• The U.S. Federal Reserve is under no urgent pressure to cut interest rates given a "prospering" economy and job market, Atlanta Fed President Raphael Bostic said in remarks that highlighted the risk inflation may get stuck above the central bank's 2% target or be sent even higher by "pent-up exuberance."
• Bostic said he still thinks it will likely be appropriate for the Fed to approve two quarter-point rate cuts by the end of this year. However, he also said the Fed was walking a "fine line" to be sure that current economic strength does not evolve into "froth" and a new round of inflation.
• Given that there was no sign yet of "degradation" to the job market, Bostic said he and his colleagues in debating the path of interest rates, "have some time to make sure that we get to 2%" inflation. He further stated that he does not envision them being "back to back," with the pace depending on "how participants in the markets, business leaders, and families respond."
• The Fed, at its upcoming March 19-20 meeting, is expected to maintain the benchmark interest rate in the 5.25% to 5.5% range, where it has been since July, and will also issue updated projections for how far rates may fall this year, given recent declines in inflation.
• Investors currently expect an initial rate cut in June, but that could slip if inflation stalls or the job market and wages continue to beat expectations.

(Source: Reuters)

• China is set to announce its 2024 growth target and outline its strategy for supporting the slowing economy at the nation’s most high-profile annual political gathering this week.
• Premier Li Qiang will deliver the government work report for the first time at the National People’s Congress (NPC) on Tuesday (Mar 5). Officials are looking to chart a recovery after a turbulent year that saw the economy grapple with deflation, an ongoing property crisis, mounting debt burden, and foreign capital exodus.
• Investors will closely scrutinise policy priorities and stimulus signals as Beijing is expected to announce an annual growth target of around 5.0% – the same as last year but one that will be harder to achieve because of a higher base of comparison. Areas of focus will include the strength of fiscal stimulus, new economic drivers as President Xi Jinping steers China away from a property-driven growth model, and the government’s plan for boosting consumption.
• Beijing’s policy stance will likely stay growth-friendly but won’t be a “bazooka-type stimulus”, JPMorgan Chase & Co economists said in a note previewing the NPC. “The policy tone has been pre-determined at the Central Economic Work Conference last December, and we see little chance of a major deviation.”
• “It will be a positive surprise” if the work report shows that policymakers share market concerns about the economic challenges, including deflation risks, unemployment, and fallout from the property downturn, the economists added.

(Source: The Business Times)

• According to data on the Producer Price Index (PPI) released by the Statistical Institute of Jamaica (STATIN), the Mining & Quarrying Index decreased by 0.4% in January, while the index for the Manufacturing industry fell by 0.1%.
• The 'Bauxite Mining & Alumina Processing' category was the main driver for the 0.4% decline in the index for the Mining & Quarrying industry.
• A 1.2% dip in the index for the major group ‘Refined Petroleum Products was the primary contributor to the decline in the index for the Manufacturing industry. However, the overall movement in the industry was tempered by a 0.2% rise in the index for the heaviest weighted major group ‘Food, Beverages & Tobacco’.
• For January 2023 – January 2024, the index for the Mining & Quarrying industry declined by 7.2%. This was a result of a 7.7% decrease in the index for the major group ‘Bauxite Mining & Alumina Processing’.
• The point-to-point index for the Manufacturing industry moved up by 2.0%, reflecting a 1.7% upward movement in the index for the major group ‘Food, Beverages & Tobacco’ and a 4.2% increase in the index for the ‘Refined Petroleum Products’ major group.
• Despite softening in producer prices last year, geopolitical tensions in Europe and the Middle East pose risks that could disrupt oil supply and reignite supply chain issues and result in higher costs for producers.
• The Producer Price Index (PPI) is a significant economic indicator that tracks the average fluctuation in selling prices that domestic producers of goods and services experience over time.

(Sources: STATIN & NCBCM Research)

• Buoyed by robust revenue grow (+16.7% or $128.58Mn), Caribbean Flavours and Fragrance Limited (CFF) reported a 115.3% year over year rise in net profit to $132.82Mn (EPS: $0.15) for FY 2023.

• The improved revenues outturn was driven by the company's continued efforts to refine its sales approach strategy, as it focused on closing new business deals, introducing new products to its various partners, and deepening its sales strategies in the markets that it serves.

