• Corporate debt defaults increased significantly in 2023, reaching 153 compared to 85 the previous year, marking an 80% rise. This trend poses a potential concern for 2024, as financially strained companies grapple with the challenges of high-interest rates, according to a report by S&P Global Ratings.
• A substantial portion of the defaults originated from low-rated companies facing negative cash flows, high debt levels, and weak liquidity. Consumer-facing industries, notably media and entertainment, played a prominent role in the increased default rate.
• Corporate debt in the United States has surged to USD 13.7 trillion, rising by 18.3% since 2020. This escalation occurred as companies took advantage of the Federal Reserve's interest rate cuts during the early stages of the Covid-19 pandemic.
• S&P Global Ratings anticipates further global credit deterioration in 2024, particularly for lower-rated entities ('B-' or below). The firm expects financing costs to remain high despite potential rate cuts. A significant portion of speculative-grade debt is projected to mature in 2025 and 2026, potentially contributing to a "corporate debt cliff."
• The economic slowdown and increased financing costs could lead to more widespread defaults, affecting sectors beyond media and entertainment, including consumer products, retail, and health care. Further, while Fed rate cuts are expected to provide some relief, elevated rates are likely to persist through 2024. Market expectations suggest a substantial cut in short-term rates, but Fed officials have hinted at a more gradual approach depending on inflation data.

(Source: CNBC)

• It is a close call whether the Bank of England starts trimming borrowing costs next quarter or in July-September, with only a slim majority of economists expecting it to do so before July as inflation falls towards its target. That is a turnaround from a December poll when more than two-thirds of respondents expected no move until at least the third quarter, as inflation is now seen falling faster.
• Inflation surged to a 41-year high of 11.1% in late 2022 and has proved tricky to tame even though the BoE raised interest rates 14 times from December 2021 to August 2023, taking the Bank rate to a 15-year peak of 5.25%.
• In December, inflation sped up for the first time in 10 months, rising to 4.0% from November's more-than-two-year low of 3.9%, denting market expectations for an early rate cut. The December poll indicates that the Bank of England (BoE) was initially expected to make its first interest rate cut in the third quarter, aligning with global trends seen in the U.S. Federal Reserve and the European Central Bank.
• Respondents, anticipating a Q2 cut, favour May over June due to its alignment with the second-quarter monetary policy report. Analysts, such as Marc Ostwald at ADM Investor Services, emphasize the importance of evaluating underlying economic trends.
• Inflation is projected to drop below target to 1.9% in the next quarter, providing the BoE with room to consider policy easing. The majority of economists foresee a Bank Rate reduction by the third quarter, aiming for 4.25% by year-end. The UK economy is expected to navigate challenges, with a forecasted growth of 0.1%-0.2% per quarter in 2024 and a more optimistic 1.2% growth in 2025.

(Source: Reuters)

• The Jamaica Stock Exchange (JSE) has issued an advisory to the public that it has decided to immediately suspend trading in iCREATE Limited’s (ICREATE) shares due to its failure to comply with the requirements of the JSE Junior Market Rule.
• This is in keeping with the provisions of JSE Junior Market Rule 505 – Ongoing Requirements, Section 14 – Delisting or Suspension 14 (a) (i).
• It states that “The JSE may, in its absolute discretion, delist or suspend trading of the admitted participating voting shares and other admitted securities of a Junior Market Company if the Junior Market Company fails or ceases to comply with any of the requirements of the Admission Agreement, or any of the statements made in the Declaration for Admission, or this Rule 505;”
• The company's trading activities were also suspended in August 2023 for failing to submit its audited financial statements on time.
• The notice of suspension will remain in force until iCREATE has responded to the satisfaction of the JSE to all matters concerning its compliance with the JSE Junior Market Rules.

(Source: JSE

• During the fourth quarter of 2023, Jamaica's Consumer Confidence Index hit 174.7 points, the highest level since 2019 and an 8.5% gain over the previous quarter.
• Don Anderson, CEO of Market Research Services, highlighted that the spike in the consumer confidence index indicates that consumers are perceiving a return to pre-pandemic conditions, with significant changes in business and work conditions expected over the next year.
• In contrast, local businesses appear to be less optimistic about their profits improving in 2024. The Index of Business Confidence reported a decrease between Q3 and Q4 from 144.7 points to 139.1 points, reflecting a change of -3.9%. This change is due to declines in firms’ financial standing and profit performance between quarters.
• Similarly, the index of business conditions, which constitutes thoughts about the climate for investment/expansion, as well as the performance in the firms’ profitability, remained relatively stable in Q4. The proportion of firms that are convinced it is a good time to invest dipped to 53% in Q4, down from 57%. The proportion of firms that reported that profits are better than expected was stable at 26% compared to 25% in Q3. Compared to Q4 2022, the index of current business conditions recorded a small negative change of -1.6%.
• Despite different confidence trends, businesses and consumers remain concerned about crime and violence, which they see as a substantial obstacle to Jamaica's prosperity.

(Source:  Jamaica Conference Board)

• The Panama Canal's toll revenues have dipped by about $100Mn per month since last October, the canal's administrator said on Wednesday, January 17, adding that if the trend continues, reduced income from tolls could total some $700Mn by around April.
• The falling revenue stems from drought conditions that have forced the canal's managers to impose shipping restrictions on the more than century-old waterway. A crucial global trade route linking the Pacific and Atlantic Oceans.
• Canal Administrator Ricaurte Vasquez described the continued trend of falling toll revenue in coming months as "possible", in comments to reporters at a press conference.
• He added that the waterway is expected to meet targets set out in its budget for income for the fiscal year, in part due to a recent toll increase that has come into effect.
• The canal's fiscal year begins in October and runs through September.

