• U.S. equity funds saw substantial outflows in the week to Oct. 30 as investors exercised caution ahead of Tuesday's presidential election and a Federal Reserve policy decision on Wednesday.
• According to LSEG data, investors divested a net $5.83Bn worth of U.S. equity funds during the week, the most since the seven days to Sept. 25. Investors ditched U.S. growth funds worth a net $4.06Bn in the largest weekly selloff since Oct. 2. Value funds also saw $2.19Bn of net outflows.
• The industrial, gold and precious metals, and healthcare sectors suffered net outflows of $779Mn, $392Mn and $278Mn, respectively. The consumer discretionary sector attracted $478Mn worth of net inflows.
• Investors snapped up U.S. bond funds for a 22nd week in a row, to the tune of $7.37Bn. They pumped $3.18Bn into U.S. short-to-intermediate investment-grade funds, the biggest amount in four weeks. General domestic taxable fixed income, and municipal debt funds also attracted a net $2.9Bn and $0.659Bn, respectively. A net $5.7Bn worth of U.S. money market funds was sold in the period, following about $30Bn worth of net purchases in the previous week. This could be due to investors exercising caution due to the upcoming U.S. presidential election and Federal Reserve policy decision, both of which add uncertainty and potential volatility.

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¹LSEG Data & Analytics, formerly Refinitiv, is an American-British global provider of financial market data and infrastructure. 

(Source: Reuters and NCBCM Research)

• Dampened by the impact of Hurricane Beryl, Carib Cement Company’s (CCC) earnings declined by 67.5% in its third quarter, However, buoyed by strong performances in Q1 and Q2, the company reported earnings of $4.91Bn, a 12.0% increase year on year.
• Despite strong revenue growth of 12.0% in Q1 and 7.1% in Q2, revenues rose just 1.0% as sales fell in Q3 as Hurricane Beryl disrupted production following a major maintenance shutdown. The shutdown led to a 11.2% decline in quarterly revenue, which weighed on the cumulative performance. With the falloff in production, there were several reports of cement shortages in the media during the quarter, which led to delays in construction activity.
• CCC’s cost of sales rose sharply, climbing 27.9% to J$4.45Bn in Q3, while total operating expenses increased by 5.5% to J$749.9Mn, largely due to higher costs associated with its planned maintenance in August aimed at boosting capacity and efficiency. These increased costs chipped away at Q3’s margins, putting pressure on the overall nine-month results.
• Despite Q3's setbacks from Berly, CCC expects to rebuild momentum in Q4, with supply levels expected to reach pre-Hurricane Beryl levels. This recovery, along with the company's ongoing investments in operational efficiency, should set a strong foundation for future performance.
• CCC is strategically positioning itself to meet market demand, especially in the western region of the island, aiming to capitalise on ongoing investments in infrastructure development in that region. Management anticipates that these moves will cement CCC’s position as a key supplier in the market.
• CCC’s stock price has risen by 21.8% since the beginning of the calendar year despite cement being unable to meet local demand. The stock closed Thursday’s trading session at $70.25, with a P/E ratio of 9.8x, higher than the Main Market Energy, Industrials and Materials Sector average of 9.5x.

Source: JSE & NCBCM Research)

