The Fed Signals More hikes

Author

Faro Capital
June 23, 2023

Good Morning,

U.S. stocks finished yesterday’s trading day mixed with the Dow lower, while the S&P500 and the Nasdaq finished in the green. This week Fed Chairman Powell signaled he is still open to hiking rates and FOMC members are open to the idea.

Canadian stocks ended lower for the fifth time in a row. The drop is due in part by gloomy economic outlook and commodity prices dropping. Energy stocks dropped due to lowering oil prices. Mining stocks dropped due to the price of gold falling and gloom economic outlook.

Brazilian stocks ended lower due to tightening cycles of various central banks. The Brazilian central bank held its Selic interest rate unchanged at a six year high of 13.75%.

The Bank of Mexico held its rates unchanged at 11.25%. The board gave the reasoning of high inflation on why it didn’t cut and stays firm on its course of high rates.

Markets: Before the Open

Top News Stories

Canada

  • Canaccord Genuity Group Q4 loss was C$7.2M (BNN)

  • Canada Bread fined C$50M for bread price fixing (BNN)

  • Baytex acquires Texas based Ranger Oil for $2.9B (BNN)

  • Mackenzie cuts 50 jobs including senior roles (BNN)

  • Allied Properties inked a deal to sell data center portfolio to KDDI Corp. for $1.35B (BNN)

  • Ontario’s pension fund to invest $400M in Northvolt for green battery plant (BNN)

  • Westjet is shutting down Sunwing and integrating operations (BNN)

  • CPA Ontario & CPA Quebec break ties with national body over disagreements (MG)

  • The Societe Quebecoise du cannabis had C$601.9M in sales in FY2022/2023 (MG) 

  • Retail sales rose 1.1% to C$65.9B in April 2023 (VS)

  • Telus & Aussie EV charger Jolt looking to create 5K charging stations across Canada (VS)

  • C$50B pandemic loan program has six months left until money is supposed to be repaid, representing issues for business owners (VS)

U.S.

  • USDA green lights cell cultured chicken by two startups (CNBC)

  • Eli Lilly to buy Dice Therapeutics for $2.4B (CNBC)

  • DraftKings makes $195M offer to buy PointBets U.S. assets (CNBC)

  • Bitcoin has rallied this week on news BlackRock will open a spot bitcoin ETF (CNBC)

  • Powell signals interest rate pause is temporary (WSJ)

  • FTC sues Amazon believing the company used manipulative tactics to enroll people to Prime (WSJ)

  • Diamond prices have fallen 18% from their peak in February (CNBC)

  • Fortress Investment group is the winning bidder for Vice Media (CNBC)

  • Darden Restaurants beats earnings (CNBC)

Argentina

  • Argentina to make $1.9B payment to IMF (USN)

  • Lithium industry hit record exports of $60M in May, up 17% (USN)

  • Argentina started exporting rainbow trout for the first time to the U.S., sending 5K kilos worth (AMB)

Brazil

  • French supermarket chain Casino to sell stake of Brazilian retailer Assai to pay down debt (USN)

  • Mass cattle death hits Mato Grosso do Sul as temperatures lows, still unlikely to affect beef production at meatpackers (USN)

  • Brazil cargo that was supposed to be tin concentrate turns out to be sand (USN)

  • Embraer inks deal for plane conversions in China with a local partner (USN)

  • BTG Pactual eyes private bank expansions in the US & Mexico (RIO)

  • Saudi Arabia’s PIF sovereign wealth fund in talks to buy stake in Vale base metal business (RIO)

Chile

  • U.S. senate advances tax treaty with Chile (USN)

Costa Rica

  • World Bank approves $500M loan to support the country’s budget (USN)

Colombia

  • Grupo Argos is seeking a “strategic investor” (USN)

  • Earnings of the top 1,000 largest companies grew 40% in 2022 (PORT)

  • For the eight consecutive month homes sales dropped (PORT)

Cuba

  • Cuba inks deal with Russia after 11-day trip, oil and increased tourism were some of the topics spoken about (USN)

  • China plans military training facility in Cuba, increasing cooperation between the two countries (USN)

Dominican Republic

  • Monetary board approves RD$25B in additional funds for economic stimulus (ELD)

Ecuador

  • Oil vote could see Ecuador losing $1.2B in income (RT)

Panama

  • Panama canal authority continues its restrictions on large ships due to drought conditions (USN)

