• Brazil’s public debt reached a record-high of 80.8% of GDP in May. The bulging primary deficit, the effect of a weaker currency on the external debt, and the contraction in GDP largely outweigh the benefits of an exceptionally low-interest rate for debt dynamics.
• The debt-to- GDP ratio is poised to rise even further in the coming months. The critical question is how and when the government will be able to fix the problem.
• Bloomberg’s economists expect public debt to reach 91.7% of GDP by year-end. This reflects their forecast for a 6.4% contraction in the GDP, a primary deficit of 10% of GDP, and a rather benign assumption that the currency strengthens to 4.80 reais per U.S. dollar.
• The primary deficit will rapidly rise from 3.9% of GDP in May to at least 10%at the end of the year, with most of the slump coming through August.

 (Source: Bloomberg)

• U.S manufacturing activity rebounded in June, hitting its highest level in more than a year as the broader economy reopened, but rising COVID-19 infections threaten the recovery.
• The Institute for Supply Management (ISM) said its index of national factory activity jumped to a reading of 52.6 last month from 43.1 in May. That was the strongest since April 2019 and ended three straight months of contraction.
• A reading above 50 indicates growth in manufacturing, which accounts for 11% of the U.S. economy. Economists polled by Reuters had forecast the index rising to 49.5 in June.

 (Source: Reuters)

• Nonfarm payrolls soared by 4.8 million in June and the unemployment rate fell to 11.1% as the U.S. continued its reopening from the coronavirus pandemic, the Labor Department said Thursday.
• The jobs growth marked a big leap from the 2.7 million in May, which was revised up by 190,000. The June total is easily the largest single-month gain in U.S. history. The numbers capture the move by all 50 states to get activity moving again after the virus seized up much of the U.S., particularly service-related industries.

 (Source: CNBC)

• K.L.E. Group Limited reported net loss of $19.07Mn (EPS: -20¢) for the three months ended March 31, 2020, despite a 46.1% (or $22.94Mn) increase revenue. This represents an almost hundredfold decline when compared to the $198k made in the same period of the previous year.
• The main contributor to this performance was an 83.9% (or $30.56Mn) increase in administrative expenses, a 57.9% (or $8.11Mn) increase in the cost of sales, a 19.5% (or $1.02Mn) increase in finance and depreciation costs as well as a 43.8% (or $2.8Mn) decline in other operating income.
• The company’s stock price has risen by 2.9% since the beginning of the year to end Wednesday’s trading session at $1.80. The stock currently trades at a P/B of 2.27x, which is slightly below the Junior Market average of 3.0x earnings.

 (Source: K.L.E Financials)

• Mexican financial authorities said on Tuesday they had revoked the license of the savings bank arm of retailer Grupo Famsa, which last week announced it was seeking Chapter 11 bankruptcy protection in the United States.
• In a statement, the financial authorities said the license for Banco Ahorro Famsa had been withdrawn due to inappropriate risk management and operations, as well as loans granted to “related parties of the group above regulatory limits.”
• The bank had also kept improper records, and repeatedly failed to comply with regulatory provisions, the central bank, the finance ministry and banking regulator said jointly.

 (Source: Reuters)

• The Inter-American Development Bank (IDB) said Wednesday that it granted a $100 million loan for Trinidad and Tobago to finance its response to the COVID-19 pandemic and promote an economic recovery after the health crisis has passed.
• Trinidad and Tobago will use part of the money to support household income and business liquidity during the pandemic through tax refunds, salary grants, food stamps and rental assistance. It will also use the loan to buy medical equipment and hire medical staff, the IDB said in a press release.
• The loan will also go to implementing the Fair Trading Act (FTA), which involves promoting competition in local markets, lowering the cost of essential goods for consumers and increasing private sector productivity.

 (Source: Latinfinance)

• The world’s tourism sector could lose at least $1.2 trillion, or 1.5% of the global gross domestic product (GDP), having been placed at a standstill for nearly four months due to the coronavirus pandemic.
• The UN’s trade and development body warned that the loss could rise to $2.2 trillion or 2.8% of the world’s GDP if the break in international tourism lasts for eight months, in line with the expected decline in tourism as projected by the UN World Tourism Organization (UNWTO).
• The United Nations Conference on Trade and Development (UNCTAD) estimates losses in the most pessimistic scenario, a 12-month break in international tourism, at $3.3 trillion or 4.2% of global GDP.

 (Source: UNCTAD)

• Oil prices dipped on Thursday after the United States recorded its biggest one-day spike in coronavirus cases and California reimposed some lockdown measures, stoking worries a resurgence in COVID-19 cases will stall a recovery in fuel demand.
• S. West Texas Intermediate (WTI) crude futures fell 10 cents, or 0.3%, to $39.72 a barrel at 0148 GMT, trimming a 1.4% rise from Wednesday. Brent crude futures eased 6 cents, or 0.1%, to $41.97 a barrel, after rising 1.8% in the previous session.
• California sharply rolled back efforts to reopen its economy on Wednesday, banning indoor restaurant dining in much of the state, closing bars and beefing up enforcement of social distancing and other measures as COVID-19 infections surged.

 (Source: CNBC)

• Despite a 9.3% (or $25.42Mn) increase in revenues, Consolidated Bakeries Jamaica Limited (Purity) reported a 41.7% (or $6.07Mn) contraction in net profits for the first quarter ended March 31, 2020. Net profit was down to $8.47Mn (EPS: $0.04) from the $14.54Mn (EPS: $0.07) that was reported in the year prior.
• This outcome was primarily driven by a 9.6% (or $9.07Mn) growth in total operating expenses, a 50.4% (or $1.39Mn) increase in finance costs, and a 99.3% (or $825k) decrease in finance and other income.
• The stock has risen 2.4% since the start of the year, and closed trading at $1.70 on Thursday. At this price Purity currently trades at a P/B of 0.52x, which is below the Junior Market Manufacturing Sector Average of 2.03x.

 (Source: Purity Financials)

• Jamaica welcomed approximately 4.3 million visitors in 2019, comprising 2.7 million stopover arrivals and 1.6 million cruise passengers, whose combined spending contributed to the destination earning US$3.64 billion. Minister of Tourism, Hon Edmund Bartlett, made the disclosure during his contribution to the 2020/21 Sectoral Debate in the House of Representatives on June 24.
• He informed that stopover arrivals last year increased by 8.4 per cent, compared to 2018, with each visitor spending an average of 8.6 nights, and overall foreign exchange earnings increased by 10.3 per cent, up from US$3.3 billion in 2018.
• “At the end of 2019, tourism was projected to create 41,000 new jobs by 2022. We recognise now that the impact of COVID-19 will result in a revision of this estimate, but the broader point being made is that tourism remains one of the most critical catalysts for job creation in the Jamaican economy,” he contended.
• Bartlett said the Statistical Institute of Jamaica (STATIN) has now classified the direct employment in the tourism sector at 170,000 workers, to include employees in the accommodations subsector, travel agencies, ground transportation providers, workers in the attractions subsector, craft vendors, etc.

 (Source: JIS)