Power Lunch - Fed ‘Indecision’, and Champagne’s Bubble Bursting? 5/24/23

Episode Date: May 24, 2023

Federal Reserve officials were divided at their last meeting over where to go with interest rates, with some members seeing the need for more increases while others expected a slowdown in growth to remove the need to tighten further, according to the latest minutes. We’ll explore where the FOMC goes from here, and what it means for markets & the economy.Plus, champagne sales were booming coming out of the pandemic. But will the slowing economy and environment factors burst the champagne market’s bubble? We’ll ask the CEO of Moët & Chandon. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Welcome to Power Lunch, everybody. Alongside Kelly Evans, I'm Tyler Matheson. We are seconds away from getting the minutes from the latest Fed meeting. Stocks have been under pressure all day long. Dows down 205. Let's get to Steve Leasman for the minute, Steve. Minutes to the Federal Reserve's May meeting show that Fed officials agreed the next move after that May rate hike was less certain due to uncertainty about the impact of the lagged effects of tightening and tighter bank credit policies that could be coming. Many Fed officials said the Fed needed to, quote, retain optionality after that May hike. Some saw a need for additional rate hikes due to slow inflation. The inflation progress coming down had slowed. And several said that if the economy evolved the way they thought, they did not see a need for further rate hikes. But some wanted to stress in that meeting, it was important for the Fed to communicate that rate cuts were not likely this year

and that they were not ruling out further hikes. so they wanted to retain that optionality. That runs throughout. They also said they stressed it was important to raise the debt limit to avoid risk to the economy and financial systems. There were several comments on the debt limit. I'll get to those in a second. On the economy, the Fed should be ready to,

on the debt limit and banking system. The Fed should use its liquidity tools to mitigate future financial stability risk. Could have been talking about the banks there. Could have been talking about the debt ceiling, unclear. Tider credit conditions, though, the banks were seen weighing on economic activity, households and firms, and hiring and inflation. But they stressed it was too early to say what kind of effects they would have.

Some saw only modest effects. Fed right hex had contributed to restricted financial conditions. They saw slower GDP, a labor market softening and a need to reduce inflation. At the time they met, it was interesting. They talked about banking conditions actually having improved from the worst days of the The Silicon Valley Bank failure. Consumer spending was strong in the first quarter. However, it was expected to slow.

The labor market was seen very tight. Some saw signs of easing labor market conditions. For example, they noted less difficulty in hiring. Wage growth, however, was still too high, and inflation was said to be, quote, unacceptably high. And again, they repeated this idea that inflation was slowing

was more slowly than they had expected. And again, on debt default, there was concern about it, expressed at the meeting, it threatened a significant disruption to the financial system and the economy. Also commercial real estate was listed as a risk to the banks. One final comment, the staff continued to forecast a mild recession in the fourth quarter of this year and the first quarter of next due to tighter credit conditions from the banks, guys. Very interesting, Stephen. And I'm going to ask you to stick around as we get a little

further reaction there. There's a lot to unpack in Steve's recitation of the minutes. And to do so, Let's bring in Aditya Bave, senior economist with Bank of America and Jerry Castellini, president and CIO of Castle Ark Management, along with Steve Leesman. Aditya, let me begin with you and ask you to give me your impressions of what the Fed Minutes said there and how they comport with your baseline case that the Fed has reached its terminal rate. I think the Fed minutes as well as Fed Governor Waller's statement today are very much consistent with our base case that June is a close call. We still don't expect them to hike in June, but it's very much on the table.

There's basically three conditions that need to be met for the Fed to hike in June. The first one is a deal to raise the debt ceiling. The second one is that regional banks, the stress around regional banks remain somewhat contained and the associated credit tightening remains contained. And then the third one is that the data remain hot. So if you get something like 200,000 on non-found payrolls on the 2nd of June, and on the 13th of June, if you get 0.4% on the core CPI, then June will be strongly in play.

