• The Federal Reserve (U.S. Fed) appears to be very much on track for an interest rate cut in September after a "vast majority" of officials said such an action was likely, according to the minutes of the U.S. central bank's July 30-31 meeting. The minutes, which were released on Wednesday, even showed some policymakers were willing to reduce interest rates at last month's gathering.
• The policy-setting Federal Open Market Committee (FOMC) of the U.S. Fed left its benchmark interest rate unchanged in the 5.25%-5.50% range on July 31. However, it opened the door to a cut at the Sept. 17-18 meeting. Financial markets have been expecting the September meeting to kick off the Fed's policy easing, with a total of as much as a full percentage point worth of rate cuts expected by the end of this year.
• At the July meeting, most policymakers thought that "if the data continued to come in about as expected, it would likely be appropriate to ease policy at the next meeting," the minutes said.
• They also noted that "many" Fed officials viewed the stance of rates to be restrictive and "a few participants" contended that amid an ongoing cooling in inflationary pressures, no change in rates would mean that monetary policy would increase the drag on economic activity.
• While all Fed officials were on board with keeping rates steady in July, the minutes revealed that "several" policymakers said progress in lowering inflation amid a rise in joblessness "had provided a plausible case" for a quarter-percentage-point cut in July, "or that they could have supported such a decision" had it been on the table. The minutes also showed that a dwindling camp of policymakers feared a premature easing in monetary policy could restart inflation.

(Source: Reuters)

• U.S. employers added far fewer jobs than initially reported in the year through March, the Labor Department said on Wednesday. This revision underscores the growing concerns the Federal Reserve has about the health of the labour market as it gears up to start cutting interest rates in September.
• The department's estimate for total payroll employment from April 2023 to March 2024 was lowered by 818,000. This represents a 0.5% downward change and means that monthly job gains during the period averaged roughly 174,000, compared to the previously reported figure of 242,000.
• If the tally holds through the final revision in February, it would be the largest downward revision since the 902,000 reductions to employment in March 2009. It also chimes with the view of some economists that data-gathering issues mean the strong job gains previously reported have been systematically overestimated.
• Private employment growth was revised down by 819,000, or 0.6% below previous estimates by the department. The professional and business services category saw the biggest reduction in jobs, shedding 358,000, or 1.6%, from the prior estimate, followed by leisure and hospitality at 150,000 jobs, down 0.9%. The hard-pressed manufacturing sector saw a reduction of 115,000 jobs, also down 0.9%. Government employment was unchanged.
• The few sectors that saw upward revisions included private education and health services, up 87,000, or 0.3%; transportation and warehousing, up 56,400, or 0.9%; and utilities, up 1,700, or 0.3%. The revisions suggest government and private employers had about 157.3Mn workers on their books in March on a seasonally adjusted basis, down from about 158.1Mn as previously reported.

(Source: Reuters)

• At its meetings on August 16 and 19 2024, the Monetary Policy Committee (MPC) unanimously agreed to reduce the policy rate by 25 basis points (bps) to 6.75%, effective Wednesday, 21 August 2024. Since November 2022, the BOJ has maintained the rate at 7.00%, following an aggressive hiking cycle when it raised its policy rate by 650 bps between September 2021 and November 2022 to tame a sharp rise in inflation.
• The reduction in the policy rate occurs mere days after the business community's appeal for rate cuts to mitigate the anticipated economic downturn resulting from the ongoing effects of Hurricane Beryl.
• With headline inflation becoming more anchored in the BOJ’s target range of 4.0% to 6.0%, it created room for a change in the interest rate cycle. Inflation has fallen within the Central Bank’s target range for five months consecutive and is projected to largely remain within the target range over the next two years.
• However, the MPC anticipates a temporary uptick in headline inflation over the next 3 to 5 months in the aftermath of Hurricane Beryl. According to the Government of Jamaica, domestic fiscal policy will tackle post-hurricane recovery by using existing savings and insurance, along with re-prioritizing expenditures. In this light, the Committee believes that fiscal policy will not pose a risk to inflation in the near term.
• The MPC’s view is that economic conditions generally support the prospect of a low, stable, and predictable inflation outlook. Local inflation has been supported by a stable USD to JMD exchange rate, favourable international commodity prices and slowing inflation in the United States.
• While the inflation outlook appears balanced, escalating international shipping costs, a more severe-than-expected impact from Hurricane Beryl and additional adverse weather conditions could contribute to an increase in inflation. 
• Any future monetary policy decisions to further reduce interest rates will continue to depend on incoming inflation data.
• With its move yesterday, the BOJ joins central banks in Latin America that began cutting their policy rates as inflationary pressures have eased and have done so ahead of the US Federal Reserve, which is widely expected to cut rates when it meets in September.

