Closing Bell - Closing Bell Overtime: Palmer Luckey Created Oculus. Next He Started A Top Defense Tech Company. Plus, The Impact Twitter’s New CEO Might Have On Ad Revenue 5/12/23

Episode Date: May 12, 2023

Major averages closed lower to end the week, marking two straight negative weeks for the Dow and S&P 500. Crossmark’s Bob Doll and GenTrust’s Mimi Duff break down the week of action and look ahead to next. Anduril Industries ranked #7 in this year’s CNBC Disruptor 50; founder Palmer Luckey talks all things defense, including the role of AI in the industry. Our Julia Boorstin takes a look at the possible impact Twitter’s new CEO will have on its ad revenue. Perrigo CEO Murray Kessler on the FDA advisory panel voting to recommend the company’s OTC birth control. Plus, three key stocks picks for your portfolio from Bruderman & Co.’s James Bruderman.

Well, another day in the red for the major averages with the S&P and the Dow finishing the week lower. That is the scorecard on Wall Street, but the action's just getting started. Welcome to Closing Bell Overtime. I'm Morgan Brennan. John Ford has the day off. Coming up on today's show, we'll talk with Oculus founder Palmer Luckey, who is also the founder of Defense Tech Company and Roll, about AI's military uses and how the debt ceiling debate could impact defense spending. Plus, we'll talk to the CEO of pharma company Parago after news this week that an FDA advisory panel recommended Parago's over-the-counter birth control pill. Let's begin with the market action, though. The Dow and the S&P 500 both closing lower for the second straight week.

Joining us now is Bob Dahl, CIO of Crossmark Global Investments, and Mimi Duff, Senior Client Advisor at GenTrust. Good afternoon to you both. Bob, I'll start with you. It's so many cross currents in terms of the push-pull in this market between bulls and bears. What's priced in here, and is it warranted? Great observation. The market's always uncertain, but it seems more uncertain than usual. Look at the Fed. Are they going to raise rates next? Are they going to lower rates next?

There are differences of opinion there. My view is what is not priced in is a recession that we might get and earnings estimates coming somewhat lower. The market is also pricing in, as you know, a Fed pause, as well as some cuts later in the year. The pause makes sense to me. I don't think inflation has come down enough for them to turn around and say, oh, we were only kidding. Let's start lowering rates. So what's not in the market tends to be, in my view, more negative observations. Yeah. And of course, you did get some hawkish remarks just earlier this morning from the Fed's Bowman along those lines, too.

Mimi, it was a one-two punch from the University of Michigan Consumer Sentiment Survey today. You had a sharp drop in sentiment and then you had a rise in long-term inflation expectations. That really pushed the reversal that we saw in stocks here today. Hard landing, soft landing or still soon too soon to tell? Well, I do think it's probably too soon to tell. Like for the most part, we believe in Bob's thesis that stocks are probably priced a little bit too well toward a soft landing. We're expecting more of a mild recession as our baseline. And we do expect inflation to be a bit stickier. We don't see cuts in the forecast. So in particular, one of our views is that it will take a little longer for inflation to come down.

And one- and two-year tips break-evens are priced for perfection. The break evens are just south of two percent. And we don't think that inflation is going to get to that target in the next one to two years. OK, Bob, I mean, all this raises questions. How does earnings factor in? Because earnings season hasn't been as bad as expected. We're largely through it. Yes, we get retail results larger in a large part next week and certainly a key read on the consumer through those. But in general, is this part of what's buoying the market here? And is that warranted? No question it is. That is to say, first quarter earnings came in better than expected. Coming into the quarter, the guess was minus five. Looks

like they're going to come in at about minus one. The problem, Morgan, is analysts didn't raise their full year numbers, which implies they're cutting something in the second, third and fourth quarter. Just not enough confidence. It underscores that earnings estimates are probably still a little on the high side. OK, Mimi, the other piece of the puzzle here is banks. We've been asking the question day in and day out. We've seen such dramatic moves in the regional banks and you've seen REITs get dragged down in all the all the turmoil and all the concern about next shoe to drop as well, too. Is this a canary in the coal mine or is this I keep saying this this week, but is this a contagion that has already or is largely contained? We don't think it's done. We think it's going to play out over a long time period as, you know, credit tightening is absolutely here. Banks have difficult choices to make to either raise their interest rate to keep deposits or

to source funding elsewhere. And, you know, as loans come due, rates are higher. So we think this is going to play out over a longer time period and we don't think that the pressure in the banking sector is behind us. Okay, so all of this raises the question, Bob, how does an investor position themselves right now? If you're just waking up, you're looking at the markets, we've got another down week, we have this wall of worry that investors are trying to climb right now. What are the best investments to make? Do you

take cash out of the market, put it to the sidelines? How are you thinking about it? So I just wanted to score with my answer what Mimi just said in a different way. The Fed raised rates from zero to five percent in a little over a year. That's drastic. The implications are we're going to have more breakage somewhere, somehow. Could it be another bank or two? Of course. Could it be a mild recession? Most likely. So I want to be careful. I want to have a little cash. I can get four or 5% on it. The equities I own, I want to make sure they have high predictability of earnings, not too ridiculous valuations, good cash flow characteristics.

