Closing Bell - Closing Bell Overtime: Salesforce Reports Earnings; Chewy CEO On Taking Market Share; Pure Storage CEO On Strong Portfolio 8/30/23

Episode Date: August 30, 2023

Fourth straight day of the major averages moving higher. Annandale Capital’s George Seay breaks down the market action, including earnings from Salesforce, Chewy, Victoria’s Secret, Crowdstrike and Pure Storage. DA Davidson analyst Gil Luria on the key takeaways from Salesforce’s report. Chewy CEO Sumit Singh on the company’s unexpected profit. Pure Storage CEO Charles Giancarlo on the latest quarter and its portfolio. Raymond James’ Sunaina Sinha Haldea talks the current regulatory environment and what deals could be in the pipeline before the year is over.  

Well, stocks extending the rally, risk on amid a rate reprieve. That is the scorecard on Wall Street, but the action is just getting started. Welcome to Closing Bell Overtime. I'm Morgan Brennan with John Fort. We have got another busy hour of earnings coming your way, including the Dow's top performer this year, Salesforce, as well as Chewy, Pure Storage, CrowdStrike, Five Below, and more. We will bring you all the numbers plus interviews with the CEOs of Chewy and Pure Storage before they talk with analysts on their earnings calls.

As we rate those earnings, though, let's talk markets. Joining us now is Annandale Capital founder George C. and CNBC senior markets commentator Mike Santoli. George, the 10-year yield below 4.12, S&P above 4,500, I believe. CPE in the morning, one trading day before the jobs number. What are the chances that inflation and wage growth are both moving in the right direction? And how should investors position? Hi, John.

More and more likely every day. It just seems like the market really doesn't want to go down. And four days in a row, that's really strong for the end of August, which is typically a ho-hum, ignore it kind of month, and September even worse than that. I'm kind of looking ahead to see if we can hold up through September, October. We might get a really explosive short-covering rally into the end of the year. We'll have to wait and see, but you got to love the inverse correlation between the 10- year and the S&P. It's holding true very well. Mike, what does history tell us about September, October and volumes?

I mean, Labor Day is right around the corner. Are is volume going to going to tick up? Probably, you know, back to school time next week, you probably will get some. I don't pay that much attention to market wide volumes. Unless we're talking about you know markets been in a deep correction we want to see if there's been a rush back in. To the market I think more

interestingly. Is whether the seasonal patterns over the long span of time which is September being the weakest month. Is going to hold up or not there's been some revisionist work. It says when you've actually had a strong year to date. Return in the S&P,

maybe September is not as bad. Maybe we front-loaded a little bit of the anxiety into August. It's very much a kind of a wide range of potential outcomes. But I don't think that it's just about September. It's also about, you know, whether the data continue to operate in this zone of the economy is resilient, but it's not overheating. Bond yields above 4% might be fine. Above 4.3% seems to give the market a little problem. So maybe there's not a huge margin for error, but for now, we're operating within it.

Yeah. George, the NASDAQ in the last couple of days that we've seen the market actually turn green again, the NASDAQ's been outperforming. It's up 3.8% so far on the week. It had been hit the hardest of the major averages coming into or throughout the month. I guess it raises the question, how key is tech still to an ongoing rally here? I think very much so, Morgan. I think we're getting the exact opposite of last year, where tech just got taken out of the woodshed and thrashed, and a lot of other things held up better.

And I think you want your generals to be in the fight and right in front if you're going to close well towards the end of the year. And, you know, we heard the term Goldilocks economy a lot in the late 90s before the tech bubble burst. And you're starting to see some Goldilocks patterns here where the rate of GDP growth gets revised down a little bit. You got nice growth, but not over excessive inflationary growth. Then your interest rates tick down because of the softening of the economy a little bit. And you've got a perfect environment for stocks. And this year's really reflected that. But whether that's sustainable, I don't really know. Maybe that recession people have been predicting for two years now shows up next year

or early the year after that. We'll have to wait and see. Yeah. I mean, some of this data we've been getting, Mike, a little bit of a double-edged sword because, OK, it's trending in the right direction for the Fed and for the outlook for rates. But it also signals potentially that the economy is starting to slow down a little bit more here. So what does that mean for the S&P? Because, yes, the S&P has been rallying as yields have fallen. But at some point, does bad news become bad news? Yeah, I think always eventually bad news becomes bad news. You can't operate for long periods of time when you're hoping for economic weakness. You only hope for that when you've otherwise already been afraid of overheating or the Fed has to become

more aggressive. So at this point, people have said, even those who expect a recession say, you know what, it always looks like a soft landing on the way to a recession or almost always, unless there's been a huge shock. So I think you have to keep that in mind. But for now, until further notice, it seems like we are in a decent spot in terms of the macro numbers, even though the economic surprises have started to work to the downside from record highs. George, taking a step back, you say it's a good moment for investors to exit positions of low conviction and concentrate in core conviction positions. What does that mean? Can you give us an example?

