SpaceX’s First Earnings, Janet Yellen, & Uber CEO 8/5/26

Summary

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Squawk Pod — August 5, 2026

SpaceX’s Earnings Debut, Janet Yellen on the Economy, Uber CEO on Consumer Strength

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Episode Overview

This episode covers some of the most significant market-moving news and conversations of the week, focused on three main stories:

• SpaceX’s first quarterly report as a public company
• A wide-ranging interview with former Treasury Secretary and Fed Chair Janet Yellen about the economic outlook, inflation, and the future of AI
• Uber CEO Dara Khosrowshahi discusses quarterly results, the strength of the consumer, and future investments in autonomous vehicles

The episode retains the spirited and collegiate tone characteristic of Squawk Box — a blend of sharp financial analysis, real-time market insight, and candid conversation among Joe Kernen, Becky Quick, and Andrew Ross Sorkin, plus expert guests.

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Market Highlights and Macro Themes (01:01–05:22)

• Indices at Record Highs:
  • S&P posts strongest day since April 8; Dow and S&P both at record highs.
  • Brent crude steady around $80.73; WTI at $76.50, up 1%.
  • Treasury yields fell sharply; 30-year at 5.16%, the 10-year at 4.61%, 2-year at 4.20%.
• Nasdaq and AI-Driven Rally:
  • Nasdaq up 671 points on the day.
  • S&P approaching 8,000, surprising some commentators and upending projections of an overheated AI trade.
• Jokes About Rapid Market Moves:
  • Becky Quick references a viral meme about investor reactions to recent performance swings [04:57].
• Current Events – Strait of Hormuz and Iran Deal:
  • Tensions high in the Middle East; potential interim deal expected that could reopen the Strait of Hormuz, crucial for oil transit [05:22–07:45].
  • President Trump and Treasury Secretary Scott Besant signal optimism for resolution.
  • The market responds swiftly to official remarks: “When Bessant says it, suddenly everybody sits up…oil drops $8” — Andrew Ross Sorkin [07:00].
• Becky Quick, with characteristic dry humor:
  • “I move the markets, not you.” [07:45]

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SpaceX’s First Public Earnings Report (08:28–15:08)

Key Numbers & Takeaways

• Revenue and Loss:
  • Revenue up 92% YoY but larger than expected quarterly loss.
  • Shares down 11% in premarket trading.
• Starlink as Profit Engine:
  • 12 million Starlink subscribers in Q2; bullish outlook for Starlink Mobile, positioning as upcoming direct competitor to wireless carriers.
  • “Starlink Mobile launches next year as a direct competitor to the wireless carriers. That’s putting all of those stocks under pressure this morning.” — Morgan Brennan [08:49]
• AI and CapEx:
  • Immense AI investment: $2B in compute this year, “exponentially ramping” next year.
  • Grok models, Cursor acquisition, and $13.4B in new compute leases fueling aggressive growth.
• Guidance and Ambition:
  • Expecting >$100B ER in December, aiming for $1T revenue by 2030 (guidance previously for 2031):
    • “Our internal projections for reaching $1 trillion in revenue…moved up from 2031 to 2030. And there’s a nonzero chance of that being in 2029.” – SpaceX Executive [09:49]
• Exclusive Nvidia Partnership:
  • Both for Earth-based and in-space AI.
• Cash Burn & “Show Me” Story:
  • $31B negative free cash flow for first six months; investor concern over spending and future capital-raising.
  • “Pretty amazing that they’re saying they’re going to make it back a year from now…but they are not planning to let up on the spending.” — Becky Quick [11:11]

Discussion and Context

• “Show Me” Mood:
  • Brennan and hosts characterize SpaceX as an execution-focused story, reminding investors: “When they have set out…and others have said it’s impossible, they’ve largely done it.” — Morgan Brennan [11:50]
• Reusable Rockets & Risks:
  • Sorkin shares skepticism but awe: “I still get nervous…now we’re talking about doing it again and again, shrinking the time it takes to use the same rocket again to land it on land and building data centers out in space. It’s just hard…for someone like me to accept.” [13:03]
• Starship Reusability as “Holy Grail”:
  • Morgan Brennan: “Fully reusable rocket has always been the holy grail…if they can get to that point, you’re talking about exponentially more mass going to orbit…and at a tenth of the cost.” [13:55]

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Economic Outlook with Janet Yellen (21:07–33:49)

State of the Economy

• Resilience Despite Shocks:
  • “The economy is really doing surprisingly well. It’s proven itself to be very resilient. I’m surprised…the oil shock and the war in the Middle East hasn’t had more of an effect.” — Janet Yellen [21:32]
  • Growth steady; labor market “has proven quite resilient.”
  • Main macro problem: inflation that is “too high and has been too high for a long time.”
• Inflation and Policy:
  • Inflation continues “at above levels consistent with the Fed’s targets” due to “a rolling series of supply shocks.” [17:00, 23:02]
  • Drivers: tariffs, energy market disruptions, AI boom driving up semiconductor prices, sectoral demand surges.
  • Hopes for inflation to subside as shocks pass, “but that would likely take another couple of years.”
  • “The danger is it’s now been five years since the Fed has achieved its 2% target, and I would be very worried about inflationary expectations.” — Yellen [24:43]

Political and Structural Issues

• Deregulation & Growth:
  • “Business has been doing well and probably benefited by [deregulation]…But we always have to remember there are reasons for regulation…”
  • “AI has been a huge driver of economic growth. Powered the stock market, kept consumers spending.” — Yellen [25:04]
• AI & Labor Market:
  • Not yet a “general effect on employment” but “some hints…in coding and software” jobs are being reduced; expects a slow, uneven transition.
  • “What we’ve seen in past…technological breakthroughs…it can take a very long time…It may be different this time, it may be faster.” [27:06]
• AI Policy and Industrial Policy:
  • “I think it’s important that AI be allowed to thrive in the United States…it’s an important source of potential future productivity growth…” — Yellen [26:24]

International Policy

• Yen Backstopping:
  • First US-Japan joint action in decades; Yellen cautious about intervention:
    • “Intervention should be rare…currency market intervention is rarely effective for very long.” [28:30]
  • Japan “has the tools it needs…I’d be reluctant to intervene.” [29:40]
• Fed Communication:
  • FOMC communications are crucial, but over-signaling risks behavioral feedback challenges.
  • “There is the ‘looking in the mirror’ problem…what you see happening in the market…reflects expectations about what the Fed will do.” [32:39]
  • Advocates for market understanding of Fed “reaction function,” not precise rate prediction.

