Power Lunch - Just Right Jobs Number, Up In The Cloud 8/4/23

Episode Date: August 4, 2023

Even though today’s jobs number came in just short of estimates, the markets are saying it’s enough to keep the economy out of recession – and the Fed on the sidelines. We’ll discuss. Plus, the other bit of news boosting stocks today: strong earnings from tech titan Amazon – especially for its cloud business. We’ll recap the results. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Good Friday afternoon, everybody, and welcome to Power Lunch alongside Kelly Evans. I'm Tyler Matheson coming up a just right jobs number, even though it came in a little bit short of the estimate. Markets saying it is enough to keep the economy out of recession and the Fed may be on the sidelines. The other bit of news boosting stocks today, strong earnings from Amazon, especially in the cloud business. We're going to dig in to those results. Kelly. Tyler, thanks. Checking the markets right now. The Dow's up 136.

The SMP up 14. These are about a third of a percent, about half the gains we saw a little bit earlier on, while the NASDAQ is hanging on to its two-thirds percent rise, and it has been leading the pack all day. As Tyler mentioned, check out Amazon, up 10 percent, nearly $150 billion in market cap added after its earnings report last night. It's also boosting other cloud stocks like Datadog and Snowflake, which are among them. Apple falling, though, after posting a sales decline for the third straight quarter. There you can see Apple share, there's Snowflake and Data Dog, of course. Meanwhile, Apple down 3.5% to just under 185. But let's get right to Bob Bassani with the question we posed off the top.

Is this the perfect Goldilocks Jobs Report number? Bob, did it come in just where the markets wanted it to? It did. And the important thing is nobody's that worried about Apple down 3%. It's the Jobs Report. Bottom line is job growth is slowing down, but not too much. That's what Kelly means with Goldilocks. It was a fine needle to thread, but they really did it on this Jobs Report,

187,000 versus 200,000 expect that. I want to show you the 10-year yield because that's what everybody's been watching. When the 10-year yield goes over 4%, the market flutters. It's happened several times this year. It happened again this week. With that moving down, it's still over 4%, but the trend is moving down, and that's a good sign, and the markets are much more stable on that. Leadership this week, well, it's one all over the place. Yes, Amazon's the number one leader because of the big move up today on the earnings, but we've had nice moves up in some of these industrial names. Eaton hit a new high this week on great earnings in Caterpillar, Ingersoll, Rand, Parker Haniffin, all in the industrial groups. They've had a good week. Consumer

Staples Fair this week, not great, but Clorox had a great earnings report. That had a nice move up. That's been one of the big leadership groups. And if you had one great move up in a sector, it had to be energy this week. Oil at $83. We're near the highest levels for oil since November. These exploration and production companies like APA have been on fire for the last month. So there's your big leadership group. Not so great. some sub sectors of technology. Cybersecurity is not having a great day. You see Fortinet down rather noticeably here. They had rather poor outlook there. They said the deals were being delayed due to macroeconomic uncertainty. So that's dragging down Palo Alto, Crowdstrike and all these

other names in the cybersecurity space. Speaking of earnings, we are almost done. Eighty-five percent or so through the earnings season, 84 percent reporting there, 79 percent beating a little higher than expected than usual. The average beats almost 8%, again, that's a little higher than expected. But prices are high, so it's hard to move the companies forward, the prices, even on relatively good earnings news. What you want to look for, nobody's worried about the second quarter. Third and fourth quarter, what's the trend? Is earnings estimates going up or down? And here, it's good to say, earnings estimates are going down, going up. Remember, Kelly, guys, this is the bottom in the second quarter. It's supposed to be the bottom for earnings. They're supposed to

post degree going up from here. So we want to see the trend moving up. And you see here, analysts revise their numbers every week all the time. 63% in the last few weeks have been revising their estimates upward, 37% down. The trend is up. And that is extremely supportive of the market. That, along with Goldilocks and the soft landing, is why the stock market continues to hold up so well. Guys, back to you. Papazani, thank you very much. We've got some breaking news now from J.P. Morgan and Steve Leasman has the story. Hi, Steve. Hey, Tyler, yeah, just got J.P. Morgan's weekly economic report, and they are calling off their recession forecast for this year. They are crediting the quicker than expected resolution of the debt ceiling, as well as less impact from bank credit tightening as a result of the Fed's program put in place. Now, they are saying recession risk is still elevated for next year. But what's happened is, and we reported on this Monday, I'll come back to that in the second, is they had to boost their GDP forecast for the third quarter. They went up from a half a point to,

2.5% along with others. They do say, though, that Fed Over tightening is the major risk to the economy. And I want to show you what we did. We reported on Monday. Just remind you, we came out with our CNBC rapid update showing a host of other folks had boosted that third quarter growth forecast from what was really an anemic forecast to one that's just around trend. It's just the way the quarter has begun, especially now you've had the vehicle sales out, Mark Zandis, at 4%. So there you go, guys. It's hard to have a recession. when you have three quarters of the economy, that is three separate quarters of the economy running around trend.

