Closing Bell - Closing Bell Overtime: Snowflake CEO On New Tool For Improving Supply Chain; Breaking Down Ethereum’s Upgrade 4/13/23

Episode Date: April 13, 2023

The averages rallied today, led by tech with the Nasdaq finishing higher by 2%. RBC’s Amy Wu Silverman and Truist’s Keith Lerner break down what the move means heading into earnings season. Snowflake CEO Frank Slootman details the company’s new tool for companies to improve their supply chain management and the current state of enterprise spending. Meanwhile, Twitter and eToro announced a partnership; eToro CEO Lule Demmissie joins to discuss what’s next. We’re getting earnings from the banks soon and Oppenheimer’s Chris Kotowski gives his top picks. Evercore’s Mark Mahaney discusses the big move in big tech stocks and Amazon’s AI ambitions. CFRA’s Cathy Seifert on why BlackRock’s earnings matter. Our Mackenzie Sigalos on why Ethereum is rallying. 

Stocks rallying today with the NASDAQ leading the way. Best day in almost a month for that average. That's 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 are awaiting breaking news this hour. When we get the latest release of the Fed balance sheet, we are going to bring you that as soon as it's out. Plus, manufacturing in the cloud. We've got an exclusive interview with Snowflake CEO Frank Slootman on today's launch of a new cloud product for manufacturers. Let's get straight to the rally with our market panel. Joining us now are Amy Wu-Silverman from RBC Capital Markets and Keith Lerner from Truist. Good afternoon to you both. Keith, I will start

with you. Looking at the action in the markets today, is this the calm before the storm or is this a scene setter for more resilient earnings than are currently expected? Yeah, well, great to be with you. And like you said, the market has been pretty resilient here. But our overall view right now is that the market is starting to price in a lot of good news and there's little margin for error. We're around 41.50. If I stress test some of our assumptions and let's just say I give this market overall the highest PE outside the pandemic of the last decade, that's about 18.5. And let's just say earnings for the next 12 months are where the consensus estimates are today are right, which we think they're too high.

That brings you maybe slightly above 4,200. So in our view, the upside is likely capped somewhere from about 2% or 3%. Of course, positioning can get you a little bit above that. But as we get into earnings, we think that the market is going to start settling. And again, from our standpoint, folks that are overweight risk at this point, we would be paring back into the earnings season. Okay. And the S&P today finishing the day at 41.47, up about 1.4%. Amy, you're head of derivatives strategy. When it comes to options, the action we see in options can be very telling in the near term about market moves. What are you seeing where the banks and financials more broadly are concerned ahead of those

earnings coming out tomorrow. Yeah, that's exactly right. You know, it feels a little calm before the storm because you have a VIX at a sub 20. But the reality is there's a lot of options activity right now playing out in financials. And you know what I think is interesting? It's all quite bullish. So you're seeing a lot of prepositioning and KRE, the regional banks ETF, as well as XLF, the larger cap financials ETF. And all that positioning tends to be leaning more toward the call side right now. So, Keith, this is weird. Just bottom line for me, what should investors at home do in this situation where, I mean, what the market is doing valuation wise and even directionally today could seem a little bit out of sync with what the Fed economists were saying yesterday about a recession and all the

uncertainty we have heading into earnings season. It's a good point. And, you know, I think if you think about the last month and we if we were on a month ago, we said there's going to be some bank stress in the system. You know, we probably would discuss it more. You know, how much is the market down? Not if it's down or up. So instead, the market's been really resilient. But I think probably what's happened is the market is looking at what's happened over the last month as bringing the end of the Fed cycle closer. And around the Fed pause, you typically get some type of rally. But from our perspective, you know, we just think that the risk reward is not that great. So, again, everyone's different on an individual basis. but in our portfolios, what we would be doing or what we are doing right

now is we have an overweight to fixed income and cash. We still have equities, but we're below long-term targets. And we would be patient to be, you know, one of our themes this year is to be tactical, to be defensive. At some point we'd like to go on offense. But again, you know, if we had a more compelling opportunity or if this market instead just kind of chops along here and moves sideways, that's just unexciting in our view. So you're getting ready to buy more later with the idea that things are likely to come down from here. Amy, similarly, are you thinking based on what you were saying that that would be a smart move for investors to just, you know, if you got dry powder, keep it dry and wait?

