• Brazilian authorities are likely to reinstate daylight saving time after five years of abolishment, as the country faces a major drought, affecting its power generation efforts. Daylight saving time refers to advancing clocks to make better use of the longer daylight available during summer so that darkness falls at a later clock time.
• The prolonged drought shifted toward using more expensive thermoelectric plants and energy imports, which is boosting power bills. Despite the growth of wind and solar power in Latin America's largest economy in recent years, more than half of Brazil's power supply still comes from hydroelectric plants.
• The drought has affected some of the country's largest hydroelectric plants, including two powered by an Amazonian river. Reservoir levels in the key Southeast/Center-West region, Brazil's main hydroelectric area, are expected to end September below 50%, as the region also gets less than 50% of the average rainfall for this time of year.
• Former President Jair Bolsonaro abolished daylight saving time after he took office in 2019, on grounds that it was no longer benefiting the country's power sector. By moving the clocks forward an hour between November and February, Brazil’s summertime aimed to make use of more daylight hours and save energy.
• However, officials now believe that reinstating it could help alleviate pressure on the power system in late afternoons, when consumption is at its peak but solar power stations stop generating electricity as the sun sets.
• Some sectors have cheered the possibility while others would likely be negatively impacted. Bars and restaurants backed the move, with local association Abrasel saying the extra hour of daylight would help increase the number of clients at 6-8 p.m. and could drive monthly revenues up 10% to 15%. Moving clocks forward by one hour, however, would affect flight schedules, forcing airlines to adjust the departure and arrival times of their flights and connections while facing additional costs to relocate crews.

(Source: Reuters)

• Three State agencies under the oversight of the Ministry of Energy, National Energy Corporation, National Petroleum and Paria Fuel Trading Company, signed a Memorandum of Understanding (MOU) on September 18, to collaborate on positioning Trinidad and Tobago (T&T) as the Caribbean's first low-carbon marine bunkering hub.
• The MOU commits the three agencies to immediately conduct a feasibility study that will evaluate the potential to supply low-carbon marine fuels (such as methanol) to ships operating on trade routes throughout the Caribbean, a statement from the Energy Chamber said.
• That study is expected to conclude by April 2025, after which an implementation plan will be developed, to make the hub operational by 2026.
• 'This is not uncharted territory for National Energy,' said National Energy chairman Dr Joseph Khan, chairman of National Energy. 'In 2023, we introduced Trinidad and Tobago's first low-emission tug, marking a major step in reducing emissions from our maritime operations. This next move strengthens our position as a regional leader and will attract cleaner vessels to our ports.'
• 'Our facilities are equipped to meet the growing demand from international ships seeking cleaner fuel alternatives.' Paria chairman Newman George said: 'Paria's infrastructure and market intelligence enables us to run reliable and efficient terminals for both petroleum products and cleaner fuels. This aligns with the global industry's shift towards low-carbon solutions.'
• T&T's creation of a low-carbon bunkering hub prepares the country for future environmental regulations, making it an attractive destination for vessels operating under stricter standards, the statement added.

(Source: Trinidad Express Newspaper)

• A big interest rate cut from the U.S. Federal Reserve on Wednesday raised bets on further policy easing at the European Central Bank in October, but this is still not the most likely outcome given different economic realities.
• The ECB has already cut interest rates in June and earlier this month, and many at the bank have hinted at steady, quarterly rate cuts ahead to make sure inflation is defeated on a durable basis.
• While the Fed's apparent rush lends some support to arguments that the ECB is falling behind the curve, given rising recession risks, the fundamental economics have not changed overnight, so policy hawks on the Governing Council can argue for waiting until December.
• This is also reflected in the market pricing a 35% chance of a 25 basis point (bps) deposit rate cut in October, up from 30% a day ago. The 5% increase is small but still, a notable shift that leaves December as the most likely date for an ECB move.
• The ECB is likely to take it slower because it has a lot less to do. It has five, maybe six 25bps cuts until it reaches a "neutral" interest rate level at around 2.0% or 2.25%, according to ECB's and other estimates. The Fed meanwhile has probably eight such reductions until then, so the world's top two central banks might still reach their end point of policy easing at the same time.
• While Eurozone rate cuts are on the radar, inflation, now at 2.2%, could tick up towards 2.5% by the end of the year. Thereafter, inflation will likely slow to 2% by the end of 2025 as Entrenched wage pressures keep service costs elevated. This is why conservative policymakers, or hawks in market jargon, have cautioned against moving too fast.