Yeah, I think that if you're speculating on some more less mature companies that have hardly any earnings, but a lot of momentum and a lot of investor interest, a lot of those, which you focused on some in the preview to earnings today, have had huge years this year, up 40%, 50%, 60%, things of that sort. I would be tempted to take profits or write calls against stocks like that and focus on the generals with the Amazons, the Googles, the Salesforce's. Salesforce is just a great company. Microsoft, Apple, so forth and so on.

And maintain those core positions. But things where you're just not quite as certain that the earnings growth is going to be there to satisfy the market because those things can fall out of bed 15 to 25 percent in one day. Maybe trim or eliminate and focus on your core conviction ideas. All right. Salesforce earnings are out. Steve Kovac has the numbers. Steve? Hey, John. Yeah, it's a beat on the top and bottom lines for Salesforce. EPS coming in at $2.12 versus $1.90 adjusted the street was looking for. Revenues, a slight beat here, $8.6 billion on the nose versus the $8.53 the street was looking for i'm going through report now john i have more for you in a minute all right uh let's see uh let's go back

to the panel on this mike santoli this is one uh that we're watching closely it is a dow component it's moving higher initially after hours um but we got to look look at margins and we've got to look at, I guess, AI commentary to see if there's anything valuation wise to get people excited about. Yeah, for sure. And look, a pretty significant bottom line beat with only a marginal upside to the revenues would suggest that it mostly is a margin story without really looking. And you have the stock up nine bucks, at least indicated right here. So it definitely was, I think, relatively high expectations in the sense that over the last six months, the estimates for this quarter were up from like $140 to $190 or so. So it shows you there is some earnings momentum, the cost-cutting plan, a lot of what's in their control they're taking care of.

I would think that's going to be a large part of the story when they talk to us. Yeah, and just going through the report here, George, I mean, it looks like it's a beat and a raise. Raising full-year fiscal 24 revenue guidance to $34.7 billion to $34.8 billion, an 11% increase year-on-year. It looks like operating margin guidance to 13.3%. Raising full-year operating cash flow guidance to 22% to 23% as well. And comments from CEO and Chair Mark Benioff here saying that based on performance and what we see in the back half of the year,

we're raising our fiscal year 24, everything I just mentioned, raising guidance. So just want to get your thoughts on that and how it speaks to the winners and losers in tech right now and what has been an uncertain economic backdrop? Well, when you have a stock like Salesforce up 60% plus this year, NVIDIA up around 200%, you can far call all you want about GDP growth and whether two's right or two and a half or whether the 10 years scary at 4.3 versus 4.1. You can talk all day long about that. But at the end of the day, what matters is earnings growth and how these companies perform. And this outperformance by Salesforce is very impressive. I'd rather take that all day long than splitting hairs on slight fluctuations in GDP growth or interest rates. And the guidance on the call will be important too, but the guidance on the piece of paper announcing

the earnings sounds very, very good. I believe Pure Storage has also crossed. We're going through those right now. Mike, in enterprise, there's been this sense of things having bottomed out. And I guess in a way, without hearing the commentary, the Salesforce results seem to echo that. Yeah, it would seem that. Obviously, you want to get some clarity on the components of that revenue guide, whether they're saying that, you know, deals are being struck at a good pace or not. And I think the reason that investors have warmed to the Salesforce story is that it isn't wholly dependent on accelerating top-line growth from here

or accelerating overall spending growth from enterprise. So, you know, you have a little bit of a cushion here psychologically because let's remember, this is a $300 stock in November of 2021 when the Nasdaq peaked. So it's still clawing its way back to that level from a lower valuation threshold because the earnings have come through and they've been doing a lot of cost cutting. Yeah, I mean, just to dig into it a little bit more, Mike, Salesforce is up, looks like more than 6% right now with immediate reaction after hours. But it is very much AI-driven. And I don't just mean Salesforce, but I just mean in terms of what seems to be performing well,

again, going back to this uncertain macro environment, AI seems to be sort of the thing that everybody's honing in on and trying to highlight in their results around around not only investments are being made, but how they're going to monetize it and what those quote unquote opportunities look like. Salesforce is that's going to be key on the call, right? Well, without a doubt. Yeah. And, you know, you would think on paper that it's the business model that should be right there. That's what they've been sort of enabling people to do is automate processes over time, create technological shortcuts for big organizations. All right. CrowdStrike and Okta earnings are also out.

