The Day at a Glance | October 29 2024

• Next week, the US presidential election will take place, and we should keep an eye on swing states.

• US Vice President Kamala Harris will hold her campaign’s closing event this Tuesday in Washington D.C., at the same location where former President Donald Trump delivered a speech on January 6^th, 2021, before his supporters subsequently attacked the US Capitol.

• The US trade deficit widened significantly in September amidst a rise in imports, indicating that trade continued to weigh on economic growth in the third quarter.

• China is considering approving the issuance of more than 10 trillion Yuan ($1.4 trillion dollars) in additional debt over the coming years to boost its economy, as fiscal stimulus is expected to gain momentum if Donald Trump wins the US election.

• Germany´s economy is expected to contract by -0.2% this year, the German Chamber of Commerce and Industry (DIHK) announced on Tuesday, downgrading its previous forecast of stagnation released in May.

• On Tuesday, oil prices rose by more than 1%, reversing part of the 6% drop from the previous session due to a US plan to purchase oil for the Strategic Petroleum Reserve (SPR).

Economic Environment

Next week, the US presidential election will take place, and we should keep an eye on swing states. Unlike the electoral process in Mexico, in the United States, the winner is the candidate who secures 270 of the 538 electoral votes. Each state in Mexico´s neighboring country has a specific number of electoral votes, and currently, 43 out of the 50 states have essentially determined their votes among the current candidates, as they are typically Democratic or Republican-leaning states that rarely change. However, there are seven states known as “swing states” because they do not have a defined preference. These states are Pennsylvania (19 electoral votes), Michigan (15 electoral votes), Georgia (16 electoral votes), Nevada (6 electoral votes), North Carolina (16 electoral votes), Wisconsin (10 electoral votes), and Arizona (11 electoral votes). Monitoring the vote certification process, potential recounts, or legal disputes is essential, as they could delay the declaration of a definitive winner, increasing market uncertainty. The exact dates for the electoral board meetings in the swing states are as follows: Arizona (December 2^nd), North Carolina (November 15^th), Georgia (November 22^nd), Michigan (November 25^th), Nevada (November 15^th), Pennsylvania (November 28^th), and Wisconsin (November 19^th). It´ll be crucial to monitor these processes, as in case there are disputes or recounts, these dates could be adjusted, triggering uncertainty in markets and the US political landscape. This means the election does not end next week with the popular vote; instead, it is only just beginning.

Markets and Companies

In the US, markets are slightly down as investors await the results from major tech companies, including Alphabet and Advanced Micro Devices, which will release earnings after market close. In Europe, the Stoxx 600 index is up slightly, with sectors in mixed territory. HSBC leads with a 4.5% increase after exceeding profit estimates and announcing a stock buyback. In Asia, markets posted mixed results. Japan’s Nikkei was up 0.77%, while China’s CSI 300 fell 1% amidst anticipation for tech earnings in the US.

Crude prices are rebounding, driven by reduced geopolitical risk. Gold maintains its upward trend, trading near $2,750 per ounce, boosted by expectations of a Fed rate cut and US election uncertainty.

US bond yields continue to rise; the 10-year bond is set at4.32%, and the 2-year stands at 4.16%, driven by expectations around key economic data this week that could impact the Fed’s rate policy.

Meanwhile, the IPC is down and is trading at 51,429.5 points, and the exchange rate stands at 20.03 pesos per dollar, down slightly from yesterday´s closing rate of 20.05.

In 3Q24, Regional reported a 12.8% YoY growth in its loan portfolio, while net income rose 2.5% YoY. Results aligned with our expectations for income and portfolio levels, and were very slightly below for profits, giving the report a neutral implication.

In 3Q24, Alfa began reporting Alpek’s numbers as a discontinued operation, so the report focuses on Sigma’s results, which showed a 1% YoY increase in revenue due to a 2% rise in volume and a 1% decrease in average price. All regions reported higher volumes except for Europe. EBITDA was $281 million, up 10% YoY.

In 3Q24, Alpek reported a 0.6% YoY growth in revenue and a 37% YoY increase in comparable EBITDA. Thanks to improved cash flow performance, Alpek revised its 2024 comparable EBITDA guidance upward to $675 million, from a previous projection of $600 million.

Yesterday afternoon, Femsa announced that it reached a definitive agreement with AMMI, a subsidiary of MilenioCapital, to divest Femsa’s plastic solutions operations for a total amount of MXN 3,165 million, net of cash and debt. The transaction is subject to regulatory approvals and other customary conditions and is expected to close in the coming months.

Corporate News

• Ford´s shares fell 6% after the automaker adjusted its annual guidance to the lower end of its previously set range.

• HSBC shares in London rose 4.5% following a third-quarter earnings report that beat analyst expectations. The bank also announced a $3 billion share buyback program.

• Despite exceeding expectations in its quarterly results, McDonald’s shares dropped more than 2% due to a larger-than-expected decline in global comparable store sales.