Power Lunch - Earnings Avalanche, and Beer Backlash 4/24/23

Episode Date: April 24, 2023

We’ve got a big week on deck for markets. A third of the S&P 500, and half of the Dow 30 are set to report earnings -- including Microsoft, Meta & Amazon. Will this earnings parade finally shake up an uninspired market? We’ll debate. Plus, Bud Light partnered with a transgender influencer, and it seems to have backfired for the brand in a major way. We’ll examine the always-sticky situation when companies wade into controversial social issues. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Good afternoon, everybody, and welcome to Power Lunch alongside Kelly Evans. I'm Tyler Matheson. Glad you could join us on a very busy Monday. Coming up, it's a big week ahead for the markets. A third of the S&P 500, half of the Dow report their profits for the first quarter. Google, Microsoft, Meta, Amazon. Will this earnings parade finally shape up, shakeup, excuse me, an uninspired market? Plus, Bud Light's brand battle, the company partnering with a transgender influencer, and it seems to have backfired in a major way. Two executives placed on leave. We'll examine the sticky situation when companies wait into these controversial social issues.

Plus, some major media bombshells in just the past couple of hours. We'll get the very latest on that as we first get a quick check on the markets. Dow's positive S&P fractionally higher, NASDAQ still negative, Dom. All right. So let's get a check right now for what's some of the movers on the day right now. We'll take a look at Healthcare Giant and Dow component Johnson and Johnson Kelly, Tyler, up a half a percent right now. Johnson and Johnson is looking at.

plans to put an initial public offering together for its consumer products unit. That's according to a Wall Street Journal report citing sources. An investor roadshow could start as early as this week. Now, that unit, which will be named Kenview, will house the big brands like Tylenol, Band-Aid, Nutrugina, amongst others. J&J could look to raise roughly $3.5 billion, valuing Knew at north of $40 billion. Let's get a check also on the energy complex rallying today, thanks in large part to a rebound in oil prices. U.S. benchmark prices up nearly one and a half percent right now for WGI crude. Still below 80 bucks, though. Energy, by the way, the far in away, the best performing sector on the day. Names like Marathon Oil, ExxonMobil, among some of the

bigger gainers, as you can see there. But every stock in that sector is higher on the day. And we'll check now First Republic, the single best performing stock in the S&P. The embattled regional lender is up 11% right now. It reports after the closing bell today, arguably, guys, the most important regional bank earnings report of this season. Those shares, as you can see, have lost 90% of their value in just the last 12 months. alone, and options traders are expecting fireworks. Big swings in this stock post report. They're already pricing it. What could be a 26% move up or down in that stocks. We'll keep it high on that. Now let's send it over to Christina Parts in Nevelas for a view from the NASDAQ. Christina, what are you

checking out? Well, I'm checking out shares of memory maker Micron, a weak player on the NASDAQ 100 today after the FT reports. The U.S. is asking South Korean chipmakers like Samsung and HK. Hynix not to step in and fill the gap. Should China ban? micron products, just that dynamics is causing the stock to drop about 2.5%. Tesla, not getting as much love today either from Wall Street with price targets and ratings cuts after the company posted weaker than expected automotive gross profit margins. Some institutional shareholders who say their holdings amount to $1.5 billion, even penned a letter to Tesla's board asking them to rein in overcommitted CEO Elon Musk.

Tesla down 2%. Speaking of EVs, shares of Album Raw are rebounding today after last Friday's sell-off. There were reports that Chile would nationalize its lithium industry. Lithium is the metal crucial for EB batteries, but Abel Marles, CEO is on our show. CNBC last claw on Friday and said existing mines and contracts in the country would not be affected. So that's why you're seeing that almost 6% rebound. And then I'll just end with just some weakness that we're seeing from Chinese tech names like PDD, Pinduodo holdings down about 4.75% in JD.com, also down about 3%.

No major catalyst aside from maybe the China reopening place starting to fade. Christina, thank you, Christina, Partsenevelas. We begin today with a string of major headlines in the media space. The exits of major on-air talents at Fox News and CNN, Tucker Carlson and Don Lemon, are out. This, along with the exit of NBC Universal CEO Jeff Shell, after admitting to an inappropriate relationship with a company employee, Julia Borsden is here to wrap it all for us, And Julia, we're seeing some moves, especially in Fox shares today.

