Q2 REPORT: FIGURE CHARGED LESS AND MADE MORE

Figure Technology (FIGR) took a smaller cut out of every loan dollar it handled last quarter, compared to a year ago, yet it made more money on each loan anyway.

The net take rate (Figure's cut of each loan) slid from 4.0% to 3.6%, while its adjusted EBITDA margin (profit before interest, tax and accounting charges, as a share of revenue) went the other way, hitting 54.6% against 47.2% a year ago.

Key metrics from Q2:

• Loan volume: $4.26B, up 132%
• Net revenue: $226M, up 113%
• Net income: $87M, up 192%
• Adjusted net revenue: $218M against the ~$208M analysts expected
• Diluted earnings: $0.35 per share against $0.23 expected

Figure managed both lower pricing and higher margins through its Figure Connect marketplace, which hit 65% of all marketplace volume last quarter, up from 42% a year ago ($2.77B of the $4.26B in total volume). Figure Connect allows outside lenders (mortgage banks, credit unions, fintechs) to bring their own borrowers and use Figure's rails to record, fund and sell loans.

Because Figure doesn't pay to find these borrowers—the partner already did—it can charge them less and still keep more of what it charges. Operations and processing costs came in around 67 basis points of loan volume, down from 79 a year ago.

489 lenders now originate on Figure's system, 102 of which were added in Q2 alone. Whichever lender wins the borrower, the loan still gets recorded, funded and traded across Figure's rails.

The Milk Road Show episode featuring discussion on Figure potentially finding crypto's killer use case.

American consumers have powered the economy forward this year. In July, they took a breather.

Why it matters: While the underlying trend in consumer demand appears solid, retail sales hit an air pocket last month, suggesting a bumpier path ahead for overall growth.

Driving the news: Retail sales fell 0.6% in July, the weakest performance in more than a year and well below the 0.1% gain analysts expected.

• Excluding gas stations and auto dealers, there was still a 0.3% decline in sales, meaning that the weakness was evident even apart from those volatile categories.
• Auto dealers' sales were down 2%, gasoline stations' sales fell 0.9%, and electronic and appliance store sales declined 0.5%.

Of note: Some one-off shifts pulled the numbers downward. Amazon held its Prime Day discounting event earlier this year than last, helping explain a 2.2% drop in online sales.

• Moreover, most World Cup games took place in June, so the associated spending would have the mechanical effect of pushing retail sales upward in early summer and creating a misleading decline in July.

Yes, but: The numbers were soft even accounting for those factors, giving some pause as to how robust consumer spending will be in the second half of the year.

• Growth in Personal Consumption Expenditures contributed a whopping 2.1 percentage points to overall GDP growth in the second quarter, even as other sectors combined to subtract from GDP.
• The retail sales control group that feeds directly into GDP calculations fell 0.4% in July, versus a 0.3% gain that analysts forecast, and previously reported gains for May and June were revised downward.

Public opinion about the economy appears to be souring further this month, per the preliminary release of the University of Michigan's consumer sentiment index.

By the numbers: Overall sentiment fell 8% in the early days of August, after two consecutive months of improvement.

• The index fell to 51, from 55.2 in July. That remains above the recent lows reached in the spring, when gasoline prices were soaring.
• Inflation expectations were stable, with expected inflation over the next year ticking up to 4.3% and over the next five years unchanged at 3.3%.

The intrigue: The steepest month-to-month drop in sentiment was among survey respondents who identify as Republicans, with their outlook now 19% below readings from just before the Iran war and at the lowest since the 2024 election.

What they're saying: "Although the early-month weakening in sentiment was pervasive across various demographic groups, notably large reductions were seen among older consumers, lower-income consumers, and those without a college degree," said Joanne Hsu, director of the Michigan survey.

• "These groups are all particularly vulnerable to any erosion of purchasing power stemming from inflation."
• "Across all consumers, only 8% expect their income growth to exceed inflation in the year ahead, down from 18% in December 2024, a reflection of the belief that high prices will continue to be burdensome."

Elon Musk is defining egalitarianism drastically downward. The average CEO-to-worker pay ratio at S&P 500 companies rose to 312-to-1 last year, up from 285-to-1 in 2024, according to data released by the AFL-CIO on Thursday. But that figure doesn't include Musk. The labor group estimates Tesla's CEO earned 2,522,203 times the compensation of a median employee at the company.

