Closing Bell - Closing Bell Overtime: Affirm CEO On How Its Customers Are Holding Up Amid A Slowing Economy; Zuckerberg Swipes At Apple Vision Pro 6/9/23

Episode Date: June 9, 2023

Stocks ended the week higher: the Nasdaq notching its seventh straight weekly gain. Envestnet’s Dana D’Auria and G Squared Private Wealth’s Victoria Wealth break down the market action and look ahead to what will drive the action next week. Unlimited CEO Bob Elliott talks the rally in regional banks and if the turmoil is behind us. Retail traders are finally buying back into the market; is AI the reason? The Wall Street Journal’s Gunjan Banerji on what the data says. Meta is releasing its Twitter competitor. Slow Ventures Co-Founder Sam Lessin on what Meta is trying to achieve and if it will work. Cohesity CEO Sanjay Poonen talks next week’s major software reports: Oracle and Adobe, combining for nearly $500B in market cap. Stat News Senior Writer Matt Herper on the FDA’s Biogen/Eisai decision.

Well, green across the board, that's a scorecard on Wall Street, but winners stay late. Welcome to Closing Bell Overtime. I am John Ford. Morgan Brennan has the day off. Coming up this hour, the meme reversion. Does this year's AI-driven rally have echoes of the meme frenzy of the days of 2021, or are there different spirits driving the action? We will debate it ahead.

Plus, we are awaiting the latest read on bank balance sheets from the Fed. We will bring you that breaking news as soon as we have it. And now let's get straight to the market action. Joining us, Victoria Green from G Squared Private Wealth. And the question now, Victoria, I mean, this week's over, but ahead next week, we've got Oracle earnings. On Monday, we've got, you know, the Fed in the middle of the week. Investors need to know what to do from here. Now, this is being called a bull market. But how much of a bull is it really? Is it a market with some really bullish big stocks that have run this far?

Yeah, thanks, John. I know it is it to be or not to be. Is it really a bull market? I think it depends on what market index you're looking at. S&P equal weight, value, Dow, definitely not in the bull market territory. NASDAQ, chip stocks, the Elite Eight, absolutely running. But I do think you're seeing a pause there and you're seeing this mean reversion here in June where you've seen small caps run. You're seeing value do better the last two weeks. And growth isn't necessarily completely tanky and rolling over. But you are seeing, I think, some profit taking, which is what we are advocating right now.

These stocks are very profitable, but they are absolutely priced to perfection, especially in Nvidia. That stock is just it cannot afford to have any lapses. The expectations, it's like 50 times forward earnings. It can't have it be delayed or late. So while I agree this week definitely felt like the JV football game before the real varsity game next week, it was still an important week. Okay. Well, let's add in Dana D'Orio from InvestNet to this conversation. Dana, if you had less equity exposure than you wanted to start the year and you're feeling kind of bad about yourself right now and you want to get into equities, what area of equities should you get into? Are the smaller caps still priced in a way that you can get into them? Are there certain

sectors that you're looking at? Sure. I think it's a matter of what's your time horizon. I'm a very strong believer in small, small value in particular. Long haul, these stocks do tend to outperform. I think we're extremely top heavy I'm going to echo. What you just heard from the other speaker that. You know you just you're you're so concentrated in the index

right now. That to the extent that you're in the equity market and you're you're hugging the index. Tilting toward. You know I would say value stocks of for example we're probably looking at liquidity coming out of the

market for a variety of reasons going forward. Treasury general account has to get probably looking at liquidity coming out of the market for a variety of reasons going forward. Treasury general account has to get replenished. Monetary policy acts with a lag. That would favor a little bit of a value tilt. So you can't take a huge tilt because what client, what investor can really stand that tracking error? But a bit of a tilt, right? Get into some value, lower price stocks.

Okay. Victoria, if you are trying to rebalance your portfolio or maybe balance it, maybe it's never really been balanced up to this point, particularly on the fixed income end, from a historical perspective, how good are the values right now and how should investors pursue that? Yeah, I think you got to be a little careful with credit spreads are pretty narrow. The potential of any stress, they're kind of widening them out we are looking at maybe looking at on adding on some duration if you assume we do have a pause coming which you have to admit bank of canada and australia has made a step back now about 30 chance of a hike or a non-hike sorry non-hike probably not

going to hike only 30 chance of a hike on on next week but there is potential after those two central banks went, you know, how the Fed reacts to CPI. That is definitely going to dictate the fixed income market. I'm a little wary of high yield. I do think if it is a pause and we are getting to this next leg of a Fed cycle, then duration is your friend. And you want to be locking in some of these rates. You know, I know everybody's been rolling this front end. You're getting paid a lot for that zero to one year on the treasuries and the money markets. But at some point, you want to be looking at some of these longer end, the intermediate part of the curve that could see some good steepening if the Fed