I'm trying to be a little defensive in this uncertain environment where it seems like stocks are priced for better than we're likely to get. Yeah, you guys seem largely in agreement here. So Mimi, quickly, I'll put the same question to you. Very, very similar. We're underweight equities. We're a little bit long cash. To Bob's point, you can earn really close to 5 percent at this point. And we're pretty square in fixed income.

We like the front end tips and we continue to like infrastructure and just real assets in general to protect against continued inflationary environment. Yeah. OK. Thanks for kicking off the hour with us, guys. Mimi Duff and Bob Dahl with the S&P finishing the day down fractionally about two tenths of one percent. Forty one. Twenty four is the level there. Let's bring in CNBC senior markets commentator Mike Santoli at the New York Stock Exchange. Mike, what are you focusing on? Well, a little picture of the consumer, Morgan, really following on the University of Michigan Consumer Sentiment Data reported this morning. It was a pretty rough number, below expectations, not optimistic about the outlook in general from this survey,

and then also an uptick in inflation expectations. However, if you look at the actual financial position of households in aggregate, it's really not that worrisome. Actually, one of the reasons a lot of economists, if they're thinking it's a recession, maybe it won't be a bad one because consumers are in decent shape. So this is the household obligations ratio, household debt obligations and other financial obligations as a percentage of disposable income. You see where we were before the last couple of recessions, these shaded areas of recessions, well toward 18%.

There was the mid and early 2000s recession. This goes all the way back to the 80s. Now, this one, we were sort of similarly low in the in the early 80s before you had a big buildup in debt. And probably we're going to get up there in the next quarter. So this is a quarterly number. But the point being, if you towed up what people owe for mortgage payments, rent payments, auto leases, property taxes, insurance, all that stuff goes into this. And it shows you that there's a little more of a cushion than there has typically been when you were right ahead of a recession. Yeah. I mean, it is fascinating to me because you look

at this data and you see why people keep saying, you know, bank executives and investors keep saying, oh, you know, consumers, resilient consumers hanging in there. But, you know, bank executives and investors keep saying, oh, you know, consumers resilient, consumers hanging in there. But, you know, we've got college debt, those student loans that are going to start to get paid off again. You know, you do have higher interest rates, whether it's, you know, taking on a mortgage. And I realize the rental market has continued to be red hot because there's just not enough inventory out there for people who are looking to buy homes. You've got auto sales. I just I don't know. I don't buy it. I don't buy that the consumer is going to say that stay this strong. Inflation has just been it's just been too it's just been too resilient. No, I don't think they're going to stay as strong as they've been. This is obviously probably going to worsen. You do have loans repricing higher. You mentioned

the student loan kind of payments kicking back in. And yeah, people are falling behind on car loans and things like that. So it's not that it's getting better. It's just that normally you're actually in a little bit of a worse position for when employment starts to weaken even more, assuming that's going to happen in the coming quarters. Got it. How does this set us up when you look at data like this? How does it set us up for those retail earnings next week? I don't think people are expecting a whole lot out of the retailers. First of all, it's a it's kind of a seasonally slow quarter. There's probably room for some of the everyday retailers to surprise a little bit to the upside. But if you look at the way the market's

viewing it within consumer discretionary, the retailers have been about the worst area. The best have been things like homebuilders, as well as services. in particular, has been where the action has been. Yeah, yeah. It's that shift from goods to services that everybody talked about coming out of the pandemic. And now it's been realized. Mike Santoli, we'll see you later this hour. After the break, we're joined by Palmer Luckey, the Oculus founder who went on to start Defense Disruptor and Roll. His thoughts on AI, the debt ceiling debate and so much more when Overtime comes back. Stay with us. Welcome back to Overtime. As the clock ticks down on the debt ceiling deal, stocks gleaning revenue from government feeling the impact. The Goldman Sachs high government

