• In true game-theory style, President Donald Trump said the U.S. will increase tariffs on China if the first step of a broader agreement isn’t reached.
• “If we don’t make a deal, we’re going to substantially raise those tariffs,” he said Tuesday in a speech to the Economic Club of New York. “And that’s going to be true for other countries that mistreat us too.” 
• Nevertheless, he noted that the world’s two largest economies were “close” on phase one deal. 
• Trump and Chinese President Xi Jinping had planned to sign “phase one” of the deal this month in Chile, but the official ratification hit a roadblock when the event was canceled due to social unrest in Santiago.
• A new site for the signing hasn’t yet been announced. Still, U.S. stocks have rallied to records in recent days partly on optimism that tensions are cooling. 

(Source: Bloomberg)

• Net profit more than doubled (104.9% or $124.27Mn) at Pulse investments for the first three months of the 2019 financial year. Net profit was $242.71Mn (EPS: $0.15) up from $118.44Mn (EPS: $0.07) one year prior.
• The company benefitted significantly from a fair value appreciation on investment property of $101.43Mn (or 230.6%).  In addition, the performance benefitted from a 15.7% (or $20.21Mn) increase in revenues.
• The stock has risen 50.2% YTD and closed yesterday’s trading session at $4.49 per share. At this price, the stock currently trades at a P/E of 9.34x which is below the Main Market sector average of 24.95x.

(Source: Pulse Investments Financials)

• Jamaica’s current account deficit will widen over the coming quarters as goods exports earnings weaken due to falling aluminum prices.
• Fitch Solutions has revised the 2019 current account deficit forecast from 2.8% of GDP to 3.0% and its 2020 forecast from 2.7% to 3.0%.
• Solid direct investment inflows and Jamaica’s sizeable international reserves will bolster its external account stability.

(Source: Fitch)

• Panama's legislative approval for wider fiscal deficits will lead to a further weakening of public debt dynamics, says Fitch Ratings.
• Modifying the fiscal rule's deficit ceiling also follows a decade-long pattern of postponement of fiscal consolidation goals that has weighed on policy credibility, a key constraint for the sovereign rating since its upgrade to 'BBB' in 2011.
• The government has modified its fiscal responsibility law (LRSF) to widen its fiscal deficit targets because of declining revenues (despite positive, albeit slower growth) and a need to settle accumulated arrears. General government debt in 2019 is expected to be in line with the 'BBB' median of 38% of GDP.

(Source: Fitch)

• 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)