Closing Bell - Closing Bell: 5-Day Win Streak, Walmart's Big Beat & President Biden Signs The Inflation Reduction Act 8/16/22

Episode Date: August 16, 2022

Better than expected earnings from Walmart and Home Depot helping the Dow extend its winning streak to a fifth straight day, although the broader market did lose steam late in the session. DWS Americas Chief Investment Officer David Bianco discusses whether investors should trust the recent rally and reveals where he still sees value in this market. Former Walmart U.S. CEO Bill Simon says the world's largest retailer is profiting from consumers shopping for lower food prices, but worries the company could get hurt by higher inventories of discretionary items. Palantir COO Shyam Sankar discusses the company's new efforts in health care and the impact the conflict between Russia & Ukraine is having on his business. And President Biden signs the Inflation Reduction Act into law.

A mostly positive session has faded just in the last few minutes, though retail results are still supporting the Dow. The most important hour of trading starts now. Welcome, everyone, to Closing Bell. I'm Sarah Eisen. Take a look at where we stand in the markets. Some crazy intraday swings here. We were lower this morning, recovered, had a nice rally going here in the afternoon, got as high as up 329 on the Dow, and it just lost it. In the last few moments ago, the S&P 500 turning negative, the Nasdaq down about a half a percent right now. And the Russell 2000 index of small caps

also lower. If you look at what is performing well and what is not, it's kind of a mixed session. You've got energy under pressure today. It started off higher. Staples are leading because of Walmart. More on that in a moment. Discretionary materials, financials, industrials, and utilities all higher right now. It's technology and energy at the bottom of the market. Here's the chart of the day. Walmart and Home Depot both getting a pop as they kick off a big week of retail earnings. We'll talk much more about the retailers in just a moment when we are joined by the former Walmart U.S. CEO, Bill Simon, plus the COO of big data firm Palantir will join us to discuss the company's expanding reach in healthcare and why Palantir is hiring while many other tech players are

tightening their belts. First up, we'll start with the market dashboard. Senior markets commentator Mike Santoli here to take a look at how big tech names are impacting the summer rally. They had been doing quite well today, not as well. Taking a rest today and really looking at how big growth is affecting the overall valuation of the market. Now, there's really a couple of camps in opposition right now. Those that look at the technical character of this rally are pointing to all these breadth and momentum signals that say this is the kind of thing you see at lasting lows. Now, fundamentally, not much has changed about the macro, and valuation has all of a sudden maybe become a headwind again. The S&P 500 forward price earnings multiple is now above

18 again. That's the middle line right here. So you see, if you take it all the way back, it's basically where we were just before the pandemic crash. And that was at a historically elevated level. But if you pull it apart just a little bit, the Nasdaq 100, which, of course, is dominated by the top five names in the S&P 500, is all the way up at 24. So really, it's that mega cap growth stocks that have not had their valuation come in quite as much. The equal weighted S&P right around 15 is not really remarkable. It's kind of around the average from, you know, 2018, 19. Now, of course, it all depends on whether inflation becomes more tame. If growth holds up in the economy, that's going to tell you whether valuation here is justified or is going to be an impediment to further upsides.

What happened in the last few moments? S&P was up 21 and then we just dropped and lost it all. I would say the short answer is the market raced right up. The S&P did, too. It's 200 day moving average, which was above for a while, everyone sort of thought it had a gravitational pull. It is still sloping lower, and it sort of touched it and pulled back from there. Clearly, we're in a little bit of a zone of a lot of mechanical, systematic trading at the moment. Also, the market is looking short-, technically stretched above the 50 day average.

All those things together, I think, is causing some of these ping pong games intraday. Unchanged doesn't quite tell the story. Mike, thank you. And stay with us. We're going to talk more about the market. Joining us in the conversation is David Bianco, DWS America CIO. Good to have you. Nice to see you here at Post 9. Thank you. So you but when we were in the makeup chair a few moments ago, you were trying to tell me that utilities are a sexier bet than big cap tech right now. Well, I'm not sure I'd compare utilities to big cap tech, but I would make the point that I think utilities are this underappreciated play on electrification. Electric is the future related to vehicles and other clean forms of energy.

