• Major banks and business groups sued the Federal Reserve on Tuesday, alleging the U.S. central bank's annual "stress tests" of Wall Street firms violate the law.
• The lawsuit, claims the Fed's practice of determining how big banks perform against hypothetical economic turmoil and assigning capital requirements accordingly, does not follow proper administrative procedure. Plaintiffs included the Bank Policy Institute, the U.S. Chamber of Commerce and the American Bank Association.
• The lawsuit marks the latest example of the banking industry growing bolder and challenging in court their regulators' powers. Notably, recent Supreme Court rulings have placed fresh restrictions on administrative authority. The latest ruling in June dealt a major blow to such power by overturning a 1984 precedent that granted deference to government agencies in interpreting laws they administer.
• Specifically, the groups are calling for the Fed to make public and subject to feedback the now-confidential models used to gauge bank performance, as well as details of the annual scenarios they create to test for weaknesses.
• The groups said they did not want to kill the stress testing program, which provides an annual bill of health to the nation's biggest firms, but argued the process needs to be more transparent and responsive to public feedback.
• On Monday, the Fed announced plans to pursue similar changes ahead of the 2025 exams, citing recent legal developments, but the industry opted to proceed with its lawsuit.
• These tests, which banks have complained for years are opaque and subjective, are a central piece of the U.S. regulatory bank-capital structure. The Fed has long resisted calls to open up the testing process, due to concerns that it could make it easier for banks to clear the exams.
• How banks perform on the test informs how much capital they must set aside to meet their obligations and dictates the scope of dividend payouts and stock buybacks.

(Source: Reuters)

• FirstRock Real Estate Investments, through its subsidiary FirstRock Capital Cayman, has successfully acquired a majority stake in the renowned Crown Square Commercial Complex, along with an adjacent commercial tower, for a total equivalent of J$1.7Bn.
• This acquisition represents the company’s largest transaction to date, highlighting its strategic commitment to expanding investments in premium, income-generating properties across the Caribbean and Latin America.
• The Crown Square Commercial Complex, situated in the heart of Georgetown, the capital city of the Cayman Islands, continues to experience strong demand for retail and office spaces. This acquisition features prime tenants, including government agencies and a communication tower fully leased to Digicel – a leading telecommunications provider in the region.
• The transaction, primarily financed by Cayman National Bank, represents a major milestone as FirstRock continues its efforts to diversify and expand its real estate portfolio across the Cayman Islands and other Caribbean and Latin American markets.
• This transaction marks FirstRock’s second investment in the Cayman Islands, following its 2021 acquisition of five residential condominiums, which were later divested at a profit.
• FirstRock’s stock price closed at $9.89, up 28.8% since the start of the calendar year despite booking a net loss of $229.72Mn for 9M 2024.

(Sources: JSE & NCBCM Research)

• United Oil & Gas plc, a London-based oil and gas exploration firm, is planning to raise £700,000 (approximately J$140Mn) through a share offer to support its operations, including activities in Jamaica.
• The company intends to seek shareholder approval for certain resolutions related to this fundraising at its upcoming annual general meeting in January.
• Earlier this month, United Oil & Gas suspended all non-core activities to preserve cash, including deferring discussions with potential offshore drilling partners in Jamaica until 2025. The decision to seek capital from the market reflects the company's strategy to bolster its financial position during this period.
• The Jamaican asset is a key opportunity for United Oil & Gas. An independent estimate valued its most promising reservoir at US$23Bn, with the potential to extract crude oil over 25 years. United has been exploring offshore Jamaica for several years but scaled back its operations this year after exiting Egypt due to currency-related challenges.
• United Oil & Gas has one year remaining on its two-year license extension, which expires in January 2026. The company is licensed to explore 22,400 square kilometres offshore along Jamaica’s southern coast, specifically in the Walton-Morant zone. In its exploration efforts, the company has conducted a series of 2D and 3D seismic surveys, which have uncovered substances resembling oil.
• However, to confirm whether the substances are crude oil or underground water, the company requires a test drill. This exploration effort remains a pivotal component of United’s strategy, given the substantial potential value of the Jamaican asset.

