Tell a friend:
 

07th January 2010
FirstCaribbean Daily Markets Report
Wednesday, January 06th, 2009

Global Markets

• Contracts to buy previously owned U.S. homes plunged more than anticipated in November, while factory demand beat forecasts, showing manufacturing may lead the economy in coming months as the housing recovery cools.

• Employers in the U.S. announced fewer job cuts in December a private survey showed.

• GMAC Inc., the auto and home lender that became majority-owned by the U.S. government last week after a third bailout, may post a loss of more than $10 billion for 2009 as more borrowers defaulted on mortgages.

• Ford Motor Co. is relying on a Federal Reserve program to market securities backed by auto-dealer payments, showing that borrowers may still need U.S. help to issue asset-backed securities as debt markets recover.

• Losses on commercial real estate loans pose the biggest risk to U.S. banks this year, troubling smaller lenders while unlikely to threaten the entire financial system, U.S. bank examiners concluded during a review. The default rate on commercial mortgages held by U.S. banks more than doubled to 3.4% in the third quarter.

• Financial markets are ahead of reality by pricing in 3 interest rate increases by the Fed this year, according to Pacific Investment Management Co (PIMCO). The central bank is unlikely to lift its target rate for overnight loans between banks from a range of 0-0.25% until late 2010 or 2011 according to PIMCO.

• Greece rejected speculation that it will need a bailout to tackle the European Union’s biggest budget deficit as officials fly in from Brussels to scrutinize tax and spending plans.

• Hungary's jobless rate rose to a record through November, draining state coffers as the European Union's most indebted eastern member hands out more in welfare payments.

• U.K. consumer confidence fell in December by the most in more than a year as expectations for the economy deteriorated, Nationwide Building Society said.

• China's central bank said it will target ``moderate'' loan growth this year, signaling that the government may rein in a record expansion in credit in the world's third-biggest economy.

• Copper rose to a 16-month high in London on speculation that demand may revive as the U.S. economy improves. Aluminum climbed to the highest since October 2008 on concern that snowstorms in China might disrupt production.

• Appaloosa Investments achieved a 117% return for the nine months ended on Sept. 30, making it the best performing hedge fund with assets over $1 billion, according to data compiled to Bloomberg. The fund bet heavily on bank related securities including common and preferred shares and junior subordinated debt in February and March as markets crashed. Bank of America and Citigroup shares (amongst others) subsequently surged 330% and 223% from Feb. 28 through September.

Figure 1: U.S. Daily Economic Indicators


 
 
Caribbean Markets

Anguilla
• Anguillans have been informed by their outgoing chief minister that they will be going to the polls on 15 February. The Anguilla parliament was being dissolved on Wednesday.

Bahamas
• Prime Minister Hubert Ingraham has announced plans for a scheme to create approximately 2,500 temporary jobs.

• The measure comes as the government attempts to combat unemployment of 12.8% in the wake of the global economic downturn. While the plan may provide some short-term relief, it is unlikely to provide a long-term solution to the current high levels of joblessness.

Barbados
• According to the Business Monitor International (BMI) Barbados’s export industry is continuing to struggle, with August 2009 figures revealing that the value of domestic exports was 11.9% lower than in the same month in 2008. The contraction was primarily led by the food and drink industry, which saw exports fall 32.6% y-o-y in August.

• BMI forecasts 2009 to see a modest narrowing of the island’s trade deficit to US$1.1bn (29.7% of GDP), from the US$1.4bn (39.9% of GDP) seen in 2008.

Belize
• The Business Monitor International reported that Belize’s main exports were 25.8% lower in January to August 2009 than during the same period in 2008. The fall was led by a 59.6% contraction in the value of petroleum exports over the same period, a figure which reflects the impact of the decline in oil prices since mid-2008.

• However, the decline in petroleum receipts masks the strong growth seen in sugar, the country’s second most important commodity, exports of which grew 26.1% year-on-year in the January to August period.

• BMI considers that Belize will weather the storm better than many of its regional peers, with GDP contracting only 0.3% in real terms in 2009, before returning to positive growth to the tune of 1.5% in 2010.

• Indeed, external demand for the country’s exports is set to pick up in 2010 as the global economic recovery takes hold, and with oil prices in the midst of a robust medium-term uptrend, the outlook for the export sector looks promising.

Jamaica
• According to BMI some form of debt restructuring is likely to materialize in Jamaica. BMI points to interest payments accounting for a disproportionate share (60% of revenues) and the aggregate debt pile continuing to swell.

St. Lucia
• In local press reports St Lucian Prime Minister Stephenson King has announced plans to go ahead with the construction of the island's first casino, scheduled for completion this year.

Trinidad
• Although Trinidad & Tobago has taken a knock as a result of the global economic downturn, the twin-island state looks poised to stage a robust recovery in 2010 owing to broadly sound fundamentals and the stabilization in the global economy according to Business Monitor International (BMI).

• BMI expects a rebound in domestic demand, driven by private consumption and government infrastructure projects, to push real GDP growth to 3.1% and remain sanguine about the country’s longer term prospects. For the time being, though, they note that a weak Q209 performance has prompted them to revise down their 2009 growth forecast from -0.7% to -1.6%.

Figure 2: Tracking key Caribbean financial indicators

DISCLAIMER- This document is for informational purposes only. This information is based on the close of the previous business day activity. The information presented is from usually reliable sources. FirstCaribbean has not independently verified the facts, assumptions, and estimates contained in this report. No representation or warranty, express or implied, is made as to, and no reliance should be placed on the fairness, accuracy, or completeness of the information and opinions contained in this report. FirstCaribbean International Bank accepts no liability for any loss occasioned by reliance on any information contained herein which may prove to be incorrect. For current market bids and offers, please contact: David Whitcroft, Treasury Sales & Trading, FirstCaribbean International Bank, Phone 246-367-2272 (Barbados), and Fax: 246-421-9207 (Barbados); david.whitcroft@FirstCaribbeanBank.com

Discuss Story
 
Top Stories  
 
 
   
Developed