Closing Bell - Closing Bell Overtime: WW International CEO On Weight Loss Drug Craze; Berkshire-Backed, Latin American Banking Giant Nu Holdings CEO On Its Record Quarter 8/16/23

Episode Date: August 16, 2023

Stocks slide after the Fed released minutes from its latest meeting. BD8 Capital’s Barbara Doran and 248 Ventures’ Lindsey Bell break down the action and earnings from Cisco and Wolfspeed. The big week of the consumer continues: Target reported earnings and Walmart is tomorrow. NRF CEO Matt Shay breaks it all down. CFRA’s Keith Snyder on the investment takeaways from Cisco’s quarter. Plus, CEO interviews with WW International on the weight lose drug craze and Latin American lending giant Nu Holdings. Plus, how China played a role in Intel scrapping its $5B+ purchase of an Israel chip contractor.  

Well, closing basically at session lows for stocks in what is back-to-back losses for the major averages. That is the scorecard on Wall Street. But the action's just getting started. Welcome to Closing Bell Overtime. I'm Morgan Brennan. John Ford is off today. Earnings results from $200 billion networking giant Cisco are just moments away. We will also get numbers from chipmaker Wolfspeed.

We're going to bring those to you as soon as they cross. Plus, we'll talk to the CEO of WW International, formerly Weight Watchers, about the company's recent earnings report and how weight loss drugs like Ozempic are changing the game. Let's begin with the market, though, as stocks do face more downward pressure today. Joining us now is BD8 Capital Partners CIO Barbara Duran and 248 Ventures Chief Strategist and CNBC contributor Lindsay Bell. Good afternoon to you both. Lindsay, you're here on set with me. Let's kick it off. It does seem like the easier, softer way for stocks right now is lower. Yeah, I think this is day 10 out of 12 that the market's been down. So yeah, there's a downtrend that we're in. We're also in a

seasonally weak period of the year. We've contended with a couple different things. You know, the banks got downgraded, a sovereign debt got downgraded, and we're just, we're getting through the end of earnings season. And so there's not a lot to hold on to. And really, I think that it's rates that really truly is in the driver's seat. And we saw that again today with the release of the Fed Minutes. Yeah. Barbara, I want to get your thoughts on this, because certainly we saw a big move for the first half of the year for for stocks, particularly anything tech or AI related. So are we due for some seasonality and due for some consolidation here? Yeah, I agree with Lindsay. I mean, it's really after a big run up in both Nasdaq

and the S&P. This is, to me, a garden variety pullback. As she mentioned, earnings are done. They're catalysts. We had news out of Japan in terms of taking the hard cap off their 10 year. And then there's worries what that does to our long end. And we are seeing a little bit of an increase there. You had the Fitch downgrade, Moody's, you know, in terms of the banks. So there was a lot going on. So I think this is not going to be a deep correction, I think three to five percent. And we're probably pretty much there and people are always cautious and all the worries come up. But I think this is going to prove to be a good buying opportunity because you know what's going on in the economy.

You saw the retail numbers yesterday. You saw industrial production. Retail was up almost twice as expected. Industrial production was up almost three times. And so that pretends well in terms of economic growth and earnings next year, which, of course, is what the market feeds off of. Yeah. And it's such a it's such a key point, Lindsay. And, you know, the S&P finished today down another seven tenths of one percent, 44.07. We're not down about four percent month to date for the S&P. But in that time period, we have seen yields on the 10-year Treasury, for example, climb back to and start testing the October highs. Where do we go from here?

And I guess, how are you thinking about the moves in the bond market and what that means longer term? Well, when I look at the bond market, it certainly has obviously thrown investors kind of off their footing. And especially the tech trade, right, has come off because the interest rate's moving higher. But when I see that, to me, it tells me that economic growth is probably improving. And we saw it. Barbara called out a lot of the economic data that we got just this week. But it also says that with economic growth continuing, there's the possibility, like we heard from the Fed, that inflation can continue to move higher. And while the CPI is in a downtrend, it seems like there's some steam coming off the downward move in CPI. We have import prices increasing. We've

got wages, real wages, increasing for two months in a row now. So there are some signs. You've got energy and food costs potentially continuing to rise So there are some signs. You've got energy and food costs potentially continuing to rise. There are some signs that inflation can be sticking, maybe potentially perk up a little bit in the months ahead. You have easier comparisons that are coming across the board, too. So we'll see how much those tougher comparisons mattered over the last couple months and where inflation goes from here. And I think it probably makes sense for the Fed to make a couple moves from here, maybe one or two more hikes like that, like we heard from in the minutes here. And you know what? I think the market and the economy can handle that at this point in time. Yeah, Barbara, we certainly got those Fed minutes and not too much in terms of a surprise, as is usually the case from those minutes.