Jerry, there are in, as I listen to Steve there, and I want to go back to Steve in just a minute, but as I listen to him, it sounds like the Fed is describing many, many areas of potential risk in the economy. and yet the central number that they seem to have their eye on, which is inflation, remains stubbornly high. And that's a sign of an economy, basically, that is humming along quite well. There are obviously exogenous factors that can affect price levels and so forth. How do you read what the Fed is saying here, and how do you interpret then what its next moves may be? Sure. Two basic concepts. They're trying to explain, as they always do, how the current conditions are somewhere around May 10th, whenever they met. They wanted to describe exactly how they felt the underlying economic trends were, and they expressed that. The more important thing, and the thing they led us to believe in these comments, was that their job is basically done.

inflation, any effect of inflation has to take months to impact from a policy perspective. And when you put the policies that they've put in place, 5% increase in rates overall in the last year or so, there's more than enough headwind against inflationary forces to see and expect to see that decline now, basically or continue the decline as hands. So I think they're done. So I want to hit that with Steve, if I'm. might. Steve, do you hear it exactly as Jerry does? That, as he said twice, in fact, Jerry said, I think they're done. Do you see it that way? Okay, I'm going to do a little English lesson here,

which is Federal Reserve English, which I believe comports, astonishingly, with the actual English language. Guys, if you would call up the lower third there that says several participants basically think were done, that's not exactly what it said. That's one. On the other hand, some think there may be more to do. Several is more than some. So where are we? We're at a place where more people believe the Fed is done, though not everybody believes that. And Tyler, when you got through the fact that there was a lot to unpack here, you're right. There's a lot to unpack because there are uncertain risk to the economy, and there's a sort of difference of opinion of the effects these factors are having on the economy. Some seem to think that the banking issue is much more important. Some seem to think,

hey, we got through that, it's not a big deal. Looming over all of this is the debt ceiling crisis. Coming as a kind of wave from the right of this thing are the lagged effects of the 500 basis points of tightening already in the economy. Waller put it well today when he said the choices between a skip and a pause. A skip is we're going to skip this meeting and come back and hike later. Waller seemed to indicate that was his preference. He's a bit of a hawk. But it looks looks like to me, given the fact that it's several more than some, at least it was in that meeting, that more people are inclined to pause rather than skip. And, you know, again, the importance of what Christopher Waller is saying this afternoon, I think,

is worth emphasizing. So, D.L. turned to you on that. When you read over his comments, what do you think the next move and the next couple moves are? Waller has been the best leading indicator in my view of where the Fed is going, a little bit hawkish, but the Fed has turned out to be more hawkish than it initially thought it would be. So I listened very carefully to Waller. I agree. I mean, Waller laid out the options of hike, skip, or pause, and he essentially said, I'm not in favor of a pause. I'm weighing the options of hiking or skipping. The difference between skip and pause would be skip means you don't hike in June, but you retain that bias to hike going forward. And that's our base case. They won't

hike in June. There's enough uncertainty still about potentially the debt ceiling, but also tightening of credit conditions, but they'll retain that bias to hike. They'll certainly want to keep the optionality to go again in July because the labor market isn't slowing down nearly as fast as they would have expected. And inflation on both the goods and the services sides, he laid this out, right? That's not getting better as fast as we would have expected. Use car prices up four and a half percent in the last reading. So that took away some of the improvements we'd seen earlier. Jerry, you get the last word. Tie up for us. My only The only point is that we're dancing on a needle. All of these end of phase events are happening. It doesn't matter. They're trying to set in motion the best possible outcome for 2024. That means their work is done, whether it's one more little quarter basis point. It doesn't mean anything. It's about how we project going into next year for which we now have plenty of tightening in, you know, in the pipe.

line, and now it's a question of how weak it gets. And I think the next form of speculation will be when they're going to ease. And I don't think that's relevant either. It's that we, as if investors, get to now anchor around the Fed being basically done with their job, and we get to buy stocks and bonds based on that premise. Folks, thank you very much. That was fun. Aditya Bave, Jerry Castellini, we thank you. You know, I have to say, Kelly, we've done a few of these Fed minutes. And I go, I've had minutes. This was interesting.

Well, this had more information, I think. This was interesting. It was meaty. Set us up for something. Meaty stuff. All right, coming up. Netflix fixing for a fight with users. The company kicking off its new password-sharing policy.

My mother-in-law is going to be very heartbroken here. Wall Street obviously likes any path to more profits. Netflix up five points today, almost six. We're going to talk about consumers on social media. They have a different mantra. Mess around and find out threatening to cancel. their subscription. More on that. Next. As we head to break, let's also get

our power check. A little imbalance today on the positive sign, corning up about 2% announcing a 20% price increase on glass used for TVs and other displays. That fairs, well, fares watching literally. On the other side, analog devices down almost 8%. After reporting

weaker than expected third guidance, citing economic uncertainty. So a price hike and uncertainty. Power Lunch will be right back. Welcome to Power Lunch, everybody, or welcome back. should say. Time now for tech check. Meta beginning its latest round of layoffs and Julia Borsden has the news for us. Hi, Julia. Hi, Tyler. Well, there are a lot of headlines in the tech space today, but let's start off on Meta where Mark Zuckerberg's rolling layoffs continue. Now,

