Closing Bell - Closing Bell Overtime 6/1/22

Episode Date: June 1, 2022

A fast-paced look at the after-hours moves and late-breaking news live from the New York Stock Exchange. Closing Bell Overtime drills down into stocks and sectors, interviews some of the world’s most influential investors and gets you ready for the next day’s action.

Welcome, everybody, to Overtime. I'm Scott Wapner. You just heard the bells. We're just getting started. GameStop and Chewy Earnings, they are imminent. The numbers and the stock moves, of course, they are just ahead. And in just a little bit, I'll speak exclusively to volatility expert Nancy Davis for the latest on where the markets are heading in this new month. And we do begin with our talk of the tape. Up, down, all around. Are we in store for a lot of that yet again in June? Let's ask Josh Brown. He is the CEO and co-founder of Ritholtz Wealth Management, a member of the Halftime Investment Committee. It's good to see you as always. What are your expectations? What are you watching closer than

ever right now? I think like everybody else, I'm keeping an eye on yields and I'm thinking more and more about the potential for some of the stock market weakness to leak into the real estate market and then ultimately to see some of that in the form of credit card issues and the corporate debt markets. I really feel like we're in the point of no return. You know, we've had pullbacks for stocks that have lasted anywhere from a week to six weeks. Ultimately, over the last few years, almost every one of those pullbacks very quickly resulted in a race back to new highs or what we began calling a V-shaped bottom, V-shaped recovery. That is not

what's going on this time. We're getting bounces and those bounces are being met with a rolling over very quickly afterward. And once you get into that pattern for a longer enough period of time, the sentiment kind of permanently turns. And I think that that's where we are. So this is going way beyond what the Dow and Nasdaq were doing in any given day. We're getting stories about firms like Fidelity writing down very big positions in the private markets, given the new reality that's come to venture-backed startup land.

We're seeing articles about Hampton's real estate being affected. We're seeing transactions for new home sales, existing home sales start to fall off a cliff year over year. And I think that when you're thinking about the stock market, you have to think about it in two ways, Judge. Part of the time, you have to think about the impact of the stock market on the psychology of the consumer, the business owner, etc. But then you also have to think about it as kind of a real-time sentiment indicator. And I know we have sentiment surveys, but just

look at stocks. When they can't hold a bid for more than an hour on what normally would be considered good news, it's very problematic to make the case that new highs are in our future anytime soon. So that's where I've been for months now. I wish it weren't the case. I love coming on here with a big smile. But look, man, price is true. This is what's going on. You know what? I hear you. And I'm listening to you. And you sound to me even more negative than you've been. You truly do sound more negative than you have been about the overall environment. Because you describe an environment, Josh, that sounds to me like you think is going to get a lot worse. And then there's no way in your mind that the stock market can perform or do anything constructive in the type of environment in which you describe?

I think what you have to do is lengthen your time horizon from when you expect positive returns from the investments you're making now. Like, you have to be willing to buy stocks or invest in an index fund or pick a manager and say to yourself, this doesn't have to make me look smart a week from now. Like you have to be okay with that because I think what a lot of people forget is that there's three options here. It's not just markets go up or markets go down. Markets do nothing is another option. We've had entire years with just chop in both directions and the result is nobody's happy. That is a thing that you have to live with if you're a long-term investor in the short term. And if that's how this year is going to go, I think it's actually

the better of some other outcomes. So just real quick here, try to think about it this way. We had 10 years of 15% average annual returns for the S&P 500. The long run average is 7%. So for a decade, we had twice as good average annual returns that anybody should ever have expected. A lot of that was the result of persistently low inflation and a Fed that had more latitude to save the market. That's not what we're in right now. So I really feel that mentally you're going to have to prepare yourself for an environment in which the stocks you buy don't reward you the next day. And if you can't do that, maybe consider losing the password to your brokerage account and stop looking. Stop looking. Try to make smart decisions and then live with them for longer than a few days.

So what do you what do you make of those who suggest the market's gotten way too negative too quickly that we went from. They've been saying that. Yeah, they went That we went from concerns about Fed tightening to deep recession. I read you, you know, that was Dubrovko Lakos. That was his take of JP Morgan today on the Halftime Report. Liz Young talking about you could have a big, big second half of the year and even finish positive by a few percentage points in stocks. Marko Kalanovic, as we were having a conversation today on the Halftime Report, put out a note, quote, we remain positive on risky assets due to near record low positioning, bearish sentiment, and our view that there will be no recession,

given supports from U.S. consumers, global post-COVID reopening, and China stimulus and recovery. Do you rebut all of that? No, those things are all possible. They're all possible. We're not in a recession now. I mean, you can't look at the data on unemployment or business activity by state or like really anything and say this is a recession. So it's very possible the Fed threads the needle. They take just enough air and froth out of the market and the economy so that we get equilibrium back in prices and we avoid an actual technical recession.

