Power Lunch - Rally Rolls On, Beer Buzz 12/20/23

Episode Date: December 20, 2023

The Dow is trying for it’s 10th-straight positive day, despite a major earnings miss from FedEx. Can the record rally keep rolling? We’ll ask the experts. Plus, the craft beer boom may be over, but they’re still popular -- and draining profits from bigger brewers. We’ll talk about the business side and stock side of the industry. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Good afternoon and welcome everybody to Power Watch. Alongside Morgan Brennan. I'm Tyler Matheson coming up. The Dow shooting for a 10-day win streak, despite a major earnings miss from FedEx last evening. This rally has yet to end or at least pause eventually, doesn't it? It's got to do that, right, Morgan? We'll see.

Santa Claus rally is almost here officially. Plus, we've got the craft beer boom that may be over, but they're still very popular and draining profits from the big beer makers. We're going to talk about the business side. the stock side of the beer industry. But first, a check on the markets as the Dow and NASDAQ are trying, as inanimate objects can, to have a 10th straight day of gains. The Dow hitting new all-time highs as well. There you see it, 5-100s, 6-100s of a percent higher right now. Six-st-st-strait day of all-time highs for the Dow. You mentioned FedEx, the stock's sinking 10 percent. The company

missed on earnings, offered a weak outlook, particularly on the revenue side of things. The CEO also with cautious comments on the global economy. So the question is, after a big recent rally, why aren't the markets more rattled by this warning from a company, which is often seen as a bellwether for the global economy? Well, let's bring in Mike Santoli now to try and answer that question. Mike, you and I have had so many of these conversations across the quarters about FedEx as a global economic bellwether.

Seems to me the key question here is how much of this is company-specific in terms of the execution, especially when you look at something like Express and all the cost cuts that are affecting ground but did not offset the trouble in express versus normalization coming out of the pandemic versus the possibility of recession. Exactly, Morgan. And I think the market is willing at this point to suggest that those initial factors that you mentioned are a bigger part of this story. Now, UPS is down 1% most of the day.

So there are some ripple effects. And I do think that investors are being given some pause about the competitive dynamics and the pricing in those markets. I think the preponderance of evidence about the economy. We got an uptick in housing starts, consumer confidence. I don't think this one factor, given the fact that FedEx in the past has also fallen short on execution, on margins. Some of the analyst commentary today was, sounded kind of like the same old FedEx on the call. I think that's one of the reasons why the market can try and put a firewall in there between FedEx and the rest of the market.

But we'll see if that lasts because this rally is stretched. All right, Mike, stick around. Why don't you? As we continue to discuss this topic, our next guest expects the rally in stocks to continue into years' end. She sees no near-term roadblocks derailing investor sentiment. And while she does expect the Fed to pull off a soft landing next year, she cautions that a stronger than expected economy could accelerate inflation again and could possibly delay the central bank's ultimate pivot to declining rates. Joining us now for more, along with Mike Santoli, is Rachel Aiken, senior investment officer at Cape Cod Five Well. Welcome. Good to have you with us, Rachel and Mike as well. The market seems to have broadened out a little bit. It's not just the magnificent seven anymore. I take it you would see that as a positive, wouldn't you, Rachel?

Yes, Tyler, and thank you for having me and happy holidays to everyone. It definitely looks as if this broadening is providing that powerful, positive feeling that perhaps the market breath will sustain. We have had a few headfakes along the way as the market is powered higher this year, but we're seeing it on many different angles. You're seeing seven out of 11 sectors having really strong positive upsides with their 50-day moving averages being extremely high. You're also seeing confirmation from not just technology, but you're seeing some trade-off there where technology continues to do well, but you're also seeing a leg up in some of the other sectors as well. So that broadening does bode well for us as we move into 2024 as long as that can continue. Mike, I want to turn back to what Dom Chu concluded his last hour with. And that was the notion, I think Jeff Kilberg mentioned it, that perhaps this year-end rally has borrowed a little bit from 2024. I mean, to the extent that is a legitimate case, is that the case this time?

Yeah, I mean, it's always tricky, Tyler, because typically, if you look historically, what has happens after a really good year in the markets actually tends to be followed through to the upside. But in the very short term, I do think there's a possibility that we really have kind of emptied the tank in the near term. So you have this tendency in the last several days of December to be strong. But when the market and sentiment have been this high for a little while, but going into that period, sometimes there's some give back. You have some of these extreme readings in terms of how far and fast the index has come that suggests even if we get further upside from here, Usually it's not like it goes up and doesn't look back.

