The Day at a Glance | January 18 2024

The Top

*U.S. manufacturing production saw a slight increase in December.

*The United States Congress struggles to pass a temporary bill to avoid a government shutdown.

*The ECB faces a bumpy road in reducing inflation as wages rise.

*Pakistan launches a retaliatory attack against Iran, escalating regional tension.

*China extends the South American trade route with a mega port on the Silk Road.

*The market is attempting to regain ground after a negative session.

Economic environment

U.S. industrial production rose by 0.1% from the previous month in December 2023, surpassing market expectations of a contraction of -0.1%. Manufacturing production, which accounts for 78% of total production, increased by 0.1%, exceeding market expectations of a flat reading. Additionally, mining production advanced by 0.9%, while utility production fell by 1%. Capacity utilization remained unchanged in December at 78.6%, a rate 1.1 percentage points below its long-term average (1972-2022). Industrial production declined by 3.1% on an annual basis in the fourth quarter, and manufacturing production decreased by 2.2%.

Markets and companies

Global markets with a positive trend. Retail sales data for December exceeded expectations, signaling resilient consumer demand and raising doubts about the implementation of aggressive interest rate cuts on behalf of the Federal Reserve. The CEO of JPMorgan Chase expressed that considering “everything is fine” would be a mistake. He pointed out that Russia’s invasion of Ukraine, Israel’s war with Hamas, and attacks in the Red Sea have affected shipping routes as well as the Fed’s quantitative tightening, posing risks to the economy this year and the next. U.S. index futures are in positive territory. The Dow Jones is up by 0.42%, the S&P 500 shows an increase of 1.12%, and the Nasdaq Composite is up by 1.69%. Meanwhile, the 10-year Treasury bond yield rose to 4.12%. In Europe, markets are slightly up, with EuroStoxx +0.89%, while news and comments from the World Economic Forum in Davos, Switzerland, continue to be monitored. In Asia, markets are mixed, with China up by +0.43% and Japan’s Nikkei 225 unchanged at 35,466.2. In Mexico, IPC futures opened higher at $55,482 points (+1.41%). The price of oil is driven by positive growth projections in global oil demand by the International Energy Agency (IEA) and OPEC. Additionally, production disruptions in the U.S. and geopolitical risks in the Middle East, including Houthi militant attacks in Yemen, forced several companies to redirect shipments around Africa. The price is at $72.43 per barrel, a decrease of -0.2%. Natural gas prices are down by -2.30%, with a focus on potential risks in replenishing inventories during the summer. Gold prices experienced a slight increase, benefiting from the depreciation of the U.S. dollar and the conflict in the Middle East. The price of gold is at $2,010 per ounce. Silver is trading at $22.50 per ounce, and copper is at $371.95 per pound. Finally, cryptocurrencies are retracing.

After the close of operations, the exchange rate fluctuated between a minimum of 17.15 and a maximum of 17.21, currently trading at 17.18.

Banorte reports its 4Q23 results, showing a positive reportbased on a higher financial margin aligned with origination volume and interest rate levels, an increasing portfolio while maintaining quality, stability in profits, and profitability metrics, along with lower preventive estimates.

Kimber will report its 4Q23 results this afternoon; we expect a positive report. We estimate that revenues will advance in the mid-single digits. Meanwhile, the EBITDA margin will continue to show significant year-over-year growth as some raw material costs have continued their downward trend.

Corporate news

*Google will reduce jobs. This measure will be carried out amid a wave of cost-cutting in the company, which aimed to eliminate 12,000 jobs, or 6% of its full-time workforce, last year.

*Apple has found a solution to avoid a potential ban on the sale of its latest watch models in the United States. Therefore, the oxygen reading capability will be removed from the versions of its Apple Watch Series 9 and Ultra 2 that will be released.

*Shares of Watches of Switzerland fell more than 30% after the luxury watch company lowered its forecasts for fiscal year 2024.

*Taiwan Semiconductor Manufacturing Company, a chip manufacturer, reported 4Q23 results better than expected, driven by weaker macroeconomic conditions.

*Deutsche Bank stated that mergers and acquisitions are not a priority for their group, as speculation about the future of their national rival, Commerzbank, resurfaces.