US Loses 23k Jobs in Surprising(ly bad) Employment Report & John Oliver Takes on Buc-ee's

This episode is brought to you by Google Chrome. You think you know a browser, but Gemini and Chrome, that's new. It can help you with practically anything on the web, like restoring a vintage motorcycle from a 50-page restoration block, or finally break down that long article you've had open for weeks. Gemini and Chrome is here for it. Ready to make anything online make sense? There's no place like Chrome. Check responses, setup required, compatibility and availability varies 18 plus. Good morning, Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, that wasn't supposed to happen. The U.S. is now losing jobs. Then Buc-ee's versus John Oliver is the trademark battle you did not see coming. It's Monday, August 10th. Let's ride. Y'all are gonna hate me for this, but it's something you should be aware of. Tonight in New York City, the sun will set at 8 p.m., the last 8 p.m. or later sunset until next May. It was a good run while it lasted. If there's a silver lining, it's that this brutal heat and humidity looks to be on the way out, and we'll see below normal temperatures through the end of August. Toby, you know what they say. Winter is coming. It's at this point of the year that I realize I have not been picnic-maxing enough or rooftop-maxing or waterfront stroll-maxing. I mistook a season for a permanent state. And in that folly, I missed what the daylight was whispering to enjoy. Do not repeat my mistakes, everyone. Gather your fruits while they are ripe. And now a word from our sponsor, Rubrik. Cybersecurity as we know it is dead. But it was so young. It's a figure of speech, Toby. No one died. But the truth is the old model was built on protection. Safety nets, recovery plans, systems designed to withstand the last era and maintain the status quo. The AI era demands confidence that you can secure and accelerate. Your business operations so nothing stops your momentum. Rubrik can give you all that confidence. Their platform helps you keep going by securing your data, controlling your AI, and protecting your identity built as one architecture, not stitched together after the fact. To learn more about how Rubrik rewrote the industry rulebook, head to rubrik.com slash mb. That's R-U-B-R-I-K dot com slash mb. The monthly jobs report dropped on Friday, and it was really, quite bad. However, there's a lot going on beyond the headline numbers, so we're going to have to make like your therapist and unpack a few things to find out what's really going on in this labor market. First, the headline numbers, a huge miss. The U.S. economy lost 23,000 positions in July, whereas expectations heading in were that up to 85,000 jobs would be added. Meanwhile, the reports for May and June were worse than initially thought, revised down by a combined 103,000 jobs. The unemployment rate? 4.1% down from 4.2%. That's historically low, and an indication that pretty much everyone who wants a job in America can get a job. Here's the problem. A whole load of people aren't looking for a job anymore. They've vanished from the workforce. Probably the biggest takeaway from this jobs report was the decrease in the labor force. The labor participation rate, which is the share of the population working or seeking work, fell to its lowest level outside of the pandemic since the 1970s. This year alone, 1.4 million Americans, have dropped out of the labor force, likely driven by two factors, Trump's immigration crackdown and a bunch of boomers holding their retirement parties. That makes that 4.1% unemployment rate look a little worse than it appears, since there's just fewer people actively on the hunt for a job. Toby, I feel like I was reading Dostoevsky with this jobs report. A lot to parse through, but ultimately, still depressing. Let's go talk about the average monthly job gain that we've seen over the past six months. It's just 44,000. And if you look, at the grand scheme of history in the United States, that would have been looked at as alarmingly low. But a lot of economists are saying, actually, do not panic. And not only should we not panic, 44,000 may just be a relic of times gone by. Some are saying that the economy only needs 15,000 jobs per month to keep unemployment stable. Where are those numbers coming from? As you mentioned, a lot of people are leaving the labor force. Low job growth isn't in and of itself, necessarily a bad thing because there's two ways for an economy to grow. One, you can add more workers. Or two, you can have higher productivity. And that's where a lot of economists are hanging their hat on saying that, hey, there's this technological revolution coming. It's called AI. That will help boost productivity. That will carry more of the burden and allow the economy to continue to grow. So that is why you are seeing not a five-alarm fire that the economy is only adding 44,000 jobs per month going back the last six months. Because productivity can step in and carry that extra weight. Let's break down where the jobs were added, where the jobs were lost in July. We know that on net, they were down by 23,000. Looks like AI is adding a few jobs. And where you can see that is in construction, actually, because of all these data centers going up. We know from the GDP report last year, or last week, that AI and computer buying, computer purchasing, and computer investment accounted for like half of all economic growth in the last quarter. You can see that in the jobs report, too. We know from the GDP report last year that AI and computer purchasing added 22,000 jobs manufacturing, added 5,000 jobs healthcare, which has propped up the entire