• Notably, the rise in revenues outweighed the 6.0% expansion in cost of sales, resulting in a 41.8% (or $95.78Mn) increase in gross profit. This growth in gross profit translated to a 6.40 percentage points increase to 36.1% on the back of better management of its inventories, efficiency gains from the manufacturing processes, and the change in its product mix. CFF successfully launched its new ingredients portfolio which provides new emulsifiers and enzymes poised to revolutionise the quality, texture, shape, and visual appeal of baked products while extending their shelf life in the market.

• However, the company’s operating and administrative costs increased by 16.69% (or $25.64Mn) as the cost of attracting new talent, and other professional fees relating to product development rose.

• CFF aims to continue offering new solutions to the market while refining its current product offerings and solutions through research and development. It anticipates that through these initiatives it will gain greater acceptance in local and overseas markets.

• CFF’s stock price has appreciated by 1.2% since the start of the year and closed Thursday’s trading session at a price of $1.69 per share. At this price, the stock trades at a P/E ratio of 16.9x earnings, which is below the Junior Market Manufacturing Sector average of 25.4x.

(Sources: Company Financials & NCBCM Research)

• During the closing news conference of the four-day CARICOM summit in Georgetown, Guyana, which ended on February 28, 2024, Barbados Prime Minister, Mia Mottley, announced that nationals from the Caribbean Community (CARICOM) will have the ability to travel throughout the region by the end of March.
• PM Mottley noted that leaders will meet again on March 15th, before then, the remaining policy issues are expected to be settled. “There was just two policy issues referred to heads for us to settle and they will meet on the seventh of March, the legal affairs committee will sign off on the draft on the eighth of March; and the heads of government will meet on the 15th of March with the hope that we can sign off in time for the deadline given in Trinidad of the 31st of March for the free movement of people,” PM Mottley said.
• CARICOM nationals have the privilege to freely travel within participating nations to engage in lucrative commercial endeavours under the CARICOM Single Market and Economy (CSME), which is governed by the Revised Treaty of Chaguaramas. However, currently, nationals only enjoy the freedom to relocate within the region for six months without any interrogation. As such, the objective of the CARICOM leaders is to facilitate the unrestricted movement of nationals throughout the region beyond the current six-month restriction.
• Beyond the facilitation of people’s mobility, regional leaders are also dedicating efforts to tackle the issue of company formation within the region. At present, when a CARICOM national intends to establish a company in another member state upon relocation, they are obligated to make a payment. This is one of the next initiatives that the CARICOM members hope to rectify.
• This was first discussed last July at the 45th Conference of the Heads of Government in Trinidad where a deadline was established to conclude the process of enabling the free movement of CARICOM nationals.

(Source: Guyana Chronicle)

• The Central Bank of the Dominican Republic has unveiled plans to conduct the First Census of Foreign Direct Investment Companies (Ceied) in the country, spanning from February 28 to May 31 of this year.
• This comprehensive survey facilitated through electronically distributed forms, aims to collect “timely” and “detailed” information to provide a comprehensive overview of the status of foreign direct investment (FDI) within the nation, according to statements from the issuing bank.
• President Luis Abinader, during his accountability speech to the National Assembly on Independence Day, highlighted a noteworthy milestone, revealing that foreign direct investment in the country reached an impressive $4,381Mn last year.
• This figure stands as a record, underscoring the growing significance of FDI in the economic landscape.
• The Ceied initiative is expected to furnish valuable insights into the dynamics and distribution of foreign direct investment, contributing to a more nuanced understanding of its impact and potential areas for further growth and development in the country.

(Source: Dominican Today)

• China's manufacturing activity contracted for a fifth straight month in February, an official factory survey showed on Friday, raising the pressure on policymakers to roll out further stimulus measures as factory owners struggle for orders.
• The official manufacturing purchasing managers' index (PMI), compiled by the National Bureau of Statistics (NBS), fell to 49.1 in February from 49.2 in January, below the 50-mark separating growth from contraction and in line with a median forecast of 49.1 in a Reuters poll.
• Seasonal factors may have affected the figure, as the Lunar New Year (LNY) fell on Feb. 10 this year and saw factories shut as workers returned home for the holiday. However, a survey by the Caixin/S&P Global released just after the official PMI showed manufacturing activity expanded steadily as both production and new orders grew faster. Taken together, the PMIs highlighted an uneven economic recovery.
• Dan Wang, chief economist at Hang Seng Bank China, said the dip in the official PMI was also due to a sharp contraction of new foreign orders. "Weakened demand from overseas seems to be a permanent, rather than temporary phenomenon" because of the economic slowdown in developed markets as well as the relocation of domestic supply chains.
• New export orders have shrunk for 11 consecutive months in the NBS manufacturing PMI, while a year-long contraction in employment in the factory sector pointed to persistent strain on businesses.
• On the other hand, the official non-manufacturing PMI, which includes services and construction, rose to 51.4 from 50.7 in January, marking the highest reading since September last year, thanks to robust activity during the LNY holidays. However, construction activity nudged down by 0.4 percentage points as property-related activity was still in contraction.

