Espresso: May 6th

Espresso for May 6th

QUOTE OF THE DAY                                                                                            

“Inflation is when you pay fifteen dollars for the ten-dollar haircut you used to get for five dollars when you had hair” Sam Ewing.

WHAT MARKETS ARE TALKING ABOUT


CHILE: INFLATION SLOWS IN APRIL

Inflation declined in April for a 3rd month in a row to 4.2% YoY from 4.5% in March, this was in-line with consensus (Bloomberg) estimates. On a monthly basis, prices increased 0.3%.  The lower inflation is explained by lower pressure from imports costs as the Chilean Peso (CLP) rallied vs the USD 5.8% in 1Q16; in addition  pressure on prices has eased as the economy slows down, with the unemployment rate in Chile increasing to 6.3% in March and a further 9.3% increase in Santiago´s Metropolitan area. Chile´s inflation is closing the gap to its Central Bank´s target of a range between 2% and 4% and as a result no increase in interest rates is expected.


COLOMBIA: INFLATION LOWER-THAN-EXPECTED IN APRIL

Consumer prices in April increased 7.93% YoY, below consensus (Bloomberg) estimates of an increase of 8.12%. The monthly Inflation rate for April fell to 0.5% from 0.94% in March  as consumer prices were aided by lower construction costs. Despite inflation was lower-than-expected,  the 12-month figure still remains above  Colombia´s Central Bank  target range of 2.0% to 4.0%. @JuanManSantos praised the ease in inflation  …. maybe to soon.


BRAZIL: REMOVAL OF CUNHA A SET BACK FOR TEMER

The removal of controversial Eduardo Cunha of the PMDB as Speaker of the Chamber of Deputies, could lead to greater instability in Brazilian Congress at a time when Michel Temer requires to establish his administration and secure the approval of economic bills that will restore confidence in the government. Mr. Cunha, who remains a deputy, has been accused of passive corruption in a Petrobras-related prosecution. The substitute speaker at the Chamber of Deputies, Waldir Maranhao from the PP, is know for switching sides along the impeachment process. Still some drama ahead for this Brazilian saga.