taylor: take a look at how these markets performed on the day. well, we are getting use to volatility, i can say that. take a look at what happened in the final few hours of the session ending near the lows of the day with the s&p 500, big tech continuing to be in focus and long-term we are seeing a re-rating of what all the companies with high valuations and what it is, technology is up on the day even as yields continue to fall, speaking to the broad-based geopolitical threats pushing yields down. people buying bonds, the two year yield is down seven points.

all of this really doesn't change the long-term narrative, rising inflation. particularly on the two-year breakevens, which are showing much higher. this is going to be part of what we talk about today and through "what'd you miss?," which starts right now. [bell] caroline: i'm caroline hyde. as taylor outlined, it was a risk off day in the markets. there was a special -- splash of green in the red, walmart having its best day since september of 2020. today's triple take, drilling down into the retailer. surpassing wall street profit expectations. this is a juggernaut of a beast that continues to outdo what analysts think. romaine: rising input,

transportation bottleneck, rising wages, but for walmart none of that seemed to matter. the guidance going forward was pretty strong. they talked about the resiliency of the consumer and the idea that the economy is unstable footing. i think that really what we want to get at today here is asking a couple of questions, kind of the same question, is this indicative of broader trends in the economy or is this just because walmart itself got it right? taylor: why not pose that question to our guest? jerome joins us now to answer that question. is walmart just doing it at her and showing how it can be done? >> absolutely. they are not immune to these supply inflation problems but they do good at keeping prices low, their main strategy.

one thing that was clear during the earnings call is the fact that they saw a 3.1% roe thin traffic with membership in crumb -- income growing, showing us that they are gaining market share. this is not only for consumers coming to purchase staples, but they are spending their discretionary money on apparel. a family that would usually purchase things at the department store, they are trading down and going to walmart to purchase apparel. consumers are indeed worried about inflation. caroline: are they trusting the brand walmart to be a company that will swallow inflation and be able to find better deals? as we look towards an economy that perhaps starts to slow with the federal reserve coming in,

how much does walmart set to benefit from that? jharonne: they have a lot to benefit from that. 90% of walmart stores are located within 10 miles of a u.s. population. in a very smart way they have warehoused because of their on the channel strategy and plan, where they have been able to gain a lot of consumers. not only during the pandemic. they are giving consumers a fast and efficient way of shopping. order online, pick up in store, drive up, pick it up, it continues to grow and the amount of products that they offer online continues to grow. one thing that was telling this week is that consumers are gravitating again towards shopping online. building a strong platform for consumers is key. romaine: numbers in the most

recent quarter are certainly good, better than the growth overall. i am curious about walmart and their advantage with regards to what they know about their customers and the ability to not only provide the goods and services they want, but the kind of just keep on top, keep ahead of these supply chain issues based on the data. jharonne: yeah, that information is key for walmart. they know what the consumer wants and they can approximate over the amount of time that the consumer would have needed the complementary item or run out of the item. it's a key indicator as to what the core consumer is shopping for, when they will need it again, when they need to restock , giving wal-mart a competitive advantage with companies like amazon. now consumers have trusted walmart not only to open up

their wallets input credit card information online, but they have relied on walmart to do what they are supposed to, deliver the products they want in a safe and efficient way. taylor: you mentioned amazon. early on with whole foods and that acquisition there was confusion about how they could be seamlessly integrated and walmart really proved how they could do grocery in a smart, reliable way and compete on the grocery business. not just within the business that you mentioned. are they poised to benefit in all different areas to reach the consumer where they want to be reached? jharonne: initially, it's interesting, yes. they were the biggest source of revenue and it attracted a lot of those shoppers. as the pandemic grew, consumers also came in for the other items . what was key this earnings season during the earnings call today was the fact that we saw strengthen apparel at a time

when consumers are seeing higher price points, they are not going to traditional mall stores. they are actually trading down and going to walmart, already feeling the pinch. walmart has only more to gain during the economic slowdown and times of high inflation. they are well-positioned for this. looking at their gross margins going forward, this is a retailer poised to, if there are more supply chain issues, to really manage those issues better than the others. they are not immune, but they have done a better job managing the profits and the margins for the retailer going forward where it looks very healthy looking at the higher supply chain costs. this quarter they had 400 million dollars in supply chain and on top of that another 300 million in covid related costs.