• Monthly output prices for producers in the Mining & Quarrying industry increased by 0.5% for September 2024 relative to August 2024, while prices in the Manufacturing industry fell by 0.6%.
• The upward movement in the index for the Mining and Quarrying industry reflects a 0.5% increase in the index for the major group ‘Bauxite Mining & Alumina Processing’. The other major group, Other Mining & Quarrying’, increased by 0.1%. The depreciation of the Jamaican dollar relative to the United States dollar was the primary factor contributing to these increases.
• On the other hand, a 4.5% decrease in the index for the major category ‘Refined Petroleum Products’—given lower crude oil prices in the international market—was the primary factor behind the decline in the Manufacturing industry index. However, this overall decrease was offset by a 0.3% increase in the index for the major group ‘Food, Beverages & Tobacco.’ This increase was mainly driven by rises in the indexes for the categories ‘Manufacture of Other Food Products, (0.5%) and ‘Manufacture of Beverages and Tobacco (0.5%), resulting from general price increases and higher raw material costs.
• For the period September 2023 – September 2024, the point-to-point index for the Mining & Quarrying industry increased by 8.1%, and the point-to-point index for the manufacturing industry fell by 0.9%, reflecting the year on year decline in international oil prices.
• The Producer Price Index (PPI) is a significant economic indicator that tracks the average fluctuation in selling prices that domestic producers of goods and services experienced over time. Currently, the only industries being tracked are Manufacturing Industry and Mining and Quarrying.
• That said, with international oil prices being a key driver of the ‘Refined Petroleum Products’ category, escalating geopolitical tensions could impact the Manufacturing industry index in the near-to-medium term, if they result in a material rise in oil prices.

(Source: STATIN & NCBCM Research)

• The Panama Canal aims to regain vessel traffic carrying U.S. liquefied natural gas (LNG) to Asia as demand in that market rises and a new reservation system allows shippers to lock in slots, following a 65% decline in the transit of its second-most important segment, the Panama Canal Authority told Reuters.
• A U.S. LNG switch to Europe in the aftermath of Russia's invasion of Ukraine, combined with long waiting times and expensive fees to transit through Panama due to severe drought, has kept many LNG ships out of the canal.
• Many gas exporters continue to take longer routes around South America even after the waterway's authority lifted the restrictions this year. The canal is the shortest route to Asia for U.S. gas exporters, whose sales to Japan, China, South Korea, and India have grown substantially in the last decade.
• "In the case of LNG, we lost 65% (of traffic), which is the traffic that now goes through Cape Horn, compared to what we had last year, two years ago," said the Canal's administrator, Ricaurte Vazquez, in an interview in Panama City.
• Europe's large appetite for U.S. LNG and delays authorizing new LNG projects in the United States have been the main drivers of the switch, he added, although the canal's drought-related restrictions also played a key role, shippers said.
• Because the Panama Canal Authority charges a set fee per passage, it can be more convenient for U.S. producers to take longer routes to Asia depending on global LNG prices, delivery terms in contracts, and seasonal demand. However, a recovery in Asian LNG demand, likely to continue next year, might require increased shipments through the canal.

(Source: Reuters)

• With inflation now only just above the Federal Reserve's 2.0% target and wage pressures easing, U.S. central bankers are widely expected to cut short-term borrowing costs next week in an effort to keep the labor market from further cooling.
• However, an uptick in underlying price pressures evident in data released on Thursday, what's likely to be a confusing monthly read on the labour market on Friday, and uncertainty over the outcome of the Nov. 5 U.S. presidential election make the road for further interest rate reductions in December and especially next year less clear.
• The year-over-year increase in the personal consumption expenditures (PCE) price index dropped to 2.1% in September from 2.3% in August, a Commerce Department report on Thursday showed. The Fed aims for 2% inflation.
• A separate report from the Labour Department showed that the broad wage-growth gauge known as the employment cost index rose 0.8% in the third quarter compared to the previous quarter, the smallest increase since the second quarter of 2021.
• The fact that wage growth eased last quarter even as the economy expanded solidly may give Fed policymakers added confidence that inflation won't resurge and a green light for interest rate cuts in their last two meetings of the year.
• The release on Friday of the Labor Department's monthly employment report is likely to show the unemployment rate held steady at 4.1% in October, economists polled by Reuters projected.
• Fed policymakers, however, are expected to take little signal from that employment data because recent hurricanes and an ongoing strike at Boeing likely subtracted as much as 100,000 jobs in the month. That impact will be seen as only temporary rather than a sudden deterioration in the labor market.