Maybe next year, but as poor, J.P. Morgan, and you remember earlier this week, Bank of America also called off their recession called this year, Tyler. So I'm curious. They've taken it off the table for this year, but they say the risk is elevated for next year. Is there any color as to why? Yeah. Or is it really just the effect of rising interest rates over time? I think it's the effect of rising interest rate, but they also signal out the idea of the Fed

over tightening relative to the economy. me in the inflation problem. All right. We shall see in the wake of today's jobs report what that might mean for overtightening or under tightening or whatever they might do at the Fed. Let's bring in Karen Kimbrough, LinkedIn chief economist. Also with us is Ron Insana, chief market strategist with dynasty financial partners. He's also a CNBC contributor. Karen, why don't we pick up with where Steve left off? Are you concerned about the Fed overtightening, particularly given what looks like a very sort of sweet employment report and cluster of economic conditions? You know, there's no doubt that this was a good report overall.

It corresponded to a lot of the data that we see here at LinkedIn, but to answer your question, absolutely, there's been 500 plus basis points of tightening, and that's a lot to digest for the economy. So like many economists, we're expecting, you know, that soft patch to hit much later this year or even earlier next year. So I think the risks are still there for the Fed as to whether or not they've done too much. But in the meantime, the labor market is very resilient, very strong from the way we look at it. And we're seeing, you know, even a glimmer of hope in some sectors. So Ron, where do you come down on this idea of a possible recession or maybe that a recession doesn't occur until next year, if at all?

And what are the implications then for stocks? She remember exactly a month ago on the last unemployment report, we talked about Goldilocks, the fact. that the economy was still growing, that jobs were being added at a reasonable pace, and wage inflation was coming down. Wage inflation is growing most at the bottom 10th percentile. So we see wageers right where you want it. It's growing faster than prices are. So that's also something that you want.

So this seems like a reasonable environment. There are risks. I mean, next year, I should say, $1.4 trillion of commercial real estate debt will come due. That will have to be refinanced at higher rates. That could be problematic for certain banks, $270 billion, of which is small and medium-sized banks, you know, that they have that on their balance sheet. So I think that's where the risks may come in. The Fed overdoing it, obviously, as I suspect, that was David Kelly at JP Morgan, who was making that forecast that Steve referenced, pushing off the recession into next year.

That seems like a reasonable bet at this point, given that unless the Fed were to do something more than a quarter point and shock the system, we're kind of, you know, moving along nicely. Karen, can you give us some granularity on the strongest and weakest parts of the labor market? I mean, what are some of the indicators you guys look at or might have proprietary access to? Yeah, absolutely. So we spent a lot of time thinking about the rebalancing of the labor market. That's been a really important question because the more it's out of whack, the more likely you're going to get wage pressures. And what we're seeing is that the amount of jobs coming down in the sense of that there are not as many open jobs available, that's come down by over 20% in the

last year. At the same time, we're seeing job seekers much more active. They're applying to more jobs when they show up. So there's like a 30% increase in the intensity of job seeking. So that's kind of creating a more competitive labor market, which means we're going to get some down. We're probably pressure on wages to continue, which is a good thing, I think, for the Fed. At the same time, we're also looking at just general labor market tightness and hiring trends. And the hiring trends are telling us that overall hiring is still coming down. People are still hiring at a slower pace than before. But there are pockets of hope.

Believe it or not, the real estate sector, the construction sector, health care and hospitals, all these sectors are actually doing a little bit better than they were a few months ago. So there's some stabilization and maybe even hope of improvement, you know, further down the line. You know, Ron, equities have been moving up, chugging along all year and certainly in the past three months, certainly in the month of July. But that's not to say that there aren't concerning signs out there. Inflation is still a little higher than, and people would like oil has gone up. There was a debt downgrade. China is still an unknown.

And certainly there is a political season coming that is going to be, I would say, destabilizing. I think maybe, certainly emotionally. I don't know if it's the thing going to be a wild year. It's going to be a wild year and two months. What does that say about the market and its fragility? I'm not sure that markets as fragile as people. Certainly in August and September, you always worry about market dips. And we've been up a lot so far this year.