does pause and it's a well and truly pause, not a skip. So Dana, what do you like there? Because interest rates are historically pretty high. If you're looking to do some tax consideration and management there on yields, how do you do it in this market? Yeah, look, I think the chances are that we are paused at least. I'm not a proponent of the notion that we're headed for a pivot. You know, it's certainly possible. We know that potentially we have a recession coming. I mean, certainly it's been prognosticated enough that we have a recession coming. So maybe there is. But I would be more prepping for, you know, a pause than I would for a pivot. I think, you know, really from the perspective of folks who are dealing with retail clients,

the advisor base, which we work with, it's really a matter of diversifying across that curve and making sure that you're not concentrated. I agree, you know, credit is something you have to look closely at because if we are headed to recession, chances are we're not in recession now, notwithstanding some pundits will say, well, we maybe already are. But if we're not, the market doesn't really bottom until after you're in the recession. So if that's the case, we have more market volatility ahead. To clarify, if you're just in the S&P 500, are you concentrated by accident based on the move that we've seen over the last several months? Yeah. Yeah, for sure you are.

Look, I mean, the vast majority of the return that we've seen so far this year all comes from the S&P 500. The average client doesn't really see this, right? The market looks great because their indexers are their closet indexers to a large extent. But yes, you know, seven stocks, call it eight if you want to throw in Netflix, make up 10 of 12 percent of this return. So you are absolutely concentrated. Really, it's getting to an unprecedented point. All right. Trader, investor, beware. Dana, Victoria, thank you. Thanks, John. Have a good weekend. And we turn now to CNBC senior markets commentator Mike Santoli at the New York Stock Exchange. Mike. Yeah, Victoria, thank you. Thanks, John. Have a good weekend. And we turn now to CNBC Senior Markets commentator Mike Santoli at the New York Stock Exchange. Mike. Yeah, John, wanted to frame out exactly the progress made by the S&P 500 over the last little bit here, getting to 4,300,

just about right on the precipice of it and how that matches up with, let's say, the rally of 19 percent on a closing basis that we saw into August. That was this move right here. In retrospect, it was a bear market rally because you did make a new low in October. But I have the moving averages in here to show another difference between them. As we were going on the way up last summer, you still had this 200-day average in a downtrend. So that's just a longer, slower-moving indication of which way the trend has been going. Now, we kind of tilted higher on that measure a couple of months ago, basically at the end of the first quarter. It's when the S&P crossed above that. And we've held above that for almost, let's say, two and a half months at this point.

Now, we're getting a little bit stretched in the short term. And of course, 4300 is about the ceiling of the last year. So maybe we have a little bit of a wavering on that front. But so far, so good in terms of kind of buying the benefit of the doubt because we are kind of staying above that longer-term trend line. Pullbacks from here, about 3% to that 50-day average, be no big deal. Take a look at Tesla. Obviously, a big upside driver this year, but also worth kind of keeping in mind how this stock runs in a very streaky fashion. So this is a two year chart. That's the all time high right around with the

Nasdaq peak in November. And you've had multiple moves like this over the course of, let's say, three to six weeks of anywhere from 35 percent to actually a doubling. That was in the January low to that high. So it's all kind of been in the service of, you know, kind of chopping around below those all time highs. Now, you can say is what are we doing here? Are we on the verge of maybe turning the trend? Certainly too soon to say, but it's an emotional stock that does tend to run in these big bursts. And this one's been going for several weeks now, John. Mike, on the S&P, you mentioned us being right near that 4,300 ceiling of the last year. But

how different is the way that we got there based on that very concentration argument that Dana and Victoria were making? That's a distinction. I would say that, yes, it's been a relatively top heavy move. I would also, though, look at it a different way, which is it's been much more gradual and a grind. And it's been kind of building a base and having these little pullbacks. Look at this. This was more like kind of a squeeze and people rushing to hope that maybe the Fed was going to become more friendly or whatever the basis for it was, whereas this has been much more in a way orderly and a little more stable. The other thing I guess I would observe is at this point, the Fed was still saying we're full speed ahead. They had 400 more or 300 more basis points of tightening at least right ahead of us. Earnings estimates were still going down.

They're now stabilizing and kind of flattening and curling up toward the end of this year. So you could say that the market's been too top heavy or you could say the market's actually kind of battle tested at this point. And some of those clouds are breaking up ahead of it. All right. Mike Santoli, thank you. Up next, we'll get the latest report on bank balance sheets from the Fed, the last reading before next week's rate decision. And we'll break down the numbers and the outlook for regional banks with Unlimited Funds CEO Bob Elliott. Plus, an FDA advisory panel just voted unanimously in favor of full approval of Esai's Alzheimer's drug, which was developed with Biogen. We will talk more about that news, the impact for those companies and the industry ahead on Overtime. Regional banks ending the day in the red, but the KRE index closed out a strong week, up nearly 3%.