But you mentioned the retail earnings and TJX was one of the best is usually the case from those minutes. But you mentioned the retail earnings and TJX was one of the best performers in the S&P today, finished up 4%. Speaks to the fact that you're seeing those results hold up better than expectations out there. Read through to some of the other names that we're going to get this week, like Walmart tomorrow. Well, I think TJX has some special circumstances for it. It also has a very different mix than Walmart. I mean, what TJX saw was softness in clothing and home decor. And then we saw other companies like a Home Depot or a Target who had strength in their home decor. So I think Walmart has probably almost 60% in

groceries versus TGX is 20%. So I think Walmart's going to be very different. I think their same store sales are expected to be 4%. And by the way, it is a core holding for me versus TGX, which was down 5.3%, worse than expected. So I think Walmart is going to report good earnings. And plus they are truly omnichannel. They are killing it. They're gaining share and they're even doing some innovative things with advertising. So I expect the numbers to be very good tomorrow. Yeah, I should note Target finishing the day higher, too. Better than expected margins there. Barbara, given that we are having this pullback, what would you be buying right now? What are you buying right now? Well, you know, it's it's interesting because you look at Palo Alto, you know me, I love my

mega cap tech and big growth. So I just wait like a little vulture. And when NVIDIA pulled back, I said, people, this is really an opportunity because this is going to be so much bigger as a stock. And I fully expect it's going to be a beaten race next week when they report. Palo Alto has really been hurt. It's down about 17 percent from its high because of a competitor and some poor outlooks there. But that's a near-term issue, and that is a good one. So I keep looking there. I still think, you know, in terms of looking at early cycle things,

because some people think this is late cycle, some people think it's early cycle. You know, I still want to stick and look for the growth names. And I don't think at higher rates, I expect them to stay high. The Fed maybe raises one or two more, but I don't think that's going to hurt the growth stock story, particularly with the AI kicker, which I think has a lot of room to run. Yeah, we're going to we're going to stick with the tech theme here because Wolfspeed earnings are out. Christina Parts Nevelis has the numbers. Hi, Christina. Well, we're seeing a negative reaction to this report. The maker of silicon carbide wafers, Wolfspeed, posting an adjusted loss of 42 cents per share. That's more than 20, well, more than the 20 cent loss estimated.

But it was a beat on revenue of 236 million. You're seeing shares down almost 7.5% right now. For its Q1 revenue guidance, it sees a range of roughly 220 to 240 million. So that's pretty much in line with what was expected at 233 million. But when it comes to earnings, the company is expecting a bigger-than-expected loss per share. Why? The continued high startup costs associated with its expansion of its facilities in North Carolina as well as New York. The CEO is saying in this report right now that they did secure $5 billion in funding to support this expansion. Keep in mind it recently signed a 10-year deal with Renasys, which is a Japanese firm, and got debt financing from Apollo. But it seems the stock,

though, is reacting to that negative Q1 guidance, as well as the miss on EPS. All right. Shares are now down 9 percent. Christina, thank you. Don't miss Overtime's first on CNBC interview with Wolfspeed's CEO Friday at 4 p.m. Eastern, right here. Meantime, Cisco earnings are out. Frank Holland has the numbers. Hi, Frank. Hey there, Morgan. Cisco shares moving lower after a beat on the top line, EPS, eight cents above the estimate. This is also the biggest earnings beat for Cisco since November of 2020, coincidentally, 8% above the refinitive estimates. In this report, CEO Chuck Robbins

citing strong demand for innovation for AI security in the cloud on the call starting at 430, expecting Robbins to really expand on the AI opportunities he's referenced in the previous quarter. I've also spoken with CFO Scott Heron about the growth in the cybersecurity business and Cisco's investments there. All right, again, shares down 3% right now. Looking deeper into the quarter, secure and agile networks, the core business of routers and switches, where Cisco gets more than half of revenue with a big beat, $8.125 billion, compared to the estimate of $7.74 billion, also a beat on gross margin. Guidance, however, overall, it was a bit mixed. So for the current quarter, Q1 for Cisco, revenue guidance is in line, EPS and margin guidance above estimates.

