U.S. Labor Market Stronger then Expected

Author

Faro Capital
July 07, 2023

Good Morning,

U.S. Equities fell yesterday due to strong labor market still persisting. The strength in the job market is leading to fears that the Fed will be heavy handed and hike rates, while keeping rates elevated for a longer period of time. ADP private employment rose 497K jobs, the highest monthly gain since July 2022. JetBlue shares dropped after announcing its ending a partnership with American Airlines. ExxonMobil shares dropped after projecting a $4B cut in earnings due to low refining margins & natural gas prices.

Canadian stocks dropped from pressure by U.S. stocks, jobs report, and lower metals prices.

Brazil’s Ibovespa ended lower with U.S. strong labor reports and hawkish sentiments from the Fed. In the local market investor ware waiting for the local tax reform. Petrobras is looking to trade and do payments is other currencies than the U.S. dollar, it announced this week.

Markets: Before the Open

Top News Stories

Canada

  • Brookfield buys the piece of American Equity Investment life its doesn’t own for $4.3B (BNN)

  • Coca-Cola to invest $70M for upgrades on its Calgary plants (BNN)

  • Lynx Airlines CEO to step down in September (BNN)

  • Kinross Gold refuses takeover offer by Endeavour Mining (BNN)

  • Stellantis NV and the Canadian government finalized a deal to increase financial support to the EV maker (BNN)

  • As B.C. port strike continues, billions of dollars worth of goods are up in the air (VS)

  • Vancouver homes prices rose in June, but home sales still below 10-yr averages (VS)

  • Hackman Capital Partners buys Vancouver Film Studios (VS)

  • Canadian government to stop advertising on Meta-owned platforms (VS)

U.S.

  • GM Q2 sales rose 18.8% (CNBC)

  • Moderna to develop mRNA drugs in China (CNBC)

  • Rivian rose 17.4% on Monday as the EV maker beat analyst earning expectations (CNBC)

  • Stellantis U.S new car sales up 6.4%, still under industry projection of 16%-18% (CNBC)

  • China stops metal exports to the U.S. (CNBC)

  • On Monday Telsa reported its EV production & delivery numbers (CNBC)

  • Meta launches Twitter rival “Threads” (WSJ)

  • Nutrisystem to relaunch Jenny Craig (WSJ)

  • Ford U.S. sales jump 9.9% (CNBC)

  • Levi shares drop after guidance cut (CNBC)

Argentina

  • Argentina to hold rates at 97% (USN)

  • Argentina stock get investments by funds who think change will come (USN)

  • Bunge & Chevron to buy Argentine seeds business Chacraservicios to meet renewable diesel demand (BAT)

  • Public employment up 34% but private employment only rise 3% since 2011 (BAT)

  • Drought cuts soybean production by 51.5% (BAT)

  • Argentina to buy locally produced lithium from U.S. company Livent Corp. (BAT)

Brazil

  • Chinese car maker BYD to invest $620M to boost production (USN)

  • Oil & gas production in Latam has increased 9% since February (RIO)

  • Brazil Airline Gol up 15.4% y/y as demand grows (RIO)

  • China’s rail project finishes first section (RIO)

  • Brazil announced positive FX Balance in 1H 2023 (RIO)

  • Car sales up 7.3% due to government incentives (RIO)

  • Volkswagen to invest $1.1B to build EVs (RIO)

Chile

  • Chile economic activity index down 2% for May (USN)

Colombia

  • Oil production rose 3.59% this year (PORT) 

  • Fertilizer prices drop 6.71% in May (PORT)

Dominican Republic

  • Government issues bonds with a rate 9.4% (ELD)

Ecuador

  • Produbanco issued their results of their first green bond of $50M (RG)

  • Hydro electric energy production dropped 70% since October (ECU)

Honduras

  • China & Honduras start free trade negotiations (USN)

Panama

  • Panama declares animal health emergency to fight the outbreak of bovine roundworm (RIO)

  • President Cortizo met with South Korean delegation to strength trade ties (LAE)

Peru

  • Avocado exports grew 8% this year, production hits 598K tons this year so far (ELC)

Mexico

  • Viva Aerobus signed a letter of intent to buy 90 Airbus A321 planes (RIO)

  • Mexico exports to the U.S. rose 5% y/y (EF)

  • Construction of warehouses grew 10% from the effects of nearshoring (ELE)

  • Finabien now has 32K regular users (ELE)

  • FDA finances Puerto Peñasco with a $98.7M package (MB)

  • New car sales grew 22.1% in 1H23 (MB)

  • Wine farmers in Baja California expect wine production to grow 20% at the end of 2023 (MB)

  • Mexico’s national debt grew 49% in May 2023 (MB)

Insights

Uruguay's beef industry is renowned worldwide for its high-quality grass-fed beef, strict production standards, and commitment to sustainable practices. The country's natural resources, favorable climate, and strong agricultural tradition have contributed to the development of a thriving beef industry, making Uruguay the 6th largest exporter of frozen beef in the world. In 2022 Uruguay exported 390K tons of frozen beef. From 2011-2022 exports have risen 171%.