(Source: BOJ, NCB Capital Markets Limited)

• First Rock Real Estate Investments Limited (FIRSTROCK), through its wholly-owned subsidiary First Rock Capital Cayman Ltd. entered an agreement to acquire a commercial property in George Town, Grand Cayman containing units leased to multiple tenants.
• This forms a part of the company’s strategy to double down on the more lucrative commercial side of the real estate market. Earlier this year, the company noted that most of the projects in its pipeline were commercial.
• Moreover, while the company has numerous commercial projects in the pipeline locally, it continues to be optimistic about various prospects throughout Central America and the Caribbean.
• First Rock Real Estate Investments Limited reported a net loss attributable to shareholders totaling US$779.1Mn (a loss per share (EPS) of US$0.003) for the first half of 2024. Unrealised foreign exchange losses from translating assets denominated in Costa Rican colones and Jamaican dollars, totalling US$203.14Mn for the period were the primary contributors to the company’s performance.

(Source: JSE)

• Although there was a slight decrease in inflation for July in Trinidad and Tobago, food prices continued to rise during the month, according to the Central Statistical Office's (CSO) Consumer Price Index.
• The CSO in its Consumer Price Index release said July 2024’s inflation rate over July 2023 was 0.3%, which represents a decrease from 0.7% recorded in the previous month (June 2024/June 2023).
• The CSO noted that the Inflation Rate for the comparative period (July 2023/July 2022) stood at 4.7%. However, the July 2024 all-items index was 123.9 points, a 0.2% increase from June 2024.
• The index for food and non-alcoholic beverages increased by 0.7% from 148.6 in June 2024 to 149.6 in July 2024. Increases were also noted for alcoholic beverages and tobacco (1.7%), clothing and footwear (0.1%), home ownership (0.7%), rent (0.1%), health (0.1%), communication (0.1%), recreation and culture (0.4%), hotels, cafes and restaurants (0.9%) and miscellaneous goods and services (0.1%).
• However, the CSO stated there were decreases in the sub-indices for furnishing, household equipment, and routine maintenance of the house by 2.2% and transport by 0.5%.

(Source: Trinidad and Tobago Guardian)

• The first flight of deported migrants left Panama early on Tuesday, August 20, as part of a new strategy to reduce the mostly U.S.-bound flow of people that crosses the treacherous jungle connecting Central and South America.
• Financed by Washington, the first flight took off from Panama City carrying 29 Colombians, all with criminal records in their home country and apprehended after crossing the Darien Gap jungle connecting Colombia with Panama. The deportees were led to the plane shackled and handcuffed.
• The deportation flights will increase in frequency. They form part of a July deal between U.S. officials and Panama's new President Jose Mulino, who campaigned on a pledge to end his country's status as a transit point.
• Panama's migration head Roger Mojica told a press conference that efforts to deport migrants from nations besides Colombia are ongoing, including Ecuador and India. But he noted that deporting Venezuelans will be more complicated given Panama's suspension of diplomatic relations with Venezuela after its disputed presidential election last month.
• Marlen Piñeiro, an official with the U.S. Department of Homeland Security, said the goal of the deportation flights is simple. "The message we're sending is very clear: Darien is no longer a route," she said, stressing that migrants must opt for only legal options to enter the United States. U.S. officials have previously disclosed a $6Mn budget for the flights and are training Panamanians. They said the repatriations are implemented per Panama's laws.

(Sources: Reuters)

• Goldman Sachs has cut its probability forecast for a U.S. recession to 20% shortly after raising it, as fresh labour market data sparked a reassessment of market views on the economy.
• Economists at Goldman earlier this month raised their 12-month U.S. recession probability from 15% to 25% after the U.S. July jobs report showed nonfarm payrolls grew by a less-than-expected 114,000. That was down from the downwardly revised 179,000 of June and below the Dow Jones estimate of 185,000. 
• The report triggered widespread concerns about the U.S. economy and contributed to the sharp — but ultimately brief — stock market sell-off at the start of the month. It also triggered the “Sahm Rule,” a historical indicator showing that the initial phase of a recession begins when the three-month moving average of the U.S. unemployment rate is at least half a percentage point higher than the 12-month low.
• Goldman initially cited this as a reason for hiking the probability of an economic downturn — but changed tack on Saturday, when it wrote in a note that it saw the odds down to 20% because data released since Aug. 2 showed “no sign of a recession.”
• That data included retail sales for July — which rose by 1%, versus an estimate of 0.3% — and weekly unemployment benefit claims, which were lower than expected. A healthy jobs report on Sept. 6 would “probably” spur Goldman to cut its recession probability back to 15%, where it had been for nearly a year before August, the bank’s economists said.
• Unless another downside surprise in the jobs report takes place, Goldman will become more confident in its forecast for a 25-basis point rate cut at the Federal Reserve’s September meeting, rather than a steeper 50-basis point trim.

