Closing Bell - Closing Bell Overtime: Evercore’s Krishna Guha On The Fed; Betterment CEO On Acquiring Marcus Customers From Goldman 5/10/24

Episode Date: May 10, 2024

The Dow posting its best week of the year, while the S&P 500 and Nasdaq are both on 3-week winning streak. Wells Fargo’s Scott Wren and Envestnet’s Dana D’Auria break down the market action and look ahead to key data and earnings next week. Zeekr spikes in its first day of trading. Evercore ISI Vice Chairman Krishna Guha talks his inflation expectations. Betterment CEO Sarah Levy gives her first interview since news her company is acquiring Goldman’s Marcus customers. Jefferies analyst Dr. Roger Song on why he sees more upside ahead for Novavax even after today’s 100% move higher.

The Dow closing higher for the eighth straight session. The Nasdaq and S&P 500 finishing out their third straight weeks of gains. This is the fourth straight week of gains for the Dow. That is the scorecard on Wall Street, but the action is just getting started. Welcome to Closing Bell Overtime. I'm Morgan Brennan. John Ford is off today. Well, coming up this hour, Evercore ISI Vice Chairman Krishna Guha joins us with his predictions on inflation and the Fed ahead of a big week of potentially market moving data. And an analyst who calls himself, quote, probably the street's biggest Novavax bull joins us to talk about the news that sent that stock rocketing higher today,

basically doubling. Let's get to today's market action, though, with our panel. Joining me now is Scott Wren of Wells Fargo Investment Institute and Dana Dioria of Investnet. It's great to have you both here. Dana, I'm going to start with you because it's been a week in which stocks have traded in a relatively tight range. Nonetheless, we're seeing gains. The S&P 500 is something like 1% from its record closing high not that long ago. The fact that we've seen this reigniting of equities, what is propelling it, even as we have seen the economic data start to slow down and show some signs of stress? Yeah, it is an interesting mixed picture here, right? And of

course, coming off a day where we saw consumer sentiment is starting to flag concerns about inflation probably having a lot to do with that. In fact, we know that pandemic savings have really dissipated at this point. So, you know, what is holding up that consumer is, of course, the employment picture. But, you know, the employment picture is still very strong by any measure. But, you know, we are seeing we did see unemployment tick up a bit. So some interesting mixed news. And yet you're right. The market remains very resilient. So I think the answer is earnings season had quite a lot to do with it. Earnings season came in largely, you know, pretty robust.

And yes, you know, you are seeing some where they're not hitting the mark. They're kind of immediately punished by the market. But for the most part, earnings have been coming in robust. And we're looking ahead to, you know, yearly estimates that are still pretty strong. So I think that's holding us up right now with the market. Okay. Scott, how do you see this market, especially given the fact that we did get that University of Michigan consumer sentiment report this morning? It showed a sharp deterioration in confidence, but it also showed an upward shift in inflation. What matters more here? Well, I think in the end, Morgan, it is going to be inflation. Is it going

to come off? And I think that as we move to the end of the summer and into the fall and probably into 2025, we're going to see some sub-3% readings on CPI, and that's going to be a good thing, and that's probably going to allow the Fed to cut a couple of times this year. And I think the market's pretty confident that inflation, and it might take,

it's taken longer than what a lot of people thought, but it is going to trend lower. And I think as far as the sentiment numbers this morning, and I don't think it's a big surprise that you see gasoline prices high, you see grocery prices high. Sentiment oftentimes is pretty tied to gasoline prices. It's certainly been tied to inflation in this cycle. And, you know, we all know that consumers, what they say, U.S. consumers, what they say and what they do are two different things. And I think you can make the argument that if consumers are employed, they have money in their pocket, they're Americans. They're going to go out and spend money. So I mean, we think the unemployment rate's going to probably crawl a little bit over 4% by the end of the year, which is not anything disastrous or anything like that.

But I think that just the thought of earnings hanging in here, the economy being better than a lot of people expected, and inflation, you know, tracking lower, even with, you know, a few things that have happened lately data-wise. That's what's really keeping this market buoyant. It sounds like we're realizing the soft landing scenario based on what you're saying, if I can pull out that implication, Scott. Dana, the fact that we're seeing utilities, financials, materials, even saw Staples catch a bid this week. These were the best performing sectors on the week. And actually, tech was one of the worst performing sectors. What does that tell us about the recent rebound we've seen in this market?