You have to kind of regain those points again after a pullback. So I think you have to be cognizant of all that while realizing that if you go out a few months, most of the momentum signals we've gotten here and most of the macro fundamentals, that storyline seems like they're relatively supportive of the trend. Rachel, we got earnings from General Mills this morning. The missed on organic revenue, flagged slower volume recovery, cut full year guidance. And this comes at a time where in general, across the sector, you're seeing a lot of commentary on the state of food disinflation,

in some cases even deflation and whether you're going to see these lower prices actually help to bolster volumes. Doesn't seem to have been the case for General Mills last quarter. It raises a key question. That is, if you continue to see disinflation taking root, as everybody's focused on the Fed next year and the possibility of rate cuts, does it become a double-edged sword when you do look companies and their earnings in 2024? So I agree. Disinflation can have the same unpowerful impact as inflation had to profitability in 2023 for companies.

I think, again, it's going to be a market where you have to look at each company and not just necessarily look at the dynamics of one sector, but really look at the fundamentals of each company in that sector. And, you know, the world where General Mills lives is the same world where Pepsi lives, which is a company that we hold and have upgraded in both our core equity portfolio and our sustainable dividend portfolio for the growth and income components that they provide, and the pricing power, quite frankly, that they continue to have. Again, with Pepsi, you're seeing double-digit organic growth, double-digit earnings growth,

to the contrary of what you just mentioned with General Mills. And you're also seeing a dividend of three plus percent, which is attractive with a tenure that's declined below four now. and the history of a 51-year dividend increase with Pepsi. So, again, polar opposite, same sector, really needing to, as an investor and an analyst, look under the hood and make sure that the company in that sector has the positive characteristics. Let me just ask one question on Pepsi, and that is this. Are you concerned, as some analysts are, that these food companies or the snack companies are at some jeopardy, if the weight loss drug take off the way they have been performing?

Great point, Tyler. And again, that's not just an issue for consumer staples companies. It's also an issue in the health care sector as well. What we think about or what we look at is there's been a huge impact to these companies and their stock prices have reflected it basically with, we think, in some cases, the bark being worse than the bite to earnings long term. And studies that are being done now show the impact to consumer staples companies like a Pepsi being three to five years out from now, which would give Pepsi a long time to pivot, shall we say, since that's been the word of 2023 as of

late, to be able to offset the impact to their salty snacks and sugary drinks. And one last piece I'll add is Pepsi was really one of the early adopters of health and wellness making that pivot. long ago with areas like quaker oats and tropicana and their foray now into protein shakes, dried fruit, things that definitely have a healthier bent. Okay. Thank you very much, Rachel. Rachel Aiken. Mike Santoli, thanks very much, folks.

And Mike, we will see you a little bit later on overtime as well, kicking off at 4 p.m. Eastern. Let's go from Santoli to Santelli. Now to the bond market as yields are falling even further. The tenure is below 3.9 for the first time since July. Rick Santelli is in Chicago. to break it down for us. Hi, Rick. Hi, Morgan. It is a wild ride. Just think it wasn't long ago, October,

and not even at the beginning of October. Interest rates, tenure was touching 5%. By the way, it did it so quickly that if you blinked, you probably missed it, but you can't possibly miss how rates have fallen and how stocks have popped. And if you look at it, six and a half month low-yield close on twos, if you look at tens, it looks like it's on pace for about a five-month low-month low. yield close. And it's not only us, guilds, boons. There's a boon chart. They closed under 2% first time in one year. Let's go see what a trader thinks about what's going on. FOMO seems to be a popular term these days. Paul? Hey, Rick. How you doing? Good. All right. All I hear is FOMO, FOMO, FOMO.

There's got to be more to what's going on in equities than fear that you're going to lose your place in line to keep up with your index or your bogey so that the money that you're either for customers of your own falls behind the curve. How much that's actually truthful? Well, since that Fed meeting last week, we've definitely seen markets set new highs, but what we're also noticing is that the VIX is not setting lows. So the money's coming in, but we're also observing people reestablishing their hedges,

rolling up existing hedges. Now, it's come so far so fast. Would you consider that, to me that seems prudent. It doesn't seem like there's any. negative about that, but it is something to pay attention to. Absolutely. It's a normal market behavior. Generally the VIX is correlated against the spooze, but we're seeing that somewhat detachment. Another thing that I find interesting is that the Fed cautioned the beginning, not to look at

inflation in a linear fashion, but am I wrong? Aren't they annualizing all these monthly inflation numbers and doing exactly that, thinking it's going to be a linear move? Well, you know, as I've said before, I'm going to leave it to you to offer your critique of their approach. Do you think it's a safe bet to say that inflation going down much closer to 2% target is at the base of this rally in equities? The Fed signaling that that's what they're seeing is at the base of that. Now, I guess my final thought is, do you think that the FOMO-type rally with all this momentum going in the ear end is going to have legs? When we come in next year, is there anything in particular you're going to be paying extra attention to in 2020 for the beginning as far as equity pricing and your final thoughts? Well, I can't say we're seeing the market pricing and some slowness for the rest of the year.