(Source: CNBC)

• Canada's annual inflation rate cooled to a 40-month low of 2.5% in July, matching forecasts. Core inflation measures eased as well, data showed on Tuesday, keeping the Bank of Canada (BOC) on track to cut interest rates again in September.
• Analysts polled by Reuters had forecast inflation to cool to 2.5% from 2.7% in June. The consumer price index also aligned with forecasts, up 0.4% on a monthly basis according to Statistics Canada data.
• Money markets expect another 25-basis point cut at the BOC’s next rate announcement on Sept. 4 and are nearly pricing in a total of three more cuts this year. Most economists are also factoring in a similar rate reduction trajectory for the rest of the year, which would bring down the benchmark rate to 3.75% by year-end.
• "With inflationary pressures fading away but concerns about the weakening labour market growing, we continue to forecast three further 25bp cuts by the Bank of Canada at the remaining meetings this year," said Andrew Grantham, senior economist at CIBC Capital Markets.
• The central bank trimmed its policy rate at its last two meetings, bringing it down to 4.5% from 5.0% before the first cut. But at its monetary policy announcement last month, it pivoted from the narrative of only trying to suppress inflation to also boosting the economy. The inflation rate is now the closest to the Canadian central bank's 2% target since 2.2% inflation in March 2021, when prices were beginning to rise after about a year into the coronavirus pandemic.

(Source: Reuters

• Jetcon Corporation Ltd was recently appointed sole distributor for (Beijing Automotive Industry Company) BAIC passenger vehicles in Jamaica.
• BAIC stands as one of China's largest automobile manufacturers. Established in 1958, it specializes in a range of vehicles including passenger, commercial, and military. BAIC encompasses various brands like Foton, Beijing, Senova, and Arcfox. It has formed partnerships with Mercedes-Benz and Hyundai to produce vehicles for the Chinese market. As a company listed on the Shanghai Stock Exchange, BAIC extends its export reach to over 80 countries.
• This partnership includes marketing, vehicle sales, servicing and parts supply, officially marking the Company’s foray into the New Car Industry.
• In 2023, Jetcon commenced the importation of BAIC vehicles, aiming to make a mark on the new car market. The used car market has suffered due to higher interest rates, in contrast to the lower rates banks provide for new car purchases. This has had a significant adverse impact on the company's revenue.
• With this exclusive dealership with BAIC, Jetcon projects that by 2025, new car sales will represent the bulk of its revenue. Management also believes that the company will be able to supply more cost-efficient new cars in Jamaica and the Caribbean and give customers real value for money.
• Jetcon Corporation Limited ended Q2 2024 at a net loss of $6.1Mn compared with a $3.5Mn loss for the same period of 2023. This can be attributed to a 67% falloff in revenues to $110Mn as used car sales fell and an increase in Finance Charges. A significant portion of these finance charges stems from the solar division due to financing undertaken for inventory procurement.

(Sources: JSE, Jetcon 2023 Annual Report and Jetcon Q2 Interim Results)

• Minister of Agriculture, Fisheries and Mining, Hon. Floyd Green, is calling on financial institutions to re-evaluate their lending practices to the agricultural sector, urging increased support for small farmers and entrepreneurs.
• “I am imploring our financial institutions to recognise the significance of supporting our farmers and the agricultural sector as a whole and extend a helping hand through the provision of more credit,” he said.
• The Minister was speaking at the Development Bank of Jamaica’s (DBJ’s) Credit Enhancement Facility (CEF) Superstars Awards on Wednesday (August 14) at the Courtyard Marriott in Kingston. The agricultural sector makes up 15% to 20% of Jamaica’s labour force and is also a significant income earner for the country.
• Currently, agriculture accounts for about 8.3% of Jamaica’s gross domestic product (GDP) and the Ministry is looking to enhance the sector’s contribution to economic growth. A large part of agriculture’s income-earning potential lies in its export opportunities. For example, Jamaica earned US$50.4Mn in 2023 through the exportation of yam, a historic achievement for the island.
• In highlighting the challenges faced by farmers, Minister Green said, “A lot of primary producers want to get into agro-processing but lack the capital to do so. Similarly, there exist ripe export markets and a growing need for climate-smart technologies, evidenced by the devastation brought about by Hurricane Beryl. However, these areas are very capital intensive and, without access to financing, cannot be truly developed.”
• In addition, he said, there are a lot of farmers who aspire to utilise more technology in their enterprises but they lack the financial mechanism to attain these resources. Minister Green noted that financial institutions tend to prioritise lending to larger and more established entities, overlooking the potential and needs of farmers and small businesses. “We have to develop ways that we can lend a hand without much fear of being disadvantaged”.
• CEF aims to increase access to credit for MSMEs, providing Approved Financial Institutions (AFIs) and Micro Finance Institutions (MFIs) with additional collateral coverage on loans extended to MSME operators. This collateral coverage serves to mitigate risks for the AFIs and MFIs, enabling them to extend credit to a wider range of MSMEs, foster business growth and economic development in the country.

(Source: JIS)