It's it's very possible. I don't think anybody could say on June 1st where we're going to be at the end of the year with any kind of real conviction. However, people have people have forgotten that recession is pricing in a 2023 recession right now and it actually happens in 2023, it's reasonable to say that some of the damage has already been done and you can get a little bit more constructive. A lot of these debates are really about time frame. You have to be OK with buying a stock and it's not the best price for that stock. You have to. You don't have a choice. This game doesn't work any other way. So I just think being realistic and moderating expectations is the key right now. And when I say it's happening, I'm not talking about that wasn't in reaction to saying the Fed is succeeding. It seems to be happening in terms of cooling. To Josh's points,

what we got from the Beige Book today, softening in consumer spending due to higher prices, weakness in residential real estate. So there are points where you can look and say that the Fed is getting exactly what it wants. Now, whether it can do that and still thread the needle are two different things altogether. Let's expand the conversation. Welcome in Malcolm Etheridge. He is CIC Wealth Executive Vice President. Malcolm, it's nice to see you again. New month, more of the same, or we have a little bit of runway here for stocks to do well? Yes, Scott. I'm actually a little bit concerned that Josh might have been looking at my notes before he came on. I'm going to have to tighten up my passwords. But I'm actually similarly positioned in the sense that I think that the good has been

the getting has been really good for a very long time. And we're starting to see that cool. And folks just have to be a little bit more rational and get comfortable with the fact that this is what a normal market cycle looks like. Right. The last two years have been a sugar high that there was no way it was sustainable. The super low rates, lower for longer or whatever the terminology was, the transient that turned into it's here forever. And now we hear about Bostick suddenly wanting to come out. And I think that was a little bit of a precursor to saying we maybe don't even need to go 50 basis points twice in a row like we were expecting through the remainder of this year as the Fed, because we're patting ourselves on the back and

saying, hey, guys, we got there. We did the thing. We did a good job. And I'm very concerned that that could have a more lasting effect, pushing any imminent recession that we do end up having into longer term because the Fed isn't as willing to do the hard thing, go 75 basis points, go 100 basis points, really stomp on the brakes really hard. And that's going to drag out the long-term effects and the negative consequences, I think, if that is, in fact, the direction they're trying to go. Let's cut to the chase. Malcolm, does that mean you think we're going to put in a new low?

It's tough to say. I'm in the same same camp as Josh there where I'd hate to be the one to say we're going down another 20 percent from here because dot, dot, dot. Right. Because quite frankly, I didn't expect the Fed to be as accommodative as it was in March of 2020 and turn the market, you know, within six weeks or whatever it was. And suddenly we're off to the races. And so there's really no telling what market forces could come in here and really make a difference the second half of the year. But I think what is really important is to make sure that investors expectations are realistic and are in alignment with the fact that, like, if you're worried about the Nasdaq falling another 20% here, you have no business being invested in the QQQs. If you're worried about the S&P falling another 10, 15% from here, you have no business being in the tech heavy indexes that are going to take the brunt of that hit going in the wrong direction. So now is the time to actually reassess your time horizon and your risk tolerance and make sure that you're not just swimming in the pool with everybody else, knowing that you really don't belong in the deep end where we're talking about.

OK, all good points. Now, you know, we've also, Josh, come to a point of time where people now say there finally is an alternative to stocks. And you have some talking about cash. Ida Liu of Citi Private Bank was on with Sarah last hour and said, we do think bonds are back. And I knew I know you to some degree do as well. That factors into this conversation, too, about where you want to be invested and stocks. There there is no alternative is over because now there is an alternative, isn't there? So, yeah, no, it's a really good point, Scott. I think when you're looking at asset allocation models, in real terms, you're still not being adequately compensated in a 10-year treasury given prevailing rates of inflation. However, I think most reasonable people understand that inflation is not going to be 8%

each month, every month, you know, for the remainder of the year. The comps get much harder for inflation when we get into the second half of this year. And so you're going to see those year over year, those year over year comps get easier, meaning inflation not be appearing to be growing as quickly, if that makes sense. So a little bit of that is just like kind of a mind trick. But if you're thinking about money that you have to use in the next two years, three years, four years, and you can earn 3% on that and not take risk versus taking the kind of risk that we're seeing in the stock market this year, given where the VIX has been, given standard deviation, yeah, you're going to see some people opting to not add that incremental amount of stock

to their portfolio that they might have two years ago. And again, that's part of this bigger sentiment shift that we're talking about. Not to get too negative, one positive. I do think we are now at the point where some of these inflation data releases are going to surprise us positively. So I talked about this yesterday. June 10th, we get May CPI. The estimate right now is like 8.1%. If that number comes in with a seven handle, it could spark a pretty substantial stock market rally, just given how negative sentiment has gotten. So that's why I don't think you want to like fall all the way off the fence into one