However, guidance for the company's new fiscal year, a bit more cautious. Revenues were light, EPS in line. Again, the call starts at 430. Shares of Cisco right now down almost two and a half percent. Back over to you. All right, Frank Holland, thank you. Don't miss the first on CNBC interview with Cisco's CEO. That is tomorrow at 9 a.m. Eastern on Squawk on the Street. Barbara, I got to go back to you on this, get your reaction to these two names. Cisco, I think in particular, given the fact that it is seen as a tech name that is very affected by the macroeconomic environment. Yeah, well, I think the expectations were sufficiently lowered. The company had

told people the orders were not looking great. Juniper also reported earnings a few weeks ago, and they saw weakness in customer orders. And so I think this was not unexpected. I mean, their whole thing is really returning cash to shareholders, their balance sheet, their cash flow. They return over half their cash flow in dividends and share repurchase. But the question really is revenue growth going forward. And it was 13% in this past calendar year. But going forward, we're looking at estimates of 3% and then 2%. And so it's a question of, you know, are we going to see a pickup in the macro to try to boost that or not? And that's really key for them. So they are also changing their model a bit. They're trying to get more recurring revenues and they have increased recurring revenues to 44 percent from 25 percent three

years ago. But it's still not not making a big difference in the revenue. OK. Shares of Cisco and Wolfspeed both under pressure right now. Lindsay, final thoughts, be it on the results we just got or on the market more broadly. You know what? I think for the market overall, we're in a period of consolidation. And I think that we just need to deal with a little bit of weakness, a little bit of garden variety weakness isn't a bad thing for investors to reset

and think about the end of the year where we could see a pop as economic data starts to improve. The consumer becomes more confident and earnings continue to move higher. All right, Lindsay Bell and Barbara Duran, thanks for kicking off the hour with me. With all the major averages finishing the day down,

the NASDAQ, the big underperformer, down at 1.1%. Let's bring in Senior Markets Commentator Mike Santoli at the New York Stock Exchange. Mike, what are you watching? Yeah, Morgan, just looking at, you know, some of the bellwethers of risk appetite and how they fare during this broad market pullback. You see Apple, as well as the high beta portion of the S&P 500,

as tracked in that ETF, have come right back to the pack over the course of the last several weeks. Big outperformance, comeback. And you see it's happened a few times here where they've come back and converged. It doesn't mean that this is running its course just yet, but it shows you that those parts of the market that had raced out farthest ahead have had a little bit of punishment. And really, some of the work that has to get done in a pullback is getting done right there. We'll see if that has a lot more to go. Now, in terms of macroeconomic implications,

the credit markets remain pretty healthy, steady, not very concerned about things like rising default risks. It's obviously about economic acceleration, not about concerns about economic weakness. So this is a high yield corporate debt ETF against a broad Treasury security ETF. And so when you see here, Treasury's radically underperforming high yields has mostly been about long term Treasury yields going up in recognition of maybe sticky inflation, maybe better economic growth, maybe Treasury supply, what have you. But high yield holding up well against it. Now, that's a good news in terms of macroeconomics. In terms of tactical market inputs, it's unclear because sometimes when you see the high yield ETF

get panicky and underperform, those were coinciding with low points in the S&P 500. So basically October, late December, back in March when we had the regional bank stress. So, you know, it's a matter of what you're wishing for from this signal. But so far, it seems pretty steady and a decent economic message. So if I dig a little deeper into this, Mike, it is is the does this speak to, as we were talking about with our panel just now, sort of the impetus for why you're seeing treasury yields move higher, that it's sort of this reflation trade. It's this stronger than expected growth, what that means for the economy. And that's the reason high yield isn't getting hit so hard by it.

Yeah, principally, Morgan, it's basically that. I mean, you can throw a lot of other reasons onto the table in terms of why longer term treasuries are going up. We've talked about global yields being a part of this, Japan, all the rest of it. And then the Treasury supply story is out there, too. So, yeah, I think all of it is there. But what's not there is some sense that that the economy is going to buckle very soon in the face of these high rates, which would hurt corporate credit here. Now, corporate credit doesn't always see the bad stuff coming a long ways away, but it is worth noting that this is not one of the stress points

that the equity market's feeling right now. Got it. Mike, thank you. We'll see you later in the hour. Mike Santoli. After the break, our target's warnings about softer sales and rampant theft, a red flag for the rest of retail. We're going to ask the head of the National Retail Federation. That's coming up next. Plus, much more on all of today's after hours action, including what a Cisco analyst wants to hear from management on the earnings call. That stock's down almost 2% right now. Overtime back in two. Welcome back to Overtime. Intel, the worst performer today in the Dow. That's after the company and Israeli contract chipmaker Tower Semi said they both agreed to scrap Intel's

proposed $5.4 billion takeover of Tower. You can see shares of Tower ended the day down about 11 percent, Intel 3.5 percent. The reason? Intel blaming an, quote, inability to obtain in a timely manner the regulatory approvals required, specifically Chinese regulators failing to rule on the transaction. Intel will pay a termination fee of $353 million. John Fort talked with Intel CEO Pat Gelsinger last month about the company's or after the company's strong earnings. He asked him about the timeline for closing the tower deal, which was originally announced back in February of 2022. Here's what Gelsinger said. Take a listen. We've clearly continued to progress our foundry

business model. You know, we had good results this quarter. So I'd say our tower acquisition accelerates our foundry business, but our foundry business doesn't depend on its completion, but we still are working to hopefully get that done in the near future. Near future, is there a particular moment when the language changes around that? Well, obviously the deal itself has a August 15th date associated with it. If you look at the filing, so there aren't that many weeks left. So, you know, we're looking forward to this near term opportunity to get it completed. All right. Perhaps a little foreshadowing in that discussion with my partner in crime,