Christina Parks-Nevelis had both of those. Christina. Yeah, I'm going to start with CrowdStrike right now. It was a beat on the top and bottom line. EPS came in at 74 cents adjusted. That's higher than what the street anticipated on revenues of $732 million. That's a 37% increase year over year. For guidance, Q3 EPS guidance, also 74 cents adjusted, so that's higher. And then I was just checking the full year EPS guidance, much, much higher, range of about 280 to 284. But you're asking me, why is the stock down, Christina? A big metric for this name is annual reoccurring revenue, especially net new annual reoccurring revenue that happens quarter from quarter. What I'm seeing from this report is 196.2 million net new ARR.

The buy side was expecting a number of around 198 million. Whisper was 200 million. So that could be part of the reason why you're seeing the stock sell off ever so slightly right now. Oh, and I can't forget Okta. Okta. Let's switch over to that. EPS beat 31 cents versus the estimate at 22 cents on revenues of 556 million. A big important factor for this one was subscription revenue. That came in at 542 million year over year increase of 24%. And overall, just say the Q3 and full year revenue and EPS guidance very strong for this name. And that's why you're seeing an 11 percent gain in the stocks. There you go. All right. Christina Parts Nevelis, thank you. Chewy earnings are

out as well. Courtney Reagan has those numbers. Hi, Court. Morgan, yes. So look at shares of Chewy. They are moving higher after hours, higher by about 5% or so after beating expectations here for both the top and bottom line. Chewy reporting earnings of 4 cents per share. The street was actually looking for a 5 cent loss. And then revenue is also stronger than expected at $2.78 billion, compared with an estimate of $2.76 billion. And a CEO quote talking about taking share here. So I know you'll have a lot more to talk to him about soon. Morgan. Yes, we will. Just a little bit later in the show, Courtney, thank you, because Chewy's CEO is going to join us in just a few moments to break down those numbers before he speaks with analysts on the earnings call.

Mike, want to get your thoughts on that one, especially given what we saw with Woof. Yes. Last week. It's been a tough category. A little bit of relief that both Petco as well as Chewy have been very weak. People worried about discretionary spending on pet products. You know, I would say that this is a beat for sure, as on the updated consensus. But this was a stock that was supposed to this quarter earn five cents based on, you know, six months ago estimates. Point is, people have downgraded their expectations. They cleared the lowered bar. But I do think it's a little more relief than it is excitement. And be very interesting

to hear what he has to say this hour about, you know, longer term trends in customer spend. If they're talking about getting market share, that's a good story. But what about the overall category? Also, you know, the path to sustainable profitability here, Chewy's kind of still operating, sort of break even, give or take at this point. All right, George, on CrowdStrike and Okta, interesting. CrowdStrike not moving much at the moment after hours. Okta way up. This is a stock that had been punished a couple quarters ago on their Salesforce momentum. And I know they've been working on that and, you know, both kind of in the security space, attacking it from different directions. What

does this tell you, especially after Palo Alto's results that people were worried about that came in better than expected? I think, John, that these reports are really making the point I made earlier, which is if you're going to continue to drive upwards as a stock price at this point in the year, you've got to really outperform in a significant way. And the stocks that are doing that are going up 6% to 12% after hours. And the ones that aren't quite giving a big enough beat to excite the street are trading flat or down a little bit. And it's also making the point for me that you look at Salesforce and you look at it trades at a much lower multiple to Mike's point than it did a year and a half, two years ago. It's a lot more inexpensive stock and it's kind of gotten its act back together again.

I think your margin of safety, if the market does react really poorly seasonally in September and October, is much higher with Salesforce than some of these some of these up and coming companies that don't have any earnings. So I would be more focused on stocks and companies like that than ones where you're kind of gambling a bit. Yeah. Just to dig into that a little bit further, George, I mean, we can argue, and certainly it's been argued that even with the pullback we've seen this month in the major averages, like the S&P, for example, that it's still expensive. Valuations are still elevated. How do you see it, and what does that mean to your point in terms of looking for value under the hood?

Yeah, well, Morgan, not to go back to the time old cliche, but I feel like last year the market was a fear market. And this year it's slowly turning into a greed market where we're wanting more and more gains. And I'm worried we're going to rob from next year and the year after if we get too aggressive going into the year. And I really think there is a decent chance in the late fall, early winter that we have a short covering and feeding frenzy rally into the close of the year. And if you get over a 20 PE multiple on the S&P and you start getting into the 30s on the NASDAQ, you're getting in very rarefied thin air. That's going to make it a lot harder next year. So you could be stealing returns from next year to make this year an even more profitable one. All right. Well, George, Mike,

thank you both. We will watch that. Still ahead, much more reaction to all of today's after hours movers, including what a Salesforce analyst wants to hear from CEO Mark Benioff and other executives on the call. And later, we'll hear from two CEOs before their conference calls with Wall Street, Sumit Singh from Chewy and Charles Giancarlo from Pure Storage. Overtime is back in two. Welcome back. Pure Storage earnings are out. The Flash Data Storage Company beating on both lines.

