Your weekly summary with the most important news for your investments, in this edition:

• Overview of central bank monetary policy in different countries.

• Inflation data 

• Business policy front

Last week, after February's headline and producer inflation data came out above market expectations, investment agents opted to save part of their gains while awaiting the decision and communication to be made by the Federal Reserve (FED) on Wednesday, March 20, together with the publication of its macroeconomic estimates for the remainder of 2024 and 2025. It was in this environment that we saw the main U.S. stock indexes yield slightly -0.3% on average, the 10-year sovereign rate rose to 4.32% (adding +25 basis points) after the price of oil measured by the WTI climbed to US$81 per barrel, accumulating an increase of 13.6% so far this year and +22.1% with respect to the same period of the previous year. This latest movement in oil prices will undoubtedly complicate the decisions of several central banks, since inflation has a two-month lag before being transferred to the final price. This rebound in oil prices, moreover, comes before the summer period in the northern hemisphere, when oil prices are usually on the rise. Meanwhile, on the business front, the U.S. House of Representatives overwhelmingly approved the potential sale of TikTok by ByteDance to a third party or run the risk of not being able to include its application in the United States, a subject that we will address in greater detail below. Finally, by the end of the week, Reddit, one of the fastest growing social platforms in recent years, should be released.      

This week, not only the U.S. Federal Reserve will be making statements, but also the central banks of Australia, Brazil, China, England, Indonesia, Japan, Mexico and Russia, among many others, will be making monetary policy decisions. Even though it is expected that most of them will maintain their current policy, the downward surprises in their interest rates may come from Brazil and Mexico, while Japan may be adopting anti-inflationary measures, leaving its monetary instance rate at zero. On the corporate side, Fedex and Nike will be reporting this week along with other companies such as General Mills, KB Homes, Lululemon and Micron. For now, according to Factset, sales and profits of S&P 500 companies during the first quarter of the year will expand 3.5% and 3.3%, respectively, compared to the same quarter of the previous year. We will see what Fedex has to report regarding transportation costs while Nike will give us a snapshot of global demand during the first quarter of the year. At the same time, we will see if the Senate chooses to give importance to the ban on the use of TikTok in the United States. In the middle of the political front, presidential candidates Joe Biden and Donald Trump launched crusading attacks on each other's programs, kicking off what will be a prolonged and hackneyed political campaign until November 5. In a geopolitical environment where Russian President Vladimir Putin cemented his power for another six-year term.

Let's start with the inflation data released last week with the 12-month headline at 3.2% (from 3.1%) and the core, which excludes food and energy prices, at 3.8% (from 3.9%). In addition, the general producer figure rose to 1.6% (from 1%) while the core reading remained at 2%. It was the latter producer data that led to a change in market expectations, as the inflationary sequence starts initially with the rebound in oil prices and continues with producer inflation, and ends up being reflected in the headline data with a two-month lag. 

As mentioned above, oil prices are showing a 12-month rebound of more than 20%, which is already reflected in the 1.6% reading of headline producer inflation, which will end in a gradual rise in inflation entering the pre-election period. Therefore, this rebound in the price of crude oil complicates the base scenario with which the FED has been working. Therefore, the speech of its chairman, Jerome Powell, may have different edges than the ones he made last week before Congress. All it will take is a global oil disruption or an increase in global geopolitical tensions for us to see a rebound in inflation and the FED will have to wait before adopting pro-cyclical measures. For now, market participants expect two to three rate cuts (currently at 5.5%) of 25 basis points each before the end of the year, starting with the mid-year policy meeting.

On the corporate political front, headlines have been focused on the impact that the Senate's approval of the forced sale of TikTok by its owner, the Chinese company ByteDance, could have. The basic argument for the U.S. government to seek a change of control of the platform is due to the potential influence the Chinese government could have on U.S. election results given its customer base of approximately 180 million U.S. users. As a result of this potential intervention, the Chinese government of Xi Jinping, pointed out that the algorithm used by TikTok could be classified as intellectual property of the Chinese government, so the company could be sold but not the intellectual property. This U.S. legislation could also extend to other social platforms impacting Alphabet, Amazon, Apple, Meta and X (Twitter) among others. What was surprising was that the legislation had an overwhelming support of 352 votes in favor and only 65 against. This will put pressure on the Senate as the vote was across the political spectrum with President Biden announcing that if passed in the Senate he will pass it into law.

In conclusion, it seems that the rebound in oil prices in recent weeks could trigger a short-term inflationary sequence, which could derail the Fed's decision to adopt pro-cyclical measures in anticipation of lower inflationary pressures.  

THIS WEEK 

Monday (March 18)

Quarterly Reports

• Shinhan Financial Group Co Ltd

• Science Applications International Corporation

• Cosan S.A.

• DLocal Limited

• StoneCo Ltd.

Tuesday (March 19)

Quarterly Reports

• Tencent Music Entertainment Group

• ZTO Express (Cayman) Inc.

• Core & Main, Inc.

• HealthEquity, Inc.

• Smith Douglas Homes Corp.

Economic Reports

• Red Book Annual Change Report

• Preliminary Building Permits Preliminary Report 

• Preliminary Monthly Change in Building Permits Report 

Wednesday (March 20)

Quarterly Reports

• PDD Holdings Inc.

• Micron Technology, Inc.

• General Mills, Inc.

• Prudential Public Limited Company

• BioNTech SE

Economic Reports

• Federal Reserve monetary policy change decision

• Federal Open Market Committee Projections

• Federal Reserve press conference

Thursday (March 21)

Quarterly Reports

• Accenture plc

• Nike, Inc.

• lululemon athletica inc.

• Rentokil Initial plc

• FedEx Corporation

Economic Reports

• Manufacturing Index Report, Philadelphia FED.

Friday (March 22)

Quarterly Reports

• PLDT Inc.

• SK Telecom Co., Ltd.

• NextDecade Corporation

• Boston Omaha Corporation

• Bitdeer Technologies Group

Now you have more information about your investments. See you next week with more news.

For illustrative purposes only. Does not represent an investment recommendation. For more information, please see our Social Media Disclosure.