The Day at a Glance | April 25 2024

The Top

*The U.S. economy grew by 1.6% in 1Q24, expanding more moderately than expected by the market.

*Unemployment claims in the U.S. unexpectedly fell last week from 212,000 to 207,000, reaching its lowest level in 2 months.

*Isabel Schnabel of the ECB said that the final stage to achieve the Eurozone’s inflation target will be complicated and will bring with it erosion in productivity, along with high costs in services, and other risks.

*Bank of Japan Governor Kazuo Ueda may take a more hawkish stance in his next monetary policy meeting after the yen reached a nearly 3-decade low.

*Oil remains stable as concerns about U.S. demand balance risks stemming from the Middle East conflict. 

*Microsoft and Alphabet will release their earnings today at market close. 

Economic environment

The U.S. economy grew by 1.6% in 1Q24, expanding more moderately than expected by the market. U.S. economic activity expanded at an annualized and seasonally adjusted rate of 1.6% during the first three months of 2024, according to the first of three estimates from the Bureau of Economic Analysis (BEA). Thus, the 1Q24 GDP reading fell short of market expectations by 2.3%, and even further below the GDP Now estimate by 2.7%. The contribution to first-quarter growth is primarily explained by an increase in consumer spending (+1.68 percentage points), fixed investment (+0.91pp), government spending (+0.21pp), and exports (+0.10pp), which were offset by a decline in inventories (-0.35pp), a highly volatile category, and an acceleration in imports (-0.96pp). Looking ahead, Bloomberg’s consensus estimates 1.5% growth in the second quarter of the year. First-quarter data was good, even if growth set below market estimates, mainly due to a highly volatile category. However, there are two key data points: i) personal consumption expenditure has grown, on average, by 3.0% in the last three quarters, and ii) fixed investment (residential and non-residential excluding inventories) has done the same by 3.8%

Markets and companies

Global markets with negative sentiment. Main U.S. indices logged gains yesterday. This morning, markets started the day in negative territory after the latest economic data was released in the U.S.: Dow -1.54%, S&P -1.36%, and Nasdaq -1.69%. In Europe, markets are logging losses, with the Euro Stoxx down -1.55% and most sectors in negative territory, the industrial sector is down -2.3%, while the healthcare sector is up +0.2%. In Asia, markets were mixed: Japan -2.16% and China +0.27%. In Mexico, the IPC opened higher, standing at $56,584 points (+0.21%). The price of oil decreased; it stands at $82.61 per barrel (-0.20%). Natural gas is down (-1.69%). Meanwhile, most metals are up, with gold +0.10%, silver +0.0%, and copper +1.4%. Lastly, cryptocurrencies are down.

The exchange rate fluctuated during the early hours, reaching a low of 17.03 and a high of 17.34, currently trading at 17.29.

In 1Q24, Gentera’s loan portfolio increased by 20.6% year-on-year, while net controlling income rose by 10.3% y/y. ROE closed the quarter at 21.4%. Results exceeded our estimates. By subsidiary, the loan portfolio recorded the following annual growth rates: Compartamos Mexico +27.2%; Compartamos Perú +6.5%; and ConCrédito +20.7%. Late payments closed the quarter at 3.57% vs. 3.60% in 1Q23.

Nemak continued to report mixed results by region, with a volume decline in North America and good growth in Europe and the Rest of the World; however, numbers exceeded our estimates both in terms of sales and EBITDA. Revenues decreased by 3.7% y/y (vs. -6.4% estimated), while EBITDA increased by 9.8% y/y (vs. -1.5% estimated).

Bajío reported a loan growth of 8.7% y/y, while the net interest margin grew by 6.1% y/y (vs. 12% estimated) and net income increased by 3.3% (vs. 7.0% estimated). Results set below our estimates and the consensus´. Results were impacted by higher funding costs. It is worth noting that for 2024, it is reasonable to expect lower growth rates given high base comparisons.

In 1Q24, Funo’s results set in line with our expectations in terms of revenue and slightly below in NOI. Funo reported 7.0% y/y growth in revenue and a 3.7% y/y growth in Net Operating Income (NOI). In terms of Funds from Operations (FFO), there was a +0.5% y/y increase. Market attention remains focused on the progress of industrial asset segregation plans and management internalization.

During 1Q24, Fmty’s results set in line with our estimates. Revenues increased by 62.4% y/y (vs. 63.9% estimated) and Net Operating Income (NOI) increased by 66.8% y/y (vs. 67.3% estimated). The reported numbers reflect the effect of acquiring the industrial portfolio “Zeus” last year.

Arca Contal released its 1Q24 results this morning. Net sales remained virtually unchanged from 1Q23 (+0.1%); volumes logged a similar year-on-year change (+0.1%). Regarding profits, EBITDA slightly increased by +1.2% year-over-year.

Cemex reported its first quarter results. The company reported results that set virtually in line with our estimates. The company reported $4,138 million in revenues, reflecting a 2.5% y/y increase, driven by their pricing strategy. Regarding EBITDA, they reported $772 million, representing a 5.3% y/y increase, due to a slowdown in input cost inflation and the strategy of their Urban Solutions business.

Cemex announced that its subsidiary Cemex Asia B.V. signed an agreement with DACON Corporation, DMCI Holdings, Inc., and Seminara Mining & Power Corporation to sell its operations and assets in the Philippines. The company expects to conclude this transaction by the end of 2024. Once completed, this transaction will contribute to advancing its growth strategy in its key markets.

Corporate news

*Meta was down 15% after the company issued weak revenue guidance for the second quarter.

*Southwest Airlines warned that Boeing aircraft delays are hindering its growth until 2025.