(Source: Reuters)

• British government bond prices tumbled for a second day on Thursday as investors judged finance minister Rachel Reeves' first budget would boost inflation and cause the Bank of England to cut interest rates more slowly.
• Reeves announced the biggest tax rises in three decades, saying she needed to repair the public services, alongside a big rise in borrowing to fund investment on Wednesday.
• Britain's budget watchdog said her plans would boost economic growth in the short run, but it expected inflation would average 2.6% next year compared with a previous 1.5% forecast. That prompted investors to reel in bets that the BoE would reduce interest rates rapidly over the next year.
• As a result, two-year gilt yields jumped by as much as 22 basis points to 4.539%, heading for the biggest one-day rise since August 2023, although by the close, they were only up 11 bps on the day - still the biggest daily rise in four weeks. Ten-year gilt yields hit a one-year high of 4.526% and finished the day around 10 bps higher at 4.45%.
• Investors still think the BoE is likely to cut rates next Thursday by a quarter of a percentage point. Rate futures were pricing that as a nearly 80% probability on Thursday, down from 95% before the budget.
• However, Reeves' plans sowed greater doubt about the outlook for rate cuts further ahead, with investors pricing in around 0.85 percentage points of BoE rate cuts between now and the end of 2025, down from 1.2 percentage points just before the budget. By comparison, they were still pricing almost five further quarter-point cuts from the U.S. Federal Reserve and European Central Bank - both of which have already cut borrowing costs more than the BoE.

(Source: Reuters)

• Jamaica's trade balance experienced a deterioration of 1.1%, reaching US$2,742.6Mn during the period from January to June 2024. This decline occurred despite a reduction in the overall value of imports, as the decrease in exports was more pronounced.
• For the first six months of 2024, Jamaica’s total spending on imports was valued at US$3,687.4Mn, while earnings from total exports were valued at US$944.8Mn, according to the Statistical Institute of Jamaica (STATIN).
• The value of imports over the period declined by 1.5% when compared to US$3,744.4Mn spent from January to June 2023. This decrease was largely attributable to lower imports of “Raw Materials/Intermediate Goods” and “Fuels and Lubricant”, which fell by 13.9% and 1.6%, respectively.
• The decrease in spending on "Raw Materials/Intermediate Goods" was primarily attributed to a drop in imports of 'Industrial Supplies,' 'Construction Materials,' and 'Food (including Beverages) Mainly for Industry.' Additionally, reduced imports of 'Other Fuels & Lubricants,' 'Motor Spirit,' and 'Crude Oil' significantly contributed to the decline in the import value of "Fuel and Lubricants" for the six months ending in June 2024.
• Revenues from exports were 8.4% below the US$1,030.9Mn earned in the similar 2023 period. This downward movement was due primarily to a 64.8% fall in the value of re-exports of “Mineral Fuels”. Earnings from re-exports declined to US$114.7Mn for the January to June 2024 period.
• The five primary trading partners from January to June 2024 were the United States, China, Brazil, Japan, and Trinidad and Tobago accounting for 38.5%, 8.8%, 5.0%, 4.1% and 3.2% of total imports, respectively. Import spending on goods from these countries declined by 6.3% to US$2,195.1Mn, down from US$2,341.8Mn largely driven by a 19.0% reduction in imports of "Mineral Fuels" from the USA and Trinidad and Tobago.
• On the export side, the USA (40.4), Iceland (8.4%), the Russian Federation (7.9%), the Netherlands (7.3%), and Canada (5.5%) were the top five destinations. Revenues from exports to these countries increased by 23.7% to US$657.0Mn, driven by a 76.3% rise in the value of "Crude Materials" export.

(Source: STATIN)

