• The British Government has asked public sector managers to test their contingency plans against a worst-case scenario of 25% staff absence as part of efforts to minimize disruption from the rapid spread of the Omicron variant of COVID-19. 
• With daily infection numbers at a record high and people who test positive required to self-isolate for at least seven days, the Government expects businesses and public services to face disruption in the coming weeks, it said in a statement. 
• "So far, disruption caused by Omicron has been controlled in most parts of the public sector, but public sector leaders have been asked to test plans against worst-case scenarios of workforce absence of 10%, 20% and 25%," it said. 
• This latest development by the U.K is an indication that governments may have to tighten up their stringency measures in order to curb the spread of the new Omicron variant. In the local context of Jamaica, the Government will likely revisit its guidelines as it relates to mandatory work from home restriction if cases continue to surge.

(Source: Reuters and NCBCM Research)

• For November 2021, output prices for producers in the Mining and Quarrying industry increased by 1.4%, with an upward movement in output prices in the Manufacturing industry of 0.8%, as released by the Statistical Institute of Jamaica (STATIN). 
• The increase in the index for the Mining and Quarrying industry was influenced mainly by a 1.5% rise in the index for the major group ‘Bauxite Mining & Alumina Processing’. The index for the other major group ‘Other Mining & Quarrying’ rose by 0.3%. These increases were due to the depreciation of the Jamaican dollar against the United States dollar. 
• For the period under review, the Manufacturing industry continued to be impacted by increases in the cost of raw materials on the international market, as well as, rising freight costs. The main contributors to the 0.8% rise in the index for the Manufacturing industry were the major groups: ‘Refined Petroleum Products’ which increased by 1.6%; ‘Food, Beverages and Tobacco’ up by 0.5% and ‘Chemicals and Chemical Products’ which increased by 1.5%. 
• For the period November 2020 – November 2021, the point-to-point movement for the Mining & Quarrying industry was 27.4%, due mainly to an increase of 28.4% in the index for the major group ‘Bauxite Mining & Alumina Processing’. The point-to-point movement for the Manufacturing industry was 20.2%. 
• Point-to-point PPI has grown in November relative to the results for October, while Consumer Price Index (CPI) had fallen for the same period. This could be influenced by the challenges manufacturers face passing on higher input prices to consumers. Further, with supply chain challenges expected to continue into 2022, the output prices for the manufacturing sector are expected to remain elevated.

(Sources: STATIN & NCBCM Research)

• Owing to a reduction in expenses, Main Event Entertainment Group Ltd. reported a net profit of $16.14Mn (EPS: $0.05) for the year ended October 31, 2021, versus the loss of $18.23Mn in the previous year. 
• The company continued its focus on cost management this year, seeing a reduction in direct costs of 46.1%. The bottom-line also benefited from by a reduction in admin & general expenses (14.7%), selling & promotional expenses (50.3%), depreciation (4.4%), and amortization (13.9%) costs. 
• Tempering the results was a 27.5% decline in revenues. The decrease is a result of very modest activity in Main Event’s core business of entertainment and promotions throughout this year. While client interest in its M-Style (Main Event’s premiere lifestyle and experience brand) services was encouraging, actual activity was tempered by the restrictions on gathering. 
• With the new Omicron variant of COVID-19 spreading, new lockdown measures and a further delay in the reopening of the entertainment sector can be anticipated. Nevertheless, the company expects demand for entertainment and event services to rebound swiftly when restrictions ease. 
• Main event’s stock price has appreciated by 35.0% since the start of the year and closed Thursday’s trading session at $4.32 per share. At this price the stock currently trades at a P/E of 86.4x.