It could be a few things. I mean, there's sort of some longer term impacts here. There's obviously the narrative now higher for longer. You certainly have the Fed out there trying to, you know, instill the message that they aren't going to move that fast to cut rates, whether that transpires or not. We've got a long way to go. Right. First rate cut now expected in November. So a lot of data that needs to come in between now and then to see where that actually goes. But, you know, when you look at something like tech, where it's longer dated, a lot of the tech story, not entirely, of course, there's a mosaic here, but AI, of course, is a big impact on the tech story. You know, not a lot of data that people can actually put into

models at this point around how quickly AI is really going to bounce. So, you know, movements and things like, well, hire for longer, and these could be longer dated cash flows. I think you have kind of secular impacts like that. And then you have short term where, you know, the market has broadened out. There's an argument to be made for just, there is resiliency in the economy.

And so you should expect a broadening out in what participates. Okay. Dana and Scott, thanks for kicking off the hour with me. Happy weekend to you both. Thanks, Morgan. With the NASDAQ finishing just below the flatline, everything else, and the Russell 2000 lower as well. Everything else, though, in the green this Friday afternoon. Let's turn now to the IPO news of the day. Chinese EV maker Zeker making a strong public debut at the New York Stock Exchange. This is the first major listing by a Chinese company in the U.S. in years.

The company's CFO was on Squawk on the street earlier talking about Zeker's positioning in the crowded Chinese market. If you look at the big picture, you know, the market over there is very, very crowded. But if you zoom in a little bit and you look at each of market's brackets, price brackets, you know, there's definitely an opening in the premium market segment. Say, for example, Zika, we've been selling cars mostly priced between maybe $300K to $500K. So we've been competing with the likes of Mercedes, Audi. Well, let's bring in Bob Sani for more on today's debut. Bob. Hello, Morgan. Zeker had a great day. They priced at $21. They opened at $26. They closed at $28.26. This deal was very significantly upsized. So the original

price talk was 17.5 million American depository shares, ADSs, at 18 to 21. But they sold 21 million ADSs. So there was more shares sold and they sold it at $21. That's the top end of that range of 18 to $21. So put it all together. They raised $441 million. The fully diluted valuation right now is over $6 billion for the company. Now that's a lot. As Morgan said, it's the largest Chinese listing since 2021. But this is well below the slightly more than $12 billion valuation that the company had at the last round of private funding in 2023. So definitely it's a valuation haircut here. Zeker, by the way, is the premium brand of the Chinese automaker Geely, which also owns Sweden's Volvo cars and also owns the UK's Lotus sports cars. Despite the very small float, this is a good sign,

considering Chinese IPOs have been few and far between in recent years. And also, remember, EV makers like Tesla have seen their share slide. So this is a nice little pop despite the small float. The company is among a very large crowd of China EV producers that's trying to stand out among a string of China competitors, particularly in Europe, including, of course, BYD. As for where we are in the IPO market right now, Morgan, it's been a decent year. We've raised almost $20 billion in total. That is a lot better than the disastrous

years of 2022 and 2023. But we still need more companies to go public before we hit a normal year. And if you're wondering what's a normal year, we would typically raise prior to 2020 about $50 billion a year. That was the average raised each year in the 2010s. By the way, Morgan, one very unusual aspect of this deal is that the parent company, Geely, said they'd buy up to 90% of the shares in the IPO. Now, we don't know what actually happened here, but we did have a Reuters report that they bought up to 60 percent of the deal. And that some minority investors, including Mobileye, also brought another 10 percent. If that is accurate, as Reuters was reporting, that means that insiders essentially still own about 70 percent of the company. So it's a very, very small float that's out there right now.

One reason I think perhaps you had such a big pop today, Morgan. Exactly. And of course, that context is key when you do have a when you do have a pop like you had today. I am curious, though, because and the company ended the day. It's such a small cap now. But Sam Altman's nuclear energy company, Oklo, also going public after merging with a SPAC. We haven't talked about SPACs in a while today. How does that speak to, again, this deal environment? What's working? What's not? Because that that tumbled today. What we're seeing working is some small tech deals that have been holding up OK. Reddit's been holding up OK. Anything related to any kind of artificial intelligence, Astra Labs has been holding up okay.

