What Jumps Out: An Eclectic Week

Last week Finance Minister Ocampo suggested the tax reform would be approved this week…..he wasn’t wrong. Both the senate and house have approved 90% of the proposals and now the text only needs fine tuning by the senate. I won’t try and evaluate the final agreement as I am neither accountant nor tax lawyer, but consensus will likely be that more segments of the bill survived than expected. Now hopefully the political temperature will cool somewhat.

The Peso hit and stayed above 5,000, many have asked if that is a fair level. The market always dictates but it does feel more of a self-fulfilled prophecy as opposed to a rational level.

As expected, President Petro declared a Climate Disaster Emergency as the ongoing La Niña threatens to continue into 2023. The amount of funds to be appropriated have yet to be announced but with 2,500 reported ‘events’, 453,000 people affected, 203 deaths and 37 missing, every Peso is welcome after the worst “winter” in 40 years.

Rupert’s opinions & analysis as an independent expert contributor are his own and not necessarily those of Finance Colombia or the BVC.

Petro met with Maduro of Venezuela this week. It is a delicate situation with many Colombians, but the border is now open and more airlines are asking to operate the routes. The first month saw a modest $2.5 million USD in trade – but from small acorns……….

Export data for September disappointed once again with exports totaling $4.778 billion USD – up on the $4.582bn of the previous month but missing the consensus of $4.97bn. The number was up 26% YoY (FOB) but only 7.7% in tonnage terms. Coal was the main driver in both FOB (76% of total increase) & Tonnage (+14.1%) but oil whilst rising on a FOB basis, dropped 7.5% in Tonnage terms, precisely when the country needs to be cashing in on favorable prices.

PMI for October came in at 50 – there are no consensus estimates on this but that isn’t a great reading. Even in 2020 the number was at 51.7 – even as the country was still struggling with Covid.

Perhaps the macro highlight was the unemployment data for September. Both the Urban (10.45%) and Total (10.70%) numbers continue to trend downwards. Also, YoY those two categories have added 1.02mn and 10.7mn new jobs respectively over the past 12 months.

CPI data is due tomorrow (Saturday) with the expectation that we will be above 12% for the first time since April 1999.

Related to this I was finally relieved to see some debate in the press as to why the Central Bank only makes rate decisions at 8 of their 12 meetings – to me an utter nonsense of a concept. In November there will be no decision even if inflation goes to 14%? There is a mechanism whereby they could move rates in an emergency, but why back yourself into that corner?

Please find below the video on LinkedIn:

https://www.linkedin.com/posts/rupert-stebbings-927b6316a_what-jumps-out-self-fulfilling-prophecy-activity-6994247241225936896-EZgS?utm_source=share&utm_medium=member_desktop

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That is about it for today – remember these are just themes that jump out at me – please refer to your local analyst, economist, salesperson or soothsayer for more details.

My regards to all,

Roops