EMI Templeton Reports


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Deinstitutionalization and Deceleration

October Report 2019

Global slowdown and trade dispute under negotiation. Oil prices in new normal. Likely short/medium-term rate cuts. TMEC possible in 2019. Growth 2020 greater than 2019. Insecurity continues to deteriorate. Expectations of more rate cuts by Banxico. Global risks: sharp slowdown, trade wars, geopolitics, Brexit/Europe, monetary policy, emerging markets.

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Trade Disputes and Monetary Uncertainity

September Report 2019

Bad month for risk assets due to renewed US-Chinese trade wars. Mexico, Bank of Mexico easing positive for stocks and debt. Global risks 2019-20: sudden slowdown, trade wars, geopolitics, Brexit/Europe, monetary policy, emerging markets. Local risks: dysfunciontal government, nonratification USMCA in US, investment downgrade.

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Global Watershed and Local Decoupling

August 2019 Report

Global. Risk assets rose during July due to expected lower rates, but August began with renewed US-China trade disputes. Mexico. Negative economic data and estimates, Pemex business plan, and anti-constitutional legal initiative damaged risk assets.

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Markets vs. Global Cycle, Local Dissonance

July Report 2019

Risk assets rise, due to positive trade outcome from G20 meeting in Japan, positive central bank tone, and continued OPEC cut. Risk assets rise due to resolution of tariff dispute with US, local ratification of USMCA, and strong peso due to interest rate differential.

Dissonance: markets vs. economy

Dissonance: markets vs. economy

April Report 2019

Globally, risks assets have recovered owing to a weaker slowdown and more dovish monetary policy. In Mexico, risk perception has increased owing to more clear government policies, including centralization of power and redistributive social spending, reflecting the government’s emphasis on politics over economics.

AMLO: popularity vs. reality

AMLO: popularity vs. reality

March Report 2019

After the first 100 days, AMLO popularity tops 83%, reflecting his clear separation of politics from economics. The US deals with dysfunctional government, non-ratification of the USMCA and frontier wall dispute could cause a Fitch downgrade.

First two months: under the volcano

First two months: under the volcano

February Report 2019

Globally, Synchronized slowdown. US: government shutdown. China-US: improved trade outlook. EU: Brexit uncertainty, Emerging Markets (EM): mixed. Mexico local risks: dysfunctional government, non-ratification USMCA in US, lowered credit rating.

AMLO: populism vs. pragmatism

AMLO: populism vs. pragmatism

December Report 2018

Globally, best investments in 2018 (measured in pesos): Cetes, S&P, US$ and Treasuries. Rate rises indicate end of cycle, oil price down on year. Brexit concerns, but trade war risk fading. In Mexico, after airport cancellation, initial measures by AMLO cause concern. Global risks in 2019, economic cycle and rates, trade wars, geopolítics, Brexit, monetary policy, emerging markets (EM).

USMCA: late cycle or end of cycle?

USMCA: late cycle or end of cycle?

October Report 2018

Globally,positive investments (in peso terms) in 2018: Mexican, oil and S&P, owing to economic cycle doubts, geopolitics, trade wars, rate rises, and emerging markets (EM). NAFTA was renegotiated at the last minute and renamed USMCA.

Will emerging market cycle affect Mexico?

Will emerging market cycle affect Mexico?

September Report 2018

Globally, investments investments affected by rate hikes, trade disputes, and emerging markets (EM) contagion. In Mexico, investments positively affected by US trade agreement, negatively by Canada exclusion and negotiations.

Hyperactive transition: mixed signals

Hyperactive transition: mixed signals

August Report 2018

Globally, investments negative owing to US rate hikes, trade disputes, and problems in Europe. In Mexico, investments positive owing to NAFTA speedup, and mixed presidential transition.

Landslide: hope vs. experience

Landslide: hope vs. experience

July Report 2018

Globally, investments negative due to US rate increases, trade disputes, and problems in Europe. In Mexico, investments positive due to landslide and postelectoral reconciliation.

Indignation and uncertainty

Indignation and uncertainty

May Report 2018

US rate increases strengthened the US$ and lower production raised oil prices. Trade negotiations continue with China. The outlook for Korea seems better, and, for Iran, worse.

Monthly Perspective April 2018.v2

Campaigns: on your mark, get set, go?

April Report 2018

Globally, fears of a trade war have combined with concerns about the economic cycle (inflation and rates), affecting markets.

Two Shocks

Two Shocks

March Report 2018

March, Trump’s announcement of tariffs on steel and aluminum, followed by the resignation of Cohn, his economic advisor, revived trade war fears.

2018: Some Clouds

2018: Some Clouds

February Report 2018

Mexico faces abnormal, extreme risks. NAFTA renegotiation can be postponed owing to non-resolution of key issues, and the left leads in electoral polls.

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Outlook 2018: looking at the abyss

December Report 2017

In Mexico, in spite of NAFTA renegotiations and a difficult election outlook for 2018, growth and investments have underperformed globally, but still been positive.