Uber-Waymo partnership, grocery prices: Asking for a Trend

On today's episode of Asking for a Trend, Host Josh Lipton breaks down the biggest stories and trends of the trading week.

Uber (UBER) has expanded its partnership with Waymo — a subsidiary of Alphabet (GOOG, GOOGL) — to offer driverless rides in Atlanta and Austin in early 2025. Carnegie Mellon University associate professor Phil Koopman notes the significance of Waymo advancing its fleet: "The question is what kind of growing pains they'll have as they start operating in new cities." While many investors are bullish on robotaxis, he casts doubt on its sustainability as a business model, explaining, "I have trouble seeing robotaxis as a business model because it's a cheaper ride hail and the technology is really sophisticated, expensive. It requires a lot of support."

The Federal Trade Commission has been trying to block Tapestry's (TPR) acquisition of Michael Kors holding company Capri Holdings (CPRI). Pauline Brown, author of "Aesthetic Intelligence" and former LVMH (LVMUY) chairman discusses the designer retail market and the FTC's action. She also breaks down the booming resale market for designer goods as some items sell for a lower price in Europe than they do in China, allowing resellers to profit from the gap.

Yahoo Finance Senior Reporter Alexandra Canal breaks down her top takeaways from the trading week, and Market Domination Host Julie Hyman breaks down the expectations for grocery shopping across different income classes.

For more expert insight and the latest market action, click here to watch this full episode of Asking for a Trend.

This post was written by Melanie Riehl

Video transcript

Hello and welcome to ask you for a trend.

I'm Josh Lipton and for the next half hour, we're going to be breaking down the trends of today that I move stocks tomorrow.

There is a lot to keep track of.

We're focusing on what you need to know to get ahead of the curve.

Here are some of the trends.

We're going to be diving into the S and P 500 the NASDAQ capping off their best week of the year.

This rebound rally driven by chip stocks, which were some of the top performance this week.

Meanwhile, Uber, one of the big movers on Wall Street today, the company expanding its partnership with Waymo offering driverless rides.

Now, Atlanta and Austin, a look at what this means for the Robo taxi space straight ahead.

Plus consumer sentiment rising in the latest reading.

But one of the key issues for people grocery prices to get a deeper dive into how shoppers are spending in our chart of the day, Waymo, Jaguar, ev Robo taxes will soon be part of Uber's fleet in Atlanta, Georgia and Austin, Texas.

The two companies making the announcement, Friday, expanding a partnership that has already been the alphabet owned Waymo autonomous vehicles fulfilling over 100,000 weekly paid rides across Phoenix, Los Angeles and San Francisco.

It is currently unclear exactly how many Waymo Robo taxis are going to be deployed.

But Uber says there will be eventually hundreds of the suvs in Atlanta and Austin and joining us now is Phil Copeman, Carnegie Mellon University, Associate Professor Phil.

It is good to see you.

So let's start right there, Phil because this uh certainly got a lot of attention today.

Uber, expanding this partnership with Waymo uh to Austin, to Atlanta made a lot of headlines, just high level.

Phil.

What did you make of that news?

What you make when you saw that headline?

Uh I don't think it changes anything fundamental about the technology.

It's a business arrangement and that's fine.

But the, the real trend here is that Waymo is growing its fleet.

And the question is, uh what kind of growing pains they have as they start operating in new cities?

And what kind of growing pains would you possibly expect?

Phil?

Well, we saw a lot of growing pains in San Francisco.

Uh and some of the things were, were things that safety folks like I hadn't really anticipated.

Uh So I expect more surprises, but to give some examples, there were a lot of incidents with interfering with emergency response equipment and firefighters and police scenes and things like this.

Uh There were cars blocking firehouse driveways.

Uh, and that was not only Waymo that was also crews having those problems.

So the question is, what about these cities that will be different, that will cause problems?

Now, I expect we mo to pay attention and I expect them to try and fix things, but we won't know what the particular problems are until we see them.

You know, Phil, you've been studying this technology for a long time, right?

I mean, for the rest of us, you know, many of us are relatively new to see these vehicles on city streets, in your opinion, Phil, um commercializing this technology here.

And now does it make sense?

Is it ready for that?

I have been doing self driving car safety for more than 25 years.

So this stuff has been around a really long time.

Uh back then it was, it was a college experiment kind of thing that uh some of my colleagues did.

Uh I I think that the question always has been safety.

Uh That's certainly what people ask.

You can have nuisances where the cars get confused and stop in the middle of traffic and those can cause problems for cities.