John Fort, just a few weeks ago. Those shares are up about 26, 28 percent so far this year, while Tower Semi is down about 30 percent. Let's turn now to Cisco, falling despite beating on the top and bottom lines. The call kicking off in just a few minutes. For more, let's bring in CFRA analyst Keith Snyder. Keith, it's great to have you on. I want to get your initial take on these results, especially since we did see that beat and yet the stock is falling, it looks like perhaps because of some cautious guidance. Yeah. So, I mean, the numbers, you know, based on press release looked great. They're experiencing growth in all the right areas, all the areas they've been targeting. But you're exactly right. The guidance for Q1 was more or less in line with what we were expecting, but the full-year

guidance definitely came in a little bit lighter. And so, you know, obviously looking at the call, it's going to be very interesting to hear what they have to say and explain that. Of course, you know, Cisco does have a reputation for being very conservative with their guidance. So as the year progresses, of course, we could see that guidance come up. But, you know, just based on the print, it's tough to say where the weakness is coming from and, you know, what they're seeing in the market. Yeah. Your thoughts on total software revenue of 17 percent. It's a software subscription

revenue of 20 percent year over year. Frank Holland was talking about AI, cybersecurity, cloud, some of these areas where it seems like they're seeing strength. Your thoughts? Yeah. So, I mean, AI obviously is all the rage right now. We're seeing everybody talk about it. It came up many, many times in both Arista Networks and Juniper's call. You know, that is going to be an area of strength. A lot of big companies are spending tons of money on the very high-end networking equipment required to run these machine learning and language models. But really, you know, for Cisco, it's going to come down to not only that business, but how's the enterprise business doing? You know, we did see weakness in service providers from Arista and Juniper,

and it wouldn't surprise me if they, you know, echo that same call. But are they going to say, you know, we see a rebound coming in the future. And, you know, that's where, you know, a lot of the spend is for them as service provider and cloud titans. That's, you know, big business. Okay. I'm going to ask you a twofer here. First part, what are you going to ask management on the call? Second part, you got a strong buy on the stock with shares under pressure. Do you buy here? You know, anytime Cisco drops, we see it as a buying opportunity. They have a great dividend. Their, you know, overall capital return program is top notch.

And so anytime the shares dip, we see it as an opportunity to accumulate more shares. In terms of being on the conference call, I really couldn't tell you right now. I'm going to see what management has to say first off and their commentary and then kind of play it from there. Got it. All right. Keith Snyder, thanks for joining us. We have a market flash on Hawaiian Electric. Pippa Stevens has the story. Hi, Pippa. Hey, Morgan. Well, Hawaiian Electric falling into the close and down another 5 percent here in extended trading after The Wall Street Journal reported the company is exploring options to address financial and legal challenges after the Maui fires. Citing sources, the journal said Hawaiian Electric is in talks with financial restructuring firms

as it faces multiple lawsuits around negligence. Hawaiian Electric provides power for the vast majority of the state, and those shares are now down more than 50 percent this week. Morgan. Pippa, thank you. Up next, National Retail Federation CEO Matt Shea on target sales and theft warning and the read-through for Walmart, which reports tomorrow and later. Don't miss our interview with the CEO of WW, formerly Weight Watchers. That stock has

more than doubled this year, riding the wave of excitement around weight loss drugs. Shares finished the day lower, though. We'll be right back. Welcome back to Overtime. Target and TJ Maxx both ending the day in the green after reporting earnings this morning. But they offer different outlooks. Target slashed its full year forecast while TJ Maxx raised its outlook. For more on the state of retail and the consumer, let's bring in Matt Shea from the National Retail Federation.