But with that VIX bottoming out, where the expiry is beyond 2023, we are seeing interest in those. You know, and real quick, I know we're out of time here, but a firm making some news today that they're going to be allowing payover time at, what, 45? 500 kiosks in Walmart. Now, I'm not making a statement about that good, bad, or from a business sense, but just from an investor standpoint, that would make me a little nervous that the consumer, at least certain consumers, might be a little bit more under the credit issues and out of spending capital that others need to pay attention to that. Morgan, back to you. Rick Santelli, thank you. Coming up, shares of Alibaba have been a laggard during this recent rally. Now, the Stephanie shaking up its executive ranks, will that get the stock heading in the right direction?

Tech check is next on Power Lunch. Stay with us. Welcome back. While U.S. tech stocks have rallied in the fourth quarter, one of China's biggest tech names has been falling. Can an executive shakeup turn things around for Alibaba? Let's bring in Dear Tobosso for today's tech check. Hi, Dee. Hey, Morgan, and Alibaba has really been underperforming for years. Its latest attempt to win back investor confidence, it is another executive shakeup. This time giving its CEO greater control over its e-commerce business. It is a move that consolidates power around Eddie Wu as Jack Ma continues to really stay out of the picture.

But it comes after Alibaba has already lost its crown to Pinduoduo or PDD as China's most valuable e-commerce company. PDD, along with Xi'an, has done what Alibaba was never able to do, and that has captured the American consumer. But really the shake-up in the Chinese tech landscape, it is even broader and more dramatic than what's happened this year in e-commerce. Wallway's smartphone business, we've spent a lot of time talking about it. It was left for dead just a few years ago under the effects of U.S. sanctions. This year, though, it has released a smartphone powered by its own Made in China chip that has put none other than Apple on the back foot. And then there is TikTok parent bite dance, which is reportedly on track to overtake

10 cent revenue this year. That's another former tech giant and continues TikTok bite dance to be the world's most valuable startup. So it might be interesting to think of it as two buckets emerging. The Chinese Old Guard and the Chinese New Guard. No longer are investors as excited about that so-called Bat X group, China's answer to our Fang made up of Baidu, Alibaba, Tencent, and Xiaomi. All eyes have shifted to this new class of Chinese tech giants. And what they might do in 2024 and key here, what kind of impact they might have on our own American tech landscape.

The Old Guard on your left, it was mostly contained to China or at least the region. The new players, though, they are challenging our own tech giants, either here or. or on home court back in China. I mentioned Huawei versus Apple. There's Timu and Sheen versus Amazon, TikTok, and all of our social media platforms. And I'd even mention the EV race, Neal and BYD and the other Chinese EVs versus Tesla.

Three out of four of those ones, though, they are uninvestable for the ordinary American investors. So if you are holding an ETF like the Chinese tech K-Web, you wouldn't have seen any of the value creation from the new Big Four. Sheehan's planned IPO next to your guys. It could set the tone. It could either see the others try to go public, or it could encourage them to stay private for longer,

depending on how it goes. And that is very much an open question, especially as Washington takes a harder look. It's amazing. I mean, the old versus new really sort of speaks to this geopolitical backdrop that we find ourselves in and the dynamics between the U.S. and China and what that's meant in terms of leadership in that market. But I also wonder, and maybe Alibaba, for better or worse,

has been the poster child of this, how much this new class of winners is dictated by the politics and the regulatory environment in China, too, when you realize that there was a crackdown on some of those names that were the prior leaders. Exactly. And sure, very dictated, right? Because what the Chinese government tried to do a few years ago was crack down on the dominance of that old guard

of the Alibaba's and the Tonset. So inadvertently or inadvertently, it has created this new class. But that also raises the question, could they crack down on this new batch if they become too dominant? And that is always the risk with Chinese stocks, right? I mentioned that most of them are private, but if they do become public, what is stopping Beijing from cracking down once again? And for reasons that we don't always know, right?