this is all part of the 10,000 roles he announced would be cut back in March. Today's round of job cuts mostly focusing on members of Meta's business groups versus the previous round last month that affected employees in technical roles. Now, meta shares have more than doubled this year. One of the best performers in the S&P 500. Also related to meta, its sale of GIFI is official. Shutter stock said it would be acquiring the GIF sharing platform for $53 million. Facebook bought it for $315 million back in 2020,

but is being forced by UK regulators to divest it over antitrust concerns. Now, speaking of you, European-style regulation, Google Sundar Pichai is in Brussels, meeting earlier today with EU regulators. The focus was AI, with EU industry chief TRI Breton giving a statement saying, quote, Sundar and I agreed that we cannot afford to wait until AI regulation actually becomes applicable and to work together with all AI developers to already develop an AI pact on a voluntary basis ahead of the legal deadline. So all of this continues a theme. seen an effort from the tech giants to make AI regulation a bit different from the confrontational

tone we saw around social media where the EU took the lead on privacy regulation and the like, and the U.S. has really failed to pass any regulation in the space here. Guys? Julia, so talk to me, what in practical terms does it mean for Sundar, Pitmus Pichai and the EU person to be getting ahead of regulation here, I guess? is how I would put it. What does this mean in a practical sense? You know, on a practical sense, Tyler, I think we just have to remember that the EU is likely to lead the regulatory push of the tech giants as it did. The last time around, we saw concerns about things like privacy when it came to the tech giants, even back when there was a real bipartisan push to do the likes of reforming Section 230 and the like. So I think the U.S. tech giants can expect to be regulated more by those EU companies than they can by the regulators here in the U.S.

think the question is how much they're getting ahead of it, how much they're mandating things like transparency about the data that's being fed into some of these large language models and using that as a way to make sure that they're proactively building some of these protections in now, as opposed to retroactively having to come back and add some of these things later. It might be harder to build that in. It was just earlier this week that EU regulators find meta, wasn't it, more than a billion dollars for privacy violations, which indicates that the EU regulators don't just talk the talk. They walk the walk. And when they bite, they have teeth, right? Yeah, exactly. I mean, that $1 billion plus fine is going to be challenged in the courts,

and we'll see how that all plays out. But we can definitely say for sure that the EU and UK and Ireland and all of these different forces overseas are taking a much. more aggressive a stance on regulation than U.S. regulators have. You know, not to diminish the importance of regulating AI, but Netflix password sharing, Julia, I mean, you know. Now we're talking serious. Now it gets real. Now it gets real.

What do we know? How serious is this? What's happening today? Well, if you have been sharing your Netflix password with people who are not in your immediate household, whether it's your ex-boyfriend or your cousin's friend, those people are going to get alerts and you're going to get alerts. and you're going to get an alert as a Netflix subscriber yourself, that you can no longer do that.

And they're going to ask you whether you'd like to have them buy an additional, sort of an extension of the account for $8 a month, or they can also have the choice of swapping out and paying $7 a month for Netflix with ads. So this is something that is perceived very well by analysts because they're saying either Netflix is going to grow its subscriber base by adding these sort of add-on subscribers for $8 a month. There are some of those people will say,

hey, I don't want to pay an additional $8 a month. What I'll do is I'll trade down to the $7 a month option. How do they know, Julia? How do they know whether a user is in my household or not? It's like the old question about the thermos bottle. How does it know whether it's hot or cold liquid? They know where you're logging in from. And here was the complicated thing that Netflix needed to figure out how to do.

They want to make sure that if you're traveling, like here I am, I'm at this CEO summit right now in Santa Barbara. They wanted to make sure that I would still be able to log in. to my Netflix account, but that my cousin's ex-girlfriend would not be able to log in, even though they were sort of coming in from a different location. So it's all about IP addresses and figuring out where you are and making sure that a family and a household can access Netflix no matter where they are, but that it's really limited to the people who live in the household.

Yeah, it also depends where we like the cousin's ex-girlfriend, really. I mean, when he'd get right down to it. And that can change. That can change. Julia, thanks. All righty. Up next is Elon Musk becoming a new king. maker in conservative politics. DeSantis kicking off his campaign apparently on Twitter later

today in an event that in the past would have almost certainly been reserved for Fox News. Plus further ahead, champagne tastes and beer pockets. More and more signs that luxury spending may be peaking. What does this mean for brands like LVMH and Moet? We will discuss when Power Lunch returned. Welcome back to Power Lunch, everybody. Florida Governor Ron DeSantis will announce that He's running for president during a discussion with Twitter's CEO, Elon Musk, tonight, so we expect. Last year, Musk tweeted support for DeSantis, saying that Donald Trump is too old to be president. And if DeSantis ran against President Biden, he would win easily. He wouldn't even need to campaign, says Musk.

