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Wisynco Has Entered An Agreement With Factories Corporation of Jamaica Published: 07 January 2022

  • Wisynco is in the process of establishing a distribution centre in the Western region of the island and has successfully negotiated and entered into a lease agreement with Factories Corporation of Jamaica. 
  • This agreement is to lease a 26,400 square foot warehouse facility at Hague, Trelawny effective November 1st, 2021 for a period of five years with the option to renew. Wisynco is currently retrofitting the warehouse space to meet its operational needs and anticipates that operations will commence at the warehouse toward the end of March 2022. 
  • The company has experienced YoY net profit growth as of the first quarter ended September 2021, with a recovering stock price. Its stock price had declined marginally by 0.8% in 2021, however, it has appreciated 5.1% YTD. With global economic recovery underway, this new distribution centre will assist the company in meeting the growing demand, to further assist with improving its revenue generation and bottom line.

(Source: JSE News & NCBCM Research)

Oil And Gas Sector Growth In Trinidad And Tobago To Drive GDP Growth In 2022 Published: 07 January 2022

  • Fitch Solutions has revised down its 2021 GDP forecast for Trinidad and Tobago (T&T) to -0.3%, from 3.4%, and revised up its 2022 forecast to 2.9%, from 2.5%, in 2022. 
  • Rising demand for energy exports in Asia Pacific and growing domestic oil and gas production will drive exports in the oil and gas sector in the coming quarters, underpinning Fitch’s growth outlook. 
  • Consumption will rise in the latter half of 2022, but low vaccination rates will likely limit the rate of growth. T&T suffered from the Covid-19 pandemic far more in 2021 than in 2020, with 2,611 Covid-19-related deaths in 2021 compared to 127 the year before. Fitch expects domestic consumption to decline Q122 as recent reports of slow retail sales echo sharp downturns in sales in Q220 and Q221 that followed prior waves of Covid-19 outbreaks. Apart from health restrictions that inhibit economic activity, the resulting decline in household income and purchasing power has weakened consumption. 
  • That being said, T&T’s low vaccination rates and the transmissibility of the Omicron variant pose risks to the economic recovery in 2022. As of January 3, 86.6% of patients in the T&T healthcare system are not vaccinated, signalling the continued susceptibility of T&T to Covid-19 outbreaks. Even if cases do decline in the coming weeks or months, T&T will likely remain vulnerable to the emergence of new variants of the virus.

(Source: Fitch Solutions)

Guyana Closes 2021 With Over US$600M In NRF – Central Bank Published: 07 January 2022

  • Bank of Guyana Governor, Dr. Gobind Ganga confirmed to OilNOW on Wednesday that the Natural Resource Fund (NRF) closed 2021 with US$608M on its balance sheet. He said the last lift, which occurred in November, raked in approximately US$74M. 
  • Guyana’s fifth lift was marketed by Aramco Trading Limited (ATL) which won a one-year contract to market the country’s profit oil from the Stabroek Block. OilNOW had reported that ATL was identified among several companies last year as the lowest compliant evaluated bidder at the price of $0.025 USD per lift which is estimated at approximately one million barrels. 
  • Guyana’s Minister of Natural Resources, Vickram Bharrat, had stated that the government remains committed to securing the best agreements for the country and further pledged to maintain the highest level of compliance and transparency to ensure benefits from the oil and gas sector improve the lives of all Guyanese. 
  • Guyana’s revenue collection for 2022 is expected to increase as ExxonMobil remains on track for the start-up of the Liza Unity FPSO in the Stabroek Block this quarter. Once operationalized, it is expected to take the country’s production to 340,000 barrels of oil per day, at least.

(Source: OilNOW)

Wells Fargo Strategists Warn S&P 500 Will Drop 10% Published: 07 January 2022

  • U.S. stock investors should brace for a correction in upcoming months, Wells Fargo & Co. strategists said, joining a chorus of warnings that Wall Street is in for a bumpier ride after last year’s powerful rally. 
  • Pullbacks will likely be more frequent in this choppier equity market,” the strategists led by Christopher P. Harvey wrote in a note to clients, forecasting a 10% drop for the S&P 500 Index by summertime. “Ultimately, the bend-but-not-break market mentality finally fails investors in 2022.” 
  • The U.S. equity benchmark is trading near a record high, after delivering a blockbuster 27% rally last year. With the Federal Reserve preparing to hit the brakes on support measures, and fears rising that economic recovery may have reached its peak, strategists from Goldman Sachs Group Inc. to BlackRock’s Investment Institute expect returns to be more muted this year, while JPMorgan Chase & Co. warned this week that the U.S. market “could stall” if the outperformance of technology stocks starts to wane.

