•  Dolphin Cove and Spur tree have reported favourable Q1 performances, evidenced by year over year growth in their respective bottom-lines. 
• Dolphin Cove saw its earnings recover from the net loss of US$154.83k in Q1 2021 to a net profit of US$759.55K. Growth was supported by an increase in visitor arrivals, though arrivals were 58% of the pre-pandemic levels. The company's revenues grew by 246.7% in Q1. 
• Spur Tree’s net profit grew by 193.7% despite the significant cost pressures being faced due to the ongoing supply chain challenges. The company’s revenues grew by 40.7% as it continues to push to expand its reach in export markets and strengthen its brand among its loyal customers. Owing to the higher revenues and some cost efficiencies, the company was able to increase its gross margin by 7.5p.p to 37.5%. 
• Going forward, we expect that both companies will experience continued growth in earnings. Dolphin Cove’s top-line will continue to benefit from increased visitor arrivals in 2022. Additionally, Spur tree through its new product offerings and further expansion in both domestic and overseas markets is expected to see earnings growth in the coming months. Further growth in efficiencies through capitalization on economies of scale will also be important to support profitability as Spur Tree contends with commodity price shocks and elevated supply chain costs. 
• Dolphin Cove and Spur Tree’s prices have increased by 45.7% and 405.0% since the start of the calendar year, and since listing, respectively. While Spur Tree currently trades above the Junior Market Distribution sector (20.1x) and Junior market (23.5x) P/E averages at 65.8x, DCOVE is just below Junior market average, at 23.0x.

(Source: Company Financials and NCBCM)

• Mexican headline inflation and the closely-watched core index rose in April to their highest levels since January 2001. This data is likely to prompt the central bank to hike its key interest rate again this week. 
• Consumer prices rose 7.68% in the year through April, and in the month alone increased by 0.54%, according to non-seasonally adjusted figures. The annual figure was still far above the Bank of Mexico's (Banxico) target of 3%, plus or minus one percentage point, and higher than the forecasts of 7.72%, according to a Reuters poll. 
• Banxico has increased its benchmark interest rate by 250 basis points over its last seven monetary policy meetings to 6.50% as it has struggled to contain rising inflation. Notably, Nikhil Sanghani, emerging markets economist at Capital Economics explained that “growing inflation risks, alongside the more hawkish U.S. Fed policy actions, will put pressure on Banxico to continue its tightening cycle.” Consequently, he expects Banxico to hike the key rate by 50 basis points to 7.0% this week.

(Source: Reuters)

• As inflation rates climb throughout the Caribbean, Governor of the Central Bank of Barbados, Cleviston Haynes is cautious about wage adjustments to match it. He noted that a wage adjustment to match inflation is really not the first best option for the country considering that once wages increase, there will be increased prices across the board. 
• Haynes emphasized that the supply shock that the region is facing currently is impacting largely food and energy, and this is what is driving the inflation rate. He further outlined that in some countries, the focus is not on the headline inflation rate but really on what they call the core inflation rate, that is you take out food and energy because those are the things that you really have very little control over, and then you try to focus on the underlying inflation rate. 
• Considering this, if there are wage adjustments the region runs the danger of trying to have wage increases that are adapting to inflation, which is a temporary cycle. Instead, the Governor believes that the Caribbean should address the impact of these prices on the average citizen by framing targeted measures that are perhaps time-bound since food and energy price increases are really likely to be transitory.

(Source: Trinidad Express Newspapers)

• Consumers grew a little more optimistic about inflation in April, though they still expect to be spending considerably more in the year ahead, a Federal Reserve survey released Monday shows. 
• Inflation expectations over the next year fell to a median of 6.3%, a 0.3 percentage-point decrease from the record high in March, according to data going back to June 2013. On a three-year basis, expectations rose 0.2 percentage point to 3.9%, which itself is 0.3 percentage point off the record. The data comes with 12-month inflation in March running at 8.5%, the highest level since December 1981. April consumer prices are due to be reported on Wednesday. 
• Responding to the surge in prices, the Fed last week raised benchmark interest rates by a half percentage point, the biggest hike in 22 years and the second increase of the year. 
• Americans are still leery about the high cost of living. Household spending is projected to rise 8% over the next year, according to the New York Fed survey. That’s a 0.3 percentage point increase from a month ago and another series high. 
• However, there also was some optimism, as consumer expectations for gas price increases fell to 5.2%, a 4.4 percentage point drop that came as oil prices edged lower in April. Respondents also grew more secure in their jobs, with just 10.8% expecting to lose their employment over the next 12 months, which tied for an all-time low. 
• Expectations for home prices were unchanged, but the 6% anticipated increase is still higher than the long-term average.

