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

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0:54Bring in show music, please. Hi, I'm CNBC producer Katie Kramer. Today on Squawk Pod. Is it happening? An Iran deal? A day after Treasury Secretary Scott Bessence said right here on Squawk that it was just a matter of time. Markets are looking up. Oil prices rise. We hear from former Treasury Secretary and former Fed Chair Janet Yellen. I'm surprised in many ways that the oil shock and the war in the Middle East hasn't had more of an effect on the economy. Uber's CEO, Dharik Hazar Shahi, says the consumer is strong and the proof is in our rides. We're not seeing any signs of trade down. We're not seeing smaller basket sizes.

1:37Consumers remain generous in their tipping, for example. Sometimes if someone is feeling pinched at the pocket, they might pull back on tipping. None of that is happening. Plus, SpaceX's first report to Wall Street, our Morgan Brennan, with the details. I mean, this is a show-me story. And the rest of today's news, from the Strait of Hormuz to, uh-oh, jalapenos at Chipotle. Man, this has been a summer. Summer of diarrhea. It's Wednesday, August 5th, 2026. Squawk Pod begins right now. Stand Becky by in three, two, one. Cue, please. Good morning, everybody. Welcome to Squawk Box right here on CNBC.

2:18We are live from the Nasdaq market site in Times Square. I'm Becky Quick along with Joe Kernan. Andrew will join us in the next hour from the annual Aspen Economic Strategy Group meeting. Wow, the Dow and the S &P both posting record highs yesterday. The S &P, it was its best day all the way back to April 8th. We did see quite a bit of movement and it all started with energy prices, which started dropping about 24 hours ago or 23 hours ago, I should say. We really started watching with what Brent was doing after the Treasury Secretary joined us and talked a little bit about how he thinks you'll see a deal sometime.

2:53He said yesterday or today. We'll see what happens with that. But Brent crude crisis are still sitting right around$80.73. WTI is well off the highs that we've seen recently. It's sitting at 76.50, although that is up by about 1%. We've also got Treasury yields that came down pretty drastically yesterday. Right now you're looking at the 30-year at 5.16. We were at 5.25 % at this time yesterday. The 10-year is sitting at 461, and then you've got the 2-year at 420. Yeah, the NASDAQ's down today. It was up 671 points. They were pretty phenomenal points. That's one number. Dow. Dow, too. But the S &P was up yesterday, but the number, 77, 36.

3:37They're close. People that are saying, people that boosted their year-end to 7 ,800, people were saying they're nuts. And other people went all the way to 8 ,000. It's only August. Somebody had said 8 ,100. I forget who was on recently. But it was up more than 100 in the last two days. Yeah. And we're not that far from 8 ,000 already. Just going to say, what was it, about 10 days ago, I don't know if you remember our conversation. Maybe it wasn't. In between that conversation, where we are today, there was a thousand point drop in the Dow. Right. So I thought, wow, I'm going to be wrong. But remember what I said?

4:20It just feels like everyone thinks that we're in the waning stages of some type of AI move and that they're overvalued. The hardest thing to do right now would be to jump in and add a bunch more positions. It would be so much easier to get out at that point. and how do you buy it's so hard to buy at highs but if you bought when when the s &p was at 7500 for a second was at 7300 and it looked like it was gonna here we are put here we are pushing 8000 7800 yesterday a video of tony soprano kind of singing and weeping saying this is leopold Oshin Brenner on his honeymoon looking at what's happened to his portfolio since Ken Griffin at Citadel bought it.

5:08I mean, instead of that being the unraveling, it almost became the thing that made the low. It almost made the low. New details on the Iran war. The White House is aiming to announce an interim deal today that would reopen the Strait of Hormuz and pave the way for further talks on Iran's nuclear program. That's according to Axios. That report says that the United States, Iran, and Oman have been negotiating and are nearing an agreement that for 60 days would mandate ships entering the Persian Gulf use a northern lane near Iran, and those exiting use a southern route close to Oman. No tolls would be charged during that interim period.