Here to discuss more is CNBC Tech and Media correspondent, Julia Borsden, and CnBC.com political finance reporter Brian Schwarz. Brian, is Musk trying in some way to be a political conservative kingmaker here? Well, I certainly think he is, and I think he wants Twitter to help him in that regard, the social media company he now owns. But it's not just him who could be that kingmaker, really. There's also another player in this, and that as venture capitalist David Sacks, who's going to be moderating this discussion between Elon Musk and Ron DeSantis this evening when DeSantis announces his run for president.

And for Mr. Sacks, you know, I spoke to someone, you know, close to. him and a few other tech leaders. And, you know, Sacks is really trying to position himself as this voice for some of him, for himself and allies in the tech community. And clearly, he could be a kingmaker himself in these 2024 elections, not just for Ronda Sanis, but for whoever else he wants to see win potentially in this race, this cycle. Julia, what interests me are not so much the personalities, but the platforms. And it does feel relevant that, you know, this might be the moment in which cable is supplanted by social media as, you know, the next platform for political debate for news and for all the rest of it.

Maybe I'm putting too much on Twitter, but maybe not. Well, look, I think we have to go back, rewind and go back to the Super Bowl when, if you recall, Elon Musk was sitting next to Rupert Murdoch, and they were very intentionally, you know, photographed together sitting in a box. And there was this question of sort of what is their relationship and also what is Elon Musk interested in having Twitter be? I think we have to say, first and foremost that Elon Musk wants to drive traffic to Twitter. You know, the Democratic race is not a contention's one. We know that President Biden is going to be running again, but there is this question about what's going to happen in terms of the Republican candidate.

And I think that he's seizing this as an opportunity to draw eyeballs. And if he's successful, he'll end up adding some new users to Twitter, which is really the plan here. For him to be successful, though, and for him to really draw a broad assortment of advertisers, which is, of course, He hired Linda Yakarino, he's going to have to figure out how to make sure that it is not so focused that it excludes or alienates a broad swath of the users who could be engaging on Twitter, but also advertisers as well. I am going to throw something out, Brian, that is so totally preposterous based on what Julia just said. And it's right out of the pages of succession, Logan Roy and Mattson. what is there a possibility that rupert murdock and fox would buy twitter and bail out elon musk effectively well it's a really interesting idea i'm not entirely sure i don't have

reporting on that but i mean i think i think look when you when you look at the scenarios here to julie's point clearly there could be some sort of alliance made between elon musk and rupert Murdoch. You know, in a way, there are two kind of media visionaries. Musk more on the tech side. Rupert, of course, on the media mogul side of things. And there could be some form of an alliance there, particularly as both of those media and, you know, for Twitter tech entities, want to see some sort of, you know, influence in these elections. You'll be there at Sun Valley, Julia, I am sure. Could happen there.

I will indeed. It'll be interesting to see how all these relationships play out. But one thing's for sure is Elon Musk wants eyeballs. and this is a pretty good way to get them. You heard it here first, ladies and gentlemen. You know, I'm looking at the market caps. Fox's market cap is about $15 billion and didn't must buy Twitter for about $45. $44.45 billion.

I mean, that tells you already the valuations. Yeah. You know, whether they, I don't think they can bail out. I don't think it's worth $44 billion today. I don't think anybody would say that. No, but I don't think they can save him from that investment at this point. He's paid too much, you know, at least for the time being. Well, there you go.

Just out of thin air. We have created, I don't know what we've created. The next chapter in media and politics. Julia Bryant, thanks. Thank you. Let's get to Contessa Brewer now for the CNBC News Update. Hi, Contessa. Hi there, Kelly.

Some sad news here. One student has been killed and others in custody after a shooting today outside of school in Pittsburgh. It took place on the steps outside school as students were heading into classes for the day. Police have not said how old the victim and the suspect are, but the school serves grades three through 12, according. according to its website. The CDC says 18 people have gotten sick because of contaminated raw cookie dough sold in six states. According to the agency, the cases are tied to dough sold by pizza chain, Papa Murphy's between February 27th and May 2nd. Illnesses were reported in Washington, Oregon, Idaho, Utah, California, and Missouri. No one has died, but two people did have

to go to the hospital if they were so sick. According to a new study published in the journal Nature, A 40-year-old man whose legs are paralyzed was able to walk again thanks to implants in his brain and spinal cord. Gertjian Oksam suffered a spinal cord injury in a motorbike accident 12 years ago, and the study says the implants in his brain actually translated into electrical signals that trigger movement. Now he's up and walking several hundred feet a day. He can stand unsupported for as long as three minutes. It is just an amazing push forward from science and technology. Kelly, thank you for bringing that to us, contested Brewer. Ahead on Power Lunch Disrupting the Disruptors.