revenue index has gained less than 4% this year versus the S&P's 7% increase. And with national security by far the biggest category of discretionary spending, $858 billion is what was in the NDAA for 2023, defense stocks have been hit especially hard. Contractors like Northrop Grumman, General Dynamics, L3 Harris, and HII, which is a military shipbuilder formerly known as Huntington Ingalls, are all down double digits this year, with selling accelerating over the past month. Some stocks have even fallen to levels that were last seen before the start of the Ukraine war. If a default were realized, government contractors would feel it swiftly and deeply. But even if that doesn't happen, and many believe it won't, at least

right now, analysts say the issue is the broader budget implications. The worst case, military spending gets cut. The best case, or at least a base case, next year's budget gets delayed, with the government again operating on a continuing resolution, which could inflate program costs, delay new ones, and prevent production increases. Just this week, in fact, the House postponed consideration of the 2024 defense policy bill as lawmakers focus on this debt ceiling drama. So we continue to monitor that. But speaking of defense, our next guest is the founder of an $8.4 billion defense tech startup. It's Andral Industries, which is also a CNBC disruptor company. It's the second

year in a row that it's made this list. Andral specializes in developing software and hardware for U.S. military agencies and other government agencies. Other clients include the Australian Defense Force, the U.K. Ministry of Defense. The company has been well-received, to say the least, by investors such as Founders Fund and Dreesen Horowitz, who talked about this company yesterday, Lightspeed, securing $1.5 billion last year in December, despite a down market in its latest funding round. Joining us now, Andral Industries founder Palmer Luckey. Palmer, great to have you on the show. Oh, it's great to be here. And it's also great to be seventh place on the disruptor list. We're

going to be first place next year, I hope. Yeah, well, it's definitely what you've been doing has been noticed. I do want to get into you've got some news for the company specifically. But first, I do want to start with some of this DC drama that we're seeing play out and specifically debt ceiling and the broader read through and implications for defense spending and the trajectory here in the U.S. for that. How you're thinking about that at Andral and what it means more broadly for this industry, especially startups? Well, let me talk about the near term. I don't think that we're going to default on the debt. I think that we're going to figure this out. Everyone says that they want to figure it out with a handful of exceptions. If things do go

in that direction, then I think we've got even bigger problems than the near-term defense budget, much bigger structural problems. As far as the long run, I saw you mention something earlier, something bad that could happen is perhaps a cut in defense spending. My philosophy, despite being in the defense industry, is that we should figure out a way to spend less on defense while getting more. That's why I got into autonomous systems for defense. The first page of the first pitch deck for my company six years ago said that Anduril will save taxpayers hundreds of billions of dollars a year by making tens of billions of dollars a year. Now, we're not doing either of those things yet, but we're on a path to doing so. And I think that with the right

technology, we can spend less and still do more, be safer, and keep our partners and allies around the world safer as well. Yeah, I want to get into what that technology actually looks like. But first, just in terms of the possibility of continuing resolution, you've had Pentagon officials who have even floated real concern, I think, that you could see something like potentially a one-year continuing resolution. Just how damaging would that be to defense tech companies and to this startup landscape that is trying to cut down on some of the costs associated with this new way of warfare? Well, continuing resolution seems like it's the new normal. So actually, just speaking candidly, we model CR into our budget planning, assuming that it's going to happen every single year. We just assume that that's what's going to happen. But we're in a

little bit of a different place. We've been around for six years. We're well-funded. We have a lot of programs. We have a lot of revenue. We're doing very well. Where this is really going to be very bad is for defense startups who are not in the position that mine is today. I started my first company, Oculus VR, when I was 19 years old, living in a camper trailer. What about the news defense startups that are relying on funding to continue, that are relying on new program starts?

What about the people who are a couple years down from that, where they have a small team of people, where they have a few contracts that they're relying on to just pay the bills, keep the lights on? Those are the people who are going to get screwed the most by a CR. It's not my company, and it's certainly not the major defense primes like Lockheed or Northrop, though certainly all of us will be having a not great time. So let's talk a little bit about this new technology or this new capability that you are testing and you just unveiled. Mission Autonomy, what is it? Sure. I mean, we just announced our new product called Lattice for Mission Autonomy. Lattice is kind of our AI sensor fusion engine that makes all of our Android systems work and that also works for a lot of other systems. We just recently announced a lot of new capabilities that allow you to use Lattice

for mission autonomy to plan, simulate, and execute missions with small numbers of people controlling large, extremely large numbers of autonomous systems, including lethal autonomous systems. And this is a really big capability that hasn't really existed in the past. It's not just about making an airplane fly waypoints or a car self-driving, self-navigating. That's typically what people think of when they think of autonomy as it pertains to vehicles. This is allowing vehicles to make decisions based on the commands they've been given by their human operators to actually manage mission decisions. So what to do with certain types of targets, when to communicate, when not to communicate, when to reallocate resources away from one target to another, when to actually strike something versus when to launch an electronic warfare attack.