But the thing everyone's really asking is, well, is it really gonna be safer than human drivers?

And what the companies have been selling on is it will be safer in terms of injuries, severe injuries and fatalities.

They keep saying it will have fewer fatalities and right, Well, right now, if you look at the Waymo safety page, it's pretty rarely interpreted to say we're already saving lives.

But the reality is nobody knows how this will turn out.

There just aren't enough miles to know whether they're saving lives or not.

And it's gonna take a few years to find out.

So, that's the big question.

Is it really safer?

That's true.

Because that is, I, I, that's a key messaging that you hear.

Right?

You know, we need this technology.

This is a lifesaver.

Your point is, you know, not to mischaracterize you, Phil.

So I wanna make sure I, I hear you right.

We don't have enough data right now to make that claim right.

There's, there's enough data now to know that, uh, small crashes, fender benders and, and minor injuries, there's enough data to know that that says Waymo seems to be on track for that.

Uh There's all sorts of discussions you can have about the data methodology but, but right now there's no reason to worry about the small crashes from what we know now, uh, maybe there's a change tomorrow that comes, that changes that.

But for, for when now it looks ok.

But we're another, they need another 10 times more miles, another 2050 times more miles before we know how it turns out for, for, uh, fatalities and, and it's a very simple numbers thing, Waymo has something like 22 million miles last time they they had a number 22 million.

Sounds like a lot.

But in the USA good round number is 100 million miles between fatalities.

And you need much more than that to get statistical significance.

So they need 2030 50 times more miles before we have any way to know how fatalities will turn out and, and I'm not saying anything good or bad.

I'm just saying that it's too early to claim you're running a marathon and you're two miles in, you're three miles in your splits.

Look good.

It's too early to give yourself the gold medal.

And so anytime someone says we've already proven we're safe, we've already proven we're saving lives.

They're giving themselves that Mar on gold medal and they're, they're still back.

You know, they're only a couple of miles in simple as that Phil final question.

We got a lot of investors watching this show.

Um As you mentioned, you, you've been studying this area for a long time.

Do, do you think Robotaxis are ever gonna prove to be a, a profitable business model film?

I, I have trouble seeing Robotaxis as a business model because it's a cheaper ride hail and the technology is really sophisticated, expensive.

It requires a lot of support.

Now, maybe someday, you know, don't ever say, don't never say never.

Uh But I, I find other business models such as middle model trucking a lot more compelling.

Uh But, but, you know, we're gonna see, I'm, I'm the safety guy.

I'm not the, the investment guy.

So we're gonna see the, the one thing that has been true for a decade and will be true for another decade is that scaling up will take longer than everyone wants to believe.

Uh The key, the key limit to this technology is um machine learning.

The technology that's used is really bad at stuff it hasn't seen before and the world is full of crazy edge cases, rare events and that is why it's taken so many years and why it's gonna take more years.

The big question is how fast can they scale?

And even at 1000 Robotaxis compared to the number of cars on the road, there's not many.

So we don't know, we'll see what Waymo does but keep your eye on how fast they can scale up.

We will and Phil, it was great to have you on the show.

How about us walk through a, a complicated topic.

Appreciate it.

Thanks for having me.

Us, stocks closed the week on a high note, posting strong weekly wins, job finances.

Alexander Canal joins us now with the trading day takeaways.

Hi, Joshua.

Big trading day take away for me.

And really the past 24 hours has been a shift in expectations when it comes to how aggressively the Federal Reserve is going to cut interest rates next week.

It was only yesterday that the majority of traders were betting on a 25 basis point cut, but that has shifted pretty dramatically.

We are now 5050 when it comes to whether or not we'll see a more aggressive 50 basis point cut or that 25 basis point cut.

Now, the reason for this is that we got two reports from the Financial Times, the Wall Street Journal, that policymakers are really having a difficult time deciding what to do here.

We also heard from former New York fed President, Bill Dudley about how a 50 basis point cut, there's a strong case to be made there as a Federal Reserve works to really navigate a soft landing of the economy.

And it's interesting to see how that's being reflected in markets, this market rotation happening right now.

If you take a look at the S and P 500 equal weighted index that closed up nearly 1% ahead of all three of the major gauges, you look at something like the Russell 2000 small caps, a very interest rate sensitive area of the market closing up nearly 2.5%.

And then I also want to take a quick look at yields.

The 10 year yields falling about three basis points to trade around 3.65%.

Same thing with the 30 year down about two pieces points to trade just under 4%.

