• The perennial problem that is the U.S. debt limit is oozing its way back onto the agenda.
• Treasury Secretary Steven Mnuchin said that under one of the Treasury Department’s scenarios, the country will be at risk of defaulting on payment obligations in early September.
• With Congress due to start its recess on July 26 and not return until mid-September, there is some pressure to agree on a way forward in the coming weeks.
• Mnuchin is in Paris for a meeting of G-7 finance chiefs where the French are busy pushing for agreement on a digital tax on tech giant profits. 

(Source: Bloomberg)

• The pound fell to the lowest since 2017 as the market once again reckoned with no-deal Brexit risk after the contenders to be U.K. prime minister toughened their rhetoric.
• Sterling hit its weakest level in more than two years versus the dollar and a six-month low against the euro, as Brexit negotiations appeared to turn more hostile.
• Both leadership contenders Boris Johnson and Jeremy Hunt have said the so-called backstop plan to avoid a hard border in Ireland, considered essential by Brussels, would need to be scrapped.
• The U.K. currency extended its slide after Sky News reported that Johnson’s team was considering sending lawmakers home for up to two weeks in October to prevent them from blocking a no-deal Brexit.
• After a strong start to the year, the pound is the worst performer in the Group-of-10 in recent months and is at the lowest ever for this time of year.

(Source: Bloomberg)

• Bank of Jamaica intervened in the foreign exchange market yesterday 11 July 2019, with an offer of US$30Mn sold to authorized dealers and large cambios by means of Bank of Jamaica’s Foreign Exchange Intervention and Trading Tool (B-FXITT).
• This intervention is intended to address temporary demand and supply imbalances in the market.

(Source: Bank of Jamaica)

• For the six-month period ended June 30, 2019, Mayberry Jamaican Equities reported a net loss of $39.42Mn, representing a 108.9% decline from the $440.69Mn profit reported for the corresponding quarter of 2018.
• The performance over the period was mainly impacted by a 62.9% decline in operating revenue coupled with a 70.9% increase in operating expenses.  Operating income was severely affected by a significant (87.1%) YoY decline in fair value gains on its investment portfolio as well as a 22.9% YoY compression in dividend income. Net interest income also deteriorated YoY from -$40.67Mn in 2018 to -$72.89Mn in 2019.  
• Operating expenses increased in 2019 to $269.90Mn from $157.89Mn in 2018 due to incentive and management fees for investment management services. This was partially offset by savings in admin expenses.
• The stock has risen 22.3% since the start of the calendar year, closing yesterday’s trading session at $11.32. At this price, MJE is currently trading at a 22.5% discount relative to its June 28, 2019 NAV of $14.60 per share.  

(Source: MJE Financials)

• A two-year Memorandum of Understanding (MoU) for trading relations and information sharing has been signed between the Georgetown Chamber of Commerce and Industry (GCCI) and the Guyana-Ghana Chamber of Commerce.
• The MoU will see the two chambers collaborating in areas such as responsible business conduct, due diligence, and responsible oil and gas supply value chain.
• Nicholas Boyer, the executive director of the Guyana-Ghana Chamber of Commerce, state that he sees Ghana as a potential trading partner, a partner who has significant experience in industries that Guyana is developing.
• He further stated that this collaboration extends beyond the oil industry to include mining which Ghana also has expertise in, among several other industries.

(Source: Guyana Chronicle)

• Puerto Rico is expected to see a substantial improvement in its fiscal account as surging revenues; limited spending increases and an eventual return to international capital markets underpin fiscal consolidation.
• Fitch estimates a general fund gross revenue growth of 25.2% y-o-y in the fiscal year 2019, which it forecasts will decelerate slightly into FY20 on base effects.
• Over the long term, risks to the fiscal account forecast include Puerto Rico’s poor demographic profile, as population loss and an ageing population shrinks the tax base and increases demands for social spending.

(Source: Fitch)

• Markets have a July rate cut from the Federal Reserve as the base case following Chair Jerome Powell’s two-day testimony to Congress.
• Federal Reserve Chairman Jerome Powell suggested that the central bank has room to ease monetary policy as the tie between the inflation and jobless rates have broken down.
• “The relationship between unemployment and inflation became weak” about 20 years ago, Powell told the Senate Banking Committee Thursday. “It’s become weaker and weaker and weaker.”
• Two regional Fed governors are pushing back, with Atlanta’s Raphael Bostic and Richmond’s Thomas Barkin disputing the need for stimulus right now. Each of them cited the Dallas Fed’s trimmed mean measure of inflation which has come in close to 2% in recent months.
• As neither of them are voting on the FOMC this year, their arguments could well get lost as Powell gets on with being the world’s central banker.

(Source: Bloomberg)

• OPEC and its allies agreed to extend production cuts into 2020 earlier this month, and already the International Energy Agency is saying that they may need to reduce production even more as the market has returned to surplus.
• The fall-off in global oil demand is only adding to the risks of another glut in the near future.
• Despite the warnings, crude is trading higher today, with a barrel of West Texas Intermediate for August delivery firmly over $60 as investors are more concerned about the immediate threat of a Barry-induced production shutdown and tensions in the Middle East.

(Source: Bloomberg)

• For the nine-month period ended June 30, 2019, Barita Investments Limited (BIL) reported an unaudited net profit of $1.43Bn (EPS: $2.26), representing a 690% improvement on the $180.56Mn (EPS: $0.30) reported in 2018.
• The performance can be attributed to continued growth in revenue through the addition of new business lines, coupled with improvements in traditional revenue sources. In particular, the company experienced a 42.3% increase in net interest income coupled with a 98.0% growth in fees and commissions.
• Furthermore, there were improvements in all aspects of net operating income which also boosted the bottom-line performance: foreign exchange trading gains showed 106.2% improvement YoY, gain on investment activity moved from $111.60Mn to $1.24Bn, and other income which increased from $871K to $312.19Mn.
• The stock has fallen 15.4% since the start of the calendar year, closing yesterday’s trading session at $45.00 per share. At its current price, the stock now trades at a P/E of 16.07x earnings which is below the Main Market Financial sector average of 18.73x. 

(Source: Barita Investments Limited Financials)

• Overall credit conditions to the private sector during the March 2019 quarter eased, relative to the previous quarter.
• The easing of credit conditions was fueled by more accommodative price and non-price lending policies applicable to both secured and unsecured lending.
• For secured loans, lenders reported lower interest rates, lower fees and increased maximum loan-to-value ratios (LTV ratios describe the size of a loan in relation to the value of the property securing the loan).
• Improved conditions for unsecured loans were evidenced by reports of reduced interest rates, lower fees on credit card and non-credit card loans and increases in credit card limits.

(Source: Bank of Jamaica)