The utilities are the big player here. And if you believe that natural gas prices are going to stay high, I think natural gas is the critical commodity for this decade. High natural gas prices, electrification, inflation protection, I think utilities are a good gift to equity investors. It also sort of speaks to your broader view, David, which is that you're not chasing the rally. You don't necessarily buy out. I wouldn't chase the rally. This rally has been faster and earlier than we expected. 4,300 is a big number on the S&P 500, not held today. Of course, it's a market of stocks, but 4,300, I think, doesn't acknowledge the continued slowdown, the likely decline in sequential

earnings ahead for the next few quarters, whether we have a recession or not, I think we'll have a small one. And the Fed, nevertheless, we think we'll still keep hiking through this year, possibly early next year too. The resilience, Mike, of the market, even in these last two days where we started weak both days and then sort of climbed, even in the face of bad news on the economy, mixed news on earnings. David said they've constantly been expecting downgrades. What do you make of the strength? In the absolute keep it simple mode, it shows you that people just became way too defensive at the lows

and really discounted the possibility that we could have a higher probability of a soft landing. And so once it started to seem like at least that was a greater chance that we don't necessarily descend right into recession and earnings don't fall apart quickly, people were underinvested. And the market behaves as if large investors felt they need to ramp their equity holdings back up from very low levels. If you look at the B of A Global Fund Manager survey today, it says exactly that. If you look at hedge fund positioning, it tells you that.

Now, we've adjusted to some degree. I think maybe things are looking a little more neutral. Just an hour ago, it looked like there was a little bit of a chase going on, people getting aggressive, the meme stock starting to run. All these reasons to say, yeah, sure, we should give back or flatten out a little bit. But as I said before, I'm not really willing to dismiss the idea that the market off the lows has looked a lot like really good rallies of the past that marked short-term or even intermediate-term bottoms. But you're not going there? I'm not. The flows and the positioning will follow the fundamentals. The fundamentals are still tough yet ahead. And the thing about corrections is that they tend to come in bunches. They love company. You can go for five years without a

10% plus pullback in the S&P. And then all of a sudden, within a year, year and a half, you get two or three of them. Well, we had a bear market. I think we're done with that. But I don't think we're done with the corrections. I think we'll see another one in the autumn. In the meantime, utilities, health care, and for those that want the cyclical risk, my preferred is banks. But what banks? Why banks? Because now we're looking at lower yields. I'm expecting short-term yields, the Fed funds rate to keep climbing. And I do believe we'll have a soft landing in the labor market, not necessarily for the economy or profits. But with a soft landing in the labor market,

credit costs are unlikely to surge. Higher short-term rates, benign credit costs, very good for the banks. And you don't like energy. Well, I've been very cautious on energy for a long time. Right now, we're equal weight on it. But if you look at the commodity, which has been driving the performance of the sector, with where it is now, it better find some support. Otherwise, that sector is really not attractive. It's making a lot of money right now, but the question is, for how long? It really feels like two things are underpinning this bullish view, Mike. The soft landing idea and also the fact that the Fed is going to have an easier time if inflation is coming down and even if the economy weakens.

It'll be a clear-cut idea that they should pause and they should cut rates. It's not what they're saying, though. No, it's not what they're saying. And the market is trying to jump ahead of what they have to say right now. What were they saying a year ago? A year ago, it was lower for longer, and we're not even thinking about thinking about it. So now the market is saying inflation is transitory and you're going to pivot. Well, they're saying that the Fed has hinged its policy outlook to an unusual degree on gasoline prices. They did that in recent months because it was about headline

inflation and it was about consumer inflation expectations. Both of those things are essentially gasoline prices in another guise. And so I think the market is essentially saying it at least creates flexibility by the Fed. I don't think it means the Fed stops. I so I think the market is essentially saying it at least creates flexibility by the Fed. I don't think it means the Fed stops. I don't think it means the Fed doesn't go half a percent or more in September. But it means that we're within the six-month window of when perhaps the Fed is going to be able to take its foot off the brake. Do you buy this idea that I guess 16 months can still be transitory and inflation is on a one-way ticket lower? Well, the disinflationary process has begun, particularly with headline inflation and commodity prices. But the more broad-based measures, wage costs and other more sticky

parts of owner's equivalent rent, health care costs, that's where the Fed needs to make sure they don't take their eye off the ball and end the battle too early as the same mistakes that were made in the late 70s and 1980. We don't want the Fed having to come out with heavy artillery as Volcker did in 1982. Is that why you're wary of tech stocks? Because you think the Fed will keep raising rates? No, I've got other...

