C (5:36)

The AI can screen thousands of stocks to build you a one of a kind index and lets you back test it against the S&P 500.

B (5:42)

Then you can invest in a few clicks public. You can also build a multi asset portfolio of stocks, bonds, options, crypto and more. So just head to public.com brewmarkets to try it out yourself. That's public.com brewmarkets paid for by Public Investing.

C (5:56)

Full disclosure in Podcast Description well, earnings.

B (6:00)

Season is a ramping back up. I can't believe it's here already. And today we are going to cover two American stalwarts, Procter Gamble, founded in 1837, and General Electric founded in 1892. Now neither according to some, is particularly glamorous. I find glamour in all these things. But png, that's Procter and Gamble, could be seen as a bellwether for consumer buying and GE as a bellwether for aerospace and defense. And there's a lot going on in both sets of those industries right now. So let's see how each fared. John Kicking off with png.

C (6:34)

That's right, Ticker PG on the New York Stock Exchange with a market cap of $350 billion. And as a reminder, this is the company behind so many household and personal care brands. The list goes on and on, but Tide, Campers, Crest Dawn, Old Spice, Vicks Vix does it. Yeah, that one surprised me. Good for the winter season.

B (6:56)

Yeah, absolutely.

C (6:57)

And so for earnings, the company reported revenue of $22 billion, up 1% year over year, just short of estimates. Adjusted earnings per share of $1.88 beat estimates by $0.02. Gross profit of 11 billion was down 1% due to higher cost of products. P and G maintained its financial guidance for the current fiscal year and the broad story here and is that everything's just basically flat, slightly lower volumes offset by slightly higher prices.

B (7:24)

And intriguingly, flat was sort of the new up for P and G in terms of the market, right? Because the shares sort of spoiler alert, up about 3 today though it is down 9% over the past year. But the thing is it was sort of the least bad outcome. Yes, and just to unpack, why, give some insight into how expectations for consumer staples in this tariff environment and just given this K shaped economy with consumer incomes has fared for P and G. So overall organic sales were essentially flat. There were declines in unit volume across a number of different business lines, offset by higher prices. There was one bright light and I'm going to take a victory lap on this one because I have been drumming on the drum of beauty for a while. And you look at the volumes, those were up for P and G sector overall up 4%, health care up 3%. But the line that is baby feminine and family care sector was down 4%. Which is really quite striking because when you think about baby, feminine and family care, those feel as though they should be the most staple of staples. Right. Which is, which is in the wheelhouse of P and G. But China is an interesting place to look. It's the company's second largest market after the United States. It's experiencing record low birth rates and fewer babies means P and G is selling fewer diapers. And this struck me because so often when we look at the markets, John, we tend to separate out. Today we're going to look at this company and then we're going to look at this macro data and then we're going to look at demographic data. And it's actually when those things come together and impact a company like P and G in such a tangible way at least spoke to me in terms of having to think holistically about the market and not just looking at it sort of piece by piece and in fragments.

C (9:13)

Right, exactly. At the beginning we said and this has been known as a bellwether for the consumer, but this is a global company. There's different consumer needs and trends all over the world.

B (9:23)

Now there's something that's interesting here that is also to your point about the consumer is different everywhere you go. The other thing that we've seen, and we've heard it from the airlines, we've seen it in a apparel and that really is certain consumer facing brands leaning into luxury. And if there was the last place I would have thought of to find a luxury strategy, it would have been in diapers. Yes, well, let's dig into that because to boost the sales of its baby care division, P and G is leaning into luxury. There specifically, the company added silk fibers to the inside of the diapers for its Pampers prestige line, part of the company's attempt to entice shopper to spend more even though underlying demand for the product seems to have waned.

C (10:04)

Right, exactly. And I looked this up. We don't have that product here in the United States yet with the silk fibers. And I saw P&G CFO Andre Schulten interview today and he explained that approach to have a product for each level of consumer spending. And he specifically cited diapers even here in the United States, that there's a price point for Pampers, there's a price point for loves. P&G's CFO also mentioned aggressive competition on today's earnings call. Personally, as a Costco member, I can buy a crate of Kirkland diapers which I do for as a baby gift and it's cheaper and people seem to like the product. So there's competition out there. Shrinkflation. I think this is a difficult space to be in.

B (10:44)

And that example you just gave John is like the epitome of the kind of inflation that brands are terrified of. And that is private label. This is when retailers like Costco are launching their own in house brands. That's exactly the kind of thing that if you're P and G and looking at Costco doing this or a Sam's Club doing this or a Walmart or a Target, and the scale of those retailers, they've got it on both ends. They've got the purchasing power to squeeze you down as PNG on prices and they've got the scale to launch their own competitive product at exactly the same time. So there's a lot of dynamics here that are just so fascinating. And these are the kinds of nuggets that are actually transferable to other elements in the consumer space. Well, let's also talk about the cash. Let's talk about the dough. Last quarter, P and G distributed two and a half billion dollars in dividends to investors, which by the way is part of the core of why people this stock. It is the epitome of the steady Eddie dividend yielder.