So, you know, as in any other move to the upside, a 10% correction is always a possibility. But, Tyler, with respect to inflation, when you look at all the various readings, August is going to be a bad print, right? Because energy went up so much in the month of July, biggest monthly gain in over two years. But I brought this up, and I can't stand when institutions do this, but the New York Fed has the multivariant trend core PCE measure of inflation. Oh, thank goodness they do. It's under 3%. It's 2.94% as of two days ago. And so the trend of inflation, of underlying inflation, is receding, I think, faster than the Fed would admit, which is why the equity markets are doing better, why interest rates until recently were contained until the debt downgrade.

And China's exporting deflation. So they may not be growing as quickly, but they're also exporting less inflationary pressures around the world than they would have otherwise. And so I think that accrues than that benefit of equities. I don't know. You're not going to duplicate what we saw in the first half of the year. I don't think by any measure. And again, at 10% correction given the concentration that we've seen, 10 stocks account for 31% of the. You say it's a possibility? I think it's a probability.

Possibility. Possible. Given how much the equity markets have surprised us this year, you don't want to put too high a probability. It's hard to get too bearish and it's hard to get too bullish at this stage in this particular cycle. Karen, quick final question to you. What would you be watching? We talk about the traditional jobs support. We watch temp jobs, revisions, things like that.

What do you guys watch for signs that there might be, you know, a sharper cooling in the labor market versus just kind of a persistent moderation? China. Yeah, the main thing that we've been looking at, really, whether or not there's going to be a sharper cooling, is looking to see whether we can start to see a little hope, a little glimmer of recovery in some of the sectors that were hardest hit. So thinking about tech, thinking about retail, which has been a bit sluggish as well in terms of hiring. So looking for some of these sectors to kind of come back. That's one thing. And the second thing is looking to see how broad-based is that return of job seekers to the market? Are they coming back? And we're starting to see that broadened out. And to me, that would tell me the labor

market's cooling even faster than we thought. Yeah. All right, Karen Kimbrough, thank you very much. Ron and Sonah, great as always to see you. Have a good weekend, folks. And let's go out to Rick Santelli in Chicago. Rick, this morning, we hit 4.2 percent. And man, what a different picture it's now. Yes, remember, the last several days I've been highlighting the areas to pay attention to in tens and thirties. We'll get to that in a minute. What I'd like to talk about is today's non-farm payroll. 187,000.

Let's throw up the chart. That's the lowest level of job creation since DISA 2020. Let's just think about what's been in between there. We started out this year in January with $472,000. Last February, we had $904,000. Job growth is slowing. What was the effect? Well, look at a two-year note intraday.

It dropped like a rock. It's been dropping like a rock or holding steady all week. Let's look at a one-week chart. Right now, where it stands at $480, we're down. down eight on the day and eight on the week. On a week where the long-dated treasuries, look at the next chart, looks a little bit different, doesn't it? The last one was red.

This one's green, because we're still up on the week, but we cut that in half. Right now, at 406, we're down a dozen on the day. We're up about a dozen on the week, but we were up double that earlier. The markets have definitely moved lower. Is it because the report was that cold? It really wasn't that cold.

Look at wages. Look at what's going on with the labor force. participation rate. However, fear. Many thought that after ADP was stronger, they were to see a much stronger report than they did. But here's the key. This chart goes back to September. On September, October 24th, both tens and thirties had their high yield close. It was four and a quarter for tens. It was four 38 for 30s. You remember what happened when we didn't close about 507 and twos? When we had the chance, they hit the stuffing out of the market. This is a technical failure thus far, not to close above those levels.

If we close below 385 before we close above 4 and a quarter in tens, it'll definitely be game-set match, in my opinion. Tyler, back to you. Rick, have a great weekend. Thank you. And coming up, Wall Street had some big worries about Apple and Amazon, but the reports, you know, still keeping the bears at bay. We'll break it down in today's tech check.

Plus work from home in the office. Google offering an on-campus. hotel special to lure workers back to the office. Those details. When Power Lunch, Richard. Welcome back to Power Lunch. Everybody, stocks higher today than NASDAQ gaining a full percent. And that's despite a drop in Apple following its results reported yesterday.

The company reporting a drop in sales now for the third consecutive quarter. Hasn't done that in a long time. Let's bring in Steve Kovac for a look at what's happening at Apple. Steve. Yeah, Tyler, Apple shares tagging even lower just this hour, actually. after the company guided to another quarter of falling sales. Now, even though Apple said to expect iPhone and services revenue to grow more in the September quarter, it also said a steep drop in Mac and iPad sales won't be enough to bring the company

back to top line growth. That would mean a full fiscal year of down sales for Apple. Now, I asked CEO Tim Cook yesterday about the demand picture for iPhone, since we're expecting new models just next month. He told me, quote, if you look at the... the U.S., the acceleration is good, the acceleration that we saw, we're glad that accelerated, but the smartphone industry is tough in the U.S. right now. So even though foreign exchange rates are improving and services are growing again, hardware demand remains the biggest headwin for Apple

