• Global supply chain disruptions may continue until the second half of next year, trade credit insurer Euler Hermes said in a report published on December 9. Measures to contain Covid-19 can and have affected manufacturing and shipping operations, exacerbating the supply chain crisis. 
• Production shortfalls are behind 75% of the current contraction in global trade volume, while logistic bottlenecks are the cause of the remaining 25%, Euler Hermes economists wrote. 
• But this supply chain chaos is likely to ease in the second half of 2022 for three reasons. Firstly, consumer demand has peaked, and they are likely to continue buying goods at higher levels. Secondly, inventories are back to pre-Covid levels; after falling off in early 2020, manufacturers rushed to restock to cope with the unprecedented rebound in demand. Lastly, shipping congestion should also be less acute in the second half of 2022 because shipping capacity is increasing. 
• However, there are risks. The cost of shipping may remain elevated next year, but capacity is set to increase as global orders for new container ships hit record highs, amounting to 6.4% of the existing fleet. Furthermore, analysts have previously warned that the new variant, omicron, could deal another blow to supply chains.

(Source: CNBC)

• U.S. household wealth rose to a record $144.7 trillion at the end of the third quarter, a report from the Federal Reserve showed on Thursday, though the $2.4 trillion gain over the period was the smallest since the rebound from the coronavirus pandemic began. 
• Real estate values added around $1.4 trillion to overall wealth, according to the U.S. central bank's latest quarterly report on household, business and government financial accounts. The value of equities held by households and nonprofits fell by $300 billion. 
• The slower growth in U.S. household wealth suggests the boost from an unprecedented period of easy monetary policy and a fiscal firehose of aid initiated by former President Donald Trump and extended under President Joe Biden has begun to wane.

(Source: Reuters)

• Buoyed by stronger sales, Jetcon Corporation Ltd. reported a 108.5% increase in net profit to $11.59Mn (EPS: $2.00) for the Nine Months ended September 31, 2021. 
• The company was able to grow revenues by 29.9% YTD due to stronger sales relative to the same period last year. This recovery in earnings was accompanied by a decline in finance cost of 49.7%. 
• The performance was, however, tempered by an increase in total expenses of 6.5%. This was the result of an increase in costs related to sales & marketing and admin & other expenses of 4.3% and 16.5%, respectively. Sales cost also grew 33.0% ($129.16Mn). 
• With increasing vaccination rates, and decreasing COVID case rates, management hopes that restrictions will continue to ease, thus helping to fuel its recovery. Jetcon is also depending on smart marketing and pricing strategies to drive sales. Revenues for Q4 are expected to be higher than that of Q3 as sales are already exceeding that reported for the third quarter. Already, units sold in November are at Jetcon’s regular pre-pandemic levels. If this upward swing continues into December, and with increased bookings to date, the directors are hopefully of a strong fourth quarter. 
• Jetcon’s stock price has appreciated by 39.2% since the start of the year and closed Wednesday’s trading session at $1.10 per share. At this price, the stock currently trades at a P/E of 1.1x below the junior market distribution sector average of 16.0x.

(Source: Jetcon’s Financials)

•  Prime Minister, the Most Hon. Andrew Holness, welcomed the $3.7Bn investment in the One Belmont corporate building in Kingston as a further testament to the growing investor confidence in the country. 
• The project, being executed through a partnership between Sygnus Real Estate Finance and Audere Holdings Limited, will deliver 79,000 square feet of Class A corporate office space, supported by four parking levels. Prime Minister Holness said that the development is in keeping with the Government’s focus on positioning Kingston as the premier city in the English-speaking Caribbean, wanting it to be the centre of trade, commerce, finance and to be the place of choice. 
• The building will include hurricane-impact-resistant glass in addition to post-pandemic features. It’s been designed with a suite of technological features, such as touchless elevators, touchless doors, touchless Kohler bathroom fixtures, and an automated infrared camera system for non-intrusive camera checks. It will also include rooftop entertainment for corporate events, LED lighting surrounding the building, as well as a host of other unique features. 
• Financing for the project includes a $2.5Bn billion construction facility from the National Commercial Bank (NCB) and a further $650 million in preference shares on top of the equity via Audere Holdings Limited. The construction is slated to be completed by April 2023. This investment speaks to the recovery in local investment and business confidence. It also forecasts support for continued growth in the construction sector and construction-related companies.

(Source: JIS News)

• On December 6, Mexican state-owned oil company Petróleos Mexicanos (Pemex) announced that it would use a USD3.5Bn cash injection from the Mexican Government to pay down some of its outstanding debt. Pemex will offer cash and new notes in an exchange with holders of 12 bonds maturing between 2024 and 2030, while paying in cash for six bonds maturing between 2046 and 2060. The Mexican Government has already pledged to cover bonds maturing in 2022 or 2023.
• This aligns with Fitch’s view that Mexican President Andrés Manuel López Obrador (AMLO)’s Government will continue to provide Pemex with financial support as part of his broader goal of effectively re-nationalising Mexico’s oil sector. The cash injection continues the Government’s robust support for Pemex, which has included reductions in Pemex’s profit-sharing duty (DUC) as well as capital injections to help the company manage its USD113.0Bn in outstanding debt. 
• Markets reacted positively to the news, as the spread of Pemex’s 5-year credit default swap (CDS) over the Mexican Government’s narrowed to 211.3 basis points as of early on December 7, from 272.6 on December 3. While the Mexican Government has never explicitly guaranteed Pemex’s debts, the narrowing spread suggests that markets are pricing in robust sovereign support given the company’s essential role in the Mexican economy and AMLO’s supportive stance.