(Sources: Main Event Financials & NCBCM Research)

• Mexican growth will slow in 2022 as higher inflation, decelerating US growth, the spread of the Omicron variant, and an unfavourable policy environment constrain activity. Fitch highlighted that Inflation is expected to average 5.9% in 2022, eating away at household purchasing power. The high inflation has also pushed the Banco de México (Banxico) into a tightening cycle, which will increase the cost of consumer loans over the year. 
• Nevertheless, economic activity will recover from the contraction recorded in Q321, as fiscal spending ticks higher, supply chain disruptions slowly ease and Mexico’s vaccination rate rises. Mexico has seen modest case levels since a surge in Q321, due in part to a vaccination rate that has climbed above 60%. 
• According to Fitch, real GDP growth is expected to slow to 2.8% in 2022, down from the 3.3% previously forecasted, and an estimated 5.6% in 2021, though this remains above the 2.0% growth averaged from 2015-19. 
• This downward revision is due to softer demand from the US, rising interest rates, and uncertainty over policy direction, coupled with a more challenging outlook for private consumption, which is expected to slow to 3.0%, from an estimated 7.4% in 2021, as higher inflation and weaker remittance inflows undercut household spending.

(Source: Fitch Solutions)

• The Central Bank of the Dominican Republic (BCRD), at its monetary policy meeting in December 2021, decided to increase its monetary policy interest rate by 100 basis points, from 3.50% per annum to 4.50% per annum. In this way, the rate of the permanent liquidity expansion facility (1-day Repos) increases from 4.00% per year to 5.00% per year and the rate of remunerated deposits (Overnight) from 3.00% per year to 4.00% per year. 
• This decision regarding the benchmark rate is based on a comprehensive assessment of the impact of COVID-19 on the world economy and the persistence of external inflationary pressures. In that order, the dynamics of prices continue to be affected by more permanent supply shocks than expected, associated with higher prices of oil and other important raw materials for local production, as well as the increase in global freight costs due to container shortages and other distortions in supply chains. 
• In particular, the monthly variation of the consumer price index (CPI) in November was 1.08%, while the accumulated inflation during the first eleven months of 2021 was 7.71%. On the other hand, core inflation, which excludes the most volatile components of the basket, reached 6.63% year-on-year in November 2021, reflecting second-round effects due to higher production costs associated with external shocks. 
• Going forward, the BCRD forecasting system indicates that, in an active monetary policy scenario, year-on-year inflation (variation of the last 12 months), which stood at 8.23% in November 2021, would converge to the target range of 4% ± 1% during the second half of 2022, at a slower rate than originally planned.

(Source: The Central Bank of the Dominican Republic)

• The U.S. Centers for Disease Control and Prevention (CDC) said people should avoid traveling on cruise ships regardless of their vaccination status, as daily COVID-19 cases in the country climb to record highs due to the fast-spreading Omicron variant. 
• The move delivers another blow to an industry that just started returning to the seas in June after a months-long suspension of voyages caused by the pandemic. 
• The CDC raised its COVID-19 travel health notice level for cruise ships to four - its highest warning level - from three, citing reports of COVID-19 outbreaks on cruises. 
• The health agency has investigated or started an investigation into COVID-19 cases on more than 90 ships. "Even fully vaccinated travelers may be at risk for getting and spreading COVID-19 variants," the CDC said on Thursday. 
• This warning by the CDC is likely to have adverse effects on the Jamaican Tourism Industry in the near term by weighing on visitor arrivals given that the U.S is our major source market for tourists. This also has the ability to lengthen the industry’s recovery time as we seek to return to pre-pandemic levels of tourism activity.

(Sources: Reuters and NCBCM Research)

• If you’re still bullish on the U.S. stock market, you may not want to hear what Bank of America has to say. 
• The second-largest bank in the U.S. has a forecast of 4,600 for the S&P 500 by the end of 2022. With the benchmark currently hovering around 4,790, that means the bank is pointing to negative returns for the coming year. 
• “The probability of a 10% correction in the near term or over the next 12 months is elevated,” the bank’s U.S. stock and quantitative strategy chief Savita Subramanian told Bloomberg earlier this month. 
• At the same time, the Wall Street firm also highlighted three sectors that could outperform in the new year, Energy, Financials, and Healthcare.