(Source: Caribbean National Weekly)

• Barbados has secured a fresh injection of US$56Mn ($112Mn) from the International Monetary Fund (IMF) as the country continues to impress international partners with its homegrown economic recovery and transformation plan (BERT 2022) and climate policy agenda.
• The new disbursement also includes US$19Mn ($38Mn) under the IMF’s Extended Fund Facility (EFF) and US$37Mn ($74Mn) under the Resilience and Sustainability Facility (RSF), bringing the combined total payout to some US$242Mn. This financial injection further supports the government’s economic recovery and climate resilience efforts.
• In its review, the IMF praised the progress of the BERT 2022 and what it described as the island’s ambitious climate policy agenda. The release highlighted the expansion of the country’s economy by 3.9% between January and September 2024, driven by growth in tourism, business services, and construction.
• Despite these positive developments, the IMF acknowledged ongoing vulnerabilities. “While the outlook is positive, Barbados remains vulnerable to global shocks, climate change, and natural disasters, as demonstrated by Hurricane Beryl,” IMF Deputy Managing Director and Acting Chair, Bo Li noted, highlighting the damage it caused to the fishing sector and coastal infrastructure.
• On the other hand, he noted that the Central Bank of Barbados has adopted a strategy to monitor and assess climate change risks, safeguarding financial stability and resilience.
• The IMF’s top official further praised the government’s efforts to mobilise international financing, including the innovative debt-for-climate swap, which will generate savings for water supply resilience, environmental sustainability and food security investments.  

(Source: Barbados Today)

• d a current account deficit of $3.1Bn in November, the central bank said on Monday, widening the 12-month shortfall mainly due to a weaker trade surplus.
• Over the 12-month period, the current account deficit rose to 2.37% of gross domestic product (GDP), doubling the level seen a year ago. The widening deficit reflects Brazil's stronger-than-expected economic performance, which has boosted imports and reduced the trade surplus.
• Finance Minister Fernando Haddad has estimated this year's economic growth at 3.5% - a sharp contrast to the 1.6% expansion projected by private economists at the beginning of the year. The robust economic activity has also driven up net spending on services and widened the deficit in factor payments, contributing to the larger current account gap.
• In November, the trade surplus reached $6.3Bn, a 20.9% drop from a year earlier. The deficit in services rose 24.6% to $4.7Bn, while the factor payments deficit increased 13.8% to $5Bn.
• Foreign direct investment (FDI) for the month totaled $7Bn, exceeding the $6.5Bn forecast in the Reuters poll. Over the 12-month period, FDI stands at 3.0% of GDP.

(Source: Reuters)

• The U.S. Congress early on Saturday passed a measure to boost Social Security retirement payments to some retirees who draw public pensions - such as former police and firefighters - which critics warned will further weaken the program's finances.
• The Senate in a 76-20 bipartisan vote shortly after midnight approved the Social Security Fairness Act, which would repeal two-decades-old provisions that can reduce benefits for people who also receive a pension.
• Last month, the House of Representatives approved the bill in a 327-75 vote, meaning the Senate approval sends it to Democratic President Joe Biden to sign into law.
• The bill will overturn a decades-old change to the program that limited federal benefits to some higher-earning workers with pensions. Over time, growing numbers of municipal employees such as firefighters and postal workers also saw their payments capped.
• Most Americans do not participate in pension plans, which pay a defined benefit, and instead are dependent on what money they can save and Social Security. Just one in ten U.S. private sector workers have pension plans, according to Labor Department data.
• The new provisions impact about 3% of Social Security beneficiaries - totalling a little more than 2.5Mn Americans - and the workers and retirees affected by these provisions are key constituencies for lawmakers and their powerful advocacy groups have pushed for a legislative fix.
• Some of them could receive hundreds of dollars more a month in federal benefits as a result of the bill, retirement experts said. Some federal budget experts, however, warned the change could hurt the program's already shaky finances as the bill's price tag is approximately US$196Bn over the next decade, according to an analysis by the non-partisan Congressional Budget Office

(Source: Reuters)

• The Bank of Canada's decision to cut rates by 50 basis points on December 11, 2024, was a close call, with some governing council members suggesting a smaller reduction, according to minutes released on Friday, December 20, 2024.
• The central bank slashed its key policy rate to 3.25% to help address slower growth. Governor Tiff Macklem indicated further cuts would be more gradual, a shift from the previous messaging that continuous easing was needed to support growth.
• The minutes said the discussions had focused on whether a 50-basis point or a 25-basis point cut was more appropriate. "Each member of the Governing Council acknowledged that the decision was a close call based on their assessments of the data and the outlook for growth and inflation," they said.
• Those preferring a bold move were concerned about a weaker growth outlook and downside risks to the inflation forecast, even while acknowledging that not all the recent data pointed to the need for a 50-basis point cut.
• "Governing Council members also discussed the future path for interest rates. There was a range of views on how much further the policy rate would need to be reduced, and over what period that should happen," the minutes said.
• "Members agreed that they would likely be considering further reductions in the policy rate at future meetings, and they would take each decision one meeting at a time."

