• According to finance ministry data compiled by Reuters, Brazil estimates aid measures taken by authorities after deadly floods in its southernmost state will cost at least 13.4Bn reais (US$2.6Bn) from its budget.
• Heavy rains, which have battered Brazil's Rio Grande do Sul state since late April, caused historic floods that killed over 150 people, while nearly 100 residents are still missing and more than 500,000 have been displaced, official data shows.
• A plan to guarantee credit lines with lower interest rates for small businesses and a cash handout program for families affected by floods are among the measures accounted for in the current fiscal estimate.
• However, the number is likely to rise, as the ministry has not disclosed the fiscal impacts from other measures recently announced such as a plan to buy homes from the private sector to house displaced people.
• Not all the aid measures taken by the government impact its budget since some of them only bring forward payments of social benefits. A proposed freezing of state debt payments also has no effect due to government accounting specifications in the country.
• Investors have closely watched Brazil's fiscal situation after the federal government decided to loosen its 2025 fiscal target earlier this year (targeting a primary surplus target between 0% and 0.25% of GDP, down from the previous 0.5% of GDP target.), even before the rains in Rio Grande do Sul.

(Source: Reuters)

• Federal Reserve officials are not ready to say inflation is heading to the central bank's 2% target after data last week showed a welcome easing in consumer price pressures in April, with several on Monday calling for continued policy caution.
• "It is too early to tell whether the recent slowdown in the disinflationary process will be long lasting," Fed Vice Chair Philip Jefferson told the Mortgage Bankers Association conference in New York, even as he called the April data "encouraging." Jefferson described current monetary policy as restrictive and declined to say if he expected rate cuts to commence this year, only noting that he will be carefully assessing incoming economic data, the outlook, and the balance of risks.
• Like Jefferson, Barr reinforced the Fed's overarching message that rate cuts, highly anticipated by markets, are on hold until it is clear inflation will return to the Fed's 2% target. "We will need to allow our restrictive policy some further time to continue its work," Barr said.
• Cleveland Federal Reserve Bank President Loretta Mester continues to believe that inflation will fall this year, though more slowly than she had expected. However, the lack of progress on inflation in the first quarter, along with a stronger-than-expected economy, means she no longer sees three rate cuts this year as likely.
• Finally, San Francisco Fed President Mary Daly said she sees no evidence of the need to hike rates, but at the same time, is "not confident" that inflation is falling toward 2% and sees no urgency to cut rates.

(Source: Reuters)

• China's fiscal revenue slipped 2.7% in the first four months of 2024 from a year earlier, after a 2.3% slide in the January-March period, in a further sign of an uneven economic recovery. According to finance ministry data released on Monday, fiscal expenditure rose 3.5% in the first four months versus a 2.9% gain in the first quarter.
• For April alone, fiscal revenue fell 3.7% against a 2.4% decline in March, while fiscal spending was up 6.1%, compared with March's 2.9% fall, according to Reuters' calculations based on the ministry data. The ministry said that excluding factors such as last year's high base and tax cut policies, fiscal revenue in the first four months grew 2%.
• China has set an ambitious economic growth target of around 5% for this year, which many analysts say will be a challenge to meet as prolonged weakness in the property sector and tepid consumer demand remain a drag on the economy.
• Factory output topped forecasts in April, helped by improving external demand, but retail sales unexpectedly slowed, and the property sector remained a key drag on the economy, piling pressure on Beijing to do more to support growth.
• The expansion of outstanding total social financing (TSF), a broad measure of credit and liquidity, hit a record low of 8.3% in April amid lagging government bond issuance. On Friday, China unveiled "historic" property easing measures, and the finance ministry kicked off the issuance of 1 trillion yuan in long-dated special treasury bonds to stimulate key sectors of the economy.

(Source: Reuters)

• The Minister of State in the Ministry of Finance and the Public Service, Hon Zavia Mayne, says the Jamaica Customs Agency (JCA) is investing heavily in the expansion of its digital ecosystem to provide quality service.
• Speaking at the 26th Regional Conference of Customs Directors General of the Americas and the Caribbean, at the Hilton Hotel, St. James, on May 13, Mr. Mayne said that in its thrust towards modernisation there will also be the development of a new mobile application, ‘JaCustoms Connect’, as well as its contactless clearance system, to enhance the end-user experience of Customs stakeholders with the entity.
• The State Minister said that the development and strengthening of Jamaica’s economic competitiveness can only be enhanced by a Customs Agency that is efficient through “streamlined processes and procedures”, cost savings, better use of resources and technology, and “transparent through the availability of accurate, reliable and timely information available online”.
• He said that international trade, countries’ economic environments, and new technologies are rapidly evolving and that it is imperative that as “we position ourselves to be competitive, innovative and productive, our Customs Agencies are guided by modernised legislation”.
• “To this end, the new Customs Bill, which has already been tabled in Parliament, and its accompanying regulations will further enhance Customs reform and support the delivery of services at the Jamaica Customs Agency, including the introduction of a canine division, body cameras, contactless processing for non-commercial imports, single-window digital document processing, and digital immigration processing,” the State Minister added.