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Uber CEO Dara Khosrowshahi: Earnings, Consumer Health, and the Future of Robots (36:05–48:48)

Uber Financials & Operations

• Earnings Beat:
  • EPS $1.17 vs $0.81 estimated; first EPS beat in three quarters, revenue $14.19B (slightly below estimate), gross bookings $58B (ahead of estimates).
  • Adjusted earnings per share up 35% YoY, free cash flow $10B over last 12 months, described as “record high.”
  • “The business continues to execute incredibly well. Very healthy across both the mobility business and the delivery business.” — Khosrowshahi [36:51]
• Price Drops & Insurance:
  • Price drops for consumers in some regions due to insurance savings, especially in California.
  • “Where we have gotten some relief as it relates to insurance, we put that back into price…” — Khosrowshahi [37:44]

The Consumer & Labor Market

• Consumer Still Strong:
  • “We’re not seeing any signs of trade down, we’re not seeing smaller basket sizes. Consumers remain generous in their tipping. None of that is happening.” — Khosrowshahi [38:56]
  • Drivers’ earnings per hour up 8% YoY; “the labor market is strong in the U.S.” [38:56]
• Tipping Norms:
  • “I always encourage you to tip 15 to 20% on a ride or a delivery. And I think it's up to the customer…the whole point of tipping is pay for the service rendered.” — Khosrowshahi [40:07]

Autonomous Vehicles & Capex Transformation

• Big Capex Shift to AVs:
  • Uber plans $10B investment in the autonomous vehicle (AV) ecosystem over coming years; partnerships with over 30 AV players and major EV OEMs. [40:39]
  • “In the early iterations of AV, we are going out, we’re investing with our own balance sheet and we’re doing it through cash flow…we’re not taking on a bunch of debt.” — Khosrowshahi [42:10]
  • Early AV utilization: over 20–30 trips per vehicle/day in some markets; eventual plans to introduce external financing once economics mature.

Partnership and Platform Strategy

• Waymo Partnership:
  • Waymo remains a partner in Atlanta and Austin, but partnerships are city-specific and the focus is on developing a broad AV platform.
  • “More importantly for us is the entire ecosystem that we’re powering and the amount of innovation that’s going into that ecosystem.” — Khosrowshahi [46:43]

Safety and Legal Scrutiny

• Sexual Assault Lawsuits:
  • High-profile lawsuits covered by NYT; Khosrowshahi reiterates Uber’s investments in safety, commitment to ending mandatory arbitration, and respectful handling of victim cases.
  • “Anytime there’s a sexual assault…it’s heartbreaking, which is why we’ve invested so much in safety…we deal with them as gently as we can, with respect, and the judge absolutely recognized that.” — Khosrowshahi [47:21]

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Memorable Quotes & Moments

• “Man, this has been a summer, summer of diarrhea.” — Andrew Ross Sorkin, on restaurant salmonella outbreaks [02:02, 16:18]
• SpaceX ambition: “Our internal projections for reaching $1 trillion in revenue…moved up from 2031 to 2030.” — SpaceX Executive [09:49]
• Yellen on inflation: “The danger is it’s now been five years since the Fed has achieved its 2% target, and I would be very worried about inflationary expectations.” — Janet Yellen [24:43]
• Uber CEO on consumer resilience: “We’re not seeing any signs of trade down…consumers remain generous in their tipping…none of that is happening.” — Dara Khosrowshahi [38:56]
• On AV transition: “In the early iterations of AV, we are going out, we’re investing with our own balance sheet…not taking on a bunch of debt.” — Dara Khosrowshahi [42:10]
• Host banter on the risks of reusable rockets: “It just seems how dangerous trying to do these things engineering wise is…hard for someone like me to accept that’s possible near term.” — Andrew Ross Sorkin [13:03]

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Timestamps for Key Segments

• 01:01 – Episode overview and major headlines
• 05:22 – Iran interim deal and Strait of Hormuz impact
• 08:28 – SpaceX’s first earnings report as a public company
• 11:50 – SpaceX cash flow, AI ambitions, and “show me” discussion
• 21:07 – Janet Yellen interview begins
• 23:02 – Yellen on inflation, supply shocks, and AI
• 25:04 – Deregulation and AI as drivers of growth
• 28:30 – Discussion on currency intervention, Japan and the yen
• 32:39 – How the Fed should communicate with markets
• 36:05 – Dara Khosrowshahi, Uber CEO, on quarterly results
• 38:56 – Strength of consumer, labor market signs via Uber’s data
• 42:10 – Uber’s AV investment strategy and financing
• 46:43 – Waymo and Uber partnership evolving
• 47:21 – Uber’s response to legal scrutiny and lawsuits

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Summary

This episode distills a pivotal market moment, with insights from business leaders and policymakers at the intersection of technology, policy, and finance. SpaceX’s debut as a public company grabs attention with bold projections and a “show me” challenge to public markets. Janet Yellen, as always, provides sober macroeconomic analysis rooted in experience, touching on inflation, monetary policy, and the tectonic effects of AI. Uber's CEO details both strong operational results and the strategic leap toward autonomy — with honest answers about the challenges and opportunities that lie ahead. Throughout, the Squawk Box team keeps things both informative and refreshingly unvarnished, with memorable asides and pointed banter.

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Transcript

[Schwab Announcer]

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[Becky Quick]

Oh, no.

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[Joe Kernen]

Bring in show music, please.

[Squawk Pod Host]

Hi, I'm CNBC producer Katie Kramer. Today on Squawk Pot, is it happening? An Iran deal. A day after Treasury Secretary Scott Besant said right here on Squawk that it was just a matter of time. Markets are looking up. Oil prices rise. We hear from former Treasury Secretary and former Fed Chair Janet Yellen.