Earnings of 34 cents per share on $689 million in revenue. Third quarter revenue guidance was a beat as well. $760 million versus $757 expected. Coming up, the CEO of Pure Storage is going to discuss those results in an exclusive interview. Looking forward to talking to Charlie Giancarlo. Salesforce shares on the move, jumping higher in overtime after topping Wall Street estimates for revenue, earnings, and guidance. Joining us now is Gil Lurie, a D.A. Davidson senior software analyst. He has a neutral rating on Salesforce. Gil, not sure if there's enough here to change that neutral rating. There are questions about how much room they had to expand margins, but they seem to be doing it.

Yeah, that's right. They've done a lot this year. And this quarter signifies another part of that accomplishment. The activist investors that came into the stock pushed the agenda on the fact that Salesforce had far below peer margins. And Salesforce did the work this year to catch up. And as they exit this year at 30% operating margins, they will have accomplished that goal. And this is a good result. And the fact they raised bottom line guidance is the good result that you want. The bigger question, though, is how can they accelerate revenue from here? They're barely growing double digits. And the real question on the call is going to be, what is it that's going to accelerate that growth going forward on the top line? Yeah, and AI is something that every enterprise software company has to talk about now. We just had Google Cloud CEO here on Overtime yesterday. Their announcements yesterday. We're going to hear from ServiceNow soon.

We're going to hear from Adobe. Lots of companies trying to make the argument we can monetize this. What do investors need to hear from Salesforce to be convinced? Something concrete. When are these products going to be in general availability? When are customers going to start paying for them substantially? When is it going to be a real contributor to revenue? As we stand here today, there's really two large companies that are benefiting from AI. We discuss them often, Microsoft and Nvidia. Everybody else has a story, but very little to back that up. And this is one of the topics going to be today. When is this real? When does it start contributing

to revenue and how much? Otherwise, less and less of these companies are going to get credit for it because as much as it's an opportunity for these companies, it's also a threat. Any disruption to technology creates new companies, new entrants that can then take share from the incumbents. And that could be the case here. So we want to hear from Salesforce. When does this become real? So the flip side of that, though, Gil, is that Salesforce has a big install base, right? I mean, aren't they in a better position potentially just in terms of the foundation they have to convert some of those existing customers over to more AI services as they roll them out? Absolutely. And they're going to hold up as new entrants come up with new products to disrupt these incumbent businesses that Salesforce has been entrenched in for so long? So that really is where the burden of proof is. But yes, they are already able to get these

products out. They have a big install base. But one of the things we're seeing this year from Salesforce and others is a lot of these customers are saying, sure, I'll take a look at the new AI offering, but I'm going to do that instead of some of the other product I was looking at. So it's not necessarily incremental dollars. Sometimes it's instead of or even delaying spend on other categories. All right, Gil Luria, thanks for joining us ahead of the conference call. Neutral rating on the stock. Salesforce. We have results from a trio of big retailers. Courtney Reagan has the numbers. Hi, Courtney. penny beat. Revenue is also slightly better than expected at $759 million. The street was looking for $758.6 million. Comps were up 2.7 percent. However, the third quarter sales revenue forecast of $715 million to $730 million is well below the street's consensus of $738 million. And the

earnings range of $0.17 to $0. cents, also well below the street's consensus for 40 cents. And the company does call out that they are adjusting their earnings guidance to reflect an anticipated increase in shrink reserves, though their sales forecasts remain unchanged, which may be true, but that is still below the street. So the stock is falling on that. Then if we can move on to Costco, these aren't full results for Costco, but these are the monthly sales numbers that we often get from this retailer, sort of the last man standing doing this. And Costco's August sales up 3.4 percent. That's comparable sales. So their e-commerce numbers were down two and a half percent, which is not uncommon from what we've seen from a number of these other retailers where actually the store numbers on a comparable basis have been better than digital. Remember, though, we're coming off sort of this strange pandemic period of time. So not unsurprising to perhaps see some of that digital number level out and come back down from some of

those big numbers we had seen. And lastly, let's talk about Victoria's Secret. Victoria's Secret is missing on its earnings expectations, or by the street at least. They are reporting 24 cents adjusted. The street was looking for 26 cents adjusted. Revenues coming in a little light at $1.43 billion. The street was looking for $1.438 billion. They are talking about their second quarter results being in line with guidance, but the outlook is calling for improving sales trends throughout the fall season, even though their earnings expectations going forward are well shy of what the street was looking for. They're looking for a range, again, Victoria's Secret, of a loss of 70 cents to a loss of a dollar. And the street is looking for a loss of 14 cents. They are talking about being encouraged by August sales trends, which were better than July. And then the second quarter better than the entirety of the spring season.