labor market for the past years, added 22,000 jobs professional and business services, up 18,000. Let's get to the negatives, because there were more negatives than positive. There were declines, surprising declines, in retail and leisure and hospitality. Leisure and hospitality lost 40,000 jobs. Remember what was happening here in July? We had the World Cup. That was like the biggest leisure and hospitality event in years. So economists are wondering, you know, what? What kind of happened there? I thought everyone was going to bars and staying in hotels and staying in Airbnbs. But the biggest decline was in local government education. That shed 49,600 jobs. So it was really the government that lost jobs last month. Private sector employers were actually up on net. But if you look at that big number, 50,000 jobs that government lost, local government lost in July, that was really the number that brought down this entire jobs report. That's why economists were also not so alarmed about this, because they're saying private sector, employers were adding jobs. The government lost jobs, especially in local education in July. Maybe that has something to do with seasonal effects or teacher turnover, and it might be revised up the way we saw a ton revised down this month. So we've sued the fears a little bit, but let me just bring them back for you because I mentioned AI is the hope, but it still hasn't shown up yet. Obviously the investment in AI is boosting the economy and boosting jobs, but the actual productivity gains have not necessarily manifested themselves yet. So that's still a big question. Mark, the other thing too, is you mentioned that baby boomers are leaving the workforce. What happens when they leave the workforce? They become retirees. You need workers to support retirees. And if you have fewer workers doing that, that's how you kind of go down the path of becoming Japan, which has struggled under the burden of an aging population for a long time. So the risk is to if unemployment remains this low and even falls even further, because the workforce is shrinking, that could jack up wages as well. And remember, there's two parts of kind of the feds, which is the labor market study, but also keep inflation in check if wages go up, inflation pressures could return, which brings in a lot of question marks around rate decisions as well. So a lot going on in this one jobs report. You can look at it as a doomer or as an optimist. Uh, both exist there for that interpretation. The question is what, what happened to these million people who left the labor force in the last two months? You know, there, there, there might be the immigration crackdown, there might be the retirement, but, but economists are saying there's something else going on and cracking that could unlock, unlock a lot of more information insights around what is happening in this economy. Let's move on. It's a winners of the weekend time, the segment where Neil and I pick two stories that had a better weekend than someone who took advantage of the post APM sunset. My winner of the weekend is the AI wonder kid at Leopold Ashbener, who is still a hot commodity despite his hedge fund nearly blowing up. Ashbener is the 25 year old who put a lot of his eggs in the AI basket, running his fund situational awareness up over 400% before a combination of a market downturn and his use of leverage forced him to liquidate most of his public holdings. But rather than being a cautionary tale, it looks like he's getting another chance. According to Bloomberg, investors are already lining back up to put money into his fund less than a week after it imploded. There's this hero's archetype. Logan Bartlett, an MD at a VC fund told Bloomberg, and now that Leopold has been punched in the face, there's a rallying behind them. Silicon Valley in particular looks more than willing to give Ashbener another go around. In contrast, to Wall Street, which is a little more skeptical, Silicon Valley and Wall Street are both reacting differently. Gig me gonna an adjunct professor at NYU Stern said in an interview at the court, Silicon Valley rewards being directionally right about transformational technologies while Wall Street rewards generating attractive adjusted returns while preserving capital retail traders too are staying on the Leopold hype train. More than 5,000 traders are still copying his portfolio on the app autopilot, which lets you mimic famous models. For example, he's been making a lot of money in the last three years. He's also made a lot of money in the last 10 years. general population knew who Leopold Aschenbrenner was before his hedge fund almost blew up. Now they know who he is. And a lot of investors are looking at his portfolio and his thesis on AI becoming generationally exponential growth over the next couple of years. And they're saying, I think this guy actually has a pretty good thesis. Yeah, he took some lumps in July, but he looks smart and he is contrite about what happened. So maybe I'll throw some change his way. Well, the other thing that helps too is that AI hedge funds have been printing money. Situational awareness wasn't the only one that was up big. There's another one called Value Aligned Research Advisors that had $26 billion under management. That fund is up 194% through this June. S&P 500's up 10%. So investors aren't dumb. They're looking for outsized returns. Leopold did generate that for a long time before he got a little over his skis. And he said that the experience of blowing up as a hedge fund is a little over his skis. And he said that the experience of blowing up as a has yielded very expensive scars and invaluable lessons. They think he's a