• The U.S. Embassy in the Dominican Republic announced the extension of Project TradeSafe (TraSa), part of the U.S. Department of Agriculture’s (USDA) Food for Progress program, for two more years, with an additional investment of approximately US$6.5Mn.
• The USDA’s Food for Progress Program supports developing countries and emerging democracies to modernize and strengthen their agricultural sectors. Its main objectives are to improve farm productivity and expand trade in agricultural products.
• More specifically, the initiative of the USDA’s Food for Progress program, implemented in the Dominican Republic by the U.S. NGO Improving Economies for Stronger Communities (IESC), seeks to facilitate trade in agricultural products by improving sanitary and phytosanitary practices and optimising the processes involved in them.
• The Director of Customs, Mr Sanz Lovatón, highlighted how the TraSa Project has been a key ally in different critical initiatives that have strengthened the export processes of Dominican products and transformed the country into a regional logistics hub.
• During the activity, the director of the TraSa Project, Mr Brian Rudert, summarized the lines of work on which the project will focus in the next two years, including strengthening capacities in risk-based inspection systems and registrations, improving coordination mechanisms such as the National Committee on Trade Facilitation and the National Committee on Sanitary and Phytosanitary Measures, as well as the improvement of capacities and surveillance mechanisms in terms of safety, among others.

(Source: Dominican Today)

• Mexican state-owned oil company, Petroleos Mexicanos (Pemex), reported a deeper third-quarter (Q3) net loss on Tuesday, October 29, hurt mostly by a weaker exchange rate even as it benefited from support from the country's new government. EBITDA generation in Q3 2024 amounted to US$4.31Bn, only slightly up (roughly 1.2%) from its Q3 2023 level.
• The company, in a filing with the Mexican stock exchange, posted a loss of around US$4.5Bn in the third quarter of 2023, but Mexico's peso currency weakened more than 13% in the year since, according to London Stock Exchange Group (LSEG) data. While Pemex mostly operates in U.S. dollars, like nearly all oil companies, it uses pesos for most of its local costs.
• .
• Revenue for the country's biggest company totalled 426 billion pesos (US$21.63Bn) during the July-to-September period, down nearly 8% year-over-year due in large part to lower crude oil export sales.
• In recent years, Pemex has sought to reduce its crude oil exports while prioritising refining. But it has mostly failed to reduce foreign motor fuel purchases in line with government targets, with gasoline and diesel import volumes consistently higher than Pemex's output.
• During the third quarter, it processed 962,000 barrels per day (bpd) of crude, up by nearly a quarter compared to the year-ago period. The quarterly performance of its refining unit yielded 278,000 bpd of gasoline and 186,000 bpd of diesel, the filing showed.
• President Claudia Sheinbaum took office at the start of this month, mostly pledging to continue generous government support for the heavily-indebted Pemex, much like her predecessor. In its filing, Pemex said it had received 145 billion pesos in assistance from state coffers during the third quarter. Furthermore, the company noted that its financial debt as at September 30, 2024, totalled $97.3Bn, down by almost $9Bn relative to the end of 2023.
• Some close to Sheinbaum have suggested she might be more open to some form of Pemex partnerships with private oil companies in a push to boost production despite the company's massive debt load. The new president has said she would target what she has described as a sustainable oil output of 1.8 million bpd.

(Source: Reuters)

• U.S. job openings dropped to more than a 3-1/2-year low in September, but nearly all the decline in vacancies was in the South, suggesting that Hurricanes Helene and Milton had temporarily weighed on demand for labour. The downbeat report from the Labour Department on Tuesday was countered by a Conference Board survey showing consumers' perceptions of the jobs market improved considerably in October, helping to lift consumer confidence to a nine-month high.
• The hurricanes and strikes by factory workers in the aerospace industry are expected to have temporarily curbed job growth in October. Economists argue that the labour market picture has not changed materially since the surge in payroll gains in September.
• Job openings, a measure of labour demand, were down by 418,000 to 7.443 million by the last day of September, the lowest level since January 2021, the Labor Department's Bureau of Labor Statistics said in its Job Openings and Labor Turnover Survey, or JOLTS report.
• Nonfarm payrolls are expected to have increased by 115,000 jobs in October after a rise of 254,000 in September, a Reuters survey of economists showed. That would be the smallest count in six months. The unemployment rate is forecast to be unchanged at 4.1%.
• In a separate report on Tuesday, the Conference Board said consumer confidence increased to a nine-month high in October amid improved perceptions of the labour market. Consumers were little worried about the Nov. 5 U.S. election.

(Source: Reuters)