But clearly there's something going on here we'd like to dig into a little further for Victoria's Secret. Back over to you. All right. Courtney Reagan, triple duty, quadruple duty, really. All right. You don't have to wait for the earnings call to hear from Chewy CEO Sumit Singh. He'll join us here next before his discussion with Wall Street to talk about Chewy's quarter and his read on consumer spending. And as we head to break, take a look at some of today's intraday winners.

Lyft getting a bounce after a number of insiders purchased shares, solar company Sunrun moved higher in an upgrade to buy from Citi. And pot stocks like Tilray jumped on a report that HHS is calling for easing restrictions on marijuana. We'll be right back. Welcome back to Overtime. Shares of Chewy jumping on the back of an earnings beat and a revenue beat. Before he hops on the earnings call, let's bring in Chewy's CEO, Sumit Singh. Shares are up 4% right now, I should add. Sumit, it's great to have you on.

You talk about it here in the release that Chewy once again gained share. Where did you gain share? How did you gain share? And what did that mean in terms of how consumers are spending money on their pets and interacting with the company and the site? Hi, Morgan. It's nice to be here. So you're exactly right. We delivered 14 plus percent revenue growth year over year. And that's a shared leading performance on the back of an industry that grew, I would say, mid to high single digits in Q2. And if you look at the

consumer right now, the story hasn't changed much from Q1 other than the fact that the consumer is slightly more discernible coming out of the Q2 quarter. So we continue to drive outsized performance in healthcare and in consumables that drove roughly 85% of our sales. And then two, if you are familiar with our Autoship subscription product, that product drove over three-fourths or 75% of our net sales in the quarter. So as a result of these two, what you're essentially noticing is high levels of consumer engagement with platforms like ours that makes up for the sales beat. Yeah, a lot of focus from Wall Street analysts coming into this report on active customers, not only in terms of growth and the numbers, but also in terms of how much those customers are actually spending.

I guess walk us through how the quarter customers are actually spending. I guess walk us walk us through how the quarter did and where folks, I mean, just talked about health care, for example, but where folks are spending. Yeah, so this is really compelling about the way consumers engage with our platform. If you look at a metric called share of wallet, or we call it net sales per active customer, that metric, as you can see on the screen, was up about 15% year over year. So we grew share of wallet to reach $530. And from the time of our IPO in 2019, this is up 60%. We were at $300 plus in 2018, coming out of 2018. So consumers, when they interact with our platform, they spend healthy levels with the way that we drive our penetration

into our health categories, which might be prescription food or medication. But at the same time, they get this great assortment or wide assortment to choose from in us serving their food needs, whether it be premium or all the way to value segments, if you're a more value-conscious customer, per se. We're also pretty great at driving attach rates. So while, you know, hard goods on an overall basis is down, you know, we're seeing some signs, you know, where hard goods categories that are much more consumables or consumption-based are essentially, you know, driving some attach for us, which is obviously encouraging to see. So broadly, you know, we're pretty satisfied coming out of the quarter.

So it makes me wonder if we're seeing you have sort of the Walmart effect in pets here, where because you've got that essential category of food and you've got auto ship and you've got that loyalty going, you're perhaps that's helping you to gain share from others. Is that fair? So, John, you're on to something here. Today, a consumer is looking for value and convenience. It's not enough to offer just value or just convenience. And so, I think consumers are declaring their retailer of choice. And when they find the platform where they can essentially extract value and convenience, which they're doing at Chewy, they just double down. So when you look at, you know, our consumer engagement or our AOEs or basket sizes, they've essentially held steady to increasing incrementally on a year-over-year

basis. So I think the insight that you're getting is essentially right. Interesting. Okay. So tell us what this means for gross margins. They were 28.3 percent up 20 basis points year over year you have been increasing margins but as this inflationary pressure on this consumer continues do you have to continue to shift into auto ship in order to maintain margins what what helps you to continue to maintain and maybe even improve margins from here yeah so we have many different ions in the fire or many different irons in the fire or many different strengths that essentially in the way that we go to market with our consumers. So, Autoship, for example, that drives 75% of our revenue is a net low-cost

