• The Central Bank of Trinidad & Tobago stated that the supply-side stimulus to both food and core inflation in the twin island is anticipated to persist to the end of 2022. According to its latest Monetary Policy Report, rising fertilizer prices will lead to higher costs of imported food. 
• The war in Ukraine has disrupted the supply of agricultural factor inputs such as potash fertiliser, and any resolution to reduce fertiliser application may result in lower crop yields which can elicit export restrictions from major food-exporting nations. 
• Inflation remained relatively anchored at 4.1% in March 2022 (up from 3.9% in October 2021), but several supply-side factors such as high and rising international food prices and international transport delays had notable pass-through to domestic prices. Elevated energy and food prices and increased external demand as economies recover are expected to be the driving factor for inflation. 
• Thus far the Central Bank of Trinidad and Tobago has kept its monetary policy stance unchanged with its short-term rate on its overnight collateralised financing to commercial banks, at 3.5%. Fitch Solutions expects the bank to raise the rate moderately to 3.75% as inflation rises.

(Sources: Trinidad and Tobago Guardian & CBTT)

• The average interest rate on the most popular U.S. home loan climbed to its highest level since the 2008 financial crisis and purchase applications were down more than 15% from last year, Mortgage Bankers Association (MBA) data showed on June 15, 2022. 
• The average contract rate on a 30-year fixed-rate mortgage rose by 25 basis points to 5.65% for the week ended June 10, the highest level since late 2008, towards the end of the financial crisis and Great Recession. 
• The MBA said its Purchase Composite Index, a measure of all mortgage loan applications for the purchase of a single-family home, increased 8.1% from a week earlier and its Refinance Index rose 3.7%. This means that more homebuyers sought properties compared to a week earlier, perhaps signalling a flurry of activity before aggressive tightening by the Federal Reserve further impacts the sector.

(Source: Reuters)

• Russia’s Gazprom announced a reduction in natural gas flows through a key European pipeline for the second day in a row Wednesday, creating further energy turmoil for Europe as it tries to reduce its extensive use of Russian oil and natural gas amid the war in Ukraine. 
• The state-owned energy giant said on Twitter that deliveries through the Nord Stream 1 pipeline to Germany would be cut again Thursday, bringing the overall reduction through the undersea pipeline to 60%. 
• The drop in shipments of gas used to power industry and generate electricity would amount to some 16 billion cubic meters by the end of the year, or around 10% of total European Union gas imports from Russia, according to Simone Tagliapietra, an energy policy expert at the Bruegel think tank in Brussels. 
• In light of the unfair invasion of Russia, the sanctions and the instability of the oil market in the West, Europe is working to reduce its dependence on Russian energy as the war worsens rising oil and gas prices that are fueling record inflation. Gas demand has fallen after the end of the winter heating season, but European utilities are racing to refill storage ahead of next winter with prices high and supplies uncertain. 
• While gas storage is refilling well, the cutoffs and reductions come on top of an explosion at a liquefied natural gas terminal in Texas whose exports were largely going to Europe, adding another squeeze to the tight natural gas market, energy expert Tagliapietra said. He urged Europe “not to be complacent and urgently scale-up coordination” so the continent is “prepared for a possibly difficult winter ahead.”

(Source: AP News)

• JFP Limited’s (JFP) net profit to rose more than three folds to $34.91Mn for the three months ended March 31, 2022. 
• This performance was driven by a 70% increase in revenues and a 8% decline in direct costs due to the increased efficiency of its operations. Revenues rose as customers brought capital projects back on stream. This resulted in gross profit increasing by 168% and its margin rising from 17% in 2021 to 33% in 2022. 
• Administrative expenses increased by 46.4% over the period mainly due to transaction costs related to the initial public offering and fees associated with the change of the name to JFP Limited. Despite higher administrative expenses, operating profit increased by 237%. 
• As the country continues to rebound on the back of the relaxation of restrictions by the government, JFP expects the strong performance in Q1 to continue in the coming quarters, especially as it considers the confirmed jobs in hand. It also has plans to take advantage of opportunities in the international market, whilst still paying keen attention to the domestic market. With these factors supporting the outlook for profitability, management expects to see an outturn reflective of its best year in its 37 year history. 
• JFP’s stock price has increased by 41% since listing in February 2022. The stock closed Wednesday’s trading session at $1.41 and currently trades at a P/E of 34.9x, which is above the Junior Market Manufacturing Sector Average of 20.0x. JFP’s high P/E relative to the sector suggest that the expected growth in earnings may already be reflected in the stock price.

(Sources: JSE and NCBCM Research)

• CAC 2000 Limited (CAC) reported a 58.6% improvement in net profit to $13.80Mn for its six months ended April 30, 2022. 
• As most companies started their return to regular working days, along with the cessation of lockdowns, there was increased demand for CAC’s services, which resulted in a  5.3% increase in revenue. This along with a 0.6% decline in direct costs influenced a 13.9% increase in gross profit and 3.3 percentage points rise in the gross margin. 
• While operating expenses increased by 11.5%, the operating profit margin increased from 3.4% in 2021 to 4.8% in 2022 as revenue growth outpaced the rise in expenses. 
• Although supply chain issues will continue to present a challenge for the company through delays and price increases, it is anticipated that it will continue to benefit from the reopening with the resumption of many of its projects and service sites, and the resulting ability to book invoices for services etc. 
• CAC’s stock price has increased by 7.6% since the start of the calendar year. The stock closed Wednesday’s trading session at $7.75 and currently trades at a P/E of 22.1x which is below the Junior Market Distribution Sector Average of 23.2x.