Performance is stronger if you take a look at the one-month chart, up 16%. So, are the regionals finally out of the woods? Let's bring in Bob Elliott from Unlimited Funds. Bob, the KRE fell to around $44, $45 a share back in March when people were initially freaking out. Then it fell even lower than that to the mid 30s. We're just now back to the initial freak out level. So how bad or cloudy is the outlook for the banks or are they priced at a discount, you think? Well, the regional banks have mostly survived this challenge to them. I think the main question was whether or not this was

going to be a broad systemic issue with a lot of different banks experiencing bank runs, or was it going to be a bit more narrow to a couple of those more poorly run banks that we are all familiar with? And I think over time, the data continues to emerge that the banks basically, most of the regional banks and the smaller banks are run pretty well, are relatively profitable, and they're able to withstand the type of economic pressures that they're seeing. And it was really pretty concentrated in a smaller subset. Now, it doesn't mean the stocks are going to go on a rip from here, but they're probably, I mean, they certainly were a bit oversold relative to the economic situation that they were facing. But are they still is what I'm wondering,

especially because you've still got the commercial real estate issues lurking out there. And there was talk that there was going to have to be consolidation in the regional bank space just because of the capital required and a certain amount of scale required? And there's so many small ones. Is that still an overhang? Well, the commercial real estate situation, I think a lot of people at the height of the concerns really wanted to bring that up. But anyone who's been through a banking cycle knows that it takes forever for those sorts of things to play out. It'll be 10 years before the entirety of the commercial real estate problem gets addressed and dealt with, and we'll be long

past thinking about regional banks at that point. They've got plenty of NIM earning potential. They have plenty of earnings capacity to absorb those commercial real estate exposures. And the frank reality is the vast majority of those commercial real estate exposures. And the frank reality is the vast majority of those commercial real estate exposures are actually in things that aren't sort of traditional, glitzy New York office space. It's in warehouses and manufacturing facilities that are actually doing pretty well. And so you put that all together, I think we're probably seeing these banks still trade at a significant discount relative to their earning potential over time, frankly, now that the bank run concern is by and large gone.

So are these bank deposit numbers important to you? Oh, they certainly are. I mean, we're looking at them every week, every Friday. It's hang out with with you, John, on the TV and look at some bank deposit numbers. And so we'll get those in a few minutes. But you're basically looking at are we seeing bank. And so we'll get those in a few minutes. But you're basically looking at are we seeing bank runs or are we seeing bank walks among the big banks, which mostly what we're seeing is sort of a slow move of bank deposits away from lower-yielding deposits and into money market funds. But it's very slow moving. And then you look at the small banks and you see whether you see meaningful pressure there. And honestly, this used to be pretty exciting, but it's been pretty quiet for the last six or eight weeks when we've gotten those numbers pretty stable when it

comes to the bank deposit data that we're seeing. Yeah. And I keep pushing on this because look at Schwab. Schwab is still in the mid 50s. It was up around 80 before all of this freakout began. So is this some opportunity that some people just aren't seeing? Meanwhile, AI stuff, you know, has been running and whatnot. But the things that people were worried about a quarter ago, there's still this gloom, this smoke, as if from Canada, of worry hanging over them. Is that a play that people should be making? Yeah, I think if honestly, when I look at when we talk to the most sophisticated investors in the world, you know, what we do at Unlimited is is is understand how hedge fund managers

are positioned. They're actually looking at a lot of opportunities in a number of these areas that have been more depressed in the smaller stocks and, you know, trying to take some risk off those U.S. mega cap tech stocks that have been surging of late. And this is an area, you know, where I think that there is where we've seen some investor interest, some promise in finding some value. It's a tough market in general to find value. But the idea that these stocks are priced today like they were when we were deeply concerned about a systemic small bank run across the U.S., that doesn't make any sense. And I think, you know, a lot of hedge fund managers are starting to see that opportunity and

move in. And that's why we've seen these stocks bounce 20 percent off the bottom. So everybody's expecting a pause, assuming that's what we get. What's the color from the Fed that matters next week? Well, I think it was interesting that the segment just before this, you're talking about what's going on with the S&P 500, whether it's concentrated or broad based. The big picture is that the S&P 500 today is where it was when Chairman Powell started this tightening cycle. And that has got to be a concern because the idea here is that they've really got to use asset prices because the economy is less sensitive to interest rate rises than it has been in typical cycles. And so when they look at the asset prices, there's basically been no change in the stock market. And