So generally tech deals are holding up okay. Some of the consumer deals are fair to middling. We've got some big names floating out there like Panera Bread that for some reason still are hesitant to go, even though they've been sitting out there for a long time. That's what's got people a little scratch in their heads. We're 1% from a new high in the S&P, and yet there's 15, 20 big names that we keep listing that just don't seem to come. So we need more volume right now. I think anything

associated with AI is going to be fine. Everything else is kind of sitting there trying to figure out if they can get a higher valuation down the road. And I don't know, frankly, why they're waiting. I don't think it's going to get much better. All right. Bob Pisani, thank you. Reminds me of what J.P. Morgan's Jennifer Nason said to me earlier this week, where she said we're in the second phase of IPOs. It'll probably be 2025 where you see a, quote, unquote, normal year again.

Bob, have a great weekend. Well, the volatility index trading near its lowest levels of the year after a spike last month. Let's bring in CNBC's senior markets commentator, Mike Santoli, with more on the VIX. Mike, it's been a while since we've talked about the VIX. It has. I look at it every day. And when it's notable, we want to point things out, Morgan. And, you know, it was a passing storm in April is the way you would look at it right now.

Just a little bit of a bump higher in anxiety as the market did have that 5% pullback. But here we are in the 12s again. That's been around the floor for the last year. I'm not somebody who looks at a low VIX and says, uh-oh, everyone's getting too complacent. Prepare for some kind of volatility storm to come. Although it does mean sometimes, if it lasts a while, that investors get a little too comfortable selling options just for income betting on continued calm. I would say right now this means, hey, it's a steady market. We're near the highs. We have sector rotation that's keeping the indexes supported and so far so good. Now, take a look at the VIX futures curve pricing. So, yep, you can buy one month or multi-month futures on the volatility index. And this is a first of all, I want to point out, this is a

positive structure when you have, like, this ascending prices for distant months in a smooth way. That's the normal futures curve pricing, and it says the market is pretty much kind of in gear. Now, what do we see here? A big bulge in pricing for October exposure to volatility. Well, we're going to have an election in early November, so if you're betting on some kind of tumult around that period of time, you'd be betting the October contract. It mostly happens

around this time in election years. Maybe that's a bigger bulge than usual. But I think it also argues for the idea, Morgan, that, you know, this idea that we might actually be in for some chop ahead of the election or around the election is certainly not a secret to the market. So, you know, whether that means anything is priced in or not remains to be seen. What's interesting to me about this chart, though, Mike, is that it doesn't seem like, at least right now, and I realize November's a long time away, but maybe some chop ahead of or around the election. But it doesn't seem like the market, at least according to the VIX right now, is pricing in uncertainty or contested elections or any of the other type of tumult that we saw in 2020 here in this chart. Yeah, it doesn't seem that way. You're

right. And in fact, Goldman Sachs was out, I believe, this week saying, hey, you know, that's one scenario that may not be in the market if we're going to have either an undetermined result or something like that. Although I do remember back in year 2000 when we did have pretty much that tie and we had months to wait before we had a resolution in terms of who was going to be the next president. Market really didn't go nuts on that. So I'm not sure if that's about a blind spot for traders here or if it's just like, well, we're just going to have to assume the probabilities are we're going to know who's the next president or the current one in mid-November or so. I do love when you trot out the historical references. Mike Santoli.

That's only 24 years. That's like yesterday for me, Morgan. All right. We'll see you a little bit later this hour. After the break, Evercore ISI's Krishna Guha and what he's watching in next week's inflation data and his takeaways from CNBC's interview this afternoon with the Fed's Neil Kashkari and Austin Goolsbee. And later, we're going to break down the stock story of the day,

the surge for biotech company Novavax on news of a deal with Sanofi. We're going to ask an analyst why he sees even more gains ahead after today's huge pop. Overtime is back in two. Welcome back to Overtime. We're heading into a week full of major economic releases. April PPI is out on Tuesday. Then we're getting CPI and retail sales on Wednesday. Jobless claims and housing stars are out on Thursday. And earlier this afternoon, Minneapolis Fed President Neil Kashkari spoke with CNBC's Steve Leisman about the future of rates and how inflation data plays into that decision. If we get concerning inflation data continued, we're going to sit where we are for an extended period of time. I mean, I think that that's the default, that we don't feel compelled.