C (11:38)

Absolutely. And let me put some numbers behind that. The company has a 135 year track record of paying dividends with 69 years of dividend increases. And just a little perspective 35 years ago, which shockingly to me was in 1990, I found out the payment was $0.06 a share. Now 35 years later, it's $1.06 a share. So increasing every year.

B (12:00)

And just to touch a little bit on dividends, there is a sort of dialogue in the market coverage now that's picking up and talking about dividend stocks. Just as we've seen the market being a little bit more volatile lately with the geopolitical outlook and folks saying what do I do if I'm not investing in big tech or I'm more nervous to do it in terms of just the share increase we've seen in recent recent years. Well, yesterday I talked about Berkshire Hathaway and it was really a case study in why people like dividends. Berkshire looking to exit its investment in Kraft Heinz after taking a $3.8 billion write down on its position. Originally it $10 billion in a 2015 deal there. But the point is that Berkshire's losses have been partially offset by dividend payments over the years. So that's the kind of strategy. This is where dividends can offset a little bit of downside risk in some positions in folks's portfolios. The money cat up with these dividend queen companies. Well, like I said, shares up 3% today, down the 9% over the past year. Important year 2026 for PG. Activists have been circling this one. Well, let's fly on over now to GE. John, change of gears.

C (13:04)

That's right. Let's talk about GE Aerospace. Yeah, market cap $317 billion. And just as a reminder, about two years ago, the conglomerate of General Electric broke up into three independent companies. Those are GE Healthcare, GE Vernova, which focuses on energy, and GE Aerospace, which creates jets and turboprop engines for commercial and military aircraft. Of the three, GE Aviation, which is what we're going to talk about, has the largest valuation. And it got the legacy ticker. It is listed on the New York Stock Exchange as ge.

B (13:36)

It got the ge, which by the way is like a primo ticker. I mean there's a lot of history in that ticker.

C (13:42)

So the headline for GE earnings was Double digit growth across all key metrics. I will fly through these. Revenue of $13 billion up 18% year over year, beating estimates adjusted earnings per share of $1.57 up 19% year over year, beating estimates operating profit of $2.3 billion, up 14% year over year. Free cash flow up 15% year over year and orders up 74% year over year. So double digit growth in all the key metrics.

B (14:11)

So some interesting context here from Bloomberg. Coming into Thursday's results, GE had beaten Wall Street's earnings estimates for 12 quarterly reports in a row. And just by the way, that's a pretty good streak from industrials companies in particular though for this business, the reason you tend to get that same kind of consistency when you're performing is this is a kind of company which has got contracts that are multi year and it provides a lot of visibility. So when you're performing against those, you're sort of on to a good thing. The streak started with GE Aerospace shares at about 81 bucks this week entered the start of this week north of 325, which just goes to show how much progress that this business has made.

C (14:51)

And I think that I found this nugget that, that plays that out. And this is really interesting. GE does business when airplane manufacturing dips because fewer planes are retired. The older fleet needs parts and services, and GE provides those parts and services. But airplane manufacturing is on the rise. Two weeks ago, we were talking about Alaska Airlines placing their largest ever order with Boeing. Well, Boeing and Airbus are expecting to deliver more than 1600 jets this year, up from 1400 last year. So the airplane business is doing well. GE is rising. The margins for GE are generally lower on these original sales, but that just means more planes to maintain and repair in the future. Today, GE CEO Larry Culp said strong demand for parts and services is tied to rising air travel. It underpins earnings and cash flow growth. But the pace of growth may moderate compared to 2025. So moderate growth in 2026, moderate growth.

B (15:49)

Let's just talk about why moderated growth, which is so disappointing for the market today. Let's just look back at that again. Revenue up 18% year over year. Operating profit up 14% year over year. Free cash flow up 15 year over year. This is music normally to people's ears. Music to people's ears. And to. Again, to your point, John, that installed base of aircraft out there is growing, which means the future pipeline of maintenance and repair revenue for this business should be pretty attractive. But the problem is, again, it's the outlook. It feels as though investors are stepping back and saying, no, we now need some looking into the crystal ball. It's all about the tea leaves right now. And moderate or moderated did not land very well. The stock went on to drop. Just looking at the screen right now, down over 77% towards the end of today. Despite an initial positive reaction, it feels as though this one had been perhaps highly priced or this had been priced in and the market saying it was good, but it was not good enough. So just to wrap up this particular conversation, it turns out that we have a General Electric experience in common.

C (16:53)

Oh, that's right. I'll start with mine. I worked for NBC for a few years and so I've been following the stock because even though I work in media, GE owned NBC at that time. So I have a modest GE Aerospace retirement savings plan at Fidelity.

B (17:09)

Right, so you hold GE stock.

C (17:11)

That's right.

B (17:11)

Right. So you must be delighted. This has turned out pretty well.

C (17:13)

It has just been up and up for years.

B (17:15)

Just don't. And what are you gonna just you don't. You haven't touched it.

C (17:17)

I don't touch it.