smart guy and they think they want to ride with him going forward. I also think the autopilot of this all is interesting. So there's this app that basically lets you copy trades of famous people. I just say famous people because you can copy Leopold's trades or you can copy Nancy Pelosi's trade. Nancy I love the Leopold roller coaster because it gets smoothed out a little bit. Autopilot doesn't use leverage. It doesn't short stocks. It basically just sees whatever's in his 13F filings. It's on a delay. And so you just pick the stocks that are in his basket. And that portfolio has done pretty well. It fell 30% in July, but it's still up 53% since its launch back in March. So if you're not leveraged, then you don't have these massive swings that Leopold does. They are still riding with their guy. I love how Leopold is just, he's a one name guy. He's a one namer. And I hope he's having a good time on his honeymoon. Maybe it's going to the moon. All right. My winner is Burger King, which has dethroned Wendy's as the second largest burger chain in the US. Can it take down McDonald's next? As of Friday, Burger King has more system-wide sales than Wendy's, CNBC reported, sagging back the two spot it held until six years ago when Wendy's claimed it. These are two chains going in opposite directions. BK is on a revamped Whopper and improving its ingredients and customer service across the board. Same store sales are up for five straight quarters. And last week, it posted booming 8.5% sales growth in the most recent one. Wendy's, on the other hand, revealed on Friday that US comparable sales plunged 7% in Q2, making that six straight quarters of declines. New CEO Bob Wright, who was brought over from Potbelly's to turn things around, gave his company a D minus when it came to performance. He said, our quality differentiation has eroded. Our value proposition has weakened. We've lost our value proposition. We've lost our and we have not consistently delivered the experience customers expect from Wendy's. Both chains trail McDonald's by a long shot, but even so, the resurgent Burger King is closing the gap. Remember how I said BK grew sales 8.5% last quarter? McDonald's rose just 0.8% and replaced its US boss to figure out what's going wrong. Toby, watch this throne. So I know Burger King just passed Wendy's, but Wendy's is really struggling. So I actually want to talk more about Burger King's versus McDonald's because that seems to be a more compelling battle at this point. And even though the gap is very large right now, Burger King made the correct strategic decision to focus on doing one thing very well. And that one thing was make the Whopper better. That's their most famous burger. It's their most famous product. And they went down to every single detail. They made a better bun. They made creamier mayonnaise. They had fresher vegetables on top. They even switched from paper wrapping a Whopper to putting in a box. So the burger doesn't get smushed whenever you're transporting it. That approach has done very well. They think that they're winning back customers that long ago ditched the brand. They also think they're taking customers away from McDonald's. Meanwhile, McDonald's has tried everything. They launched a McValue menu with 10 items under $3. They had the big Archburger that remember its CEO took a very small bite of. They have six new caffeinated beverages that they're trying to throw at Gen Z. So they're doing a lot. They're throwing a lot of things at the wall, but nothing is sticking. But like just making your best burger even better. Yeah, I thought this was interesting from both McDonald's and Wendy's reports. They said that these collabs and tie-ins with pop culture references like movies and sports just really weren't driving traffic the way they used to. So Wendy's had this big tie-in with Minions and Monsters, and that just kind of fell flat. And similar, McDonald's said all of our promotions, our value menus are you think you could just throw Grimace out there and people would come flocking to McDonald's, but that is just not working anymore. Burger King actually had a successful one of these working with Star Wars for a Mandalorian movie that came out. So it's not it's not really the days of old where you could just throw in any pop culture tie-in and have it work. So these fast food chains are going to have to reevaluate their promotional strategies. That seemed to be a very interesting part of this report to me. That's why analysts are so bullish on Burger King to one bursting analyst said that this feels like a proof of concept durable growth driver because most of Burger King's new traffic came from just a normal. Normal customer base. What that means is that they did it without heavy discounting. They did it without this crazy promotional machine spinning up and trying to get customers through the door. They barely raised menu prices, too, and we still saw those sales go up. So it's a very durable moved at McDonald's and above Wendy's. It's not something that's built on the backs of a one off promotion. Still got a long way to go to catch McDonald's. As of twenty twenty four, McDonald's held about forty eight percent of the U.S. burger market compared to Wendy's at the time at eleven point four percent. And Burger King had ten percent. I thought it was closer than that. I'm not going to. We said all this thing like Burger King's coming for the throne. It's really not close. All right. We're going to take a quick break and come back with a story about Buc-ee's right after this. You think, you know, a browser, but Gemini and Chrome, that's new. It can help you with practically anything on the Web, like restoring a vintage motorcycle from a 50 page restoration block or finally break down that long cycle you've had open for weeks. Check responses set up required compatibility and availability. Various 18 plus. This episode is brought to you by Palmolive. Family time isn't just the big moments. It's weeknight dinners sitting around the table, everyone talking all at once. So when the plates are empty and the sink is full, use Palmolive Ultra. Palmolive's most powerful formula removes up to ninety nine point nine percent of grease, leaving your dishes sparkling clean. And the new convenient pump makes cleaning even easier so you can spend less time tackling dishes and more time together. Shop now at Palmolive dot com. 