camp or the other. You have to keep your mind open for positive shocks as well as negative shocks to impact the tape. Hey, Scott, can I add something to that real quick? Yeah, briefly, because I want to move to another topic before we have to go. Yeah, I think this is where my friend Josh and I might diverge a little bit, because I'm actually equally as concerned about the bond market as I am the stock market right now, simply because they seem to be so positively correlated over the last, I don't know, nine, 12 months. Right. And so if I'm concerned about putting money to work in the stock market, I have to be almost equally as concerned about putting it to work in the bond market just because

bad days in the stock market have in the last few days equal bad days in the bond market as well. So I would rather just sit on it as cash and take the hit from inflation eating at that money versus putting it into the bond market and losing five, six percent right along with the stock market. Understood. The topic I wanted to get to, Josh, before I lose you, is Sheryl Sandberg stepping down as CEO of Meta, the former Facebook. What's your reaction from somebody who I know does not own the stock, won't own the stock, and has taken issue from time to time over the, I think, the direction in which Mark Zuckerberg and Sheryl Sandberg have taken the former Facebook? Well, I wish her well. I think in the early years of the company being a public company, she was a really big part of their success. She was exactly what I think they needed to have alongside Mark Zuckerberg to make him palatable to the investor class. back and remember 2010, 2011 with the hoodie, you know, he's grown up a lot since then, but he was genuinely a child at that time. And I think her presence, you know, she had been involved with the Clinton administration. She had financial experience. She was with the treasury. She had been at Google. Like she was the thing that was necessary for Facebook to have become, you know,

a 20, 30, then 50, then $100 billion company. I really don't think he could have done it without her. I think he's gone out of his way to acknowledge that. I don't know that this changes the shareholder base's mind about the prospects of Facebook. I don't think anyone looked at her presence there and said, yes, this is important for innovation or for product or anything like that. And she's going to stay on the board. So it's probably not that big of a change in real life, but we'll see, because the next time he goes through a crisis without her, it might not go as well. Keep in mind, they have survived like 10 existential threats in the 10 or so years since they went public in 2012.

So on the 11th version, can he navigate it without her by his side? I'm not sure. I guess that remains to be seen. And in many of those cases in which you describe, she was the front person cleaning it up, if you want to characterize it as that. And the other point that I guess I would make is that not too many COOs become notable publicly. Not saying that everybody walking down the street knows the name Sheryl Sandberg, but I can tell you a lot more people know her name as a COO than do many others.

So it's interesting, and that speaks to the presence that she became in Silicon Valley and for this company in general. Somebody told me that she's David Einhorn's cousin, and I had to Google it. I didn't believe it. So you learn something new every day. There you go. All right, guys, I appreciate it. That's Josh Brown, Malcolm Etheridge joining us. I know we'll talk to you again soon. Earnings are out. Chewy is out. The stock is soaring right now in the OT. Earnings coming in at $0.04 a share. The street was looking for a loss of $0.14. No shocker that the stock then is up 22%. Revenue basically in line to estimates as well. We're going to have the CEO of that company on, by the way.

Sumit Singh is going to join us in a first on CNBC interview. That's coming up in just a few minutes, as he obviously has a good story to tell today. And we'll test him on it. We'll see where we're going from here. GameStop earnings are out. Steve Kovac has the numbers for us. Steve? Yes, I do, Scott. One point three eight billion in revenues, the number for last quarter and a loss per share. Two point two dollars and eight cents. That's a gap. We don't have comparisons for that, but those are the results. And what I was looking for is any more information on this NFT marketplace they're planning to launch. No news on that yet, but they only have a few more weeks left to launch this thing they're kind of betting the company on

to meet their second quarter goal. So maybe some more color in that at the call, Scott. I mean, this, Steve, you know, the way that this stock has traded lately, if you put like a one month chart up guys in the back, if you can do it at this point, the stock was eighty nine dollars on March 24th. And then it shot all the way up. There was like me mania again for a moment in this name. And you get the picture here for a one month. Right. Eighty nine dollars, Steve. On May 24th, it was one thirty on May 30th. Right. And here we are today as it reacts to its earnings. Yeah. And it's been cut in half over the last 52 weeks. So before we saw this market downturn, it was already on its way down. So it's it's it's heyday is over. That's for sure.

