Squawk on the Street 5/18/23

Jim Cramer (0:00)

It's Jim Cramer here. You're listening to the opening bell of CNBC's Squawk on the Street. Don't miss a minute of the action.

Carl Quintanilla (0:07)

And good Thursday morning. Welcome to Squawk on the Street. I'm Carl Quintanilla with Jim Cramer, David Faber at Post 9 of the New York Stock Exchange. Coming off the best day for stocks in a couple of weeks, NASDAQ at new highs for the year. That labor market data this morning though comes in a little warm. Futures do lose some gains in that two-year yield back to 4-2.

Our road map is going to begin with retail though and the consumer Walmart rallying after raising their full year guidance at least.

David Faber (0:30)

Plus, we've got the return of that big tech trade, Nvidia and Meta. They're both up more than 100% year to date. Of course, names such as Apple and Microsoft have also rallied sharply. We're also keeping an eye on shares of Cisco. They are moving lower ahead of the open despite what was a raise of its full year profit forecast.

Carl Quintanilla (0:49)

Let's get to Walmart. Up in the pre-market, company posts a quarterly beat, raises its outlook for the full year, although the current quarter guidance is just shy of consensus. US comps up 7-4. We were looking for something with a 5 as consumers shifted more purchases to grocery. E-commerce, though, up 26, Jim, after Amazon 11 and Target down 3

Jim Cramer (1:09)

I'm so glad you pointed that out. The two surprises are e-commerce and international.

Yesterday, Brian Cornell, otherwise I thought really good call from Target, mentioned, hey, of course, you know that e-commerce is slowing down, more people are coming back to the stores. And it was said in the notion of course. Well, of course, Walmart continues to build e-commerce. And David, you know how you first brought out that Amazon could have this amazing advertising business?

David Faber (1:39)

Yeah, we discussed it some time back.

Jim Cramer (1:41)

Walmart making money.

David Faber (1:43)

Are they?

Jim Cramer (1:43)

Yeah, a lot of money. So, and you've got John Rainey there late about PayPal and he's a terrific CFO.

David Faber (1:49)

John David Rainey. Apparently, he likes to go buy his full name.

Jim Cramer (1:54)

He didn't when he was at PayPal. I was Jimmy Cramer on the trading desk.

David Faber (1:58)

What Courtney says in her notes here.

Jim Cramer (2:00)

John David Rainey. I'm so glad we brought that up because that was right where I was going. You know what? Okay, so listen, Princess Bride.

There is the early read is so positive on Walmart that it makes me wonder why anyone felt. No, I mean, we're like people that people really think was going to be bad after Target. It's look, it's better than Target, but a lot of its food. But then again, who cares? I mean, food may not have the margins, but the fact is, is that they pivoted big. And it's interesting that they were talking about how people are buying smaller form factor. Yes, they should be buying the Walmart brand, which tastes really good.

I could do a taste test with you. You wouldn't do it in string beans, really string beans.

David Faber (2:41)

Yeah, there's a Walmart string bean brand.

Jim Cramer (2:45)

It's about as good as it gets. Interesting.

David Faber (2:47)

I did.

Jim Cramer (2:47)

Yo, yo, yo, David Giant. It's fantastic.

One for one. I did taste test. No one could tell.

David Faber (2:54)

Of course you did. Because why wouldn't you be doing taste test of string channel checks? Yeah, I mean, let me check the string bean quality today at Walmart because I got nothing else to do. I'm really like, I'm just...

We'll get to that, don't we?

Jim Cramer (3:10)

Well, let me tell you, okay?

David Faber (3:12)

The CFO does say consumers are trading down to smaller pack sizes, which you just said.

Jim Cramer (3:16)

Which makes no sense because that's the big rip off.

David Faber (3:19)

And also says discretionary spending such as on electronics, TVs, home apparel, more selective, waiting until items go on sale.

Jim Cramer (3:26)

And the cadence was not great, but the cadence at Target was an amazing drop off. Look, I just think that when you look at what Walmart's doing, the operating margins are really good. And I point that out within the confines of how much they raise people's salaries.

Remember when they had that $14 salary and you thought, well, wait a second.

David Faber (3:46)

I remember when, you know, now this is a long time ago, my second documentary, it was $10. That's what they were talking about. It was a debate around $10.