You know, it's interesting because the one thing I like about focusing on the option side is there's this ability to be really tactical. So, you know, I think what's interesting is maybe we're kind of range bound on a longer duration sense. But short term, I do see these opportunities. For instance, let's say financial institutions come out and they say, look, you know, we're actually OK on the depositor side. Maybe long term the balance sheet isn't strong, but that gives you some sort of short term rally. Right now, those option prices are relatively inexpensive for an earnings season, especially one that's this critical. And so short term, you can still own some calls, a very low outlay in premium. But then obviously, you still keep some dry powder behind you.

OK, Keith, what would you be looking for in this market right now to start buying and where? So, I mean, we're still in the market in general, again, just more of an underweight position. And I mean, we think globally and globally, we like the us better than other markets it's the big blue chip country and within um you know within the overall market uh even though we certainly acknowledge that it's expensive we still think tech on a relative basis will be an outperformer because i think investors will continue to look for areas of safety the dollar's been weakening the interest rates have come down as well so we would also uh. Listen, for longer term investors who can stomach the volatility, I think longer term, the valuations in small caps and mid caps are compelling. The business cycle is just working

against them. But again, for folks that are thinking a little bit longer term, I think you could use some of this choppiness. I mean, small caps are still down about 10 percent off the recent highs from a few months ago. So those are areas. But I think I think time frame really matters today. OK, I like that balance that you guys gave there. Keith, Amy, thank you. Thank you. Let's focus in on the numbers for the economy as another cooler than expected. Inflation print helped boost sentiment on Wall Street quite a bit today. Steve Leisman got more on today's producer price index. Steve. Yeah, John, a big beat on wholesale prices, raising optimism about the outlook for inflation and lowering the outlook for Fed rates. And I'll show you that in a second. But first,

here were the numbers down half a point on the headline versus zero expected. Now, the core ex-food and energy was up a tenth more than expected. But look at that ex-food energy and trade, that trade portion. We'll see that in a second. That's a proxy for margins, which have helped push up inflation. And now, on the way down with the clearing of some of the supply chain issues, is helping push it down. So take a look. Food up 0.6 percent. but trade services, that's that margin proxy right there, down by almost a full percentage point. Transportation and warehousing down by 1.3%. And there's the big reason for the decline.

Energy down 6.4%. Now remember, PPI led the way up in the inflation surge. It rose ahead of consumer inflation. You can see that in this chart. And it began falling before consumer prices did. So it suggests price pressure is easing up the supply chain and importantly could have a positive impact on services inflation. That's the thing the Fed is watching most carefully here.

So what it all means for the Fed. We've got two inflation reports this week. The outlook for the Fed. We look at the January 24 contract to see the outlook for the full year. It's eased about 10 base points. Not a whole lot, but remember, it was already 70 basis points lighter than where the Fed thinks it will be at year end. So a pretty big disagreement between the market and the Fed. Keep going tomorrow, we get retail sales that Wall Street expects to show a decline.

So here we go. The question is whether we have a weakening consumer with improving inflation numbers, some new softness in the job market, and concerns over credit tightening, whether that could move the Fed finally into the pause column for May. Folks? Steve, tell me more about this trade services proxy for margins thing. I don't understand that. It's a complicated thing, but basically if it's the profits received by the differential

between the wholesale price and the consumer price ends up being a tack on or an add on ends up being part of the wholesale prices. So that was something that was really strong on the way up and now it's coming down. So it's an issue we've talked about, John, which is retailers and wholesalers have done very well as prices rose. In most cases, it appears they raised prices more than their input prices, for whatever reason, we can argue about that. And now they're on the way down. And so some of those profit margins or extra profits from raising profits are going away. That's going to be the key thing to watch in this

earning season and whether there's companies that can navigate that sweet spot of falling costs with those prices remaining high. I know you're going to be on the lookout for all of that. And Steve, you're going to be joining us a little bit later this hour for the H4-1 balance sheet data from the Fed, a.k.a. the salad buffet, as you named it last week. The Fed salad salad buffet a place you can go and get tomatoes or money from this different thing and we'll see how much continued stress there is in the banking system which is key to the outlook remember yesterday we learned that the fed staff has now made a recession their baseline forecast morgan and one of the reasons is because of their concern about credit tightening in the economy yeah and this is one weekly measure we get.