(Source: Reuters)

• The Bank of England (BoE) held interest rates at 5.0% on Thursday and voted to run down its stock of British government bonds by another 100Bn pounds ($133Bn) over the coming 12 months, a move that could weigh on the government's finances.
• The Monetary Policy Committee voted 8-1 to keep rates on hold. Only external member Swati Dhingra voted for a further quarter-point rate cut after last month when the BoE delivered its first reduction to borrowing costs since 2020.
• Economists polled by Reuters had forecast a 7-2 vote to keep rates on hold after last month's tight 5-4 decision to cut rates from their previous 16-year high.
• The BoE struck a more cautious tone regarding its inflation pressures than the Fed with Governor Andrew Bailey stating that cooling inflation pressure meant the BoE should be able to cut rates gradually over the months ahead. "But it's vital that inflation stays low, so we need to be careful not to cut too fast or by too much," he said in a statement.
• Investors think the British central bank will cut rates more slowly than the Fed over the next year, citing more persistent inflation pressure. The BoE said inflation was likely to rise to around 2.5% by the year's end from 2.2% in the most recent data, compared with a previous forecast of around 2.75%. Lower oil prices contributed to the downgrade.
• Financial markets now expect the BoE to cut rates in quarter-point moves four or five times by June. By contrast, they see around seven such cuts in the U.S., even after its outsized move on Wednesday.

(Source: Reuters)

• The Development Bank of Jamaica's flagship initiative, the Boosting Innovation, Growth, and Entrepreneurship Ecosystems (BIGEE) Programme, is dedicated to empowering local micro, small, and medium-sized enterprises (MSMEs) while promoting innovation throughout the country.
• This five-year programme is supported by a US$25Mn loan from the Inter-American Development Bank (IDB) and a US$8.2Mn grant from the European Union (EU) to enhance Jamaica’s entrepreneurial landscape and support MSMEs.
• David Wan, Acting Managing Director of the DBJ, shared during a Jamaica Information Service (JIS) Think Tank on September 17 that the programme enables innovative businesses to grow, scale, and increase their competitiveness locally and globally through funding, technical assistance, and mentorship.
• “Since its launch, the programme assisted entrepreneurs in transforming ideas into sustainable businesses, fostering a culture of innovation, and creating numerous growth opportunities within the MSME sector” he noted.
• Grants from the BIGEE programme are awarded to MSMEs with innovative products or services that have the potential to drive economic benefits, create new jobs, and inspire other companies to enter similar markets.
• The is accredited by the Green Climate Fund (GCF), which is a critical element of the historic Paris Agreement – the world’s largest climate fund, mandated to support developing nations’ move towards low emissions and climate-resilient pathways in keeping with the UN Sustainable Development Goals (SDGs).
• The government, through the Development Bank of Jamaica (DBJ), remains committed to supporting the MSME sector, which is crucial to the nation’s economy. As at June 2024, it was estimated that over 422,000 MSMEs are operating in Jamaica, employing approximately 80% of the workforce and contributing 44% to the country's GDP.

(Source: JIS)

• Eppley Limited has announced its acquisition of a significant stake in the Eppley Caribbean Property Fund Limited SCC – Value Fund (ECPF). The purchase, which represents approximately 18.7% of ECPF’s outstanding shares, took place on the Jamaica Stock Exchange and the Barbados Stock Exchange on September 13, 2024, through Eppley Fund Managers Limited (EFM), a wholly-owned subsidiary of Eppley Limited.
• ECPF stands as the largest listed real estate mutual fund in the Caribbean, with a portfolio of 39 properties totalling 1.2Mn square feet across Jamaica, Barbados, Trinidad, and St. Vincent.
• Eppley already manages ECPF through its subsidiary, EFM. With this latest acquisition, Eppley will become the largest shareholder of ECPF’s listed shares.
• Raymond Donaldson, CEO of Eppley Limited, emphasised the alignment of this transaction with Eppley’s investment philosophy. He noted that ECPF provides the ability to own a diversified portfolio of high-quality commercial real estate assets across our region and to earn attractive, reliable income and capital appreciation.
• Eppley Limited’s year-to-date profit has declined by 68.5%, mainly due to a bargain gain of $229.12Mn on the purchase of 47.0% of the shares of the ECPF, which led to a one-off increase in earnings in Q2 2023. As of Wednesday’s trading session, its stock price closed at $35.83, and a PE multiple of 26.5x, almost double that of the Main Market Financial Sector Average of 13.6x.

 (Source: JSE and NCBCM Research)

• Panama’s economy continues to grow, although slower than in previous years. At the end of the first half of 2024 (H1 2024), the country’s gross domestic product (GDP) grew by 2.2%, according to the latest data from the National Institute of Statistics and Census (INEC). For H1 2024, GDP totalled $38.7Bn, representing an $814.3Mn increase compared to H1 2023.
• Notably, during the second quarter of 2024 (Q2 2024), real GDP increased by 2.5%, reaching $18.25Bn. This growth represented a $444.0Mn increase in Q2 2023 and was attributed mainly to growth in Construction, Land Transport, Wholesale and Retail, Finance and Tourism.
• Investment in public infrastructure projects was one of the main growth drivers in the construction sector, while the increase in passengers on the Panama Metro by 7.9% and the increase in traffic on road corridors by 6.1% contributed significantly to Land Transport.
• The wholesale and retail sector saw a 6.4% rise, especially in food and automobile sales, according to official figures. Growth in Finance was led by a 7.0% increase in Loan balances, highlighting confidence in the financial system.  Meanwhile, increases in the Tourism sector were supported by 13.2% growth seen among hotels.
• That said, not all sectors experienced growth. There were declines in sectors such as Panama Canal toll revenues (11.7%), and in the activities of the Colon Free Trade Zone (12.5%). Mining and quarrying operations were also affected by the closure of a major copper mine.