There is still, you know, the idea of founders and billionaires at odds with Beijing, and that can affect the whole company and destroy a lot of value. How big a threat globally beyond China is Huawei to Apple? So in the Chinese market, so several businesses here, smartphone market, which is so important to Apple. I mean, honestly, a lot of people never thought that Huawei would be able to really be a competitive threat. But with its new homegrown chips, with its new smartphones, it's done exactly that. In terms of telecommunications equipment, which has been its main business for a very long time, right? Governments the West have sort of cracked down and said we don't want that equipment here. But they've made inroads in other countries, right, and other places around the world.

So in terms of Apple, I think the most important market is China. But you never know. If they create a really compelling phone at a lower cost, you could see other users and other nations start to adopt that, especially if they're cheaper. Interesting. All right, Dee, thank you very much. We appreciate it. The Beatles said money can't buy you love or can't buy me love. And for one of America's biggest billionaires, that couldn't be more true.

We'll reveal the tech titan who drew the most ire in our latest CNBC All-America Economic Survey. I've got a couple of ideas who that might be. But first, a quick break. Stick with us. Well, the oil markets are closely watching events in the Red Sea. The U.S. attempting to secure Red Sea commerce, but the Houthis say they're going to keep targeting Red Sea shipping.

Pippa Stevens joins us now with more. It's not as though the oil market is suffering from a dearth of supply, but any threat to oil, natural gas shipping through that area is a concern. That's right. And it is that focus on the supply side, which is very strong right now, which is why oil is not rallying more. And so earlier today, Brent did briefly top $80. But once again, traders are squarely focused on how supplies have not been disrupted yet.

And we can draw parallels here with Russia's invasion of Ukraine. Remember, after that, oil shot above $130 per barrel. But then it very quickly became clear that while oil supplies were being realigned, they were not being taken offline. And so this time around, I think the traders are a little bit more cautious in terms of bidding prices high. when there's no actual disruption on the supply front. Now, there's no question that the Red Sea in the Suez Canal

have taken on greater importance since Russia's invasion, given that energy flows have been redirected. But there are alternatives. You can, of course, as we've heard, sail around the Cape of Good Hope. There's also the fact that Saudi Arabia could pump more oil through its pipelines for delivery at Yanbu, and that bypasses about two-thirds of the Red Sea, including the Babelmandab Strait,

which is where the attacks have taken place. And so right now there is no threat, and the U.S. is now produced is now producing 13.3 million barrels per day. That's a record. That's more than any country in history. We've also seen Brazil and Canadian production rise to record levels. And so it's focused on the supply side and with no disruptions there. We're not going to see a big response in oil. It is pretty amazing to see the U.S., basically the swing supplier, if you will, to the global oil market and really not just the U.S. to your point, but really the Western Hemisphere in general.

So it's the way to think about this and contextualize this with all the issues in the Red Sea then. that it is potentially more troublesome from a supply chain standpoint on the container shipping side or the grain side rather than the energy side because there are these other alternatives? I think that's right. And I think that, you know, if you do take an extra two weeks to go around the Cape of Good Hope, yes, there are some delays that raise expenses a little bit, but there's no immediate threat that we're not going to have enough oil supply. You can draw down on reserves. We saw another build in U.S. crude inventories today. Of course, storage levels in Europe are very high. I think one potential area to watch is on the product side, particularly in Europe, the diesel inventories. They are now at a healthier level, but that is one area where we could start to see pain. However, with the U.S. at record levels of production and so much oil coming online, unless there's some sort of big indication that either demand is bouncing back in China specifically or that supply is being disrupted, I don't think we'll see a big response. Okay, Pippa Stevens. Thanks for joining us and breaking it down.

Well, let's get over to Bertha Coombs for a CNBC News update. Bertha. Hi, Morgan. The EPA says America is accelerating toward clean transportation. According to the agency, fuel efficiency in 2022 reached a record high while emissions levels dropped to record lows. The EPA says the average vehicle in 2022 got about 26 miles per gallon. Brazilian lawmakers cleared the way to repave a highway that cuts through the heart of the Amazon, scientists say the development will trigger an explosion of deforestation and threaten the future of the world's largest tropical rainforest. The bill allows for the use of conservation funds donated to the country to finance that project. It still needs the Brazilian Senate's approval.