Uruguay is known for its grass-fed beef production, which distinguishes it from many other countries that rely on grain-fed beef. Cattle in Uruguay are primarily raised on natural pastures, feeding on the country's abundant grasslands. This grazing system results in lean, tender, and flavorful beef that is highly sought after by discerning consumers. It’s estimated that Uruguay will slaughter 2.56 million cattle head in 2023. A niche industry growing in Uruguay is the cattle fattening industry. The industry helps farmers finish cattle younger, heavier, and faster. The fattening process is done in feedlots around Uruguay. It’s estimated that there are 110 registered feedlots but around 200 are active (others aren’t registered).

Uruguay places a strong emphasis on traceability and quality assurance throughout the beef production process. The country has implemented strict regulations and controls to ensure the safety and integrity of its beef products. Each animal is individually identified and tracked, allowing for complete traceability from farm to fork.

Uruguay's beef industry has a strong presence in international markets. The country exports its beef to various countries. Its top export market is China with around 70% of all exports. The rest goes to the U.S. and Europe. An untapped market which hasn’t seen much Uruguay exports is South Korea. At the moment these two countries have no trade agreement but with South Korea being one of the world’s biggest beef consumers, this presents opportunity for increase revenues.

Uruguay's beef industry stands out for its commitment to producing high-quality, grass-fed beef while prioritizing animal welfare, sustainability, and traceability. The country's favorable natural conditions, strict regulations, and focus on natural production methods have established Uruguay as a global leader in the beef market. As consumer demand for premium, sustainable, and ethically produced beef continues to rise, Uruguay's beef industry is well-positioned to meet these expectations and maintain its reputation as a top exporter of exceptional quality beef.

Source: OEC, USDA, Minvera Foods

Source: Intrafish

Ecuador's crustaceans industry plays a vital role in the country's economy. With rich coastal waters, industrial sized shrimp farms, favorable environmental conditions, Ecuador has become the top exporter of crustaceans (mostly shrimp) as of 2021. Crustaceans include shrimp, lobster, and crabs. China is the primary destination for Ecuador's crustacean exports, followed by the U.S. and Europe. Between 2011-2021 exports have risen 347%.

Shrimp farming is a major component of Ecuador's crustaceans industry, generating around 200K jobs. The country has a long coastline along the Pacific Ocean, providing abundant access to marine resources. According the “The Fish Site” Ecuador exported 841,000 tons of shrimp in 2021. Ecuador has 220,000 hectares worth of shrimp farms and farmers are looking to expand further. Some of the contributing factors on the increased production over the decade is:

· Gulf of Mexico Oil spill in 2010, which increased shrimp prices and pushed farmers to start production in stalled ponds that have been closed since the whitespot outbreak in 2000.

· Outbreak of early mortality syndrome (EMS) in Asia in 2012.

Shrimp farming in Ecuador involves both extensive and intensive methods. Extensive farming takes place in mangrove areas and relies on natural tidal flows, while intensive farming occurs in controlled environments such as ponds and tanks. Its high-quality shrimp products are sought after in international markets. The country exports a variety of shrimp species, including whiteleg shrimp (Litopenaeus vannamei) and black tiger shrimp (Penaeus monodon).

As of 2022 the top 10 exporters of shrimp are:

· Santa Priscila

· Omarsa

· Songa

· Promarisco

· Empacreci

· Exportquilsa

· Expalsa

· Cofimar

· Propemar

· EdPacif

Ecuador is actively involved in certifications and initiatives that promote sustainability, such as the Aquaculture Stewardship Council (ASC) and Best Aquaculture Practices (BAP) certification programs. These initiatives further strengthen the industry's commitment to sustainable practices and provide assurance to consumers regarding the responsible sourcing of Ecuadorian crustaceans.

Ecuador's crustaceans industry, with a focus on shrimp production and exports, plays a vital role in the country's economy. The industry's commitment to quality, sustainability, and responsible practices has established Ecuador as a global leader in the crustaceans market. Ecuador continues to strengthen its position as a reliable & competitive supplier of high-quality crustaceans to international markets. The future looks bright of crustacean exporters in Ecuador. 

Source: OEC, thefishsite, Intrafish