5:48Asked about the report, President Trump said an announcement could come today or tomorrow. To this point, the ships that have been going in and out have been kind of hugging the coast along Amman's coast on the southern route of that. I'm not sure it would be the first ship to go on the northern route. Once again, it seems like you listen to the scuttlebutt and we're powerless to do anything about the strait and Iran's internal control. Why does oil listen to what everybody else says is just bluster from the Trump administration? Yesterday, Scott, and I was thinking about that yesterday, whether, you know, the president, you know, he likes to be in charge, and he is.

6:32But so he's been saying, you're going to do this. Yeah, we're close to a deal. Besson has a lot of credibility on a lot of different issues. And I think he's gotten more and more and more as we've watched him and how he does it. He's got a huge portfolio that he is managing. He does. But when he's, it's like the president would say, no, wait a minute. I've been saying this, that we're going to have a deal. When Besson says it, suddenly everybody sits up and. He also said it right here on the television interview. I know, but it was the same thing. He said it this way. I think there is a chance we may have a deal today or tomorrow to open the strait and move towards a more normalized position in this conflict.

7:12The president has been saying we're close to a deal over the way. He's been saying it for the last four days, the same thing that Besson said. Besson said it and oil drops$8. I think the president is like, I'm glad and I like that, but better watch yourself, peasant. Right? You don't, you don't, I don't think he's overshadowing the president. I think that he's doing a great job, but knowing the president, it's like, hold on there, fella. Getting a little big for you. I move the markets, not you? Yeah. Is that what you're... And normally, I don't think people that win in Augusta are allowed to take their jacket.

7:53I wasn't. Why did I tell you that? I know I mentioned this is the jacket. I don't think they're allowed to take it away from from Augusta, Masters champions. You they made an exception in my case. You got to say. I did say right before we came back from break, this is my Masters. You know, if you say something, it's not going to last long. I thought maybe if I said it, I'd cut you off at the pass. Instead, you just caused it. Yes. But just remember next, whenever it is April, you've got to do that again. I will. OK. SpaceX posting higher revenue and a worse than expected loss in its first quarterly report since going public.

8:31Revenue was up by 92 percent versus the same period a year ago. Shares are down by just over 11 percent in the pre-market. Our Morgan Brennan covers SpaceX, and she joins us live this morning. Morgan, there's a lot to dig through with this. Oh, my gosh. Yeah. So much to dig through. So I'm just going to give you the things that I think investors are focusing on the most right now this morning. Comfort reporting its first ever earnings yesterday, noting Starlink subscribers is the profit engine of the company, growing to 12 million in Q2. Elon Musk and President Gwen Shotwell extremely bullish on that business, especially as Starlink Mobile launches next year as a direct competitor to the wireless carriers.

9:09That's actually putting all of those stocks under pressure this morning. Starship moving closer to commercial service will launch the new Starlink V3 satellites to operational orbit on the next flight test. Nonetheless, for investors, it is all about AI. How much cash the company is burning as it looks to deploy two gigawatts of compute on Earth this year and exponentially ramp that next year. new Grok models, the cursor acquisition, more neocloud deals, including a new compute lease worth$13.4 billion. This is all part of the aggressive return on investment case that was laid out by Musk on the call.

9:45We are expecting to reach$100 billion plus ARR in December of this year. And it's probably also worth mentioning that our internal projections for reaching a trillion dollars in revenue, not ARR, but revenue, have moved up from 2031 to 2030. So prior to the IPO, the financial projections we had were reaching a trillion dollars in revenue in 2031. We now expect that to be in 2030. And there's a non-zero chance of that being in 2029. Musk also disclosing an exclusive partnership with NVIDIA, both on Earth and in space. First, AI compute satellites expected to launch next year. That partnership perhaps putting some pressure on AMD this morning amid its own earnings.