going into the back half of the year. And speaking of services, that's the most promising piece of these results. Cook telling me advertising and spending in the app storage starting to return, plus Apple has reached a billion subscriptions through the App Store, and it gets a cut out of each of those subscriptions. And of course, we've got to talk about AI, Apple playing a different role there than what we would see out of Microsoft and Google and all those others. Cook telling me the new iPhone software features coming this fall will leverage AI, and it helps make new products like the Apple Vision Pro, Tyler. Very interesting. So AI, I mean, I guess I'm not surprised because Apple is fundamentally and, equipment, a gear company. I mean, it's not that it's not a software company, but the others that are the big players in that area, like Microsoft and Google, strike me more as software companies.

Yeah, and that's right. And that's been the thing about Apple all along. I mean, from its founding, it's been a hardware company, and you could easily argue its weakness has been on the software and services side. But look, everything you do on an Apple product is in some way kind of powered or informed by AI. I'll give you, like, a very good, example of this. They're going to have this new feature in the iPhone software coming up, where you can record snippets of your voice, and then it can talk back in your full voice. This is an accessibility feature, but it is powered by a lot of the same or similar AI technology that we've been seeing from the other big tech peers, Tyler.

Steve, thank you very much. Steve Kovac. Appreciate it. The other big earnings out last night, of course, Amazon. And that stock absolutely jumping today. Dear Jabosa has more in tech check. I loved reading the trader notes on this dirja because they were like, you know, cloud is bottomed and margins. Wow. What I mean, there was just so. And then they said, hey, this is now as tradable as meta and some of the other, you know, former fang components.

You know, Kelly, that hits a nail on the head. This is Amazon's time to shine. I want to show you where we're coming from. Take a look at the last one year of the mega caps. And you will see that Amazon has been a serial underperformer. Go back even further than that five years. And Amazon, it is that white line. It has underperformed because it has put so much money into doubling its network capacity,

its logistics footprint. That has really hurt profitability over the last few years. But this quarter, everything came together. Efficiency. It's now delivering faster than ever. And to boot, AWS growth rate has stabilized, which is what investors really wanted to hear. So the core e-commerce, more efficient, better margins there. The profit machine, AWS, stabilizing.

So it's kind of a perfect start. which is why you are seeing shares gain so much. And, you know, it's not surprising that maybe you're seeing Wall Street analysts ask, is this going to be the outperformer over the next few months? Because it has lost ground over the last year and five years. So, Kelly, a lot to pick through there, too. Advertising, $10 billion. So that continues to be, you know, a much smaller,

but another high-margin, high-growth business for the company on top of AWS. So me, I don't want to say flip-side, but I was looking at Open Door. A tough day for the stock. which is only a couple dollar stock at this point. What's going on there? Okay, so Open Door was a huge pandemic winner. As most of our audience knows, the stock once traded at nearly $40 a share.

But even with a more than 200, at 1.300 percent point gain this year, it is well off those highs. And look at it, it's under four bucks. At the heart of that longer term decline, our questions about the eye-buying model, one that lets homeowners sell their homes directly online and very quickly, in a seller's market, like the one we are in right now, inventory is low and supply is tight, home buyers, they could be leaving table on the money,

money on the table, excuse me, if they go with the eye buying model. So in her first broadcast interview since becoming open-door CEO, Carrie Wheeler told me that they only need a slice of sellers. This is a $2 trillion market, 99% offline. That is our competitive set. We need a slightly bigger slice of what is an enormous pie. Today, our Tam within that housing market is $650 billion. We are across 53 markets with less than 1% share. So again, we don't need all sellers.

We'd love them to get them someday. We don't need all sellers. We need some of them to be able to take our offer. And I think there's no shortage of seller demand in what we see. So that Tam, she cited, $650 billion, maybe investors, saw a closer horizon. and to get there a few years ago, it does feel like it's going to take longer, especially in the kind of market we're seeing right now a seller's market. But she said that housing is the last big sector that is yet to be disrupted by the internet. Certainly, that's the case when you

look across PropTech. All right. Thank you very much, dear Jabosa. A judge making a ruling in the government's case against Google. Let's go to Aman Javers to explain what's happening. Amen. Hey there, Kelly. A big win for Google here just coming in in court. This is the 60-page memorandum opinion that just crossed the wire here. What it is is an opinion in the ongoing Department of Justice case against Google. And the ruling here is that some of the claims that the government was making are going to have to be thrown out, right? So that's going to limit some of the exposure here that Google faces when this case goes to trial. And ultimately, just got off the phone with some folks over at Google, they believe that ultimately what's going to happen here is that