(Source: Reuters)

• The Ministry of Agriculture, Fisheries and Mining will be placing greater focus on key areas in 2025 to pivot the sector for robust and sustainable growth, as well as to build a stronger, food-secure Jamaica. This was noted by Portfolio Minister, Hon. Floyd Green, during a press conference at the Ministry’s Hope Gardens offices, in St. Andrew, on December 18.
• “In 2025, we will be pivoting agriculture for robust and sustainable growth. The Prime Minister has already laid the charge that what we are looking forward to is accelerated growth, and we are very sure that the Ministry of Agriculture, Fisheries and Mining will have to drive that accelerated growth in a real way,” he said.
• Green said the Ministry will focus on strengthening resilience through more climate-smart technologies, irrigation systems, as well as continuing to organise around disaster preparedness. The Minister noted that $120 million is being spent to purchase small irrigation kits that will be distributed to farmers in the first quarter of 2025. The Minister also noted that the network of retention ponds has been expanded.
• Green noted that the Ministry will continue to introduce new technologies in the fisheries sector to enhance productivity. “We have deployed nine fish aggregating devices where our artisanal fishers now, instead of going out and doing guesswork in fisheries, use technology (to aid in their trade) and get greater returns on their investment,” he said.
• The Minister added that the Ministry will focus on driving growth through investments, the introduction of new agro parks, new contract farming arrangements and storage. Turning to contract farming, he said engagements have started with critical stakeholders on the matter.

(Source: JIS)

• Consumers are being urged to exercise prudence as they purchase agricultural produce, especially during the busy Christmas period. The urging came from Minister of Agriculture, Fisheries and Mining, Hon. Floyd Green, during a press conference at the Ministry’s headquarters, in Hope Gardens, on December 18.
• “Consumers need to understand that while farmers have faced challenges leading to price adjustments, the major price hikes are often occurring at the resale level, not necessarily at the farm level. For example, when we look at the average price for local Plummy Tomato it is about $660/kg. However, in the Kingston Metropolitan area, the same commodity is sold at an average price of $1,694/kg, with prices climbing as high as $2,070/kg,” he said. Mr. Green said this demonstrates the significant markup occurring at the retail level.
• Given these variations, the Minister urged consumers to shop around. “Prices differ significantly between markets and supermarkets, and taking the time to compare prices can result in major savings. Market spaces typically offer fresh produce at lower prices than some of our retail outlets, and where possible, consumers should buy directly from our farmers,” he said.
• Green said that despite the challenges of the drought, Hurricane Beryl, Tropical Storm Rafael, and continuous rainfall, some food commodities have rebounded well. “Because of that, we are seeing in some commodities, some decline in prices,” he said. He informed that crops such as cucumber, iceberg lettuce, pakchoi, and red sweet peppers have already seen reductions in the first two weeks of December, compared to November, adding that Pineapple (MD2 variety) has also recorded a decline.
• The Minister noted that commodities like pumpkin, callaloo, papaya, and watermelon have been fairly stable, meaning no movement in price over the last two weeks. Providing an outlook for price stabilisation, he said the forecasts project that some prices are expected to moderate by mid-January to early February 2025, as production continues to stabilise across the country.
• “Our market analysis, supported by JAMIS (Jamaica Agricultural Marketing Information System) data, suggests that at the farmgate level, vegetable price increases are expected to moderate significantly early in the new year. Fruit prices will continue to see some increases as we go into January. At the supermarket level, we do hope that as the prices come down, it will be passed on to consumers,” he said.

(Source: JIS)

• Mexico's central bank lowered its benchmark interest rate by 25 basis points to 10.00% on Thursday, December 19, 2024, and signaled larger rate cuts could be considered in future meetings given progress on inflation in Latin America's second-largest economy.
• The unanimous decision by the Bank of Mexico's five-member governing board is the fifth rate cut this year since it started lowering borrowing costs from a record high of 11.25% in March.
• "In view of the progress on disinflation, larger downward adjustments could be considered in some meetings, albeit maintaining a restrictive stance," Banxico, as the bank is known, said in a post-meeting statement.
• Mexico's closely watched core consumer price index, seen as a more reliable measure of price trends as it excludes volatile energy and food prices, fell to 3.58% in the 12 months through November, from 3.80% in October.
• Banxico targets inflation at 3%, plus or minus a percentage point. While both headline and core inflation are still forecast to follow a downward trend, the board raised its year-end inflation forecasts for 2024 and 2025.
• The board now sees headline inflation reaching the 3% target in the third quarter of 2026, later than the board's previous guidance of the fourth quarter of 2025.
• After the board's unanimous cut in mid-November, Mexican markets were rattled by U.S. President-elect Donald Trump's threat of a 25% across-the-board tariff on imports from Mexico. Thursday's statement referenced the Mexican peso's volatility amid "the possibility of measures that could weaken integration with our main trading partner."

(Source: Reuters)