The Day at a Glance | July 19 2024

The Top

• The Timely Indicator of Economic Activity (IOAEfor its acronym in Spanish) suggests that the economy is slowing down.

• Donald Trump accepted being nominated for the US presidency, calling for national unity, while Joe Biden faces increasing pressure to drop out. 

• Chinese officials acknowledged this Friday that the extensive list of economic targets emphasized at the end of the Third Plenum contained “many complex contradictions,” indicating a challenging path ahead for policy implementation.

• A software update wreaked havoc on computer systems worldwide, causing flight suspensions, forcing some broadcasters off the air, and affecting services ranging from banking to hospitals.

• Oil prices held steady on Friday, as the strength of the dollar and concerns about the economy of the world’s largest oil importer, China, were offset by tighter supply forecasts.

Economic Environment

The Timely Indicator of Economic Activity (IOAE) suggests that the economy is slowing down. The IOAE estimates that, in May and June, Mexico´s economy grew by 1.2% year-on-year and 0.9% year-on-year, respectively, according to seasonally adjusted figures. By components, industrial production, an indicator encompassing construction, manufacturing, electricity generation, and mining, grew by 0.6% year-on-year in May, and the IOAE estimates it could decrease by -0.1% year-on-year in June. On the services side, the timely indicator estimates 1.9% year-on-year growth in May and 1.6% year-on-year growth in June. According to IGAE figures for April and IOAE estimates for May and June, the economy likely grew close to 1.0% year-on-year in the second quarter of the year; this would entail that from January to June, cumulative growth would be 1.6% compared to the same period of 2023.

Markets and Companies

Main US stock indices are logging mixed figures after declining yesterday. Throughout the week, a rotation toward smaller-cap companies has been observed, following a year where mega-cap stocks have led market gains. In corporate matters, markets have remained focused on the 2Q24 earnings season. Politically, the market is focused on developments regarding the US presidential race. In Europe, stock markets were trading lower as they continue to digest the latest ECB decision and react to the disruption in IT services company CrowdStrike, which impacted operations among several sectors and companies.

In the debt market, the yield on the 10-year Treasury bond stands at 4.24%, increasing after previous sessions loggeddeclines, as investors absorb the latest comments from Federal Reserve members regarding the direction of monetary policy.

In Mexico, the IPC is down, standing at 53,037.2 points. The peso-dollar exchange rate is at 17.86 after closing at 17.96 yesterday.

Kof reported its 2Q24 results this morning. Total revenues increased by +13.1% year-on-year, driven by a +7.5% increase in volume. Volumes increased in most territories, including strong performances in Mexico, Brazil, Guatemala, and Central American territories, although partially offset by declines in Argentina and Uruguay. As for profits, Adjusted EBITDA rose by +21.7%.

Terrafina announced that its Technical Committee determined that the price offered by Fibra Macquarie for the acquisition of Terrafina’s assets is inadequate.

In 2Q24, Quálitas reported a 28.0% year-on-year growth in premium issuance, and net profit increased by 85.4% year-on-year. The company benefited from an increase in insured units, price increases, and higher investment income.

Corporate News

• American Express reported quarterly revenues below expectations; however, on an adjusted profit level, the company exceeded expectations.

• Microsoft shares were declining after the company was affected by a disruption in services from cybersecurityfirm CrowdStrike due to a software update. This affected the operations of several companies in various segments.

• Travelers reported mixed quarterly results; its profits exceeded expectations, although its revenues fell short.