so stock's basically where they were at the start of this inflation still running at five percent, whether it's core PCE or core CPI, unemployment rate at secular lows, like put those things together. There's basically only one path ahead, and that's for higher interest rates for the Fed. OK, but maybe not yet. Bob Elliott, thank you. After the break, the reversion to the meme. AI stocks have been drivers of the markets rally this year. But are there any echoes to that frenzy that bubbled up then cooled down after the trading days of 2021? We will look at the data with Wall Street Journal's Gunjan Banerjee next. Welcome back to Overtime. The Nasdaq touching a 52-week high today

while the S&P 500 is trading at its best levels of the year. And retail traders are getting back into the action, according to new data. Pippa Stevens has that story for us. Pippa? Hey, John. Well, inflows from retail investors averaged $1.36 billion per day

over the last week, according to Vander Research. Now, this marks a turning point since retail investors had largely been on the sidelines over the last three months. The firm pointed to several factors driving the inflows, including better than expected economic data and the debt ceiling deal. But most importantly, enthusiasm around AI is really what's fueling this round of buying. That is notable because initially retail investors weren't really buying the hype. Because of that, Vanda said levels don't look frothy, with likely more retail buying in the coming weeks. Now looking on a more granular level, we can see what retail investors are actually buying.

Tesla tops the list with $1.22 billion worth of shares purchased in the last five days. Apple and Nvidia follow, each with more than $300 million. AMD and Amazon round out the top five. Now, those figures are on a total dollar basis. But if we look at which names are seeing the most new interest, Dollar General takes the top spot. The retailer saw more than 300 percent increase in volumes over the last five sessions versus the prior month. T-Mobile and Lululemon, John, also seeing a jump in interest. Post earnings on overtime, Pippa, thank you. And with retail traders back in the fold,

that got us thinking. Are there any similarities between this AI-driven rally and the frenzy over memes from a couple years ago? Joining us to discuss are Gunjan Banerjee, lead writer at The Wall Street Journal and a CNBC contributor, and our Mike Santoli. And guys, both of you, welcome. Now, I want to start this by comparing and contrasting the meme and AI stories, stocks, and people. So let's start with the stories. In the meme craze, Gunjan, it was grassroots traders rescuing nostalgic brands from hedge funds, right? I mean, it wasn't really so much about the fundamentals of the companies, but this is, you know, AI, smarter software disrupting the pecking order in enterprise chips and search.

From where you sit looking at how this is playing out, how similar or different is it? I think there's some key differences, John. When you look at the data, it's been institutional and retail investors piling into this market. This is not all retail driven. You know, as Pippa just told us, a lot of retail investors have kind of stepped off the sidelines and jumped into the market lately, turning to options. But there's also a lot of interest on Wall Street. You know, Wall Street is all in on AI. They're really bullish on stocks like NVIDIA. And that's also what's driving these moves. Mike, how significant is it that this one started with, you know, institutions and retail seems to be following, at least with the fund flows.

It's definitely a change. And it reflects to me that retail is not that far removed from having been relatively burned by chasing a lot of the kind of bright, shiny objects in the market in the last year and a half, two years. I do think that the distinction you set up there, John, is important. You know, the meme stock craze, if we're talking about the true original memes, it really was just this kind of us against them. We're going to essentially, you know, punish the short sellers who seem like they're, you know, inflicting some injustice on these companies. Whereas now, I mean, AI is a very open ended technological disruption change. To me, it really more reflects something similar to what was going on, coincident with the meme craze, which was the ARK invest type disruptive tech move, where that seemed like sky's the limit, but for different reasons. Let's keep going on this, looking at the companies that are driving it. With the meme craze, the companies were AMC, Bed Bath & Beyond, GameStop, all of which had some

certain kinds of challenges. We can see that reflected in what they've done since. But now this AI excitement is driven by NVIDIA, C3 AI, Supermicro, for example, which uses a lot of NVIDIA chips. Does the size, Gunjan, of these companies that are sort of the poster children of these movements matter? I think it does. What's interesting, though, is that since the meme craze in 2021, there's just been this, you know, this combination of activity. You know, stocks can go viral more quickly than ever before. Retail investors are more involved in the markets than they've ever been. And options trading has just hit record after record. So when we step back and

ask ourselves, is this a meme trade? It's because all these factors can combine to drive just giant moves in stocks, whether it's a trillion dollar company like Nvidia or Tesla or GameStop and AMC. And I think we saw this at play with the regional bank stocks, you know, in March, where people were like, what is driving these insane moves in PacWest and Metropolitan Bank? And it's because, in part, you have these market structure forces that are driving big moves in big companies and small companies. OK, Mike, what about the velocity of these moves, especially in the options activity? How much is that reflected in, you know, how quickly in 2021 things moved higher and then how much more slowly, as you were saying earlier, this growth,

at least in the indices, has been? Yeah, it's been a little bit more spotty, though I would say that there's absolutely a muscle memory going back to the options and very short dated options as a way to express these views and as a tool to speculate on rapid moves. So what we see here is that the put call ratio, when that's very low, it means almost everybody is betting on near term upside relative to those who are trying to hedge downside. If you look at 2020, 2021, that was a totally different range only compared with the very late 90s in terms of how persistently optimistic short term traders were. So what you see here is it's declined a lot from the high.