And really when we look ahead at what the fed decides, I think we're going to see some volatility regardless of the decision.

And that places that much more emphasis on that post decision presser from Jerome Pell at 230 what is he going to say if we do get a 25 basis point cut, what is he going to say if we do get a 50?

And is he going to leave the door open heading into the rest of the year?

Yeah, there's so many interesting wrinkles in this because I've heard very smart economists who want to say 50 say, um listen, the federal funds rate has been around above 5% for a while to fight inflation, inflation is now cooled.

We need to focus on the labor market at the same time.

Another thread to think about is, you know, we were just talking to our own Rick Newman um politics.

I mean, II I know Jay Powell will tell you he's a political but can you really do 50 in an election year just weeks before the big voting day?

Right earlier today we heard from JP Morgan Michael Foley saying that he hopes the fed will do the right thing, which in his view is cutting by 50.

So you know, it's going to be a toss up to see whether or not we're going to see that.

But another thing I also wanted to highlight when we think about the trading action that we saw is that tech is back baby.

I mean, we saw the NASDAQ having its best week of the year.

And a lot of that has to do with the strength that we've seen in names like NVIDIA.

If you take a look over the past five days at a heat map here you'll see in video is up nearly 16%.

Along with some of those other mag seven names like an Amazon Microsoft alphabet Broadcom up more than 22%.

And this follows a lot of positive commentary that we got this week from the Goldman Sachs Investor Conference.

A lot of the leadership within the chip sector including Ceo Jensen Wong really talked positively about the demand.

And another story there is the hyper scalar and how much more aggressive they're going to be when it comes to spending on these A I chips.

And don't forget it was only about a month ago that we were at that August route and now look at where we are today.

Yeah, Jensen Wong, I mean, really helping there talking about, you know, his latest and greatest generation of Blackwell, you know, talking about strong demand that really helped lift a lot of chip names.

Also to your point though, a a lot of these names have been really beaten up, I mean Broadcom reported and got slammed, right.

And if we take a look at a longer term here, let's take a look at, let's take a look at a three month here.

You'll see the choppiness that we've still seen uh down of, of roughly flat over the past three months.

So we'll see how we can play out towards the back half of the year and whether or not we'll see some momentum.

I think Q three earnings that's gonna be really critical to see how some of these stocks can really sustain this recent rally.

And a lot of that is going to have to come down in demand.

You got another chip, a Miron memory chip giant reporting soon coming up later this month.

Thank you.

Thank you, appreciate it.

Coming up a deep dive into luxury retail.

Ever wonder why designer products are a bargain in some countries to break down how this price gap is fueling a booming resale market.

Why some brands are struggling to address the issue?

Tapestry continuing its court battle with the Federal Trade Commission, the holding company for brands including Kate Spade and coach trying to acquire Michael Kors holding company Capri in a deal worth $8.5 billion for more.

We are bringing in Pauline Brown, E Mh, former chairman and author of Aesthetic Intelligence, along with Yahoo Finance's very own, Julie Hyman Pauline.

It is good to see you.

So, um, the F DC doesn't like this deal, Pauline, they don't like this merger.

They say it's gonna lead to higher prices.

You agree with the US government on that?

In this particular case, I don't, um, and I was surprised that they, uh, they took action.

Um, I think the trickiest part of their legal argument is that there is a natural market, not for handbags and not even for luxury handbags, but for what they're calling excessively priced handbags, luxury handbags.

And, um, I mean, the reality is, you know, I think it's a spectrum, um, and gonna be, you know, normally I would say once the FTC takes action, their probability of, uh, of, of victory is pretty high.

When I look at the facts here, I think this is a high hurdle as someone who is inside that world, what goes into figuring out how much a luxury handbag should cost some of it is cost of goods.

So the cost of goods of a coach bag is considerably less than the cost of goods of an Hermes bag and considerably more than uh the sports Act.

So there's always that variable.

Uh There is also where it sits on the floor.

Um What the competitive market is, what the trends are, you know, every few years, a a brand uh hits it bright and is um and it bag and therefore able to have a lot more pricing power.

Um But I would say in the case of Capri and tapestry and most notably coach and Michael Kors, you know, they have played pretty consistently in that bridge in that bridge category in terms of their pricing.

And that is because that's where the distribute in terms of the mid tier department stores and uh and that's where they price it based on how much it costs them to make it.

And do you see, do you think that the FTC has a valid argument in thinking that customers will be disadvantaged from a pricing perspective if, if these two do complete the merger?

Right?