My concern about tech stocks is that you will see more earnings pressure yet to come. They're not immune to these cyclical risks. We thought that last earnings and then they came out in surprise. It's still early, and their profitability tends to lag some of these fundamentals. But I do think the more aggressive the Fed is, the more likely long-term yields stay low. And it's not so much a valuation problem for the market or tech, but I still think we have yet to go through the earnings downgrades yet to come. Yeah. I mean, when—my final question, Mike, is when when

is bad news, bad news for the economy? Because lately we got a better industrial production. That was good news. I mean, soft landing. We got a worse housing starts. We got worse New York manufacturing and the market rallied because it makes the Fed's jobs easier. But it has to affect multiples at some point. I think bad news becomes bad news when it's truly bad. In other words, when you really do see employment buckle more than it has right now, when it looks like a little bit more than just a little bit of an adjustment. And industrial production, for as reassuring as that number was, I did see some work that it also just peaked coincident with the economy in 2007.

In other words, it's not that much of a leading indicator. It's just kind of telling you where we are at the moment. So we bought some time. And I think that there is still time for things to erode. I don't discount the idea that there's a lot of tightening that's already been done. Financial conditions did tighten up quite a bit in the first half of the year. That hasn't fully necessarily been felt by the economy. And companies have good top line growth because of inflation and nominal growth. But we don't know if that's going to continue in the second half and into next year. Unchanged S&P 500. Mike, thank you. David, it's great to see you in person. David Bianco. Walmart giving the Dow an extra boost today. It's still positive, up about 200 points after earnings and revenue topped expectations. Up next,

we'll talk to former Walmart U.S. CEO Bill Simon about the quarter and ask him whether the troubles that hit the stock earlier in this year are now behind them. You're watching Closing Bell on CNBC. Shares of Walmart jumping today after beating earnings estimates this morning. The results coming, of course, three weeks after the retailer issued a profit warning about the quarter, citing inflation's impact on the consumer. So despite the earnings beat, Walmart CEO Doug McMillan says the company still has challenges to navigate. Listen. We've seen food inflation be persistent and continue to tick up mid-double digits, as we've expressed. General merchandise is a little better.

The ports are clear. The transportation issues that we were also focused on a while back have cleared up as time has gone on. So we have a different set of challenges looking ahead than we've had in the last six months. Joining us now is Bill Simon, former president and CEO of Walmart U.S. Bill, how much credit do you give Walmart and the team for beating their lowered expectations? Well, those guys are masters. You know, they've done this for a long time. Tell everybody you're going to be terrible and then come in a little less terrible and, you know, get kudos for it. So they manage the business really well,

given where they were headed. And you've got to give them credit for that. But you say it's kind of a mixed result. Why? Yeah, I mean, there's some things to like in there. They did a good job. I mean, I love how they're holding pricing down to try to give the consumer some relief. But if you look in the detail, and Doug just mentioned it there in that clip, food inflation mid-teens is brutal. I mean, brutal for the consumer.

Getting past that, it's really all they're focused on right now. And until that eases up, I worry about the overall macroeconomic situation. Also, I think when you look at their inventory, about a third of their inventory, 26 percent up, about a third of that can be explained by the food inflation. But they got a lot of general merchandise product to move through in order to have a good holiday season. So I think that's a concern. And finally, for me, I'm not quite sure what to make of their guidance, their same store sales guidance for the back half of the year at 3%. You know, you could be optimistic and say they're forecasting 3% because food inflation is going to moderate. But if food inflation stays in the mid-teens and they're only delivering up 3 percent and the rest of their business is going to be struggling.

Right. So that was sort of my next question, which is what did we learn about the consumer? The consumer's taking a beating right now, just a beating, particularly in the middle of the economy and down with food costs up the way they're up. That's taken about every bit of discretionary dollar they can have. And it's forcing people into difficult decisions on, you know, food or rent. And that's a brutal situation to be put in right now. Some of that's offset by wages generally are up and unemployment's high. So they're getting paid, but all of it's going to food. But so Walmart is growing share in grocery, even in this tough environment. And it's interesting, Kroger shares are up three and a half percent on the back of these results. Costco's up. The Sam's Club's numbers were good. I guess that bodes well for the club stores like a Costco

or a BJ's. But what is the read through on Walmart's own grocery business relative to its competitors at a time when food inflation is in the double digit rise? Well, that's always been Walmart's strength. I mean, they're really great at managing costs and, you know, able to hold their breath longer than anybody else. And you can see that in their numbers, their gross margins down because they're selling product. They're absorbing some of the inflation costs and that's causing customers to trade into Walmart. They mentioned that as well, that they're seeing even a substantial portion

of their same store sales coming from household incomes over $100,000. So people seek Walmart in an inflationary and high-cost periods, and they're doing a really good job at that. That's what they're built for. When you look across the landscape, Bill, retail winners and losers right now, it's not as simple as defensive stocks are working, like a Walmart and a Target that you might see perhaps in a recessionary environment. What stands out to you about who wins and who loses in this environment, which is sort of distorted by changes of consumer behavior around COVID and also inflation?