AI has the potential to simplify and disrupt many industries across the market. But what about the startups that were working on the next big thing before the AI got to it? We'll discuss that in today's working lunch. One of the promises of generative artificial intelligence is that it will let us talk to computers without us knowing how to code, thank goodness. So what does that mean for upstart software companies that were already promising? to do that. Today, John Ford brings us up close with an entrepreneur who is used to adapting, John. Yeah, Tyler. Howie Liu is the co-founder and CEO of Airtable, a company with software that helps other companies automate processes without having to code. Now, Howie's parents are

ethnically Korean, but grew up in China before emigrating to Texas where Howie was born. And right out of college, Howie started a little company that got acquired by Salesforce. And that just inspired him to dream bigger and start what became AirTen. But it hasn't always been smooth sailing. The pandemic brought a major crisis for air table when sales slowed and how he's growing team told him he was making things worse by committing the Cardinal sin of micromanaging. The truth is I couldn't have stepped completely back, you know,

and been out of the weeds. And yet, you know, clearly doing exactly what I was doing at 50 people or 40 people at 100 people was not working either. And so I think the truth lied somewhere in between and ultimately the right solve was to actually allow some of the smaller fires to burn and, you know, and to not, you know, to let some of the balls be dropped, you know, on a, you know, kind of on a very tactical level. How he digested that feedback, changed his approach and the pandemic ended up fueling air tables rise. His valuation reached $11 billion in the heady days at the end of 2021.

Since then, as startups have retrenched, Airtable laid off 20% of staff at the end of 22. But now the company is also embracing AI tools as a way to expand the use of its automation software. Howie says, AirTable plans an AI product rollout this summer that should not only protect margins, but also grow the top line. I don't think it's just a bottom line protector. I think there's actually going to be more opportunities to monetize AirTable. So we haven't officially announced or finalized our pricing model for AI capabilities. But some AI capabilities are certainly going to be available only in our premium tiers, right? or even potentially as an add-on to those premium tiers.

So there's certainly an opportunity to drive more revenue from users getting more value out of Airtable. If you think about our position, not just as a product who's enhanced by AI, but in fact, we become the no-code platform where you build AI workflows using our platform. We want to become the best platform that the easiest and fastest way to build AI-enabled apps that you can deploy into any function of the enterprise. This is a good example of a company trying to play defense and offense at the same time with the emergence of AI. If Airtable doesn't lean into using it to help manage projects, a competitor will use it to steal customers away. I'll try to cut through.

This is that kind of concept that's really abstract unless you're using it. If you're using Airtable, it kind of looks like a spreadsheet, but on steroids and you can, you know, if things change more easily, you can automate processes if you're like planning an event or, you know, looking through manufacturing, things like that. It tells me in part that virtually every company, especially technology companies, have to be AI companies one way or another, right? Yeah. The danger is, and this is similar to what we saw with open source with mobile. If you don't figure out how to create an advantage out of this, an upstart competitor is going to steal your share with it, right?

So right now what's happening is the scramble. People are buying a lot of Nvidia chips. People are experimenting with open AI, trying to figure out both what their advantage is and what their exposure is. I remember interviewing John Chambers some years ago, and he said, you know, every company has to be a digital company. If you're not digital in some way, you're dead. And that's sort of fast-forward six years to the AI thing.

It feels the same way to me. If you don't adapt to it, somebody's going to come along and take your share. I was going to use another word. Indeed. And the difference, though, is that not every company can fundamentally build. digitally, so they got to partner sometimes with the right companies and how to do that. You say every tech company is a tech company? No, they're really not. Not every company builds great technology. They've got to decide what they build and what they buy. But I think about,

for instance, the success of a Domino's pizza, the success of a Chipotle, the success of McDonald's, I was a little skeptical early on of this idea that every company has to be a tech, okay, what does that mean? But then the ones that are winning, Starbucks have mobile apps and, you know, digital optimization, and they kind of lean into that. And I'm like, you know what? They have been the ones that have won over time, it seems to me. The sushi restaurant in town that I'm sure you use. It's a digital company, man. Well, it's hired the right partners to build it.