[Janet Yellen]

I'm surprised in many ways that the oil shock in the war in the Middle east hasn't had more of an effect on the economy.

[Squawk Pod Host]

Uber CEO Dara Khosrowshahi says the consumer is strong and the proof is in our rides.

[Joe Kernen]

We're not seeing any signs of trade down. We're not seeing smaller basket sizes. Consumers remain generous in their tipping. For example, sometimes if someone is feeling pinch of the pocket, they might pull back on tipping. None of that is happening.

[Squawk Pod Host]

Plus, SpaceX's first report to Wall street, our Morgan Brennan with the details.

[Morgan Brennan]

I mean, this is a show me story.

[Squawk Pod Host]

And the rest of today's news, from the Strait of Hormuz to, oh, jalapenos at Chipotle.

[Andrew Ross Sorkin]

Man, this has been a summer, summer of diarrhea.

[Squawk Pod Host]

It's Wednesday, August 5th, 2026. Squawk Pod begins right now.

[Joe Kernen]

Stand Becky by in three, two, one.

[LifeLock Announcer]

Cuba, please.

[Becky Quick]

Good morning, everybody. Welcome to Squawk Box right here on cnbc. We are live from the NASDAQ market site in Times Square. I'm Becky Quick along with Joe Kernan. Andrew will join us in the next hour from the annual Aspen Economic Strategy Group meeting. Wow. The Dow and the S and P both posting record highs yesterday. The S and P, it was its best day all the way back to April 8th. We did see quite a bit of movement and it all started with energy prices which started dropping about 24 hours ago or 23 hours ago I should say. We really started watching with what Brent was doing after the treasury secretary joined us and talked a little bit about how he thinks you'll see a deal sometime. He said yesterday or today we'll see what happens with that. But Brent crude prices are still sitting right around $80.73. WTI is well off the highs that we've seen recently. It's sitting at 76.50 although that is up by about 1%. Also got treasury yields that came down pretty drastically yesterday. Right now you're looking at the 30 year at 516. We were at five and a quarter percent at this time yesterday. The 10 year is sitting at 461 and then you've got the two year at 420.

[Andrew Ross Sorkin]

The NASDAQ's down today. It was up 671 points. Pretty that's one. That's one number. The S and P was up. Yeah, doubt. But the S and P was up yesterday. But the number 7736 people they're close people that are saying people that boosted their year end to 7,800 people were saying they're nuts and other people going all the way to 8,000.

[Becky Quick]

It's only somebody had said 8,100. I forget who was on recess but

[Andrew Ross Sorkin]

it was up 100. It was up more than 100 the last two days and we're 100. We're not that far from 8,000 already just going to say like what was about 10 days ago. I don't know if you remember our conversation. Maybe it wasn't in between that conversation where we are today. There was a thousand point drop in the Dow. So I thought wow, I'm going to be wrong. But remember when I said it just feels like everyone thinks that we're in the waning stages of some type of AI move and that they're overvalued. The hardest thing to do right now would be to jump in and add a bunch more positions. It would be so much easier to get out at that point. How do you buy? It's so hard to buy at highs. But if you bought when the S and p was at 7,500 for a second was at 7,300 and it looked like it was going to here we are pushing 8,000, 7,800.

[Becky Quick]

Did CNN yesterday a video of Tony Soprano Kind of singing and weeping, saying, this is Leopold Aschenbrenner on his honeymoon, looking at what's happened to his portfolio since Ken Griffin at Citadel bought it.

[Andrew Ross Sorkin]

Instead of that being the unraveling, it almost became the thing that made the low. It almost made the low.

[Becky Quick]

New details on the Iran war. The White House is aiming to announce an interim deal today that would reopen the Strait of Hormuz and pave the way for further talks on Iran, Iran's nuclear program. That's according to Axios. That report says that the United States, Iran and Oman have been negotiating and are nearing an agreement that for 60 days would mandate ships entering the Persian Gulf use a northern lane near Iran and those exiting use a southern route close to Oman. No tolls would be charged during that interim period. Asked about the report, President Trump said an announcement could come today or tomorrow. To this point, the ships that have been going in and out have been kind of hugging the coast along Amman's coast on the southern route of that, not sure what would be the first ship to go on the northern route.

[Andrew Ross Sorkin]

Once again, it seems like you listen to the scuttlebutt and it's, we're powerless to do anything about the Strait and Iran's in total control. Why does oil listen to what everybody else says is just from the Trump administration yesterday, Scott, Beth and I was thinking about that yesterday, whether, you know, the president, you know, he likes to be in charge and he is, but so he's been saying, we're going to do this. Yeah, we're close to a deal. Descent has a lot of credibility on a lot of different issues. And I think he's gotten more and more and more as we've watched him and how he does that huge portfolio

[Becky Quick]

that he is managing, covering.

[Quince Announcer]

He does.

[Andrew Ross Sorkin]

But when he, it's like the president would say, now, wait a minute, I've been saying this, that we're going to have a deal. When Bessen says it, suddenly everybody sits up.

[Becky Quick]

He also said it right here on television.

[Andrew Ross Sorkin]

I know, but it was the same. He said it this way.

[Joe Kernen]

I think there is a chance we may have a deal today or tomorrow to open the strait and move towards a more normalized position in this conflict.

[Andrew Ross Sorkin]

President's been saying we're close to a deal over the week. He's been saying it for the last few four days. The same thing that Bessant said. Bessant said it. And oil drops $8. I think the president is like, I'm glad and I like that, but better watch yourself Besant. Right. You don't. You don't. I don't think he's overshadowing the President. I think that he's doing a great job. But knowing the president, saying, hold on there, fella, get a little big for you?

[Becky Quick]

I move the markets, not you.

[Quince Announcer]

Yeah.

[Morgan Brennan]

Is that what you're.

[Andrew Ross Sorkin]

And normally I don't think people that win in Augusta are allowed to take their jacket.

[Becky Quick]

I wasn't. Why did I tell you that? I know I mentioned this is the jacket.

[Andrew Ross Sorkin]

I don't think they're allowed to take it away from Augusta Masters champions. You.

[Becky Quick]

They made an exception in my case.

[Andrew Ross Sorkin]

They made an exception.