So people are getting more comfortable. They're betting more on upside, but it's still within that that prior range. So it doesn't seem as if it's getting back to the exact same fevered levels. Interesting. OK, finally, the people, two CEOs and a mascot for each. With the meme craze, it was Adam Aaron of AMC, Ryan Cohen, who drove a lot of the GameStop, as well as Bed Bath, and then tend to have people leading them, right? The character of these two different cohorts is different, Kajun. Totally. And what I've been hearing from individual investors is they are hanging on to every word that these people are saying. You know, individual investors, they've really stuck with tech.

They're listening to what is Elon Musk saying? What is the NVIDIA CEO saying? So they're hanging on to every word. And there is this really, you know, zealous fan base at play with some of these tech stocks where throughout last year, people kept buying the dip and they continue to do that this year. And this year they've been rewarded. Fewer apes and diamond hands, though. Gunjan Mike, thank you. All right, speaking of meme traders, do not miss CNBC's documentary, Making of the Meme King, that airs tonight at 8 p.m. Eastern. It profiles the rise of, yes, Ryan Cohen, who this week was named executive chairman at GameStop,

and his popularity with the many retail investors who studied his every move. All right, breaking news now on bank balance sheets. Leslie Picker has that. Leslie. Hey, John. Yes. Digging into deposit levels across the banking system for the week ending May 31st. And they did rise over that week on a week over week basis up about forty six point six billion dollars for all commercial banks. That's an increase of 0.27% on a week-over-week basis. Both sizes of banks, large and small, saw increases in deposit levels. For large banks, they were up about $17.2 billion for the week through May 31st. That's up about 0.16%.

And small banks also saw increases up about $124 billion or 24 basis points higher on a week-over-week basis. So trend-wise over the last few weeks, kind of matching with what we're seeing in the stock market, as you see broadly some more confidence surrounding these stocks, you're also seeing deposits somewhat of a correlation there, although there are many factors at play as well in terms of what brings deposits into the system. But interestingly enough, overall, we did see an increase in deposit levels for the week through May 31st. John? Indeed. Yeah. Our viewers, including Bob Elliott, watching that very closely. Leslie, thank you. And time now for a CNBC News update with Courtney Reagan. Courtney.

Hi, John. Special Counsel Jack Smith gave brief remarks this afternoon about the unsealing of a federal indictment outlining 37 counts against former President Donald Trump. The indictment claims Trump lied, schemed and misled federal investigators in order to hold on to sensitive materials recovered by federal agents at his Mar-a-Lago resort. That happened last August. It also says Trump allegedly showed the documents to others on two occasions. Smith says his office will seek a speedy trial. We have one set of laws in this country, and they apply to everyone.

The charges make Trump the first former president to ever face federal criminal charges. He will appear in a Miami court on Tuesday to enter a plea. A trial venue has not been set. Secretary of State Anthony Blinken's planned trip to China will take place next week. Blinken is expected to meet with senior Chinese officials on June 18th in Beijing, according to an AP report. The visit was postponed in February after the U.S. shot down a Chinese spy balloon flying over the U.S. John, back to you. Courtney, thank you. Now to the break. Meta's next chapter, that company reportedly working on a Twitter competitor and outlining new plans to integrate more AI into its products, we will discuss with Facebook's former VP of product management. And do not forget,

you can catch us on the go by following the Closing Bell Overtime Podcast in your favorite podcast app. We'll be right back. Meta might be going after Twitter. Meta's chief product officer, Chris Cox, showed off an upcoming Twitter competitor during a company-wide meeting, according to The Verge. The standalone app will be based on Instagram's account system, and users will be able to bring their followers and account information directly into the app when it launches. Joining us now, Sam Lesson. He's a partner at Slow Ventures, former VP of product at Facebook. Sam, you know Mark Zuckerberg well, so give me your sense. Facebook could have launched something like this years ago. And the popular wisdom was it was small potatoes. Why mess with Twitter? Why now? And how much of it might be because