10:31And CFO Brett Johnson summing it up like this, quote, We expect the supply-demand imbalance in the compute market to continue the current economics of translated into a less-than-one-year payback on our new capital deployments for compute. So very strong guidance and commentary from the call from the C-suite. Still, stock is lower. It's down 11 percent right now. Wall Street's digesting cash flow. This translates for the first six months of the year to free cash flow that is negative, give or take,$31 billion. Also, you get that first lockup expiration that kicks off tomorrow here. Guys? Yeah, I think the negative cash flow, the questions about how much they're going to spend.

11:14I mean, pretty amazing that they're saying they're going to make it back a year from now that it will be cash flow positive. But they are not planning to let up on the spending. And that has some people wondering how long before they have to go back to the capital markets, if at all. I think they had$93.5 billion after the IPO, after the$25 billion debt offering that they had. But the cash spend, Morgan, they said, is not going to drop off. They are kind of planning on spending all the way around. They're going to have to do that for the big initiatives the company has designs on. Absolutely. And, you know, they said$100 billion in cash and cash equivalents at the end of Q2, to your point.

11:53And obviously, CapEx continues to ramp. It was very aggressive within the AI unit. It was$7.7 billion in Q1 and then more than doubled in Q2, to your point. I mean, this is a show-me story. A new company that's publicly traded. You had a lot of noise in the quarter. And you have a lot of big, ambitious, lofty goals and forecasts being set forth here. It's also really sort of at the juncture of this convergence of space and AI. The thing I think investors in the public markets need to keep in mind where SpaceX is concerned is that historically, and this has been the case in the space industry across a number of different aspects of it, when they have said that they're going to set out and do something, especially when others have said it's impossible, they've largely done it.

12:38And so when they set out and they say we're going to take all of that knowledge and all of that hardware expertise in manufacturing expertise that we've learned in making rockets and building satellites and we're going to bring it to AI infrastructure, take it seriously because they do have that plus the partnership with Tesla to be able to bring those worlds hardware and AI together. Right. We have to expand our mind. But I was just going to say to you that I still get nervous. OK, now we're going to start landing reusable rockets on land. And I like it's like that just makes me nervous that you even think you can do that.

13:13I'm glad no one's riding along, okay? Because I grew up just with those tragedies that we saw. Just how, it just seems how dangerous trying to do these things engineering-wise is. NASA, I used to have so much respect, I still do, for NASA and to be able to do these incredible things. Now we're talking about doing it again and again, shrinking the time it takes to use the same rocket again to land it on land and building data centers out in space. It's just hard for someone like me to accept that that's possible near term. And I think maybe it is, Morgan. Look, I think it's hard for a lot of people to accept in the sense that a fully reusable rocket has always been the holy grail and something that's never been achieved before.

14:02So what they're tackling and how they're trying to do it and how they're trying to achieve it, this is very much a first. It goes back to this idea of SpaceX overall being a show me story. That being said, they've already employed so much reusability, at least in the first stage with their Falcon fleet. And with Starship specifically, if they can get to that full reusability, it's going to start with cargo. There's be a lot of cargo that moves before any kind of human step foot on Starship. But if they can get to that point, you're talking about exponentially more mass going to orbit and beyond at a fraction of the cost, a tenth of the cost of what it currently costs for a Falcon, which already drove prices down something like 90 percent.

14:45Right. It's a rate-limiting step. It's like the holy grail of what, if you want to do this eventually what his plans are, you've got to do it, you've got to make the strides. That's how the economics work for data centers in space. You need Starship to do it. All of it. Yeah. All right. Colonize the universe. We, this is the royal we, in this case, are watching the shares of Chipotle. I haven't looked, but now I'm seeing it down. Wow, down 10 percent. That was yesterday. The restaurant chain said it had removed the jalapeno peppers from some of its locations since they could be linked to a salmonella outbreak.

