The Day at a Glance | October 25 2024

The Top

• Demand for durable goods in the US is slowing down, driven by the most volatile categories.

• Kamala Harris and Donald Trump are deviating from their focus on the battleground states that will decide November’s election by stopping in Texas, a conservative state that was the first to enact an almost total abortion ban.

• The European block and China agreed to hold new technical negotiations soon on possible alternatives to tariffs on Chinese-made electric vehicles, the European Commission and China’s Ministry of Commerce said on Friday.

• According to Reuters, European diplomats are preparing to back sanctions against Russia, anticipating that the return of former US President Donald Trump could undermine Western efforts to isolate Moscow.

• The Bank of Japan will keep interest rates unchanged next week and will likely signal a less dovish policy outlook due to easing recession fears in the US and the need to prevent speculation from putting too much pressure on the yen.

• Oil prices are heading for a weekly gain of nearly 3% as investors remain nervous about lingering tensions in the Middle East ahead of planned ceasefire talks in Gaza. 

Economic Environment

Demand for durable goods in the US is slowing down, driven by the most volatile categories. In September, demand for durable goods decreased by -0.8% m/m after a similar drop the previous month. However, excluding volatile items like transportation and defense, demand roseby 1.2% m/m in September, following a 0.4% rise the prior month, according to seasonally adjusted figures. In September, demand for transportation goods fell by -3.1% m/m, while demand for defense goods dropped by -23.7% m/m. Annually, based on original figures, demand for durable goods declined by -2.9% in September, while excluding transportation and defense, it increased by 1.4%. From January to September 2024, demand for durable goods decreased by -1.5% compared to the same period last year, but excluding volatile items, it showed a 1.5% increase over the same period. This indicates that non-residential investment continues to grow, albeit at a moderate pace, suggesting a potential slowdown in growth for the world’s largest economy. 

Markets and Companies

US markets are up, following a nearly 22% surge in Tesla’s stock price yesterday. In Europe, markets are up amidstmixed corporate earnings. Mercedes shares fell after reporting a 64% drop in operating profit for its car division due to a weakened economy and strong competition in Asia. Lastly, in Asia, markets had mixed performance; Japan’s Nikkei dropped after inflation data from Tokyo showed a 1.8% annual rate, while investors await the country’s general election this weekend and the upcoming Bank of Japan meeting.

In commodities, oil prices are positive amidst tensions in the Middle East and expectations of a resumption of ceasefire talks in Gaza. Gold prices dipped slightly after reaching an all-time high of $2,758.37 per ounce earlier this week. Tensions in the Middle East and the upcoming US elections have partly backed demand despite profit-taking.

In the bond market, the US 10-year yield remained at 4.18%, while the 2-year bond sits at 4.04%.

Meanwhile, Mexico’s IPC is up, trading at 51,897.3 points, and the exchange rate is at 19.84 pesos per dollar, after closing at 19.82 yesterday. 

Kof reported its 3Q24 results this morning. Total revenues increased by 10.7%, driven by revenue management initiatives and favorable mix effects. Excluding the impact of currency conversion, revenues increased by 11.3%. Consolidated volumes rose by +0.8%. And, as for earnings, Adjusted EBITDA increased by +18.4%.

Alpek announced the approval of its spin-off as part of a new entity. Shareholders of the parent company, Alfa, approved the proposal to transfer all of Alfa’s stake in Alpekto a new entity called Controladora Alpek, S.A.B. de C.V., which will be listed on the Mexican Stock Exchange.

Grupo Televisa announced that Emilio Azcárraga Jean, Executive Chairman of its Board of Directors, took an administrative leave effective immediately. This decision comes as the US Department of Justice continues its investigation related to FIFA, in which Televisa is fully cooperating.

Corporate News

• Capital One shares rose 4% after reporting earnings of USD $4.51 per share and revenues of USD $10.01 billion, surpassing expectations.

• Shares of DexCom, a glucose monitoring device manufacturer, fell nearly 8% at the open, despite beating third-quarter estimates and reiterating its annual forecast.

• US company Colgate-Palmolive reported quarterly results exceeding expectations and raised its sales forecast to between USD $159 and $161 billion.