[Becky Quick]

I did say right before we came back from break, this is my master's jacket.

[Andrew Ross Sorkin]

You know, if you say something, it's not going to last long.

[Becky Quick]

I thought maybe if I said it, I'd cut you off at the pass.

[Andrew Ross Sorkin]

Instead, you just caused it.

[Becky Quick]

Yes.

[Andrew Ross Sorkin]

But just remember, next, whenever it is April, you got to do that again. I was okay.

[Becky Quick]

SpaceX posting higher revenue and a worse than expected loss in its first quarterly report since going public. Revenue was up by 92% versus the same period a year ago. Shares are down by just over 11% in the premarket. Our Morgan Brennan covers Space X and she joins us live this morning. Morgan, there's a lot to dig through with this.

[Morgan Brennan]

Oh, my gosh. Yeah. So much to dig through. So I'm just, I'm just going to give you the things that I think investors are focusing on the most right now this morning. Company reporting its first ever earnings yesterday, noting Starlink subscribers is the profit engine of the company growing to 12 million in Q2. Elon Musk and President Gwen shot, well, extremely bullish on that business, especially as Starling Mobile launches next year as a direct competitor to the wireless carriers. That's actually putting all of those stocks under pressure this morning. Starship moving closer to commercial service will launch the new Starlink V3 satellites to operational orbit on the next flight test. Nonetheless, for investors, it is all about AI. How much cash the company is burning as it looks to deploy 2 gigawatts of compute on Earth this year and exponentially ramp that next year. New Grok models, the Cursor acquisition, more NEO cloud deals, including a new compute lease worth $13.4 billion, is all part of the aggressive return on investment case that was laid out by Musk on the call.

[SpaceX Executive]

We are expecting to reach 100 billion plus ER in December of this year. And it's probably also worth mentioning that our internal projections for reaching $1 trillion in revenue. Not air, but revenue have moved up from 2031 to 2030. So prior to the IPO, financial projections we had were reaching trillion dollars in revenue in 2031. We now expect that to be in 2030 and there's a non zero chance of that being in 2029.

[Morgan Brennan]

Musk also disclosed also disclosing an exclusive partnership with Nvidia both on Earth and in space. First AI compute satellites expected to launch next year. That partnership perhaps putting some pressure on AMD this morning amid its own earnings and CFO Brett Johnson summing it up like this quote, we expect the supply demand imbalance in the compute market to continue. The current economics of translated into a less than one year payback on our new capital deployments for compute. So very strong guidance and commentary from the call from the C suite. Still stock is lower. It's down 11% right now. Wall Street's digesting cash flow. This translates for the first six months of the year to free cash flow that is negative, give or take $31 billion. Also you get that first lockup expiration that kicks off tomorrow here, guys.

[Becky Quick]

Yeah, I think the negative cash flow, the questions about how much they're going to spend, I mean pretty amazing that they're saying they're going to make it back a year from now, that it will be cash flow positive, but they are not planning to let up on the spending. And that has some people wondering how long before they have to go back to the capital markets, if at all. I think they had 93 and a half billion dollars after the IPO, after the 20, 25 billion dollars debt offering that they had. But the cash spend, Morgan, they said is not going to drop off, that they are kind of planning on spending all the way around. They're going to have to do that for the big initiatives the company has designs on.

[Morgan Brennan]

Absolutely. And you know, they said $100 billion in cash and cash equivalents at the end of Q2 to your point. And obviously CapEx continues to ramp. It was very aggressive within the AI unit with 7.7 billion in Q1 and then more than doubled in Q2 to your point. I mean this is a show me story new company that's publicly traded. You had a lot of noise in the quarter and you have a lot of big ambitious lofty goals and forecasts being set forth here. It's also really sort of at the juncture of this convergence of space and I the the thing I think investors in the public markets need to keep in mind where space X is concerned is that historically, and this has been the case in the space industry across a number of different aspects of it, when they have set out, said that they're going to set out and do something, especially when others have said it's impossible, they've largely done it. And so when they set out and they say we're going to take all of that knowledge and all of that hardware expertise and manufacturing expertise that we've learned in making rockets and building satellites and we're going to bring it to AI infrastructure, take it seriously because they do have that, plus the partnership with Tesla to be able to bring those worlds hardware and AI together, right, we

[Andrew Ross Sorkin]

have to expand our mind. But I was just going to say to you that I still get nervous, okay, now we're going to start landing reusable rockets on land. And like, it's like that just makes me nervous that you even think you can do that. And I'm glad no one's riding along, okay, because, because I grew up just with a couple of, with those tragedies that we saw. And it just seems how dangerous trying to do these things engineering wise is and how NASA I used to have so much respect for, I still do for NASA. And to be able to do these incredible things, now we're talking about doing it again and again, shrinking the time it takes to use the same rocket again to land it on land and building data centers out in space. It's just hard, hard for someone like me to accept that that's possible near term. And I think maybe it is.

[Morgan Brennan]

Morgan, I look, I think, I think it's hard for a lot of people to accept in the sense that a fully reusable, reusable rocket has always been the holy grail and something that's never been achieved before. So what they're tackling and look and how they're trying to do it and how they're trying to achieve it, this is very much a first. It goes back to this idea of Space X overall being a show me story. That being said, they've already employed so much reusability, at least in the first stage with their Falcon fleet and with Starship specifically. If they can get to that full reusability, it's going to start with cargo. There'd be a lot of cargo that moves before any kind of humans step foot on Starship. But if they can get to that point, you're talking about exponentially more mass going to orbit and beyond at a fraction of the cost, a tenth of the cost of what it Currently costs for a Falcon, which already drove prices down something like 90%.

[Andrew Ross Sorkin]

It's a rate limiting step. It's like. It's like the holy grail of what if you want to do this eventually, what. What his plans are. You got to do it. You got to make the strides.

[Morgan Brennan]

How the economics work for data centers in space. You otherwise have to do it.

[Andrew Ross Sorkin]

All of it. Yeah. Colonize the universe.

[Joe Kernen]

We.

[Andrew Ross Sorkin]

This is the royal we in this case are watching. The shares of Chipotle haven't looked, but now I'm seeing it down.