But again, it seems like everyone's kind of hinging their hopes on this NFT thing that they haven't really explained how it's going to work other than launching a wallet that only works in a web browser just the other day. Yeah. All right. Steve, thank you. You pop on if you got anything else. We'll definitely play that. Josh Brown, I'm told I still have you with me. So you have a comment on this. I mean, as I as I noted of the stock move of the last month, there was a moment in the sort of frenzy of a rally where all of a sudden this thing woke up again. Yeah, I'm trying to figure out if it trades more with crypto than it trades with the Nasdaq. Like, it's not really a tech company. It might become one.

I kind of feel like the correlation here is really like probably the shareholder base are people who are trading crypto all day and then like throw in some GameStop. It doesn't really feel like it's an index kind of stock or that it's got any real correlations to anything, you know, in the tech market per se. One thing I would say about if the NFT thing is going to be successful or not, is there enough of a business there that anyone's really going to be successful? Because other than Bored Apes, most NFTs seem to have lost their bids entirely. There's not a ton of dollar volume going over even the largest of these exchanges. And now there is like regulatory action against some of the people who have been involved there and have been potentially front running NFT placement on these sites. And what does that do in terms of buyer and seller psychology? Like, are people still going to really be interested in this so if that's what they're betting the company on i guess you have to be really bullish just on nfts in general not just on whether or

not gamestop is going to build the best mousetrap in the space so uh that's not really my area i don't have a strong view one way or the other but that feels like it's the bet that you have to make more so than on anything else. Well, you always bring us good perspective. Nonetheless, Josh, I appreciate it. And as I said before, I'll see you soon. Coming up, Julia Boorstin just spoke with Sheryl Sandberg about stepping down from her COO role at Meta. She's going to tell us exactly what she said next.

Plus, Quadratics Nancy Davis joins us with her volatility playbook, what she is forecasting for the month ahead after the wild swings we saw in the month of May. Later, we're live at Morgan Stanley headquarters for a CNBC exclusive with the bank's co-president, Ted Pickett. It's his first ever TV interview. His take on what could be next for the markets. His company that's just ahead. Lots is coming up. Don't go anywhere. We're back in two.

Will June be as volatile as May or possibly even more? Our next guest runs an ETF geared to capitalize on interest rate volatility while hedging the risks around inflation. Nancy Davis, Quadratic Capital's founder and CIO. It's nice to see you again. Hey, Scott. Thanks for having me on your show. All right. So new month after what's been a crazy one, obviously, in May. Are we in store for even more volatility, particularly from the rate side? Well, today is June 1. We are starting the first day of actually having quantitative tightening.

So the Fed's taper ended on March 9th. And today is the first day that the Fed is not going to be reinvesting that balance sheet. So today is day one of not having the continual bond purchases. So I think it's time to crank it up. Vol, I expect, and fixed income will be going higher. Really? I mean, across the curve? I mean, how do you look at it? What specifically are you going to be looking at? Yeah, it's generally the rates market. Most investors, any place that you have mortgages inside your fixed income portfolio, you're actually short fixed income volatility. If you think about it, homeowners can prepay their loan whenever they want. So the owner of that financial mortgage is actually short options to homeowners. And when

you're short options, you're short vol. So it's very important for investors to realize that they probably have embedded short fixed income vol inside their bond portfolios right now. The Bloomberg Ag, for instance, which is considered core fixed income, about a third of that index is mortgages. Interesting. I mean, your headline continues to be you don't think the Fed's going to pull this off. That's the bottom line. Well, I think the Fed has moved the market already with the number of rate hikes. Just this year alone, with six months left in the year, we have 190 basis points of Fed hikes already priced in. I think they're going to be using the balance sheet more as a tool because we've only had 75 basis points of actual hikes. And you can see

kind of the financial Armageddon that we're already seeing in the markets this year. So I think the balance sheet will be more of a tool to kind of squash inflation and inflation expectations, not just the rate hike side. You also continue to talk about stagflation. And I'm wondering if you if you really think that's what is going to be the case and if so, how long it's going to last, because even if there is a period of it, it doesn't necessarily mean that it's going to be longer lasting. Yeah, definitely. We've had one negative GDP print so far. I think stagflation, I hope it doesn't happen. I hope it doesn't last long. But that's kind of the nightmare scenario for a 60-40 portfolio because stocks and bonds, if they sell off together like they have so far in 2022,

that's when your portfolio construction, your diversification doesn't help because everything's going down together. So I hope it doesn't happen. I hope we recover. I hope it's not a stagflationary outcome. But if you define stagflation, it's higher prices and lower growth. And we've definitely been experiencing that so far this year. Yeah, I got to let you run. I hope you'll forgive me. I have breaking news, though. I have to get more of that. I'll have you back soon. That's Nancy Davis Quadratic. Back to Julia Borsten now. As we said, she just got off the phone with Sheryl Sandberg. Julia. That's right. I just spoke to Sheryl Sandberg about her decision to step down from Meta as COO.