 (Source: Reuters)

• In September, a group of Brazilian farmers and officials arrived in the Peruvian fishing town of Chancay. The draw: a new Chinese mega port rising on the Pacific coast, promising to turbocharge South America's trade ties with China.
• The $3.5Bn deep water port, set to start operations late this year, will provide China with a direct gateway to the resource-rich region of South America. Over the last ten years, Beijing has unseated the United States as the largest trade partner for South America, devouring its soy, corn, and copper.
• The port, majority-owned by Chinese state-owned firm Cosco Shipping, will be the first controlled by China in South America. It will able to accommodate the largest cargo ships, which can head directly to Asia, cutting the journey time by two weeks for some exporters.
• There are hopes for Chancay to become a regional hub, both for copper exports from Peru as well as soy from western Brazil, which currently travels through the Panama Canal or skirts the Atlantic before steaming to China.
• Peru's government is planning an exclusive economic zone near the port and Cosco wants to build an industrial hub near Chancay to process raw materials that could include grains and meat from Brazil before shipping them to Asia.
• Brazil's ambassador in Peru, Clemente Baena Soares, said there were plans for meetings between officials early this year to seek to resolve logistical, sanitary, and bureaucratic hurdles at the border so Brazilian trucks can more easily reach the port.

 (Source: Reuters)

• Workers in Europe are hoping this year's pay round will help restore incomes eroded by higher prices, but the expected boost to their purchasing power could hamper the European Central Bank's efforts to bring inflation back to target.
• The ECB has singled out wages as the single biggest risk to its 1.5-year crusade against inflation. It expects salary growth across the eurozone of 4.6% this year, far more than the 3% pace it considers consistent with inflation at its 2% target.
• Higher wage settlements would be a risk to interest-rate cuts that financial markets are betting will start in April. Pay hikes increase costs for firms and boost household income, both factors that might push up prices and require the ECB to keep rates high.
• "We see a path to 3% (wage growth) but it will be a bumpy road," Reamonn Lydon, an economist at the Central Bank of Ireland and one of the minds behind the popular Indeed Wage Tracker, said in an interview.
• Unions see a combination of gradually cooling inflation, low unemployment, and fat corporate profit margins as their best and possibly last shot at restoring workers' living standards in this economic cycle.

(Source: Reuters)

• The Bank of Japan is likely to maintain its ultra-loose monetary settings next week, putting the focus on any hints Governor Kazuo Ueda drops about when the central bank will boost short-term interest rates out of negative territory.
• As many policymakers want to spend a few more months determining whether wage increases will broaden enough to keep inflation sustainably at the BOJ's 2% target, markets now expect a rate hike in March or April at the earliest. However, while the BOJ likely has its eyes set on ending negative rates, people familiar with the central bank's thinking said there were plenty of benefits to holding fire at least until its April 25-26 meeting.
• Surveys and comments from business lobbies have shown an increasing chance Japan's spring wage hikes will be above last year's 30-year high of 3.58% for major firms - a key prerequisite Ueda has set for exiting ultra-loose monetary policy, which is an outlier among major central banks.
• Many BOJ policymakers want to check whether the increases will become more widespread and prod companies to pass on higher labour costs via price hikes, particularly for services. This is in line with a Reuters poll of analysts, who unanimously forecast the BOJ would keep its short-term interest rate target at minus 0.1% and the 10-year government bond yield around 0% at the two-day meeting ending on Tuesday.
• With easing cost-push pressure slowing inflation back towards its 2% target, the BOJ can afford to await more data, such as the outcome of the annual wage talks between big firms and unions in mid-March, said the sources, asking not to be identified because of the sensitivity of the matter.

 (Source: Reuters)

• Knutsford Express Services Limited is reforming its passenger processing and boarding procedures, using a model similar to airport logistics, inclusive of departure gateways. In addition, the company has also added a digital ticket-checking system. 
• Knutsford Express provides luxury bus services and courier services across Jamaica, bringing passengers and cargo to approximately 20 touchpoints in all parishes, except St Thomas. CEO Oliver Townsend said St Thomas would be added to its routes later this year.
• The new passenger movement system is up and running at the company’s Drax Hall depot in St Ann. With the new system, travellers headed to different destinations exit through labelled gateways after bookings, and once verified by codes that are scanned.
• The business touted the new technology as an operational boost at a time when passenger volume is increasing. Overall, the new ticketing is expected to improve the company’s efficiency as demand for its services is increasing.

(Source: RJR News)

• Minister without Portfolio in the Office of the Prime Minister with responsibility for Skills and Digital Transformation, Senator Dr. the Hon. Dana Morris Dixon, is encouraging Jamaicans to consider the new job opportunities that come with increased automation.
• Dixon cited the World Economic Forum's projection that automation and artificial intelligence will displace 85 million jobs worldwide, saying that beneficial achievements are not given enough emphasis.
• She noted that the World Economic Forum also forecasted the creation of 97Mn new roles, emphasising the need for a skilled workforce adapted to the robotics era.
• Meanwhile, HEART/NSTA Trust Managing Director, Dr. Taneisha Ingleton highlighted that the agency has commenced preparations for the ‘New World’. She also noted that robotics is at the forefront of a revolution, promising advancements in industries from healthcare to agriculture, adding that “we are determined to position Jamaica as a leader in this transformative field”.
• Across the globe, countries are moving towards more automation and reliance on artificial intelligence. As such, it is inevitable for Jamaicans to adapt to this new regime to remain competitive. This includes completing the necessary trainings and becoming more accommodating to the change.

 (Source: JIS)