• The significant increase in Amazon rainforest wildfires in 2019 and international backlash highlights potential trade risk caused by environmental, social and governance (ESG) factors for the Brazilian protein sector, says Fitch Ratings.
• Credit implications are manageable but quantifying the effect of Amazon deforestation and the effectiveness of sector sustainability and traceability efforts in minimizing financial ramifications remains a challenge.
• Brazil is the world's second-largest producer of beef (the U.S. is largest), exporting about 20% of production in 2018, per the US Department of Agriculture's Foreign Agricultural Service. Livestock farming is a driver of deforestation in the Amazon region with roughly one-third of Brazil's cattle pasture land in the rainforest.
• JBS, Marfrig, and Minerva have mechanisms to only procure beef produced on land that can be legally used for cattle production. However, deforestation, given the release of carbon dioxide when trees burn, is garnering greater attention due to climate change, resulting in increased scrutiny of industry practices.

(Source: Fitch)

• The U.S. and China both said that a phase-one agreement would feature pledges to roll back tariffs on each other’s goods in stages.
• Such a move would pave the way for a de-escalation in the trade war that’s hung over the world economy.
• Still, nothing’s certain, including where to sign any deal, with Iowa and Alaska having been ruled out.
• Separately, a “fully informed” European Commission President Jean-Claude Juncker said European Union carmakers can breathe a sigh of relief, pledging the U.S. won’t impose tariffs on the region’s cars next week as threatened.

 (Source: Bloomberg)

• The EU slashed its growth forecasts for the eurozone Thursday, saying global trade tensions are set to weigh on the region and limit economic expansion.
• The warning from the EU’s executive arm comes at a time when the ECB has started a new round of stimulus to prop up fragile growth.
• The 19-member region is now set to grow at a pace of 1.1% this year and 1.2% in 2020. In its previous forecasts, out in May, the European Commission had estimated a 1.2% growth rate for the euro zone in 2019 and 1.5% for 2020.

 (Source: CNBC)

• The U.K. election campaign starter gun has unquestionably been fired and the first significant speech from Labour Party leader Jeremy Corbyn will arrive on Thursday.
• He’ll reiterate many of the pledges already made by his party, including re-nationalizing swathes of British industry, and will attack a “corrupt system” filled with “tax dodgers” and “bad bosses.”
• Traders, however, are more worried about the threat posed by Brexit champion Nigel Farage than by the socialist agenda of Corbyn while companies face a difficult choice too.
• Consumer confidence, by the way, has hit a six-year low with Britons fretting about their finances.

(Source: Bloomberg)

• The Federal Reserve cut interest rates by a quarter-point and signaled that policy is just about where officials want it to be, so there may not be any further reductions on the way.
• That's prompted traders to trim their bets on any imminent further easing, all of which is unlikely to offer any salve to Fed critic President Donald Trump, who on Tuesday said the Fed “doesn’t have a clue!”
• The decision complicates the outlook for many Asian central banks and eyes will turn once again to the European Central Bank and its new leader, Christine Lagarde, as skepticism grows about negative rates.

(Source: Bloomberg)

• Argentine corporates may adopt a wait-and-see approach with business strategies over the near term, even after President-elect Alberto Fernandez's widely-anticipated victory on Sunday.
• Electric utilities may be most vulnerable, given an increased possibility of Argentine pesification (paying back liabilities in pesos rather than dollars) of contract rates, but all Argentine issuers are subject to risks stemming from the country's economic crisis, monetary policy changes and uncertain regulation.
• Political uncertainty remains high due to the tight fiscal constraints the incoming government will inherit, lack of clarity on its policy orientation, and what this could mean for existing regulatory policies. Additionally, Argentine peso volatility can further stress issuers' ability to service debt.

(Source: Fitch Solutions)

• Fitch affirmed Costa Rica’s B+ rating with a negative outlook on “weaknesses in public finances and political gridlock that has prevented the timely passage of reforms addressing these”.
• Government’s fiscal deficit to widen to 6.3% of GDP this year and remain above 5% of GDP until 2023: debt-to-GDP will climb to 71% by 2023
• Fitch estimates sovereign financing needs of 10.3% of GDP and 13% of GDP 2021 and 2022. Economic growth to slow to 2% in 2019 and stay below 3% in 2020-21 on costs of new VAT tax and weak consumer confidence. They also see risks around compliance with new fiscal rules. Expenditure reduction required under the fiscal rule is currently facing political and social resistance.

(Source: Bloomberg)

• Social Protection Analyst at the Planning Institute of Jamaica (PIOJ), Camille Graham, has underscored the need for continuous dialogue on the implications of the aging population and how to capitalize on opportunities that this group offers to the economy and society.
• Graham said that citizens and stakeholders “must be mindful of the social, economic and environmental implications of the aging population in Jamaica, what this phenomenon means for all of us and how we can make it work in the best interest of all”.
• She was addressing a recent ‘Dialogue for Development Series’ public consultation at the Golf View Hotel in Mandeville, themed ‘Ageing and Development: Exploding Myths, Exploring Opportunities’.

(Source: JIS)

• Lasco Manufacturing’s profit increased by 11.8% for the six-month period ended September 30, 2019. Net profit YTD moved up from $503.06Mn (EPS: $0.12) to $562.56Mn (EPS: $0.14).
• The net profit improvement came on the back of lower finance costs (down 15.3% or $9.7Mn) as well as a 1.3% ($50.30Mn) increase in sales coupled with a 2.0% ($48.30Mn) fall in cost of goods sold.
• The stock has risen 36.2% YTD and closed yesterday’s trading session at $5.03. At this price, the stock currently trades at a P/E of 17.80x which is below the Junior Market Manufacturing sector average of 24.50x.

(Source: LASM Financials)

• A resilient American consumer helped the U.S. economy expand more than forecast in the third quarter, assuaging concerns for now of a more pervasive slowdown tied to weakening business investment and faltering export markets.
• Gross domestic product expanded at a 1.9% annualized rate, according to Commerce Department dataWednesday that topped forecasts in a Bloomberg survey that called for 1.6% growth. That’s down from 2% in the second quarter.
• The gain mainly reflected strength in consumer spending, the biggest part of the economy, which increased at a 2.9% rate and exceeded projections for a 2.6% rise.
• For businesses, non-residential fixed investment fell the most since late 2015.

(Source: Bloomberg)