Again, under the control of a person, but that person is giving high-level intent commands, not micromanagement to the second commands that require continuous data links that, unfortunately, in the modern era are easily disrupted and easily jammed, at least temporarily, by our strategic adversaries. Yeah. So people are still involved, but maybe fewer people. How does this speak to, at a time where investors are really focused on artificial intelligence and things like generative AI, how does this speak to these new capabilities in real time rolling out in the real world? Well, you know, honestly, I feel like the last year has been the two-part Palmer Lucky I Told You So tour. I mean, I started an AI company six plus years ago when it wasn't hot to start an AI

company. And now everyone is agreeing, everyone's recognizing that autonomy can be applied not just to research or science, but also to real problems, defense problems, education problems, finance problems. Even as kind of large language models have demonstrated, the problems of just writing stuff that sounds good. And I would say that's on top of the fact that when I started Andral, there were a lot of people who insisted that we lived at the end of history, that conflict was over. There's not going to be any more large-scale conflict, so we don't need better weapons. I think the war in Ukraine has shown that that is not the case. China's aggression towards Taiwan shows that that is not the case. And so that's the thing that we're focused on every day. How can we build the tools that we need to defend our nation and our allies and our partners from the aggression that is already occurring and that will occur in the future using the power of autonomous systems. Yeah. And of course,

you already have products. And last time we spoke, even people on the ground in Ukraine involved in the war there and protecting Ukraine from Russian aggression there. The unintended consequences of some of these new technologies as they are deployed. I mean, there was a very dramatic analyst note just today from BCA, and there's a lot of qualifiers to this note, but it basically says that we're going to be blindsided by how quickly AI transforms society and the economy. And that, quote, assuming that humanity survives the transition to super intelligent AI, the impact on growth could be comparable to what first occurred during the agricultural revolution and then the industrial revolution. So how do you see this evolving when we're talking about war fighting? And what are the types of guardrails

or types of rules of the road that you or even regulators need to put in place because of possible unintended consequences? I think that there's a lot of people who imagine that the military has some of the loosest rules around AI or they haven't gotten their head around it. The reality is there are people who have been thinking about these ethical implications for decades. And so while a lot of people are struggling with these for the first time, they're first now learning about these ethical challenges. The people who have been thinking about the ethics of autonomous systems, going back to even to the Vietnam War, I mean, we have radiation-seeking missiles that seek out autonomously sites and strike them. We have things like CWIS and CRAM systems that protect our military bases and our ships that autonomously fire on anything that's incoming. The ethical

implications of this have been thought out and turned into real doctrine decades ago. And so I think the military is actually an area where we don't need to worry so much about figuring this out as if it's Pandora's box opening for the first time. Now, in society writ large, that's where I think things get interesting. I don't think the economists, I don't think the writers, I don't think the entertainment industry have been preparing for AI the way that the military has for decades. And with that said, there are people who want to pause AI development for six months. I think that that's extremely dangerous because there are certain countries that are not going to go along with that. Any kind of pause that we do right now

is going to ensure that we are six months behind those adversaries at a minimum. And in a world where China is ramping up to invade Taiwan, destroy our supply chain of integrated circuits, and end our high technologytechnology way of life. We need to take that very seriously and realize that six months is not something the United States can afford to give up. Yeah. I do want to shift gears here finally with you and just touch on the expiration of Title 42. Don't want to get into any of the politics on that. That's not what CNBC is for. But we are seeing a reported surge in migrants at the southern border. We've seen troops deployed. Andrel's a contractor at the southern border. You've basically been building what's essentially a virtual wall.

How does technology and how can technology help to address and mitigate what has been a crisis at the border literally for years? Well, the thing about the systems we build is they provide awareness of what's crossing the border in both directions. And I think that people often conflate these two things. They think that immigration policy and border security are inherently the same thing, but they're not. Even if you change immigration policy in an extreme way, imagine that anyone who crosses the border is immediately given full citizenship in the United States. I'm. Imagine that anyone who crosses the border is immediately given full citizenship in the United States. I'm not saying that anyone's seriously suggesting such a thing, but even if that were to be your policy, you still want border security. You want awareness of weapons moving back and forth across the border, cash moving back and forth across the

border, narcotics that are moving back and forth across the border, people who are being trafficked back and forth across the border. I mean, you want to be aware of these things. And so I think the key is we need better technology on the border, not to enforce any particular immigration policy or decision, but because we want people to be safe. We don't want criminals to operate with impunity. We don't want drugs and weapons and cash and worse to be going back and forth across our border without us knowing about it. And so, yeah, I mean, look, the policy side of this is very complicated on the immigration side. But I think on the border security side, there's a reason you see strong bipartisan support for securing the border through awareness of what's happening and through

responding in the right way to what's happening. All right. Palmer, it's always great to speak with you. Thanks for joining me. Palmer Luckey. It's always great. Thank you for having me. I'll see you next year or earlier. Oh, yeah. I think earlier. I hope earlier. All right. For more on aerospace and defense, check out the latest episodes of my podcast, Manifest Space. We had a flurry of new space companies reporting earnings this week.