(Source: Bloomberg)

Euro Zone Economic Recovery Stumbled In Dec As Omicron Spread -PMI Published: 07 January 2022

  • The euro zone's economic recovery stuttered in December as a renewed wave of COVID-19 infections curtailed growth in the bloc's dominant service industry, a survey showed on Wednesday, and could weaken further if tighter restrictions are imposed. 
  • As the Omicron coronavirus variant spread rapidly at the end of last year governments reimposed measures to contain infection rates, particularly in Germany, Europe's largest economy. 
  • That meant IHS Markit's Composite Purchasing Managers' Index (PMI), a good gauge of overall economic health, sank to 53.3 in December from 55.4 in November, its lowest since March. 
  • "The final Composite PMIs for December confirm that the euro zone economy ended 2021 on a weak note. The economy lost momentum at the end of last year but still appeared to be expanding," said Jack Allen-Reynolds at Capital Economics.

(Source: Reuters)

STATIN Reports Lower Third Quarter Growth for Economy Than PIOJ Published: 05 January 2022

  • In November 2021, the Planning Institute of Jamaica (PIOJ) released its estimate of GDP which projected a 6.3% expansion for the Jamaican economy in the September 2021 quarter relative to the corresponding quarter of 2020. The estimated output in the Goods Producing and Services Industries was 2.8% and 7.3%, respectively. The performance was premised on a few key factors, including increased employment, both locally and in major trading partners; the easing of containment measures implemented to curtail the spread of COVID-19; increased vaccination globally; and the continuation of building projects and road construction works. 
  • However, official figures released by the Statistical Institute of Jamaica (STATIN) last week showed that the Jamaican economy grew by 5.8% during the third quarter of 2021 relative to the third quarter of 2020. This is below the 6.3% estimate for the quarter put forward by the PIOJ. This expansion stemmed from slightly lower growth outturns of 7.1% and 2.4% in the Services and Goods Producing Industries respectively. 
  • The growth in the Services Industries was due to improved performance in all eight (8) industries. However, Hotels & Restaurants led the recovery, registering an increase of 114.6%. The other major contributors to the performance in the Services Industries were Transport, Storage & Communication (+8.8%), Wholesale & Retail Trade; Repairs; Installation of Machinery & Equipment (+4.4%), Other Services (+12.2%), and Finance & Insurance Services (+2.3%). 
  • On the other hand, the performance of Agriculture, Forestry & Fishing (+7.3%) led to the increase in the Goods Producing Industries. Manufacturing (+4.6%) and Construction (+4.4%) also aided growth. The performance was, however tempered by Mining & Quarrying, which declined by 29.7%. The outturn in the Mining & Quarrying Industry can be explained by the fire which occurred at the JAMALCO plant on August 22, 2021. The fire will constrain the contribution of that industry to economic growth for at least the next two years.  
  • The growth outturn was a surprise to the downside and stemmed primarily from the thirteen ‘No Movement’ days that were implemented between August and September to help curb the COVID-19 outbreak that happened during the quarter. The implementation of the days brought commercial activity to a virtual standstill and as a result, weighed on the GDP performance during the period. 
  • For the December 2021 quarter, the PIOJ anticipates that the Jamaican economy expanded between 5.0% and 8.0%. All industries, except for the Mining & Quarrying industry, are expected to record growth. This is predicated on, the continued economic recovery in most industries following the relaxation of COVID-19 containment measures in Q4 2021 relative to the measures which were in place during the December 2020 quarter; the gradual re-opening of the economies of Jamaica’s main trading partners, which is expected to facilitate higher levels of external demand, particularly for tourism-related services; and higher levels of employment and the easing of the curfew times during December, which are expected to have supported an increase in demand.  
  • However, the downside risks to the outlook are the presence of the ever-evolving COVID-19 virus and the fire at JAMALCO’s refinery plant, which is expected to impact growth figures for at least the next eight quarters.