If Musk's outlier compensation package, which included a restricted stock plan valued at $158.3 billion, is taken into account, the 2025 S&P 500 CEO-to-worker pay ratio jumps to 5,387:1. In fact, the AFL-CIO said Musk last year earned compensation equal to the total annual pay of a median Tesla employee every 4.23 seconds.

Anthropic is in talks to pay $6 billion for startup Decart, which makes software that improves chip efficiency, reducing the cost of training and running AI. As Anthropic preps for its initial public offering, the company is reading the room on cheaper open-source models.

More and more US firms are right-sizing their AI needs to lower-cost (and often Chinese-made) open-source AI models, Citi said in a note to clients this summer. Meanwhile, SpaceX's xAI unit this week announced Grok 4.6, its latest AI model that scores dead even with OpenAI's top model and just behind Anthropic's ultra-powerful Opus 5 and Fable 5 Max models on the Artificial Analysis Intelligence Index. Worse for Anthropic, xAI boldly broke into the frontier while offering its model at roughly half the cost of Anthropic's best models.

DeepSeek, which made its name as the first cheap open-source Chinese alternative to expensive flagship US models, said it is upping the price of its models during "peak hours," moving from a previous price of $0.87 per 1 million output tokens for the V4-Pro model to $3.96. It will cost half that during non-peak hours. Grok 4.6 is offered at $6, while Claude Opus 5 runs for $25.

The SEC unexpectedly called off its high-stakes crypto meeting this morning, scrubbing a planned vote on landmark fundraising exemptions for startups. The SEC canceled its planned Reg Crypto meeting, gave no new date, and is delaying its "innovation exemption" for tokenized securities after pressure from the White House — which doesn't want to complicate Clarity Act negotiations — and from Wall Street's trade groups.

BTC ETFs flipped to outflows this week, reversing last week's $853 million inflow run. Bitcoin's implied volatility index has fallen back to a 2026 low. Wall Street's fear gauge is at its lowest since January. Bond, gold and oil volatility are all falling too. The 30-year Treasury yield drew 5.22% at auction — the highest since 2001.

XRP is teetering at exactly $1.

The SEC unexpectedly called off its high-stakes crypto meeting this morning, scrubbing a planned vote on landmark fundraising exemptions for startups. Bitcoin and equities now show textbook regime divergence. The same risk-on tape leaves Bitcoin stranded near $63,000 with the quietest spot volume since 2019, while eight of eleven S&P 500 sectors printed solid gains, led by an unstoppable artificial intelligence bid.

Bitcoin is currently undergoing a brutal volatility squeeze, completely detached from legacy risk-on momentum. Liquidity is bleeding from alts with retail traders completely on the sidelines.

Institutional capital is quietly absorbing supply while long-term holders continue stacking through the noise. On-chain data shows liquidity building underneath, setting the stage for rotation into high-throughput settlement rails.

Bitcoin remains tightly coiled near $63,000. Risk assets continue to find breathing room even as elevated crude oil prices near $89 and Middle East geopolitical risks linger in the background. Fed policy remains data-dependent with no immediate hike pressure, allowing traditional markets to hold their recent gains while digital assets digest the broader tape.

Anthropic, an AI company, could potentially go public at a valuation of $2 trillion, according to reports, which would set a record for IPO valuations.

Several companies are getting substantial refunds related to tariffs, though specific details about which companies and the amounts are not provided in the available excerpt.

Generation Z investors are reportedly shifting funds away from stock market investments toward sports betting activities.

According to New York Times analysis, the most popular emojis globally are predominantly crying and laughing faces: 😭 (crying face), 🤣 (rolling on floor laughing), and 😂 (face with tears of joy). Fast-rising emojis include 🥀 (symbolizing heartbreak on TikTok) and 🗿 (used as a deadpan reaction by younger users). The "hot beverage" emoji ranked 213th despite being favored by the newsletter authors.

Stocks moved upward yesterday, with the S&P 500 notching a record high as investors digested the latest inflation data. Netflix jumped significantly after billionaire Bill Ackman revealed a new stake in the streaming giant.

The Treasury Department this week scrapped a key part of the Corporate Transparency Act that required anonymous shell companies and other firms to disclose their owners.