Yeah. And of course, they hiked anyway. Steve Leisman, thank you. No, I get it. There's money in this buffet. I like this buffet. All right, coming up next, our exclusive interview with Snowflake CEO Frank Slootman as his company announces a new cloud service to help companies manage supply chains and manufacturing. We're going to hear more about that news and his forecast for enterprise spending when Overtime comes right back. Welcome back. Tech seeing strong gains today, but Infosys

just posted its worst session in three years. The Indian IT company said its revenue growth would hit a six-year low as clients clamp down and defer spending because of growing recession fears. The CEO said unplanned ramp downs in client projects across a number of sectors, including financial services, were part of that slowdown. Emphasis is the second largest IT exporter in India, the largest Tata consultancy reported similarly disappointing numbers earlier this week. Now, cloud computing firm Snowflake flagged a similar concern just about slowing consumption earlier this year, saying customers were purchasing smaller bits,

but it expected them to consume the same amount just in smaller chunks. Meantime, Snowflake today announcing a new manufacturing data cloud aimed at improving supply chain performance for auto tech, energy and industrial companies. Joining us now, Snowflake CEO Frank Slutman. Frank, great to have you back. Let's talk about manufacturing here. There's still a lot of economic activity happening, but there's a need for efficiency. How is this offering going to drive that? Yeah, there's really two major domains, if you will, that are the focus of the manufacturing cloud. One is supply chain management. I personally have a passion around it. And the reason is supply chain management is sort of the only major realm in the enterprise that has never been platformed.

It's still spreadsheets and email, how people run supply chains. And it is essentially a data problem. So we're incredibly well suited to make enormous headway there. The other domain is really what we refer to as IoT, which stands for Internet of Things, but it's really acquiring data from machines. And that data is then processed and used for predictive maintenance and service experience management. All kinds of optimizations are being used. And we've been on the factory floor. This is already quite common. This is a sort of a use case that's in white use. Well, communication between different pieces of the

supply chain, also an important piece here. At least that's what I was hearing earlier today from the CEO of Autodesk, Andrew Anagnost. Here's what he had to say about what manufacturers need from the cloud right now. Take a listen. It can't just be China. They have to think about nearshoring. They have to think about distributed supply chains, supply chains that come from the east, the west, from the south, potentially from the north. And they have to be able to dynamically shift between those as time goes on based on their demand and based on the capacity of their supply chain partners. The number one thing that gets in the way of people successfully managing multiple supply chains is the ability to communicate what you want from that supplier, what you want them to build,

how you want them to build it, how it integrates with what you're trying to build as a system. Frank, is this going to help with that communication? Well, it's fundamentally a data problem. In a supply chain, you have multiple partners, and, you know, the data is siloed, so people have real trouble, you know, getting the oversight of what's going on. I mean, signals get generated, but they're not in your world. They're in somebody else's world. I mean, if you're making ice cream, I mean, there's four ingredients that make up vanilla ice cream,

but they come from different places and different people. And that is the simplest example I can come up with. You can go over to somebody like Honeywell, who has like 4 million SKUs. I mean, the equation obviously changes just dramatically in terms of the complexity of the problem and the challenges. So Frank, it's Morgan. At a time where you do have companies beginning to tighten their belts, given all the economic uncertainty,

what is the pitch around this manufacturing data cloud? What does it do in terms of increasing productivity and lowering costs and making the process of actually producing a good faster? Yeah, well, supply chain management became incredibly pronounced during the pandemic. We were sending the wrong product to the wrong places every day, and we were upside down on everything. And you saw that from the large retailers and the large manufacturers. That's because we can no longer drive our operations through anecdotal observation. We really need to be predictive. We need to be predictive. We

need to be data-driven, all these kinds of things. So, yes, you're going to become efficient. This is a very opportunity-rich environment to make improvement because the technology really exists now to get the overview, to be predictive, and to really manage operations with a high level of efficiency. This has been a problem people have been trying to solve for the last 30 years and made very, very little headway on. From the factory floor, I mean, we work with semiconductor companies for years that have very, very deep instrumentation on the equipment that they use for manufacturing, and they're very sophisticated.

But you now see that everywhere when you see people like Scania, which is the truck division of Volkswagen, I mean, the amount of data that they're acquiring in real time from the vehicles on the road, and they use that for predictive maintenance and service experience issues. This is where there's a huge pickup on efficiency. So, Frank, let me try to connect this

to what you were telling us right after you reported earnings, which was that some of the newer customers in this environment are taking longer to ramp up their spend and consumption because they want to see the return on that technology investment. For this manufacturing data cloud, is there a quicker or more clear return on that investment because of the immediacy of supply chain? You know, I think that the slower ramp really has to do with we're dealing with a much more conservative, much more regimented demographic. You know, in the early days, it was, you know, already aim fire. People were running really hard to enable

growth and all that sort of thing. So now we're foddering to the marketplace and people are just on a much more methodical, disciplined way of rolling out software. And it's just culturally, you know, I think a little bit different. But in manufacturing, look, we've been in manufacturing for a long time and people have, they have been, you know, very data-driven, very data-savvy, if you will, have had a data culture around their operations for a long time. But the technology is now opening this up. Supply chain was incredibly difficult because of the siloing of data between the different parties that make up the supply chain. Those are now opportunities through data sharing that we can directly address. So I think there's a lot of pickup here for supply chain optimizations and improvement. All right.