It's very different. Well, I've been in and around retail a long time, and I think right now, Sarah, you're seeing those that are successful are the really good retailers, really talented, well-capitalized, good leadership. Anybody who was at least a bit wobbly heading into the COVID situation and now the inflationary environment and the supply chain issues, they're really struggling. So guys like Target and Walmart are good because they have good, well-capitalized companies and great market share positions and very good leadership. And the ones that don't, you know, are still trying to figure it out.

Bill Simon, thanks for your perspective today. Always good to talk to you. See you, Sarah. Bye-bye. Former head of Walmart US. Let's check in on the markets right now. We've got a Dow that is still going strong. It's off the highs up about 200 points, though, right now. The S&P 500 just turning positive on the day. Staples are your leading sector. Thank you to Walmart. But you've also got some strength in consumer discretionary names,

materials, financials, industrials, and utilities. A lot of the retailers are working well, not just Walmart and other staples, but strength across the board. TJX, Etsy, CarMax, Lowe's, which reports tomorrow off the Home Depot quarter. NASDAQ down four tenths of a percent as tech lags. Still ahead, the CEO of Palantir will join us to talk about the company's new efforts in health care. Why they're hiring while other tech firms are pulling back on spending at the moment. And later, a supersonic addition of the Wall Street buzz that could revolutionize the way you travel.

And as we head to break, check out some of today's top search tickers on CNBC.com. Tenure yield right on top. Selling off today. Yields are a little bit higher. 282 or so is the yield. It's been a mostly lower yield story lately. There's Walmart with the earnings reaction of 5.2%. Home Depot, which turned around after the earnings fall,

was a little bit under pressure on weaker transactions. But July is trending better, and that has sent shares higher by about 4.25%. Tesla is back a percent. We'll be right back here on Closing Bell. Check out today's stealth mover. It is Lumentum, the Apple supplier, beating on both the top and bottom lines, thanks to better than expected operating margins.

But the maker of smartphone 3D sensing technology did issue a disappointing profit guidance. That's what's hitting the stock down more than 6 percent. By the way, Apple accounts for more than 30 percent of Lumentum's revenue. That was in fiscal year 2021. Up next, Palantir's chief operating officer discusses the company's fast-growing health care business and when investors can commercial sectors. Revenue there up more than 260 percent since the first half of 2020. Joining us now is Palantir's COO, Shyam Sankar. It's good to see you, Shyam. So clearly it's coming off of a low base, but there's a lot of potential. First, COVID, I know, is big for you in terms of managing some of the government's work on vaccines and medications.

And now, monkeypox? Tell us about it. Well, thanks for having me back, Sarah. Absolutely. You know, one of the things that makes our presence in healthcare unique is that we span the entire value chain. So of course, working with government agencies to help them distribute vaccines efficiently, plugging into the pharma companies and the biomanufacturing processes that create them, driving the hospital operations that is getting those needles into your arms and driving the healthcare outcomes, clearing the backlog in the wake of COVID. Why should investors care about this? I talked to a number of our team, actually reached out to a number of analysts ahead of today wondering about the healthcare business. And

they said it's still such a tiny slice. Clearly there's growth there. How big of a part of the business do you intend it to be? I think healthcare is absolutely massive. The number of opportunities that we're seeing to help the U.S. clear the patient backlog with hospital operations to deal with nursing shortages. COVID really put healthcare on its knees here. It showed the weaknesses in the system. It spurred innovation. It's created funding to go after and fix these problems. That's as true in the U.S. as it is in the U.K. and Canada and continental Europe and Japan. And so we see a lot of opportunity all the way from the preclinical clinical R&D side through clinical trials all the way to the payer and provider side. Broadly, what is happening beyond health care, Sean, with the government business?

You were expecting all these deals to close and have pushed that out. We're really excited about the government business. It has grown at a 35 percent compounded rate, the U.S. government business in particular, over the last decade. The nature of these contracts, when you're going after $100 billion contracts, they are lumpy. Some years you see 0 percent growth. Some years you see 50% plus growth.