And it's not quite New Year. It's not even Christmas yet, but 2024 has all the focus in Times Square. The seven-foot numbers arrived today ahead of New York City's legendary New Year's Eve celebration. They will remain on the ground for a few days before they're hoisted on top of the one-time square to get into position in time for the party. Strap on your seatbelt. I don't miss being in Times Square. I will not be there. I will not be there either.

But I wish safe passage and an easy-go-go. of it for all of our colleagues that do work out of the NASDAX. Yes, yes. I've done it on New Year's night. Maybe you have to. I have, yeah. It's good to do it at least once, but just to take in the ball drop at least once, but that's it. Coming up, beer pressure, craft breweries, were all the rage for years and put a dent into the business of the big beer makers, but recently sales have gone flat. We're going to get the scoop from an industry insider when Power Lunch returns. Welcome back to Power Lunch. If you attend a holiday party, you've likely seen many, many beer choices beyond the traditional bud, Coors Light, Miller Light,

the regulars. But after seeing a boom for many years, craft breweries are seeing sales maybe plateaued just a little bit. It's not just the craft brewers that are feeling the pressure. According to the Brewers Association, overall beer production fell this year, and it's the first time that's happened since the pandemic year of 2020. Despite that, at least 420 new breweries opened across the U.S., narrowly outstripping the 385 closings. of breweries. Here on set, to give us some insight into the challenges facing the craft beer industry is Mateo Roshaki. He is the CEO of Voodoo Brewing Company, which has 18 locations. That would be brew pubs, right? Basically, Mateo, in seven U.S. states, and you have two breweries that supply

different kinds of craft beers to those locations, right? That's correct. You've gone off into franchising, which is a little unusual in this business. Usually they are owned by the brewer and the brewing company themselves. Here you've gone the franchise route. Why? There are a few companies before us that were offering the brewery franchises, but you had to build out a brewing facility. This is one of the first of its kind where you can have the benefits of a brewing tap room without actually having to brew any of the product. What about the plateauing of beer sales generally and the and the plateauing specifically of craft brews? Some years ago, the big guys, the Budweiser's, the constellations, the constellations,

So we're going out and snapping up craft brewers, or they were introducing their own versions of boutique beers. Yep. Now not so much. What's happened in the marketplace? Well, you're still seeing a lot of this, what I call macrocraft, which is being produced by some of those larger brands. And there's still lots of...

Is there stuff as good as yours? I'll say it depends on the user. But at the end of the day, you know, I mean, there's still a lot of room out there for everybody to play and find some space. I mean, it's definitely getting more crowded, and there's a lot more out there. But a lot of the consumers are a lot more discerning now about, you know, well, who actually is making this product? You know, where is it being produced?

Where is the dollar going? And I think that's going to be a trend we're going to start to see as we go into next year. So what do you see is your biggest competition? Is it other craft brewers? Is it cannabis? Because we're starting to hear that from an investor side of things as well. Is it something else? We're still always going to be competing with each other in the craft beer sector for sure.

I mean, we're still making up about a quarter of. all beer sales in the U.S., which is really great for craft beer, and it's still doing its thing. But you're going to see different beverage things hitting the market as well. You're seeing a lot of popularity with the young and up-and-coming drinkers that are looking at non-alcohol products and different shelters, RTDs, things like that. It was a time when I was an up-and-coming drinker. That's a long past time, actually. We're going to have a guest on who's going to follow you and who's going to say specifically

that the rise of legalized cannabis has had an effect on the volume and sales of beer generally and craft beers particularly. You agree with that? I would agree with that. Really? They're even putting cannabis and different ingredients into some of the beverage products as well. So it's definitely going to take up different shelf space and things like that. Has the market for craft beers gotten so not oversaturated, but when I go into bars sometimes that feature lots of beers, there are almost too many of them for me to choose intelligently from. And sometimes the bartender can help me. Sometimes a bartender can't.

Speak to that. You'll go into accounts and you'll see some, you know, 10, 12 lines. You'll see 50, sometimes 150 draft lines. It just depends. And at the end of the day, it really depends on, you know, the consumer coming in and what they're looking for. There's something out there for everybody at this point. It's just going to be, you know, a matter of what's that retail establishment trying to

achieve? And the consumer is going to gravitate towards those types of places. based on their offerings. I realize you're in a very specific part of the market, but what are you seeing in terms of the health of the consumer and some of the patterns for buying and what they're gravitating towards, not only from a taste perspective, but also in terms of pricing and just general robustness of appetite to purchase? I think convenience is a big piece of it right now.