Yeah, that's right. We're seeing some moves among these media stocks after these three high-profile departures of men in top media roles. The latest news, CNN announcing that it is parting ways with host Don Lemon, who tweeted his frustration about the way he was informed, saying he was stunned and did not hear directly from management, which prompted a response from Don Lemon, I'm sorry, from CNN to Don Lemon. Lemon saying, quote, Don Lemon's statement about this morning's events is inaccurate. CNN saying he was offered an opportunity to meet with management, but instead released a statement on Twitter. Now Lemon has been criticized for making offensive comments about women and his firing does come after layoffs and cutbacks at CNN. Meanwhile, over at CNN's rival Fox News, Fox News media announcing that it is parting ways

with longtime host Tucker Carlson and that his last day was this past Friday. Shares dropping on news of the loss of one of Fox's top-rated anchors, who was also one of its most controversial. His departure notably comes after a discrimination lawsuit filed by a producer on Carlson's show, and after Fox's settlement with Dominion voting systems, after that lawsuit showed how Carlson's show spread misinformation. And all of this comes after yesterday. Comcast announced that Jeff Schell, the former CEO of CNBC's parent NBC, Universal would be leaving the company immediately following an investigation into what Shell called an inappropriate relationship with a woman at the company. Comcast CEO Brian Roberts announced that Shell's senior team will now report to Comcast president Mike Kavanaugh and sources tell

CNBC that the company does not plan to immediately replace Shell. Now Comcast earnings are coming up on Thursday morning so we will surely learn more then. Guys, I don't know where to begin, but why don't we begin with Fox because the stock move seems to be the most dramatic there. Are there any rumors as to what or I shouldn't say rumors? What can you tell us about the reasoning behind this departure if we know anything and whether there may be other shoes or stilettos to drop? Well, look, I think that the fact that there was that big settlement with Dominion and the In fact, that Tucker Carlson and his show played such a key role in the middle of that, the idea that his show was specifically spreading misinformation and disinformation

and was such an important part of that settlement at great cost to Fox is not to be underestimated. There's a report out, I believe it's a report from the LA Times saying that Rupert Murdoch personally was involved in the decision to end the relationship with Tucker Carlson. so I'm sure we will learn more there. And then that, of course, ties in to this discrimination lawsuit filed by a producer on Tucker Carlson's show. So I think that's a key piece of that as well.

And of course, those things are certainly intertwined. Has Carlson been heard from? I have not seen a statement from him yet, but this, of course, has all just started breaking the last couple of hours. So all new news, if you will. All right, Julia, thanks very much. We appreciate your reporting there. A lot to watch as we start this earnings week.

Earnings will be in focus with 34% of the S&P 500 reporting, among others, technology companies, big names on deck. Let's bring in Stephanie Link, Chief Investment Strategist and Portfolio Manager at Hightower, as well as the CNBC contributor. Also with us is our own Steve Kovac. Steph, let me start with you. As you look at what we've seen so far from earnings, they seem to be tracking roughly where they usually do with more. of the company's beating estimates and a few missing. It's been pretty good, right? About 17% of the S&P 500 have reported.

About 76% have beaten, about 20% have missed. So, so far, so good. The biggest surprise, Tyler, to me, is consumer staples and how resilient they have been in the face of double-digit price increases. They're still seeing very solid organic growth. You guys have been talking about Coke. On Friday, it was P&G. L'Oreal had a gangbuster number, especially out of China.

So these stocks are expensive, but they have surprised by being so strong and resilient in the face of all the macro uncertainty. So I actually am feeling a little bit better, at least at the starting point. We'll see we have a lot to get through this week. I was surprised to read stuff that GE is now. Gee, I don't want to jump ahead here. One of the names reporting, obviously we're watching McDonald's in the morning, but GE is up more than 50% year to date.

Why? I know. Well, it's, yeah, it's been a great one. Because they spun out GE Healthcare, and they're going to spin out the renewable business in January of next year. So it becomes a much more simple company, a pure play on aviation. And that's the one thing that this company has done an amazing job at. It's really world-class. And so now we can focus on aviation.

We can focus on the secular growth trends there on aftermarket, which carries higher margins, and free cash flow. If there's anything that this does, anything that you want to pay attention to on GE, it's free cash flow. And they better do between $3.4 and $4.2 billion this year because that's what they guided on March 9th. What are you going to do to them if they don't do that? It sounds like you're going to come after them. I'd love to see that. All right. I am going to come after them.

You're going to come after them. I am. Oh, with a switch. What's coming up in tech this week? What should we be watching? Oh, just the measly $5 trillion worth of market cap reporting. No big deal. No big deal.