She's been at the company for 14 years and she stressed to me that this decision is very much about her decision to do something else with her life and to focus on her philanthropy and does not have anything to do with some of the challenges that Meta is facing right now in terms of the advertising slowdown or some of the regulatory overhang that she's had to reckon with, some of the testimony she's had to do. But she says this is really because this is a job she's been at for 14 years. She thought she was going to do it for five years. And when I pressed her on some of the challenges the company has been dealing with, she said, quote, the job has been the honor and privilege of a lifetime. It's a job that I love, but it's not a job that you can do and also do other things. She said she

very much wants to focus on helping women and said that this is a time that you can do and also do other things. She said she very much wants to focus on helping women and said that this is a time that is more important now than ever to focus on helping women, both in the, and something that she's been focused on both in the U.S. and around the world. She also said that she wanted to make it clear she is staying on the board. She has full confidence in the company and she's very optimistic about the future of the company because of the team that she helped put in place. She mentioned people such as Marnie Levine, who is someone who has really risen through the ranks underneath her. And she talked about how her replacement SEO, Javier Olivan, will really have a very different type of job. He won't be overseeing the things like public policy that she was in charge of her human relations, but she does think that both Javier

Olivan and the rest of the team is very well positioned to take over when she does leave, which will be in the fall. So she's going to be helping with the transition there. So very much stating that she does expect to focus on philanthropy. I asked her if she might go work for another company or start another company. She can't predict anything, but her expectation and plan, Scott, is to focus on philanthropy. Do you before I let you go, Julia, not to put you on the spot, but, you know, Cheryl well, I know that you've interviewed her on a number of occasions and, you know, this company as well as anybody else.

Do you know how she truly felt or feels about the transition to the metaverse that Facebook is trying to make and how it is, let's just call it, away from, let's say, the core mission of a company that she joined such a long time ago? Well, so I asked her a little bit about this when we were on the phone just now. I said, is this really because Facebook is transitioning to this long-term metaverse plan? And she said, look, we have been focused on the metaverse or different parts of the metaverse for a while now. So what I would suspect she would say, if I'd had more time to press her more on this, is that the company has constantly been in transition. It has been a constant evolution.

Remember, they went from desktop to mobile, from the news feed to the stories format to the mobile feed. So there have been a lot of transitions. And I think she would say that while obviously the company rebranded and made this big declaration of a commitment to the metaverse, it has actually been a more gradual transition than that. And she said it's notable that the person who is in charge of the metaverse stuff now, Andrew Bosworth, is someone who has worked with her on advertising. So she wanted to point out that who is in charge of the metaverse stuff now, Andrew Bosworth, is someone who has worked with her on advertising. So she wanted to point out that there is perhaps more of a through line there than outsiders might think. So she was I think she would say that this has been a plan that's been in the works for a while.

But, Scott, I do hope she will sit down with me again for another interview and give us a little bit more insight there as she sat down with us in the past. All right. Pitching on live television. That's that's all. That's all good. All right, Julia. I appreciate it. Thanks so much. Good to get your insights. I'm really straight off the phone with Sheryl Sandberg. It's time for a CNBC News update with Shepard Smith. Hi, Shep. Hi, Scott. From the news on CNBC, here's what's happening now. A verdict in the defamation trial between Johnny Depp and Amber Heard. The jury's siding mostly with Depp, awarding him $10 million in compensatory damages. Depp sued his ex-wife for an opinion piece she wrote in the Washington Post, and she

calls herself a victim of domestic violence, but never names Johnny Depp directly. Amber Heard also countersued. The jury awarded her $2 million on her claim. One of the teachers killed in the Uvalde school massacre buried today alongside her husband. The gunman killed Irma Garcia inside her classroom. Her husband, Joe, died just two days later from an apparent heart attack. The Garcias were high school sweethearts, married 24 years. And nearly 4 million bottles of baby formula set to arrive in the U.S.

beginning next week. It's the latest shipment from the White House's Operation Fly formula. President Biden also meeting virtually with formula manufacturers today to discuss new ways to increase production here at home. Tonight, analysis of the Depp and Hurd case, Jamie Dimon's inflation warnings, and NASA gets a makeover with new spacesuits on the news right after Jim Cramer, 7 Eastern, CNBC. Scott, back to you. All right, Jeff, appreciate it. Shepard Smith, Chewy, just reporting results a few moments ago. Stock is shooting higher in the OT. Up next, the CEO, Sumit Singh, joins us to break down that quarter and the recent shift in e-commerce spending. Overtime's right back. We told you Chewy earnings are out and the stock continues to jump higher, better than 20 percent in overtime after beating on earnings and revenue.