Frank Slootman, CEO of Snowflake. Thank you for joining us. After the break, the social side of trading, investing platform eToro getting some buzz today after launching a new partnership with Twitter. We'll talk to eToro's U.S. CEO next. And as we head to break, check out some of the names hitting 52-week highs today. McDonald's, Vertex, Cody and Merck all making that list. We'll be right back.

Welcome back to Overtime. Let's get a CNBC News update with Seema Modi. Seema. Hey, John, here's the update at this hour. This afternoon, the FBI arresting 21-year-old Jack Texera, who was suspected of leaking classified Pentagon documents. Attorney General Mayor Garland said the Massachusetts Air National Guardsman was taken into custody without incident in connection with an ongoing investigation. The leaked documents contain sensitive intelligence about Russian efforts in Ukraine and evidence of the U.S. spying on allies. Jailed Russian opposition leader Alexei Navalny is suffering from a mystery ailment, according to his spokeswoman. Navalny is reportedly grappling with severe stomach pain in jail and is, quote, not in good condition. The spokeswoman said she can't rule out that

Navalny is being slowly poisoned, but offered no definitive proof. In 2020, keep in mind, Navalny survived an apparent attempt to poison him during a flight in Siberia. And Mitch McConnell saying he will return to D.C. to work in person after treatment for a concussion. The Senate minority leader had been working remotely as he recovered from a fall in early March that landed him in the hospital. Morgan, I'll send it back to you. Thank you. Elon Musk taking the bull by the horns. Starting today, Twitter users that search for cash tags or hashtags with a dollar sign in front

will be given the option to go directly to the eToro trading platform to invest. CNBC first broke the news overnight, and eToro U.S. CEO Lule Demise joins us now. Lule, great to have you on the show. Let's talk a little bit about this partnership with Twitter. Why Twitter and what is the business model here? Yeah, so as you know, eToro is a social trading platform, right? So that means that in our own ecosystem, social dialogue between users of our 30 million plus users is something that's part of our DNA. And so partnering with a platform that has over almost 5 million sort of hash those dollar sign cash tag searches a day made a lot of sense. Twitter has a lot of business as well as news dialogue that happens to it. And so that synergy felt like a no-brainer for us. Yeah. How deep is the intersection between

finance and social media, Twitter or otherwise? I guess, what does the total addressable market of this look like? And what does it mean from a financial opportunity standpoint for a startup like eToro? Yeah. So the financial opportunity comes later, right? The first part of it is reach. We believe that social investing creates reach and accessibility of knowledge about investing, dialogue about investing. And so ultimately that in itself ends up being a financial benefit. So of our 30 million users globally, around 3 million of them do trading and investing with us with funded accounts, right? So ultimately, our thesis is that when you're in the dialogue sort of ecosystem, it creates opportunity, it creates knowledge and a sharing of information. And so, again,

that's why we're so super excited about this partnership because it magnifies that conversation. So it's one part education, essentially, or education within a social media sphere and one part potential on ramp to future users on the platform. Yes. So one part education, one part dialogue, right, as social media platforms allow that. And then ultimately also coming into our eToro.com ecosystem to learn more about our services. Lula, I want to get your sense of retail investor sentiment. You guys did this survey of 10,000 retail investors from February 20th through March 9th, and 70% said they were confident in their investments. But then on March 10th, we had SVB happen. So based on what you've seen in retail investor behavior and the chatter on the platform since, how much have things changed?

Are people tilting more toward either safer investments, things that pay dividends, bond funds? I don't know. What are you seeing? So I would have two words for you when it comes to retail investors, resiliency and opportunistic. And that's exactly what we saw with even with the when the crisis, the banking crisis hit, we saw retail opportunity and engagement rise that very same day. It doesn't mean that people are foolish and foolhardy. What it means is that the retail investor is becoming ambidextrous. On the one hand, looking at crisis and saying, how do I protect my portfolio with diversification and other things? On the and saying, how do I protect my portfolio with diversification and

other things? On the other hand, how do I take advantage of crisis to be able to have gains in my portfolio? And I think that's a welcome sort of sense of resiliency that we didn't see in the prior crises that we're seeing now. Yeah. Did you see a change in user behavior on the platform? I mean, I think about Betterment, which is a different company with a different business model. But we had that company's CEO on last week, and she talked about seeing record inflows into their cash reserve in the wake of everything happening with the banks. Have you seen similar changes to investor behavior or have you benefited in some way with new products? We have. So actually, what I would say to you is like they do three things all at once, right?