No big deal. But not Apple. Not Apple. So Apple's actually next week. They have an extra week. It's wonky, extra week in their fiscal year that puts everything back a week. But tomorrow we get Microsoft and Google,

or Alphabet, rather, the two AI kings battling it out to see who can win this AI race, particularly in search, but also other products. Microsoft just today, they put out a big blog post kind of bragging about all these clients they have already using AI, such as Mercedes and other companies like that. And then the cloud business, also both of these companies,

really big in the cloud, obviously slowing down quite a bit because we're seeing IT spend slow down across the board. And then we get into the social stocks. We have meta. And then obviously their year of efficiency. I'm calling this the quarter of efficiency because this is when we've gotten through all these layoff announcements. We've gotten through all these cost-cutting announcements.

Now they kind of have to show their work and what comes out of that. And by the way, layoffs might not be over. And then we get Amazon on Thursday, AWS. What a week. Yes, AWS also having. some issues, headwind, same as Microsoft with IT spend going down. Then again, they are getting big into AI. They just announced a bunch of new AI stuff that we talked about, Kelly, on your show.

And also, just the consumer, what Andy Jassy told our Andrew Ross Sorkin just a couple weeks ago, that consumers are trading down. They're looking for deals. So what does that mean for the e-commerce business? It's a lot to digest. Do you talk to Kelly before you come here? Yeah, well, she has her own show right before this. Yeah, it's pretty crazy.

Yeah. And sometimes it's just me and her, you know. Stephanie, I see that a couple of the stocks on your watch list, the ones you're keeping eyes on, are GE-related, GE-Healthcare and GE? Yes, well, GE Health Care, so they were spun out by GE, and this stock is up something like 45% year-to-date since the spin. And again, it's because spins work. They get, they're more simple, right? This is a great company. It's been around for 125 years.

but it kind of got ignored because of all the problems that were happening at the parent company. So that's why spins usually work because there's a lot more focus and attention. They've got a billion patients worldwide. They have a four million installed base and they have a lot more that they're doing in recurring revenue. And so that's going to help margins and help growth. And their margins are kind of depressed. And I think there's a lot they can do there, especially on pricing power, relative to their biggest competitor, Siemens. Stephanie, also I saw, you know, we spoke to Carter Worth just a few minutes ago. He said, you know, in a case of would you rather Google versus Microsoft, he'd said that he'd go with Google. And I'm curious, I know you look at these stocks all the time.

What's your thinking lately on kind of where would you most like to be within big tech as we get into earnings this week? So the only one that I own in the Fang complex is meta. And I suffered with it, as you know, last year, all of last year. I would say just be careful on the cloud because you are seeing a pretty big deceleration. Google, the number is 20% for their cloud business. Amazon, the numbers have come down to 10%. This was in the 30s for months and quarters and quarters. So be careful.

Meta, it's going to be all about the second half trajectory on total revenues and if they can monetize reels. And I think that they can, along with the cost-cutting story, I think you have the most operating leverage in that name. Steph, why not take a 10% estimate for Amazon as an entry point? Well, I mean, look, I think Amazon, it's hard, right? Because A, they're seeing a deceleration in growth in one in their biggest growth area, which is, again, cloud, right? And then you also have trade down happening at the consumer. I do understand the total addressable markets are really compelling. It, right? Like, I mean, workloads are still on-prem 90% of the companies out there. So there's such a tailwind for cloud for them. And they only have 1% worldwide share on online retailing. So there's a lot of, lot they can do, but I just think the valuation is not, it's not attractive. It's at 45 times. It's had a nice run. It's up 20%. And I just think there are a lot of moving parts at this point. And I just find other valuations a little more compelling. Steve, as you look at those tech companies that I know you follow very closely, what is the one

that you will really have your eye on? Because it's... You know I'm going to say Apple, but that's next week. So let's talk about... I love looking at Microsoft because they tell us so much about about there's such an international company. They touch so many things. We're going to learn tomorrow a lot about foreign exchange getting a lot better for these companies. That has been hurting Microsoft quite a bit. So any, we know the dollars getting weaker

and how is that benefiting them. That's gonna affect a lot of other companies too. And then the overall IT spend, we know, we know that report we got a couple of weeks ago about PC sales just falling off a cliff again this quarter. That means really bad news for the Windows business at Microsoft. that also just says people aren't spending much on IT, which is bad for the cloud business.

Stephanie keeps talking about deceleration. That is the theme of the week. Top-line revenue growth, just going to be minimal, flat. It's going to be down for Apple. It is. That's why we're seeing so much cost cuts. They're protecting that bottom-line growth over the revenue growth. All right, Steve, Steph.