But what's important for us is really the long-term trend, the investments that we're making to be the operating system for public health care, for defense and national security, for civil administration. How do you think about the resilience of those businesses and what you offer in a recessionary environment? I think they've become even more important. If you look at the, in the wake of COVID, all those people were wondering, will these be enduring investments? And you see crisis after crisis

that those capabilities have met their moment. The monkeypox vaccine is being allocated on the same infrastructure that the COVID vaccine was being allocated on. The legitimation crisis that Western institutions face right now in the wake of the recession and the need to take care of people has only become more important. You see that not only in the U.S., but again, in Western Europe as well. Do you think there's a disconnect between the

stock market and what you're seeing fundamentally? Do you think Wall Street understands your story? I'm sure it's been frustrating to watch the reaction to earnings and just what we've seen all year. The stock is down almost 50 percent. When we look at the business, the thing that we are most excited about is what is going on in the U.S. So if you look at the U.S. commercial business, the customer count growth there has grown from 34 customers a year ago to 119 customers in the last quarter. Obviously, that's starting on a small base, but that's incredible growth. And it shows you how much runway we have ahead of us. The revenue there grew 120 percent year over year. And as I mentioned earlier, the U.S. government business has a long track record of growing at 35 percent. And so

together, we see a lot of growth ahead of us here. And I think investors are starting to pay attention to that story. And curious, are you seeing an increase in business related to what's happening between Russia and Ukraine and the uncertainty of that war? We are, perhaps not in the ways that people would expect. I think alongside the crumbling of this 40-year geopolitical consensus that the world would get safer, more predictable, simpler, I think you're also seeing perhaps the crumbling of another consensus. We all thought software would eat the world to me it kind of looks like the world ate software that the world needs a new type of software a software that is built with the assumption that efficiency comes from resiliency how do we help auto manufacturers keep their factories open when their wiring

harnesses come from ukraine how do we ensure supply chains continue to work so across our commercial business we're seeing revenue that's coming from folks investing in dealing with these disruptions and maybe a little counter-cyclical. We plan to continue to invest through this cycle here. We have seen, whether it was the global financial crisis, ISIS attacks on Europe, or even COVID, that leaning in ahead of time, working with customers ahead of revenue, has always been a good bet for us. Right. So why the decision to withdraw the long term annual growth guidance of 30 percent? Well, what we have visibility into right now is clearly a full year 22.

So we thought it would be best to create clarity around what's going to happen there. Alex mentioned on the call and we still believe we'll achieve $4.5 billion in revenue in 2025. And where does health care, just to bring it back to the health care situation, since we're focused on monkeypox, we're still unfortunately dealing with COVID, commercial applications as well. Where does it fit in, in the long-term growth plan and ultimate path to profitability? Health care is a significant part of that. You see the growth that we're seeing in life sciences, with payers, with providers, as well as with governments. And it really leverages the unique abilities that we have, privacy-first data platform that enables collaboration. We help 70 academic medical centers pull together the largest integrated COVID patient record to study long COVID and

drive therapeutics to market. These capabilities are quite unique, and I think they're going to position us well to see sustained growth over the last few years. It's been 91% compounded in healthcare here. Sean, thank you for joining us to highlight it. We appreciate it. Sean Sankar, COO of Palantir. Take a look at where we stand in the markets. It's actually Home Depot that's contributing the most to the Dow's rally right now, which is above 240 points. Home Depot adding 86 of those points, Walmart adding another 40. So the combo there making the Dow the outperformer.

S&P has gone positive, though, and it's now up about two-tenths of 1%. We're looking at our fifth day in a row higher for the Dow. S&P is up for a third day in a row. And the leader is consumer discretionary, but you've got a lot of cyclical groups in there, like, excuse me, consumer staples are the Dow. S&P is up for a third day in a row. And the leader is consumer discretionary. But you've got a lot of cyclical groups in there like, excuse me, consumer staples are the leader, but discretionary is in there, materials, industrials, financial. They're all in the rally today. Technology is lagging. That's why the Nasdaq is down about two tenths. Wall Street is buzzing about a major airline making a big bet on supersonic travel. We will discuss the potentially booming business straight ahead.