On the one hand, we see searches and behavior for ETFs like Bill. On the other hand, we see searches for diversified ETFs like SPY or QQQ. And then on top of everything else, they're opportunistic about saying, OK, we're seeing all this macroeconomic news. Does that mean I go into technology or, for that matter, digital assets? And so you're seeing this sort of like trifecta or quadruple of opportunity plus defensiveness. But are you seeing that shift significantly versus prior periods of market volatility? Because, I mean, we were talking a couple of years ago about Wall Street bets and the Reddit crowd, and was this good for investing? Are investors getting smarter or are they just getting risky? It seems to me, I mean, I don't see a lot of evidence that it's made investors a lot smarter, but I hope that maybe that's happening on eToro. What can you tell us? Yeah, you know, and part of it is, you know, it's so much easier to have a narrative of either losers or winners.

Right. It's not as interesting to talk about the person that's learning from their losses and their gains. So we do actually see investors being more holders. We have 70%, as you saw on our research, that feel like they are still opportunistic about investing. And remember, our investors are what I call tomorrow's investors. So in other words, millennials, young Xers. And so they appreciate the length of time they have ahead of them. And so they look at these as opportunity. I will tell you that this year and the past year has been an education in what happens when you have a frothy market. And people have taken that to heart in terms of understanding diversification and other things. What's really been exciting is that they haven't run away. All right. Final question for you, because I know crypto is something that you offer on your platform as well. As we're seeing this crypto winter thaw, perhaps a little bit where specifically Bitcoin and maybe Ethereum are concerned. Have you seen a pickup in activity there? We have. We have. And, you know, as you

know, it's been up, what, 78, 70 percent a year to date. And again, we're not saying, you know, we don't win. We don't necessarily tell people it's Bitcoin, Ethereum or anything else. It's more about this diversification mindset that we promote and education at the center of that. All right. Lule Demise, thanks for joining us today. Thanks for having me. Well, earnings season officially kicks off tomorrow, so much as there is an official kickoff. But Citigroup, JP Morgan and Wells Fargo are going to report results. Those names are going to be even more

closely watched this quarter because of the turmoil in the banking sector. A top analyst is going to tell us which bank he says is too cheap to resist. And don't forget, you can catch us on the go by following the Closing Bell Overtime podcast on your favorite podcast app. We will be right back. Investors are going to be on alert tomorrow morning as we get the first round of bank earnings. This comes as Wall Street still reeling from the Silicon Valley bank collapse, growing recession fears. Joining us now is Chris Katowski from Oppenheimer. Chris, we tend to pay attention to the biggest banks and not as much to the regionals, but I have a sense that maybe we're going to need to pay a lot more attention to the regionals this season in particular. What are the most important metrics there?

Well, the big banks will report first. And, you know, so far, when you look at the deposit numbers that you get from the Fed every Friday, the big banks have been in relatively fine shape. You know, since Silicon Valley, they've lost roughly six-tenths of a percent of their deposits. The smaller banks, by contrast, 4.2 percent. So, you know, you can see really that's where the outflow has been. And if anything, the big banks have probably had a little bit of a benefit. But I think the two questions that people are going to be asking mainly is, yeah, what are

the deposit flows and where are you at quarter end? And then they're also going to ask, you know, OK, how these big securities portfolios, how quickly are they going to burn down and what should we see in the marks going forward? All right. Well, Chris, stay with us because we do have breaking news on the Fed's balance sheet. Steve Leisman has the details. Hi, Steve. Thanks very much, Morgan. The Fed's balance sheet shrinking again to eight point five eight trillion dollars. That's down 17.2 billion on the week. And that is down for the third straight week. We still haven't given back all of the gains. Still up $274 billion since the failure of the two big banks. But it's interesting how it happened. You had a

$9.2 billion decline in the amount of money the banks are taking down So there's definitely a reduction in stress of the discount window fell by two billion dollars. Is that right? Yes That's right two billion dollars and the bank term funding program That's the other thing when other places the banks can go to get liquidity where they can bring their paper at par That totaled seventy one billion dollars and that was down by $7.1 billion. Other credit extensions, that's the thing the Fed is using to finance the two banks. Sorry, the FDIC is using from the Fed to finance the two banks. That was down, loans to the British banks down $1.9 billion. So at least that's not growing and getting worse. So bank borrowing from the Fed was a total of, I'm going to double check that number. I have $139 billion on that number,

a little different from what I'm seeing in my screen there. But the key here, I think, is that you still have quite a bit of borrowing from these two programs at the Fed, but it's gotten sequentially a little bit better each week. And I have a chance to talk to Austin Goolsbee, the new Chicago Fed president, tomorrow morning about this. We'll have his first TV interview, his first interview, I guess, totally, since becoming Chicago Fed president tomorrow morning, 8.30 on Squawk Box. John? That is must-watch TV, especially since he is a voting member. We're going to be watching that very closely.