Names like Virgin Galactic and Rocket Lab actually finishing the week higher, bucking the broader market. It might not be actual rocket science, but investing in space is complicated. So this week, two episodes diving deeper into the topic. Andrew Chen and the CEO of Procure AM, which offers what was the market's first pure place space ETF UFO, plus the Bank of America analyst Ron Epstein, a.k.a. Rocket Ron, as he's known on Wall Street, laying out how we get to potentially a trillion dollar space economy by 2030. You can listen wherever you get your podcasts. Breaking news from the Fed.

Meantime, Leslie Picker has the details. Hi, Leslie. Hey, Morgan. Yes, this is the Fed's H8 data, which gives us a snapshot of the current deposit levels among U.S. banks. Actually, it is backdated to May 3rd for this recent release. But we did see that big banks saw a pretty significant decline, down 0.13 percent for the week ending May 3rd relative to the week prior. Total deposits at U.S. commercial banks, those were down by about $13.8 billion or about eight basis points there. And small banks barely saw declines down about

$300 million in that week or about one basis point there. So, you know, continuing to see some declines at deposit levels. But big banks, interestingly, in the week to May 3rd, despite what we saw with the regional bank volatility in the stock market, it was the big banks that saw a more significant withdrawal of deposits overall. Morgan. Leslie Picker, thank you. Up next, Twitter gets a new chief. We're going to talk about Elon Musk's decision to hire NBCUniversal ad boss Linda Iaccarino as CEO. And if she'll be able to bring more advertisers to the platform. Stay with us.

Welcome back to Overtime. It is time now for a CNBC News Update with Pippa Stevens. Hi, Pippa. Hey, Morgan. Well, here's your CNBC News update at this hour. Sources telling NBC News that President Biden and House Speaker McCarthy spoke by phone ahead of the debt ceiling meeting on Tuesday. The conversation came after more than three months without negotiations about the looming debt limit. A McCarthy spokesperson confirmed the call, but declined to provide additional details. Biden and congressional leaders are expected to meet again next week to discuss additional details. Biden and congressional leaders are expected to meet

again next week to discuss the topic. The New York City subway rider who put Jordan Neely in a fatal chokehold was charged with manslaughter today. This comes after a video showing 24-year-old Daniel Penny putting Neely in a chokehold went viral. Penny surrendered to police earlier this morning. And ex-NBA star Dwight Howard facing backlash in China for calling Taiwan a country. In a promotional video with Taiwan's vice president, Howard said he has gained a new appreciation for Taiwan since coming to the, quote, country. Social media users took to Weibo to condemn Howard, with one user saying, you were my idol, but not anymore.

Morgan, back to you. All right. Pippa Stevens. Thank you. Big changes are brewing at Twitter. NBCUniversal advertising chief Linda Iaccarino stepped down from her post at our parent company and will become Twitter's new CEO. Elon Musk says he will transition to executive chair and chief technology officer.

Julia Borson joins us now with a look at what Iaccarino could bring to the platform. Hi, Julia. Hi, Julia. Hi, Morgan. Well, Linda Yaccarino brings to Twitter relationships that she's built with all of the biggest advertisers, along with a dozen years of experience at NBCUniversal, building out its one platform to deliver targeted ads and measure their results across both linear TV and digital platforms. Musk saying she will, quote, focus primarily on business operations while I focus on product design and new technology. And Twitter needs her help. Many of the platform's biggest spenders reportedly either pause spending or decrease spending in the wake of Elon Musk taking over Twitter. Insider Intelligence forecasts that Twitter's global ad revenues will

plummet 28 percent this year from 4.14 billion last year to just under 2.98 billion by year end of this year. Now, in addition to Yacarino's relationships in the ad industry, she does know Twitter well. That's because NBCUniversal and Twitter have had a longstanding partnership. So she's familiar with both how to share content and ads on the platform and also its potential appeal to brands. Morgan? Yeah, I think this is fascinating. And you can make the comparisons to Gwen Shotwell over at SpaceX or maybe Zach Kirkhorn over at Tesla. But I almost wonder if you can make the comparisons to like Sheryl Sandberg, to Mark Zuckerberg,

when that was, you know, company was still so much younger and so much smaller and building out too. Yes, I would say the difference between Sheryl Sandberg is she held the COO title. Here we're having Elon Musk give her the CEO title. It'll be interesting to see how much he's involved in the day-to-day and how much he really gives her free reign. I mean, her expertise here is really on the business side. It's on the advertising relationship. She's obviously worked at a company, NBCUniversal, that both has a direct to consumer relationship with Peacock, as well as selling to other partners with the licensing of content on one hand, and then also of just sort of packaging