(Source: Fitch Solutions)

• Colombia’s Banco de la República (BanRep) will hike its policy interest rate over the coming months to help contain inflationary pressures and anchor inflation expectations amid a strong economic rebound, according to Fitch Solutions.  
• The BanRep is forecast to raise its policy interest rate to 3.00% by end-2021, from 2.50% currently, and hike to 4.50% by end-2022. Inflation will end 2021 at 5.2% y-o-y, for an annual average of 3.4%, and average 4.3% in 2022. 
• Risks to the agency’s interest rate forecasts are weighted to the upside, particularly if Colombian inflation remains above target for longer than Fitch anticipates, or if the US Federal Reserve tightens monetary policy more aggressively than expected.

(Source: Fitch Solutions)

• The Bank of Canada on Wednesday held its key overnight interest rate unchanged, as expected, and said inflation was broadening even as it warned that the Omicron coronavirus variant has created "renewed uncertainty." 
• The Central Bank, in a regular rate decision, left its key overnight interest rate at 0.25% and maintained guidance that economic slack would be absorbed in the "middle quarters" of 2022, setting the stage for the first rate hike as soon as April. 
• But it dropped a reference to the pressures pushing up prices as being "temporary," while noting employment had returned to pre-pandemic levels, with job vacancies high and wage growth picking up. 
• "Inflation is elevated and the impact of global supply constraints is feeding through to a broader range of goods prices," the Bank of Canada said.

(Source: Reuters)

• The Bank of England faces a fresh decision next week on whether to become the first of the world's major central banks to raise interest rates since the onset of the coronavirus pandemic.
• The BoE shocked financial markets on Nov. 4 when its policymakers voted 7-2 to keep Bank Rate at 0.1%, even as it said inflation was heading towards 5%. 
• Many investors had read previous comments by Governor Andrew Bailey as meaning a November rate hike was extremely likely. Since then, data has suggested the labour market withstood the end of the Government's furlough scheme - something the BoE wanted to see before any rate hike - and inflation hit a 10-year high of 4.2% in October. 
• But the emergence of the Omicron coronavirus variant has prompted some MPC officials to sound a new note of caution about the economy's recovery, although Omicron could also add to inflation pressures by aggravating supply chain problems.

(Source: Reuters)

• The National Housing Trust (NHT) is slated to spend a record $57.7Bn to provide housing solutions this year. NHT Board Member, Nesta-Claire Hunter, said that the sum is the largest programmed expenditure in the entity’s 45-year history. It will mean construction of quality and affordable housing solutions at an even faster pace, with the possibility of even more Jamaicans being able to experience the joys of homeownership. 
• Hunter also advised that the NHT has surpassed the minimum 23,000 housing starts that were targeted for delivery by March 2021. This year, NHT expects a further 8,500 housing solutions, and for the parish of St. Catherine, the second largest parish, there is another upcoming 3,984 housing solutions scheduled over the next three years. 
• In addition to supporting the Jamaicans through modern, suitable, safe and functional buildings, these housing initiatives will help support economic recovery through the contribution it will make to the construction sector. Further, increased construction activity will help to bolster the revenue and bottom line of construction companies such as Caribbean Cement Company Ltd.

(Source: JIS News & NCBCM Research)

• For the first time, Jamaica’s household helpers and fisher folk will be able to secure pension benefits under the National Insurance Scheme (NIS) as the Government moves to formalize these sectors. This will be facilitated under the Transition to Formality Action Plan, which will provide them with access to health and life insurance, pension and other facilities to offer security and protection in their work environment. 
• This follows the growing trend in many developing countries of workers being employed in industries that are unregistered or do not comply with the minimum standards of labour legislation or in some cases Decent Work. The International Labour Organization’s (ILO) defines Decent Work as productive work for women and men in conditions of freedom, equity, security and human dignity. 
• Jamaica’s national action plan, which is a tripartite collaboration among the Ministry of Labour and Social Security, the Jamaica Confederation of Trade Unions (JCTU) and the Jamaica Employers’ Federation (JEF), seeks to encourage micro, small and medium-sized, as well as large entities to embrace systems that make the process of transitioning to formality seamless. 
• The project’s development goals are to reduce the informality in work and workers engaged in the domestic, agricultural and fishing industries in the first instance. It also seeks to increase the formalization of agricultural and fishing business units and increase the institutional capacity of employers and organizations representing these industries. 
• This process will prove beneficial to workers’ as they will now have a retirement benefit. It should also improve the overall attractiveness for jobs, and potentially increase the supply of labour. An increase in persons seeking jobs could improve private consumption, and in the long run, allow them to maintain a better standard of living after retirement.

(Source: JIS & NCBCM Research)