mechanism for us to be able to fulfill that volume. Because think about it, you're much more efficiently forecasting, you're much more efficiently fulfilling that product, you know, through our fulfillment centers. Two, we've invested in supply chain transformation over the last three years. So coming out of the pandemic, we're a stronger company as it comes to supply chain and operations. And that provides tremendous leverage to us as we kind of bring down sales all the way through our freight line into our fulfillment centers, per se. So it's a combination of growing high margin verticals like health, high accretive products like auto ship,

and then investing behind supply chain and operations transformation. Quickly, Sumit, do you have any news for us on a CFO situation? Well, we have lots of tremendous incoming demand and we're being highly diligent and deliberate. So I'll come share with you when I have the next good news there. Looking forward to that. Sumit Singh, CEO of Chewy, thank you. Nice to see you. And time now for a CNBC News update with Kate Rooney. Kate. Hi there, John. Hurricane Adalia is expected to weaken to a tropical storm as it heads north.

According to the National Weather Service, Georgia and the Carolinas are still at risk of heavy rain and possible flooding, with strong wind knocking down trees and power lines. Charleston could see coastal flooding onto roads and in the downtown area. The governor of South Carolina spoke about his state's storm preparations, saying that he will not order any evacuations or close state agencies. Officials are still warning people to prepare for dangerous flooding, flash floods, downed trees and power outages. And back in Florida, brokerage UBS estimates Hurricane Adalia is going to result in over $9 billion worth of damage. This estimate is still less than 10 of the costliest hurricanes to hit the U.S.

The brokerage expects reinsurers to bear the brunt of that cost. U.S. reinsurance rates for policies covering natural disasters rose up to 50 percent during July renewals. Back to Purdue. Yeah, it's been a big source of inflation on the services side. Well, we hope everybody's staying safe and sound in that region of the country right now. Kate Rooney, thank you. After the break, Mike Santoli returns with a look at the surge of interest in money market funds and what it means for equities. Welcome back to Overtime. Michael Santoli is back, and he is looking at money market funds. Mike.

Yeah, Morgan. There's been a lot of pointing and marveling at the rush of money into money market funds. People going to capture the 5% or so yield pretty safely. It has been dramatic. On the top here, you see the absolute levels of assets under management in money market funds. It's now something like $5.6 trillion. It's a new record. I should point out, this is like a 40-year chart. It's a logarithmic scale, which means it shows you

the percentage trend up here. And it is higher than the previous record, which was during the global financial crisis in 2008-9. So yes, a lot of cash. But relative to the size of the overall equity market, it's actually not particularly high. You see here, this is the percentage, money market assets relative to total equity market cap. This, in 08-09, showed you it was almost half of the stock market value was sitting there in money market funds.

That showed you how much dry powder there was potentially to be put back into the stock market at low valuations. Right now, we're around 12 percent. It's closer to the lows than the highs. So this doesn't mean that somehow the supply demand dynamic for stocks is unfavorable. It just means this isn't going to be a major source of big incremental buying. You see other things like not too many stock offerings. That's good for stock prices. Also, of course, you have companies buying back a lot of stock.

I just think the idea of tons of cash on the sidelines misses the point that the stock market's really big right now. All right. I just want to go back to some of these peaks and valleys on that lower chart. And that is especially when you go back to 2008. When you see these increases in money market funds, how much of that is tied, I mean, how much of that's tied to interest rates and what you can yield off of these? Back here, it was tied to fear. It was tied to the system is going down. And yes, of course, you could get safe yield, but it's not. Right now, I think you are having money chase the yield. It's

a novelty factor that you can get 5% safely right now. It hasn't been the case in a very long period of time. The other thing about money market assets now is they're kind of replacing bank deposits and to an extent bonds, as opposed to being the kind of money that's sort of just waiting to be put back into risky assets like stocks. All right, Mike Santoli, thank you. Up next, we've got the CEO of Pure Storage to discuss his company's earnings beat before he speaks with analysts on the call. Beat on the guy there as well. Overtime will be right back. Welcome back to Overtime. Data storage firm Pure Storage reporting second quarter numbers this hour. Topping street estimates, the stock moving higher. It's off the best levels at the moment.

Joining us now is Pure Storage Chairman and CEO, Charlie Giancarlo. Good to see you, Charlie. So I got to start off asking about this AI move that we've seen in the enterprise. Last quarter, you said AI infrastructure investment not really having a big impact. Large language models, just a tiny portion of what you're seeing demand-wise. But we are seeing an impact from enterprise companies moving their spend from kind of traditional data center stuff into accelerator-related ecosystems. So are you still seeing little impact, positive or negative? Well, we're seeing it increase, to your point. First of all, John,

great to see you again. Thanks for having me on the show. Very much appreciate the time. We are starting to see a pickup in AI. We had a number of AI-related deals this quarter, as we typically do. But this time around, more of them in the Gen AI space to tag on that increase in interest in Gen AI and chat GPT. And to cap it off, we had a nice eight-figure deal in a production environment for Gen AI. So definitely starting to see that pick up. Yeah, eight figures is big. So last quarter, you also said that you were seeing stabilization across from the end of Q4 into Q1. What did you see here? How would you characterize the environment in Q2?