They didn't hire engineers. So companies have to be careful here. Do you want to hire the AI engineers or do you want to partner with the right company in order to do that? The sushi restaurant can't be a tech company, you know? But these are the challenges these times. Sometimes companies that are maybe chip companies become platform companies. That's what Nvidia is trying to do. Companies that are software companies decide.

to become playing hardware. Also, that's what some of these hyperscalers are doing, designing their own chips. And it works sometimes, but you've got to figure out is now your moment or not, because it can cost you a lot of money. Very interesting. John, thanks. Coming up, grab your glasses, not your sunglasses.

Your champagne ones. Champagne sales hit a record of $6.5 billion last year. We have to imagine we'll be down now. But more than 300 million bottles of bubbly were shipped around the globe. Is the champagne bubbles starting to burst that we'll talk about a host of headwinds they're facing with the CEO of Moe

and Chandon when Power Lodge returned. Welcome back to Power Ledge. Investors are closely watching the global economy for any signs of a slowdown. Looking at the high end of the market in particular, like champagne sales, they were booming out of the pandemic, but will the slowing economy and even environmental factors combined to burst champagne's bubble,

joining us now to talk about it, Berda de Pablo's Berbier, is the CEO of Moet and Chandon. How did I do? Perfect. It was perfect. Okay, which is part of LVMH, of course. And you haven't even started drinking. I'd be better, I think, if I asked.

She's good at French. Our wealth editor, Robert Frank, is here as well. So just set the scene for us a little bit. There's a champagne shortage maybe developing, Berda? Well, there is no champagne shortage. I mean, champagne is always limited in the production that we have in champagne. It's all produced in one region, only in champagne. And it's about 300 to 325 million bottles every year.

So that as much as you can have. So when we drink more than that, there is shortage. When we drink less than that, there is no shortage. What does it do to prices? I mean, if there's, if consumption is up and you have a limited supply of bottles, how have you? Yeah, prices are not impacted by the supply and demand. It's mainly about our, like any other company, is what our cogs and the cost of production and the inflation that is impacting us all.

And that is the only thing that determines our price in Champagne. You're the largest champagne brand in the world. You sold 40 million bottles last year. It was almost unsustainable what we saw in 2021 and even last year. I have to believe you're seeing a slowdown in sales. Where are you seeing that slowdown? What sort of regions of the world? And what segments?

Is it bars and restaurants? Is it home use? Where are you seeing impacts right now? Yes, you're right. Actually, in 2021 and 2022, we saw a high peak of consumption for Champagne. Clearly, after the lockdown, Champagne was we all wanted to go out and celebrate, and champagne was a good product to do so. What we are seeing now is a different by geography.

So we see Asia, the Asia region is picking up, and the U.S. is actually slowing down after the peaks of 2021 and 2022. The decline in the U.S. is mainly coming from nightclubs, bars, and lounges. That's what we are seeing on the first quarter of this year. Again, a decline versus 22 after a high peak, but we are going into normalized level of consumption versus the pre-COVID area.

And when you look ahead the rest of the year, do you feel like I think the first quarter was probably flat? Do you think that decline will accelerate? What is your sense about what the next sort of six months to a year looks like in terms of overall demand? Well, it's difficult to predict anything with anything happening this year. We are expecting to see flattish to an slight decline versus 222 this year, again, higher than what we have seen in 2029.

But there is certainly a slowdown in the U.S. I'm curious, your associates at your parent company. You must talk to them. You're the CEO of the, well, three or four of the leading labels in Champaign. And if you're seeing a slowdown, what are your associates saying about potential slowdowns in other lines of business at LVMH? Well, I'm not here to talk about LVMH and the parent company, but what I can tell you is that for Moete Chandon,

What we are seeing in the U.S. is an increasing share, and we are seeing solid results in the U.S. Now, we are sold in 150 markets. So while we are seeing a flattish result in the U.S., we are seeing high increase in Asian markets, as well in European markets. We are getting ready for the summer season, and summer is a perfect time to drink champagne in the Mediterranean. There was some concern of Robert, correct me if I'm wrong, about the sustainability of champagne grapes if the region, we've had these crazy droughts and heat waves and that's affected growing conditions and, yeah, is that a real threat? It is. It is a real threat. I mean, champagne

is been in the world for nearly 300 years. So Moete Chandon is celebrating the 280th anniversary at this time. In all this period, we had very similar conditions of harvesting and we are seeing with climate change, a big change on temperature. So Moe de Chandon now is accelerating the economy. transition to fight against climate change. And we are doing this in three ways. First, we are focusing on restoring the biodiversity that has been lost in the champion region. Second, we are changing the way we are our agriculture methods. So instead, for example, instead of doing weeding with tractors, we are using ships,

echo grazing. So if you ever come and visit me, you'll see we have 220 ships now doing the wedding. That sounds like an invitation, folks. It sounds like any time. I don't know. Anytime. And last, just to finish,

is we are, of course, focusing on reducing the carbon footprint. So we are working on reducing the weight of our glass bottle, which today is the biggest source of CO2.