NBCUniversal's channels through the bundle. So she does have that perspective on different parts of the business as well as the ad business. So we'll see how much he gives her free reign, because this is a company where the product and the monetization of that product are really intertwined, right? You know, the question of how much Musk invests in trust and safety, that might affect Linda Iaccarino's chances of bringing on more advertisers who maybe, since Musk took over, are a little bit wary, concerned maybe he's not spending enough on those different issues. So I think these things will be very interconnected, Morgan. Yeah. And of course, the possibility that maybe the product or the types of products begin to change and evolve, too, when you're trying to bring more content creators onto the platform. Look no further for for better or worse than

what's going on with Tucker Carlson and that announcement just earlier this week. It's going to be interesting to see how all of this plays out. Julia Boorstin, thank you. Thanks, Morgan. Let's bring in Mike Santoli with a closer look at how Tesla stock has fared since Elon Musk bought Twitter. Hi. Yeah, Morgan, interesting. The immediate reflex when the news came from Musk that he was hiring a CEO was for Tesla shares to rally. I guess on this perception that perhaps it would mean he could turn more attention to Tesla. I got this chart going back four years ago. I wanted to show the entire mega move in the stock into and through 2020 and into last year. So if you wanted to really plot when things started to to turn a little more for the

worse, this is basically when Musk first disclosed he had a stake in Twitter and might try to buy it. And then basically down around here is when he actually closed the deal. So clearly, it was when Tesla was on the downslope. But it's not the only thing going on. It wants to make real upside momentum in all of the Nasdaq kind of broke. You weren't able to kind of have the retail money forced to stock higher. And you've went below these sort of key levels. It's been very hard for the stock to get out of its own way. By the way, it's also profitable now. And that means you can put a valuation on it. You can look at the margins. It's much more of a mature company now. And it can't just go on kind of Musk's fairy dust and hopes that he's going to have a vision for the future. So this is the level 200 to 215.

That has been a cap in the recent months. We'll see if it can make a run at that again, Morgan. Have this magic way, Mike, of sort of finding the range and drawing a perfectly straight line and putting it all in perspective over the course of years. Look, it's all that Etch-a-Sketch training I had as a kid, I think. Mike Santoli, have a great weekend. Thank you. And happy Mother's Day. sketch training I had as a kid, I think. Mike Santoli, have a great weekend. Thank you. And happy Mother's Day. Oh, thank you. Up next, the CEO of pharma company Parago on this week's FDA

advisory panel recommendations surrounding its over-the-counter birth control pill. Stay with us. Welcome back. FDA advisors unanimously recommending the sale of birth control pill Opal without a prescription this week. Up next, the FDA will have to approve the switch, which is expected over the next two to three months. Parago owns the maker of Opal. And if this goes through, analysts expect this to be, quote, significant for the company. Parago CEO Murray Kessler joins me right here on set to discuss. Welcome. Thanks. Good to be here. So I realize this is not the green light, but this is an important step in the process towards

a potential green light with over-the-counter. The fact that you saw this unanimous vote, how significant is it? And how quickly do you expect the FDA to then make a ruling? Well, I think it's a massive, Morgan. The FDA, rightfully so, they do all their work to make sure there's safety, et cetera. But this is a product that's been on the market from a prescription standpoint since early 1970s. And so there's 50 years of safety data. And what was magnificent about the advisory committee is how many groups came out. There were thousands of individual letters and cases made. There were over 35 third-party groups testifying besides us. And everyone almost across the board, with few exception, were in support of this. So a 17 to 0 vote by the advisory committee hopefully gets the message to the FDA that they need to approve it and approve it quickly. I mean, thus far, we've seen the FDA push back and really raise some concerns around around risks.

So so if you were to see the FDA ask for more information or even call for potentially another study, since this was a study done through, I think, the pandemic, and there were some questions about the efficacy of it. How long would that process take? I think the advisory committee made it clear that that's not something they wanted them... It's something they shouldn't do. That is an unnecessary delay. They, you know, they've ruled, they've studied the data. Other advocacy groups studied the data.