(Sources: PIOJ & STATIN)

Mexico Inflation Seen At Highest Level In Two Decades In December Published: 05 January 2022

  • Mexican annual inflation likely accelerated to a two-decade high in December, a Reuters poll showed on Monday, reinforcing expectations that the central bank will raise its key interest rate for the sixth consecutive time next month. 
  • The consensus forecast of 11 analysts surveyed was for inflation to advance to 7.51% from 7.37% in November. If the prediction is correct, that would be the highest rate seen since January 2001, when inflation hit 8.11%. 
  • The core rate of inflation, which strips out some volatile food and energy items, was seen accelerating to 5.94%, which would be the highest since October 2001. The Bank of Mexico (Banxico) raised its benchmark interest rate more than expected last month to 5.50% as it sought to contain rising price pressures. 
  • Banxico's next monetary policy meeting is scheduled for February 10. The bank targets inflation of 3%, with a one percentage point tolerance range above and below that. That being said, we are likely to see more rate hikes in the near term as the government attempts to guide the inflation rate back to the target. 
  • The higher rate will have a mixed impact on the banks and non-banking financial institutions (NBFIs) in Mexico that we currently recommend. While it is expected that the higher rates will result in a reduction in the demand for loans for banks, due to the higher borrowing costs, the revenue boost from the higher rates is expected to offset this factor. NBFI’s earnings could be affected by higher funding costs combined with the fact that NBFI business models focus on sensitive sectors of the economy, such as SMEs.

(Source: Reuters & NCBCM Research)

Colombian Peso Hits Post-Pandemic Low Due to Election Risks Published: 05 January 2022

  • Colombia’s peso started the New Year by hitting a post-pandemic low. It may be a sign of things to come ahead of the May 29 presidential election.  
  • While the currency is undervalued based on fundamental factors, congressional and presidential elections will likely stoke tensions and “temper a return to fair value,” wrote Kathryn Rooney Vera, head of research and strategy at Miami-based Bulltick LLC. The peso tumbled almost 16% in 2021, despite a 50%-plus rally in the price of oil. 
  • That weakness has become a familiar story across the Andean region in the past year, with currencies sinking as left-wing candidates surge in the polls and finally win the election, spooking investors accustomed to decades of market-friendly policies. Even soaring commodity prices and rising interest rates did little to salvage the Chilean peso and the Peruvian sol last year. 
  • The peso lost as much as 0.9% to 4,105.50 to the dollar on Monday, the weakest since March 2020, before ending the day flat. It weakened again on Tuesday.

(Source: Bloomberg

Global Supply Pressures May Be Nearing Peak, New York Fed Index Shows Published: 05 January 2022

  • The historically high pressures on global supply chain networks that have contributed to shortages of key goods and materials and a surge in inflation may have peaked, according to a new index released by the New York Federal Reserve on Tuesday. 
  • The Global Supply Chain Pressure Index (GSCPI) which tracks supply chains surged early in the pandemic when China imposed lockdown measures. More recently, the (index) seems to suggest that global supply chain pressures, while still historically high, have peaked and might start to moderate somewhat going forward. 
  • The index is based on 27 variables such as shipping rates and air freight costs between the United States, Asia and Europe. Researchers found "enormous growth" in shipping costs since the beginning of the recovery from the lows at the start of the pandemic. But that growth has started to slow in recent months. 
  • The index, draws on data going back to 1997, and shows that global supply chain pressures are substantially higher now than in previous times of stress. For example, pressures rose in 2011 after two natural disasters, including an earthquake in Japan and flooding in Thailand. The index rose again during the U.S.-China trade war in 2017 and 2018. But those spikes pale in comparison to what has been observed since the COVID-19 pandemic began.


Treasury Traders Are Betting Omicron Will Add to Inflation Spike Published: 05 January 2022

  • Treasury traders are betting the rapid spread of the omicron variant will increase inflationary pressures in the U.S. economy, rather than weaken them. 
  • U.S. 10-year break-even rates which are market estimates for the average rate of inflation over the next decade climbed to as high as 2.66% on Tuesday, the most since November, and up from as low as 2.36% on December 14. The extra yield on Treasury 10-year notes over two-year securities has also jumped this week, indicating the bias may be switching back to a steeper yield curve. 
  • The move came after Treasuries posted their worst start to the year since 2009 sending ripples through markets from Australia to the U.K. amid growing expectations that the Federal Reserve will start to raise its policy rate as soon as May, earlier than the July liftoff projected a month ago.

(Source: Bloomberg)