And it's an existential threat because champagne has to come from the champagne region. And it's not a big region, right? No, actually. Champagne is about

88,000 acres. To give you an idea, it will be half of the size of New York City. Wow. So imagine you take New York City and you put vigniors and that's the

limitation is a good year. We will need some sunshine and some good way and some soils. The tour to France last summer actually went through all the sham. It was very interesting to watch kind of all the different things that highlighted. There's been a lot of social angst lately. I mean any time you have champagne doing well, it always raises ideas.

Marie Antoinette and you know the halves versus the have-nots. But when LVMH's office were kind of stormed, it was I guess a couple of months ago earlier this year, did that create a little bit more concern about Okay, is there kind of a communication and messaging problem here? Is this just, hey, a moment in French politics that will blow over? What was your reaction to that?

No, listen, again, I'm not here to talk about LVMH, and definitely not about French politics, not part of the government. I'm not a minister of the government, so no. But is there, I mean, it sort of goes without saying that Champagne always represents, like, that kind of ultra-luxury, high-end thing. And I don't know if there's anything you can do about that. I mean, at some point, you have to lead into it. Well, we should point out that their bottles start at $50, right?

So it's not an exclusive hyperl. Unlike Vitton or Dior or some of those other. I think, I mean, Champagne, you can find Champagne, absolutely. Our price is that at $50, so, you know, consumers can decide how many of those can have. And certainly, we can have much more prestige at Champagne. But what we know is on our consumer of champagne, especially in the U.S., interesting fact, 70% of the champagne is purchased by women versus men. Now, you might be interesting to know that men index on purchasing champagne versus other groceries.

So, say in a different way, you go down more often to buy a bottle of champagne than other things than your shop. And in terms of age, it's pretty much the same by age, is slightly askew to the 25 to the 44. years old. So pretty, pretty universal. That's a sweet spot. That's where everybody wants to be, 25 to 44. That's where your brand association sort of cements itself. Bertha, thank you very much. Robert, thank you for... Thank you guys. Do we get to try anything? Sure. It's been a pleasure. You can open them. I leave them with you, and it's delicious. And we're coming to champagne to see the sheep.

Well, anytime, and by the way, make sure it's a little bit cold and drink it in a wine glass. I've heard a raisin can make it fizz again if you lose the fizz. I don't know if you've ever had... Burna's like, I haven't had to worry. Okay. Oh my God. It used to be a grape, so that makes sense, right? We're going to keep talking to Tramane for coming up. Speaking of Mouet, our trader has a hot take on LVMH and some other key names. We'll get his trades in three-stock lunch as we had to break.

CNBC celebrating Asian Pacific Islander Month. We were going to do that, but I think we're going to go to Suzanne Yun, Kinsey Capital Partners, found. I feel very fortunate to have grown up an American, but also with a deep appreciation for my Korean roots. When I started my career in finance, I didn't look like everyone else and found I was often misunderstood and underestimated. But I learned to take a seat at the table and contribute by finding my voice and using it. I have found strength in the Asian American community, which has given me support and confidence, especially as I went off to launch my own company.

Each of us has our own superpower, and it's up to you to use that power to create success, on your own terms. All right, welcome back. It's time now for three stock lunch, and let's take a look at some of the names making moves and news today. First up, LVMH, shares are down 7% so far this week as the demand for luxury goods dwindles overseas

and here in the U.S. LVMH, CEO Bernard Arnaud, lost more than $11 billion in net worth yesterday on that news. Here with our trades, Carter Worth, founder and CEO of Worth charting. Carter, you say investors should keep selling here, LVMH. Why? Well, I mean, look, it perfectly normal,

whatever nomenclature one prefers, dip, corrections, sell-off, decline, drawdown. It's down 10%. It's not anything big. In fact, in the etymology of the word, correction implies that it was incorrect. It was, it was steep, uncorrected. The question is, does it continue?

I think it does. I'm a seller of LVMH. Hmm, okay. That flat is his, well, no, actually down, flat for the, anyway, let's get to Invidia, Carter. They're down about 2% into the Q1 report. They've doubled in a year.