[Schwab Announcer]

Wow.

[Andrew Ross Sorkin]

Down 10%. That was yesterday. The restaurant chain said it had removed the jalapeno peppers from some of its locations since they could be linked to a salmonella outbreak being investigated by. Where everything bad in the world is happening lately. Minnesota.

[Becky Quick]

The other one was Michigan.

[Andrew Ross Sorkin]

Take it Canada. We'll take the western part of Canada. You take Minnesota. So far, the state.

[Becky Quick]

You mean the election, not the Taco Bell stuff? That was Michigan.

[Andrew Ross Sorkin]

Michigan. I'm talking about everything. Medicare, Medicaid. I mean, it's that guy. It's that Tim. Public health authorities. So far the State has identified 110 cases. Minnesota cases. And officials say that the food was making people sick. Was life likely served at other restaurants as well? Though she noted she wasn't concerned about Chipotle, in a statement, the company said it had pulled the jalapenos out of its food in an abundance of caution and replaced them with products from different growers.

[Becky Quick]

Man, this has been a summer.

[Andrew Ross Sorkin]

Yeah. Summer of diarrhea.

[Becky Quick]

Summer of love. What they had, call it what it is in her day, we get the summer of diarrhea.

[Andrew Ross Sorkin]

Is that what salmonella is it the same as the stuff that explodes? I don't know. It might be different than cyclists.

[Becky Quick]

I think this may get you salmonella. Probably makes you vomit.

[Andrew Ross Sorkin]

Yeah.

[Becky Quick]

Probably gets you before it gets that low in the intestinal tract. Happy breakfast, everybody.

[Joe Kernen]

Cheese will be next.

[Squawk Pod Host]

Coming up on Squawk Pod. Wall street may be optimistic. Is the economy ready to put inflation fears in the rear view and maybe raise interest rates? Somebody who should know. Janet Yellen is next. Former treasury secretary and former Fed chair.

[Janet Yellen]

A major reason why inflation continues at above levels consistent with the Fed's targets is a series, a kind of rolling series of supply shocks.

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[Squawk Pod Host]

This is Squawk Pod from CNBC again today with a split show from the NASDAQ market site in Times Square and the Rocky Mountains of Aspen.

[Andrew Ross Sorkin]

You're watching Squawkbox right here on cnbc. I'm Andrew Ossorkin along with Joe Kernan and Becky Quick. We've got a huge lineup today from the Aspen Economic Strategy Group meeting, so we've got a lot to talk to them about. Obviously everything going on in the straight right now and whether there's a deal in place and what's happening. Plus all the situational awareness stuff is a big topic of conversation here and we're going to go through all that and more.

[Becky Quick]

All right, we will talk about all of that coming up. And Andrew, I have a secret to share with you a little later.

[Andrew Ross Sorkin]

You're going to wrap me out on the protein drink.

[Becky Quick]

I am, I am.

[Andrew Ross Sorkin]

I know you so well.

[CDW Announcer]

Finally.

[Becky Quick]

He finally came out. Hold up, hold up the drink here.

[Andrew Ross Sorkin]

She's ratting me out.

[Becky Quick]

I am trying this first sip that you have been telling him to try.

[Andrew Ross Sorkin]

I'm trying your kale infused coffee.

[Becky Quick]

Coffee with protein.

[Andrew Ross Sorkin]

No, there's no protein.

[Becky Quick]

He said like this. He goes, pretty tasty. That is exactly what he did.

[Andrew Ross Sorkin]

It's great, right?

And I put. I did put some sweetener in it. Two little pounds. Is that okay?

[Becky Quick]

How'd you know I was.

[Andrew Ross Sorkin]

That's okay because I just know you. I know you're going to wrap me

out and tell me, are you drinking, you're drinking the hot coffee with the protein in it or you're doing the iced coffee with the protein in it?

The hot coffee. Should I try that? Should I do the ice tomorrow?

I'll, you know, I'll be back tomorrow. I'll bring you iced in the morning. Tomorrow we'll do it together.

That might be nice if we. Can we do it like this?

[Joe Kernen]

I have to tell you.

[Andrew Ross Sorkin]

Can we do it like, like that?

[SpaceX Executive]

Like we do?

[Becky Quick]

I can see you were right, Andrew.

[Andrew Ross Sorkin]

Thank you, Becky. I appre. You know.

Yep. Be the very first time I've been. It's been necessary for me to say that. Kidding.

Brookings Institution distinguished fellowship. Janet Yellen, she's of course, the former Federal Reserve chair, served as Treasury Secretary in the Biden administration. And great to see you. We've talked to a number of treasury secretaries focused on the Fed, FOMC and others. So I'd love to get your perspective on. Well, let's just start this where. Where do you see the economy right now? You want to grade. Grade the economy for us?

[Janet Yellen]

Well, the economy is really doing surprisingly well. It suffered a lot of shocks and it's proven itself to be very resilient. I'm surprised in many ways that the oil shock and the war in the Middle east hasn't had more of an effect on the economy than it has. I do worry that if it continues or escalates that we will begin to see a bigger effect. But we've had moderately good growth. Maybe some signs that productivity growth is improving. The labor market, which I was quite concerned about six months or a year ago, seems like it's proven quite resilient and is functioning well. It doesn't look to me like it's so hot that it's a source of inflationary pressure. So I'd say the main problem we face from a macro standpoint is inflation that's too high and has been too high for a long time. And how to bring that down without doing damage to the economy, I think is one of the central.

[Andrew Ross Sorkin]

Okay, so that is the central question these days. Kevin Warsh is now in the job that you sat in. At one point we just had Neel Kashkari on. He was one of the dissenters seeking a hike. Would you be seeking a hike right now?

[Janet Yellen]

I think I would be watching the data very carefully. I think that a major reason why inflation continues at above levels consistent with the Fed's targets is a series, a kind of rolling series of supply shocks. You know, first we had the, the tariffs, it looks to me like pass through of the tariffs into the price level, which has been escalating. Inflation is almost complete. But now of course we have all the disruption in energy markets, spillovers into food, into transportation. And then a third thing is that the AI boom, which is been very important in powering the economy forward, is leading to escalation of semiconductor prices, which is showing through to iPhones and all the things that embody chips, pushing up electricity prices. You know, the last thing is a little bit of a demand shock, but it's very sectoral specific. And my hope would be that it would be possible for inflation to subside as these shocks pass through. But that would likely take another couple of years. And the danger is it's now been five years since the Fed has achieved its 2% target. And I would be very worried about inflationary expectations and continuing supply shocks.