Thanks very much. We appreciate it. Good to see you. Thank you. Still ahead. Bud Light's brand backlash continues following weeks of controversy over a campaign featuring an LGBTQ-plus TikTok star. The two executives behind the strategy are apparently going on leave. How did the company so clearly disconnect from its core consumer? The stock down after the backlash began, but it's come

back and up 9% so far this year. Meanwhile, 3M down 12% this year, already facing one legal battle and now staring down another big headache. But first, up next, a climate conflict of interest. It turns out many state leaders are targeting climate investing and attacking ESG, and they actually have some quiet stakes in the fossil fuel industry. It's all coming up on power lunch. Welcome back. ESG has been a point of contention for many politicians, specifically Republicans, including instances of state funds being pulled away from firms like BlackRock that have adopted such ESG policies. But now CNBC learning that many of those state leaders targeting climate investing have quiet stakes in the fossil fuel industry. CNBC.com political

finance reporter Brian Schwartz has more. Brian, fill us in. But yeah, so what we've learned over the course, we're reporting for a number of weeks now is that there are a few state leaders. And we're talking about people like at the rank of treasurer, comptroller, and you name it, chief financial officers for their states who are owning and have purchased stocks or some other equity interest, really, in the fossil fuel business while they've been, in many cases, defending the fossil fuel industry publicly and taking on ESG investment standards at BlackRock and the like. And so when we spoke to lawyers who are ethic experts, people who, we spoke to a person used to run the Bush White House ethics team years ago,

he was saying to me that basically this appears that could be a conflict of interest, potentially, because, again, these are very powerful executives, the state level, leaders there, who have the power to move money around based on their state. They have control of some state funds that would be like a state pension fund or something like that.

And meanwhile, they are really, in a way, potentially profiting off the fossil fuel business, the very same business they are trying, arguably to protect. Do the pro-ESG state leaders ever have quiet stakes in clean energy companies that would benefit from their legislative push? Well, not that I've really seen so far. I mean, I guess there have been some smaller companies here or there that I caught wind of when I was looking through the disclosures. But nothing as big as, let's say, Exxon and Chevron, right?

We're talking about the giants that we really found through this, Conoco Phillips, you name it. And these, in some cases, look, the fossil fuel business is a big player in some of these states. Talking to places like Texas and Missouri. So there's the other side of it where they could just say, hey, this is. is an industry thing that we're really interested in. But on the other hand, in their positions that they've really developed over the last few years, they've become defenders of this industry, and that could potentially create a problem. I'm surprised that these state officials are as free as is implied by this reporting to invest sort of anywhere, wherever and whenever they want.

Well, it is interesting, right? That's part of this story, where there is really no clear state regulations, at least in the states that we went through. We went through over half a dozen of these states. You can read the rest on CNBC.com to see us. what else we've touched on here. But there are really no clear state regulations to decide and to push back on these leaders on what they can own and when they can purchase it. You know, again, Scott Fitzpatrick, the auditor of Missouri told us through his office that, you know, he has a broker, essentially, an advisor who is buying these stocks for him. He doesn't have any power over what that person goes off and decision-making skills on that front. But still, he does own these stock.

He does have a stake in this industry. Well, listen, if Congress can't, you know, come up with ways to say, You're right. Should we expect state leaders? It's unfortunately a big gray area, and I just wonder to your point, are there other agendas where people have, and when we say stakes, we were talking about shares of publicly traded companies, right? And other firms of equities.

So do they own, you know, clean energy is a newer industry. There aren't as many companies, although there's plenty of solar names people might own. And other kinds of industries as well are there, it's probably ripe with conflicts of interest, whether you consider that to be share ownership or even probably business ownership in some cases from people who came from those positions in the private sector. Yeah, that's right. And we've seen this come up time and time again on Capitol Hill, as you just mentioned. And this has been an issue in Congress. And over and over again of the past few congressional cycles, we've seen people, including Nancy Pelosi, whose husband owns tons of stocks, as we know. And she's been bringing up and other leaders in the passive, say we're going to bring up some sort of bill that's going to take on this problem in Washington. And it hasn't come up. And it hasn't really gone to a vote in any way, shape, or form. Go to the stay level. Of course, there's no movement in that direction there either, which is another potential issue. All right. Brian. Ryan, thank you. Thank you very much. Brian Schwartz, we appreciate it.

Further ahead in the show. Is it always sunny for Ryan Reynolds? The guy seems to be a business machine. Brand deals, Hollywood fame, our stock draft trophy, of course, and now a championship soccer team. But the government may be taking aim at one of his most successful recent deals, and that's for Mint Mobile. We've got the details when Power Lunch continues.