If the labor market stays strong, we don't have to do anything. We can stay here as long as needed. Well, joining us now is Krishna Guha, vice chairman at Evercore ISI. Krishna, great to have you back on. We had a flurry of Fed speak today. So we had those comments from Kashkari, but you also had Bostick repeating his forecast for only one cut to come later this year. Logan saying no soft landing yet, still uncertain if policy is sufficiently restrictive. And Bowman saying doesn't see rate cuts as warranted this year. What are we to make of this coming into a week where CPI is really going to be the star of the show with all the other economic data kind of circling it?

So you're 100 percent right. The next week is all about inflation now when it comes to the fed speakers today i would aim off a little bit the relatively hawkish selection of speakers we happen to get today it's not a fully representative sample but what i took away from your interview with Kashkari and Gillespie is this very key point. Both the doves and the hawks are agreed that rate cuts are on pause and they are in wait and see mode to see what story that inflation data tells over the months ahead. In a few months' time, we'll have a much clearer picture of whether the Q1 inflation was a temporary setback, the economy is not overheating, and inflation is stepping down again, or Q1 inflation was the signal the economy is heating up too much, and we have a more persistent inflation problem. Either way, the Fed should know what to do. And of course, we're having this conversation as we do see the Fed begin to slow down

quantitative tightening. So less restrictive, arguably, on that side of the table as well. But I guess all of this raises the key question, especially when you talk about inflation data, which is lagging by its very nature. How much of this is a credibility situation for the Fed? How much of this is truly a data dependency situation for the Fed? Well, look, I certainly think that they worry about moving ahead with cuts. They've long worried about moving ahead with cuts and then finding out that they had a more persistent inflation problem than they thought. That's been the whole basis for this line they've been taking for a long while now. They won't move until they're sufficiently confident in the inflation outlook.

But you're onto something important there, which is policy really should be forward looking. So data dependent, yes, but not in the pass fail data point dependent sense. Data dependent in terms of informing, updating our understanding of where inflation is going to go over the next year or two. I do worry that we're not necessarily as forward looking as we should be. And I hope that the Fed will really focus on that forward looking outlook going forward. How much does fiscal policy factor into what we're seeing in the economy right now? And I ask that because you've had certain major spending policies years in the making for which the money is now finally going out to the door and actually being manifested in projects, whether it's infrastructure, whether it's chips, whether it's some of the other stuff that we've seen. And then on top of it now, you have President Biden poised to put more tariffs onto more

goods being imported from China as soon as next Tuesday. So unquestionably, in my mind, easy fiscal policy, serial fiscal programs hitting the economy one after the other are a very important part of the to why the so-called neutral rate might be elevated, at least in the short run, fiscal policy has got to be part of that story. Is it the whole story? No. But for sure, it's part of the reason why the economy hasn't slowed more with Fed rates where they are, part of the reason why in the short run, at least that neutral setting looks quite high. Part of the reason why you have some Fed officials, not most, but some worrying whether they are sufficiently restrictive. OK, Krishna Guha, thank you for joining me. Thank you. Financial advisory firm Betterment recently striking a deal with Goldman Sachs to acquire accounts from its Marcus Invest platform. Up next, Betterment CEO Sarah Levy joins us for her first interview since that news broke.

And check out McDonald's today, getting a pop mid-session on news that the company is preparing to launch a $5 value meal in an effort to win inflation-conscious customers. Stop, finish the day up 2.5%. Stay with us. Welcome back to Overtime. Betterment recently announcing a deal to acquire the digital accounts of Marcus Invest. Goldman Sachs launched Marcus Invest in February of 2021, targeting retail investors, but shifted its strategy and will no longer offer these services. So joining us now in her first interview since announcing the Marcus deal, Betterment CEO Sarah Levy. Sarah, it's great to have you back on the show. Walk me through the details, what this brings to the table for Betterment, how it grows your business.