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That has included more than a dozen lawsuits targeting cartoon animals, including chickens, ducks, dogs, alligators and even a moose. They've even gone after a business simply if their name ends in ease. While Bucky's enjoyed a lot of favorable PR around the World Cup with its plethora of food options and sheer size delighting visitors, its history of targeting small convenience chains also caught the attention of John. Oliver created a brand that sold merch adorned with a squirrel mascot named Mr. Nutter Butter that looks like a beaver emblazoned with the phrase buck off, essentially begging the gas station giant to sue it. So far, Bucky's hasn't taken that bait, but has continued to go after smaller chains, this time targeting beavers mini mart in Beaver Creek, Ohio, that according to locals has been a staple of the city for decades. Plenty of big brands do this because the sheer imbalance in resources usually results in smaller companies rolling over without a fight. But Oliver's attention means this trademark bullying is finally getting a spotlight shown on it. Neil, do you think we're in danger of being sued since our show's name is Morning Brew Daily? I think we might be safe because we don't own a store in one of the states that Bucky's is opening up a store in. And I think that's the subtext here is that Bucky's has grown from this one gas station to just a national empire. They have, they're in 12 states now and they want to open up 24 more stores. So when they go into a new state, like they just did in Ohio, they really throw their weight around and find anything with a animal mascot to sue. I mean, if there's a Zootopia 3, they will absolutely be the villain. I think it's worth going through some of the specifics about the companies that they have sued. And there have been at least a dozen. They sued Super Fuels in Dallas logo, Brown Dog with a red cape, a liquor store in Missouri named Duckies, which had a cartoon duck sunglasses. Choke Canyon Travel Center in Texas, they have a cartoon alligator wearing a cowboy hat and nut huggers an oklahoma-based underwear company with a mascot of a squirrel i think we're gonna need to look more into that company but recently it has been this stuff in ohio that's drawn a lot of criticism and also alerted john oliver as to what bucky's is doing i mean they are suing this company for beavers mini mart in beaver creek ohio for having a beaver logo and having beaver iconography this is it's the town is called beaver creek ohio the the the there's beaver statues all over town the high school is all themed about beavers so that's just one reason why people are saying look bucky's like you are really not picking on someone your own size so why are they doing this if a lot of their claims probably would not stand up in court and the reason is is that most lawsuits end in settlements if you are the bigger entity here so smaller companies don't want to fight though they'd rather change their branding than go toe-to-toe with a well-resourced well-funded legal team because even if they might win in court it's going to cost them tens of thousands of dollars uh and that pressure alone is enough to change their their branding the one risk for bucky's though if someone does stand up and someone decides to fight they could end up shooting themselves in the foot because if you go to court with someone the court more clearly define the limits of bucky's trademark rights and if that happens then you can't just go spray and pray and sue people willy-nilly so that's the risk that bucky's is running if they do too much of this maybe they'll get bit in the beaver butt and it will come back and you'll say like okay you can't go and sue this moose brand because clearly you need to have be beaver iconography as you put it uh in order to go after another company so most of these gas stations and stores that bucky's has soon had had sued have settled but now at least one is gonna fight and maybe it'll go to court we'll we'll see the ceo of mickey's which is a gas station in northern ohio said we've been challenged by an out-of-state corporation questioning the very identity and symbols that have been developed by our family since i was that kid on a milk crate years ago we intend to move forward as the mickeys you've always known we aren't going anywhere and i think what was funny about this is so john oliver picked a fight with bucky's and bucky's has not taken the like he wants to create he wants them to sue john oliver but instead last week they go ahead and sue another small gas station just just extending this cycle that john oliver pointed out in the first place you kind of bared the lead to mickey's mascot is a moose that's the company that has a moose mascot so one commenter was looking at this it goes a beaver is not a moose how the heck could you possibly sue but again that just shows the extent of bucky's you know trademark battling it's