Let's bring in Chewy CEO Sumit Singh for more on that quarter. It's good to see you. Welcome to overtime. It's good to be here. What to Overtime. Hi, Scott. Good to be here. What do you think the market's focused on? The fact that you reported a profit when expectations were for a loss? Well, I think generally, look,

I think the team executed really well through the quarter, right? And I think the results reflect the resilience in the pet category. And it also reflects our ability to execute through that, through macro environment and deliver results to our stated objectives. And the fact that we grew top line by 14 percent and delivered incremental profitability, really great sequential momentum. I think we're getting rewarded for good execution here. Yep. If you don't say so yourself. I did notice that you are suffering a few of the issues that some of the other retailers that have reported are dealing

with. Shipping and labor costs are higher. Your margins fell slightly. And I'm wondering how that dynamic is going to play out, do you think, in the months and quarters ahead, if it's still going to be an issue? Yeah, I think there's a lot left to play in the year, Scott. But, you know, when we came into the year, if you recall our April earnings call, we essentially are coming in with a headwind of, you know, roughly 100 to 150 basis points as a result of incremental freight, in which our fuel estimates are actually baked in. And so, you know, given that we've played the quarter, you know, given our ability to be able to pass pricing through and drive healthy gross margins on the back of product margins, and also the fact that we're driving

logistics and supply chain initiatives inside the company that are actually providing the leverage that you see here, what it tells you is that we have the ability to shape and steer through the current macro environment to be able to deliver the results. Now, you know, it's obviously what needs to be seen here is how much inflation is still left in the system. How would inputs like fuel or product cost inflation kind of flow through the rest of the year? But, you know, we're prepared to kind of handle both the pluses and the minuses as they come along. And we're bullish about the future. I'm looking at the active customers that you have, 20.6 million. It's the same number that you had when you last reported.

How about growing some more of your subscribers? Yeah, it's a great question. Look, when you look at it from a year-over-year perspective, right, we grew active ads by roughly 800,000 customers or just over 4%. And when you combine that with the fact that share of wallet, which actually is a really important input metric that drives our revenue. So when you look at Chewy, it's the active ads that we bring onto the platform and then the spend per that customer, that spend per customer grew 15%. And so it tells you two things. One, we're still acquiring customers that are really healthy clip. And B, customers who we are engaging with or customers who are engaging with the platform are incrementally spending really healthy sums to be able to grow net sales per active customer by roughly $58 on a year-over-year basis. is this kind of ebb and flow as the consumer mindset reacts to inflationary pressures, as consumers start kind of traveling and spending their dollars on restaurants or travel,

as the economy reopens back up and some of the consumers flow back into retail. But look, on the back of that, e-com continues to grow, right? When you look at Q1, let me give you two data points. Actually, three, because I'm going to throw Chewy next to it. U.S. retail sales grew about 11% in Q1. Ecom sales grew at 6.5%, and Chewy grew 14%. So not only are we growing on top of the strong ecom growth in Q1, we're actually taking share both in pet and overall ecom. And that's actually a great place to be. Yeah. I'm looking at your shareholder letter. And real quick, the prior quarter you cited, quote, fundamentally strong consumer demand. I read the latest one and I read it quickly. To be totally honest with you, I didn't see such strong language this time about

the consumer demand that you noted last time. Am I reading too much into that? Can you speak to what you think is the strength of the consumer right now when there are so many questions about it? Yeah, you may not have seen that in the preview comments here, but you'll definitely hear it on the earnings call that we're about to get into. But underlying trends haven't changed as we played the quarter sequentially. We still are underpinned by strong fundamental consumer demand and resiliency, particularly driven in non-discretionary categories such as consumables and healthcare,

which were further boosted by strong, you know, pricing that flowed through the quarter. And any, you know, pullback that we're seeing is very consistent with the rest of the industry in discretionary purchases such as hard goods, et cetera. And I think, you know, up until the macro environment stabilizes, we should expect to see, you know, similar trends, at least in pet, we should expect to see a similar momentum and similar trends for the rest of the year. Wall Street certainly likes it today. Sumit, I appreciate your time so very much. I'll see you soon. That's Sumit Singh, the CEO of Chewy.

More than 20 percent of the float is short as well. So maybe get a little bit of a short squeeze going on. We will certainly see what that stock does in the hours and days ahead. Still to come, stormy skies ahead. Mike Santoli gives his take on Jamie Dimon's latest market warning. But first, we are breaking down more big movers in the OT. Who else? Christina Parts and Novelos has them. What's coming up? Well, I've got another retailer, warning about its full year guidance and a $100 million revenue beat. And that stock is also surging in the OT. I'll have those names and obviously much, much more right after this short break.