15:22Being investigated by where everything bad in the world is happening lately. Minnesota. The other one was Michigan. Take it. Canada. We'll take the western part of Canada. You take Minnesota. So far, the state... You mean the election, not the Taco Bell stuff. That was Michigan. Michigan. I'm talking about everything. Medicare for... I mean, it's that guy. It's that Tim. Public health authorities, so far, the state has identified 110 cases, Minnesota cases, and officials say that the food was making people sick, was likely served at other restaurants as well, though she noted she wasn't concerned about Chipotle.

16:05In a statement, the company said it had pulled the jalapenos out of its food in an abundance of caution and replaced them with products from different growers. Man, this has been a summer. Yeah, summer of diarrhea. Summer of love is what they had. My mother had in her day. We get the summer of diarrhea. Is that what salmonella, is it the same as the stuff that explodes? It might be different than cyclists. I think this may get you. Salmonella probably makes you vomit. Yeah. Probably gets you before it gets that low in the intestinal tract. It's a comet. Happy breakfast, everybody. Cheese will be next.

16:42Coming up on Squawk Pod, Wall Street may be optimistic. Is the economy ready to put inflation fears in the rear view and maybe raise interest rates? Somebody who should know, Janet Yellen, is next. Former Treasury Secretary and former Fed Chair. A major reason why inflation continues at both levels, consistent with the Fed's targets, is a series, a kind of rolling series of supply shocks.

17:13Hello, I'm Ozempic. And I'm other GLP ones, kind of like him. Are you shaking a maraca? No, I'm shaking the pill version of Ozempic, which no one should ever do except in ads like this. A nice disclaimer. Hey, thanks. Ask your doctor about which FDA-approved uses of the Ozempic pen or pill may be right for you. Call 1-833-OZEMPIC or visit Ozempic.com to view the medication guide and learn more about Ozempic semaglutide tablets, 9 mg, and Ozempic semaglutide injection, 2 mg. There's a pill version of Ozempic! With the Discover Cashback Card, it's payback time when you earn cash back on everyday purchases.

17:49purchases. Activate and earn 5 % cash back at different categories each quarter on up to$1 ,500 in purchases. That's 5 % cash back at different places each quarter, like grocery stores, on gas, and at restaurants. It pays to discover. Terms apply. See discover.com slash five for details. This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Lansford for this information-packed daily market preview delivered in 10 minutes or less, including projected stock updates, monetary policy decisions, and key results and statistics that may impact your trading.

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18:42This is Squawk Pod from CNBC, again today with a split show from the Nasdaq market site in Times Square and the Rocky Mountains of Aspen. You're watching Squawk Box right here on CNBC. I'm Andrew Osorkin, along with Joe Kernan and Becky Quick. We've got a huge lineup today from the Aspen Economic Strategy Group meeting. So we've got a lot to talk to them about, obviously, everything going on in the straight right now and whether there's a deal in place and what's happening. Plus, all of the situational awareness stuff is a big topic of conversation here. And we're going to go through all of that and more.

19:19All right. We will talk about all of that coming up. And Andrew, I have a secret to share with you a little later. You're going to rat me out on the protein drink. I am. I am. I know you so well. He finally, he finally. What's the secret? Hold up the drink here. She's ratting me out. I am. This is his first sip that you have been telling him to try for a long time. I'm trying your kale-infused coffee. Coffee with protein. No, it's no protein. And he said like this. He goes, hmm, pretty tasty. That is exactly what he did. It's great, right? Andrew, I did put some sweetener in it. Two little packs.

19:53Is that okay? How did you know I was going to rat me out? That's okay. Because I just know you. I know you're going to rat me out. Hold on. Are you drinking the hot coffee with the protein in it, or are you doing the iced coffee with the protein in it? The hot coffee. Should I do the iced tomorrow? I'll be back tomorrow. I'll bring you iced in the morning tomorrow. We'll do it together. That might be nice. Can we do it like this? I had to tell you. Can we do it like that? Make him say you were right, Andrew. Thank you, Becky. I appreciate, you know. That would be the very first time it's been necessary for me to say that.

20:27No, I'm kidding.