Treasury's rationale: The rule was overly complicated and costly for small businesses. Treasury Secretary Scott Bessent stated: "Treasury is eliminating a burdensome reporting requirement for millions of law-abiding business owners without compromising our national security." Bessent also noted skepticism about enforcement, suggesting shell company owners would not voluntarily comply with disclosure requirements. The Treasury estimated the cost to small businesses at $2,500.

Opposition: Sens. Chuck Grassley (R-Iowa) and Sheldon Whitehouse (D-R.I.) stated that the Treasury's decision "undermines the clear intent of the law," which was designed to address criminal activity including human trafficking, terrorist financing, drug distribution, and sanctions evasion.

Database impact: The law had established a database of shell company owners for law enforcement use. As of March, the database contained 16.4 million reports, with only about 15,000 filed by foreign reporting companies. Treasury said it would delete information about individuals believed to be "U.S. persons."

Broader context: Anti-corruption advocates note that the U.S. is one of the most lucrative and safe places for criminals to stash money, contrary to popular assumptions about island havens. The move reflects a broader trend of reduced financial transparency, including missing labor and inflation data from government shutdowns and SEC consideration of allowing companies to report financial data less frequently.

Reddit shares are up more than 12% premarket after news broke that the social media platform would be added to the S&P 500 index on Tuesday, replacing AvalonBay Communities.

At auction yesterday, the U.S. government sold 30-year bonds at a yield of 5.216% — the highest since 2001.

Finding: Big Tech's massive data center spending binge for AI infrastructure hasn't significantly dented return on invested capital (ROIC), a core gauge of corporate investing prowess.

What ROIC measures: Return on invested capital indicates how effectively a company converts capital investments — in acquisitions, equipment, plants, and infrastructure — into profits. It differs from profit margins, which measure the cost-to-revenue ratio without accounting for upfront capital expenditure. ROIC is calculated by dividing after-tax operating profit by average total invested capital from balance sheet reports.

Data trend: Among major tech companies tracked from Q4 2013 to Q2 2026, Apple's ROIC rose from 27.0 to 78.8 (the highest), Amazon ranged from minus 2.0 to 21.8, and Alphabet reached 42.3 in Q2 2026, despite enormous capital outlays for AI infrastructure.

📈 The dashboard: The S&P 500 closed up 0.7%, hitting a new record high.

• There was more evidence of cooling inflation today, with producer prices flat in July.

🥶 Today's stock spotlight: Cisco Systems (-8.4%), the networking equipment giant, delivered better-than-expected earnings, but an underwhelming outlook disappointed investors.

The U.S. auto industry's retreat from China is accelerating, while Chinese carmakers are inching closer to the American market despite attempts to keep them out.

Why it matters: China once represented a lucrative growth opportunity and manufacturing base for American automakers, but those ties are unraveling as Chinese rivals like BYD and Geely expand their reach around the world.

The latest: Ford announced late yesterday that it will end production of its Lincoln luxury brand in China for export to the U.S., while General Motors is reportedly ceasing sales of its Chevrolet brand in China.

• Ford said it'll expand production in the U.S., where it currently makes Lincoln vehicles in Louisville and Chicago.
• GM will focus on Buick and Cadillac sales in China, and will continue to build Chevys there for export elsewhere.

State of play: Chinese vehicles are catching up on quality, and with excess production capacity, the country's automakers have been engaged in a feverish price war, undercutting the competition around the world.

Meanwhile, the path for Chinese vehicles to reach the U.S. market looks like it'll initially run through North American production rather than exports from China, Tu Le, founder of Detroit-area consultancy Sino Auto Insights, tells Axios.

• That could involve standing up plants in Mexico, though the Trump administration today released a report assailing Mexico as one of "China's biggest enablers" for allowing China to build what it called "shadow transshipment networks" designed to evade U.S. tariffs — a beef that potentially complicates that route.

The intrigue: It could become smoother, however, if Mexican President Claudia Sheinbaum gets her way.

• "The Mexican government is pushing the U.S. to lower tariffs on North American automobiles as part of conversations over reworking the U.S.-Mexico-Canada Agreement," WSJ reported.

OpenAI chief revenue officer Denise Dresser is leaving the company less than a year into the role.

