Stocks exposed to Russia-Ukraine crisis: McDonald’s, Mohawk Industries, PepsiCo, Philip Morris

Yahoo Finance Live's Julie Hyman and Brian Sozzi discuss how stocks like McDonald's, PepsiCo, and Philip Morris International are exposed to escalating Russia-Ukraine tensions.

Video Transcript

- And just a few minutes till the opening bell on this first trading day of the holiday-shortened week. And we continue to have US investors and global investors really grapple with what's going on between Russia and Ukraine. Russia beginning to make incursions into Eastern Ukraine after essentially claiming two states there as its own-- stateless, as they've sometimes been referred to, as its own. So Brian Sozzi, we've been going through some of the notes this morning as US strategists try to figure out how to play all this. Goldman Sachs, for example, is saying that this could cause in a worst case scenario a 5% hit to the S&P 500. So there's that commentary. You've been looking at some of the individual names that could be affected also.

BRIAN SOZZI: Yeah. Even just staying on that Goldman note real quickly, Julie. I mean, Goldman looking at a potential worst case scenario euro stock 69.3% decline. The Nikkei could fall about 9%. The Russell 2000 is at risk for an over 10% drop here. So Goldman, of course, I would just say dropping the hammer here on just trying to shed light on investors. Hey, it could be a worrisome situation here for markets around the world, just not in the US.

But also, the folks over at JPMorgan put together a good list of 25 companies with outsized exposure to Russia in terms of their sales. I listed seven in a new piece now on the Yahoo Finance Homepage. A couple of notables that stick out-- McDonald's. 4.2% of their sales actually come from Russia and Ukraine. Mohawk Industries. They're one of the largest makers of tiles and carpet. 4.3% of their sales come from Russia and Ukraine. PepsiCo. 4.4% of their sales come from Russia and Ukraine.

Even Philip Morris. 8% of their sales from this region. Arconic, 9.4%. So you get the point. There are some big large multinational companies with a lot of exposures here. And it is interesting, Julie. We're not seeing these stocks move much here in the premarket here despite those exposures. But still, it's something to very much keep in mind here if you're investing in these companies.

- Yeah. I mean, I think to, again, come back to the point that the Goldman note makes, you're talking about worst case scenarios here, right. So in order for a real hit to earnings for some of these companies, the fallout here would need to be much broader than it appears to be at this point. And we just don't know yet. It seems like there are still some diplomatic channels being left open. We don't know yet how severe this conflict is going to end up being. So perhaps investors are sort of waiting here before they react.

But I thought Lenore made some really good points a few moments ago in that conversation that shows it's, of course, not just companies that have direct revenue from Russia and Ukraine. It's the supply chain effect. So if you see a shortage of certain gases that are integral to various tech manufacturing processes, then you're going to have the exacerbating of the already bad supply chain issues for the semiconductor industry, for example. And there you also see the direct effect on the RSX, which is the ETF that tracks Russian stocks that's trading sharply lower. So Sozz, there's a big-- [INTERPOSING VOICES]

BRIAN SOZZI: There's a lot going on.

- --here potentially.

BRIAN SOZZI: No. And make no mistake, consumers in the country, if not around the world, are very much concerned. Google searches for the word recession have been on the climb the past about three weeks. I tweeted that out over the weekend. You have gas prices in California are approaching $5 a gallon on average. That is a major increase. And one of the top stories on Yahoo Finance for us the past week has been this view that if this invasion does happen, perhaps we get gas prices going to $7 a gallon, as Dan Dicker told us last week. So there's a lot of angst out there. Make no mistake about it.

- Yeah. There is a lot of angst out there. And also by the way, on the flip side, something that might alleviate the oil supply situation, it looks like there we are close to another nuclear agreement with Iran, which could then unlock some of the sanctions there and get that oil flowing to other areas of the world where it hadn't been, including the United States. So that's something also that could mitigate some of the effect.

But this morning, we're not necessarily seeing that mitigation as we are watching energy prices continue to climb. We've been watching oil. We've been watching natural gas. We've been watching all of those various other commodities, including metals and AGs, that have been climbing on concerns about a cut off in supply there. There you see crude oil futures. That's WTI. Brent is even higher. It touched $99 a barrel this morning.

So all of that factoring into investment decisions this morning. And Brian, I think we should really put a fine point on this. We now seem to be having an increasing drumbeat that if Russia and Ukraine continues to worsen, the Fed is less likely to raise by 50 basis points. I mean, that's a really important point here because it seemed like last week people were saying the Fed needs to raise by 50, right. That's what the market wants them to do. Now that seems to be waning a little bit.

BRIAN SOZZI: But still raise. I think that's the key takeaway and it's ultimately why you have, I think, the market in a very hard spot. The Fed's in a tough spot here, Julie. Very tough.

- Yeah. The Fed's been in a tough spot. And this doesn't make it any easier as we look to this opening bell on this Tuesday.

[BELL RINGING]

So opening bell here. We are coming off of two straight down weeks for the major averages. The Dow, the S&P, and the NASDAQ all fell last week yet again. So we've been seeing this pretty dramatic uptick in volatility as of late. You already had an uptick in volatility because of rising inflation, because of the debate over central banks and how much they're going to move, particularly the Fed. And now you have Russia layered on top of all of that. So we are seeing the NASDAQ out of gate this morning down by nearly 1%, leading, as it has been, to the downside.