Steve Leisman, thank you. Chris, we're going to go back to you. This data, this high-frequency data that we get from the Fed, your reaction to it, how closely are you watching it and how does it set us up for bank earnings and the focus on the balance sheets? We're watching it every week. And I think the big takeaway that people should have from these numbers is that overall, most of the deposits that are in the banking system are there for a reason. And that's especially true with the big banks, right? Silicon Valley, in some ways, was a place where companies parked money.

The big banks like J.P. Morgan and Wells Fargo and B of A, they don't want companies to just park money with them. What they want is the operating accounts that's tied into a company's payroll and paying their suppliers and all that. That's kind of what they get nice, sticky deposits for. And so far, what you're seeing with the big banks is really stability in their deposit bases. And I think that's the big takeaway, and that's good news for most of the banks. So, Chris, tell us about this bank that's too cheap to resist. Oh, you mean Citi? Yeah, I mean, I think, you know, if you're a regular investor who is thinking,

like, oh, maybe the banks got oversold and I should, you know, participate in a rebound, there, quite honestly, the names I'd advise you to get involved with for that are Bank of America and U.S. Bank, you know, big, broad-based banks with huge deposit bases, and they've been sold off with the rest. You know, the one that's really too cheap to resist is Citibank, and, you know, they have been chronic under earners but it's you know they've chronically earned like seven eight nine percent returns on equity when everybody else is earning 12 13 14 15. and so it's it's been chronically uh under earning but on the other hand you know it's trading uh barely above half of tangible book. And they have been buying back stock year in, year out.

So, you know, over the last six, seven years, they've been able to reduce their share count by over a third. And, you know, the bet is that at some point they get their act together and they can get their returns closer to the peer average. And you'll have that value spread out over a lot fewer shares. Okay. So quickly, Chris, we also get PNC reporting tomorrow. How does that set the stage for the regional results we're going to be getting in the coming days and coming weeks? Yeah, that will be the biggest bellwether, though B&A and Wells Fargo also are very much regionals. Again, you're going to want to see, and I think with PNC, they had been very vocal about the fact that they didn't care so much about their tangible

common equity ratios and that they were going to continue to buy back stock. That was their, you know, mantra through the fourth quarter. You know, we'll see if they moderate that. I would expect them to. And I think, though, you'll see their numbers probably firmly in the big bank category it ballooned its balance sheet by $4.8 trillion. Guess what happened to bank deposits? They went up by $4.7 trillion over the same time period. And it's only natural that some of that was going to roll out of the banking system, you know, inevitably. But so far, you know, of that $4.8 trillion, probably, you know, less than a trillion has actually rolled off. Okay. Well, we'll leave it there, Chris. $4.8 trillion, probably, you know, less than a trillion has actually rolled off. Okay. Well, we'll leave it there, Chris.

Thank you. Thank you. Morgan, it's not just me. A lot of guests saying, on the other hand, this afternoon. And I'm like Pavlov's dog. I like salivate every time that happens. Up next, Evercore ISI's Mark Mahaney weighs in on the NASDAQ's big rally and explains why AI could provide a tailwind to big tech stocks this earnings season and beyond. We'll be right back.

The Nasdaq 100 posting its best day in nearly a month, up some 2% today. Big tech powered the rally. Apple, Amazon, Microsoft, Meta, all posting strong gains. Joining us now is Evercore head of Internet research, Mark Mahaney. Powered the rally, Apple, Amazon, Microsoft, Meta, all posting strong gains. Joining us now is Evercore head of Internet research, Mark Mahaney. Mark, what about this? I mean, you're saying a lot of multiples have been de-risked and estimates have been de-risked. But is there just this huge difference between the largest tech companies and Internet names writ large? Because it looks like the biggest are kind of expensive.