Being able to go to one place and do those things, if you can grab your holiday shopping, your beer, have a nice dinner, someplace you can take the entire family. So that's one of our kind of approaches to growth would be putting those community establishments in place where it is kind of like a one-stop shop and you can do all of those things. Mateo Roshaki, thanks for joining us here on set. Thank you for having me. Appreciate it. Continue good luck. I like your hat, too.

Thanks. Very cool. Well, despite all the craft beer options on the market, as well as inflation, the big beer stocks have managed to hold up this year. Anheuser-Busch-in-Bev and Moleson-Cores both in the green year to date. And as we discussed with Mateo, our next guest, says access to legal cannabis is the biggest challenge facing beer companies right now. Well, here to explain is Vivian Azer, senior research analyst at Cowan and Company. Vivian, it's great to have you on.

And I do want to start right there. The fact that cannabis is taking up more market share when we talk about the vices in general. Is that a trend that continues and how strongly is it happening? Thanks for having me on. Yeah, it's a trend that continues in as the cannabis industry gets larger, in larger year by year with individual state legalization, the dislocation to alcohol sales, we think, is becoming increasingly apparent. When we analyze data and segment between medical cannabis states, adult use states, and non-legal states in the United States, we can see that alcoholic

beverage sales underperform when cannabis is available to the order of magnitude of 100 to 150 basis points, which is pretty meaningful. You can also see the same phenomenon apparent industry. the Canadian marketplace where the entire country has access to adult use cannabis. And that's been the case for the last five years. And you can see prior to the legalization of cannabis, beer and near beer sales in Canada were essentially flat down like 0.3%. And in the five years post-cannabis legalization in Canada, the industry is now down over two and a half percent on average. It's fascinating. I mean, is this just consumers choosing one high or switching one high for another, or are there very specific, meaningful reasons for why we're seeing this shift?

I think, you know, just aging demographics is a big component of it. You see that cannabis incidence tends to be higher with younger legal age consumers. In particular, we focus on 18 to 25-year-olds with the NSDUH data from the U.S. government, which is a 70,000 person survey. And we can just see that every year, the percentage of consumers that are reporting using cannabis on a past month basis has gone up. But with those 18 to 25-year-olds over the last decade, past month alcohol incidence has been on the decline. And if you unpack that survey a little bit, we think that changes in risk perception are a key contributor to that. You've seen with that 18 to 25-year-old cohort that perceived risk around alcohol consumption has been on the rise, while the perceived risk around moderate cannabis consumption is declined. rapidly over the last decade. Risk meaning health effects or the risk of accident, risk of

being pulled over in a car, what? It's defined as great personal risk to you. So the question would be five or more drinks once or twice a week versus once or twice a week cannabis use. So let me ask you this. As a stock picker, if you had to choose between an alcohol and spirit selling company and a cannabis company, which would you choose and why? Well, we don't cover any of the U.S. listed cannabis stocks, but, you know, I think it really becomes, you know, a stock-specific choice because we are recommending a number of the U.S. beer manufacturers into the point that you guys made earlier about the stock price performance. We are outperform rated on both ABI and Molson Quar's, but just for different reasons. You know, there are ways to win, you know, despite those industry headwinds. You know, these are very well-run companies. The beer industry in the U.S. is still well over 100, million dollars in retail sales. So it's still an attractive category with healthy margins and good cash flow. So where does non-alcoholic beer fit in all this? Since we know that it is another area that is growing and growing dramatically. Certainly. The growth has been really fast.

It's still less than 2% of total alcohol sales, but you are seeing a lot of the majors put in new brand offerings like Corona from Constellation Brands. They have a non-alc variant now. You've seen Hyenkin enter with non-alcs and ABI. And also, of course, have done this. same given that growth profile. But I think also it's a way to future proof the business because one of the other phenomenons that we're seeing in particular amongst younger consumers is reported intentional abstinence. And it's not just, let me just interrupt with a final quick question. If you had to choose in the beverage category between a company that was heavy on beer and one that was heavier on spirits, where would you go? Well, our topic is constellation brand. So they are

heavy in beer, but they're all on, they're winning a lot of market share. So we like where their trends are going. Okay. Vivian, thank you very much. Have a great holiday. Vivian Azer. And coming up, the only beloved billionaire, Warren Buffett, taking the top prize

in our latest CNBC economic survey of most liked and disliked business titans who reveal all the results when Power Lunch return. Welcome back to Power Lunch. I want you to think now about some of the biggest names in business. The richest people in the world, Musk, Bezos, Zuckerberg, do you like them? Or do you hate them? Turns out most billionaires are very unpopular, except one. Steve Leesman joins us now