Matt, it's great to have you on the show. Thanks for being here. We get Walmart results tomorrow. It would seem, and this has been going on for a couple of quarters now, consumers are much more cost conscious. They're spending more of their money on groceries where we've seen inflation continue to tick higher and maybe being much more deliberate in terms of their discretionary purchases. Is that what you're seeing? Yeah, Morgan, I think that's been the story of the last year after we saw the incredible spending spree that consumers went on during 2020 and 2021. We saw in 2022, a year ago, a few more

than a month than a year ago, we saw inflation really start to increase substantially. And that's when you began to see consumers adjusting the way in which they were spending their monthly income. And they've adjusted increasingly this year, in spite of a pretty robust start to 2023, they've adjusted accordingly. So they're spending more on necessities and they're being much more cautious and deliberate about spending on those discretionary items. And I think that adjustment in the mix combined with increasing dollars or percentage of wallets still going into the experience economy, into travel, hospitality, dining, all those categories.

I think that's reflected in what we're seeing today. And I think that's the story that all retailers are telling us. Yeah, it's your point. We did see this major pull forward in goods consumption in the pandemic. We come out of the pandemic. People start splashing money onto onto services and into things like revenge, travel and experiences and the like. Have we found equilibrium yet? Is this the new normal or is it still adjusting? Well, I think the question of that is yet to be determined. We know that in terms of the overall mix of consumer spending, it was historically 65 percent on experiences and 35 percent on goods or plus or minus. It's been elevated through the pandemic and it remains elevated to historic norms. So we haven't receded, so to speak, on the good side. We're still spending more of the experience, more of the services economy and

goods economy in consumer spending than we were before the pandemic. So I think we're going to have to wait and see what happens. But as much as the I guess the message is this, though, Morgan, I would say as much as the Federal Reserve would like to be in control of this economy, consumers are in control of this economy. And that's why we saw sales jump in July unexpectedly for retail sales by our measure, as well as the Department of Commerce. And I think that's why we saw sales jump in July unexpectedly for retail sales by our measure, as well as the Department of Commerce. And I think that's going to be the challenge for the Fed going forward is our consumers going to keep spending. Wages remain elevated relative to inflation. That drives consumption.

That drives demand. And that results in inflation. And that's the real challenge in the economy right now. Yeah, I do realize that wages are continuing to rise here, but credit card debt crossing a trillion dollars for the first time ever in the second quarter. The fact that we're seeing that rise as well concerning. Well, you know, I think it's interesting, but I think the number to really look at is delinquencies and delinquencies are at a 20 year low. So debt is increasing in a macro sense, but delinquencies are still relatively still historically low. And if you're going to look at credit card debt, I think you have to look at the percentage of

debt relative to household income. And that's also still very low. It's higher than during the pandemic because the government threw $5 trillion of fiscal stimulus at all of us. And so we used it to pay down debt. But relative to historic norms, it's still very low. So I think that, yes, in an absolute sense, credit is up. But relative to measures of distress, I don't think we're seeing those signs yet. Yeah. Target today, just shifting gears here, talked about the fact that higher shrinkage due in part to organized retail crime hurt profits again. We've heard this in the past from a number of retailers. I mean, look no further than Los Angeles over the weekend with that flash mob robbery at a Nordstrom department store as well. How big is this issue and how much

is policy or a need for change in policy going to contribute to it? Yeah, Morgan, it's a terrible problem. And it's a horrible problem, certainly from a financial perspective. And there are real financial losses. And we've measured that. And it's in excess of $100 billion across the economy due to organized retail crime and theft. I think the thing that has historically been missed, however, and that you're alluding to with the video that you've talked about, is the way this impacts communities and the way it impacts customers, consumers, people that live and work in those communities, and in some ways, most importantly, the way it impacts store associates and the people on the front lines. And they're all being victimized here. And so something's going to

happen. Either the stores will have to close or the goods will be out of stock and not available. But it's gotten to be a really enormous problem. And we're working with Congress, state and local legislators, law enforcement across the country to try to address it. But it's a big number and it's a material number. Matt Shea, thanks for joining me. Thanks, Morgan. We just mentioned it, but Walmart's CFO will break down the retail giant's earnings in an exclusive interview tomorrow at 1130 a.m. Eastern on Squawk on the Street on the heels of earnings for Walmart. It's time now for a CNBC News update with Bertha Coombs. Hi, Bertha. Hey, Morgan. The Federal Emergency Management Agency has opened its first disaster

recovery center on Maui to help victims of the wildfires. People can visit the centers for information about assistance from multiple federal agencies in addition to FEMA. The centers will also answer visitors' questions about the status of their aid applications. The FEMA administrator will travel with President Biden to Maui on Monday. Fulton County District Attorney Fannie Willis proposed a March 4th trial date for her case accusing former President Trump and 18 co-defendants and his allies of trying to overturn Georgia's 2020 election results. That is one day before Super Tuesday. And the Oklahoma Supreme Court will consider a reparations case from survivors of the 1921 Tulsa race massacre. A lower court judge dismissed the case last month, but the remaining three survivors have appealed.