(Source: Newsroom Panama)

• Brazil's central bank kicked off an interest rate-hiking cycle on Wednesday September 18, with a 25 basis-point (bps) increase, as expected and signalled more increases ahead to tackle a challenging inflation outlook amid stronger-than-expected economic activity.
• The bank's rate-setting committee, known as Copom, voted unanimously to raise the benchmark interest rate for the first time in over two years to 10.75%, in line with most forecasts.
• Policymakers said the balance of inflation risks is now tilted to the upside, flagging a stronger-than-expected labour market and robust growth. "The scenario, marked by resilient economic activity, labour market pressures, positive output gap, an increase in the inflation projections, and unanchored expectations, requires a more contractionary monetary policy," they wrote.
• Gustavo Sung, chief economist at Suno Research, said he expected two more rate hikes of the same size in November and December, bringing the benchmark rate to 11.25% at year-end. The central bank had held its policy rate steady at 10.50% in June and July after a series of cuts since last year to bring it down from a six-year high of 13.75%.
• Expectations for a rate hike, the bank's first since August 2022, firmed after second-quarter activity significantly exceeded forecasts, driven by a robust labour market and rising wages in Latin America's largest economy.
• However, bets on tighter policy had been building since late July, when central bank minutes indicated that policymakers would not hesitate to raise borrowing costs if needed amid growing upside risks for inflation.

(Source: Reuters)

• The Federal Reserve on Wednesday kicked off what is expected to be a series of interest rate cuts with an unusually large half-percentage-point reduction, a move aimed at boosting a cooling job market, while continuing to push down on inflation.
• "This decision reflects our growing confidence that with an appropriate recalibration of our policy stance, strength in the labour market can be maintained in a context of moderate growth and inflation moving sustainably down to 2%," Fed Chair Jerome Powell said in a press conference.
• Fed policymakers see the central bank's benchmark rate falling by another half of a percentage point by the end of this year, another full percentage point in 2025, and by a final half of a percentage point in 2026 to end in a 2.75%-3.00% range. The endpoint reflects a slight upgrade, from 2.8% to 2.9%, in the longer-run federal funds rate, considered a "neutral" stance that neither encourages nor discourages economic activity.
• U.S. stocks gained following the release of the statement and updated quarterly economic projections before reversing course to close lower on the day. The U.S. dollar was slightly stronger against a basket of currencies, while yields on U.S. Treasuries rose. Rate futures traders moved to price in even more easing than projected by the Fed, with the policy rate now expected to be in the 4.00%-4.25% range by the end of this year.
• The size of the cut announced on Wednesday will likely raise questions about the Fed's strategy, and whether policymakers were merely trying to account for the fast decline in inflation since last year, address concerns that the U.S. job market may be weakening faster than desired, or needed to ensure inflation fully returns to the target.
• Inflation, based on the Fed's preferred measure, is currently about half a percentage point above the 2% level, and the new economic projections now show the annual rate of increase in the personal consumption expenditures price index falling to 2.3% by the end of this year and down to 2.1% by the end of 2025. The unemployment rate is seen ending this year at 4.4%, higher than the current 4.2%, and remaining there through 2025. Economic growth is seen at 2.1% through 2024 and 2% next year, the same as in the last round of projections issued in June.

 (Source: Reuters)

• The interest rate for the most popular U.S. home loan fell last week to its lowest level in two years, on anticipation that the Federal Reserve would start cutting interest rates on Wednesday, potentially by as much as a half of a percentage point.
• The average contract rate on a 30-year fixed-rate mortgage dropped 14 basis points in the week ended September 30^th, to 6.15%, the Mortgage Bankers Association said on Wednesday. That was the lowest rate since September 2022, and followed a 14-basis-point drop the previous week.
• Applications for home loans, refinancing, and purchases all jumped last week, the MBA said, citing lower borrowing costs and improved housing affordability as home prices rose more slowly. US mortgage rates peaked about 11 months ago at nearly 8.0% and have since fallen as the Fed signalled its 2022-2023 rate-hike campaign had ended and that its next move would be a rate cut, once policymakers became confident inflation was under control.
• On Wednesday, September 18^th, the anticipation came to pass, and the US Fed announced a 50 basis point cut as it gained 'Greater Confidence' about Inflation. Still, one school of thought is that, given that the prospect of a rate cut has already helped send mortgage rates lower, mortgage rates might not actually drop much further right now as the rate cut was already priced in. However, mortgage rates are bound to fall a little more given that policymakers have made clear they intend to continue cutting interest rates into next year.

(Source: Reuters and NPR)