still, walmart is maintaining healthy levels, telling us that they are better poised to deal with supply chain issues and inflation. romaine: all right, jharonne martis there. thank you. bloomberg lp does compete with their company when it comes to providing news data to the industry. continuing triple take, rising inflation could be a positive, luring more customers from all income levels to seek out what they say our everyday low prices. the company ceo saying on the earnings call today that middle income for families and lower mode -- lower income families and even wealthy families like yours, taylor, become more price-sensitive. brendan joins us now. i guess i have no reason to doubt them, right? >> not so far. they turned in a strong quarter and had a stronger-than-expected out look for comparable sales

this year. definitely an indication that they think they will do pretty well. a big part of that is just there big powerful brand. the everyday low prices. as you said, they are expecting they might pick up additional customers this year as people become more price conscious, something they haven't been the last couple of years. inflation rising so quickly right now, the expectation is that shoppers will be looking more carefully at prices and walmart thinks that's a time when it wins more customers and loyalty. it's interesting though in the last earnings, people beat up on that. they didn't like that this company would swallow the price increases to keep the loyal customer but this season as inflation becomes more real, they are impressed. is it because the margins ended up being so strong? how much is walmart worried

about passing on rising costs? i think -- brendan: i think that is exactly right. what changed between today and three months ago is they showed they can shore up their gross margin. just a broad measure of profitability rising slightly. the amount of the increase is less important than the fact that it didn't fall and outperformed wall street expectations. what walmart is saying there is that they can figure out ways to pull all the levers to keep profits at least, you know, study, without, without necessarily ramping up prices aggressively. that said, they have been taking some issues on. price management in the fourth quarter, picking up some prices but looking at ways to cut prices on other goods and push

that message to consumers that if you are looking for a good deal, you have got to come here. taylor: bargaining power over suppliers is clearly a key one where walmart has the upper hand . can you sort of fold that over into the other retailers we are expected to hear from as well? where they do or don't have the same types of relationships? what does it mean for them? brendan: i can only imagine the discussions going on between walmart and suppliers. they are probably pretty intense. because of their scale, they are often able to extract that are terms than other companies. if there was a big message out of the report today, they see consumers as hanging in there and doing ok and we will probably see that with home depot, lowe's, target, costco. i think the big question is whether they have the same levers that they can pull around

controlling costs. romaine: the last time we were in a protracted recession, walmart was in a different space, competitively speaking. everyday low prices, these aren't the only ones out there. not only that, but the democratization of internet searching shopping around for prices is much more prevalent today. i wonder if that at all worked against them. brendan: it could, it could. the other thing that has changed since the financial crisis is the progress they have made in trying to catch up a little too amazon and other e-commerce retailers. they have a lot more offerings in stores and online. what might help them is their power of a place where they price conscience.

now they have got all kinds of competition online and they have got brick and mortar retailers that have also developed a reputation for keeping prices awfully low. caroline: thank you so much. interesting, walmart has under over the last year versus some big-box and then some. romaine: that's probably because of the margin issue. you mentioned it before where they said they would eat costs to keep customers happy. i remember they got derided for the grocery move but that has become a big magnet to keep people in the store even if it isn't the most high-margin. taylor: the anecdotes on the conference calls, that curbside pickup. amazon, whole foods, where you are confused about the integration and what it looks like. romaine: don't get me started. have you been to whole foods lately?

