Target Surges, Disney and Activism, Markets Extend Post-CPI Rally 11/15/23

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David Faber (0:31)

Market insight and analysis. You're listening to the opening bell of CNBC's Squawk on the Street.

Carl Quintanilla (0:37)

Good Wednesday 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. Bulls looking to add to Tuesday's monster rally as PPI now gives us more disinflationary queues, down 5 tenths, biggest monthly drop in 3 1 2 years.

Retail sales soften up a bit as well. 10 year goes to 442 today. A roadmap begins with Target, though, smashing expectations.

Shares are surging ahead of the open, even as shoppers pull back a bit.

David Faber (1:03)

Plus, rally mode, the S&P and NASDAQ notch. What was the best day they've had since April? The Magnificent 7 stocks, adding more than $200 billion to their market cap, so it's just one day. And it may be that we have more gains on tap today. Stay tuned.

President Biden is set to meet China's Xi Jinping. That's just a few hours from now. And of course, one question, how China's economic slowdown factors into today's historic problems.

Carl Quintanilla (1:31)

Let's get to target surging on this Q3 earnings beat. Holiday quarter profit guidance largely above consensus. Company cites some lower inventory levels and supply chain costs. COMPs did fall 4-9 on weakness in discretionary. That's the biggest drop in COMPs since 2009 Here's Brian Cornell on the call.

Brian Cornell (1:50)

While we're happy to see inflation rates moderating this year, if you compare industry pricing in key categories back to 2020, food at home pricing for families has increased 25% overall and in some areas up to 30%.

And if you're a parent raising a baby, you're facing increases of more than 30% on baby food and Formula 2 And that's in addition to persistent increases in a variety of other categories. So when you layer on the impact of higher energy prices, it all puts pressure on discretionary spending.

Carl Quintanilla (2:20)

Jim, you're gonna have a lot of time to chat with him tonight.

Jim Cramer (2:23)

Yeah, and I think that Brian delivered the kind of quarter that you really want to see in terms of not having a lot of inventory, which is so important going into Christmas. He's got the right inventory, even better. And a lot of it is, by the way, his own private brands, which are selling like mad. I think that in the same way that you go to Costco and you buy the Kirkland Signature, which is actually a premium private label, he has premium private labels. He's got about, jeez, close to $30 billion worth of those.

Now look, I mean, he did make the point, and I think it's really important that we're not back to where we were in 2019 A lot of people keep thinking, well, inflation's under control. What Brian's talking about is, David, there's just a huge amount of money going to things that make it so you don't spend a lot of money at Target. And that's one of the reasons why you have to have inexpensive products to sell.

David Faber (3:09)

Right, do you think this starts a new trend for this company and or a new positive one? Because they have gone through so much over these last, let's call it, couple of years, whether it was boycotts, whether it was shrink and or theft and on from there.

Jim Cramer (3:25)

Well, I think it's good that you mentioned that. The shrink is better. They've actually went over with me last night about all the things that are working to make shrink to be much less a piece of the puzzle that was so negative. Of course, he never gave into the idea that the cashier should be law enforcement. And that was one of the reasons why I think you remember. He runs a very tight ship in terms of being, having a, I don't want to say good attitude because it sounds almost like, you know, Pollyanna-ish, but he was always protective of his workers, which then hurt him the most, I felt, for shrink. But I will point out, David, he's got this strategy of doing partnerships.

Right now, it's the Starbucks strategy that is crushing it, just crushing it. He's made it so that there's still, but you pull up and you can get a Starbucks.