• The next couple of weeks see major decisions at both the Federal Reserve and the European Central Bank.
• The list of ECB policymakers pushing back against a resumption of asset purchases is growing daily, with Francois Villeroy de Galhau the latest to add his skeptical voice to the choir.
• Incoming-President Christine Lagarde faced lawmakers in Brussels this morning and pledged to act with “agility” when she takes charge on Nov. 1.
• From the Federal Reserve, there have been mixed messages, with St. Louis Fed President James Bullard saying an aggressive 50 basis-point reduction is warranted, while Federal Reserve Bank of Boston President Eric Rosengren is unconvinced that the bank needs to cut rates at all at the upcoming meeting.

(Source: Bloomberg)

• iCreate Limited sunk deeper into losses for the six-month period ended June 2019. Losses for the period were $9.34Mn (EPS: $0.05) down from $3.65Mn (EPS: $7.31).
• The most significant contributing factors to the deterioration of the bottom line were a 46.2% (or $8.19Mn) increase in administrative expenses as well as a 288.0% (or $885.71k) increase in depreciation and amortization.
• The stock has fallen 29.4% since the start of the calendar year, closing yesterday’s trading session at $0.84. The stock currently trades at a P/B of 5.55x which is above the Junior Market average of 3.94x.

(Source: iCreate Institute limited)

• Fitch Solutions expects the Bank of Jamaica (BOJ) will maintain its record-low interest rate of 0.50% through 2019 in an effort to boost below-target inflation.
• The bank will enact two 25 basis point (bps) hikes in H220 as inflation gradually rises, bringing the rate to 1.00%.
• This is a revision of our previous forecast for the BOJ to cut rates to 1.00% in 2019 and hike to 2.00% by end-2020.
• Fitch has downwardly revised its 2019 and 2020 average inflation forecast from 3.7% y-o-y to 3.6% and 5.3% to 4.8%, respectively, due to weak commodity prices and sluggish economic activity.

 (Source: Fitch)

• According to the report on budgetary performance for the fiscal year 2018/2019: "Subsidies to public non-financial corporations expanded by $38.2m (12.3%) to $348.2Mn, vis-à-vis FY2017/18. Of this total, approximately $230.2Mn (66.1%) was allocated to the Public Hospital Authority (PHA).
• The report also said transfers to the University of The Bahamas and the Bahamas Technical and Vocational Institute grew by $5.8Mn and $3.1Mn, respectively, likely owing to the Minnis administration's free tuition and financial coverage policy. 
• "Subsidies to the national airline carrier and the water and sewerage utility company were marginally increased by $0.2Mn and $1.0Mn, respectively, whereas transfers to the National Health Insurance Scheme were relatively stable at $14.9Mn," said the report.
• The report also noted: "Subsidies to private non-financial enterprises were higher at $42.0Mn from $13.5Mn in the previous fiscal year, largely owing to arrears settlements with cruise line operators, of $21.6Mn, and the $5.5Mn spend for small business development as a part of the Government's $25Mn five-year commitment to support small businesses.

(Source: Tribune 242)

• On August 29, the Banco de México (Banxico) released the minutes from its monetary policy meeting on August 15, during which it decided to cut its benchmark interest rate to from 8.25% to 8.00%.
• Fitch Solutions believes the minutes help pave the way for another rate cut in 2019, potentially as soon as Banxico’s next meeting on September 26. The board members generally agreed that slack in the economy was substantial, with risks to economic activity continuing to point to the downside.
• It is expected that the August inflation print, which will be released on September 9, will show a continued slowdown in headline inflation towards the midpoint of Banxico’s 2.0-4.0% y-o-y target amid low global oil prices.
• Core inflation has been somewhat higher recently and may give pause to policymakers considering additional cuts.

(Source: Fitch Solutions)

• Chinese and U.S. officials are having difficulty agreeing on a date for the next round of trade talks after Washington rejected Beijing’s request to delay tariffs that took effect over the weekend.
• Authorities in the Asian nation said they planned to file a complaint at the World Trade Organization against the U.S. moves.
• The fallout from the prolonged trade war is biting deeper into global factory production, with manufacturing PMIs from across the world yesterday showing increasing weakness.
• Although not everyone is gloomy on the outlook: Veteran market strategist David Woo says now is the time to bet on a deal.

(Source: Bloomberg)

• Parliament returns for its first post-holiday sitting today in London, and it looks like it’s going to be a very interesting one.
• A cross-party group is hoping to introduce a draft law which would force Prime Minister Boris Johnson to delay Brexit if he can’t broker a new deal with the EU by the current Oct. 31 deadline.
• Johnson reacted to the threat by saying he would rather have an election than see his negotiating position with Europe undermined.
• Sterling dropped to $1.1959 this morning, the lowest level since 2016, as the uncertainty takes its toll.

(Source: Bloomberg)

• For the nine-month period ending June 30, 2019, 138 Student Living recorded a decline in net profit from  $3.29Mn (EPS: $0.01) to a loss of $60.43Mn (EPS: -$0.15). 
• The main contributor to this deterioration in the bottom line over the period was administrative expenses which grew by 67.8% (or $226.74Mn). The two main non-recurring expenses which caused the operating expenses to balloon were utility costs which grew by 80% together with $54.2Mn in interest and professional fees associated with an arbitration award related to the first phase of development in 2016.
• The stock has risen 20.0% since the start of the calendar year and closed yesterday’s trading session at $4.20. The stock currently trades at a P/B of 0.53x which is below the Main Market Real Estate sector average of 2.14x.

 (Source: 138 Student Living Financials)

• Costa Rica receives a score of 53.1 out of 100 in Fitch’s Short-Term Economic Risk Index, a moderate downward adjustment from last quarter's score of 56.5. 
• Costa Rica's overall score is weighed down by poor marks in the 'growth' and 'fiscal' sub-components of the index, reflecting the country's lackluster growth prospects and persistent fiscal deficits.
• Indeed, Costa Rica has run nominal budget deficits in excess of 4.0% of GDP since 2013, owing to elevated levels of government spending and significant delays in passing fiscal consolidation measures.
• While the Legislative Assembly passed fiscal reform in December 2018, which will combine spending caps with tax adjustments, Fitch is forecasting fiscal shortfalls of 5.8% in 2019 and 5.6% in 2020.

(Source: Fitch)

• El Salvador scores 44.2 (out of 100)  in Fitch’s Short-Term Economic Risk Index. The country is highly dependent on household consumption to drive economic growth, with worker remittances from the United States playing a crucial role.
• An improved US economy will bolster remittances and export growth, providing tailwinds to the Salvadoran economy.
• That said, structural weaknesses, including a lack of domestic productive capacity and on-going investor concerns about the security environment, will result in only modest real GDP growth over the coming years.

(Source: Fitch)