[Andrew Ross Sorkin]

Okay, political question given that you think the economy is as resilient as it's been and we can look at some of the shocks, whether it's what's happening in the strait or tariffs. Do you give this administration credit for the deregulatory environment that I think a lot of CEOs would actually credit with some of what's happened here.

[Janet Yellen]

So I don't know how to quantify that. I think business has been doing well and is probably benefited by that. But we always have to remember that there are reasons for regulation and it addresses a set of risks. And for example, in the financial sector where there's been a lot of rollback of regulations, have I seen any adverse effects yet? I'd say no. But I always worry about financial stability risks and the possibility that they will build in a deregulatory environment. But you know, fundamentally, AI has been a huge driver of economic growth. It's powered the stock market, it's kept consumers spending.

[Andrew Ross Sorkin]

When I mentioned the deregulatory environment, one of the things is this administration has been very active around artificial intelligence, around promoting artificial intelligence in terms of trying to, you know, allow for, for the build out of data centers. And the like. There's now a number of states, increasingly blue states that like New York, that are saying no data centers. And so I just wonder when you start to think about the politics of, of our economy and of AI, how you think about this administration currently.

[Janet Yellen]

Well, I think it's important that I be allowed to throw thrive in the United States and it's an important source of potential future productivity growth and competitive advantage globally. So I'm supportive of that. But there are certainly dangers and risks and spillovers from it that I think require policy attention. And you know, we're beginning to see what some of the negative spillovers are and they certainly do require potential.

[Andrew Ross Sorkin]

One of the things that everyone's talking about here in terms of AI is what's going to do the labor market long term. Do you have a particular take?

[Janet Yellen]

I think it's unclear at this point. I don't think we're seeing any general effect on employment, but there is some hint, hints in sectors where it's, you know, particularly being intensely used right now that it is diminishing job opportunities. I mean, I think that's true in coding and software. And of course, you know, part of the issue is how long will it take for AI to be broadly used throughout the economy. And what we've seen in past major technological breakthroughs throughs is it can take a very long time. This would be true with the Industrial Revolution or with the Internet that it can take a very long time to really have a massive effect. It may be different this time, it may be faster, but it remains to be seen there'll be a transition here in which, you know, certain kinds of jobs will become less prevalent and the hope is that new ones will be created and policy can help with that.

[Andrew Ross Sorkin]

Foreign policy question for you, which is Scott Bessant and the Treasury Department recently backstopped the yen, bailed out the yen in Japan. I'm curious what you make of that. That's the first time we've done this in quite some time.

[Janet Yellen]

It's been, I think, over two decades that since we have actually engaged with Japan in action to prop up the yen. You know, the view I've had for a long time is that intervention by the United States and currency markets and by the major, certainly G7 other major economies is that intervention should be rare. And I think what economic research shows is that currency market intervention is rarely effective for very long and influence exchange rates on its own. If it signals a shift in policy, and we do see shifts in policy following intervention, that's what's necessary?

[Andrew Ross Sorkin]

I'm assuming that we're trying to buy some time to try to get

[Schwab Announcer]

the

[Andrew Ross Sorkin]

bank of Japan to change its rates. Right. I mean, I think, I assume that this is the goal has to be to make it a bridge to somewhere. The question is, is it a bridge to somewhere?

[Janet Yellen]

Well, there are reasons why the bank of Japan may choose to raise rates and I think it's mainly the rate differential and widening of that differential that's led to the pressure on the yen. But I would be reluctant to intervene. We, we, I think during the Biden administration really never intervened with other current countries in currency markets. Japan did intervene on a number of occasions arguing that there was excess volatility. But I mean Japan does have the tools it needs to I think address the situation if it's undesirable.

[Andrew Ross Sorkin]

Regime change under Kevin Warsh the idea about how the Fed communicates with the public dot plots, how many meetings there should be a year. How do you think about that?

[Janet Yellen]

Well, I think communications with the public is important and it's something the FOMC during my time at the Fed focused on a great deal deal. It was especially important during the, I believe it was seven years that interest rates were pinned, short rates were pinned in zero at zero. We had the zero lower bound problem and we saw communications as a particularly important tool to influence longer term rates by helping to shape market expectations about the path of short term rates. So there was a lot of innovation in communications during that time. Now the zero lower bound is not a problem at the moment. I think there's a lot of uncertainty about the future path of policy. I certainly can see why there would be a reluctance to try to signal with the future path of policy would be but the markets have to be in pricing long term bonds very focused on the path of the path of policy. That entails thinking about the economy and the economic outlook. But the markets are very focused on what the Fed will do and at a minimum I think it's, it's necessary for the Fed to, and normally this is the job of the chairman is to speak on behalf of the committee

[Andrew Ross Sorkin]

and but I think he's, he's argued effectively that it's been a mistake, that there's been almost too much too much speaking. I mean he's also arguing effectively this idea of the market being the ball or the Fed being the ball and who's the ball if you will meaning if you, if you tell everybody what's going to happen then they react and it's sort of the react. It's a psychological, behavioral science game.

[Janet Yellen]

Well, there is the looking in the mirror problem, and this has long been recognized by the fomc, that what you see happening in the long end of the market, or in markets more generally, importantly, reflects expectations about what the Fed will do. But that's always going to be the case. It has to be the case. And then the question is who is going to communicate? Members of the FOMC are going to talk. I think it would be undesirable for them not to do so. The market needs to, at a minimum, understand what is the Fed's reaction function. Maybe the market should be forming their own views on the outlook on Is inflation going to come down on its own or is it going to intensify and it's going to be necessary to address it? And the markets need to understand the reaction function. That's not necessarily a forecast of where rates will be, but how will the Fed respond to data. And I think that's central to good market funk to good market functioning.