Peru

  • American Lithium Peru project costs hit $700M (USN)

  • Agricultural sector fell 14.21% in April (ELC)

  • Spaniard company Posada looks to start infrastructure projects in Peru (ELC)

  • 1.7M users of Yape use the app to pay their bills (ELC)

Mexico

  • Mexico keeps rates unchanged at 11.25% (RT)

  • Goldman calls the Mexican Peso overvalued (BBG)

  • Mexican inflation hit lowest level in two years, came out at 5.18% (USN)

Uruguay

  • Uruguay declares water emergency, implements tax exemption for bottled water (USN)

Insights

Paraguay's rice industry plays a significant role in the country's agricultural sector and economy. Rice cultivation has a long history in Paraguay, with the crop being one of the staple foods for the population and a major agricultural export.Paraguay has favorable climatic conditions for rice cultivation, including warm temperatures, abundant rainfall, and fertile soils. The majority of rice production takes place in the eastern and southern regions of the country, where the Paraguay and Paraná rivers provide ample water resources for irrigation.

 Rice is grown in both large-scale commercial farms and smallholder family farms. Many farmers practice traditional methods of cultivation, including transplanting young rice seedlings into flooded paddies. However, mechanization and modern techniques, such as direct seeding and machine harvesting, are becoming increasingly popular to improve efficiency and productivity.

Rice production for 2023/2024 is projected to be 1.3 million metric tons. The acreage is projected to be a record high of 197,000 hectares. The new areas with large investments that make up new rice production are in the north and south of Asuncion. Rice prices are higher this year due to Brazil & Argentina having difficulties with production due to warmer weather in 2022/2023, decreasing supply. Brazil is projected to be the main destination of rice that comes from Paraguay this year. Exports are trucked to the states of San Pablo, Minas Gerais, Rio de Janerio and Goias. Most is milled & brown rice. Chile is projected to be the second largest destination of Paraguayan rice this year. 

In 2022 Paraguay exported rice to 31 countries.

Paraguay's rice industry is a vital component of the country's agricultural sector and economy. With favorable climatic conditions, diverse rice varieties, and government support, Paraguay has established itself as a key player in rice production and export in Latin America.

The Dominican Republic's cigar industry is renowned worldwide for its craftsmanship, rich tobacco heritage, and high-quality cigars. The country has gained a reputation as one of the premier cigar-producing nations, known for its skilled artisans, favorable climate, and fertile soils.

Tobacco farming takes place in several regions, including the Cibao Valley, Santiago, La Vega, and Bonao. Both large-scale commercial plantations and smaller family-owned farms contribute to the industry's success. 

Cigar production involves several stages, including the selection of tobacco leaves, sorting, fermentation, aging, and rolling. The 15 tobacco-producing provinces in the Dominican Republic are Santiago, Valverde, Monte Cristi, Azua, Espaillat, La Vega, Puerto Plata, San Juan, Monseñor Nouel, Santiago Rodríguez, Sánchez Ramírez, Monte Plata, Dajabón, Elías Piña and Hato Mayor.

The Dominican Republic has a wide variety of Cigar brands, some are:

· Fuente Fuente Opus X

· Ashton ESG

· Arturo Fuente Hemingway

· Ashton

· Romeo y Julieta 1875

· La Flor

· Montecristo

· Macanudo Café

· Davidoff Aniversario

Dominican rolled tobacco exports have increased 188% from 2011-2021. Rolled Tobacco includes cigars, cheroots, cigarillos and cigarettes. In 2021 the value of exports past the $1 billion mark, representing the fast growth of the rolled tobacco sector. Almost all exports (avg: 90%) are sent to the United States. Other export markets include Germany, Spain, Canada, Switzerland, and the Netherlands. 

With an increasing number of exports every year, outside investors looking to invest in the Dominican Republic’s tobacco industry, and the master craftmanship of Dominican cigars, it’s safe to say the tobacco industry will continue on its growing path. The Dominican Republic's cigar industry represents a pinnacle of craftsmanship & tradition. Its reputation for producing premium cigars is a testament to the country's commitment to excellence and the passion of its skilled artisans. With its favorable climate, diverse tobacco varieties, and global recognition, the Dominican Republic continues to be a leading force in the world of cigars, contributing to its economy and the enjoyment of cigar enthusiasts worldwide.

Source: OEC, USDA, Dominican Today

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