It clearly comes out that the benefit outweighs the risks. And listen, we live in a world right now where women's reproductive rights are being limited and being more restricted. And this is an opportunity to provide access and affordable contraception and, you know, to prevent, you know, 50 percent of unintended pregnancies in the United States a year. This is this is a big opportunity for women. And, you know, and it's historic, in my opinion. And it's historic for Perrigo as well. Yeah. And it comes in the wake of the overturning of Roe versus Wade. And you want science to be apolitical and sort of above the politics and the policies. But how long has this actually been in the process? I mean, is this the fact that you see an advisory panel unanimously vote in favor of it?

Would we have seen this a year ago? Well, that's a great question about whether the politics are affecting it or not. But listen, the FDA did their job. HRA, the company we bought a year ago, is the one who's led the way on this. It's nearly I know it's over seven years, maybe a decade that they've been working on gaining this approval. And again, for a 50 50 year old product that has reams and reams of safety data on it. So listen, this is the time for them to act. And it's this isn't the first country that's going to approve this. We've already gained approval in the UK and we're applying in other countries around the world. And this is something society needs right now.

So over the counter, expected pricing and just how big is this market opportunity? J.P. Morgan, for example, expects $100 million. I think that's a starting point for year one in the U.S. as you begin. And, you know, I don't have the exact pricing on it at this moment, but our entire company's DNA, I don't know how well you know Perigo or don't know Perigo, we're the guys who make things that are great value. So when you buy at the big, if you buy in the United States, any over-the-counter product and it's got the store brand on it, Walmart, Walgreens, CVS, for the most part, that's made by Perigo.

So quality, affordable self-care is what we're all about. But $100 million, and then as it grows, I think it could be massive. We'll apply for countries all over the world with the product. Yeah. You're also a big player in the baby formula industry as well. There's been a lot of focus on supply chain issues, especially coming off of the shortages we saw last year. Pricing,

how are you thinking about investments there? How are you thinking about resiliency of supply chain? And what does it mean in terms of pricing in a week where we saw inflation data, including record prices for baby formula? Yeah, I mean, there's a lot going on in baby formula right now. Perigo was proud to be part of the solution last year. Again, we're the value player. We sell at about half the price of the national brands. And there was one of the two big national brands had a major recall last year and caused a massive, not only a shortage, but then a pantry loading run by scared moms that they wouldn't have enough infant formula. And we ran around the clock 24 hours a day seven days a week. The fallout this year has been interesting though because there's been a lot of political pressure on the FDA of whether they had enough guardrails in place as a result they've put out additional

regulatory restrictions which is actually making it more expensive and more difficult to produce infant formula than ever before and that's why I think you're seeing infant formula prices go up further and we're we're all for infant formula we don't ship a product that we don't think is is safe but um we're not done yet with the the infant formula issues in the in the U.S. given what's going on right now. Okay it's a it's a conversation we will continue and of course you had earnings week. You also announced you're retiring as CEO of the company this week. So congratulations on that. And appreciate you being here in studio with me today. Thank you very much. Yeah, it was great to report some of the best CPG results with double-digit earnings and 37% EPS growth. And yeah,

after 18 years, I am pleased to be retiring and transitioning to a new CEO over the next few months. All right. Murray Kessler, the CEO of Parago. Thank you for joining me. Thanks, Morgan. Well, up next, the top asset manager gives us his top three stock picks as earnings season winds down. Stay with us. Welcome back. More than 90 percent of S&P 500 companies have reported so far in the current quarter, revenue growing better than three percent compared to the same quarter a year ago. So how should you be positioned as we head into the summer? Well, joining us now with three top picks is James Bruderman, president of Bruderman and Company. All right, let's get right into it. Your first pick, it's a growth pick. What is it and why? Well, we like Uber right now because they've got a growing addressable market and they're getting a growing share of it. Their margins have hold

up fantastically and there's a lot of positive wind at their back. So we think Uber is a great company in the growth area right now, especially when you look at, for example, in New York, where commuters are going to be paying a significant amount of money, $23 a head, to go into downtown Manhattan. And in a lot of areas, a lot of cities that are congested, we're seeing Uber continue to penetrate, penetrating and getting their Uber system into taxi cabs, for example. Yeah. It's going to be interesting, too, to see Lyft with a new president, a new CEO, I should say, whether you see a little more competition between these two names. There's been such a divergence. OK, let's talk about some communications names that we don't talk

about very often on CNBC. BCE and Telus. Why do you like these names? Well, we like the Canadian telecoms right now a lot more than the U.S. peer group. Penetration, especially with mobile, has not been as complete as it is in the U.S. And both of those companies are positioned very, very well. They pay a very strong dividend. And as we start seeing rates come down, we think that dividend is a benefit and will continue to drive the stock price. Okay. And so one more, a small mid-cap name that's actually nearly doubled over the past year, and that's Crocs, which is very popular with the kids. Very popular. Very popular with the adults, too.