Absolutely. Well, thanks for having me, as always, Morgan. Pleasure to be here. So Marcus is really, this transaction for us is really about the customers first. And when you think about this group of mass affluent customers that Marcus had attracted, it really became no longer the target segment for Goldman Sachs, because they're more of an upmarket, higher net worth target. For us, it was squarely in the sweet spot of who we serve. And so really, first and foremost, what Goldman was looking for was a trusted brand and platform that could deliver for this customer segment on the promise that they really came to Marcus for originally, which is diversified long-term investing advice, ease of use, mobile first. And this really was

our sweet spot. So we were excited to welcome them. We are excited to welcome these customers to bring them the great advice that we bring to our other 850,000 customers. So we've seen Goldman, as well as a number of other big banks and financial firms, basically try to build out their own, you know, digital forward investing platforms only to then leave them or exit them or in the case of Goldman, sell it or, you know, hand forward investing platforms only to then leave them or exit them or in the case of Goldman sell it or, you know, hand it over to you. Why can you succeed where they can't? I think there are two reasons. The first is this is a scale business. And I think you've got to be in it for the long haul because you need to achieve a certain amount of scale to keep prices as low as

we do in order for this to be viable economically. And I think there are going to be the haves and the have-nots who haven't been able to achieve that scale. So first, I would say we got there early, we got there first, and we're one of very few who have now achieved the scale to be able to continue to innovate for that customer and at the same time deliver the low costs that they come to expect. And I think the second is a technology company is hard to build, it's hard to sustain, it's hard to motivate engineers to continue to deliver excellence. And that's just a more difficult thing to do as part of a larger institution like Goldman. Okay. So now you have a couple of different businesses, but I'm going to focus on this individual investor business, the retail investing business. what are you seeing in terms of trends and behaviors on the platform? So we see pretty consistent behavior in almost in all market

conditions, which is people who join us really have more of a set it and forget it mentality. And so they come, they set up a plan, and then they put money to work on sort of a consistent basis dollar cost averaging. The major difference that we see when rates rise and fall is really where they're putting that investment. So right now, we continue to see a lot more flows into high yield cash than we do into taxable investing. And then there's the obvious seasonality, like in March and April, you see people topping up their IRAs as the deadlines approach. And then on the other side of that, they go back to investing in taxable investing accounts. Yeah. And of course, you're forward facing with retirement.

You've got a 401k as well. You're working with small and medium businesses largely on some of those programs. I guess walk me through the competitive landscape, because we are seeing Robinhood and some of the other newer, I guess, fintech players increasingly move into this space, too. So what is it taking to acquire customers and to keep them? So when I think about our aspiration, I believe that we are going to become the definitive wealth brand for the millennial and Gen Z generations. So when I think about some of the large institutions who serve, you know, my parents and my grandparents incredibly well, I think this new generation is really looking for, you know, a step up in terms of technology and mobile first in ways that the prior generation wasn't. And so I think that's really the space

we're all fighting for, where better and strategy is different, as you mentioned, is our B2B strategy. I really look at this as a single technology stack that powers really what I think of as three legs of the stool, a retail business, an advisor solutions business, and a workplace solution, which is the 401k. And there's an incredible connectivity for us in those three businesses, whether it's at the end user who can move seamlessly from a retirement account to a taxable account, or whether that's through the technology stack where you build something once and then it services multiple audiences. And so for me, that's really what sets us apart. I think some of the other competitors are either targeting a more advanced

trader, which is not our crowd, or targeting solely advisors. And I think that has its limitations because we have the scale and the ability to really build once and keep costs low for all three segments. Okay, real quick. Any plans to go public anytime soon? Not immediately. It's really fun to be private and focus on growth. Okay. Sarah Levy of Betterment, thanks for joining me. Thanks, Morgan. Time for a CNBC News Update with Julia Boorstin. Julia. Morgan, the U.S. announced a new $400 million package for Ukraine. The package includes rocket systems, munitions, and armored vehicles to help Ukraine hold off advances by Russian troops. And it's the third delivery to the country since Congress passed supplemental funding in April after months of gridlock. Five former Korean Air Passenger planes will become the next

generation of America's doomsday planes. Defense contractor Sierra Nevada Corporation confirmed to CNN the purchase of the Boeing 747 jets, which will be modified and replace the U.S. Air Force's current fleet. The doomsday planes are designed to be command and control centers replace the U.S. Air Force's current fleet. The doomed state planes are designed to be command and control centers for the U.S. military in the event of a national emergency. And a Polish director created a biopic featuring an AI-generated Vladimir Putin. According to The Hollywood Reporter, the director used AI his company developed to recreate the Russian president, overlaying Putin's face on an actor of a similar build, creating what the director called the first deepfake film. Back over to you. All right, Julia Borson, thank you. That doomsday contract, a $13 billion win for

Sierra Nevada Corporation. Well, after the break, unplugging the hype machine, Mike Santoli returns with a reality check on the chatter around AI's bullish impact on utility stocks, which were the best performing sector this week. Plus, we'll talk to Hightower Stephanie Link about the names she likes in the space and why she sees the decades long catalyst that isn't just about AI. Stay with us. Welcome back. Utilities closing out the week as the top sector in the S&P 500, also one of the best sectors for the year, up more than 12% now. Mike Santoli is back with a look at what's really powering, get it? The rally in utilities.

