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

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0:27Good 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.

0:50Y 'all are going to 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 of being.

1:27And in that folly, I miss 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.

2:02Their 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.

2:39The 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.

3:14The 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 percent 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.

3:49Let'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.

4:30One, 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, you know, 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.

5:02We 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. Construction 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.

5:39Let'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 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.

6:11Private 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. over and it might be revised up the way we saw a ton revised down this month. So we've soothed 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.

6:46Obviously 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 two, if unemployment remains this low and even falls even further because the workforce is shrinking, that could jack up wages as well.

7:23And remember, there's two parts of kind of the Fed's mandate, which is to keep the labor market steady, 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. Both exist there for that interpretation. The question is, what happened to these million people who left the labor force in the last two months? You know, there might be the immigration cracker and there might be the retirement, but economists are saying there's something else going on and cracking that could unlock a lot of more information, insights around what is happening in this economy.

8:00Let's move on. it's winners of the weekend time, the segment where Neil and I picked 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 Ashbenner, who is still a hot commodity despite his hedge fund nearly blowing up. Ashbenner 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.

8:36According 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 Ashbender another go around in contrast to Wall Street, which is a little more skeptical. Silicon Valley and Wall Street are both reacting differently, Gigme Gunnett, an adjunct professor at NYU Stern said in an interview. At the core, Silicon Valley rewards being directionally right about transformational technologies, while Wall Street rewards generating attractive adjusted returns while preserving capital.

9:16Retail 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 money managers, showing he still has his AI acolytes. Neil, one more thing to add to the whole Leopold lore. His wedding was the same weekend his fund blew up. Hope he vowed to never lose$40 billion in one day again. You know what they say, Toby? The richest man on earth is the one who's surrounded by people who love you and who you love. People are buying the Leopold dip. I mean, he was down 67 % in July, but he's still up 80 % on the year.

9:53And this might have just been the best marketing that he could have ever gotten, because I don't think the 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.

10:30Situational 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. SP 500 is 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 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.

11:07So 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 Pelosi tracker is one of the most followed and copied baskets of stocks on there. And they 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.

11:48So 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 first 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.

12:24BK is on a heater after launching 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 U.S. comparable sales plunged 7 % in Q2, making that six straight quarters of declines. New CEO Bob Wright, who was brought over from Potbellies 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, and we have not consistently delivered the experience customers expect from Wendy's.

13:00Both 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 U.S. 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.

13:37And 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 it 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.

14:10They launched a McValue menu with 10 items under$3. They had the big Arch Burger 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 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.

14:45And similar, McDonald's said, all of our promotions, our value menus, 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 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 too.

15:16One Bernstein 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 customer base. What that means is that they did it without heavy discounting. They did it without this crazy promotional machine spitting 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 move 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 2024, McDonald's held about 48 % of the U.S.

15:51burger market compared to Wendy's at the time at 11.4%, and Burger King had 10%. I thought it was closer than that. It's not close. 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.

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17:14Bucky's is a giant gas station known for being big enough to break a European's brain, but it's also breaking trademark lawyers' brains with a very intense IP protection strategy. Bucky's logo is a cartoon beaver, and while it has every right to protect itself from any close matches, it has grown a reputation for suing any brand that is even remotely close. 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 in his show last week tonight.

18:02Oliver 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, Buc-ee'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.

18:39Neil, 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 is a Zootopia 3, they will absolutely be the villain.

19:16I 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 wearing 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 going to 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.

19:50I mean, they are suing this company for Beaver's Mini Mart in Beaver Creek, Ohio for having a Beaver logo and having Beaver iconography. This is – the town is called Beaver Creek, Ohio. 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, 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 that most lawsuits end in settlements. If you are the bigger entity here, smaller companies don't want to fight.

20:31They'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. And that pressure alone is enough to change their branding. the one risk for Buc-ee'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 might more clearly define the limits of Buc-ee'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 Buc-ee'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 beaver iconography, as you put it, uh, in order to go after another company.

21:25So most of these gas stations and stores that Bucky's has soon had sued have settled, but now at least one is going to 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 Buc-ee's and Buc-ee's has not taken the bait.

21:57Let's be clear. Like he wants them to sue John Oliver, but instead last week they go ahead and sue another small gas station, just extending this cycle that John Oliver pointed out in the first place. Well, you kind of bared the lead too. Mickey's mascot is a moose. That's the company that has a moose mascot. so one commenter was looking at this he 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.

22:44Yeah, according to a Financial Times report, citing people familiar with Fed chair Kevin Worses thinking the Fed, he remains open to an interest rate hike in September if inflation data over the coming week runs hotter than expected. 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 guy who did this is energy prices. Energy prices are still elevated. You know, the straight-up form moves has still not been reopened. So that's still the big, you know, canary in the coal mine here.

23:18We 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.