And they've really correlated that stay-at-home market into a brand that really resonates with consumers. Their recent acquisition of Hey Dude, which is a very similar position brand, I think also bodes very well for that company. And their ability to drive partnerships and customization, all of those are driving a company that's got fantastic margins. Now even if they give up a little bit of margins, we think with the revenue they're driving, they'll be able to continue to drive significant cash flow. And that's one of the important things we look for in the stock.

Okay. So we've got four names there for our viewers to check out. Jim Bruderman, thanks for joining me. My pleasure. Up next, we're going to break down a new list of the top companies for working moms as Americans get ready to celebrate Mother's Day this weekend. Welcome back. It's Mother's Day this weekend. Welcome back. It's Mother's Day this weekend, and we are taking a closer look at what it's like for working moms. Silicon Valley tech giants like to tout their generous benefits programs, but new analysis from Just Capital reveals that only three, three companies in the Russell 1000 offer a comprehensive set of policies aimed at really supporting working moms and families.

Intuit, U.S. Bank Corp., and Lilly. Each offer 16 weeks of paid parental leave for primary caregivers, plus at least 10 weeks for secondary caregivers. Also things like paid sick leave and backup dependent care, subsidized child care, and flexible scheduling. So Just Capital polling shows that access to child care and paid leave are among the top obstacles that working women face. But experts say that they are key tools for companies to retain talent and boost performance. The data bear this out. The labor force participation rate for mothers with children under age 18 was 73 percent in 2022. That's 20 percentage points behind the labor force participation rate for fathers with children under 18. The economic

impact goes beyond working women and families. The annual cost of the infant toddler child care crisis adds up to 122 billion dollars in lost earnings, productivity and revenue as well. It's growing, too. It's up 50 percent since 2018. That's according to the Bipartisan Council for a Strong America. So improving those benefits that could end up boosting retention and with it corporate results. And of course, this is a key conversation to have given how tight the labor market remains. I'd also just say to all the mothers out there, happy Mother's Day this weekend and every day. In the meantime, up next, we will discuss what's next week's debt ceiling showdown and another huge week of earnings could mean for Wall Street. Stay with us. Welcome back to Overtime. The earnings calendar is jam-packed again next week as retailers take center stage. Tuesday, we'll get results from

Home Depot and Baidu. Wednesday brings Target, TJX, Cisco, and Take-Two Interactive. Thursday features Walmart, Alibaba, and Applied Materials. Friday closes out the week with Deere and Foot Locker. But it's not all just about earnings either. On Tuesday, OpenAI CEO Sam Altman will testify about the oversight of artificial intelligence in front of a Senate Judiciary Subcommittee. On Wednesday, investors will digest housing starts and mortgage applications. And Thursday brings the latest existing home sales data. But perhaps the biggest thing on Wall Street's radar is those debt ceiling talks between President Biden and congressional leaders. Kayla Tausche is looking at what to expect from the next meeting. And of course, Kayla, the fact that we could very well see some more headlines over the weekend. Yes, Morgan, staff level negotiators met again today to try to advance conversations on a spending compromise that's detailed enough for leaders to discuss

it next week after postponing a meeting that was supposed to take place today. But so far, Republicans have focused on four categories, permitting reform, COVID aid clawbacks, cuts to spending and work requirements for government aid recipients. That last one is a non-starter for Democrats, though. White House officials expect the president to meet with the top four congressional leaders before leaving for Asia on Wednesday, but so far there has not been enough to discuss. And the Congressional Budget Office is reinforcing today with some new data the government could run out of money in early June, as if more urgency was needed to an already urgent situation, Morgan. Yeah.

In terms of the spending cuts, do we have any sort of sense of where and how those could actually manifest? Well, it depends on both the depth of the cuts and the length of the cuts. You know, Republicans have been suggesting that their bill that cuts government spending by 22% is the starting place for negotiations. And Republicans told some reporters yesterday that any deal that would cut spending for just two years would come with a heavy price attached for Democrats.

So that is expected to be, you know, where the locus of negotiations are taking place. And as far as we've heard, there's not been an agreement on that, Morgan. OK, we're going to continue to monitor the situation in Kayla Tauscher. We know you're going to bring us all the headlines and all the developments and all the breaking news as you get it and as you make it. Have a great weekend and a happy Mother's Day. Just going to take another check on the markets, which did reverse course to finish today lower with the Dow and the S&P both finishing the week lower. But the S&P, but the

Nasdaq, excuse me, hanging on to gains for the week. That's going to do it for us here at Overtime. Fast money begins right now.