Asia Forms World’s Biggest Trade Bloc, Excludes U.S. | Tyson Foods Prepares For Second Wave

MarketBites Investment Newsletter for 11/16/2020

Your daily dose of stock market commentary and most important investment and business news. written by investment professionals at Taylor Hoffman Capital Management.

Quote of the Day
“Believe you can and you’re halfway there.”
– Theodore Roosevelt

Today’s Top Investment Stories
  1. Asia Forms World’s Biggest Trade Bloc, Excludes U.S.
  2. Tyson Foods Prepares For Second Wave
What is driving the stock market today? – November 16th, 2020

– U.S. stocks were influenced by election and vaccine news last week. The Dow had the best stretch for blue-chip stocks in months, rising 4%. Tech stocks seemed to make a comeback on Friday, but the tech-heavy NASDAQ closed the week down 0.6%. Among the week’s biggest decliners were highflying “lockdown” stocks. Zoom Video fell 6.76%, while Amazon slipped 3.14%.

– Benchmark 10-year Treasury yields peaked at 1% on Wednesday, but settled at 0.89% by the end of the week. Bond traders became less optimistic about a vaccine-induced economic recovery, as Covid-19 cases continued to peak.

Coronavirus tracker: Per Johns Hopkins, the U.S. reported 167,000 new cases yesterday, while Europe had 243,000 new cases. United States Covid hospitalizations jumped to 69,455. More states are easing into previous Covid restrictions. A nationwide lockdown continues to be a “last resort action” by both political parties.

– By Raymond Kanyo

Top Story 1: U.S. Excluded from Asia’s Free-Trade Bloc

What is Happening?
Fifteen Asia-Pacific economies formed the world’s largest free-trade bloc on Sunday, called the Regional Comprehensive Economic Partnership (RCEP). The deal is backed by China, and specifically excludes the United States.

Why does this Matter?
The deal seems to more firmly plant China’s position in the Southeast Asia region. RCEP will account for 30% of the global economy, 30% of the global population, and reach 2.2 billion consumers. It should also help Beijing cut its dependence on American markets and technology. It is unknown how the agreement will impact American firms exposed to the region, such as semiconductor companies.

China touted the agreement as a historical event. For the first time, the rival East Asian powers of China, Japan, and South Korea are all in a single, free-trade agreement together. India chose not to join the RCEP, but China is open to enrolling the country in the future.

The Takeaway:
We don’t yet know the exact details of the agreement. Vietnam’s Ministry of Trade indicated that the deal would help reduce or remove tariffs on industrial and agricultural products, and set rules for data transmission. At this time, experts think that neither Republicans nor Democrats share a desire to be included in RCEP. Experts believe that in the immediate term, the U.S. will be focusing on the Covid-19 pandemic.

– By Raymond Kanyo

Top Story 2: Tyson Sets the Bar for Proactive Covid Measures

What is Happening?

Tyson provides 1 out of every 5 pounds of chicken, pork, and beef consumed in the United States. As local governments reinitiate coronavirus restrictions, Tyson is working diligently to keep its operations intact, and its employees safe.

Why does this Matter?

As grocers begin to implement quantity limits on various consumer staples again, Tyson is taking the necessary steps to keep its plants clean, workers healthy, and distributors stocked.

Tyson has developed an algorithm for its 241 domestic meatpacking plants. The algorithm uses local infection rates, and each plant’s testing results, to improve the firm’s risk mitigation. With the algorithm’s guidance, Tyson is able to ramp up testing and precautionary measures in specific departments as needed. The system has lead to extraordinary results, as less than 1% of Tyson meatpacking workers are currently infected.

Tyson has also hired more than 200 nurses since the beginning of the pandemic. The nurses work on-site, administering often ‘free’ healthcare to Tyson employees. Although these measures have greatly cut into Tyson’s budget, they are actively preventing full plant shutdowns, which would lead to product shortages and further financial damage. Tyson executives have been making strategic moves on digital platforms, to better directly serve consumers as outbreaks ravage parts of the country.

The Takeaway:
As various consumer staples will again have purchase limits, Tyson plans to adequately stock grocery stores everywhere. They are much better prepared than they were in March. The firm and its executives believe they have built a very stable health environment for operation.

– By Jack Dunne

What else is happening:
LinkedIn finds error that inflated ad performance metrics – (read here)
SpaceX attempts to make human space travel routine – (read here)
Dustin Johnson wins Masters in record fashion – (read here)
Marlins hire Kim Ng, the first female GM in sports – (read here)
Deals & IPOs:
Earnings Calendar:
Baidu ($BIDU), ($JD), Palo Alto Networks ($PANW), Tyson Foods ($TSN)
Nio ($NIO), Home Depot ($HD), Kohl’s ($KSS), Walmart ($WMT), La-Z-Boy ($LZB), Sea ($SE)
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