(Source: JIS)

• The Factories Corporation of Jamaica (FCJ) has been directed to develop turnkey community micro-business parks islandwide as a means of creating more cost-effective operation spaces for micro, small and medium-sized enterprises (MSMEs). Prime Minister, the Most Hon. Andrew Holness, made the disclosure during the launch of Adam and Eve Day Spa’s new location on Old Hope Road in Kingston on Wednesday (May 15).
• Mr. Holness said access to proper infrastructure, specifically purpose-built facilities, is a general challenge that businesses experience. He pointed out that the Government has directed the FCJ, that right across Jamaica, where they have property or where they do not, they should acquire to start building out “what we are calling the turnkey community micro-business parks”.
• “We’re doing the first one in Morant Bay; we have made a massive investment in the parish of St. Thomas in building out the Morant Bay Urban Centre. The Morant Bay Urban Centre is on 25 acres of land. I toured there a few weeks ago; fantastic what is being done there in terms of buildings and facilities and infrastructure,” he stated.
• “But we recognise that whilst we will have larger businesses moving in and occupying this space, we must support the MSMEs in and around the area to create this ecosystem of real estate and facilities. So, the first park will be built on an additional 10 acres that we have acquired. So, it is not only the urban centre in terms of the buildings that have been laid out for banks and for universities and for big shopping centres and so forth. But we will build out a business park for micro and small businesses,” the Prime Minister added.
• Mr. Holness emphasised that MSMEs are a critical part of the economy, noting that there are about 425,000 of these entities across Jamaica. He also noted that, collectively, there are about 412,000 own-account workers (self-employed persons) in Jamaica.
• Mr. Holness further informed that the FCJ has undertaken massive expansion of the GARMEX facility in two phases, with some $3.5 billion spent over the last three years. “It is a wonderful facility, and many businesses are finding accommodation there,” he said.

 (Source: JIS)

• Trinidad and Tobago has obtained approval for the reduction in the current rate of duty applicable to hydraulic cements from 20% to 10% until June 30, 2025. This came out of the 58th Meeting of the Council for Trade and Economic Development (COTED) between May 14 and 15 in Georgetown, Guyana. Trade Minister Paula Gopee-Scoon chaired the meeting, the ministry said in a media release yesterday.
• The approval for the reduction in duty on 'other hydraulic cements', coupled with the termination of the quota and registration system for the importation of cement, 'will allow for the product to be imported from extra-regional sources at a lower cost, ensuring the availability of affordable cement for the construction sector and consumers.
• 'It would also promote a level of competition in the local market. It is to be noted, however, that imported cement will have to meet the current standard for the product to ensure that any imported product complies with relevant safety and packaging requirements,' the ministry stated.
• The COTED is the body within Caricom responsible for promoting trade in goods and services and sustainable regional economic development. The 58th COTED discussed a number of matters pertaining to the promotion of the Caricom Single Market and Economy (CSME), trade in goods, external economic and trade relations and regional standards, amongst others, the ministry said.
• Regional trade ministers also deliberated on issues related to compliance with the Revised Treaty of Chaguaramas, specifically related to the imposition of the correct rates of duties on products from extra-regional sources, the statement said. 'Member States were mandated to ensure the correct duties were being applied on extra-regional imports. This measure will ensure that domestic products are afforded a level of support against imports of products into other Caricom markets from extra-regional countries,' the Trade Ministry said.

(Source: Trinidad Express Newspaper)

• On Wednesday, May 15, 2024, the Colombian government statistics agency, the National Administrative Department of Statistics (DANE), released historical data revisions and preliminary Q1’24 data. The preliminary results showed that real GDP growth in Q1 2024 came in at 0.7% y-o-y growth, compared to Fitch’s expectations of 0.5% and consensus of 0.1% y-o-y.
• Positive contributions came from aggregate consumption (0.4%) and exports (0.7%), which contributed 0.1 and 0.3 percentage points (pp), respectively, to headline growth. In comparison, the steep contraction in imports (12.9%) represented a positive 3.2pp contribution to headline GDP.
• On the flip side, there was a continued contraction in gross capital formation (13.4%), representing a 2.9pp deduction from the headline Q1 2024 GDP. In seasonally adjusted terms, Q1 2024 saw a real GDP growth of 1.1% q-o-q.
• With the Q1 2024 print broadly in line with expectations, Fitch maintains its forecast of 1.3% annual growth in real GDP terms, as tight policy and high inflation will still hinder growth below the economy’s potential.
• Indeed, there are signs that the economy is facing some headwinds going forward as the seasonally adjusted monthly economic activity indexes show contractions in February (-0.4 m-o-m) and March (-0.8%). That said, Fitch believes there are risks to the upside, as looser policy from the Banco Central de la Republica (BanRep) could spur stronger economic growth than Fitch is currently predicting.

