The Day at a Glance | February 12 2024

The Top

*Mexico’s tourism balance reached a historic high in 2023.

*Republicans criticize Trump for his threat to abandon NATO allies if they delay their payments.

*Kristalina Georgieva, IMF Managing Director, said on Monday that she is very optimistic about seeing a soft landing for the economy; she anticipates rate cuts by mid-2024.

*Global stocks remained stable at their highest level in over two years as investors await U.S. inflation data.

*Oil falls after last week’s surge due to supply shortages in the Middle East.

*Futures for major U.S. indices are slightly up after a record-setting week for the S&P.

Economic environment

In Mexico, the tourism balance reached a historic high in 2023. During 2023, the tourism balance, part of the external accounts balance of payments, closed at $21.548 billion, consisting of $30.809 billion in income and $9.260 billion in expenses. As a percentage of GDP, the tourism account contributed 1.2% last year. The tourism balance grew by 2.8% in 2023, compared to an increase of 43.4% in 2022. In December 2023, tourism income reached a historic high of $3.397 billion, and expenses amounted to $971 million, increases of 11.5% and 18.3%, respectively. The balance of the tourism account for the last month of 2023 closed at $2.426 billion, a historic high for December. The fundamentals of the external accounts reveal that the country attracted foreign exchange at the end of last year, particularly when combining remittances and tourism income, reaching a total of $84.862 billion, equivalent to 4.7% as a percentage of GDP, a figure that can more than cover the trade deficit

Markets and companies

Global markets are mostly positive. U.S. stock futures log moderate movements this morning after the S&P 500 closed above 5,000 points for the first time in history last Friday. The broader index has risen more than 5% since the beginning of the year. The three major indices are coming off their fifth consecutive week of gains, with the S&P 500 and Nasdaq Composite up 1.4% and 2.3%, respectively, last week. The Dow Jones also edged slightly higher. This week, investors will be watching for the release of the Consumer Price Index (CPI), a key measure of inflation, scheduled for Tuesday morning. More key economic data is expected on Thursday and Friday, including January’s readings on retail sales, production, imports and exports, and the Producer Price Index. Currently, S&P futures are up +0.35%, Dow Jones +0.11%, and Nasdaq +0.45%. In Europe, after a strong end to January, the regional Stoxx index has had a quiet February so far, despite significant movements in individual stocks as quarterly results were announced. This week, investors may pay particular attention to consumer stocks and what they suggest about the strength of certain economies, while central banks monitor the state of growth and inflation. Many major Asia-Pacific stock markets were closed on Monday for the Lunar New Year, while Chinese markets remain closed for the week. It’s noteworthy that Japan’s Nikkei surpassed the 37,000-point mark, reaching 34-year highs on Friday. In Mexico, IPC futures are seen rising (+0.89%), reaching $57,837 points. Oil prices fell on Monday after rising more than 6% last week due to escalating tensions in the Middle East. U.S. crude and the global benchmark increased last week after Israel rejected Hamas’ ceasefire proposal and vowed to continue its offensive in Gaza towards the southern city of Rafah, located on the border with Egypt. The West Texas Intermediate contract for March was last down 72 cents, or 0.94%, trading at $76.09 per barrel. The Brent contract for April was last trading at $81.37 per barrel, down 82 cents or 1%. As for metals, gold is down -0.1%, silver is up +1.6%, and copper is up +0.3%. Lastly, cryptocurrencies are down: Bitcoin -0.57%, Ethereum -0.82%, Litecoin -2.01%. Over the weekend, the exchange rate fluctuated between a minimum of 17.06 and a maximum of 17.11, currently trading at 17.06

Corporate news

*Hershey’s shares fell 1% after Morgan Stanley downgraded them to Sell from Hold. The bank cited weak consumer demand and high cocoa inflation affecting margins.

*Rocket Lab’s shares rose around 1% after Citi reinstated coverage with a Buy rating. According to Citi, Rocket Lab’s liquidity conditions have improved, and a recent $515 million award by the Space Development Agency suggests increased traction with the U.S. government.

*Teva Pharmaceutical Industries’ shares jumped 3% following an upgrade by Piper Sandler to Overweight from Neutral. Piper Sandler highlighted Teva’s brand portfolio and improving capital structure, positioning it well for multiple recovery and expansion.

*Lowe’s shares added 1.7% after JPMorgan raised its rating on them to Overweight from Neutral. The expected rate cuts from the Federal Reserve later this year are anticipated to lower mortgage rates, providing a boost to Lowe’s.

*XPO’s shares slipped 2.4% following a downgrade by Morgan Stanley to Underweight from Equal Weight. The bank suggested that optimism around XPO’s purchase of bankrupt Yellow Corp’s service centers in December may be inflated.

*Urban Outfitters’ shares rose more than 2% after an upgrade from UBS ahead of the retailer’s fourth-quarter earnings release. UBS expects an earnings per share beat and solid sales momentum.

*Rivian Automotive’s stock sank 3.5% following a downgrade from Barclays to Equal Weight from Overweight. Barclays cited the slowdown in the electric vehicle market and implied profit risk for Rivian as reasons for the downgrade.