monday so here's what you need to know about the week ahead after that stinker of a jobs report incoming inflation data will take on even more importance on wednesday the consumer price index report will drop for july revealing the ongoing impact of the war in iran on the cost of goods a hotter reading would bolster the case for a fed rate hike while cooler results could encourage the fed to hold on a little longer yeah according to a financial times report citing people familiar with fed chair kevin warsh is thinking the fed he remains open to an interest rate hike in september if inflation data over the coming week runs out hotter than expected the the thing is is that it probably will because it's like the tim robinson meme where he's in the hot dogs he was saying we're all looking for the guy who did this the the guy who did this is energy prices the energy prices are still elevated you know the straighter for moose has still not been reopened so that's still the big you know canary in the coal mine here we just had this jobs report that was soft but inflation is probably going to come in hotter than expected due to these rising energy costs dust off your eclipse glasses because another total solar eclipse is on the way on wednesday unfortunately the path of totality won't run through the u.s like it did in 2024 but day will turn tonight across parts of greenland iceland northern spain and a little of portugal millions of sky watchers are expected to travel to the path of totality to glimpse europe's first total solar eclipse in almost three decades which is something i definitely wish i did two years ago is it just me i don't know if this is a popular take or not are we having more eclipses these days it feels like in the first 29 years of my life we barely had any eclipses now it seems like we have one every so year every few years or so i need the astrologists and the astronomers to weigh in maybe i'm just in the news now and i'm paying more attention but i also did not look this up i think a little recency bias yes it was 2024 and then there was one in 2017 before that do you remember that or were you still what were you doing i don't know i was in blackout in college okay so there was a big there was a big eclipse here in 2017 we had an awesome one that cut through a huge swath of north america last year and then well this is europe's first one in 30 years so this doesn't happen often so i'm excited to learn more about this and we'll bring you more information about the eclipse uh later this week and if you're in or traveling to the path of totality i hope you have gone to your airbnb already all right finally you know toby's been to a million weddings over the past few summers later this week he'll be attending his own yes our beloved toby's all grown up and getting hitched and somehow i got invited which means that we'll be out for a few days later this week toby we all want to know how much did it cost to book madison square garden neil you know i wanted an outdoor wedding we're doing that met life instead now i'm very excited for this wedding i also love how excited all of you guys are so sometimes i get recognized around new york city and over the last month every single listener has gone how's the wedding toby like how's the wedding planning going i mean at this point we're five days out so there's not much uh planning or not planning that can get done i wish i could invite everyone who comes up to me but neil didn't want to share his food so we're keeping it a little smaller okay that is all the time we have thanks so much for starting your morning with us and have a wonderful start to the week it's the moment you've all been waiting for the answer to password last week we ran a game that required you to guess a secret word from a series of clues first of all we were blown away by the response thousands upon thousands of you submitted answers and the ones who said audio were correct the password was audio but there could only be one winner chelsea mackie congratulations you have won yourself some morning brew daily swag with a thursday submission interesting and thanks to everyone who played stay tuned for a new password before the end of the year i also want to shout out everyone who submitted and also left a comment for us because you were able to do that in the google form you guys are so nice you're you're you're buttering us up you're saying nice things sometimes you're shouting out uh your colleges as well that was a very popular thing to do but i love seeing everyone's responses and everyone's comments again it makes me feel like we have one big happy family here to share your thoughts on the episode or anything else send an email to morning brew daily at morning brew.com or dm us on instagram at mb daily show let's roll the credits emily milliron is our supervising producer raymond liu is our senior producer our producer is olivia lake technical direction by nina miller hair and makeup went to spain for the eclipse devin emery is our president and our shows are production of morning brew great show danielle let's run it back tomorrow labor day savings are happening now at the home depot with select appliances starting at 399 plus save up to an extra thousand dollars and get free delivery on appliance purchases of $998 or more get a whirlpool laundry tower featuring industry-first uv clean technology designed to reduce bacteria in the wash without fading fabrics plus with great prices at the home depot you can save on select appliances designed to make laundry day easier shop labor day savings at the home depot today offer valid august 27th through september 16th us only see store online for details