so much of Instagram is about video even more than images even now? Look, I mean, I just think this is true and true through and through a product company in the day. And like, there's a lot of things that could go after any given time. I agree that compared to the metaverse vision of the future, things like this, it might seem like small potatoes. But I think there's a lot of people around the Facebook ecosystem that love building new products. And when you see an opportunity to do something like this, there's almost a question of, you should explore it. Why not? Why not make an attempt to build another great experience people would love? But you could have done it 10 years ago, right? So is it about the heat around Twitter, Elon Musk, people looking for

an alternative? Is it about there being less attention paid to text-based communication now? So it's a little bit more perhaps of an exploitable niche? Yeah. I mean, look, there's no question, you know, more than 10 years ago, Facebook launched a basic follow system. We could follow each other's posts that were public and things like that. So it's been on the mind of the company, obviously, for a very long time. I do think that there's no question that with Twitter's kind of recent troubles and challenges figuring out kind of their direction ahead, it potentially creates an opening for something new to come into the market and work.

And I do think the reality is that while you've seen a lot of startups go after this opportunity in many ways, trying to kind of create a new Twitter or things like that, their big problem is they haven't had a network to bootstrap off of. You know, is the people that you follow on Instagram the ideal network for a text-based system? I mean, that we'll find out, won't we? I mean, there's an argument that it's a very different set of people you want to follow for their text insights versus pictures and photos. there's an argument that it's a very different set of people you want to follow for their text insights versus pictures and photos. There's an argument that it's not. Right. And I think that'll be one of the interesting things to see play out here is I think it's a heck of an interesting experiment.

OK, you mentioned the metaverse. Facebook is making a multi multi billion dollar bet on it. And this week, Apple unveiled the Vision Pro. Mark Zuckerberg taking a swipe a bit at that and the price of it. And this week, Apple unveiled the Vision Pro. Mark Zuckerberg taking a swipe a bit at that and the price of it. How big of a risk, a danger is Apple's move to meta? Well, look, I think at the end of the day, whenever a $2 trillion company decides to focus on something, you need to pay attention to that. And so I think the reality is that Apple getting involved or putting a stake in the ground and putting a device out is a big moment. I think it helps the whole category broadly.

It brings a lot of attention into the AR and VR space. Now, how it actually plays out, it's such early innings. You know, I don't think even Apple seems to believe that a $3,500 device is going to be a consumer device. It's a first step of an experiment they're doing. But how does this help Meta if they're subsidizing their hardware, right? If Apple comes out with something that's just as popular or more popular and Meta was subsidizing its headsets as an ecosystem play, how can you continue to do that? Well, I think there's a few things to keep in mind. One is no one really knows yet what the future of VAR and AR is going to be experientially.

You know, Apple has a kind of personal computer or personal vision of the future. Meta is obviously and unsurprisingly far more social. So we're in such early innings, it's really hard to know how this plays out. In the end of the day, you know, I think the real story on a lot of this stuff is where is developer mindshare going? Where is consumer excitement? You know, we're in a moment where everyone's talking about AI. And that's great. I think Meta has a really interesting AI story ahead of it, as do a lot of companies. But the VR,

AR story on a relative basis has been less top of mind. That means fewer developers, less attention, less engagement. I think this is a moment where we're so early that I really do believe that effectively a rising tide lifts all boats. The war will come, right? And don't doubt that. But it's not this year. It's not next year. It's probably not in the next three or four years. It will be down the line once this goes from being a niche to a category. Let's talk venture ecosystem. There are less companies getting funded. Some are running out of money. Investors like yourself have been triaging them. What are you doing for the rest of the year?

Well, that's a great question. I think the reality is that there's always great companies getting started. You know, we invest in companies super early, and, you know, we see a lot of interesting stuff. We as a firm are staying away from AI, as are a lot of my colleagues I respect the most, because it's an unfortunate nexus of extremely overhyped, meaning pricing is very difficult.

And I think a place where you're gonna see a lot of startup failures. Despite the excitement, I think a lot of the victories there will go to the big platforms, the Metas, the Googles, the Microsofts, et cetera, as opposed to kind of the startup world. That said, I think there's a lot of great business being started across the board as there always are.

In the later stage stuff- If not AI, what are you investing in? You know, look, I'll be honest. I'm very excited about the small business ecosystem world right now. I think one of the things I'd say is happening is that there's a lot of the world is reckoning with the fact that a lot of these unicorn style companies that look super attractive on paper, they're never going to get liquid. And they're going to kind of languish for long periods of times as companies that can't go public and can't get acquired.