with the results from the CNBC All-America survey. Steve. Hey, Morgan, thanks. Yeah, Buffett the beloved, Musk the Divider, and Zuckerberg, the guy no one seems to like. That's what we found when we asked about the biggest business billionaires in our CNBC All-America economic survey. Only Warren Buffett has a positive net favorability rating that is approval minus or disapproval or favorable minus unfavorable. He's seen favorably by 30% of the public, 15% seem unfavorably. A bunch don't know or rate him neutrally. Elon Musk comes in at zero. He gets there with sharp and divisive feelings on boat size. It goes all the way down to Jeff Bezos at minus 18 in Zuckerberg, minus 13 net approval. No one seems to like him. It appears in our survey anyway.

Nearly every demographic group has a positive view of the Oracle from Omaha, except people with incomes below 30,000. They're only negative by minus three. But the standouts include men age 50, Democrats, those with 50,000 are more invested in the market, and incomes over 75,000. Musk, on the other hand, he divides the nation amazingly right down the middle. Women are negative 17 on Musk, men are plus 17. Biden voters, or minus 44, Trump voters plus 44 in the North. Cc's minus 13, south plus 10. Must is a little better among users of X coming in at plus 9.

Zuckerberg, he doesn't have much support anywhere. Democrats minus 19, but it's worse for Republicans. They're minus 49. You can see the split there between men who are more negative on Zuckerberg than women, but who are still negative. And there's the Northeast minus 26 and the Midwest minus 44. Groups with the lowest net support, Republicans age 50 plus. Now, even those with the most in the market give all but but,

at low marks. No one has made more money for them than Zuckerberg. His stock's up 191% in this year, followed by Musk and Bezos. Showing guys money does not buy a whole lot of love. When you said earlier that nobody much likes Zuckerberg, my immediate thought was, yeah, but his investors like him this year a lot. You know, I would think that, Tyler. Gates does a little better with investors, or what we call the financial elite, those with high incomes and more money in the markets. than your average American. But he's plus 15.

But Zuckerberg and Bezos do not. It's kind of interesting. And you're right. I looked it up. I actually made myself a scatter chart to try to see if, you know, income or earnings or returns in the market and favorability had any correlation. They do not. In fact, Buffett, by the way, has the lowest return in terms of Berkshire,

what it did this year, just up 18%. Just, let me, I just want to lay. want to follow up one thing on Musk, and that is when was this survey done and was it done before he created controversy with remarks that were regarded by some as anti-Semitic? It was done after. In fact, it was the idea of figuring out what people thought about Musk that got us onto this idea of seeing, well, how do people feel about all of these rich people out there, all these mega billionaires? It was done December 8th through the 12th, and by then, there had been quite a bit of controversy out there.

I find the numbers quite amazing, Tyler. The symmetry on both sides of the zero line for Musk, he ends up at zero, but only with intensely negative feelings and pretty positive feelings on the other side. Go ahead. All right. Steve, you know, it's interesting to me to see this as we're coming into an election year

and whether there are any tea leaves to be read in terms of what this could mean for policy proposals and election trail. commentary and the feed-through, I guess, to some of these companies and some of these sectors that some of these billionaires are so heavily operating in. That's a great question, Morgan. And I have to go back to previous surveys that we've done in which we find a lot of support for taxing billionaires and taxing millionaires and taxing the wealthy, assuming that's the

kind of policy you're talking about. I don't think there'd be a couple of any too many tears shed if it came to more regulation of some of these social media companies. We'll have information tomorrow on which are the most popular social media companies from this survey, along with who finds the ads most relevant. I don't want to give it all away, but it's pretty interesting. People do use this stuff and use it every day in large numbers. That is for sure. But I don't think if it came to a personal appeal from these billionaires about not regulating if that would carry much weight with the American public.

Thank you very much. Steve Leasman reporting. Pleasure. Still ahead. Serial struggles. General Mills lower after warning of weakening demand and pricing pressure on its earnings call. We'll trade the shares in a fresh three-stock lunch when power lunch returns in two. All right, time for today's three stock lunch, taking a look at three big movers of the day. Here with our trade is Michael Farr, President and CEO of Farr Miller in Washington. First up, Michael, welcome.