(Sources: JSE and NCBCM Research)

• Dominican Republic will be one of the few economies in Latin America that will experience growth this and next year. This statement was made by the Central Bank of the DR (BCRD) and supported by the World Bank, as it forecasts 5.0% growth for the country, while reducing forecasts for almost two dozen countries in its recent “World Economic Outlook”. 
• The International Monetary Fund (IMF) and the international risk rating agency Moody’s have co-signed the excellent performance of DomRep, reaffirming that the country’s prospects remain favourable with a similar GDP growth projection of around 5.0%. 
• According to the BCRD, the economy achieved a growth of 5.8% in January-April 2022, and registered an increase of 4.7% in April alone. Growth in the first quarter of the year was 6.1% owing to the recovery of the hotels, bars, and restaurants sector. 
• However, the World Bank warns that “an aggravating factor of the damage caused by the COVID-19 pandemic, and the Russian invasion of Ukraine have exacerbated the slowdown in the world economy, which is entering what could become a prolonged period of low growth and high inflation.” 
• Notably, the danger of the economic situation that has prevented many countries from growing is that it increases the risk of stagflation (a period of high inflation combined with economic stagnation) with potentially damaging consequences for both middle-income and low-income economies. 
• The Central Bank has preventively raised its monetary policy rate by 350 points, from 3.00 in December 2021 to 6.50 points in June 2022, to counteract domestic inflation. However, it is taking care not to cause an abrupt drop in economic activity and employment due to higher borrowing costs.

(Source: Dominican Today)

• The World Bank’s Board of Executive Directors has approved approximately US$44Mn for Guyana’s Strengthening Human Capital through Education Project. 
• The project will focus on expanding access to quality education at the secondary level, as well as improving technical and vocational training (TVET) to meet the needs of the labour market. The funding aims to prepare Guyanese citizens to excel in emerging sectors of the economy including climate-resilient agriculture, low-carbon technology, and digital development. 
• “Guyana is investing heavily in its citizens, with education and vocational training playing a key role as the country is at a key juncture of its growth,” said Diletta Doretti, World Bank Resident Representative for Guyana and Suriname. This project complements other education initiatives that the World Bank is supporting, as the government is working to ensure that more people can acquire the needed skills to benefit from the ongoing economic transformation.

(Source: Kaieteur News)

• The Federal Reserve raised its target interest rate by 75 basis points, and projected a slowing economy on June 15. The Fed funds target rate range now lies in the range 1.5% and 1.75%. 
• Whereas in March the Fed expected the federal funds target rate to end this year at 1.9%, it now expects the funds rate at 3.4%, near the point St. Louis Fed leader James Bullard, one of the Fed's biggest hawks, has long been calling for. 
• It sees modest action next year that will lift the funds rate to 3.8% from March forecast of 2.8%, and an easing in monetary policy in 2024, to 3.4%, from its March estimate of 2.8%. The Fed sees the longer-run federal funds rate steady at 2.5%. 
• The shift in the Fed's rate projections outlook suggests officials now believe they can get inflation back under control with a front loaded rate rise campaign, and their inflation forecasts holds for a big moderation in price pressure by next year. That said, the story of the Fed for some time has been one of it blowing its inflation forecasts and getting surprised by the persistence of price pressure gains.

(Source: Wall Street Journal)

• The U.S. Department of Energy on Tuesday (June 14) said it was selling up to 45Mn barrels of oil from the Strategic Petroleum Reserve as part of the Biden administration's previously announced, largest-ever release from the stockpile. 
• Deliveries of crude from the SPR sale would take place from Aug. 16 through Sept. 30. The Biden administration said in late March it would release a record 1Mn barrels of oil per day for six months from the SPR. 
• The release was meant to help control oil prices that spiked after Russia, one of the world's top petroleum producers, invaded Ukraine and as the West imposes sanctions on Moscow. Prices for global benchmark Brent crude have marched higher since the March 31 announcement to trade above $120 a barrel. The rise has come as few global oil producers have spare capacity ,while consumers emerging from the pandemic are driving fuel demand. 
• Biden administration officials have said the oil price could be higher if the SPR had not been tapped. But the release has also driven the level of the reserve to the lowest point since 1987, adding to worries about tight global oil markets, despite the United States having more in the stockpile than required under international agreements.

(Source: Reuters)

• The Ministry of Tourism is looking to tap into the local labour force to identify, recruit and deploy at least 10,000 of the 90,000 workers required in the global cruise industry. Portfolio Minister, Hon. Edmund Bartlett, says the demand stems from a shortage of workers occasioned by the COVID-19 pandemic’s disruption of tourism activities worldwide, which resulted in a reduction in the number of persons employed in the sector. 
• The demand for employees within the tourism industry is consistent with those in various domestic and global sectors and forms part of the response in the overall post-COVID-19 recovery efforts. 
• The labour demand in the tourism, as well as growing Business Processing and Outsourcing (BPO) sectors should fuel employment in 2022. Overall the unemployment rate which has been trending downwards since July 2020, could fall lower than the 6.2% recorded in January 2022-- the lowest in over 10 years. 
• However, there are downside risks as increased costs to businesses due to the high inflationary environment may result in some businesses reducing their wage bill to stay profitable.

(Source: JIS and NCBCM Research)