(Source: CNBC News)

• The economic growth in emerging markets is set to slow "sharply" this quarter weighed by China, Russia, and the spread of tighter monetary conditions, JPMorgan analysts said on Monday. 
• "China’s adherence to its zero-COVID policy, Russia's recession and tightening global financial conditions are set to pull EM growth sharply lower this quarter," wrote Luis Oganes, head of currencies, commodities and EM research, and Jonny Goulden, head of EM local markets and sovereign debt strategy at JPMorgan. 
• Emerging market currencies are likely to underperform as U.S. dollar strength continues and there is risk to EM economic growth, they said. The dollar on Monday hit a 20-year high against a basket of developed market currencies and an index of EM currencies touched its lowest since November 2020.
• JP Morgan remains neutral on foreign debt with a ‘market weight’ on the EMBI global diversified index "as EM sovereigns remain at the mercy of rates but cushioned by a combination of front-loaded pain and cleaner technicals." 
• On EM corporate credit, they keep a market weight on the Corporate Emerging Markets Bond Index (CEMBI) as "the uncertain market environment and macro risks are mitigated by strong standalone fundamentals and supportive technicals."

(Source: Reuters)

• Caribbean Cement Company Limited continues to deliver positive growth in earnings, aided by robust demand for cement despite an overall increase in costs, but the rate of growth has slowed. 
• For the first quarter ended March 31, 2022, the company reported a year-over-year 4.2% rise in unaudited net profit. This performance was driven by a 14.2% increase in revenue, which continues to reflect strong demand in the domestic market and CCC’s capacity to supply the local market. 
• Note; however, CCC’s bottom line was tempered by increased costs. For the review period, Carib Cement saw an 18.1% (or J$559.28Mn) increase in direct costs, 8.3% (or J$48.03Mn) rise in operating costs, and a 403.6% expansion in other expenses (which consist of demolition expenses, management fees, royalties, COVID-19 expenses, amongst others). Direct cost continues to be impacted by higher fuel and electricity costs as well as high shipping costs, while other operating expenses rose owing to the royalty fee that CCC now has to pay to Cemex, the ultimate parent company. 
• In December 2021, the majority of shareholders approved CCC’s Master Services Intellectual Property Agreement with CEMEX, CCC’s parent company, where the agreement sees the company receiving corporate service support in key areas. With the agreement now in effect, earnings will continue to be impacted by the added costs. However, over the medium term, the company should also be able to leverage the competencies of its parent company, per the royalty agreement to reduce costs and improve the efficiency of its operations. 
• Going forward, Carib cement should continue to see positive results despite the risk of increased costs. Demand from major infrastructure projects by the government, and new and ongoing commercial and residential developments, should all support domestic demand and product sales. Moreover, as the tourism sector continues its gradual recovery, the resumption and increase in building and renovation projects should also support the demand for CCC’s products. 
• Notwithstanding, there are downside risks to CCC’s prospects, namely rising fuel, electricity, and shipping costs, as well as threats from new strains of the COVID-19 infection. 
• CCC’s stock price has increased by 0.63% since the start of the calendar year. The stock closed Thursday’s trading session at $70.30 and currently trades at a P/E of 14.0x relative to the main market energy, industrials, and materials sector average of 18.9x.