Okay. Well, I think there is a difference. I think the market's coming back more so for the large cap names because they were de-risked. I mean, we had a massive sell-off across tech last year, probably for some very good reasons. But the setup this year is just materially more constructive. And so, yes, estimates happen to risk. We had a lot of estimates cuts last year. And then multiples, you know, you've got names like Amazon, Google, and the space that I look at, at Meta, that are pretty close to trough multiples. So that's a very constructive setup, we think, for at least, you know, Internet stocks

and definitely for the large cap names. We continue to like, even with the 90% run in the stock here today, we continue to like Meta and we continue to like a few other names like Uber that haven't had a big run up yet, but we think will happen. And then Spotify and Netflix, those would be kind of our top four picks, but we're getting a lot of queries and a lot of discussions on Amazon and Google too. I was a little surprised to see Spotify in there. Why do you like that one? You know, given all of the hand-wringing that we've seen over past quarters about how much they were spending on podcasts, et cetera, they're getting an inflection point with their profits?

I hope so. I mean, that's the pitch. And if there was, you know, if there's a handful of companies that really needed to get the memo about managing down costs, Spotify was at the top of that list. They had sort of indicated we all thought that they were going to see a margin inflection point, a profitability inflection point last year. We didn't get it because they accelerated investments in the podcasting. They saw what happened to their stock. I think they got the message loud and clear. And so if they reverse that and you start getting gross margin expansion, especially for low gross margin stocks, that's usually a huge catalyst. We think we're going

to get that. That's why we like it. And that's why we have not performed on it. That's why I particularly like it for this year. Mark, what did you think of the Amazon investor letter this morning and some of the commentary we did get from Andy Jassy, whether it was talking about consumers continuing to spend, but maybe seeing more trade down and a little more discretion in terms of what they're buying through Amazon. And then, of course, more details on AI. Morgan, I thought he checked pretty much every box he needed to check with that shareholder letter. And I've read them all over the last 26, 27 years out of Amazon. So highlighted cost efficiencies, did a little bit of a click into generative AI,

and then warned people about softness, particularly in AWS, which is what we're really concerned about near term. Talked about some efficiencies in the current business, faster speeds out of retail. And then they talked about that elusive fourth pillar or what are the new, new growth opportunities for them. That's some satellites, it's healthcare, it's groceries to some extent. So I thought they kind of, I thought that letter covered everything you wanted to know if you were an Amazon shareholder. It's not like he didn't cover the issues that were pressing for most Amazon shareholders. Worthwhile read. So I thought they did a good job. And I think that helps explain why the stock is up today. Yeah, the stock did end the day up more than four and a half percent. Mark Mahaney, thanks for joining us. Thanks, Morgan. Of course, the Nasdaq had a strong day as well,

finishing up two percent, a little over two percent. Bitcoin has also been booming, but Ether is outperforming today. Find out why investors are betting big on this cryptocurrency when Overtime returns. Welcome back to Overtime. Cryptocurrency Ether hitting its highest level since August after a software update sparked a wave of new investors to jump in. Mackenzie Segalos explains why she's on set. What happened here with Ethereum? So Morgan, the headline of this software upgrade was that it unlocked $31 billion worth of Ether tokens. The worry was that we'd see investors rush to liquidate their holdings now that they had the option to withdraw tokens that, up until last night, had been staked on the blockchain for years. The concern was that a flood of supply would drag down the price, but the upgrade has actually had the exact opposite effect. The queue to put your money in and stake it in order to earn yield ranging from around 5 to 6 percent is a whole lot longer

than the line to cash out. In the last 24 hours, crypto traders appear to have realized that they over-indexed on upgrade-related worries. There's been no substantial selling pressure, and instead we've seen Ether breach that key $2,000 price threshold. It's been outperforming Bitcoin up more than 6%. When we talk about staking, What does that actually mean? It means that you are essentially putting a cash of your Ether holdings up in order to say that I will be a validator on this network. I will help you confirm transactions. And as a reward for that, you're going to earn yield of 5% to 6%. And the case here, last year, you've got these bankrupt firms like Celsius Network that were promising 18% APR for not doing anything really. It was fake yield.

But the argument is that in the crypto space, ether staking is a pretty good place to park your cash. Quickly, any chance this is a short squeeze? Well, I mean, I think that a lot of the, you know, the short bets were liquidated overnight. You've got ether doing quite well right now. And I think the larger takeaway for a lot of investors is that we're probably going to see institutional money come into the space, which is what led the last bull run. OK, Mackenzie, thanks. Up next, we will discuss whether BlackRock, the world's largest asset manager, is a buy ahead of tomorrow's earnings report. We'll be right back. Take a look here at shares of Hartford Financial moving lower in overtime, just over 3%.