Survivors are asking the court to determine what happened and to fix the racial division and tension they allege stems from that massacre. Morgan? Martha Coombs, thank you. Up next, the Atlanta Fed just put out a bold new forecast for GDP in the third quarter. Mike Santoli breaks it down. Those great expectations is coming up next. And take another look at Wolf Speed as we head to break. Falling sharply after a big miss on the bottom line and light guidance. Shows it down 11.5% right now.

We'll be right back. Welcome back to Overtime. The Atlanta Fed making news after lifting its third quarter GDP tracker to 5.8 percent. Mike Santoli is back with his take. Mike. Yeah, Morgan, it's pretty dramatic. Here's a chart of the last year or so of this Atlanta Fed GDP now tracking model. And you see that jump over on the right there. That was from yesterday's retail sales report, as well as today. We got stronger than expected. Housing starts in industrial production. All that feeds into this model. And all it is, is a statistical model of the numbers that go into the GDP calculation as of this moment. So what you have seen in the past at times is it'll jump, sometimes early part of a quarter, and then moderate as we go along. So it's not necessarily the case that this is suggesting we are at a near 6% real GDP economic pace on a sustained basis. It definitely shows you that the economy has some strength to it right now

based on everything we know. And it certainly raises all the questions we've been asking about what it's going to mean for Fed policy, whether inflation can come in, whether the labor market is in fact going to continue to decelerate or or as the Fed would say, come back into greater balance. So interesting eye catching number got a lot of attention today. And arguably, it also fits with longer term Treasury yields inching up toward what's basically a 15 year high today on the 10 year. Great context. I'm just wondering, when it comes to the Atlanta Fed, I mean, how often is it that we see these very robust, maybe more robust than reality type of GDP numbers, just historically speaking? Well, it jumps all over the place. So you have seen I mean, look, than reality type of GDP numbers, just historically speaking? Well, it jumps all over the place. So you have seen, I mean, look, if you go back to the 2020, 2021 period, when essentially the COVID shut down and then the restart of the economy

broke all economic models and charts, essentially, you saw massive swings that had no bearing on really what was going on. But, you know, even down here, you know, you're talking about basically a negative two percent GDP pace into the end of the second quarter of 2022. Yeah, we did technically have fractionally negative GDP growth in the first half of last year, but it was never as weak as that on a sustained basis. So it's really a snapshot in time and, you know, something that you certainly want to watch. But the consensus of economists is way below this. The job growth pace has decelerated. So you have to I think what we're going to want is we're going to crave moderation in this number. It's also worth noting this is real GDP. So if inflation is coming down hard, then it's you know,

it's not necessarily as much of a jump in nominal GDP because we have been dealing with much higher price inflation over the past couple of years. All right. Mike Santoli, thank you. Up next, the CEO of WW, also known as Weight Watchers or formerly known as Weight Watchers, on how supply issues of incredibly popular weight loss drugs such as Ozempic and Wegovy could impact the company's sales. Stay with us. Welcome back to Overtime. WW shares soaring this year up 145 percent. The weight management company acquiring telehealth platform sequenced back in April, where doctors can prescribe clients weight loss medications, but the demand for the drugs is outpacing supply. The shortage causing WW to cut its 2023 revenue guidance. Weight Watchers CEO Seema Sistani

joins me here on set to discuss everything. It's so great to have you. Thank you. And it really does seem like it is a reimagining of this company, a reinvention of this company. But one that does involve the core business reigniting as well. Yeah, absolutely. And we were so excited to see that, for those of you not familiar with the seasonality in our business, we usually have a big Q1 and then the seasonality takes over. This was the first time in our reporting history that Q2 ended higher than Q1, an in-year increase. And so we're really excited to see that. I think it shows that our product changes, our digital-first roadmap, our evergreen innovation is working. Yeah. How much of that increase in subscribers

came through those digital channels? How much of it is tied to this new clinical business that you're building out? It was all with regards to our core business. So we delivered on our signup growth a quarter earlier than expected. The clinical business, we did increase that by 40%, but it's still 37,000 members. I know there's a lot of excitement and attention on it, but, you know, we have a core business that we ended the period with four point one million subscribers. Why is the core business seeing that that increase in growth, particularly at a seasonally weak time? Like how does it because I feel like I have so many conversations about the GLP one drugs and the fact that folks are getting on to them. You have startups that are popping up to focus on this with companies and their health care plans right now. So the fact that you're seeing the core business pick up, why?