Mike. I think I get it, Morgan. Let's see if we can figure this out. Yes, there has been this AI narrative that's been in utilities, Mike. I think I get it, Morgan. Let's see if we can figure this out. Yes, there has been this AI narrative that's been surrounding utilities. But here's the utilities ETF in the S&P 500 relative to the equal weight S&P. So the broad market not even counting it really against mega cap tech. It's a 10-year chart. Look at the depths we're coming off of here on a relative basis.

So we had a washed out group with yields going higher until a couple of weeks ago. And it seems as if there's been a lot of the left behind sectors have been picked up as the high momentum stocks have come down and yields have eased back. And that has definitely created this nice bid for utility. So if there's going to be a kind of power generation play on AA, there absolutely is. It might not really accrue to the benefit mostly of regulated utilities who make up the sector. But take a look at this subsector of industrials, these electrical equipment and component makers. That's the blue line right here. And this is just a one year chart. So you see these have been incredible stocks beating util beating industrials and the

broad market. This really is where the outsized demand from AI-related uses seems to be coming from, as opposed to that utilities move, which may just be an explanation for something in retrospect that just was due to bounce anyway, Morgan. So that's it from here, and have a great Mother's Day. Oh, thank you. And back to your wife as well, Mike Santoli. Have a good weekend. Let's continue the conversation with our next guest, Hightower Advisors Chief Investment Strategy and CNBC contributor, Stephanie Link.

Stephanie, it's great to have you on the show. Welcome. Thank you. Great to see you. I want to start with what Santoli just broke down for us. The fact that utilities have been igniting higher and AI has been seen as a catalyst for this, but that there's some context to be had, too, because it perhaps also just playing out as a value trade to a certain extent after being beaten down so, so much. How do you see the sector? What do you like in the sector if you do? Yeah, well, I think utilities and electrification, electrical stocks are tied to the same theme. It's energy transition super cycle. And I think anything tied to green, clean, grid, power, data center, of course, AI, but anything tied to these end markets, we are going to spend between now and 2050, $4 trillion on all of this stuff,

technology as well as infrastructure. And so maybe you don't wanna own the utilities as a pure play, but their CapEx Morgan is actually going to go higher over the coming years as a result of all of this, and it will benefit some of these electrification stocks. And oh, by the way, I think the other reason utilities have done well is because actually earnings have come in

much better than expected, up 30 percent year over year. And so I think that was that got the attention of a few investors as well. Yeah, I mean, traditionally, I've always thought of utilities as defensive, as safe haven stocks, as yield plays. But to hear you break it down like that, it reminds me of what the CEO of GE Vernova said to me a couple of weeks back before the spinoff. And that being the fact that for, call it the last 20 years, you saw limited growth, only something like half a percent

in terms of power generation from these companies and from the industry. And now all of a sudden it's turbocharged. And that is set to jump much higher because of AI, because of data centers, and because of the electrification of everything right now. It's really remarkable that if you listen to not only GE, Vernova, but you listen to Quanta Services and you listen to Eaton Corp. All three companies on their conference calls were very, very surprised at the underlying demand. The Quanta Services CEO said it was mind boggling the amount of power loads that are going to be needed for data center. I mean, those words don't come. I mean, I take those very, very seriously.

And when it comes from so many different companies, I think you have to pay attention. In fact, the Dodge Momentum Index, which I know you know this index very well, was up 6 percent month over month. And the person representing Dodge Momentum said they're seeing a deluge, a deluge of data center projects. So you definitely want to have exposure, especially on the electrification side. OK, I'm going to shift gears a little bit because next week we obviously we get inflation data, we get retail sales, but we also start to get the beginning of retail earnings. Given what

we've heard so far through earnings season about the consumer, what seems to be a much more cautious picture in terms of particularly for lower end and even middle class consumers and how they're spending and those behaviors continuing to shift and belts continuing to tighten amid higher inflation. How are you thinking about these names? How much are they going to mean to the broader market with that narrative already in place? Yeah, I mean, I think it's going to be extremely important and we get a whole host of companies next week and the week thereafter. I think you want to be very stock specific, very company specific within the consumer. I am a big bull on the consumer because we have the

