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“What America needs now is a drink.” – Franklin Roosevelt, 12/5/33

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It’s been a modestly positive week already, and futures are looking to modestly add to those gains with the S&P 500 up 0.20% and Nasdaq futures pointing to a gain of 0.3%. Bond yields are marginally higher on the day ahead of important (but stale) inflation data, and the 10-year yield is just below 4.12%. Crude oil and gold are little changed, but silver prices are up another 1.5% while copper is up just over 1%. Lastly, crypto prices are lower across the board, but the losses are contained at just 1.3% for Bitcoin.

In Asia, the Nikkei fell 1.1% but still managed to finish the week up 0.5% as yields at the long end of the curve continue to hit multi-year highs. Outside of Japan, though, other indices in the region are trading higher, finishing in positive territory for the week.

European stocks are higher across the board again this morning. The STOXX 600 is poised to close out the week with a gain of nearly 1%, while German stocks lead the region higher as factory orders rose more than expected. Q3 GDP for the entire Eurozone also rose slightly more than expected (0.3% vs 0.2% forecast).

It may have been a Tuesday, but for many Americans, December 5, 1933, probably felt like a Friday. Earlier in the day, Pennsylvania and Ohio had already ratified it, but at 5:32 PM Eastern time, the state of Utah became the 36th state to ratify the 21st Amendment. The amendment repealed the 18th Amendment, and with Utah’s passage, the 21st Amendment achieved the three-fourths majority required for it to become law, ending the nearly 14-year period of national Prohibition in the United States.

Liquor and tobacco stocks have historically been considered recession-proof investments for most of the last 100 years. However, in the last few decades, tobacco stocks have fallen out of favor due to escalating health concerns and heavy government regulation. In recent years, many of the same pressures surrounding tobacco have begun to affect the stocks of alcohol companies. Between emerging health concerns, the proliferation of GLP-1 treatments that suppress the urge to drink, and the rising popularity of cannabis, alcohol stocks have been taking punches from multiple directions.

As the snapshot illustrates, the majority of major alcohol purveyors have experienced significant Year-To-Date (YTD) declines, with most falling over 20%. While Anheuser-Busch InBev (BUD) may appear to be an outlier and is not down by the same extent, the broader trend is one of sharp underperformance across the sector. More recently, individual stock performance has been mixed: Brown-Forman (BF/B) has seen a multi-week rally, and Constellation Brands (STZ) is also currently trading marginally above its 50-day moving average (50-DMA).

The one-year charts of these six stocks are a sobering picture of underperformance, making you want to grab a drink and drown your sorrows rather than celebrate. Even BUD, while up YTD, is down sharply off its high, but the other five stocks remain mired in steep downtrends.

Finally, just because tobacco stocks have fallen out of favor, you could have done worse. As shown in the chart below, from a price perspective, shares of Altria (MO) underperformed the S&P 500, but not by a ton.  What the price chart doesn’t account for is dividends. MO has a much larger dividend than the S&P 500, and when you take those dividends into account since the start of 2005, they add up. Had you reinvested dividends back into the stock, MO’s total return would have been over 1,300% compared to a total return of 730% in the S&P 500. Whatever you think of tobacco stocks and their impact on the health of the population, investing in them over the last twenty years has been anything but putting your money up in smoke.  See you all at 5:32!