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Higher Rates and a Banking Crisis
Faro Capital
May 05, 2023
Good Morning,
This week the U.S. rose interest rates by 25 basis points to 5.25%. The ongoing regional banking crises is putting pressure on stocks with U.S. equities finishing the trading day lower yesterday. The Average 30-year mortgage rate dropped to 6.39% yesterday vs 6.43% last week.
In Canada stocks finished lower from pressure from U.S. stocks. The biggest losers were in the energy and financial sectors. Oil producers lost this week due to plunging oil prices. Gold miners rose this week due the rising price of gold.
Brazilian stocks ended a little higher with support coming from Petrobras Q1 earnings. The Central bank decided to the Selic rate unchanged at 13.75% and signaled they don’t plan on cutting rates just yet.
Paraguay’s inflation dropped for five consecutive months to 5.3%, a 20-month low. Colombia’s exports dropped 10% in March to $4.46B. Uruguay’s inflation rate rose to 7.61%, a 3-month high.
Markets: Before the Open
Top News Stories
Canada
Glidan earned $97.6M in Q1 earnings, down 33.3% from a year ago (BNN)
Canfor reported a C$142M loss in Q1 earnings (BNN)
Barrick Gold reported a $120M profit in Q1, down $438M a year ago (BNN)
Couche-Tard buys 112 stores from Mapco (MG)
Enbridge buys an underground natural gas storage facility for C$400M (FP)
Gold Field announced a joint venture with Osisko Mining to develop a gold mine in Quebec (FP)
Canada’s Ivey PMI shows economic growth but at a slower pace (RT)
U.S.
Paramount announced it will cut is quarterly dividend (CNBC)
Darden Restaurants acquires Ruth’s Chris for $715M (CNBC)
Ferrari reported Q1 profits up 24% (CNBC)
Johnson & Johnson’s Kenvue business line will IPO at $22 per share (CNBC)
Yum Brands misses analysts estimates (CNBC)
Spotify announces 20% reduction in staff (CNBC)
Regional bank stocks drops as fear in the markets increase (WSJ)
Argentina
Brazil
Colombia
Dominican Republic
Manufacturing activity index rose in March 2023 (ELD)
Panama
World Bank approves a $150M loan to Panama for green development (RT)
Peru
Mexico
Uruguay
Exports dropped 23% year over year in April (IR21)
Venezuela
Chevron’s CEO says it could raise oil output in Venezuela by 50% without any significant new investments (RT)
Insights
Colombia's emerald industry is a complex and multifaceted sector that involves a range of actors, including miners, traders, and government regulators. It is estimated Colombia produces 70-90% of the worlds emerald market.
Geography and Geology:
The majority of Colombia's emerald deposits are found in the eastern Andes, primarily in the departments of Boyacá, Cundinamarca, and Nariño. The emeralds are typically found in geological formations known as veins, which are narrow channels of rock that contain the precious gemstones. These veins can be several meters wide and up to 100 meters deep.
Mining Methods:
Emerald mining in Colombia is typically done through open-pit mining, with miners using explosives to extract the emeralds from the rock. The process involves drilling holes into the rock and placing explosives, which are then detonated to break up the rock and release the emeralds. The extracted rock and soil are then transported to processing plants, where the emeralds are sorted, cleaned, and cut.
Regulatory Framework:
Colombia's government has put in place a number of regulations to ensure sustainable and responsible mining practices in the emerald industry. These include requirements for miners to obtain permits and licenses, as well as standards for environmental protection and social responsibility. The government also monitors the industry closely to prevent illegal mining and smuggling of emeralds.
Industry Structure:
The emerald industry in Colombia is highly fragmented, with a large number of small-scale miners and traders operating in the sector. However, there are also larger companies that operate mines and processing plants, as well as export-oriented traders and retailers. The industry also involves a range of intermediaries, including brokers, cutters, and polishers.
Quality and Value:
Colombian emeralds are highly prized for their quality and beauty, and they are considered to be some of the best in the world. The country's emeralds are known for their intense green color, which is due to the presence of chromium and vanadium in the rocks. Colombian emeralds are also valued for their clarity, with many stones exhibiting few or no inclusions. As a result, Colombian emeralds command premium prices on the global market.
Challenges and Opportunities:
The emerald industry in Colombia faces a range of challenges, including issues related to labor rights, environmental protection, and social responsibility. Additionally, there is ongoing concern about illegal mining and smuggling of emeralds, which can undermine the industry's reputation and sustainability. However, the industry also presents significant opportunities for economic development and job creation, particularly in rural areas where mining is a key source of livelihood. With the right policies and practices, the emerald industry in Colombia can continue to thrive and contribute to the country's development.
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DISCLAIMER: The writing above is not financial advice or solicitation to buy/trade any financial product/security. This newsletter is for educational purposes only. Any action/decision made by any reader is done by their own accord. Financial markets are full of risk so please be careful.