And I think that form of entrepreneurship is very challenging in the Valley for a lot of people. What is true though is that people wanna own and start businesses. And so platforms that help people start owning, start businesses in America, I think there's a huge set of opportunities there. You know, we've invested in many companies

like TeamShares, et cetera, in that space, and we're excited to see more. I'm focusing a lot on that myself. GlossGenius comes to mind. Sam, thank you. Sam Lesson. Thanks so much. Enterprise software stocks have had a wild few weeks of trading from HashiCorp's big drop this week to MongoDB's earnings spike last week. Up next, an industry insider helps you get ready for next week's software results from Oracle and Adobe. We'll be right back. Welcome back. Two big software names on tap next week. Oracle reports earnings Monday,

Adobe on Thursday. And we've already heard from names in the sector with some diverging fortunes. Check out MongoDB and HashiCorp moving in opposite directions. We heard from both CEOs right here on Overtime. So what should you expect next week from Oracle and Adobe? Joining us right now, Cohesity CEO Sanjay Poonen. Cohesity is a late stage enterprise software company in backup, you know, data security. Sanjay, always good talking to you. Sanjay, also a former top exec at SAP and VMware. So the consumption rates and enterprise software really getting affected by the macro economy. How do you expect that to continue to play out, even with some of the larger players that at this point have seemed pretty immune?

Yeah, actually, you know, I'm in my office at Coheste and right to my left is the Adobe headquarters. And I could probably just look a little bit left and say hi to Shantanu. I expect strong results from both of them. They both have very strong stories. The Firefly announcement related to AI should really bolster digital media. They've always been at the forefront of some of these big trends. They were the first to drive in the cloud, so I expect good results from Adobe.

Obviously, I'll be watching to see what they say about Figma, the acquisition that I think is very pivotal to their future. In the case of Oracle, I'll be watching very closely how does Cerner, is that starting to really take their app store? They've been doing a remarkable job at Cloud ERP. And AI to them could also,

they've got a next-gen Oracle Cloud infrastructure stack. They're number four or five in that market. So how they proceed there. I think the move in all of these categories, and it's the memo to all of us CEOs, is you have to drive profitable growth. And these are two examples of highly profitable companies, 40, almost 50% growth that obviously scale 20 or 50 billion that are also growing. And that's the memo to all of

us, even smaller company CEOs, of how we got to look at the future. Sanjay, David McJanet from HashiCorp was just telling us that larger customers especially are looking to optimize their cloud spend. By optimize, they're looking to spend less. They're looking to get the same amount for less money and do it more efficiently. Does that necessarily just benefit larger players in the space versus best of breed newer companies? Or are we going to see more pull in of growth expectations based on that trend? I think it's a great question. For the larger companies, you've certainly seen the growth rates slow down in AWS, Azure, Google. So certainly law of large numbers there. They get the benefit of having much larger transaction sizes in which they can kind of play down, but certainly growth rates are slowing down. For the

smaller companies, you have to have two sides of the same coin. I've talked about this in your show before. A total cost of ownership solution where you are lowering cost of ownership when you look at the totality of everything you provide. And a rapid return on investment, ROI. When you can offer that in a compelling fashion, most of the purchases, even for companies like us at Cohesity, and we're in a hot category of security, have to go off and all the way up to the CFO for approval now. These are not as probably stringent times as we saw in 2008, but I do think you build that muscle now as a CEO and leader that will do you well as we get into better times. Talk to me about cybersecurity because it's interesting.

I look at Zscaler. I look at CrowdStrike, for example. Zscaler has had a big bounce off of those May levels where it was down and people were saying, oh, well, maybe they are going to be under pricing pressure. How able are you to maintain those profit margins based on the quality of your software and the need in in your case, to ward off ransomware attacks or recover from them? Well, first of all, you have to have a very clear proposition that's relevant. You know, what we're doing at Cohesity is at the junction of security, multi-cloud, and AI. So we have a strong proposition going to a customer. We have a differentiated platform that's best in its category. You talked about companies that I respect deeply. They're deep partners of us in our data security alliance. Let's talk about them. Palo Alto, one of them. They've

gotten to scale now, six, seven billion, and they are exemplifying profitable growth outside of just one category, network security firewalls. They've got a broad portfolio. I think CrowdStrike's having a little bit of a tougher time, but they have a chance to get there. Fortinet and Palo Alto are two examples. Fortinet's probably even more profitable than Palo Alto, so I respect them a lot. Zscaler and CrowdStriker, the next ones, are going to have to prove that they can get to that point of scale, but they are in that 20 billion plus market cap. And obviously, the big vendor that's making a lot of noise in security, also a good partner of ours, is Microsoft. They've got a very formidable portfolio now in security. So I think these four or five names are the ones to watch in cybersecurity.

For the smaller players, you have to. You saw this happen at Sentinel-1. They weren't able to cross that chasm. They got hit pretty hard in their last earnings. It is tougher for the smaller players if you don't get to that scale quickly. All right. We're going to keep covering it on Overtime next week. Watch out for more cybersecurity.