We're tracking the biggest movers in the OT. Christina Parts and Novelos is doing that. Christina? I want to start with Pure Storage because the stock's surging right now. This is a company that provides data storage for hardware and software. It posted a $0.04 earnings beat along with sales of $620 million, which is more than $100 million than what the street was expecting. Subscription reoccurring revenue, which is pretty much the bread and butter for many of these data storage firms and accounts for 34% of Pure Storage's business, climbed 29% year over year, the company raising its guidance. And that's what's pushing the stock

up over 8%. We also have the parent company of Tommy Hilfiger and Calvin Klein posting a small beat on the top line, but earnings beat by a much wider range. The CEO pointed out their plans to focus on direct-to-consumer, so this is interesting, not through store brands, and really focusing on brands such as Calvin Klein as well as Tommy Hilfiger. The company lowering, though, their full-year revenue outlook, and yet the stock is climbing well above 4%. And lastly, lastly, shares of C3 AI, an AI enterprise firm, posted a smaller-than-expected loss with a revenue beat, but the company posted a weak Q1 and full year revenue guidance, and that's causing the stock to plunge 20.5%.

I feel like Vanna White. Christina, thank you. Sorry, go ahead. Well done. Well done. The Christina parts of that was. All right, coming up, Morgan Stanley's co-president Ted Pick joins us exclusively following today's Bernstein Strategic Decisions Conference. We'll get his take on the broader markets and the future of that firm.

We'll do it next. Top bank executives speaking at the Bernstein Strategic Decisions Conference this afternoon. Morgan Stanley's co-president Ted Pick joins us fresh off that conference along with our own Leslie Picker. Let's take it away. Hey, Scott. Thank you. Yes, we are here at Morgan Stanley with Ted Pick. Thank you very much for joining us today. Morgan Stanley's business is unique because you span so many different types of clients. You've got corporate, high net worth, wealthy individuals, retail investors.

Can you give us a sense of what confidence looks like among these various demographics and these groups and how they're putting money to work in an environment that you described earlier today at the conference as a paradigm shift? Well, Leslie, first of all, welcome to Morgan Stanley. Thank you so much for coming. Thank you for having me on CNBC. It is an extraordinary moment, isn't it? A hundred years since we've had a pandemic, 75 years since we've had a war in Europe, 40 years since we've had a pandemic. Seventy five years since we've had a war in Europe. Forty years since we've had inflation. And they're all happening at once. They're intersecting. It creates a lot of uncertainty. It's on everyone's minds. I think it is the beginning of paradigm shift. We're going from a period of 15 years of low inflation and low interest rates into what's next. And what is next? Is it a period of fire, of inflation, or is it a period of ice, recession? And that's what we're all grappling with right now. And so what does that mean for your business exactly? And maybe we can start with M&A,

because you have a very diverse business. At this point in the cycle, do you think that the pipeline, much of which has been paused so far in 2022, is actually delayed? Or do you think it's just dead at this point in time? And what would it take to really jumpstart this business? I think when there's uncertainty, boardrooms take a second to look. But the reality is when you think about the pandemic, the war, the inflation that we have, they're going to be with us for the next year, two years, three years. And after taking a pause during COVID, I think boardrooms

and executives are ready to move. They know, for example, that supply chains have changed. They have the telescope out. They're looking at the big picture and they're saying, you know what, we may need to make an acquisition given the new supply chains, or they may need to make a sale. So I actually like the idea of the M&A cycle getting going again as we get into the second half. Given that, are you hiring more bankers to anticipate that? It's actually a good question. As you know, investment banks are famously pro-cyclical. We hire right into the peak. But I do like the idea of Morgan Stanley, which, as you know, has a world-class investment bank and investment banking franchise where we advise folks in the boardroom. I like the idea of us hiring bankers for the next 6, 12, 18 months in sectors

that have been dormant for most of the last 15 years, the energy space, the transition to ESG, the financial space. I think there is room for additional bankers at Morgan Stanley, and we're spending some time on that. So maybe paring back on the tech side, the San Francisco banking, and putting more headcount in some of those more industrial, old school type of sectors? I think actually, Leslie, it will be a net add. We have that world-class Silicon Valley TMT franchise. We like it as it is right now. And a lot of industries are now bleeding into TMT. I think what we're talking about is adding additional players in the underserved sectors,

the sectors that have been quiet for the last 10, 15 years, while preserving that juggernaut we have in the technology franchise. Speaking of juggernaut, I want to ask you about trading. Last week we did get trading guidance from J.P. Morgan at its annual meeting, or I'm sorry, their shareholder meeting. They said that in the second quarter the revenue would be about 10 to 15 percent higher. Are you seeing the same kind of thing, especially in FIC, which you are credited with turning around up to doubling market share? You know, is this a good environment for trading right now?

