• The US Congress has approved a $3.5Tn budget blueprint, setting the stage for Democrats to enact President Joe Biden's ambitious economic agenda. The rule that passed on Tuesday allows Democrats, who narrowly control both chambers, to move ahead with key policy proposals.
• The resolution's fate was unclear as late as Tuesday morning, amid a standoff between progressive and centrist House Democrats. The Democrats are enacting a process called budget reconciliation to approve President Biden's larger spending package - and passage of the budget blueprint Tuesday is the first step.
• A group of 10 moderate Democratic lawmakers had threatened to withhold votes on the blueprint unless the House first approved a $1tn bipartisan infrastructure bill. That package includes funding for roads, bridges, the power grid, public transport, and internet.
• To win a compromise after over 24 hours of debate, top House Democrats have assured moderates that the infrastructure bill will be discussed on 27 September, when the House is back in session. "Passing this rule paves the way for the Building Back Better plan, which will forge legislative progress unseen in 50 years," Speaker of the House Nancy Pelosi said ahead of the vote. The top Democrat added that delays only threaten the economic plan and other bills.

(Source: BBC News)

• Oil prices rose 3% on Tuesday after Mexico suffered a large production outage due to a fire on an oil platform and full U.S. regulatory approval of vaccines for COVID-19.
• Oil is up more than 8% for the week, clawing back the 7.6% lost last week, the biggest weekly decline in more than nine months.
• Investors took a more upbeat view on the continued fight against the virus after the U.S. Food and Drug Administration on Monday issued full approval for the Pfizer/BioNTech two-dose vaccine, having authorized it for emergency use last December.
• Analysts said China's apparent success in fighting the Delta variant of the coronavirus also boosted demand sentiment with no cases of locally transmitted infections in the latest data.

(Source: Reuters)

• Bank of Jamaica (BOJ) Governor, Richard Byles, says the country’s growth outturn for the fiscal year 2021/22 is likely to be higher than previously anticipated. The BOJ is currently projecting that real GDP growth for this fiscal year will be in the range of 7.0%-10.0%, up from the 5.0%-8.0% it indicated in May 2021.
• Pointing to this rebound are leading indicators, such as GCT flows and electricity consumption. The Governor also added that key drivers of this rebound are the tourism and related sectors due to the stronger than expected improvements in the economies of Jamaica’s main trading partners from the fallout sparked by the COVID-19 pandemic, largely driven by successful vaccination programmes.
• The BOJ anticipates continued strong growth in the construction sector while noting that risks to the growth forecast were balanced. A faster pace of growth is possible if tourist arrivals and related activities rebound faster, due to the pent-up demand that exists.
• The main downside risks relate to the domestic spread of the COVID-19 virus, the emergence of new variants, and the accompanying measures to control it. The BOJ Governor noted that if Jamaica’s stringency measures are tightened and protracted, it could influence a slowdown in travel and disruptions in the production and distribution of goods. He maintained, however, that the macroeconomic outlook pointed to “even stronger improvement” in real economic activity.

Source: (JIS News)

• The Bank of Jamaica (BOJ) has announced its decision to hold the policy interest rate, which is the rate offered to deposit-taking institutions on overnight placements with BOJ, unchanged at 0.50% per annum.
• The Bank also decided to consider commencing a tightening of monetary policy at the next meeting of the Bank’s Monetary Policy Committee (MPC) in September 2021 and to immediately implement other measures aimed at moderating inflation expectations, including the containment of Jamaican dollar liquidity expansion.
• While the Bank does not target any specific level of the exchange rate, BOJ will also seek to ensure that movements in the exchange rate do not threaten the inflation target. Monetary policy decisions taken by the BOJ are aimed at ensuring that inflation remains within the Bank’s inflation target of 4.0% to 6.0%.
• These decisions were made by a unanimous vote by the MPC. The decisions were based on the MPC’s assessment that, while inflation is likely to breach the upper bound of the Bank’s target range over the next year, starting from as early as the September 2021 quarter, inflation will gradually decelerate thereafter as the transitory effects of the pandemic fade. Inflation is projected to remain at 5.0% over the medium term, conditional on the gradual tightening of monetary accommodation.

(Source: JIS News)

• Fitch is expecting that a rebound in private consumption and investment in Peru will underpin a 10.2% real GDP growth in 2021 and 4.7% growth in 2022. In Q2 2021, real GDP grew 41.9% y-o-y and 6.5% q-o-q, with the Q2 results outlining a broad H121 recovery in private consumption (14.0%), public consumption (19.5%), fixed capital formation (82.3%), and exports (17.5%), though imports also rose 20.7% in the first half of the year.
• As Peru's national vaccination campaign progresses, it will allow for greater economic activity and fewer public health restrictions, underpinning Fitch’s expectation for a broad economic recovery in the short-to-medium term, especially as Peru's national vaccination campaign progresses. As of August 21, 29.2% of Peruvians had received at least one COVID-19 vaccine dose and 22.5% had been fully vaccinated.
• While the agency’s growth forecasts imply that Peru will fully recover from the pandemic in 2022, less favourable government policies and tighter monetary policy will cause growth to decelerate in the medium-to-long term, averaging 3.2% from 2023 to 2025.
• In addition, downside risks to the short- and long-term forecasts include the spread of COVID-19 variants in Peru and globally, in addition to elevated concerns over policy direction under leftist President Pedro Castillo.

