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26th January 2010
FirstCaribbean Daily Markets Report
Friday, January 22nd, 2010

Global Markets

• President Barack Obama, tapping into voter anger over bank bailouts, called for limits on the size and trading activities of financial institutions in order to reduce risk-taking and prevent another financial crisis.

• Analysts have estimated that the Presidents plan to curb proprietary trading will cost Goldman Sachs Group Inc., Morgan Stanley, Credit Suisse Group AG, UBS AG and Deutsche Bank AG about $13 billion in revenue next year.

• Employment dropped in 39 U.S. states in December, seven more than in the prior month, indicating job losses were widespread. With the national unemployment rate projected to average 10 percent this year, state budgets may continue to be strained by limited tax revenue and jobless insurance payments.

• General Electric Co.’s fourth-quarter profit exceeded analysts’ estimates as the order backlog rose and the company benefited from a tax gain and cost-cutting efforts including job reductions.

• Credit-default swaps on U.S. Treasuries rose to the highest level in six months as investor confidence in sovereign debt is hurt by concern the Greek government will struggle to lower its budget deficit.

• The Bank of England agreed with the U.S.’s Federal Deposit Insurance Corp. to expand co-operation when they act as resolution authorities for “troubled” retail banks with operations in both countries.

• U.K. retail sales rose less than economists forecast in December as price increases squeezed spending during the holiday season, casting doubt on the strength of a domestic recovery.

• European industrial orders rose more than forecast in November on demand for goods such as steel and car parts. European companies are boosting output to meet reviving orders after governments around the globe spent trillions of dollars on stimulus measures.

• Emerging-market bonds were headed for a weekly loss as the busiest start to a year for borrowing by developing nations since 2005 and monetary tightening in China cooled demand for high-yielding assets.

• White sugar fell the most in almost two months in London on speculation that prices, near their highest in more than two decades, no longer reflect the outlook for supply and demand.

• Copper headed for a second weekly drop in London on concern that interest rates may rise in China and the U.S. government might curb banks' trading activity, potentially eroding demand for metals.

Figure 1: U.S. Daily Economic Indicators


 
 
Caribbean Markets

Caribbean
• The Caribbean Community (CARICOM) through its Secretariat has accepted an invitation from the Government of St Kitts and Nevis to observe the country’s General Elections scheduled for January 25, 2010.

• The CARICOM Electoral Observer Mission to St Kitts and Nevis follows a practice of fielding Missions to Member States during such constitutional processes. The Mission is funded by the Government of Australia, whose contribution is seen as a critical support of good governance, democracy and the rule of law in the Caribbean Community.

Bahamas
• The new Sandals Emerald Bay Resort in Exuma is opening its doors today with the completion of a $20 million facelift. Management has forecasted an 80% occupancy level.

• The Minister of State for Finance has conceded that the government must “turn the tide” on the management of its public finances. The government will seek to undertake meaningful measures to rein in its fiscal deficit and national debt levels in the upcoming 2010-2011 Budget.

• Whilst the debt-to-GDP ratio increased significantly during the past year, the Minister assured that the government is not having any difficulties with servicing its debt and meeting its financial obligations.

Barbados
• The Wall Street Journal reports that Barbados is bailing out the troubled Four Seasons luxury-resort development on the island. Construction of the project stalled a year ago as financing dried up and sales of its private villas slowed, after initially attracting a cast of celebrity buyers.

• The government of Barbados agreed last month to guarantee a $60 million loan from a Caribbean bank to help restart construction. In return for the guarantee, the government ultimately will end up with a 20% equity stake in the project.

• Senator Darcy Boyce, Minister of Finance commented this year will continue to be a difficult one, with projections indicating that the Gross Domestic Product (GDP) is expected to be small or negligible due to slow growth in major export sectors such as tourism.

Jamaica
• Barclays Plc has published a report commenting that Jamaican is moving in the right direction. The report suggests that Jamaica’s external debt may now be attractive versus bonds issued by the Dominican Republic and El Salvador as the Jamaican government’s default on local debt this month will free up cash to pay foreign creditors.

• Barclays analysts have attached a high probability of a successful completion of the exchange while stating that “the likelihood of an imminent further default should be very small in the medium term.”

• Jamaica announced on Jan. 14 the exchange of 700 billion Jamaican dollars ($7.81 billion) of domestic debt for notes that pay the same principal but lower interest rates and have longer maturity dates. Moody’s Investors Service and Standard & Poor’s considered the swap a default.

• Central America and Caribbean (CAC) Daily by J.P. Morgan reported that real GDP contracted 2.3%oya in the third quarter of 2009, marking the eighth consecutive quarter of decline.

Netherlands Antilles
• According to the Central Bureau for the Statistics (CBS). The unemployment percentage in Curaçao fell from 10.3% in October 2008 to 9.7% in October 2009.

Trinidad
• Central Bank Governor Ewart Williams has promised to act if wrongdoing is revealed when the auditors complete their review of the operations of the cash-strapped CL Financial Group, leading up to its bailout by government last February.

• Governor Williams said he has become very impatient and often frustrated with the pace at which the review and audit was taking place. He said it was necessary to determine the state of the company and to estimate the value of the assets of the financial services group.

• Charles Campbell, Human Resource Manager at Toyota Trinidad and Tobago Limited commented that this year is expected to be very challenging for Toyota in T&T. Campbell said the company will be focusing on strengthening its presence in the market and will seek to provide greater customer value. He added that there were no intentions to lay-off workers this year.

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

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