Why it matters: It's the latest in a series of recent executive departures for the AI company.

• The announcement comes just days after the exit of longtime exec Brad Lightcap.
• Fidji Simo, OpenAI's head of product and business, left her role at the company last month due to a chronic illness.
• Dresser had been tasked with filling in for both — when Lightcap was moved out of the COO role and Simo took medical leave.

State of play: OpenAI has appointed Dali Rajic, most recently president and COO of Google-owned cybersecurity company Wiz, to replace Dresser.

The big picture: The moves come as co-founder Greg Brockman consolidates more operating responsibility around himself while OpenAI grows its enterprise business to prepare to go public.

A study of the Bigfoot-hunting community finds that the search has taken an unexpected turn: "A field that has long been dominated by hunters and outdoorsmen is today also inhabited by a form of 'citizen scientist', armed with a pipette rather than a rifle."

The authors add that many Bigfooters are "dedicated empiricists who employ methodologies modeled on those found in professional scientific research."

For an example of the empirical Bigfooter's mindset, the authors quote the cryptozoologist George Eberhart: "You can apply a scientific method, or a journalistic method to it, to get some good science out of it."

(I was disappointed to learn that a "cryptozoologist" is not a person who studies crypto enthusiasts, but a person who searches for and studies hidden, legendary, or unverified animals.)

Bigfooters recognize that their science remains speculative. "There's plenty of evidence, there's no proof," Cliff Barackman told the authors. "There's a big difference."

The evidence includes witness testimony, casts of footprints, recorded audio, and even the occasional photograph (the most famous of which is above).

Some in the community argue that the only conclusive proof that Bigfoot exists would be a body — which makes killing a Bigfoot a scientific necessity.

Most are against the idea, reasoning that since the number of remaining Bigfoot is unknown, killing just one "may doom their population."

Suspected hair samples have been tested for mysterious DNA. Suspected handprints have been analyzed for distinctive skin oil. "The results have been inconclusive so far."

"Bigfooting is clearly empirical," the authors conclude. "We hope readers of this essay, and of our book, appreciate how seriously Bigfooters take this dimension of their work, even in the face of derision."

The essay is a fun read, but I'd say it's really about epistemology: It asks how people who diligently gather evidence and conscientiously apply the scientific method can retain their belief in something that seems so ridiculous to everyone else.

The answer, if there is one, would explain a lot about markets, crypto, politics, life…

Kalshi gave Francesca Hong a 95% chance of winning the Democratic nomination for governor in Wisconsin this week. She narrowly lost.

Kalshi founder Tarek Mansour says the odds weren't wrong: "A 5% probability doesn't mean it won't happen. It means it should happen 1 in 20 times."

Does it? Because an election isn't a roll of a 20-sided Dungeons & Dragons die.

Helpfully, we learned that the Wisconsin electorate was evenly split: Hong won 39.3% of the vote to David Crowley's 39.8%.

If you could re-run that election 20 times, the electorate would remain close to evenly split every time.

Hong would not win 19 of those theoretical elections.

We can therefore say that the correct odds of Hong winning were something much closer to 50%.

Now that the results are in, we have enough information to say that the Kalshi odds were, in fact, wrong.

There's no shame in being wrong (thankfully), and in this case especially, as prediction markets are usually well calibrated.

Mansour cites a study from the Washington Post showing that, in the aggregate, prediction market odds get election probabilities about right: Candidates with a 95% chance to win almost always win. Candidates with a 50% probability win about 50% of the time.

But that's not the same as saying that every 5% upset was genuinely a 1-in-20 event. Sometimes you really do roll a critical-hit 20. Other times, what the market called a 20-sided die was really a coin flip.

Hong was a coin flip.

A new study details how North Korea uses a network of launderers, OTC brokers, and peer-to-peer exchanges to cash out stolen crypto.

Much is planned in advance: Pre-arranged wallet structures automatically scatter stolen crypto across hundreds of addresses and venues, including peer-to-peer marketplaces in South Asia or unregulated exchanges in Latin America.

Funds pass through many blockchains along the way, including bitcoin. "There is a belief that the change of ownership often occurs on the bitcoin blockchain," the authors report.

The money is typically distributed in increments as small as $30,000, "so a freeze would not be overly impactful." On peer-to-peer marketplaces, crypto is exchanged