20:32Brookings Institution Distinguished Fellow Janet Yellen. She's, of course, the former Federal Reserve Chair, served as Treasury Secretary in the Biden administration. And great to see you. We've talked to a number of Treasury secretaries, folks on the Fed, FOMC and others. So I'd love to get your perspective on. Well, let's just start this. Where where do you see the economy right now? You want to grade grade the economy for us? Well, the economy is really doing surprisingly well. It's suffered a lot of shocks and it's proven itself to be very resilient. I'm surprised in many ways that the oil shock and the war in the Middle East hasn't had more of an effect on the economy than it has.

21:19I do worry that if it continues or escalates, that we will begin to see a bigger effect. But we've had moderately good growth. Maybe some signs that productivity growth is improving. The labor market, which I was quite concerned about six months or a year ago, seems like it's proven quite resilient and is functioning well. It doesn't look to me like it's so hot that it's a source of inflationary pressure. So I'd say the main problem we face from a macro standpoint is inflation that's too high and has been too high for a long time. and how to bring that down without doing damage to the economy, I think, is one of the central problems.

22:12OK, so that is the central question these days. Kevin Warsh is now in the job that you sat in at one point. We just had Neil Cash carry on. He was one of the dissenters seeking a hike. Would you be seeking a hike right now? I think I would be watching the data very carefully. I think that a major reason why inflation continues at both levels, consistent with the Fed's targets, is a series, a kind of rolling series of supply shocks. You know, first we had the tariffs. It looks to me like pass through of the tariffs into the price level, which has been escalating. Inflation is almost complete. But now, of course, we have all the disruption in energy markets, spillovers into food, into transportation.

23:08And then a third thing is that the AI boom, which has been very important in powering the economy forward, is leading to escalation of semiconductor prices, which is showing through to iPhones and all the things that embody chips, pushing up electricity prices. You know, the last thing is a little bit of a demand shock, but it's very sectoral specific. And my hope would be that it would be possible for inflation to subside as these shocks pass through. But that would likely take another couple of years. And the danger is it's now been five years since the Fed has achieved its 2 percent target.

24:00And I would be very worried about inflationary expectations and continuing supply shocks. OK, political question. Given that you think the economy is as resilient as it's been and we can look at some of the shocks, whether it's what's happening in the strait or tariffs. Do you give this administration credit for the deregulatory environment that I think a lot of CEOs would actually credit with some of what's happened here? So I don't know how to quantify that. I think business has been doing well and is probably benefited by that. But we always have to remember that there are reasons for regulation and it addresses a set of risks.

24:46And, for example, in the financial sector where there's been a lot of rollback of regulations, have I seen any adverse effects yet? I'd say no, but I always worry about financial stability risks and the possibility that they will build in a deregulatory environment. But, you know, fundamentally, AI has been a huge driver of economic growth. Both it's powered the stock market. It's kept consumers spending. When I mentioned the deregulatory environment, one of the things is this administration has been very active around artificial intelligence, around promoting artificial intelligence in terms of trying to allow for the build out of data centers and the like.

25:35There's now a number of states, increasingly blue states, like New York, that are saying no data centers. And so I just wonder, when you start to think about the politics of our economy and of AI, how you think about this administration currently? Well, I think it's important that AI be allowed to thrive in the United States. And it's an important source of potential future productivity growth and competitive advantage globally. So I'm supportive of that. But there are certainly dangers and risks and spillovers from it that I think require policy attention. And, you know, we're beginning to see what some of the negative spillovers are.

26:17And they certainly do require potential regulation. One of the things that everyone's talking about here in terms of AI is what's going to do the labor market long term. Do you have a particular take? I think it's unclear at this point. I don't think we're seeing any general effect on employment, but there is some hints in sectors where it's, you know, particularly being intensely used right now that it is diminishing job opportunities. I mean, I think that's true in coding and software. And, of course, part of the issue is how long will it take for AI to be broadly used throughout the economy.