the scale of what the government can do, if there's an adverse ruling against them will be a lot smaller here as a result of this opinion in court today. We'll wait and see what all the other players in the case have to say about it. It's very complicated ruling, as you can imagine, 60 pages of antitrust legal jargon here for us to sort through, but being viewed right now as a win for Google and limiting the exposure that they might face at trial. Not to put you on the wrong foot, but is there any one particular thing that was thrown out that stands out to you as a biggie? Yeah, one of the issues here was whether or not Google's positioning of search results

had an adverse market impact on people in the marketplace, right? And if you can't prove that, then you can't say that Google's doing anything wrong here, ultimately, or that has any real antitrust impact to the consumer out there in the world. The folks at Google feel like that was the key win here for them, is that the court ultimately sided with their view of the world, which is that any ranking or prioritization that they're doing in those search results doesn't have a real-world market dollars and cents impact on consumers. And so therefore, any ruling that the government makes or that the court makes at the end of this

won't really go to that search prioritization issues. So they won't have to change the way they do search at the end of this case, even if the case goes against them. That's my understanding. And it's relatively limited, Tyler. So I'm going to leave it there. Amen, thanks. Amen Jabbers.

Up next. Reaching a boiling point. The UN chiefs saying we've entered the era of global boiling, not to oversell it. The extreme heat placing a new focus on water stocks. With the S&P Global Water ETF actually hitting some new highs in recent weeks, we'll break down the moves for you next. All right, July, officially now, the hottest month on record and as temperatures worldwide sore, more focus is being placed on water scarcity, and Pippa Stevens joins us with more.

I guess water is the ultimate commodity. Yeah, that's true. Temperatures and drought often go hand in hand. And with worldwide water demand growing, scarcity concerns are on the rise. That's leading to more interest in companies that update water infrastructure and make operations more efficient. Three funds that track the space, the PHO, FIW and CGW, all hitting new 52-week highs in the last week. Now here in the U.S., there's a water main break every two minutes leading to six billion gallons of treated water lost each day. that's enough to fill more than 9,000 swimming pools.

Overhauling pipeline systems is a massive undertaking, and the gap between what's needed and what's been spent is forecast to reach more than $400 billion by the end of this decade. Now, on a stock-specific level, there are lots of different types of companies involved in this space. You've got the utilities like American Waterworks and California Water Service. Companies like Xylem and Franklin Electric make pumps, sensors and other equipment for water systems,

While Badger Meter and EITRON specialize in metering and software technology, this is both the consumer and business stories, since businesses, all industry, also requires water. Is there much appetite in municipality states to do the kind of infrastructure repair, or is there the money to do the infrastructure repair that you just mentioned, $400 billion worth? Well, in many places there is not that money. And, you know, they are raising rates, but a lot of the time it's where we most need to have more spending is in disadvantaged communities. so that can be a challenge. And of course, there are, a lot of these industries are highly regulated, so you can't just raise rates overnight to a big degree. But, you know, these systems were, some of them were built decades ago.

And they also weren't. Yeah, exactly. And they weren't made for the changing climate conditions. So they're subject to things like flooding. And so that's why there's so much focus on efficiency. It's identifying where is the leak happening. How can we make it so that we can conserve more, preserve more, and then recycle more so that we aren't tapping into the resources as much.

And no one anticipate, I'm not saying no one, but many people did not anticipate the population growth that has happened in, for example, the southwest, southern California, fed by the Colorado River, which has been dramatically affected by drought. Exactly. And we have all those new chip factories opening up in places like Arizona. And so there's a lot of move down south. And yeah, those are the areas that are most at risk of water shortages. And a lot of need for water. Pippa, thanks. Let's turn to the markets now. We saw them peak around 1 p.m. Eastern time, but there's. those gains, which for the Dow was as much of two-thirds as 1 percent, have slowly evaporated, and we've now turned negative. Dow's down 38 points. And take a quick look at Apple as our Bob Bassani points out. This one, a bit of a tell for the whole market.

We don't want to blame Apple and say it's all their fault, but the shares are down 4 percent now to $183 after nearing 200 in the last week or so prior to last night's earnings report. Meantime, let's get to Contessa Brewer for the CNBC News Update, Contessa. Kelly, thank you. Chris Christie made a surprise visit to Ukraine today, which makes sense. him the second Republican presidential candidate to travel there during the Russian invasion. The former New Jersey governor met with President Volodymyr Zelensky in Kiev. Christy says he wanted a firsthand look at the war and reiterated his support for the country.