Look, we've been the leader in weight loss for 60 years. Eighty percent of our membership moved to digital over COVID, but we weren't taking a digital first lens. And I think that what you're seeing in that growth has to do with us delivering a better product. Weight loss is an emotional problem. And when you have a solution that works and you're seeing success, you tell others. And so what's happening is that the MPS is increasing. People are having success on the program and they're willing to talk about it, and they're excited about it. Yeah.

You're sunsetting, or you said in your recent earnings that you're going to sunset the e-commerce and consumer products offerings. Why? They're a low-margin business, but more importantly, it's about trust. I don't think that we should be in the business of selling our own products and telling people what they should or should not eat. Everything is on the menu. And I think that, you know, as our focus is on weight health, that that's where we want to put our attention is fewer, more wood behind fewer arrows. Yeah. Yeah. You mentioned the fact that the clinical business is still, is still small, but it's growing. There is a lot of excitement, particularly from an investor standpoint around that business.

I guess just walk me through how quickly you do expect it to grow. And given the fact that we are seeing some shortages for some of these GLP-1 drugs like Ozempic and Wegovi, et cetera, how quickly can you get the supply to meet the demand? So it's a very exciting space. I think that what these medications are doing are finally getting us to recognize the biology behind living with overweight and obesity. And what we want to do is help our members have a across the full spectrum of weight health solutions. And for those who are struggling with the genetic, biological underpinnings of obesity, then a clinical intervention makes sense. In the meantime, while we're in an environment of supply shortages, we provide a wide formulary. So we're able to ensure the continuity of care.

And I think that's going to be really important as we are seeing demand increase. But we're still at the very early stages. It's in the zeitgeist and we're talking about it. There's still a lot of misinformation. So we're trying to harness that energy and really use this moment to destigmatize the conversation around obesity overall and impact access by getting people to recognize that this is a chronic condition. So what does WW, Weight Watchers, what does this business look like in two years, five years, ten

years? Right, well look it's about the spectrum of care. We have our number one doctor recommended, evidence-backed, behavior change program, but on either side of that we have clinical interventions and functional interventions. So on the functional side, everything from our partnership with Abbott, such that people can wear the Abbott Libre CGM monitor so that they can monitor their food and how it impacts their glucose. And on the clinical side, when medically appropriate, getting the right medication so that they can adhere to lifestyle changes. But the foundation under all of that is behavior change.

OK. Seema Sistani, thanks for joining me here on set to talk about WW. Thank you. I appreciate it. Thank you. All right. Up next, the CEO of Latin America fintech giant New Holdings breaks down his company's earnings beat and what's driving the nearly 30% year-over-year growth in new customers. Stay with us. Welcome back to Overtime. Major Brazilian fintech player

New Holdings closing down slightly today. That's despite posting record revenue on strong user growth for its latest quarter. The lender saw 28% customer growth year over year, boasts a market cap of more than $36 billion, and counts Berkshire Hathaway among its major shareholders. Joining us now is New Holdings founder and CEO David Veles. David, it's great to have you back on the show. Brazil is such a huge market, 10th largest economy in the world. And you now account for what, one in two Brazilians using your services and using your banking capabilities? Hi, Morgan. Yeah, that's right.

We just recently announced we passed 85 million customers in Brazil, Mexico and Colombia, which positions us as the fourth largest financial institution in the country. And we have now one out of every two Brazilians use one of our products. And we're getting to a level of reach that, frankly, no bank in the U.S. even have. So I think this just talks to our ability to provide a product to consumers that are really hitting a nerve, producing a product that has better quality with no fees. And this really growth has been viral since the very beginning as when we started about 10 years ago. Are you approaching saturation levels in Brazil or can you continue to grow in that market specifically? No, we think there's

still a lot to grow. So Brazil has gone through a huge amount of digitalization. There is a new payment infrastructure that has about three years called PIX that is digitalizing the economy. You're finally seeing the end of cash in a big economy like Brazil. And this is driving a lot of people into the financial services economy. So before, in a cash economy or addressable market or banks addressable market was something like around 100 million out of the 180, 200 million Brazilians. Today, the addressable market can go to 160, 170 million Brazilians, and we have 80 million. So we see a pretty significant opportunity to continue growing the customer base, but we have a large base and still small share in the

different verticals of products that we have. We have about 14% market share in credit card, 3% in personal loans, 1% in investments, 1% in insurance, 0% in crypto and marketplace. So a lot of opportunity to grow the pie and continue gaining share across all these different verticals. Yeah, I do want to talk about credit risk, whether it's the credit cards or whether it's the loans. How are you managing that right now, especially when it looks like delinquent loans, the share of 90-day-plus delinquent loans in your portfolio reached record highs in the second quarter? Sure. So it's definitely the past 12, 18 months in the Brazilian economy, the entire delinquencies of the system have gone up, coming from a very bottom post-COVID when you saw the lowest delinquencies in the system in a very long time. We've been able to navigate that environment fairly well, extremely well, where we continue to grow within our consumer base, but we get to cherry pick the type of customers that