[Andrew Ross Sorkin]

Secretary Yellen, I want to thank you for joining us this morning from My pleasure.

[Janet Yellen]

Thanks for the invitation.

[Squawk Pod Host]

Next on Squawk Pod Uber CEO Dara Khosar Shahi it is full speed ahead for a new business. Autonomous vehicles, cars that drive themselves.

[Joe Kernen]

We are going out, we're investing with our own balance sheet and we're doing it through cash flow, which is pretty important as well. We're not taking on a bunch of debt.

[Squawk Pod Host]

The rules of the road for the ride sharing and delivery giant.

[Andrew Ross Sorkin]

Can I ask for a non smelly car when I'm asking for an Uber?

[Squawk Pod Host]

Right after this

[DSW Announcer]

Foreign

[Keith Lansford]

this episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Lansford for this information packed daily market Preview delivered in 10 minutes or less, including projected stock updates, monetary policy decisions and key results and statistics that may impact your trading. Download the latest episode and [e-mail] Market Update podcast or find Schwab Market Update wherever you get your podcasts.

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[Squawk Pod Host]

Welcome back. You're listening to Squawk Pod.

[Joe Kernen]

Stand under by 3, 2, 1, up. And Andrew Cube is Mike.

[Andrew Ross Sorkin]

We've got some news just out. Uber Reporting earnings of $1.17 a share, topped estimates of $0.81, marking the company's first earnings beat in three quarters. Revenue, $14.19 billion. That was slightly below expectations of 14.24 billion. Gross bookings totaling $58 billion. That was ahead of estimates. And delivery bookings also topping expectations, while mobility bookings came in slightly below estimates. Want to talk about all that and more? Joining us right now, the company's CEO, Dara Kharishahi. Dara, it's good to see you this morning. As we said, you beat on the EPS number. The revenue piece came in a little light. What's, what's, what's your take on what, on what happened there? And is that something that happened there?

[Joe Kernen]

Yeah, the gross bookings of the company, we grew 22%. It was actually an acceleration over Q1 of 22%. Revenue grew 14, which is lower than gross bookings. But that's actually because of an accounting change that we had in the uk. We change how we account for revenue in the uk, So I wouldn't call that a fundamental issue in any way. And then you saw our adjusted earnings per share up 35% on a year, on year basis. And we had free cash flow over $10 billion over the last 12 months, which is a record high for us. So the business continues to execute incredibly well. Very healthy across both the mobility business and the delivery business.

[Andrew Ross Sorkin]

Couple of other things that were interesting to me. Prices have declined, you know, you know me, I love a lower price, but I don't know if that's, it's probably not good for the business in places like L A and San Francisco.

[Joe Kernen]

Yeah. So we have actually had some wins as it relates to insurance. And one of the most significant causes of price increases in mobility in the US have been insurance. There's tort reform going on. Hopefully it's going to bring the cost of living down and that also includes the cost of Uber. So where we have gotten some relief as it relates to insurance, we put that back into price lowered Prices for consumers and a lot of markets, for example in California and we've seen an acceleration in terms of bookings in those markets. So the US actually continues to be really healthy. Growth in the US accelerated both in mobility and delivery Q2 over Q1. And part of it is because of some of these insurance savings that we're giving back to the consumer.

[Andrew Ross Sorkin]

What are you seeing in terms of the consumer strength itself? You know, here at this Aspen Economic strategy group meeting, there's just conversation after conversation just about how healthy is the economy itself. We spoke to Scott Besant yesterday who talked about how he thinks there's no longer a K shaped economy. He thinks it's something these describing as a C shaped economy. What do you see?

[Joe Kernen]

We're seeing something similar in that the consumer broadly, as you can see, is strong and that's why our overall bookings, gross bookings actually accelerated quarter by quarter. We're not seeing any signs of trade down, we're not seeing smaller basket sizes. Consumers remain generous in their tipping. For example, sometimes if someone is feeling pinch of the pocket, they might pull back on tipping. None of that is happening. And at the same time we're seeing actually earners, our drivers for example, their earnings per utilized hour are up 8% on a year on year basis. So the labor market for blue collar market, to some extent we represent the spot market for labor and the labor market is strong in the US which is reflected in our earners making more money I think than you know, they have for the past couple of years with their earnings per hour up 8% year on year, which is super, super healthy.

[Andrew Ross Sorkin]

Since you raised it. I should just go there because it's not an earnings story, it's a tipping story. What do you think? What's the average tip these days? What's a fair tip? Because I know years ago we had a conversation about how when Uber was first built there was no, the plan was for no tipping.

[Joe Kernen]

Well Andrew, you don't want to ask me. I'm the CEO of Uber so I always encourage you to tip 15 to 20% on a ride or a delivery. And I think it's up to the customer. I mean the whole point of tipping is pay for the service rendered. So if you get a great ride, if you get that delivery on time, put a good tip in there because there are real people who are giving that service and show your appreciation.

[Andrew Ross Sorkin]

One other piece, it looks like, you know, we keep talking about spending how much people are going to spend in capex big tech companies, you plan to spend about $10 billion it looks like over the coming years.

[Joe Kernen]

Yeah, that is investment that we're making in the autonomous vehicle ecosystem. As you know, AVs represent a very important future of mobility. We are partnering with the entire ecosystem. We've got partnerships with over 30 AV players. We're going to be in 15 markets across the world by the end of the year. So we're leaning forward and investing in av, whether that's in partnerships like Wave or Wabi, or whether that's vehicle commitments with partnerships with Lucid and other OEMs like Rivian to make sure that we have enough AV vehicles. When this technology hits a prime time, we think it's worth the investment. Obviously with $10 billion of free cash flow on a 12 month basis, we've got the balance sheet and more importantly the cash flow to fund these kinds of investments for future growth.

[Becky Quick]

You've been pretty clear about your plans on this growth for a long time. So maybe your, your shareholder base is pretty well informed on some of these things. But I can't help but think it's the same sort of transition that a lot of these hyperscalers have made where you had companies that were very capex, light software companies that were bringing in a ton of cash and didn't have to put out much capex. How, how do you think about things as you make that transition yourself? You know, you were a very capex like company. You see the future being in these robotaxis. It's a huge change in the business though. What are the advantages, what are the disadvantages that and how do you manage that transition?