job market that's so tight. We have stronger wages running for four and a half percent. We have higher home prices and we have a little bit lower inflation. I think all of that bodes well for the consumer. But I think you want to be selective. I like housing very much. We have higher home prices and we have a little bit lower inflation. I think all of that bodes well for the consumer, but I think you want to be selective. I like housing very much. We have Home Depot that reports next week. I think after five quarters in a row of negative comps, I think you're at the inflection point this coming quarter. I don't think it's going to be anything terrific, but I think you have very easy comparisons starting now into the end of the year. And you have a seasonally strong trade and gross profit margins have been very strong along the spectrum of the company in the economy over the last couple of years. I happen to own Target, I think mainly because it's trading at 16 times. Walmart's trading at 25 times.

I don't think that it should be that wide a gap. And I think the target has done a lot of great things in terms of getting their inventories down, reducing markdowns, being more profitable. And I think you can get margins back to that 6% level, which they saw back in 2019. And that operating leverage will be very nice once the top line comes back. OK. Anything else you're watching, either stock specific or in terms of the broader market right now? Well, I think I think we're all waiting for the inflation number next week, to your point. I do think that we're not going to get to two percent inflation, which is the Fed's goal. And I'm not even sure why the Fed's goal is two percent.

You can have a goal of inflation at 2% when you're growing the economy at 1, 1.5%. We're growing this economy at 2, 2.5%, 3%. The Atlanta Fed tracker yesterday came out with a 4.2% GDP number for the current quarter. I don't think we're going to grow 4%, but my point being is you're not going to get inflation down if growth is elevated. By the way, that's a good thing. I'll take higher growth and a little bit higher inflation any day because that's really good for corporate earnings, which have come in much better than expected. All right, Stephanie Link, great to have you on the show. Have a wonderful weekend and happy Mother's Day. Thank you. Happy Mother's Day. Thanks. Still ahead, why space could be the next frontier in the future of

health care and the key to drug development and get this bioprinting human organs. And speaking of health care, check out Moderna. It's one of the worst performers in the S&P 500 today after the FDA delayed a decision to approve its RSV shot until the end of the month. Stay with us. we'll talk about an out of this world advancement in health care up next a close look at one company that's bioprinting human organs like this heart tissue this is a real picture in space and don't forget you can catch us on the go by following the closingosing Bell Overtime podcast on your favorite podcast app. We'll be right back. As companies develop commercial space stations, the most promising markets emerging from microgravity research are in health care. Take the development of human organs. This

is something Redwire has been on the forefront of advancing. You have the ability to manufacture and 3D print organs in a way where you can actually use the person's own bioprint and stem cells to develop out the organ. And because a lot of terrestrial printing of bioprinting on Earth is affected by gravity, microgravity has a lot of potential for making that process a lot more successful because we don't have to worry about the organ collapsing on itself. Redwire, a small cap space infrastructure company, just this week announced it has successfully 3D bioprinted the first live human heart tissue sample. This right here. Now, it did so on board the International Space Station with sample now returned to Earth and already undergoing further testing. It opens the door to more personalized medicine. This is a template that could eventually be used to create heart patches as a treatment for damaged heart tissue. The experiment follows the successful bioprinting of a human meniscus. And up next,

Redwire plans to print human blood vessels in space. But Redwire, like others, including Varda Space and Sierra Space, to name a few, is also capitalizing on the $80 billion plus drug discovery market, offering pharmaceutical companies like Eli Lilly access to microgravity through, in the case of Red Wire, its pillbox missions to grow unique crystal compounds crucial to the development of new treatments and new delivery mechanisms for some existing ones. Using pillbox, you can grow these crystals that are very important to the pharmaceutical industry in a more pure and also a larger way because you don't have the effects of gravity on the crystal formation. So Eli Lilly was excited enough about the results

from the first mission that we flew and the crystals for the compounds that they provided us that were developed. And now they've come back and asked for a second one. This is really exciting to us because as we talk about manufacturing in space, really at the end of the day, it's about the end users. Now, I sat down with Redwire CEO Peter Canedo last month at the Space Symposium, so before this week's heart news to discuss those possibilities, Lilly's second pillbox mission is already underway on the ISS and is expected to return to Earth via a SpaceX Dragon capsule come August. Redwire this week disclosed 16 additional pillbox investigations

