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| Hello Insiders!! Today's Business newsletter covers: - 🚫 U.S. blocks China's access to AI chips
- 🍻 Deep Dive: Mexican liquors and beers boom in U.S.
- 💰 BofA profit beats estimates on interest income
If you enjoy reading this newsletter, please share it with your friends and colleagues. Make sure to continue reading for the Quarterly Earnings Report and the Quick Hits. Thank you!! Shriram
p/Shriram | |
| 1 | | The U.S. Commerce Department has introduced stricter export controls on semiconductors to safeguard national security, extending these regulations to 21 countries beyond mainland China and Macao, including Iran and Russia. These measures will impact advanced artificial intelligence chips, such as Nvidia's H800 and A800 products, while chips used in phones, video games, and electric vehicles will remain unaffected by these rules. More: - U.S. chipmakers saw declines in their stock prices on Tuesday in response to introducing new export controls, with Nvidia's shares falling 4.7%, Intel slipping 1.4%, and AMD ending 1.2% lower.
- The U.S. is working with its allies (Europe and Asia) to prevent China from purchasing cutting-edge chipmaking machinery, as the U.S. and China's tech rivalry has been growing more intense.
- The Semiconductor Industry Association voiced concerns regarding these regulations' effects on the U.S. semiconductor industry.
- The U.S. Department of Commerce added 13 Chinese entities, including startups Biren Technology and Moore Thread Intelligent Technology, to a list of firms U.S. companies can't do business with for national security reasons.
Q: How will these regulations impact U.S. chipmakers' global competitiveness in the semiconductor market? Join the conversation here. |     | |
| 2 | | 
What the numbers say: According to the Distilled Spirits Council of the United States, in the U.S., almost 30 million 9-liter cases of mezcal and tequila were sold in 2022. Over the past two decades, the tequila and mezcal category in the U.S. has seen significant growth, with a 273% increase in volume and a remarkable 1,522% surge in premium agave-based spirits since 2003, while Mexican beer imports into the U.S. grew by 10.6% in 2023. Relevance: The popularity of Mexican alcoholic beverages in the U.S. is due to authentic marketing and consumers' preference for premium brands like Modelo Especial and Corona Extra. The success of Mexican beers also stems from changing tastes for lighter, pricier imported lagers, influenced by the growing Hispanic population and Latin culture in the U.S. More data: In 2022, tequila and mezcal, Mexican agave-based spirits, became the second-fastest-growing category in the U.S., and they are expected to surpass vodka as the fastest-growing category in 2023. Earlier this year, Constellation Brands' Modelo Especial surpassed Bud Light to become the best-selling beer in the U.S. To compete with rivals, Heineken's Dos Equis brand intends to increase its distribution throughout the U.S. | | | |
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| 3 | | Bank of America posted Q3 earnings of $0.90 per share, exceeding LSEG's expected $0.82, with revenue reaching $25.32B, surpassing the projected $25.14B. The bank's profit also saw a 10% increase to $7.8B compared to the previous year, and revenue grew by 2.9% to $25.32B, outperforming the estimates. More: - Driven by rising rates and growing loans, the bank's interest income increased by 4% to $14.4B, about $300M more than analysts had projected.
- Against the $1.3B projection, Bank of America's provision for credit losses came in less than anticipated at $1.2B.
- CEO Brian Moynihan claimed that the bank had expanded and gained customers and accounts across all business lines despite indications of an economic downturn.
- While competitor JPMorgan Chase had a 10% rise, the bank's stock had dropped 18% year to date.
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| 4 | | Goldman Sachs recorded a net profit of $2.06B, representing a 33% decrease compared to the previous year but surpassing analyst projections with $5.47 per share in earnings. In the third quarter, Goldman's investment banking fees remained relatively stable at $1.55B, following a 20% decline in the second quarter from the previous year. More: - David Solomon, the CEO of Goldman Sachs, voiced optimism about a recovery in capital markets and strategic initiatives like mergers and acquisitions despite a drop in earnings.
- The bank's stock fell 0.2% in yesterday's late-morning trading.
- The bank's real estate holdings and $864M writedown associated with its GreenSky fintech business contributed significantly to the decline in profits.
- Another factor weighing on profits was real estate investments, where the bank recorded an impairment charge of $358M instead of $485M in the second quarter.
- 14% of Goldman's total loan portfolio consisted of commercial real estate loans, which have become riskier for banks as interest rates climb.
- Commodities, currencies, and fixed income instruments (FICC) showed weakness, with a 6% decrease in net revenue.
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| 6 | | In September, U.S. retail sales outperformed expectations, increasing by 0.7%, with a 0.6% rise when excluding automobile sales, surpassing the predicted 0.3% and 0.2%, respectively. The growth was supported by a 0.9% increase in gas station sales, contributing to a year-over-year retail sales growth of 3.8%. More: - Sales rose across different sectors, with the most significant increase at miscellaneous store retailers (3%), followed by online sales (1.1%), motor vehicle parts and dealers (1%), and food services and drinking places (0.9%), which saw a notable 9.2% yearly growth, leading all categories.
- Merely a few sectors underwent reductions; apparel retailers and stores selling electronics and appliances displayed a 0.8% monthly dip.
- According to the CME Group's gauge of futures market pricing, "as a result of encouraging consumer statistics, there is an increasing likelihood that the Federal Reserve will take a closer look at raising interest rates in December."
- Credit card balances, including Bank of America's 0.2% monthly increase in September, are rising, and the expected return of student loan payments is likely to affect spending.
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- A report from Setapp indicates a growing trend in AI adoption among Mac users, with 42% using AI apps daily and 63% favoring them for their perceived benefits over non-AI apps.
- Engaged Capital, an activist investment firm, bought a stake in VF Corporation, owner of Vans and The North Face, seeking cost cuts and board changes, causing VF Corp.'s shares to rise by 14% to $18.45 on Tuesday.
- Laurie Ann Goldman has been appointed as Tupperware's new CEO as the iconic brand aims to overcome recent difficulties, resulting in an 8% stock price increase, closing at $2.18 on Tuesday.
- X is conducting a trial called "Not a Bot," where new users in New Zealand and the Philippines need to pay a $1 annual subscription to post and interact with content, prompted by Elon Musk's previous hints.
- Don't wait for IPOs to make your move. Sandhill Markets offers access to pre-IPO shares of Stripe, Anduril, OpenAI, and Databricks.*
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INSIDE BUSINESS LEADERBOARD (7 DAYS) |
 | Freelance Writer | | Shriram is pursuing Master’s in Business with Marketing at Warwick Business School. He worked as a Senior Consultant in Tech and Political Consultancies before his Masters. He is passionate about Tech, Marketing, Strategy, Anthropology and Politics. He is also the Postgraduate Ambassador for Warwick Business School. | | This newsletter was edited by Aaron Crutchfield | |
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