What do you think about the stock? Yeah. And we shall see, right, just an hour or two, and it reports after the close. And this is the big one that will inform so many things. It's the steepest and most uncorrected within the most popular area of the market technology. My hunch is that it will break trend. And so I'm a seller of Nvidia. All right.

Wow. Let's go to Carnival Cruise Lines now, down nearly 5% today. following a big run up. What do you say there, Carter? All right. So it's two ways to look at where you start one's narrative or story. A big run up from the low. Exactly, Tyler.

And yet here's a stock that peaked in 2018 in the 70s. That's five years ago. And it's walking along the bottom here, sort of doing nothing. I don't like it. I'm a seller as well. All right, Carter, thanks very much. Carter Worth, our friend Carter Worth, charting. Thursday is the ninth annual red,

NOS Day. The NBC family is a big supporter and we need your help. Buy a red nose at Walgreens for a buck and then tune in to an NBC Red Nose Day edition of The Wall at 8 p.m. Eastern. Since 2015, this campaign has raised more than $324 million to fight childhood poverty in the U.S. For more information, go to rednoseday.org. Power lunch. We'll be right back. Welcome back, everybody. About three and a half minutes left in the show and a bunch more stories you need to know. The clock is ticking. So let's get started with shares of Abercrombie and Fitch, which are partying like its 1999, gaining 30% today, which would be its biggest trading day in 10 years. The company posted a surprise profit, signaled to investors its efforts to reinvent itself are working, Ty.

Had a great interview earlier on our air with Sarah Eisen and the CEO, Fran Horowitz, who's done very good job turning around this retailer. What have they done? They're taking it back to the 90s. It's all about the 90s. You look at the website, it's 90s gene this, 90 gene. But they also said the workwear is working. the dress selection is working. The men's is catching up to wear the women's.

It almost was Lulu Lemon-esque to me in the sort of confidence in their apparel lines for both genders that they just discussed. I love seeing sort of legacy brands reinvent themselves, turn themselves around. It's a very interesting little niche. All right, Panera planning a comeback to the public markets. JAB Holdings took the company private

for $7.5 billion. That was in 2017. Now the company is naming a new CEO as it lays the groundwork for an eventual IPO. The company's revenue was just short of $5 billion last year. Back to the markets comes Panera. It kind of continues the theme. Maybe it's not 1999, but it's 2009 or something.

I mean, that was the peak. As we said, they've combined it with a couple other brands. Be curious to see how they do on this transaction financially. JAB obviously wants to make some money. Oh, sure. If they can exit now, I mean, this window might be kind of small if markets continue to deteriorate. The negative impacts of inflation are continuing to hit the consumer.

According to Lending Club, of those earning more than six figures, 49% are living paycheck to paycheck. That's a seven point rise from a year ago. 61% of adults say they are stretched too thin. It's very interesting. I'm sure this is partly a regional phenomenon. There are some areas where a six-figure income is squarely in sort of a middle-class income, other areas where it would be a high income.

Housing and rent costs are one of the key contributors to, I think, this phenomenon, which says that the six-figure income, individual feels like they're living a paycheck to paycheck. Also the higher price of automobiles. So the lease that used to be 300 a month is now 600 a month. That's a big difference. Oh, yeah. Or more. Exactly. Or more. All right, Comcast unveiling plans to launch Now TV as a $20 per month streaming video product aimed at the low end of the U.S. market. The offering will include over 40 live channels as well as a subscription to Peacock premium at no additional cost. Now TV will be available to Xfinity internet customers with no equipment required.

More and more streaming coming along. From our parent, by the way. Exactly. It take a lot of. Look at the stock of 15% this year. So you'd think as cord cutting accelerates, why is the stock doing well? Well, it's because of offerings like this in a way, moving post bundle to still give people that product, to still offer that connectivity with the internet connection people are willing to pay up for.

And the other offerings, you know, like the fixed wireless from the team, maybe they're not making the inroads. And these offerings are tailor-made for the Generation Z. I don't know what it is, the 25 to 40-year-olds, many of whom do not have go for the full cable bundle. Absolutely. And finally, the party police are arriving just in time for summer. Airbnb says its quote-unquote party prevention system is in effect for Memorial Day and July 4th holiday weekends. That means flagging and blocking one in two nights days they deem at risk for disruptive house parties.

That similar measures last year blocked at least 100 potentially risky. bookings. I'm sorry, Ty. Yeah, what can I say? You know. Anyhow, go have a good weekend. So why don't you start early? Thanks for watching for Halloween.