and samples launching to the ISS and returning to Earth on every upcoming commercial resupply mission. So you can scan this QR code on your screen. You can check out my podcast, Manifest Space, wherever you get your podcasts for the full discussion. Well, here's a stock that's rocketing higher. Novavax, after inking a multi-billion dollar COVID vaccine deal with Sanofi. Up next, an analyst with a $38 price target on the stock explains why he is so bullish on that name. And a programming note. Do not miss Monday's special, tomorrow's Saturday's special CNBC Changemakers, and hear from the women changing the business world. That is tomorrow, kicking off at

5 p.m. Eastern, right here on CNBC. Welcome back to Overtime. Novavax essentially doubling today its best day ever after announcing a licensing partnership for its vaccine products with French health care giant Sanofi. The deal allows Novavax to remove its, quote, going concern warning and provides a much needed cash infusion as Sanofi plans to deal allows Novavax to remove its, quote, going concern warning and provides a much needed cash infusion as Sanofi plans to use the partnership to develop a joint COVID flu vaccine. Despite today's gains, though, a longer term chart of Novavax tells a fuller story on the stock. You can see it's down pretty dramatically from its highs just a few years ago. Let's bring in Jeffries biotech analyst, Dr. Roger Song.

He has a buy rating and a $38 price target on Novavax. $38. How do we get there? Hey, everyone. Thank you for having me. Great. So $38. Why is that your price target? Why are you so bullish on Novavax? Yeah, so it's mostly driven by the underlying platform, which is the protein-based adjuvant vaccine platform. So they do have this approved COVID vaccine in the U.S. and many other parts of the world. And then today's deal is really a validation for this platform, let alone adding a lot of the economics to the company. You know, 500 million upfront and 70 million equity investment from Sanofi and the 350 milestone payments for the COVID and another 350 for the COVID combination, along with significant loyalty payments over years.

So my $38 is really building on the over years, the potential for the COVID vaccine and the potential combination with their COVID vaccine, including the flu COVID combo. How large could this opportunity, this market opportunity, actually be? And I ask that knowing that there's a lot of fatigue about getting COVID vaccines. Folks have a lot of immunity now, and I realize it hasn't gone away or died out in terms of the virus, but vaccinations are pretty widespread at this point. And in general, if we look back to pre-pandemic, the vaccine market more broadly was not necessarily the highest margin business for many of these drug makers. Yeah, so we can use flu as the, you know, the benchmark here. So in general, in the U.S.,

30-ish percent people are getting vaccinated every year. COVID, people want to say it's similar to flu, but at least for the past year, we're not getting there, nowhere near to the peak for the pandemic because of maybe the fatigue and maybe people think, okay, COVID is not severe enough to get the vaccination. But we're talking about over the long term. And then the strategy a lot of pharmaceutical companies, including biotech companies, they're using is to do the combination. So we can leverage the awareness adoption from the flu and then to adding on top of that for the COVID, you can get one shot to protect to the virus, which makes a lot of

sense from the kind of real-world use. That's why we think we may eventually get to the similar adoption rate for flu-COVID combo, and then we can think about the significant revenue potential for this market. In terms of how much Novavax can get, it really depends on the product profile and the competitor landscape. Right now, we think, you know, they are having the most efficacious, maybe the safest vaccine for COVID. And then we'll see how the flu-COVID combo vaccine will look like.

Okay. And of course, we're talking about a vaccine that's not an mRNA vaccine like the competitors. Dr. Roger Song, thanks for joining us. Thank you for having me. Another jam-packed week is on the way. We've got insights into the state of the consumer with retailers Home Depot, Walmart, and Under Armour reporting next week. Also, you've got Google kicking off

its annual I.O. conference on Tuesday. Expect to hear more about the company's vision for A.I. and Gemini, plus more on mobile platform Android 15 and a possible tease for a new Pixel phone. On Wednesday, big inflation read, CPI, economists expecting an increase of more than 3 percent versus last year. You also get PPI the day before that, retail sales as well. So there's going to be a lot to digest. Markets did finish today higher with the exception of the NASDAQ, which was down fractionally in the Russell 2000. All of the major averages finished the week higher. That does it for us here at Overtime.

Happy Mother's Day.