Still just stable, a bit of an uptick? What? I'd say marshy with a few green shoots. You know, we started to see a few green shoots in the latter part of the last quarter. Hesitate to call that, you know, any kind of recovery at the moment. So I would say largely stable. I call it marshy. You never know if the next foot, you know, is going to be on solid ground or in a sinkhole. But I would say on average, on average stable, although, you know, to give it more color, internationally, very varied, different countries at a different point in their economic

cycle in this recession. Some of them we're seeing having really challenging times, others in a bit better shape. So the stable part, I'd say North America, other parts of the world, highly varied. Talk to me about your share gains to the extent that you had them. You've been very vocal about talking about hard disks being spinning in their grave, basically, and then traditional SSDs, you know, solid state drives not being up to the task of what the data center is going to need. How are you doing versus the competition? You know, we had one of the Kurian brothers, well, we had both of the Kurian brothers on

recently, but one of them competes more directly with you in storage. How do you think you're doing? Indeed. Well, if you look at the recent announcements by our competitors, yeah, we continue to pick up, you know, 10 to 15 percent market share each and every year. And if you consider the fact that more and more of our sales now is subscription based, that and in fact, we had a breakout, we had another record quarter in our subscription sales. You know, that doesn't even show up in the market share numbers. So actually, we believe our market share continues to grow relative to the market overall and relative to our competitors quite nicely.

Do you have a sense? And this is kind of a broader enterprise question. Do you have a sense of the degree to which your customers are stockpiling accelerator chips? You know, you see what they're spending on. You say you're seeing some pickup in AI-related spending. But, you know, some of the numbers are off the charts. Yeah, I don't know that I'd call it stockpiling because whatever they can get, they plan on using. Now, some of that is waiting for other infrastructure to be put into place. As you know, supply chain is still highly varied. So there's a lot of purchasing

going on, a lot of early orders. But I would say anything that's coming in that can be used is being used. Yeah, a lot of usage. And it's interesting to see it showing up for you as well, including that eight-figure deal. I know you got the call to get to. We appreciate you stopping in first with us here at Overtime. Charlie Giancarlo from Pure Storage. All right. Thank you. Thanks, John. Always good to see you. All right. Shares up 1% right now. Up next, Raymond James, Global Head of Private Capital Advisory, discusses how easing regulatory headwinds are impacting the capital markets. Stay with us. Welcome back. Wall Street is watching some big developments in the regulatory space.

This week, the FTC pausing legal proceedings to block the Amgen Horizon Therapeutics deal. Meantime, a court ruling says the SEC must reconsider Grayscale's application to launch the first Bitcoin ETF, a move that sent crypto assets sharply higher. Joining us now is Raymond James, global head of private capital advisory, Sunaina Sinha-Haldea. It's great to have you here back on set. And I do actually want to start there because it does seem like there's been some, dare I say, regulatory setbacks for the regulators with some of the M&A activity we've seen lately. They have. They've been pummeled in the courts, but that's not stopping them from taking a very different stance to the way they've regulated mergers. It's very clear that the FTC and DOJ are going to stick with their new guidelines, which are really moving the standard away from a consumer welfare standard, which it has been

for years, towards one that's more concentration, size, competition-oriented. And that's going to put the brakes, headline risk, and also completion delays on a lot of mergers. Now, the interesting thing is that they've picked fights with some big companies like Amgen and lost to Microsoft, lost to Meta in the courts. And so it'll be an interesting playbook whether the Amgen strategy, which is a new one for them in the recent history here, where they're trying to see if they can settle, is going to be more of a playbook going forward. I think we're all watching this space to see what happens next. Yeah. I mean, with some of these, I guess, legal challenges that have been successful or otherwise by some of these more deep-pocketed companies, though, I mean, I have had so many conversations in the past year or two

years where it's been, oh, you know what? A lot of cold water has been thrown on the M&A space right now. Does this change that dynamic at all? Do you expect that you are going to see some more dealmaking now or no? It's just it takes too long. The risks are still too high. Well, there's a lot of capital standing in two different buckets that need to get put to work. The first is corporate balance sheets, which remain fairly robust and healthy. We're yet to see an earnings recession, which a lot of folks

were talking about early in the year. That's still not happened yet. The earnings picture still remains pretty healthy overall in the economy. And the second is the private equity pockets, about $3.7 trillion in capital sitting in private equity funds remaining to be deployed. So when you look at the two of those things combined, that deal making pressure is there and is now starting to see some very good green shoots with all these announcements and more. It'll get priced in. It'll be priced into price and structure of how these deals come together. It's a question of when these closes happen and completion happens and there'll be a fight with the regulator along the way.