Look at the gains in the Dow and the... Monstrous. Monstrous gains. Rip-orri-R-A-R. But Bobazzani has a way of making a flat, look interesting. Bob, the challenge is yours. My entire career is based on that idea. Basically, thank you for that, Tyler. Narrow range and narrow leadership. That's the problem. Tyler, just summarized it. But there is things moving, and it's primarily just confined to

defensive names. Healthcare stocks and consumer stocks have been really the leaders in the group. We've been talking about McDonald's every day, new and high. Procter & Gamble, excellent report overall there. We had Coke. great pricing power. That's right near, that's been moving very well. Walmart's been looking very well recently. That's at the high for 2023. Merck is just close to breaking out. And there's only a very limited new high list, but it's all the consumer names, Mondalese is sitting there, young brands, Lilly. Crocs is at a new high, a Clorox, which is a perpetual defensive stock, also sitting at a 52-week high. So we don't have any breakouts. On top of,

that as Tyler referenced we have a very narrow trading range not just today today is about 20 point trading range and on a typical day the s appeal move maybe in a 40 point trading range so this is a narrow range on a daily basis but even in the last several weeks we've been an unusually narrow trading range so we try to figure out what the second half is going to look like and it's really all about what side of the soft landing are you on so people talk about the risk to earnings a lot of people talk about margin risks margin pressure risk but it's pretty clear that that the big risk is a soft landing doesn't happen, that inflation is high and going higher,

and that the Fed remains hawkish, that the market is not positioned for this, rather the market is positioned for this to happen, but people do not want to believe it's going to happen, which is why you have so much skepticism out there, so many people who don't believe that the market is correctly pricing in, and don't believe, Kelly, that the earnings estimates for the second half of the year are correct.

They are coming down, but not much at all, So far, the soft landing crowd is still winning the day. Back to you. Yeah, it may look quiet on the surface, but we're kind of on a knife edge here, Bob Banks, Bob Bassani. Let's get to the bottom market now. Rick Santelli tracking that action for us out in Chicago. Lots of worry about the debt ceiling lately, Rick. Yes, lots of worry about the debt ceiling. And, of course, there's a lot of questions as to why we are all being forced to worry about the debt ceiling when it's pretty darn obvious that debt needs some type of a,

constraint at some point, but I guess politicians aren't going to wake up to reality anytime soon. Look at a chart starting on March 1st for two-year no deals. You know, they peaked it over 5%. That is something to pay attention to because it certainly has gone very range-ish since then, as you see. And if you pair it up with the dollar index, it's clear that the dollar index's fate is all bundled up with what's going on with interest rates and what's going on with interest rates is pretty much to some extent bundled up in two various packages. The Fed's pretty much going to be done, and the economy has definitely slowed.

We've seen big revisions to jobless claims, a big drop in jolts, we've seen banking issues. There's a lot of moving parts here in that chart. And finally, if you look at twos versus tens, just since last Wednesday, when we hit some important technicals and started to come back down, you'll see there's not a lot of movement on the yield curve either. These are usually very important symptoms that we have reversed, and it certainly seems as though interest rates have seen their highs. Kelly, back to you. Rick, thank you very much. Let's get over to Simomodi now for the CNBC News Update. See, Seva. Kelly, good afternoon. Here's the update at this hour. The Supreme Court said it will decide

whether public officials can block critics from commenting on their social media accounts. This comes two years after former President Trump blocked critics on Twitter and a lower court said the move violated the First Amendment. The Supreme Court dismissed the lawsuit after the Justice Department said the end of Trump's presidency nullified the case. Senior officials telling the AP that President Biden is said to unveil new efforts to protect South Korea from North Korean attacks during a state visit from the South Korean president. According to the officials, Biden will detail specific new nuclear deterrence efforts,

among other initiatives to highlight the, quote, breadth and depth of the relationship between the two countries. And Shakira is said to be named 2023 Women of the Year, woman of the year at Billboard's first Latin women in music event. The pop superstar is receiving the honor for her contribution to the music industry as well as for bringing recognition and opportunities for Latin women across her career. Billboard representative said Shakira is the, quote, ultimate woman and music. And I've got to say, probably one of the best dancers. Tyler?

Yes, indeed. Hips don't lie. Yes. All right, thanks, Seema. All right, ahead on Power Lunch, Bud Light, continues to face backlash from conservative consumers for its ad featuring a trans TikTok star. Why did this happen? At the core, a fundamental misunderstanding of its customer, both the one they had and the one they wanted, underestimating the power of their core base and overestimating their ability to win over younger buyers.