And we are just moments away from President Biden's signing of the Inflation Reduction Act. We'll take you to Washington as soon as it happens. Closing bell. We'll be right back. What is Wall Street buzzing about today? Supersonic travel. American Airlines placing an order for 20 supersonic overture jets from Boom. It's the second carrier to place an order. United already agreed to purchase 15 jets last year. Boom says its overture jets will fly as fast as Mach 1.7, which apparently is more than 1,300 miles per hour. So basically a flight from Seattle to Tokyo, which typically takes 10 hours, can be done in six. However, this is still years

away. Boom expects the first model to roll out in 2025 with the first flight in 2026. And if all goes well, then Boom will enter commercial service by the end of the decade. Our Phil LeBeau joins us. Phil, so why is American ordering these supersonic jets right now? Well, it's a smart bet if you are American that you believe these could eventually be built and ready to fly by the end of the decade. Look, they're not spending a lot of money here, a few million dollars as part of the firm order. So it's not like this is going to move the needle on the on the books. But it does put them in position that if Overture goes through the process through certification as expected and is ready for commercial service by 2029,

well, then this is a nice addition to your fleet, especially on the transatlantic and trans-Pacific routes. There you go. Can't wait. End of the decade. Bill LeBeau, appreciate it. Sign me up. Up next, we will discuss whether FuboTV is the latest stock to get caught up in the resurgence of meme mania. Look at the move of 45%. By the way, Bed Bath & Beyond, stunning move today, up 21%. And that is off the highs of the day.

It's only up now 100. Wait, let's see. 100%? No. Week-to-date, 50%. The last month, 300%. Jim Cramer wants to know why they're not issuing more stock. That story, plus Walmart's big rally and a pair of software stocks getting downgraded when we take you inside

the Market Zone, coming up. We are now in the closing bell Market Zone. Crossmark Chief Market Strategist Victoria Fernandez is here to break down these crucial moments of the trading day. Plus, Courtney Reagan is here on Walmart and Julia Boorstin on FuboTV. We'll kick it off with the broader markets. Dow's up about 229. Home Depot and Walmart are certainly helping the Dow outperform. The S&P 500, though, has turned positive just in the last 10 minutes or so. It's up less than two-tenths of 1%.

It's kind of a split today, Victoria, between consumer staples and discretionary, which are leading on the upside. And then on the downside, you've got technology, healthcare, real estate. There are two types of investors right now. One that thinks that we've seen the lows and one that thinks we're going to make new lows off the June lows. And this is just a bear market rally. Which one are you? Yeah, I think if you had asked me, Sarah, maybe a week and a half ago, I would have definitely been in that bear market rally camp. It was looking very similar to what we had seen previously this year, two or three times. But we're starting to see the breadth and the momentum come into play. That's what we were waiting on to really believe that this was going to be a stronger rally.

We're not 100 percent in that camp yet, but at least we're seeing, you know, 20-day highs being made by the majority of stocks. We're seeing more and more, over 90% now that are going above their 20-day moving averages. So that's strong. But you also have to look at some of these leaders. You talked about discretionary names. They're leading, but yet they're still in a downtrend when you look at their stock price. So we want to see some of those things change before we go all in on a sustainable rally. For us, you use these opportunities to trim some of the names you have in your portfolio and then wait for maybe a slight pullback in order to start adding some others. That's at Walmart because it is one of the stock stories of the day. Big winner in the Dow, beating Wall Street's earnings estimates thanks to stronger than expected same store sales.

Earlier on Squawk on the Street, CEO Doug McMillan told our Courtney Reagan that the retailer is benefiting from a shift in consumer behavior across all income levels. Listen. Inflation is having an impact, particularly for those that don't have as much money. So we see them behaving in different ways, but we're also attracting a lot of new customers to come to our stores, to our app, to our website. Higher income families are shopping at Walmart because they're so price sensitive right now. We shared earlier this morning that families making more than $100,000 in household income have driven a lot of our growth during this last quarter. Trade down seems to be one of the words of the day. Courtney Reagan joins us.

Courtney, after all your time there and your conversation, what are the takeaways for you from Walmart on the consumer across income levels? Yeah, Sarah, I really thought it was interesting that I sort of pressed Macmillan again, asking him about the state of the American consumer. Is it the same for everyone? And he more or less paused and said, yeah, I think even that higher income consumer is feeling the strain because they can tell they're shopping more in Walmart stores. Part of that soundbite that you played, but he also said three quarters of the growth that they're seeing in food, which was one of the biggest sales drivers of the quarter, is coming from that higher income consumer with a household