So the um assumption there is that once the two companies which are the two largest in that particular segment, once they merge, that they will be in a position to raise prices and therefore harm the consumer uh uh economically.

Um Do I think that if the quality of their bags uh is not radically improved or the um investment that they put in them doesn't change that, that will in any way change their ability to control the customer behavior.

No, I don't, I think the customers, if they're, if they're happy, they'll still come at the right price for the right designs and if they're not, they're going to go to another uh uh another player.

Um So I think that it's a, it's a feeble argument.

Um If the FTC does prevail here and blocks the deal, what effect does that have on consolidation within luxury?

Whether it, we're talking about handbags or clothing or beauty or whatever it may be?

Oh, I think um you know, having been in the uh acquisition world for many years, I was a partner of the Carlisle Group and then earlier than that, I had uh headed uh M and A at S A Lauder uh which was a very inquisitive time in Lauder's history of all the things that I weighed in terms of risk of uh doing the deal and risk of the deal turning into an accretive one FTC blocking really didn't enter my consideration.

It's not to say we didn't have to go through the protocols and you know that it was a no brainer, but I would say relative to all the other risks, it was not a deterrent.

I think it will add a very different consideration set going forward, especially among larger players that are as they have been historically looking to consolidate.

And Pauline finally, I wanted to ask you about another handbag related uh story that we're watching, although it's not unique to handbags, but we've been seeing this sort of arbitrage business that has sprung up with luxury goods where folks buy the goods in Europe, for example, handbag made at a lower price and then resell it at a higher price in the US in Asia.

And it's, that's been a growing business on the part of these third party sellers.

How is the industry viewing that?

And what if anything can they do about it?

Well, uh first of all, the industry doesn't like it for a lot of reasons.

Um The consumer loves it so far as the consumer is protected from um the uh cheaper bags actually being counterfeit bags and I will say counterfeits have become especially in the accessory segment.

So, so good that it can be very hard even for a trained eye to see what's legitimate and what's not um of the, of the legitimate products that are being resold for uh cheaper amounts.

You know, I think there's a few issues that have opened the way or a few uh uh shifts that have opened the way for that uh that new Mar market dynamic and some of it is the industry's um own doing in the last five or six years, most of the handbag companies in the luxury segment have gone up in price by an average of 55%.

And when you take price that radically, you know, you're basically telling the market, you're giving them a great incentive uh to um to find arbitrage opportunities.

And you know, there was, there's always been a differential between how much a French bag costs in Paris and how much a French bag costs in New York or even more uh um in terms of even more differentially in um in Shanghai.

Uh that difference though right now is making it worthwhile for any middle man to buy and sell and capture um you know, capture the profit in the middle Pauline.

Great to have you on the show today.

Enjoy the weekend.

Thank you.

Thank you.

Good to see you both and coming up, we're taking a bite into the chart of the day more.

Asking for a trend.

Right on the other side, in today's chart of the day, we're looking at grocery shopping and what people are expecting to spend at the market.

Let's get to your finances, Julie Hyman.

Now with a closer look, I mean, this was very much on my mind this week for a number of different reasons.

One, it's a political issue, right?

What people are spending at the grocery store is something that came up in the debate.

Two, we looked at food at home prices.

Remember as one of our charts of the day this week following CP I that we have seen since before the pandemic overall.

CP I up 21% food at home prices up 26 percent.

So it's very much something consumers are thinking about Bank of America, uh, does a regular survey of consumers and tries to get a sense of what they're planning to spend on and how much they're planning to spend on.

They did this survey of 1000 people from September 9th to the 11th.

And one of the things they look at is how much people plan to plan to spend on groceries.

This is looking at what they plan to spend 12 months out from now.

And there is this divide between higher and lower income consumers.

You've seen that it's kind of muddled along the lower income.

Consumers are the purple ones here and they plan to spend less on groceries a year from now.

Whereas upper income consumers plan to spend more, there have been times when both of them plan to spend less and there are a number of reasons behind this one.

It could be that people are still cutting back to maybe they're hoping that prices are going to start to alleviate.

Although prices are probably not gonna go down necessarily, they might just rise at a lower rate.

One other thing I just quickly wanted to mention is we also got numbers from Kroger this week, a big grocery store chain.

Of course, those shares went higher over the course of the week here.

After reported numbers people buying more private label A K A cheaper stuff.

Um and their margins have been improving.

Josh, thank you Julie.

That is a wrap on today's asking for a trend.

Be sure to come back on Monday at 4:30 p.m. Eastern for all the latest market, moving stories affecting your wallet.

Have a great night.