That discussion is next. Welcome back. Two Bud Light executives behind the company's recent controversial ad campaign are reportedly taking a leave of absence. With some reports indicating it was involuntary. So what led to this? It kicked off on April 1st when the company began a partnership with the popular trans TikTok star Dylan Mulvaney. A move clearly part of the strategy for Melissa Heinershide, one of the executives taking leave, who was hired around a year ago to shake up the company's image and win over younger consumers. After all, Gen Z drinks 20% less beer per capita than older generations, according to Berenberg. So overall, it seemed like a simple plan, partner with a popular influencer, and potentially woo some of her 10 million followers,

especially those younger ones. It's worth mentioning this was not the company's first pro-LGB campaign, but the strategy backfired. Since then, a boycott from the company's older and more conservative customers, leading to a significant initial stock decline, losing the company roughly $5 billion in market cap, though it's come back since then. So we asked the question today, what went wrong? Here to discuss is Dean Crutchfield, CEO of Crutchfield and Partners and Tony Ponturo. He's the CEO of Ponturo management, and Tony worked in marketing for Anheiser Bush for 26 years. Welcome to both of you. And Dean, you know, Bud could have just doubled down and said, no, this is what we're doing. We're trying to reach this next generation now. They seem to

have gotten hit kind of both ways here. Absolutely. Well, you know, a purpose of a brand is to unite people and bring them together as a sense of community. Instead, we have a brand in crisis that's created a rainbow of hell for itself. So you have to ask, what are something? were being made because assumption is the almighty mother of mistakes. And clearly a major mistake has been here. Not being pro-LGBQ by a long shot, not at all. But there's assumptions that's been made. Mistakes have been made in the planning and the research and direction of what they've done here.

That's been a calamity for the brand in terms of the success that it has not had. So we have a stock that's dropped. We've had a market share that's going to decline potentially and revenues that can tank. So it's a real crisis. So instead of denying, delaying, deflecting, and defending the situation, this is really about the best defense as an offense. And what else, what are the bags in the, you know, what are the tricks in the bag do they have? Because my concern here is, was this the only campaign you were launching for the summer?

I mean, isn't there somebody in the room with the millions of dollars you spend on marketing, advertising, and research that might have put their hand up saying, this is bold, this is ambitious, but we might actually alienate some of our other core customers. So it's knowing your customer, knowing your brand and getting it right, and not taking crazy risks. Tony, react to what Dean said there and take us inside the room where you've been, where these kinds of marketing calls are made in terms of who we're going to hire as an endorser of our precious products at Anheiser, in Bev.

Yeah, step number one, your brand, the name Bud Light, that's the image of what you're selling. The minute you put a face, anybody's face, on the can, you're now taken away from what you've been building now for 40 years, because people see themselves in the brand. In other words, I drink Bud Light because I like what it says about itself. I like the product itself from taste profiles, etc. But the minute you put a face on there, that's a whole different image. It has nothing to do with the authenticity of what the brand's all about. The second part is a lot of new marketers forget that let's take Bud Light. 70% of Bud Light's volume is probably someone 35 plus.

It's baby boomers like myself who grew up with the brand. They continue to drink the brand. And as they focus on this small new entry-level drinker, if the older consumer thinks, well, you're not talking to me anymore and you're just focusing the small target, they'll go away. And once a beer brand particularly starts to lose its customer base, it never comes back. There's never been a brand, to my knowledge, the history of beer that once it declines and it actually returns back to its normal state. So, Tony, what I just want to point out. I thought it was very interesting what you said about putting anybody's face. Now that we're, people do this with influencers all the time now.

A couple of friends of mine are influencers. Their faces on, you know, nut butters and things like that. And maybe the whole point is, like you said, it's supposed to be a mirror. You know, for you to see yourself in it. An interesting point to corporate America moving in this direction. But I wanted to actually ask about something different. And we said no one successfully makes this transition. What about Nike?

I mean, there are brands out there in the marketplace that represent and really kind of lean into a socially hot-button issues on the more progressive side with the younger generation and and do so with great success. And yet still have plenty of older customers, whatnot. If Bud said or Bud Light said, we're trying to Nikeify ourselves, what would that really look like? Well, it's really trying to be something they're not. Nike's whole campaign from day one was to be this very sort of young, irreverent, sort of non-corporate kind of position. And so it was it was baked into their history. But Light's history, but Light's history, was we need to establish you not to drink Miller Light, which had a head start for six years

in the light beer category before Bud Light was even introduced. And what we're going to do is be sort of collaborative, co-ed, fun humor. If you go back and look at the history of Bunlight commercials, quite frankly, before MBE bought the company, it was all about just having fun, exclusive co-ed, you know, activity. And that's what it was known. So when you start, and listen, As a beer drinker, you want to get away from the daily grind, right? You go to sporting events. You have a beer. You go have a softball game.