we should do a whole show on that. the integration between amazon and whole foods, i never got it. they never had, they had so much potential to do it right. then the amazon boxed. taylor: to bring it back, this is where walmart made it so easy to do grocery. caroline: meanwhile, we have so much more to talk about with walmart strategy. getting to the nitty-gritty now on supply chain, guys. i'm so excited for this conversation with the cornell professor and author, here to talk to us about how they nailed it. romaine: can you purchase that book at walmart? caroline: probably. [laughter] this is bloomberg. ♪

caroline: today's triple take is on walmart. why? one of the very few stocks in the green during thursday's session and focus on the domination of the just ask. and one man knows all about it, in his book, "the rule of logistics emco professor jesse lecavalier takes a look at the intricate nature of keeping things running. have the logistics of walmart affected your life? the professor joins us now. talk to me about how it affects my life here, living in new york. pretty hard to get to a walmart,

why does it affect me? jesse: first of all, thank you for having me. the reach of walmart is hard to underestimate in terms of their impact on every aspect of logistics, the supply chain, and so the way that they control their own costs likely affects the way that you might buy something in new york. so, they are famous for having a wide influence on consumer prices because of their own margins that they are trying to control. that has a knock on effect through a range of products. they have been very influential in shaping other kinds of logistical models that now we see active in competitors like amazon. romaine: it is. when we talk about amazon it's not a retailer really, it's a logistics company and i guess you can call walmart that as well. in your research you talked

about the idea about how walmart centered its physical locations, there was a very clear strategy to how they spaced out stores and warehouses. jesse: that's right and that is important to understand about the history of the company. they were one of the first companies to understand themselves as a logistical company, even though they are often perceived to be a retailer. really, what they are doing is logistics and they became expert in that through control of precise locations in combination with early adoption of information technology, barcodes, satellites, data centers. it all worked together. working across the country and the world. taylor: you talk about making strengths in the commerce of

e-commerce and the footprint they have in the store, the e-commerce strategy being to continue to take on the other big logistics company that romaine mentioned, amazon. what further progress terms of finalizing logistics around the e-commerce business? jesse: their strength is in the brick-and-mortar business. they are always looking into markets that have been overlooked. in the early days when they built the stores on the edges of small towns, it was deemed it to be a wildly risky move but it has obviously paid off dramatically. there are opportunities there for them and it has consequences for the ways that -- but i'm interested plays out is the way that cities develop. it's also important to make a distinction between walmart as a retailer with a logistical identity and someone like amazon, a much different entity,

more of a systems builder with the component of retail that is much larger, a much larger combination of interests. caroline: yeah, i want to understand the lessons that have been learned through walmart as amazon is going into bricks and mortar. i go in, it takes things off a shelf -- i take something off a shelf, they have honed the efficiency so much. we lived through one of the most offended times of stocking of stores. there wasn't the right brand, the right product. the -- toilet roll was all sold out. how did they weather that challenge in particular? jesse: the thing you are describing is that notion of a demand shock. a much different set of consumer behaviors. i think walmart has a really robust distribution network that allows, allows for maybe a more

resilient response than smaller scale logistical networks. so, i think that plays a big role. in the locally controlled distribution networks, they have fulfillment centers that can find the stores in a way that other companies may not be able to though it is worth noting that what we are seeing is i think i think an understanding of -- is i think an understanding of the role of resilience in an enterprise, something that you never want to do, sitting still in front of a warehouse on a shelf. organizations are now understanding that resilience is increasingly important. having a little bit of slack in the system is essential. taylor: really appreciate your time. next time we will have to bring him back on to really discuss what he said about how it means the planning of the future of

fittings and the layouts of what the next cities and towns look like. this is bloomberg. ♪

romaine: all right, today's triple take was about walmart, the fundamentals underpinning the market. how did i do? caroline: inflation as well. this is what is on the mind of the market, the nasdaq pointing to another excruciating day, the fed and politics. taylor: what's the number one rule, romaine? pricing power over your suppliers. romaine: i don't know. don't get silly. in all seriousness taking a look at the nasdaq futures and the selloff today, what brings people back into the market right now? caroline: the volume was thin,

selloff but not capitulation. will geopolitical tensions bring them back in? taylor: more clarity from the fed. caroline: we have got to wait until march 16. that does it for "what'd you miss?" "bluebird tech" is up next. -- bloomberg attack" -- bloomberg tech" is up next. ♪

>> from the heart of where innovation, power, and money collide, silicon valley and bilotta -- beyond, this is "bloomberg technology, with emily chang." emily: i'm emily chang in san francisco and this is "bloomberg technology." google, launching a multi-year effort to overhaul ads more gradually and less abruptly than apple.