(Source: Fitch Solutions)

• The number of Americans filing new claims for jobless benefits fell last week, unwinding nearly half of the jump at the start of the month, indicating that labor market conditions remain fairly tight even as job growth is cooling.
• There are signs the economy slowed further early in the second quarter as the delayed effects of the Federal Reserve's hefty interest rate hikes start to have a bigger impact. Single-family homebuilding dropped again in April and permits for future construction hit an eight-month low. Output at factories unexpectedly fell, other reports showed on Thursday. April's economic data, including nonfarm payrolls and retail sales, have so far come below economists' expectations.
• "The economy is losing momentum in the face of restrictive monetary policy," said Sal Guatieri, a senior economist at BMO Capital Markets. "But the jury remains out on how quickly inflation will subside to provide some rate relief."
• Initial claims for state unemployment benefits dropped 10,000 to a seasonally adjusted 222,000 for the week ended May 11, the Labor Department said. Economists polled by Reuters had forecast 220,000 claims in the latest week. Claims raced to an eight-month high in the prior week.
• Unadjusted claims decreased by 13,325 to 196,725. Claims in New York tumbled 9,442, almost reversing a prior surge which the state attributed to layoffs in transportation and warehousing, accommodation and food services as well as educational services industries. There were significant drops in filings in Illinois and Indiana, more than offsetting a notable rise in Florida.
• The labour market is steadily rebalancing in the wake of 525 basis points worth of rate hikes from the U.S. central bank since March 2022 to cool demand in the overall economy. That, together with the resumption of inflation's downward trend, has raised the odds of a rate cut in September. Earlier this month, the Fed left its benchmark overnight interest rate unchanged in the current 5.25%-5.50% range, which it had been since July.

(Source: Reuters)

• Top global brokerages have retained their expectations for when the U.S. Federal Reserve will lower interest rates this year after softer-than-expected inflation data boosted hopes of a soft landing for the economy.
• J.P. Morgan and Goldman Sachs expect the Fed to start cutting rates as soon as July, while Morgan Stanley, UBS Wealth Management, Bank of America, and Deutsche Bank see rate cuts coming in September or December.
• This year's expectations of interest rate cuts have boosted demand for equities after a downbeat 2023 when steep borrowing costs dented the valuation of companies and forced consumers to rein in spending. The April inflation readings renewed confidence in rate cuts, with most brokerages keeping their forecasts unchanged as they await more data.
• This is in contrast to March when hot inflation numbers had nudged them to push their outlooks for the year's first rate cut as far as December, while some even suggested no cuts. The U.S. consumer prices index (CPI) increased less than expected in April, data showed on Wednesday, potentially encouraging policymakers who were waiting to see renewed progress on inflation before reducing borrowing costs.
• "April Consumer Price index took a step in the right direction after an alarming Q1... However, one report is unlikely to inspire a significant amount of confidence for the Fed," BofA Global Research economists said in a note.
• "While it is still hard to get any good service (level inflation improvement) around here these days, some stabilization is encouraging and can reinforce the Fed's desire to still make rate cuts this year and keep two cuts still on the table for 2024," said Rick Rieder, BlackRock's chief investment officer of Global Fixed Income.

(Source: Reuters)

• TransJamaica Highway Limited recorded a net profit of US$6.91Mn for the first quarter ending March 31, 2024. This represents a 38.8% increase in profitability year-over-year (yoy)  driven by higher revenues and other gains earned.
• Revenue for the quarter was up by 9.9% yoy to US$19.78Mn and other gains moved from a loss of US$140K to a gain of US$1.23Mn, representing a 975.7% increase. However, earnings were partially offset by higher expenses incurred during the quarter.
• The company incurred operating expenses of US$6.02Mn, reflecting a 9.8% (or US$537K) increase, compared to US$5.49Mn reported for the same period in 2023. This increase was primarily due to higher amortisation of the ‘Intangible Asset’, higher insurance renewal cost and increased security cost based on the 2023 court ruling and minimum wage increase. This was slightly tempered by lower consultancy fees and lower greenery and other maintenance costs for the period.
• Additionally, administrative expenses increased by 13.4% (or US$276K) primarily due to the salary changes following the December 2023 completed restructuring exercise and the annual salary increases for the year 2023, which were delayed pending the results of this exercise.
• TJH’s stock price has increased by 22.2% since the start of the calendar year. The stock closed Wednesday’s trading session at $3.30 and a had P/E of 9.7x, which is below the Main Market Energy, Industrial, and Materials Sector Average of 9.8x.

(Sources: Company Financials & NCBCM Research)