D (2:32)

It shows us that it's functioning fairly well because there is consensus the two Officials that dissented, each of whom asked for a quarter point cut, were Stephen Myron and Waller, who's one of the four candidates to be Fed chair. You know you're not going to get the job if you're not seen playing ball because Trump is explicitly calling for Fed rate cuts. So no surprise there at all. It counts as consensus for any normal meeting.

B (2:56)

Right. By Waller, you mean Christopher Waller, who's in the running to be the new Fed chair, along with Kevin Warsh, Kevin Hassett and Rick Reeder. But our current Fed chair, Powell, he was asked today about the Justice Department investigation into him and the Lisa Cook case in front of the Supreme Court, both of which could affect the independence of the central bank. How did Powell talk about those things?

D (3:17)

He was asked about it, but he wouldn't be drawn. So he was extremely professional. Did not allow any of that distract from the economic message.

B (3:25)

What has been the market reaction to today's Fed decision?

D (3:28)

The market reaction has been fairly muted. The decision was very widely expected and there was nothing really unexpected that came out of Powell's mouth. He said that they have a dual mandate, full employment and controlling inflation, and that the two are imbalanced and perhaps a bit more benign than they had been in the past.

B (3:45)

That was WSJ investing columnist Spencer Jacob. Thanks, Spencer. Sure. Like Spencer said, markets didn't have a strong reaction to the Fed. But the dollar did climb today after Treasury Secretary Scott Besant said the US Had a strong dollar policy and absolutely wasn't intervening in currency markets. The dollar had sold off yesterday, partly because President Trump said he wasn't concerned about currency declines in round number milestones. The S&P 500 briefly crossed 7,000 points today for the first time, but later retreated. And stock markets finished the day pretty much unchanged from yesterday. The biggest move in the indexes was a 0.2% gain in the Nasdaq. In corporate news, Amazon said it was laying off 16,000 employees. That brings its total cuts to 30,000 workers since October. CEO Andy Jassy has portrayed the cuts as an attempt to reinvigorate the company's culture rather than to cut costs. Amazon went on a hiring spree during the pandemic, adding about 100,000 workers in a short period. And Jassy's said that surge in hiring led to bloat at the company. He's promised to operate like a startup and that means, quote, removing layers. And Starbucks said today that its Same store sales grew 4% and revenue increased 6% in the latest quarter. CEO Brian Nichols says His turnaround strategy is working, but profit declined 62%, taking a hit from those investments in stores and workers and from coffee tariffs. And we have some headlines for big tech earnings that came out after the bell. Tesla's revenue fell 3% as it lost its lead as the world's top electric vehicle maker to China's byd, while Metta said it had record sales and expects a massive increase in projected spending this year, a sign that its AI investments are still going strong. And Microsoft reported better than expected earnings because of its new deal with OpenAI and continued growth in its cloud computing business. For more details, visit WSJ.com and we'll be discussing those results on tomorrow morning's show. Coming up, what's drawing investors to AI startups with no product or revenue and President Trump's ultimatum for Iran. That's after the break.

E (6:04)

Hi, this is Gunjan Banerjee and this is Telus Demos.

F (6:07)

We're reporters at the Wall Street Journal and The hosts of WSJ's take on the Week.

E (6:11)

Take on the Week is a weekly show that gives listeners a leg up in the world of markets and investing.

F (6:16)

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E (6:22)

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B (6:38)

There's a new kind of startup getting attention in Silicon Valley. These companies don't have any products or any revenue, but they've got eager investors and some of these companies are valued at $1 billion or more. The industry is calling these startups Neo Labs. And Kate Clark, who covers startups for the Journal, says that they're riding the AI wave in a different kind of way. Kate, how do these companies differ from other kinds of AI startups?

C (7:03)

You can think of a Neolab as kind of a mini baby. OpenAI. These are a new generation of startups that like OpenAI, are getting their start as purely research labs. Research that would usually happen inside academic environments. So basically they are trying to build better AI models, better systems of building AI through complicated equations, whiteboarding, coding, and they're not worried about applications of that AI. In other words, they're not really worried yet about actually trying to make any money.

B (7:32)

Can you give us a couple of examples of the names of these companies and how they're thinking about approaching AI?

C (7:40)

Yeah, there are a couple of more well known examples One of those is Safe Superintelligence, which was founded by one of the original founders of OpenAI, and it is focused on building AI more safely. It is valued at over $30 billion, making it one of the most valuable startups. There's also Thinking Machines Labs, which is also founded by an OpenAI alum. And there's a startup I focused on in my story called Flapping Airplanes, which wants to build new AI models with less data. He raised over $100 million to do that.

B (8:10)

These valuations seem quite high and also there's no plan for our products or any kind of revenue anytime soon. Why are investors interested in these neolabs?

C (8:20)

I think the idea for investors is if one of these companies really does figure out a more efficient way or just a better way of building AI systems, that they will have a trillion dollar opportunity on their hands. These are a lot of the same people who have put billions of dollars into OpenAI and Anth and who are absolutely convinced that those companies will be worth a trillion dollars or more in the near future. So they think that if they bet on a bunch of these little companies that also want to disrupt the AI space that they will see massive payday at some point, even if that is a decade down the line. All of this just points back to how much excitement there still is for AI development. Even though there has been more skepticism in the market, there is more talk of a bubble that has not stopped investment from climbing even into these extremely risky businesses like the Neolab.

B (9:09)

And what kinds of challenges do Neo Labs face?

C (9:12)

I think that the big one is retaining the star talent that they have recruited or even keeping on some of the co founders of these companies. We've already seen several examples of big shot researchers who founded these NeoLabs actually leaving pretty quickly to go back to OpenAI or to go to Meta, because they were offered in some cases one 200, $300 million packages to leave. And if they can't keep their talent, they don't have anything.

B (9:41)

That was WSJ reporter Kate Clark. Thanks, Kate.

C (9:44)

Thanks.

B (9:47)

In the latest development after the fatal shootings in Minneapolis, two Border Patrol agents who fired shots at Alex Preddy last weekend have been put on administrative leave, a decision that the Customs and Border Protection Agency says was, quote, standard protocol. And the Department of Homeland Security says the ICE officer who shot and killed Renee Goode earlier this month has also been placed on administrative leave. With the backlash to the aggressive immigration enforcement operation in Minneapolis, the Trump administration has changed its strategy, putting border czar Tom Homan in charge of the operation in the city as Democrats and some Republicans call for Homeland Security Secretary Kristi Noem to step down. President Trump has issued new threats against Iran. Posting on social media today, Trump said that he hopes that Iran will negotiate, negotiate a deal that includes stopping its nuclear program or it will face a possible attack. He said, quote, time is running out. Iran says it won't compromise on its right to continue enriching uranium for civilian purposes or to maintain its missile arsenal. The Pentagon's buildup in the Middle east includes an aircraft carrier with its accompanying warships. And like the US Many countries in Europe are trying to stop or deport migrants. Not Spain, which yesterday said that undocumented immigrants can legalize their status in the coming months. The government estimates that about 500,000 people will gain legal residency, though analysts say it could be more. The plan doesn't apply to every migrant. For example, people with criminal records are ineligible. And that's what's news for this Wednesday afternoon. Today's show is produced by Pierre Biennime, with supervising producer Tali Arbel. I'm Alex Osola for the Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening.

E (11:29)

Sam.