income of $100,000 or more. And so that does suggest that there is some strain being felt by inflation and that decisions are being made differently. And that Walmart has been able, he believes, to successfully attract some of those higher income consumers. But he said, look, things that are still weak, apparel, home, electronics, while people are having to spend more money on food, but also, of course, still trying to take those vacations that they put off. So the spending is just still very discerning across the stratification of income levels. Victoria, do you buy Walmart? Clearly, people are today. That is the reaction. Expectations were low. They beat 5.3 percent, talked about strength in back-to-school categories, for instance. Do you like the

stock? It's down about 3.5 percent now year-to-date. Yeah, so Sarah, we have exposure to Walmart in our large cap strategies and in our option strategies. So we didn't add to it prior to the earnings, but we've had the belief all along that the consumer, yes, they're going to pull back. There's going to be some slowdown, but there's still strength there. And we think that's why there's going to be so much volatility going forward in this market. I mean, McMillan talked about that consumer and pulling back a little bit. But at the same time, you have the inflation component that we know the Fed is going to continue to fight. So you're going to get this push-pull. I'm not surprised that they've brought

more shoppers from the higher end into their store. I think longer term, this is a name you want to continue to have because they can pull from so many different demographics. All right. We're going to take you now to Washington. President Biden about to sign the Inflation Reduction Act into law. Let's listen in. Thank you, Majority Leader Schumer. Chuck, you've been a good friend a long, long time. And Joe, I never had a doubt. Joe had an operation on his shoulder. I just want you to know it wasn't because of anything we did. He's in great shape. And our whip, Mr. Clyburn, you're amazing. And I am reminded often by my staff, were it not for you, your wife, telling you to endorse me, I wouldn't be standing here.

But thank you very, very much. And also, Congressman Castor and my good friend Frank Pallone, Congressman Pallone, thank you for your leadership. You know, while they couldn't be here, I especially want to thank Nancy Pelosi, who was instrumental in this law, and Vice President Harris for her incredible work she did. And I'm about to sign the Inflation Reduction Act into law, one of the most significant laws in our history. Let me say from the start, with this law, the American people won and the special interests lost. The American people won and the special interests lost.

We're in a session of, for a while, people doubted whether any of that was going to happen. But we are in a season of substance. This administration began amid a dark time in America. As Jim said, a once in a century pandemic, devastating joblessness, clear and present threats to democracy and the rule of law, doubts about America's future itself. And yet we've not wavered, we've not flinched, and we've not given in. Instead, we're delivering results for the American people. We didn't tear down. We build up. We didn't look back. We look forward. And today, today offers further proof that the soul of America is vibrant,

the future of America is bright, and the promise of America is real and just beginning. Look, the bill I'm about to sign is not just about today. It's about tomorrow. It's about delivering progress and prosperity to American families. It's about showing the American and the American people

that democracy still works in America, notwithstanding all the talk of its demise, not just for the privileged few, but for all of us. You know, I swore an oath of office to you and to God to faithfully execute the duties of this sacred office. To me, the critical duty, the critical duty of the president is to defend what is best about America. That's not hyperbole. Defend what's best about America. To pursue justice, to ensure fairness, deliver results that create possibilities, possibilities that all of us, all of us can live a life of consequence and prosperity in a nation that's safe and secure. That's the job. Fulfilling that pledge to you guides me every single hour of every single day in this job.

You know, presidents should be judged not only by our words, but by our deeds, not by our rhetoric, but by our actions, not by our promise, but by reality. And today is part of an extraordinary story that's being written by this administration and our brave allies in the Congress. This law, this law that I'm about to sign, finally delivers on a promise that Washington has made for decades to the American people. I got here as a 29-year-old kid. We were promising to make sure that Medicare would have the power to negotiate lower drug prices back then. Back then, prescription drug prices. But guess what? We're giving Medicare the power to negotiate those prices now on some drugs. This means seniors are going to pay less for the prescription drugs while we're changing circumstances for people

in Medicare by putting a cap, a cap of a maximum of $2,000 a year on their prescription drug costs, no matter what the reason for those prescriptions are. That means if you're on Medicare, you'll never have to pay more than $2,000 a year, no matter how many prescriptions you have, whether it's for cancer or any other disease. No more than $2,000 a year. And you all know it because a lot of it comes from families that need this. This is a godsend. This is a godsend to many families. And so, so long overdue. The Inflation Reduction Act locks in place lower health care premiums for millions of families

who get their coverage under the affordable care act last year a family of four saved on average two thousand four hundred dollars through the american rescue plan that i signed in the law that the congress voted in place in the years ahead thanks to the inflation reduction act 13 million people are going to continue continue to save an average of $800 a year on health insurance. The Inflation Reduction Act invests $369 billion to take the most aggressive action ever, ever, ever, ever in confronting the climate crisis and strengthening our energy security. It's going to offer working families thousands of dollars in savings by providing them rebates to buy new and efficient appliances, weatherize their homes,