we want to give credit to. Remember, we have 80 million customers in Brazil, but only about 10 million of them have access to personal loans. So as we have built a methodology to start with low credit limits on the credit card side, small limits on the personal loan, sometimes you begin with as low as $10 credit limit. We wait 15, 30 days to see if the customer pay. We use a lot of behavioral information, a lot of different data sources, and we can grow with that customer and provide higher limits as we get to know the customer better. So the ability to work with such a large consumer base and cherry pick the best type of customers allows us to continue growing in an environment where the entire economy's

delinquency have gone up. Although Brazil is now on the other side, where you're seeing even the central bank starting to decrease rates, and that should ultimately be lower delinquencies for the entire system. Yeah, and it's not just Brazil that you're operating in. Mexico and Colombia as well. In Mexico, it looks like your customer base grew 33%. In Colombia,3 percent, though, still off of a very low base. I mean, when we think about banking, it tends to be a very highly regional business. Each country has its own regulations and complexities. What gives you confidence to take a model that was born in Brazil and apply it to some of these other countries and some of these other markets right now? That's a great question. And I think you're right. It's a model that is much more local.

You need licenses. You have capital requirements. You have local regulators. So different from our technology business models where you can really go, you know, you're Netflix, you can turn on 30 countries at once. In financial services, especially with the financial services where we do it, where we want to be the primary bank account. We don't just want to be a wallet where you leave some cash. We want to be the place where consumers put their life savings and invest with us. And for over 60% of our customers, we are their primary bank account. That requires us to go very deep and very local and get licenses and regulators. So we've done a relatively slow expansion in the region. In 10 years, we've done these three countries. Mexico, we opened really about three and a half years ago,

Colombia about a year and a half ago. And what gives us confidence about the opportunity is that at the end of the day, though, a lot of the problems that we're solving for consumers are very similar in nature. In Mexico, for example, only 12% of Mexicans have access to a credit card. 88% of Mexicans are outside the system. And we have learned how to involve these customers, how to provide credit to this population and provide banking services. So we're trying to solve the same problems fundamentally. Okay. David Velez, thanks for joining me. CEO of Union Holdings. Up next, what you need to know about tomorrow's huge slate of earnings, including Walmart's results,

plus a preview of a very special hour of overtime. We'll be right back. Welcome back. Let's get one more check on our after-hours movers. Cisco shares turning higher now after a beat on both lines, now up about 3%. Wolfspeed is sinking on an EPS miss and soft guidance. And Synopsys is higher after beating on both lines and announcing a CEO change at the end of the year. The company's outgoing CEO will be on Mad Money tonight at 6 p.m. Eastern. Meantime, earnings from Walmart, Tapestry, and Ross stores will headline another busy day tomorrow for retail results.

Plus, we'll get numbers from Applied Materials after the bell. And on the economic front, we'll get initial jobless claims and the Philly Fed index print. Mike Santoli is back with us to recap the trading day and share his insights. What are you watching most closely, Mike? Well, Morgan, I think the Walmart number is pretty crucial just in terms of how high expectations are for the company during this period. You've had earnings estimates going up for the last six months in contrast to most companies and most of retail. Its valuation is basically at a 20-year high based on expected earnings, also at a pretty much record premium to target. So the question is, can the company deliver on all those expectations that its specialty in Staples

and really what color it offers about the consumer, about price sensitivity out there as well? Now that we're dealing right now in the last couple of days with all these inputs that suggest that we have this reaccelerating economy and the consumer is in good shape now that real wages are starting to turn positive again. Yeah. I'm assuming you're going to continue to watch yields here. The data, how much does that matter when you when you have the doldrums or I guess the dog days, I should say, of summer, not a lot of volume and also not necessarily that much to move the markets more broadly? No, although we do have a bit of a choppy, illiquid bond market, which is relevant. You know, the yields still count, even when it's not heavily traded.

Leading economic indicators is one. It's expected to be negative again. It's such a scrambled view because we're going to be negative at LEI for a record period of time without a recession. All right, Mike, thank you. Also tomorrow, I'll be live from the Hamptons waterfront speaking with some of the biggest names in the business world, including Galaxy Digital CEO Mike Novogratz, Fortress Investment Group co-founder Wes Edens, Douglas Elliman, CEO Howard Lorber, and Lux Capital co-founder Josh Wolf. That all begins at 1 p.m. Eastern on The Exchange. It's going to continue with a special hour of overtime.

I'll see you tomorrow. That does it for overtime. Fast Money begins now.