(Source: Yahoo Finance)

• Minister of Tourism Hon. Edmund Bartlett says Sandals International Resorts’ investment of US$240.0Mn in local projects is proof of the company’s belief and commitment to Jamaica. He noted that Sandals is taking the bold approach in reaffirming its belief in brand Jamaica and the future of the tourism sector. 
• The company has recently had the official opening of 84 new rooms and suites at the Sandals Royal Caribbean in Montego Bay, St. James, and has more projects in the pipeline. Sandals’ Executive Chairman, Mr. Adam Stewart disclosed that the 2021-22 local projects include next summer’s construction of a brand-new property to replace the demolished Jewel Runaway Bay, the completion of phase one of Sandals Royal Dunn’s River in Ocho Rios, and major expansion at Beaches Negril in Westmoreland. 
• The tourism sector has been experiencing recovery, as stopover arrivals from January to October 2021 was 1,088,969, this is up approximately 47.0% from the 740,827 for January to October 2020. Minister Bartlett has noted that total visitor arrivals are estimated to reach 4.5Mn, with gross foreign exchange earnings of US$4.7Bn by end 2021. 
• Sandals’ investment is expected to further support that recovery and is a  signal of its confidence in the sector which has the potential to influence the confidence of other investors. Notwithstanding, the spread of the Omicron variant could weigh on visitor arrivals as travel restrictions are imposed in some countries, thereby negatively impacting the recovery in the sector, at least for the short term.

(Sources: JIS News & NCBCM Research)

• Owing to an increase in revenue, Salada Foods Jamaica Ltd. reported a 41.9% increase in net profit to an audited $156.83Mn (EPS: $0.15) for the year ended September 30, 2021. 
• The company was able to grow revenues by 11.4% for the full year which was partly attributable to the successful introduction of new, non-coffee products, namely the Jamaica Mountain Peak Ginger Turmeric Tea, and continued strong export sales. 
• Lower admin expenses (-7.3%) resulting from lower spending on areas such as audit fees and salaries, and other related costs, also supported the improvement in net profit. 
• The performance was, however, tempered by an increase in selling and promotional expenses. Selling and promotional spending increased by 18.3% to $52.43M in support of new products and shifting market trends from bottles to sachets. The team was also forced to develop more innovative promotional tactics to gain and/or maintain consumer attention, which was also contributed to increased selling and promotional expenses. 
• During the year, Salada was faced with numerous obstacles including the deleterious effects of complying with the Jamaica Agricultural Commodities Authority (JACRA) regulations for a 30% locally grown coffee quota, ongoing supply chain disruptions, and increasing freight costs. However, these negative impacts were mitigated by the use of the built-up inventory of raw materials, and lower-cost beans. 
• Salada Food’s stock price has fallen by 79.1% since the start of the year and closed Wednesday’s trading session at $6.42 per share. At this price, the stock currently trades at a  P/E of 42.8x which is above the main market distribution and manufacturing sector average of 23.4x

(Source: Salada Foods Financials)

• Venezuela this year almost doubled its oil production from last year's decades low as its state-owned company struck deals that let it pump and process more extra-heavy crude into exportable grades. 
• The surprising reversal began as state-run Petroleos de Venezuela (PDVSA.UL), known as PDVSA, won help from small drilling firms by rolling over old debts and later obtained steady supplies of a key diluent from Iran. The two lifted output to 824,000 barrels per day (bpd) in November, well above the first three-quarters of the year and 90% more than the monthly average a year earlier. 
• Whether it can continue to ramp up production is unclear. Years of unpaid bills, mismanagement, and, more recently, U.S. sanctions have cut its access to specialized drilling equipment and foreign investment. The sanctions have also limited its customers to firms with no track record of trading.
• PDVSA's latest gains - including reaching 1 million barrels of daily output for the first time in nearly three years, which Oil Minister Tareck El Aissami described in a Christmas day message as a "great victory" - still fall short of current management's 2021 goal of producing 1.28 million bpd.

 (Source: Reuters)