get tax credit for purchasing heat pumps and rooftop solar, electric stoves, ovens, dryers. It gives consumers a tax credit to buy electric vehicles or fuel cell vehicles, new or used. And it gives them a credit, a tax credit of up to seven thousand five hundred dollars if those vehicles were made in America. American auto companies, along with American labor, are committing their treasure and their talent. Billions of dollars in investment to make electric vehicles and battery and electric charging stations all across America, made in America, all of it made in America. This new law also provides tax credits that's going to create tens of thousands of good-paying jobs and clean energy manufacturing jobs, solar factories in the Midwest and the South, wind farms across the plains and off our shores, clean hydrogen

projects and more all across America, every part of America. This bill is the biggest step forward on climate ever, ever. And it's going to allow us to boldly take additional steps toward meeting all of my climate goals and the ones we set out when we ran. It includes ensuring that we create clean energy opportunities in frontline and fence line communities that have been smothered, smothered by the legacy of pollution and fight environmental injustice that's been going on for so long. And here's another win for the American people. In addition to cutting the deficit by $350 billion last year, my first year in office, and cutting it $1.7 trillion this year, this fiscal year,

we're going to cut the deficit point out by another $300 billion with the Inflation Reduction Act over the next decade. We're cutting deficits to fight inflation by having the wealthy and big corporations finally begin to pay part of their fair share. Big corporations will now pay a minimum of 15 percent tax instead of us 55 of them got away with paying zero dollars in federal income tax on 40 billion dollars in profit. And I'm keeping my campaign commitment. No one, let me emphasize, no one earning less than $400,000 a year will pay a penny more in federal taxes. Folks, the Inflation Reduction Act does so many things that for so many years, so many of us have fought to make happen. And let's be clear, in this historic moment, Democrats sided with the American people and every single Republican in the Congress sided with the special interest in this vote.

Every single one. In fact, the big drug companies spent nearly $100 million to defeat this bill. $100 million. And remember, every single Republican in Congress voted against this bill. Every single Republican in Congress voted against lowering prescription drug prices, against lowering health care costs, against the fairer tax system. Every single Republican, every single one voted against tackling the climate crisis, against lowering our energy costs, against creating good paying jobs. My fellow Americans, that's the choice we face. We can protect the already powerful or show the courage to build a future where everybody has an even shot. That's the America I believe in.

That's what I believe in. And today, today, we've come a step closer to making that America real. Today, too often, we confuse noise with substance. Too often, we confuse setbacks with defeat. Too often, we hand the biggest microphones to the critics and the cynics who delight in declaring failure, while those committed to making real progress do the hard work of governing. Making progress in this country as big and complicated

as ours clearly is not easy. It's never been easy. But with unwavering conviction, commitment, and patience, progress does come. Your dad was right. And when it does, like today, people's lives are made better and the future becomes brighter and a nation can be transformed. That's what's happening now. From the American Rescue Plan that helped create nearly 10 million new jobs to once-in-a-generation infrastructure law that will rebuild America's roads, bridges, bridges, ports, deliver clean water, high-speed internet to every American, to the first meaningful gun safety law in 30 years. And if I have anything to do with it, we're still going to have an assault

weapons ban, but that's another story. And to get significant veterans' health care law in decades for the first time, to a groundbreaking chips and science law that's going to ensure that technologies and jobs of the future are made here in America. In America. And all this progress is part of our vision and plan and determined effort to get the job done for the American people, so they can look their child in the eye and say, honey, it's going to be okay. Everything's going to be okay.

Everything's going to make it sure that the democracy delivers for your generation, because I think that's at stake. And now I know there are those here today who hold a dark and despairing view of this country. I'm not one of them. I believe in the promise of America. I believe in the future of this country. I believe in the very soul of this nation.

And most of all, I believe in you, the American people. I believe in my core. There isn't a single thing this country cannot do when we put our mind to it. We just have to remember who we are. We are the United States of America. There's nothing beyond our capacity. That's why so many foreign companies decide to invest or make chips in America. Billions of dollars. We're the best. That's why so many foreign companies decide to invest or make chips in America.

Billions of dollars. We're the best. We have to believe in ourselves again. And now I'm going to take action that I've been looking forward to doing for 18 months. I'm going to sign the special deduction.