(Source: Reuters)

• The personal consumption expenditures price (PCE) index, excluding food and energy costs, increased 0.4% in January and 2.8% from a year ago, as expected according to the Dow Jones consensus estimates.
• Headline PCE, including the volatile food and energy categories, increased 0.3% monthly and 2.4% on a 12-month basis, compared with respective estimates for 0.3% and 2.4%, according to the numbers released Thursday by the Commerce Department’s Bureau of Economic Analysis. The respective December numbers were 0.1% and 2.6%.
• The moves came amid an unexpected jump in personal income, which rose 1.0%, well above the forecast for 0.3%. Spending decreased by 0.1% versus the estimate for a 0.2% gain. January’s price rises reflected an ongoing shift to services over goods as the economy normalises from the COVID-19 pandemic disruptions.
• Services prices increased 0.6% on the month while goods fell 0.2%; on a 12-month basis, services rose 3.9% and goods were down 0.5%. Within those categories, food prices accelerated 0.5%, offset by a 1.4% slide in energy. On a year-over-year basis, food was up 1.4%, while energy fell 4.9%.
• Both the headline and core measures remain ahead of the Fed’s goal for 2% annual inflation, even though the core reading on an annual basis was the lowest since February 2021. While the Fed officially uses the headline measure, policymakers tend to pay more attention to the core as a better indication of where long-term trends are heading.
• “Overall, the report is meeting the expectations, and some of the worst fears in the market weren’t met,” said Stephen Gallagher, chief U.S. economist at Société Générale. “The key is we’re not seeing the broad nature of increases that we had been more fearful of,” he further explained.
• January’s consumer price index data raised fears of persistently high inflation, though many economists saw the rise as impacted by seasonal factors and shelter increases unlikely to persist.

(Source: CNBC)

• Mayberry Jamaican Equities (MJE) concluded its financial year ending December 2023 with a substantial net loss of US$15.89Mn, a significant decline of US$49.09Mn (or 147.9%) compared to FY 2022.
• Net unrealised losses on investments in associates of US$14.53Mn (-142.5%) was the primary driver of the falloff in earnings.
• The persistent high-interest rate environment caused by elevated inflation levels continued to negatively impact the stock market throughout the financial year and the stock prices of its associates.
• Notably, total operating expenses decreased by US$1.73Mn or 55.4% to US$1.39Mn, which tempered the impact of weaker revenues on the bottom line. With the losses incurred on the funds under management, there was a reduction in the incentive fees paid to the Investment Manager, and this accounted for the reduction in expenses.
• Net Interest Expense also increased by more than doubled (+152.3%) to US$4.19Mn due to increased borrowings through margin loans from its parent company, Mayberry Investments Limited, for new investments.
• MJE’s stock price has increased by 9.5% since the start of the calendar year. The stock closed Wednesday’s trading session at $10.89 and trades at a P/B of 0.8x, which is below the Main Market Financial Sector Average of 1.4x.

(Sources: Company Financials & NCBCM Research)

• The Bank of Jamaica (BOJ) has confirmed that it has stopped issuing old banknotes as part of its ongoing transition to polymer notes. During the BOJ’s Quarterly Monetary Policy Press Conference, Deputy Governor Natalie Haynes emphasised the institution’s commitment to adhering to the two-year timeline for the complete demonetisation of the outdated currency.
• Haynes outlined the steps required for the full withdrawal of the old notes from circulation. Currently, these notes account for 40.0% of the total currency in circulation. The cessation of issuing “old notes” commenced in November 2023, marking a significant milestone in the transition.
• Despite the ambitious timeline set by the BOJ, challenges persist in ensuring a smooth transition. Haynes acknowledged ongoing issues with some Automated Teller Machines (ATMs) and highlighted the banks’ progress in accepting and dispensing the new polymer notes, with an impressive 99% ATM acceptance rate.
• She further emphasised the necessity for comprehensive ATM coverage before announcing the date of demonetization. The old notes, collected by the central bank, will be destroyed after the date of de-monetization.

(Sources: BOJ & Caribbean National Weekly)