Good to have you, number one. Let's take a look at FedEx. The shares are down about 10%. second quarter miss on the top and bottom lines. What's your trade on FedEx, sir? Tyler, I've owned FedEx for a long time. I think today is an overreaction, but it's an overreaction to a year that up to now

was up about 60-some-odd percent. Stocks still up 55 percent year-to-date. I look for companies that are growing earnings faster than the average company in the S&P 500 and that are selling, if I can, for a lower multiple. Well, the average multiple of the S&P 500 now, is 19 to 20 times earnings. FedEx right now is trading 12 and a half times next year's earnings. Earnings growth for the S&P 500 is supposed to be 10 or 11 percent next year.

Most analysts don't think that it's going to actually meet that in a slower GDP growth year. This stock should be growing earnings at 15 percent for the next five years. So I have superior earnings growth in the companies I favor. This is one of them. I think it's a blip now. It was from the higher cost. Express segment, putting some pressure here, but this is not a broken company. It's not a broken stock. And you've got a 1.8% dividend while you wait. I'm going to continue to hold,

and I would add on this weakness. Okay. Up next, General Mills, share slipping 3% after the food products company posted a miss on the bottom line amid softer demand and pricing pressures. General Mills like FedEx lowering its full-year sales forecast. Michael, your take on General Mills. And by the way, the staples, which are broadly down alongside it. Well, they are. And with the FedEx, actually, they maintain guidance for the year, but their actual sort of median number is below where the street was. So they kind of took the street a little lower, but not their number lower. General Mills, different problem, okay? Different problem. Down 22 percent. Ugh. I feel bad for them. 15 times earnings. That

meets my pricing. But earnings growth of 4%. You know, they've got a bunch of sugary snack stuff, a lot of snack food, cereals. And I think there, some, even some, pressure from the GLP1 drugs, the anti-obesity drugs, people just don't eat as much on those. Also, during times when the consumers trying to save a little bit of money and be more budget sensitive, they don't buy brand names. They have a trade down to generics and other names. I think General Mills is going to be under pressure for a while. I don't think this is going to be a place to make money anytime soon. That's a no. Let's go to Lowe's now. Michael shares down.

That's a no. That's a no. No. Hold the cereal. Shares down a percentage. after Stiffle, or Steeffle, downgraded the home improvement retailer to a hold. Last month, the company cut its full year sales and earnings guidance. Michael, your trade, sir, on lows. Look, I've owned lows for a long time. I think they've performed very well. I mean, they're up 12% year to date, 12%. As a retailer, and retailers, remember, Tyler, have struggled across the board this year.

I think this company has a strong balance sheet and good management. 17 times earnings at a discount to the S&P 500, just right around a 2% dividend while you wait, and 12% earnings growth. So I've got superior earnings growth at a discount price with a dividend while I wait. They're gaining in that pro-share. You know, you go to the stores and it says pro-parking only. They're gaining there. That's profitable. And in their rural stores, Tyler, that's their best-performing DIY sector.

I like this company. I like the management. it's certainly a good hold for me and I would add where I didn't have it. You know what I like, Michael? The lemon cake you sent. Thank you, sir. Delicious, as always. The annual gift from Michael Ford.

You're very welcome. Thank you, sir. Have a great holiday. Stocks go up and down. Lemon cakes never disappoint. No, it's empty for me, brother. See you. All right, well, the sell-off here in stocks this afternoon is picking up some steam.

The Dow is now down about 180 points. Coming up, we'll power through as many more headlines as we can. It's closing time. on the other side of this break. Welcome back. We just want to take a look at markets right now, which have taken a leg lower here in this final, almost hour of trading.

We're at session lows. The S&P is down 9 tenths of 1%. 4725 is the level there. That's after getting to about 28 points within a fresh all-time high in trading yesterday. The Dow is lower right now, too, 235 points after it touched a new fresh record. high earlier in the trading session too. And I think the NASDAQ 100 did as well. I guess maybe just

time for a little bit of a breather, given how far stocks have come so fast in the month of December after the Fed meeting last week. That's right. I mean, wildly overbought conditions, as Mike Santoli talked about at the top of this hour. And so perhaps just a breather here and some consolidation. But in terms of sector performance, really everything is now in the red in the S&P with the exception of communication services. Google has been one of the best performing mega cap names of the day. So that continues to hang on to gains. But everything else here for the most part, starting to see some more weakness. And of course, FedEx, I can't remember whether the FedEx is in the Dow or not, but it has been. It's in the transports. That's right. It has been an underperformer today on

a lot of other companies moving a little bit lower at this hour. So we'll keep an eye on it for you. It could have been 10 in a row, maybe not so much right now. but you never know that last hour is a busy one. Thanks for watching Power Lunch.