In June, Mike Pence also visited Ukraine and met with Zelensky. Niger's ousted president says he's a hostage and he's calling on the United States to rescue his country after its democratically elected government was taken over during a coup last week. The military group that sees control isn't backing down. It's seeing demands, though, from a block of West African leaders who've given that group until this weekend to reinstate the president. And 115,000 people are descending on Chicago this weekend, Lollapalooza Music Festival. This one could be the largest ever.

The city is permitting an additional 15,000 people to attend in exchange for keeping the festival in the city for another decade, according to reporting from the Chicago Tribune. I was just looking, you've got Billy Elish, Kendrick Lamar, red hot chili peppers, and a long wait list, Kelly. So if you didn't already get your tickets, it's probably too late. I'm not a music festival person. No.

It's hard for me to navigate. It's loud, you know? I sound like such a grouch. But there are plenty of other people would take my seat happily, I think. That's true. It might take it. Contessa, thanks. Still ahead on Power Lunch.

Help wanted for now. The next era of automation is about to arrive, but first, companies need workers to build the robots who will eventually replace them. Details when Power Lunch returns. All right, let's go to Kate Rooney now for a market flash on shares of Carl Icon's Icon Enterprises. Hi, Kate. Hi, Tyler, Icon Enterprises, down more than 20% after slashing its quarterly dividend in half to a dollar. Also reported a surprise, quarterly loss and revenue that missed estimates. in a statement, billionaire, chairman, and founder Carl Icon says the second quarter

partially reflected the impact of short-selling on companies we control or invest in, which I attribute to the misleading and self-serving Hindenburg report concerning our company. It also reflected the size of the hedge book relative to our activist strategy. Hindenburg first sounded the alarm about Icons' investing arm back in May, saying that IEP used, quote, Ponzi-like structures to pay dividends and accounting techniques to inflate the value of their assets. ICON has firmly denied that. He says the firm now plans to, quote,

stick to their knitting of corporate activism. Icon's bet that the market would collapse this year has been a losing one. Back to you. All right, Kate, thank you very much. Kate Rooney. Meantime, the return to office fight is raging on. Companies are trying everything to get workers back in person.

Some are using force. Others are using flattery. Google is trying something totally new, bringing home to the office with a hotel offer. CNBC.com tech reporter Jen Elias is here to discuss. Jen, what are the details of this? Yeah, Kelly, that's right. Google is hoping to bring employees back to the office

and one way is through its on-campus hotel, which it first opened last year. So what they're hoping with this is offering a summer special for employees to stay in a room for $99 a night in Mountain View near their headquarters. And really, they're just hoping that this kind of helps employees transition to hybrid work. And they're doing it because they have been trying to be more strict in asking employees to come to the office. But as you know, sometimes these companies have to walk the tightrope and try to flatter employees, try to remain flexible,

but also, you know, are trying to get employees back into the office, especially during this time where there's this incredible AI arms race. I don't understand what the hotel is doing to attract people to work. Is it people who literally live in a different state and in order to come into the office need a cheap place to crash? I don't understand what the perk is. Right. A lot of Google employees moved out of the area during the pandemic. And part of that is increasingly high housing costs, especially in Mountain View, where the housing supply shortage is even greater.

So, you know, it's been a work in progress of the company trying to get employees to move back. and cracking down, even asking, you know, approved remote workers to come back and consider reversing that. So for employees, they say that this offers them, you know, a room to stay a little cheaper than what another room they could get at some other hotel in Mountain View. But so far, some employees also don't seem very convinced that it's a good deal. Do we know what the uptake has been, number one? And I assume Google is the owner of this hotel?

Yes, Google's the owner. It's smack dab on their campus. It's specifically for partners and full-time employees, but no, they haven't shared with us what, you know, what the take has been or what the occupancy rate is. All right. I guess if you're charging basically 100 a night, if you stayed there 20 nights a month, that's $2,000, probably beats rent in some of the more expensive areas of Silicon Valley. Jen Elias, thanks. Appreciate it. Sure.

All right, coming up, help want it. As AI and automation continue to rise, will robots take our jobs or help create new ones? The only time we'll tell, of course, but in the meantime, someone needs to build the robots. We're going to hear from some robotics companies in need of human health for now. Power don't you be right back. Welcome back, everybody, with AI and Automation on the Rise. An age-old question is back on the table. Will robots take our jobs or create new ones?

Maybe a bit of both, of course. Kate Rogers here to explain. Hi, Kate. Hey, Tyler, we're here at Zipline in South San Francisco. go, the company uses robots to change the way deliveries are made to make them both faster and more environmentally friendly. Now, here at their manufacturing facility, workers are working on parts for their autonomous delivery drones, which have been used to deliver vaccines to hospitals and also e-commerce

deliveries, big companies like Walmart. Zipline is looking for 100 workers right now in robotics roles, from electrical engineers to data logging to customer application. Its CEO says the technology enables a better paying safer job for the future. Before we were using a human to do one delivery at a time, driving a car one at a time to go and make deliveries. Now we're training that human to maintain and manage a fleet of robots so that human can now do 50 deliveries in an hour rather than five. And that enables us to pay that human a lot more. These are jobs that people actually really want.