 (Sources: CCC’s Financials & NCBCM Research)

• On May 4, policymakers at the Banco Central do Brasil (BCB) announced an increase in the benchmark Selic interest rate to 12.75%, from 11.75% previously. This was in line with Fitch Solutions’ view and consensus expectations that brought total hikes in the BCB’s current cycle to 1,075 basis points (bps) since March 2021, one of the most aggressive tightening cycles globally. 
• The BCB stated that it ‘foresees as likely an extension of the cycle, with an adjustment of lower magnitude’. This aligns with the Agency’s view that the bank will make one additional 50bps rate hike this year, in a shift from the central bank’s previous position that it would end its tightening cycle with the May meeting. 
• Notably, this view is underpinned by persistent, broad-based inflationary pressures, which have been exacerbated by higher commodity prices after the Russian invasion of Ukraine and a slight recent weakness in the currency. In March 2022, inflation accelerated above consensus expectations to 11.3% y-o-y (1.6% m-o-m), the highest level since 2003, driven higher by food and fuel prices alongside strong core inflation. 
• Overall, it is expected the BCB will hike by an additional 50bps at its next meeting on June 15, bringing the rate to 13.25%, which is in line with Bloomberg consensus expectations of 13.30%., then hold through the rest of 2022. That said, risks are poised to the upside, with the bank leaving the door open to extending its rate hiking cycle further if inflation continues to surprise to the upside, inflation expectations trend higher or if the Brazilian real were to significantly weaken.

(Source: Fitch Solutions)

• New claims for U.S. unemployment benefits increased to a more than two-month high last week but remained at a level consistent with tightening labour market conditions and further wage gains that could keep inflation hot for a while. 
• The report from the Labour Department on Thursday also showed the number of Americans collecting state unemployment checks was the smallest in more than 52 years towards the end of April. Economists brushed off last week's increase in initial claims, arguing that the data are volatile around moving holidays like Easter, Passover, and school spring breaks. 
• Initial claims for state unemployment benefits rose 19,000 to a seasonally adjusted 200,000 for the week ended April 30, the highest since mid-February. Economists polled by Reuters had forecast 182,000 applications for the latest week. Claims at 200,000 are viewed as consistent with strong demand for workers. They have declined from a record high of 6.137 million in early April 2020. 
• Further, government data this week showed there were a record 11.5 million job openings on the last day of March, which widened the jobs-workers gap to a record 3.4% of the labour force from 3.1% in February. The labour market imbalance is forcing employers to increase wages, contributing to soaring inflation. 
• Rising labour costs showed that worker productivity plummeted at its sharpest pace in more than 74 years in the first quarter, suggesting that the Fed cannot, for now, rely on workers being more productive to rein in inflation.

(Source: Reuters)

• The Bank of England raised interest rates to their highest since 2009 at 1% on Thursday to counter inflation now heading above 10%, even as it sent a warning that Britain risks falling into recession. 
• The BoE's nine rate-setters voted 6-3 for the quarter-point rise from 0.75%. But Catherine Mann, Jonathan Haskel and Michael Saunders called for a bigger increase to 1.25% to stamp out the risk of the inflation surge getting embedded in the economy. 
• Central banks around the world are scrambling to cope with the surge in inflation that they once described as transitory when it began with the reopening of the global economy before Russia's invasion of Ukraine sent energy prices spiralling. 
• The BoE said it was also worried about the impact of China's COVID-19 lockdown policies which threaten to hit supply chains again and add to the inflation pressure. 
• The BoE's move represented its fourth consecutive rate hike since December - the fastest increase in borrowing costs in 25 years - and it hardened its message about further increases, despite its worries about a sharp economic slowdown. 
• The BoE said most policymakers believed "some degree of further tightening in monetary policy may still be appropriate in the coming months".

(Source: Reuters)

• iCreate reported a net profit of $10.11 Mn for its first quarter ending March 31, 2022, which represents a 428.7% increase relative to the prior year. 
• The rebound was supported by a jump in revenues as revenues increased by $37.97Mn or 451.1% to close the quarter at $46.4Mn. This revenue outturn was also 41.3% more than the total revenues for the 2021 financial year ($32.83Mn). This was however tempered by an associated rise in direct costs (1220.9%). 
• The company’s core business, the Institute/Education division benefitted from a shift in strategy as it transitioned from a business to customer model to a business to business model. As a result, the group would have secured long-term corporate clients which will help to drive future revenues. The company now has three major long-term corporate training partnerships. 
• Going forward, management expects that the company will see continued growth for the rest of the financial year, supported by a downward trend in receivables when payments from corporate clients begin to flow in Q2, especially considering the fact that they would have trained a record number of professionals in digital skills. 
• ICreate’s stock price has increased by 434.3% since the start of the calendar year. The stock closed Wednesday’s trading session at $4.15 and currently trades at a P/B of 41.7x.

(Sources: Company’s Financials & NCBCM)