What Jumps Out: Quite The Week
Gustavo Petro’s murmurings about controlling energy prices have caused consternation, and there needs to be further clarification. It is no coincidence that ISA, Promigas and GEB have been three of the worst performing stocks this week. The concern locally is that this may be the tip of the iceberg with pension and health reforms also being planned. It would be fair to say most things need some kind of reform in Colombia but it remains to be seen how choppy the waters get. This week in Bogota there has been a dust up over the plans for the Bogotá metro: Is this Petro flexing his muscles ever so slightly? Hopefully not a sign of more friction to come.
It has been a heavy macro week, which we will get to momentarily, but tomorrow (yes Saturday) DANE will be publishing the CPI data for January and it is expected to climb once again to 13.30%, from 13.12% a month ago. That will be the highest reading since 1999 – look on the bright side, in March 1999 interest rates were at 23%!
Export data was once again disappointing and propped up like a drunk on a bar by coal; not exactly the most popular product to be shipping all over the world. Exports for December totaled US$4.498bn – below the consensus reading of US$4.56bn and also that of November, there was also a 1% decline YoY in FOB terms. Coal rose 27% and contributed a 5.3% increase to the basket, on the flip side oil fell 15.7%. The only honorable mentions go to Metal Manufacturing (+38.9%) & Fruit & Vegetables (+32.3%). In tonnage terms it was even worse with a total decline of 14.5% with Coffee (-6.9%), Oil (-15.7%) & also Coal (-16.6%) all in the red.
The latest unemployment data for December was a reality check with Urban Unemployment at 10.8% (est 9.6%) rising from 9.1% in November, likewise Total Unemployment 10.3% – also rising from 9.5% the previous month. The total number of people working 22.46 million versus 21.49 million 12 months before, the month on month number was down just 18,000 with Agriculture and Vehicle related sectors the weakest performers.
Moving to January and Davivienda PMI was 48.5, whilst anything below 50 represents an economy that is contracting. We have already seen negative numbers in both November (47.3) & July (49.5) but they weren’t consolidated, so we will need to see February. That said Bancolombia in their weekly consumer report continues to see YoY declines during January.
I’ve spent the week watching the Peso quite carefully and unquestionably it seems to be far more correlated, at this juncture to the dollar (DXY) than oil. The week thus far has seen oil slip back 6% along with Ecopetrol whilst both the Peso and DXY were more or less unchanged.
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Have a wonderful weekend.