[Joe Kernen]

I think it is, Becky. It's absolutely a change in the business and it's something that we are managing carefully. In the early kind of iteration of the business. There is no kind of financing model out there. You know, there's a question as to how much is an EV worth, What's a residual value of an av? None of these things have been established. So in the early iterations of av, we are going out, we're investing with our own balance sheet and we're doing it through cash flow, which is pretty important as well. We're not taking on a bunch of debt for this stuff. To establish the business model of av, what we're seeing very early on is that we can drive a lot of utilization of these cars. It is well over 20 trips per vehicle per day. In some markets it's over 30 trips per vehicle per day, which creates kind of a monetization model that then we can take to financiers and for example, we have established a financing vehicle with Santander, who is very kind of lean forward in terms of innovation in the financial space so that we can fund both EVs, which we do, which we're continuing to increase in our traditional business as well as AVs as well. So early on it's going to be on balance sheet over a period of time. This stuff is going to be kind of financed by industry. It's an age old trend and we're just very, very early in the development of this industry, which is why we're leaning in to innovate for the entire ecosystem.

[Andrew Ross Sorkin]

I can't believe it. I'm coming into the future. I had to use it for a very specific reason yesterday to pick up a car that was left somewhere. So I had, I had to use an Uber or I would have had to walk. But the guy, I mean, we may like keep in touch. Swear to God, that's Anthony. Yeah, he talking, but the amount of money he's making per day, I said, no, that can't be right. He goes, yes, it is right. And if he would, if he would have said, yes, I'll do New York trips, he could even have made more than that. He said one of the ways that he makes so much as he'll do it all, whatever Uber offers. He said sometimes if he's done an Uber eats, people don't like the smell that's remaining in the car. He said that was a major problem. Just wondering, have you heard that before? And is it. I don't see how you can do anything about that. Can I ask for a non smelly car when I'm asking for it for an Uber?

[Joe Kernen]

You know, Joe, it is sometimes an issue. It's not an issue. That happens often. And the thing is these drivers, they are entrepreneurs and they, you know, he's aware of exactly what happens when he takes Uber eats and Uber rides, etc. So he's essentially running his small business. We give him a ton of opportunity. He can accept rides, he can accept deliveries. He can now go shopping for groceries as well. And as you see, the earnings are very, very healthy. But it's ultimately up to the entrepreneur to decide what they're going to do with their time. And we want to give them all the tools and all the opportunities to do so.

[Andrew Ross Sorkin]

Dara, I just want to go back to the, the autonomous vehicle piece of the story for just a moment because the other thing that's happened, I think since we last saw you is it appears that the Partnership that you've had with Waymo, collapsing, falling apart, maybe you're not having it anymore. You tell us what the state of affairs is with Waymo and what that looks like, long term or not.

[Joe Kernen]

Well, Waymo is a really important partner of ours now. They're not the only partner of ours. We are in market with them in Atlanta, in Austin. We'll continue to do business with them this year, going into, into next year. But really what we're developing is a full ecosystem of av and Waymo is the leader now. But just like you saw in the foundation model space, you had OpenAI, who was the only leader, the only kind of game in town. Then you got Anthropic and you had XAI coming in and Gemini coming in, and then now a bunch of open source models. Whether it's Kimi or many of the other open source models out there, it's a very, very competitive space. And we're seeing the same thing in the physical AI space as well. Just yesterday, Nvidia released their Alpha Mayo 2 model, which is an open weight physical AI model, which is pretty incredible as well. So. But partnership with Waymo, but it really is an ecosystem that's going to power our growth going forward.

[Andrew Ross Sorkin]

But, but in cities like Phoenix that that partnership appears to have ended, is that, yeah, it's going to be city

[Joe Kernen]

by city or in Phoenix we were less than 10 cars, so we, it kind of wasn't worth it to continue. We'll see where we go with Waymo. But more importantly for us is the entire ecosystem that we're powering and the amount of innovation that's going into that ecosystem.

[Andrew Ross Sorkin]

Right. And then finally I have to ask because it was a big, big story in the New York Times about, you know, passengers who have been sexually harassed in vehicles, lawsuits that have happened as a result of those, and the position that Uber has taken, which seemed at odds, at least in the article, with some of the public statements that the company has made over the years. And I just wanted to get your reaction to that.

[Joe Kernen]

Yeah, Andrew, any time there's a sexual assault on, on the platform, it's heartbreaking, which is why we've invested so much in safety. Whether it's the ride check technology that we have or record my ride or track my ride, or even video or audio recording on the ride itself. As part of those efforts and as part of our commitment to safety, we ended mandatory arbitration as part of our service. And victim can decide whether or not she wants to settle privately or go to court. And the thing about the court process, unfortunately, is that it is adversarial in nature. You've got to ask questions. It can be unpleasant, it can be uncomfortable, but that's what the process is, especially when people are looking for a bunch of money. And anytime we ask questions of the victim, we do so in a respectful manner. And what was not included in that article was the judge presiding over the federal cases saying, specifically, I want it known that Uber has not engaged in anything that will be considered shaming the victim that somehow didn't find its way into the article. So these are the really unfortunate circumstances. We deal with them as gently as we can, with respect, and the judge absolutely recognized that. But this is part of the law, and it's just a tough part of something that we've had to face.

[Andrew Ross Sorkin]

Dar, I want to thank you for joining us on this earnings day, but also answering so many of other questions. We look forward to seeing you again very, very soon.

[Joe Kernen]

Thanks very much.

[Andrew Ross Sorkin]

You bet.

[Squawk Pod Host]

That's Squawk Pod for today. Thanks for listening. Squawk Box is hosted by Joe Kernan, Becky Quick, and Andrew Ross Sorkin.

[Becky Quick]

Mm, pretty tasty.

[Squawk Pod Host]

Tune in weekday mornings on CNBC at 6 Eastern or get the best of our TV show right into your ears and listen whenever you want. When you follow Squawkpod, we're available wherever you get your podcasts. Have a great Wednesday. We'll meet you right back here tomorrow.

[Joe Kernen]

We are clear. Thanks, guys.

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