Now automation advocates say robots and automation can help remove more menial tasks from some. jobs to make workers more productive instead of replacing them all together while keeping companies competitive jobs are available in engineering roles programming helping to integrate AI into these robots even maintaining them once they're being used at companies all over the world guys back over to you so how do these zip lines work the drones I'll do my best to explain it Tyler yes via drone so this is the basket where the package would be housed these are the original zips a delivery is being made

in one of these. The company says every 90 seconds all around the world. This would be launched from one of their launch pads. The package would live in here. It would drop via parachute. This would then return back to its nest. I want to show you something else, though. This is the P2. This is the next generation delivery droid, which is going to be out next year. Companies like Sweet Green are going to be using this. They say it can cover a 10-mile delivery in 10 minutes or less. And most importantly, they say the cost is about equal for what you're paying for a salad to be delivered today, guys. That's what's going to be my question. I mean, there's a lot of technology and engineering here, and these devices clearly look like they are not exactly cheap. How is it likely

to raise the cost of an item I buy, if at all? Well, the company, Tyler, is private, so they're not releasing all of that cost data right now. But again, for this next generation droid that's going to be used next year, they told me the cost for a salad delivery would be comparable to what you're paying for delivery today. Real quickly, I see one person working behind you. How many people are actually involved in building these things? Kelly, great question. I'm not sure how many people go into creating actually one of these products,

but they are hiring again for 100 roles. There actually are quite a few people here, but just one behind me on the floor right now. But again, a lot of manpower goes into making these operating them. And remember, the logistics and design all in-house here, too. So there's a lot of opportunity outside of just the fabrication part. Yeah, obviously it's ironic to be manufactured. your own demise, but even then it shows how the modern factory has become so labor efficient,

shall we say. Kate, thank you very much. We appreciate it. That's right. Kate Rogers reporting. Coming up, traveling, gambling, paying shares of booking holdings, draft kings, and block are all moving on their results as this market turns lower, dows down 100 points. Three-stock lunch is next on the other side of this break. Welcome back, everybody, and it's time for three-stock lunch. We're going to look at three big movers today. With our trades, we turn to Malcolm Etheridge. CIC wealth executive vice president and a CNBC contributor, Malcolm, welcome. And we'll start with Draft Kings. Up about 2.5%, the stock was a beat and raise on results.

How do you feel about being an owner of this one? Yeah, I consider that one a buy. I don't want it personally, maybe just yet, but coming off a strong Q2 earnings report where they not only beat expectations, but also raise guidance for the remainder of the year, and who doesn't love a beat in the race. Plus, they're heading into football season, which I know is prime. time for their business model, right? And it's when they tend to see bigger bets and higher with higher profit margins. So I think if they can finally make this the last year of losing money

and finally turn a profit heading into 2024, Draft Kings might actually have something here. Stock up nearly 3% right now. Up next, booking holdings, the stock making big gains after robust second quarter results. The CEO telling CNBC the company sees no signs of travel demand slowing. So Malcolm, what do you think? Yeah, I consider this one a hold. I saw Glenn Fogle on the network this morning, touting the blowout earnings quarter they just had. And in fact, on the call, they said it was a record-breaking quarter. But my concern is the mixed picture we've been getting from the airlines as far as international versus domestic travel. Plus, I think the excitement is going to fizzle out in the back half of the year as the

consumer runs out of firepower, right, and a willingness to spend at all costs like they have been. And so we've already started to see some of that happen in retail and dining numbers coming out of Q2 earnings. I expect travel to also be on that same list. Okay. Let's turn to Blockben, where we see, you know, talk about pressure. They're down more than 12 percent, even after they reported pretty strong quarterly results. What do you think is going on? Would you be a buyer here? I'm with the crowd. I consider this one a sell. Despite the strong Q2 earnings, it just posted. I think it's easy to just look at the sell-off that happened and say, you know, PayPal reported.

And so they're just a victim by association. But I think the guidance they gave for the rest of the year doesn't sound as good as the first half. And that shouldn't bode well for block shares going forward either. They still have to address their shrinking margins, which won't be easy to do since their customer acquisition costs, they still haven't been able to get those under control. I know that they had good numbers and increase in subscribers for cash app, but at what cost? And so admittedly, I'm not all that constructive on the payments names altogether, but this is one that I just, it would be at the bottom of my list if I was going to buy into that sector. Would that extend to Square then, as you mentioned, you're kind of concerned about the whole area?

