SOTS 2nd Hour: Ukraine-Russia Tensions, New Highs for Walmart, RFK Jr.'s Big Food Plans 11/19/24

Sara Eisen (0:00)

Good Tuesday morning, welcome to another hour of Squawk on the Street. I'm Sara Eisen with Carl Quintanilla and David Faber, live as always from Post 9 of the New York Stock Exchange. Stocks under a little pressure. We're not down quite as much as we saw in the futures this morning, but still down 368 points on the Dow S&P 500 off about a half a percent, getting some headlines overseas which will talk about Russia-Ukraine tensions ratcheting up that's spooking the markets. You've got every sector lower right now in the S&P 500, leading us down are financials giving back 1 percent. They've been super strong lately. Industrial's energy at the bottom of the pack, real estate holding up well, consumer staples holding up better, so more of the defensive groups. There's the NASDAQ, it's down 0.3 percent. You do have some strength in names like NVIDIA, which is helping. Also, Supermicro is up again today, so that's offsetting some of the losses. Apple's higher again today. That's helping the NASDAQ, it's why it's not worse. Take a look at treasuries right now. You're seeing a safe haven bid for bonds, and that is what we've seen across assets this morning. The 10-year yield just below 4.4 percent. Remember, we were inching higher than 4.4 yesterday. The two-year yield below 4.3. 30 minutes here into the trading session. Here are some movers we are watching. Walmart hitting new highs after raising its outlook again, but lows down on the back of results. More on the retail trade coming up. Shares of Supermicro, I mentioned, they're soaring. After hiring a new auditor in an effort to maintain its NASDAQ listing, the stock has been cratering since peaking in March due to these growing fears about compliance with NASDAQ. And then keep an eye on Google Parent Alphabet reports the Justice Department plans to ask a judge to force Google to sell off Chrome. We're going to discuss the fallout on this one later this hour. But let's start on the safe haven bid that I mentioned, the flight to safety, because it's not just in treasuries. You're seeing it, for instance, in the Japanese yen. You're seeing it in gold prices as well, which are catching a bid. Gold hasn't done that well since the election. It ran up into the election, maybe on worries about uncertainty about a result. Once we got that, it sold off. Now it's up today on these fears overseas. And it is worth highlighting. Of course, this all is after reports from both Russia and Ukraine about the US long range missiles that were used in Russia.

And, of course, this revision of the nuclear doctrine from Russia, Putin sort of lowering the threshold for using nuclear weapons. The Putin quote that people are focused on here, investors are watching, aggression against Russia by any non-nuclear state, but with the participation or support of a nuclear state, is proposed to be considered as a joint attack on the Russian Federation. And then markets sold off further when we heard from Russian Foreign Minister Lavrov, who is at the G20 meeting right now, the fact that these missiles were used repeatedly in the Bryansk region overnight is of course a signal they want escalation. So escalated talk spooks the market. It's why we saw markets sell off on this idea that things are getting worse. Yeah, I mean, let's never want to read about nuclear.

David Faber (3:08)

There had been pressure on President Biden for quite some time from many different quarters, certainly Zelensky from Ukraine, but many others in the US, to allow the use of the Atacams for use on Russian territory. And only in the last couple of months of his presidency has he now allowed that, Sara.

Sara Eisen (3:31)

Yeah, in the final months here, right after, as there's expectations building that President-elect Trump would end the war. I find it interesting that investors like Bruce Richards have been buying Ukrainian bonds on this idea that Trump comes in, ends it and then the economic cleanup.

David Faber (3:47)

Trump will just end the war.

Sara Eisen (3:49)

Negotiate a deal. Right.

David Faber (3:51)

He says in 24 hours.

Sara Eisen (3:52)

Well, this makes it harder. What's happening now? I think no doubt.

David Faber (3:56)

Maybe. I don't know.

Sara Eisen (3:57)

That's part of the market story. And then Walmart is bucking the trend. And I did just get off the phone with John David Rainey, who's the CFO of Walmart. Really good color on what they're seeing from the consumer right now and across the economy.

Remember, strong top line growth and bottom line growth. Six percent growth there raised their outlook again. It was a high bar and Walmart managed to surpass it. Here's some of the color that I got from the CFO. First of all, good news. Thanksgiving basket down three percent on price from last year. Seventy five percent of the share gains, he said, came from households that make $100,000 plus. So higher income shifting into better value and better convenience at Walmart. Convenience was a big theme we talked a lot about. And here's a stat for you that he gave me. Thirty percent of online orders, people actually paid extra for faster delivery. One to three hour delivery, which speaks to the high income and speaks to what consumers want right now. They want to cook, they want their ingredients delivered, and they want to make it now. As far as what the expectations are for the holiday season, Rainey said about nine days out from Thanksgiving feels similar to where we were at this time last year. Of course, Carl, you've highlighted that it's a shorter period, fewer days, which works against Walmart and other retailers. But he does say this feels like a good one, and a leading indicator is Halloween and back to school. John David Rainey says they were good this year, but not gangbusters. The other thing that's helping Walmart is that they're taking share in all categories, and they are able to keep prices low, even for branded items like Apple products and Beats headphones. And they're able to keep margins high because the membership income and advertising, which is a really fast growing market and very profitable, is helping offset some of that margin pressure.