You don't want really to be caught up in the political voices of what's going on. That's not why you're drinking beer. Tony, forgive me for interrupting because we're running a little short on time on this busy newsday. I'm fascinated by Kelly's question there, Dean, because I think it's a really, really good one. What is it about beer and beer drinkers that got Anheuser-Busch imbev into such hot water with its consumers? Why couldn't they do what Nike did? Well, I think the fact here is to Tony's point is that if you think about Bud Light, and I like a Bud Light too, and I'm a white, you know, a middle-aged white man, but basically it's about

fun. It's about family. It's about friendship. And that's what Bud Light does. That was its position. It's clear position. You can have fun. You bring your friends together. You have family and the Bud Light's in the cooler. And that position they've totally eroded by Erinus

decision that they've made. But that's the role of beer. That's the role of the idea. It's fun. It's family. It's friendship. Don't forget that. We're celebrating life to Tony's point. We want to forget the day or enjoy ourselves, cracks and jokes and relax. and kickback. That's the idea here. This isn't about politics. Yeah. This is about family,

friendship, the important things in life. Interesting points, gentlemen. Thank you very much. Dean Crutchfield, Tony Ponturo. We thank you. Now, some developing news on the departure of NBC Universal CEO Jeff Shell. Julia Borson has the story. Julia. Tyler, that's right. We have an update on the firing of NBC Universal CEO Jeff Shell yesterday. CNBC anchor, CNBC international anchor Hadley Gamble filed complaints of sexual harassment and discrimination against Jeff Schell, this according to her attorney who shared this statement. Quote, the investigation to Mr. Shell arose from a complaint by my client of sexual harassment and sex discrimination. Given these circumstances, it is very disappointing that my client's name

has been released and her privacy violated. We have reached out to Comcast, which did not have an immediate comment, but Comcast did say yesterday that Shell was fired following an investigation into an employee complaint. Power Lunch will be right back. Let's go to this camera instead. Welcome back to Power Lunch, everybody. More legal headaches for 3M, the industrial giant, facing new lawsuits connected to its production of so-called forever chemicals, which have been linked to health risks. And it comes amid its ongoing battle over issues with its military-grade earplugs. Simomodi here with more. Hi, Sima. Tyler, so 3M is now facing lawsuits from states like Maine that alleged the industrial giant,

along with other manufacturers, knew the health risks tied to PFAS, these toxic chemicals, but concealed the information. It was a product that they were creating. We believe it was a product that they knew darn well was a dangerous product that was going to live forever. 3M is ending production of PFAS by 2025. and is working to actively remove it from its sites. The first bellwether trial set for June, a water provider in Stewart, Florida that has alleged contamination.

Research team at Credit Insights says PFAS manufacturing is potentially a multi-billion dollar liability for the company, substantially in excess of what 3M has in reserves. And it does come as the industrial giant is also battling those earplug lawsuits launched by thousands of plaintiffs. Earnings are on deck tomorrow. Investors will not only want an update on the list. legal risks it's also facing, but also on the plans to spin off its healthcare business guys,

which is actually the highest margin business that it has that is expected to unlock some liquidity. Yeah, it reminds us of the GE health care spinoff. And like we were talking to Dan Premack, about how all of these spinoffs have been quite lucrative. Big trend across the industrials. And you could argue that the health care spinoff at GE has done very well if you look at the stock performance year to date and not only as well as GE, which is on track for its best year since 1982. So we're certainly seeing a lot of of industrials find ways to simplify their businesses. It's just easier to digest for investors. And I'm going to be talking to Larry Kulp tomorrow about that as well.

It's very interesting how many companies have spun off units. Some of them spun off units because of, in part because of legal controversies that they've gotten involved in. I'm thinking of Johnson and Johnson in part in this case. And here's yet another one, I suppose. Exactly. It's a great point. Yeah. Seema, thanks. Good to see you. Still ahead. pacemakers panels and quarter pounders. We've got big movers of the day and a fresh three-stock lunch

when power lunch comes back right after this. Time now for three-stock lunch. And on today's menu, we have McDonald's hire into its earnings tomorrow morning. Medtronic hire on an upgrade to overweight at Wells Fargo, saying the medical device company could benefit from improving trends and a maturing product pipeline. And for solar lower after a downgraded city, cautioning the long-term outlook and some challenges there. Here to help us trade them all is Eva Otto. She's Chief Investment Strategist at ER shares. Good to see you, Ava. Let's start with McDonald's, buy or a sell for you. I would say it hold for this one. I do like the fact that over the last 16 years, even though the revenues have been flat, the management has done a great job,

squeezing margin. Their profits and margins almost doubled in the last 16 years. And also, I like the fact that in the last two years, in an inflation environment, even though their prices, their costs were coming higher, their prices went higher faster. So they were able to increase their prices much faster than their cost increases. And so their margins widened. I also like the fact that their dividend yield is almost 2%. They have been able to steadily increase it over the last two years, so a very good dividend yield here.