I'm concerned about PayPal. I'm concerned about square slash block or whatever, you know, whatever we'll call them later. And I think the ecosystem in general, the acquisition costs for that next customer who doesn't already know about these services is just way too high to be constructive on the space and decide that now is to time to put new capital to work in that sector. We're looking at the Dow turning negative by 75 points now. What is your overall view of the market today in light of a week where we've seen U.S. debt downgraded, and on the other hand, a very sort of Goldilocks-ish jobs report? Yeah, I think coming out of Apple's earnings yesterday, we got about what we expected to get. They didn't have the best guidance. They didn't have the best revenue numbers.

And the market is responding in line with what Apple's share price is doing, simply because they reflect so much of the market and say a lot about what they expect consumer strength to be. Yeah. All right, Malcolm, thanks very much. We'll leave it there. For now, we really appreciate it. And this quick programming note, don't miss our CNBC special Taking Stock. Mike Santoli and Josh Brown will break down all the day's big stories in a way only they can.

That's at 6 p.m. Eastern tonight. Don't miss it. We will be right back. We've got about four minutes left in the program, a bunch more stories we'd like to share with you right now, so let's get right to it. Alphabet, pairing back large positions, who knew, and multiple publicly traded firms, including 90% of its stake in Robin Hood, the trading platform. This according to SEC filings, Alphabet also trimmed positions in 23 in May and Duolingo. It sold 4.3 million shares of Robin Hood in the period ending June 30th. still holds more than 600,000 shares. Now, Robin Hood has struggled since its 2021 IPO,

but did turn its first ever profit in its latest quarter. But I guess Google or Alphabet saying we don't want to be quite as exposed to other stocks as in the past. I think these moves make a lot of sense in bull markets, you know, bull IPO markets to have sort of in this portfolio of holdings. But they get tough when the markets turn and investors probably want them to streamline. I think Uber had a bunch of these that helped their results recently as well. So I don't know if we'll see quite as much of this going forward. Meanwhile, Huawei's plotting its smartphone revival in China with a new mobile operating system and enhanced AI assistant. The embattled telecom names still struggling after those American restrictions cut them off from Google's Android operating system.

I guess if it works in their whole market, that's a pretty big market to take. It's a pretty big market to work in. And it's one of the top three, maybe I don't know where it fits in terms of. of overall sales globally, but their system, Android and Apple, of course, the big ones there. Rough day for some of the EV makers, Nicola, I hope I'm pronouncing that, right? Yes. Ricola, like the cough drops, I don't know. Falling sharply, lost more money than last year.

Sales were lower than last year. The CEO, stepping down, Fisker also lower. After missing on sales and production targets, said not a good day for Nicola, down 16%. Fisker also down about 6%. I don't know whether you can say a shakeout is coming in the EV market, but it certainly feels as though the dominant companies are going to be Tesla and some of the legacy automakers, whether it's Kia, Hyundai, Audi, VW, and so forth. I mean, it's massively capital intensive, and Tesla built its business during a decade of very low interest rates. And it still almost went bankrupt several times. So with the financing

being the way that it is right now, it's going to be tough for these companies to overcome that bogey. Meantime, large swaths of South America are now experiencing an unprecedented heat wave, much like the U.S. and Europe earlier. The difference is it's wintertime now down there. It should be relatively cold, but parts of Brazil are expected to top 100 degrees in the coming days. Similar temps in Argentina, Chile, Paraguay, experts say it's thanks to Global Warning and El Nino. It's really amazing. I mean, we just reported earlier that this was the July was the warmest month on record. I believe sea temperatures are the warmest they have ever been measured. as you average them across everything.

So the planet does seem to be getting hotter. Yeah. All righty, NFL superstar Aaron Rogers, embracing his new role with the New York Jets. He got a lot of airtime last night on that preseason game. Oh, yeah, he didn't play, but there he was. You know, he was talking. They interviewed him and so forth.

Mike Tariko and Chris Collinsworth. Making himself at home in the Garden State. Welcome to the Garden State, Mr. Rogers. According to the New York Post, A quarterback recently purchased an eight-bedroom, 10-bath home in Montclair, New Jersey. We're in that area. Someone else I know. Really the area for $9.5 million.

I know some people there. The new build reportedly sits on two acres of land and features more than 4,000 square feet of living space. It also has skyline views of New York City, though he'll be playing, of course, his football games on the other side of the river at MetLife Stadium. The view from his house also includes MetLife Stadium, may I say. Well, just saying. All I'm saying is we welcome him. We are happy to have him. We hope he can pull this off.

There is no small amount of pressure on this man. Have a great weekend, everybody. Thanks for watching.