one an hour for the every every >> day. But but his point is that if you can get to a place where you're doing that, the the economics do start making more sense. >> Yeah. The SpaceX thing you're talking about this full quiver. We showing the the reusability on full display. Multiple of these boosters have been reused for other different things. And it's just this how you can do three launches in a week. >> Um usability. >> There's one ticker that we didn't talk about that was involved in all of this. Planet Labs was also a partner on the Google mention. Oh, you did mention it. My bad cuz um I was just checking the stock. It's up about 2%. >> It's their satellite. Exactly. That the Google stuff is being going to have an experiment on the TPUs. >> Well, before we go today, there's a story that Jake is really >> I'm [laughter] I don't know if I'm excited or if I'm terrified. Um, so there's a to >> there's a new company called Tavis that's just come out with uh what they call Griffin, which is a model designed for live face-to-face video conversation to to simulate a human Zoom call. It's worth just watching a few seconds of their their promo they put out. >> I think a video of just us like this would be the best way to actually prove it. >> Do you think they'll believe that you're AI? >> I think that's the whole point, isn't it? >> If it's good enough, they won't even have to think about it. If it's good enough, >> they won't they won't even have to think about it. Oh, dude, that was that looks >> And she has like a dimple and she's kind of doing this chair, >> pausing, breathing. There's breathing. >> She she she teases the other guy who comes over. >> She like she kind of gives him a roast. Yes. >> It It makes >> He's like, "Oh, you got me on my [laughter] my thrifted sweater. You got me." It it makes me think of all the headlines we got a few months ago of um companies in North Korea or in China or other places using you know these human AI zoom models to try to uh get into US the US labor force get into sensitive jobs and the problem is that if you ask these old models to wave their hand in front of their face or do simple things the image broke up they also they were very stiff they sounded very stilted if you watch the full demo reel that Tavis has put out to your point >> I don't want to say she I don't want to anthromorize because these are computers, but the computer model is shifting in its seat. It's squinting and blinking regularly. It's kind of, you know, licking its lips and doing all these human interactions. >> I will say this, it seemed like this is a heavily edited video, right? They they cut they cut it together just the right way. >> Do you remember when they like was it last week or two weeks ago, they were doing interviews with that AI actress? >> Yeah. Yeah. There's a glitch in one of them in the interviews where she started speaking in Chinese. >> Yeah. Telly Norwood. That's right. All of a sudden starts answering in Chinese. They're like, "Uh, what's in you'd like to you'd like to see an actual action this thing before you buy instead of this edited promo video?" >> I said 60% of the people something like that if pass the touring test of 60% of people thought >> they thought that that it was you something like that. Yeah. Well, but but to your point like whether to be terrified or excited like >> you know obviously this in the wrong hands it could be a big problem. I mean, we already have problems with all of our grandparents getting calls and thinking it's real people and sending money and all of this thing. This this puts that into another strategy. >> It could copy you, right? And your your dad or whoever seeing you on >> take my job, Ross. >> I'm going to take all of our job. I have a correction. It was 48% believe >> 48%. Okay. 48% thought it was a real So, not over half. >> Not over half. >> At what point is, you know, one of these talking to Muhammad Alan about the jobs report, right? >> Hopefully not. Hopefully not for a long time. >> Very we can do a test. >> So Mohamad, how are those Jets doing? He's like, I don't know what you're talking about. What are who are the Jets? It's not him. >> Or [laughter] I hate the Jets. Definitely know that that wouldn't be him. That's a good test. All right. Do we have to leave it there? >> I think we leave it there. The future is a scary one. Let's all figure it out together. >> No, it's a great one. The future >> abundance. >> The best is yet. >> We will leave it there. >> Speaking of which, Brian Sassy's up next. [laughter] He's on the >> best is yet to come. It better not clone Sazi. >> [music] [music] [music] [music] [music] [music] [music] [music] [music] [music] [music] >> Down. [music] Hey. Hey. >> [music] [music] [music] >> Down. Down. Heat. Heat. [music] >> [music] [music] [music] >> Heat. Heat. >> [music] [music] [music] [music]