They're just building that into their processes now. Along those lines, I guess kind of related to private equity, tell us what the mindset is right now in private wealth. Right. Maybe a bit underexposed to private markets so far. Are people eyeing real estate and maybe riskier stuff where capital is harder to come by and there might be a chance to get some really nice cash flows? What are they talking about? What are they asking about and perhaps going into? Well, I think if you look at what's happened in private wealth over the last 10 years with the loosening up of regulations by the SEC in 2020, there's been a real interest in private wealth platforms to try to bring diversification to portfolios of high net worth, ultra high net worth individuals via the private markets, whether that's private equity, whether that's private credit or real estate. It's a diversification

play, but it's also a less an asset allocation play that we can build portfolios for you outside of the public markets. So when you look at the under relative under allocation of a private wealth investor versus a large institutional investor in the private markets, it's two to four times underinvested. So if you look at Blackstone, which has raised tens and tens of billions of dollars each year from private wealth, it's a great harbinger of what's to come in the private markets. I can't believe I'm going to do this, but I'm going to ask you about crypto because it's, I mean, are there any rich people who want to buy bitcoin who haven't

bought it yet because they're waiting for an etf well let's put it this way buyer beware there most platforms worth their salt will say you go and do that analysis and do that work yourself that they will hesitate to make that recommendation but yes there's plenty of people who did that got burnt and we'll see if they want to go back in for a second bite. You mentioned Blackstone. I mean, non-bank lenders, how key are they to this economy and to the capital landscape right now in terms of some of, for example, dealmaking and investments? Incredibly important, because as you know, most leverage bans happen with leverage. And you have a market where the syndicate loan market has been stalled for a number of quarters now. The non-bank lenders become incredibly important to try to catalyze some of these deals, especially when it's capital coming out of private equity.

Sunaina, great to have you on set here again. Always come back. Thank you for having me. As often as you can. All right, be sure to catch more investing advice at this year's Delivering Alpha conference. Join us on September 28th in New York City, where we'll convene investors and leaders to provide ideas and analysis.

You can scan that QR code on the screen or visit cnbcevents.com slash delivering alpha. Up next, a countdown to all the earnings calls that are about to kick off and a look at the key inflation reading that could move the market tomorrow when overtime returns. Welcome back to Overtime. It's been another jam-packed hour of earnings.

Here's a recap of the movers. Salesforce, Dow Component, turning in a solid quarter, beating on both lines and giving strong third quarter guidance. Shares are up 5.5% right now. Okta is jumping after beating on both lines and providing robust guidance as well. Those shares are up double digits. And in retail, 5 below moving lower after matching revenue estimates and giving soft third quarter earnings and revenue guidance. Those shares down 6%. Finally, Chewy topping the street with 4 cents of earnings per share versus estimates of a loss of 5 cents.

Those shares have actually turned lower. It's really been a bifurcation in terms of the results today, John, just because tech's been pretty strong relatively, retail not so much. Yeah, five below is six below. Couldn't resist. Oh, I had to mention that. And there's plenty of action coming your way tomorrow on the final day of August. On the earnings calendar, we're going to hear from Dollar General, Cignet and Campbell Soup in the morning, followed by Lululemon, Broadcom, Dell and VMware after the bell. On the data front, the big number to watch is going to be the PCE price index. That's a key inflation read for the Fed. That's 830 a.m. Eastern. Economists are expecting a jump of 4.2

percent year over year. But if you get a little less than that, wouldn't hurt, right? Because, you know, a lot of those inflationary readings coming in later, the market's been getting excited. That's right. I think there's sort of an expectation that you're actually going to see a little bit of an acceleration for July for PCE versus June. But perhaps that's already baked into the market. Bigger story we know, especially looking ahead to Friday, the loosening labor market, whether it's the ADP numbers we saw today, whether it's jolts yesterday, this idea that maybe finally you're starting to see some easing on that side of the inflation services equation. And as we've been saying here on overtime, the wage number perhaps matters a bit more in this Friday jobs report

than it has in the past for some of those reasons, right? Like there's a lot of pressure, upward pressure there has been on wages. How much is that translating now? And of course, we've got concerns. Workers want to get paid more, especially if they're in a union and they're pushing for it. That's right. In the meantime, we had another day of green for the major averages as this rally is continuing with the S&P finishing the day at 45-14. That's going to do it for us here at overtime. Fast money begins right now.