(Source: Fitch Solutions)

• Fitch Solutions forecasts that Argentina will post a current account deficit of 0.7% of GDP in 2021 and 1.5% in 2022 (from a surplus of 0.9% in 2020), narrow shortfalls relative to recent years as multi-year high soybean prices support export earnings.
• Fitch Solutions have revised its real GDP growth forecast for Argentina to 6.2% for 2021, from 5.6% previously, due to a stronger than anticipated Q2 2021 and expected stimulus efforts in H2 2021. This will see the country exiting the three-year recession, but remaining subdued by an ongoing crisis of confidence among households and firms.
• The 2022 growth forecast was revised down to 3.3%, from 5.7% previously, as political headwinds will likely prevent a sustained rebound in consumption and investment.
• Several factors underpin this view, including the fact that the government will likely need to scale back its deficit spending as a condition of renegotiating its debt repayments to the IMF, as well as the expectation of multi-year high commodity prices (particularly soybean), which will leave the government with fewer resources to support its stimulus efforts.
• The forecasts imply that the Argentine economy will not return its peak size (reached in 2017) until 2025, among the slowest recoveries in the region.

(Source: Fitch Solutions)

• The IMF has distributed about $650 billion in new Special Drawing Rights (SDR) to its members on Monday, providing a "significant shot in the arm" for global efforts to combat the COVID-19 pandemic, Managing Director Kristalina Georgieva said.
• The International Monetary Fund's largest-ever distribution of monetary reserves will provide additional liquidity for the global economy, supplementing member countries’ foreign exchange reserves and reducing their reliance on more expensive domestic or external debt, Georgieva said in a statement.
• IMF member countries will receive SDRs - the fund's unit of exchange backed by dollars, euros, yen, sterling, and yuan -- in proportion with their existing quota shareholdings in the fund.
• Georgieva said about $275 billion of the allocation will go to emerging markets and developing countries, with some $21 billion to flow to low-income countries.

(Source: Reuters)

• Corporate earnings have continued to strengthen over recent months, with Q2 2021 results showing record growth across several sectors. While these growth rates will ease due to base effects, earnings will nonetheless remain elevated and will help to underpin the cyclical recovery in global capital expenditure (CAPEX) and growth over the coming quarters.
• Earnings per share (EPS) reached new highs for the S&P 500, and 87% of companies posted a positive surprise in their earnings the most in almost three decades. The MSCI World Index saw a new high in EPS, and while the MSCI Emerging Market (EM) Index has seen an improvement in EPS from the lows in 2020, it has not hit a new high.
• Ongoing fiscal and monetary policy support globally, combined with the continued easing of restrictions as vaccination rates continue to rise, will help to underpin corporate profits over the coming quarters, which in turn will support CAPEX and economic activity.

(Source: Fitch Solutions)

• Despite robust revenue growth, Productive Business Solutions Ltd experienced a loss attributable to shareholders of US$726K for the 6-months ending June 2021 (loss of $1.14Mn H1 2020). 
• Revenue grew by 40.9% (29.89Mn) and other income improved by 32.2% YoY due strong performance of its information technology business. The receding impact of COVID-19 in the first half also positively impacted earnings. There was also a sharp recovery in print volumes, though they remain 7.0% below pre-COVID levels. 
• The earnings were also supported by a 20.3% (US$892K) decline in finance costs and a 7.3% (US$2.11Mn) reduction in selling, admin and general expenses. 
• Despite these favourable developments, direct expenses and taxation rose by 79.5% (US$32.19Mn) and 42.9% (US$347K), respectively and were the main reasons for the net loss.
• PBS’s stock price has appreciated by 4.6% since the start of the year and closed Thursday’s trading session at a price of $0.78 per share. At this price, the stock trades at a P/E ratio of 1.6x earnings, which is below the USD Stock Market average of 8.5x.

(Source: PBS Financials)

• Jetcon Corporation Ltd.’s net profit for the 6 months ending June 30, 2021 was $17.56Mn (EPS: $0.03), a fourfold increase over the same period last year. 
• Revenues, which grew by 31.0%($97.13Mn), was attributed to the adjustments being made to facilitate a reopening of economic activity, as countries have a better understanding of the effects of the COVID-19 virus. 
• Also supporting the earnings was a 1.9% (or $880k) reduction in total expenses due to lower administrative and other expenses. 
• Jetcon’s stock price has appreciated by 48.1% since the start of the year and closed Thursday’s trading session at a price of $1.17 per share. At this price, the stock trades at a P/E ratio of 97.5x earnings, which is above the Junior Market Distribution Sector average of 19.1x.

Source: (Jetcon Financials)