Closing Bell Overtime: What Nvidia’s New AI Chip Means For Investors; What Both Sides Need From China-U.S. Sideline Talks This Week 11/13/23
Nov 13, 2023
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Solus' Dan Greenhaus and Edward Jones' Mona Mahajan discuss market action and year-end investing. Bernstein's Stacy Rasgon shares insights on Nvidia's new AI chip. The Blueshirt Group's Gary Dvorchak talks about sideline talks between China and the US. Janus Henderson's Adam Hetts discusses finding value in investments. Courtney Reagan looks ahead to retail earnings and interviews Tyson CEO on consumer behavior changes.
Tyson Foods is facing challenges in its chicken, pork, and beef segments due to oversupply, high feed costs, and low cattle inventories.
Retailers are approaching Q4 earnings with caution as apparel sales decline, store traffic drops, and cost pressures persist.
Tyson Foods is focusing on producing more bacon to offset the pork glut, while retailers are prioritizing profitability, inventory management, and automation amid challenges in the market.
Deep dives
Mixed earnings and disappointing guidance weigh on Tyson Foods stock
Tyson Foods reported mixed earnings results, with a revenue miss and disappointing guidance. The chicken and pork segments faced challenges due to oversupply and high feed costs. However, the company expects improvement in cash flow and profitability in the coming year. Tyson plans to produce more bacon to offset pork glut and sees signs of recovery in the chicken segment. The beef segment faces pressures from low cattle inventories, resulting in higher costs and retail prices. Tyson is focusing on growing its prepared foods business and investing in automation to address labor challenges.
Investors cautious ahead of retail earnings
Investors are approaching retail earnings with caution as sentiment for the retail sector remains negative. While US consumers have been resilient in the face of inflation and rising rates, retailers are setting cautious expectations for Q4. Foot traffic at Home Depot and Target declined during the quarter, and apparel sales have been weak due to warmer weather and lower spending. Walmart's store traffic also dropped. Investors are looking for guidance on how retailers will navigate cost pressures and inventory de-stocking. Gross margins and profitability will be closely watched, particularly for companies in the grocery and consumable sectors.
Tyson Foods CEO highlights challenges in beef, chicken, and pork segments
Tyson Foods CEO Donnie King discussed challenges in the beef, chicken, and pork segments. Oversupply and high feed costs affected chicken and pork, while beef faced low cattle inventories, resulting in increased costs and retail prices. Tyson is planning to produce more bacon to offset the pork glut and sees signs of recovery in the chicken segment. However, beef is expected to face challenges in the coming year. King also emphasized the importance of higher labor costs and investments in automation to address workforce challenges.
Retailers cautious with Q4 expectations amid challenges
Retailers are taking a cautious approach to Q4 expectations due to challenges in the market. Home Depot anticipates a year of moderation for home improvement, while Target is seeing a pickup in discretionary categories like clothing. However, clothing spend has been declining, and the warm weather has impacted sales. Walmart remains steady due to its large grocery business, but store traffic has dropped. Retailers are focusing on profitability, managing inventory, and investing in automation amid cost pressures.
Investors anticipate challenges in the retail sector
Investors hold negative sentiment towards the retail sector and anticipate challenges in the upcoming earnings reports. While US consumers have remained resilient, retailers have set cautious expectations for Q4. Home Depot expects moderation in home improvement, Target and Walmart have seen declining store traffic, and apparel sales have been weak. Investors are focused on gross margins, profitability, and guidance related to cost pressures and inventory de-stocking.
Markets vacillated throughout the session but ended the day little changed after Friday’s rally. Solus’ Dan Greenhaus and Edward Jones’ Mona Mahajan break down the market action and what how they are recommending clients position their portfolios heading into year-end. Bernstein’s Stacy Rasgon on what investors need to know about Nvidia’s new AI chip, unveiled today. The Blueshirt Group’s Gary Dvorchak will be at the Xi Jinping banquet at this week’s APEC summit; he shares what both sides hope to gain from sideline talks. Janus Henderson’s Global Head of Multi-Asset, Adam Hetts, on where investors can find value right now. Plus, Courtney Reagan looking ahead to a major week of retail earnings and Morgan speaks with Tyson CEO on the changes in consumer behavior he is seeing.
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