Sanjay Poonen, thank you from Cohesion. Thank you, John. Still ahead, an FDA advisory panel just voted unanimously in favor of full approval of Esai's Alzheimer's drug developed in partnership with Biogen. We're going to talk about the market opportunity for those companies. And for the month of June, CNBC is celebrating pride, sharing stories of corporate leaders with you. Here is the Toast Chief Technology Officer. You know, the definition of the word pride is consciousness of one's own dignity. And I think this annual event, designated time to recognize the LGBTQ community and to celebrate out loud and proud creates great awareness for ourselves and others that we're deserving of love, honor, and celebration and dignity.

And I think everyone deserves dignity. We have a pair of big bank interviews coming up on CNBC on Monday. I got to tell you about first Goldman Sachs CEO David Solomon is going to join Squawk on the street at 1015 a.m. Eastern for an exclusive conversation on the state of the banking sector and his outlook for the economy. And then later, 1 p.m. Eastern, don't miss Bank of America CEO Brian Moynihan exclusively on the exchange from the World Medical Innovation Forum in Boston. Now, after the break, we're going to talk to Matt Herper from Stat News about the outlook for Alzheimer's treatments as an FDA advisory panel votes in favor of full approval of the drug made by E-Cy and and its partner Biogen. Be right back.

Welcome back to Overtime, an FDA advisory panel voting in favor of full approval of an Alzheimer's drug made by Biogen and Isai. Shares of Biogen were halted all day while Isai finished the day in the green. Joining us now is Stat News senior writer Matt Herper. Matt, was any of this, even the unanimity of it, unexpected? And how important is this for Biogen? So answering backwards, it's very important, but it was also largely expected. This is pretty much the outcome that most people on Wall Street and also most researchers who are watching the space have been expecting. I mean, maybe people might have been wondering whether it would be a fully unanimous vote. And there were some people who came off the panel. But really, yeah, pretty much expected. So these Alzheimer's

drugs are expected to be a $13 billion market by 2030, I believe. And I'm wondering about the implications for Eli Lilly, which is by market cap around 10 times bigger than Biogen, I think. They've got this drug, I think it's called Denonimab, which sounds like a Babylonian king from the Bible. The generic name is the Roe is Hard. Okay, that's better. Maybe. That's supposed to be out by the end of the year. Generic name throw is hard. Okay, that's better. Maybe. That's supposed to be out by the end of the year. What are the implications for them? Is this more competition or is this a market that's forming that's going to be a good environment for them?

Well, it's both. I mean, Denonimab tested in a slightly different population. They did more pre-testing. They had very strong results from what we've seen of them. We still haven't seen a full data presentation. But there's obviously going to be some competition. And we're just starting to get a sense of what the product profiles are. It's obviously a very big market. Obviously, a lot of that e-blad, Lilly run-up is around the obesity market, where we have a similar situation, where Lilly's coming in. We all hear about the Novo drug, semaglutide, but Lily's coming in with another one, Mujaro, even more weight loss. But here in Alzheimer's, I think that it's hard to call, but a lot of it's going to be a slower market to build because we have to deal with this is really a step along the way of getting Medicare coverage. Yeah. And the issue is going to be Medicare is going to start off requiring all these patients go into a database that may slow things down initially. But it looks like they're going to be covered. And there are a lot of people who could be taking these drugs. A lot of people get Alzheimer's on pricing.

Then how significant is this based on the kind of bureaucracy involved that's necessary to deal with, but then also how much you can reasonably charge for a serious condition that affects a lot of people? this FDA approval. I mean, again, this was, it would have been a shock if this hadn't gone through. It's honestly not a huge surprise. Unanimous vote is never a bad thing, but it's not even that much of a surprise that it got one. These were really strong clinical data. Some of the discussion that has still been ongoing about exactly who the groups are where you're going to have to worry about side effects. There are groups who have double copies of one of the genes that causes Alzheimer's. There are groups that have a condition where the amyloid builds up in blood vessels, the stuff that this removes, and they seem to be at potentially higher risk for bleeds. That's going to be a lot of that discussion, but they're going to be able to charge a lot. It's going to be interesting to see how that goes. Obviously, we watched Biogen previously kind of mess that up with the last drug in this class,

Adjahelm, but that drug also didn't have very good data. Huh. So a different situation here, better data, and certainly a very important space for these companies to be playing in. Matt, thank you. Matt Herper from Stat News. And we are looking ahead to a very important week, as I mentioned earlier. Not only do we have earnings in technology from the likes of Oracle first on Monday, right after the bell. Monday is a little unusual for a company of this size.

Then Thursday from Adobe, there's also, of course, the Fed decision. A lot of the market is expecting a pause, but what's the language around that pause or perhaps hike going to be? You don't want to miss any of that. We're going to cover it all on Overtime for now. That does it for Overtime. Fast Money begins right now.