But I have it as a hold and not a buy because their valuation is almost two to three times their peers. And the stock has never been higher. It's currently at an all-time high, which obviously it's a safe bet if you're heading into a recession environment, but I wouldn't buy it in this relative valuation. Eva, let's move on to the next one, which is Medtronic. What do you think here? So this one is a short-term buy. I like the fact that the relative valuation is one-third below their peers, and also they recently got an FDA approval for their insulin pump. So that can be a short-term catalyst, and investors can take advantage of this in the short-term. However, we need to remember that over the long haul, this company has been an underperformer for more than a decade. Their revenues have been flat in seven years, and their margins have been steadily decreasing in the last 20 years.

And so their fundamentals do not look that good, short-term buy, monitor it very closely, and make sure you don't hold it for the long term. So let me ask you when you say, I want to bear down on what you mean by when you say short-term buy. Is there something that I, if I follow your advice, I buy it. Is there a moment in time where you would say, okay, get out now because X has happened? What is that? You get my drift. Yes. Monitoring the news very closely.

So they recently got this FDA approval. And so their news will carry over the future months or so. But when that fades out and investors start taking more, yeah, they notice more their fundamentals, the actual fundamentals, which do not look that good, then it's probably a good time to start considering taking props off the table. And, Ava, that brings us to First Solar. You're not a fan here. I would say itself.

So that's definitely a sell for me, actually, because the relative valuation is three times their peers. And what's interesting to notice is that in an environment where oil prices and energy costs have been rising, and that has benefited the overall category, I don't understand how this company cannot make money when everyone else in their sector is making money. In fact, also, the revenue growth is negative 10% when the rest of the category is averaging 50 plus 50% and their EBDA growth is negative 100% when the rest of the category is, categories up 40%. And so their fundamentals do not look good.

They cannot make money. And I would say it's a cell for this reason. Eva Ados, we'll leave it there. Thanks for your time. Good to see you today. Thank you. All righty. Coming up, Ryan Reynolds' busy weekend, a soccer championship and a potential

snag for his Mint Mobile deal. All the details when power lunch returned. One more thing before we go. It was a world wind of a weekend for the 22 C&N. NBC stock draft champion Ryan Reynolds. The Welsh soccer team he co-owns winning a league title and promotion into the English football league. In the meantime, the Department of Justice is reportedly considering blocking his deal to sell Mint Mobile to Team Mobile because of some antitrust concerns. Dominic Chu here with the details. Dominic?

So the Mint Mobile deal is a story according to the New York Post. And what's going on is there's a possibility that the according to the Post, according to the Post, anyway, that the DOJ's antitrust division is looking into whether or not there could be competition concerns, whether or not by having T-Mobile buy Mint Bolmell for $1.35 billion, that we could see some more regulations being put in play, and it could impact customers and the prices that they pay for mobile. So that's one thing to kind of put on the radar. The other thing, as Tyler mentioned, was this promotion for Wrexham into the English soccer league, and that's a big deal here because it's Reynolds backed as well. But on the

flip side, let's talk a little bit about the stock draft because with the mountain goats, whether or not we do see some kind of a defending repeat champion type situation here, well, remains to be seen. Remember, of course, last year that it was Netflix and Ford that really got him the title, and Netflix had

a huge banner year last year, right? So real quick comment on the deal stuff, it would fit with this administration where people are starting to think there's just broad hostility to anything getting done. They blocked the FCC stepped in on the Tegna deal, which is kind of a much smaller type of thing. So whether this is firmed up or not, nobody would be surprised, but you wonder if there's a break fee because all of a sudden of

Mint Mobile. I mean, we were joking about how he's a billionaire, if that, if it goes through, but it may not. I mean, the reports have put the payday for Mr. Reynolds in the upwards region of around $270 million if this deal were to go through. So there's a lot of money at stake if this were to kind of fall apart. Think about how many more rexums he could pull off if he had that kind of capital. There's no doubt that Mr. Reynolds has proven himself to be an astute investor, an astute business person. We haven't even talked about aviation gin or anything else that's been going on. But the curious part to me is whether or not some of the lessons learned during the Reynolds win last year in the stock draft will influence some of the other players and participants this

year. By your business partner? I remember when he first drafted him, he was like he went with what he knew, right? He had a number of titles and properties that, you know, between six underground, Red Notice and everything else that was coming out on the Adam Project and everything. So I don't know. And his way proves that in the stock draft, you've got to hit a home run. You got to. And he hit a home run for sure with Netflix and it countered anything that would have happened anywhere else with any other picky ads. Tom, good to see it.

Good to see you. Thanks for watching Power Lunch, everybody.