Will we see that in the second quarter? It's interesting because the trading businesses are very active, both on the equity side and the fixed income side. The equities investor needs to adjust to this new paradigm of potential inflation. They need to think about whether there's recession down the road. They need to own something more than these bond proxy big tech stocks. And fixed income which as you know has been dormant for most of the last dozen years, the rates business is active again. The Fed is moving so folks want to hedge their risk or they want to play the interest rate curve. Foreign exchange is active again. The Fed is moving, so folks want to hedge their risk or they want to play the interest rate curve. Foreign exchange is active again. Credit continues to be very busy. So

yes, the markets business as a whole is active and will be up versus last year's period. What does that volatility mean for stress on the hedge fund community? You have a very big prime brokerage business as well. Are you seeing some capitulation on that front we're not seeing capitulation we're definitely seeing dispersion of returns there are folks that have had a great run that for the first time in a long time are having a tough year but a lot of these hedge funds are highly institutionalized they've been through multiple cycles they know how to weather the storm they've been de-levering i.. getting smaller for the last several months. When there are rallies like there were yesterday, they'll sell into them. I think a lot of these hedge funds are here to stay. They're thinking about their business model. They're not looking

to either make it or break it in a given year. If you Google Ted Pick, who, by the way, just to clarify things for our audience, not related to Leslie Picker, but your name is mentioned alongside. There's kinship though. There is. Being an heir apparent to James Gorman, current CEO. Last week, he told shareholders at your annual meeting that he does not have plans to retire. Yet this is your first TV interview ever. So I'm curious if this is part of the grooming process for that CEO suite role. Well, James Gorman is a fantastic CEO. He's remade

Morgan Stanley, as you know. We made that acquisition of Smith Barney. We bought E-Trade. We bought Eden Vance during the pandemic. He's led this place brilliantly. And we're so lucky to have him. We have a great team. We all get along real good. We have grit. We're a determined bunch from the days of the financial crisis. And for me, job number one is to run the investment bank. That's what I think about coming in every morning. Mel, you've been here 30 years. Something tells me you're not going anywhere anytime soon. But we appreciate you sitting down with us today. Ted Pick, co-president of Morgan Stanley. Thank you so much for coming. Thank you. Scott, I'll send it back to you. Okay, Leslie, thank you. Our thanks to Ted Pick as well. Up next, Santoli's last word.

Time for Santoli's last word. I didn't have a chance to cheat or anything today. I didn't see any of the notes. What do you got? We're learning along with everybody else. Stormwatch, I guess we would call it. You know, we've been talking all day about Jamie Dimon's comments about the potential for a hurricane brewing. Now, granted, it would be a pretty

well-forecasted storm if it did strike. He's mostly focused on quantitative tightening, so the Fed reducing the size of its balance sheet, which, of course, it has told us about for months in advance. And then oil, maybe because of the war getting up to 150, 175 a barrel, would not be good in either case. But I do think it's important to remember that Jamie Dimon, as leader of J.P. Morgan, has positioned himself and the bank as the fortress that will get you through bad times. Almost the identity is we're the prudent ones when things get rough. And he said, we're going to be careful about how we extend capital into these markets and they're going to be focused more on risk mitigation, which I think is fine, but it's more preparatory than it is predictive. Well, because even he says, I mean,

it essentially could be a category one or a category five. Exactly. And by the way, they can also turn out to sea sometimes. You know, you go back to his shareholder letter from early 2015 and he says there is going to be another financial crisis. Of course, he wasn't saying it was imminent. But the point is is that's the orientation. It doesn't mean it's wrong, but I think we're in general, what we've been doing is bracing for something like this for several months right now. I mean, look, he's a person of extraordinarily high stature in the finance world. So when he speaks, you listen, regardless of what he says. Absolutely. However, it's worth noting, look, Dubrovko Lakers of J.P.

Morgan, who's one of their main market talkers, publicly was on with me today at halftime and suggested that stocks could go up an awful lot in the second half of the year, like a lot. Exactly. Yeah. So I think, look, if you are if you're there and you want to preserve the capital base of this bank and make sure you're not making silly decisions, that's the orientation you have is to be careful. If you're looking for opportunities in a market that's already down in valuation and already looks like people are positioned defensively, then it's a different call about the next 10 or 15 percent in the market.

I'm just looking over your shoulder because I was looking at volume, and down volume was almost 2 to 1 over up today. We've spilled back a little bit, right? So you had three days in a row you had 80 percent percent up volume coming into the weekend and now you've been negative. So it's it's it's in the mode of general digestion at this point. Obviously could get worse from there. I think if the S&P holds 4000, you'd consider it a net victory on this run. Yeah. And June, I mean, you know, look, May is usually, you know, they say sell in May, go away June. Who knows? For the for the most part, it can be a split.

Well, normally at this point, you're up 4%. All right. Well, we'll see. Thank you.