The insurance company out with preliminary earnings results. EPS coming in 30 cents below estimates at $1.68. Blaming catastrophe losses from winter storms and recent severe weather. Meantime, competitor Progressive finished at the bottom of the S&P 500 today, down more than 6.5% after earnings disappointed. The other financials, that's a big move for Progressive. Well, sticking with earnings, BlackRock is getting set to report numbers tomorrow before the bell. Our next guest joins us with a strong buy rating on the stock.

Let's bring in CFRA Research Vice President and Director Kathy Seifert. Kathy, great to have rating on the stock. Let's bring in CFRA Research Vice President and Director Kathy Seifert. Kathy, great to have you on the show. What are you watching for when BlackRock reports tomorrow? So, I mean, you know, market conditions are challenging and BlackRock is not immune to any of these challenges, but I think this is a good opportunity to sort of get into really a top-tier

asset management franchise. My sense is that incrementally, from year-end to the first quarter, we're likely to see a revenue uptick. But on a year-over-year basis, we're probably going to see a 5% to 8% revenue decline. For the full year, I think revenues will be up modestly, assuming that things gradually improve. But I think there are four key things that investors should be focused on during the BlackRock call. One of them is fund flows. If you look at the asset management space, there's really two camps. There's those firms that grow their AUM because they have a tailwind of a strong market, and those firms that are capable of growing AUM

organically because money is coming to the firm. And I put BlackRock in the latter camp. They had almost $400 billion of inflows last year, which was a tough year. I think inflows are going to stay positive and continue to top their peers. I think in terms of some of the dust up that happened over some of the ESG initiatives, I think it'll be important to hear what kind of pension fund mandates they may have brought in during the quarter. I'm sorry, what? No, I was just saying, OK, just to go back to this idea of growing AUM organically, is BlackRock in a position to have potentially benefited from inflows in the wake of the banking turmoil we've seen in recent weeks? So that's an interesting—it's an interesting point.

And there are a number of businesses at BlackRock that could potentially benefit. I mean, obviously, they've been hired by the government to dispose of the Silicon Valley assets. But I also think that if you look at what happened to Silicon Valley, it was a failure of asset the go-to risk management and cash management software package for asset managers. I think Aladdin will benefit from this crisis. And then the other thing in terms of, you know, when you have a market crisis like this, you tend to have a flight to quality. Bigger is better. Diversified is better. And firms like BlackRock are positioned to benefit from that. Kathy, quickly, if you can, why the sell on T. Rowe Price?

A valuation call combined with some mixed to eroding fixed income performance numbers, a lack of exposure to, a lack of significant exposure to two areas that are growing fast, the alternatives market and the ETF marketplace. And again, a valuation call. All right. Appreciate it. Kathy, thank you. You're welcome. Well, tomorrow, don't miss an exclusive interview with BlackRock CEO Larry Fink on Squawk on the street that kicks off at 10 a.m. Eastern. Also coming up tomorrow, two key reads on the consumer when we get retail sales data and also the latest consumer sentiment number.

We're going to talk about the state of spending with the CEO of Krispy Kreme. Sweet. Whose stock, delicious, whose stock is up sharply so far this year, which is, by the way, something we've seen with a lot of the restaurant and fast food names since the start of the year. Especially when it comes to restaurants and food. I wonder about the inferior good effect. And maybe it's too early for some of that to be kicking in, though we did see it with retail at the very beginning of the year and Walmart's results. I don't know.

Like, do you remember that? Things seemed so bad for a couple of weeks before before they were fine. Hmm. Yeah. I mean, it's going to be an interesting earning season. We have seen in all the data thus far, though, the shift from goods to services. Restaurants have been in a position potentially to benefit. We also know restaurants have been navigating higher costs. Are we going to see the trade down effect now into services, things like like restaurants that we have seen in goods where something like Walmart is concerned? And does Krispy Kreme actually benefit from that?

Is that a good or is it a service? I don't know. It's both. It's a good service. It gets on your fingers. I'm a little hungry here. I'm getting a little hungry. I appreciate how Frank Slootman made an ice cream metaphor.

After the last time we had him on. You know, it was all about candy bars, I think. We've got something sweet going between between Snowflake and then crossing over to Krispy Kreme. Yeah, we do. In the meantime, we did have a market rally today. The Nasdaq led the charge up 2 percent today. The laggard was the transportation average, which was down slightly. We did get those Delta earnings this morning, which misread expectations, but really strong commentary and forward forecast from the CEO at Bastion on CNBC. But now banks. It's all about banks starting

tomorrow and then heading into next week, especially those regionals. All right. Well, that's going to do it for us here at Overtime. Fast money starts now.