B (17:18)

You haven't touched it. So I interned at NBC, excuse me, when it was owned by General Electric. So I used to work at Rockefeller center. And the weirdest thing would happen. I think my office, you know the office I was in was on like the 52nd floor or something. And I remember going up there and seeing someone sneak into. I poked my head around and I couldn't see the person in the room. And it turned out that the windows on the 52nd floor were not locked and this person had popped out to take a little cheeky cigarette.

C (17:43)

Oh, sure. He says, oh, that was the thing at 30 Rock was, was the smoky break.

B (17:50)

It was amazing. Anyway, yes, I too remember when NBC was owned by General Electric. Let's take a quick break from this nostalgia and when we come back, spin through headlines moving the market today including updates from Tesla, Halliburton and Spirit Air. Producer John I want to set you up.

C (18:07)

All right, well I'm not on the market but either way I don't know if I trust you in that department.

B (18:10)

Oh yeah, well would you trust a matchmaker who uses AI to comb through a database of people who meet all of your criteria?

C (18:16)

Actually yeah, that sounds great.

B (18:18)

Well that's what sitch matchmaking does. It was designed specifically for the high intent datas out there such as detailed onboarding. Gets to know exactly what you're looking for and your non negotiables.

C (18:28)

Okay, well my non negotiables include being a good pet parent and having an up to date will and testing to it specific.

B (18:33)

But yes, their matchmaker will help ease you into conversations to avoid ghosting and actually set you up. Skip the waitlist@joinsitch.com Morning Brew. That's joinsitch.com Morning Brew. There it is, the closing bell. It's 4:00pm on the east coast and the market's wrapping up for the day. We don't have a ticker tape so let's throw it over to our human ticker, our producer John.

C (18:56)

The S&P 500 up half a percent, the Dow up 6.10of a percent and the Nasdaq finishing up 0.9%. Some market headlines key macro data came out today with release of the Personal Consumption Expenditures price index. That's a critical measure for the Fed that they use for forecasting. It showed inflation at 2.8% for November in line with market expectations but still above the central bank's 2% target.

B (19:20)

Just putting that in perspective too. So today was a rebound in the markets, but it was a rebound on top of yesterday's rebound. So just to put that in some perspective, yesterday the markets responded very well to President Trump saying that he was not going to use force on Greenland. And then actually later on in the day he said in an interview on CNBC that the tariffs that were about to kick in on certain European nations were not going to take effect from next month. So seeing the markets absorb that, in addition to the earnings data, today saw a tick up as a result in the major equity indices. Let's talk about Spirit Airlines really quickly reported to be in talks with the alternative investment firm Castle Lake for a potential takeover. That says the discount airline is looking for a path out of bankruptcy which had entered, you may remember, in last year. Now Frontier Airlines, which is publicly traded, had been in recent talks of Spirit for a potential merger. I got a sense of deja vu when I was reading about that because Frontier has tried several times to go down this path to buy Spirit over the years, but apparently again didn't secure a deal. Stay tuned though, because if there's one thing we're learning in M A these days, when competitors want to go after a target, they're willing to come back to the negotiation table if they want it hard bad enough. So going to keep watching that one. It does have implications for the airlines industry more broadly.

C (20:37)

And finally, to bookend your story about Lemonade giving favorable insurance rates to Tesla's FSD enabled cars CEO Elon Musk announced that Tesla has started robo taxi rides in Austin without safety monitors in the car.

B (20:51)

Wow. It's coming. It's on its way. Waymo actually was in the headlines today. So there's just a whole ton of these robo taxi news stories coming out. We keep watching those. Just as a final, just as a final thought, last Friday we dropped our episode which was a conversation with Alix Steel which was a bit of an overview of what goes on in the oil and gas sector. And it's top of mind for everyone, of course, because of the situation in Venezuela. Now oil field services companies which have been talked about as potentially one of the major beneficiaries if there is more activity to extract oil in Venezuela, are out now with earnings. So reporting this week has started. Halliburton came out yesterday with nearly, it's by the way, a nearly 28 billion dollar market cap. It did beat expectations for fourth quarter earnings and revenue and did say that it would see Venezuela as a place it could get busier in. And its competitor SLB has earnings due out tomorrow morning. Well, we're going to do a roundup of the major players in an upcoming show. We're going to try and bring it to life and add some jazz to it. But meanwhile, we've got our ears open for what they all say about any potential opportunity for growth in Venezuela, again, given the White House focus on opening up that oil market. But one key consideration in all of this narrative has been whether Venezuela will have a step up in law and order to encourage US Oil companies to send their teams into the country, something they've been reluctant to do in part because of safety concerns. Well, Energy Secretary Chris Wright today said on Bloomberg that the U.S. government is, quote, not going to get involved in providing on the ground securities. We're going to have to keep watching this to see how that evolves. That's it for today's Brew Markets Daily.

C (22:33)

Brew Markets Daily is hosted by Anne Barry and produced by John Croteau, Tarkat Belletief and Emily Milian. Our technical director is Lonnie Fiskis. Jim Orzo is our audio engineer. And the president of Morning Brew Inc. Is Devin Emery.

B (22:43)

Wake up tomorrow with the Morning Brew newsletter and tune in to Neil and Toby on Morning Brew Daily. We'll see you back here tomorrow, same time, same place.