Jacobo Taurel

November 3–7

Markets reflected a week of steady interest rates, weaker manufacturing data, and resilience in services. In the United States, the government shutdown remains unresolved, while year-end spending shows a more moderate tone compared with 2024. 

United States: 
Concerns over AI valuations drove market sentiment. Manufacturing activity declined, but the services sector rebounded. The government shutdown set a new record, and year-end spending is expected to moderate. 

Europe: 
Eurozone manufacturing stalled due to a lack of new orders, although production continued to grow. The Bank of England kept its policy rate at 4%, as expected. 

Asia: 
In Japan, manufacturing posted its worst reading in more than a year, pressured by weak demand in autos and semiconductors. The services sector remained resilient despite a slower pace of new orders. 
In China, manufacturing activity fell to its lowest level in six months. Services expanded but at the slowest pace since July, mainly due to weaker export demand. 

Latin America: 
In Brazil, the Central Bank held its key rate at 15%, the highest level since 2006, indicating caution amid persistent inflationary pressures. 
In Mexico, Banco de México cut its policy rate to 7.25%, in line with expectations. September remittances fell 2.7% YoY, though they remain above $5 billion. 

“The investor’s chief problem — and even his worst enemy — is likely to be himself.” — Benjamin Graham 

Important Events: 

• U.S. October inflation data will be released — November 13 
• U.S. Producer Price Index (PPI) will be published — November 14 

Monitor

Week: October 27-31 

The week was marked by mixed signals in global markets following a series of key events. These included the Federal Reserve’s (Fed) second consecutive policy rate cut, the extension of the tariff truce between the United States and China, the stagnation of the German economy, and the improvement in China’s industrial profits. These developments underscore the complexity of the global economic and trade environment. 

United States: 

• The Federal Reserve cut the policy rate to a range of 3.75% – 4.00%. 
• Trump and Xi agreed to extend the tariff truce for one more year. 
• Consumer confidence fell to its lowest level in six months. 
• Earnings season continues to show strength, with S&P 500 earnings growing about 10% this quarter. 

Europe

• The European Central Bank (ECB) kept its key rate at 2%. 
• Germany’s economy stagnated due to weaker exports and ongoing global trade pressures, despite a slight improvement in business sentiment. 

Japan

• The government highlighted a moderate recovery supported primarily by capital spending. 
• Caution persists due to risks linked to U.S. trade policy. 

China:

• Industrial profits rose 21.6% YoY in September, the fastest pace since November 2023. This reflects better capacity utilization. 

Brazil

• The U.S. Senate approved a bill to revoke tariffs on Brazil by lifting the national emergency declaration issued in July. 

Mexico:

• Gross Domestic Product (GDP) contracted 0.3%YoY in 3Q25. 
• According to President Sheinbaum, the United States extended the negotiation period to avoid the implementation of a 30% tariff. 

“Compound interest is the eighth wonder of the world. He who understands it, earns it; he who doesn’t, pays it.” – Albert Einstein 

Key Upcoming Events 

• U.S.: ISM Manufacturing – Nov 3. 
• U.S.: ISM Services & employment-related data (tentative) – Nov 5-7. 

Monitor

Week: October 13–17 

Markets showed a mix of recovery signs and new challenges, driven by trade tensions, monetary policy decisions, and corporate earnings. 

United States 

• Tensions with China escalated following new statements from President Trump. 
• Chair Powell suggested the end of the tightening cycle, opening the door to potential rate cuts. 
• Banks reported solid earnings, though volatility persists among regional banks. 

Europe 

• German investor confidence rose less than expected. 
• The U.K. economy grew 0.1% in August, but with downward revisions to prior data. 
• The IMF urged the Bank of England to remain cautious, as inflation is expected to stay the highest in the G7. 

Asia 

• In China, exports rose 8.3% year-over-year in September, the fastest pace in six months. 
• Inflation fell again (-0.3%), reflecting weak domestic demand and ongoing trade tensions. 
• Producer prices dropped 2.3% annually. 

Latin America 

• In Brazil, the economy expanded 0.4% in August, below expectations. Analysts expect a deeper slowdown as monetary policy remains tight. The Central Bank maintained its benchmark rate at 15%. 
• In Mexico, the IMF projects a fiscal deficit of 3.9% of GDP for 2025 — the highest since 2000. The government is assessing potential tariff adjustments for 2026, depending on U.S.–China trade developments. 

“Risk comes from not knowing what you are doing.” — Warren Buffett 

Key Upcoming Events: 

• China: GDP, industrial production, and retail sales data — October 20 
• United States: Consumer prices and new home sales — October 24 

Monitor: 

Week October 6–10 

Markets opened October with mixed signals. Attention focused on the ongoing U.S. government shutdown, revised growth forecasts in China and Mexico, and stronger trade performance in Brazil. In Asia, Japan saw a historic political shift with the election of Sanae Takaichi as leader of the ruling party, while Europe faced renewed political instability. 

United States: 

• The government shutdown remains unresolved. 
• Gold surpassed $4,000 amid political and fiscal uncertainty. 
• The Fed signaled openness to rate cuts, though doubts persist about their extent. 

Europe: 

• France faced an unexpected resignation from its prime minister. 
• In Germany, exports and factory orders fell. 
• The government raised its 2024 growth forecast to 0.2%. 

Asia: 

• In Japan, Sanae Takaichi was elected leader of the ruling party, positioning her to become the country’s first female prime minister. 
• In China, despite the holiday break, the World Bank raised its growth forecast to 4.8%, and the government tightened export controls on rare earth minerals. 

Latin America: 

• In Brazil, beef exports to China rose 38.3% year-over-year in September, setting a new trade record. 
• In Mexico, inflation rose to 3.76% in September. The World Bank revised its 2025 growth forecast upward to 0.5% and anticipates 1.4% for 2026. 

“The four most dangerous words in investing are: ‘This time it’s different.’” — John Templeton 

Key Upcoming Events: 

• China: Export and inflation data — October 12–15 
• United States: Inflation report — October 15 

Monitor

September 29 – October 3

General Summary: Markets faced mixed signals last week, balancing political uncertainty in the U.S., inflationary pressures in Europe, and weakness in Asia. Meanwhile, Latin America showed resilience in public finances and corporate outlooks.

United States

• The government remains shut down, the first in nearly seven years, delaying official labor data. Still, markets closed higher on optimism for a short shutdown and strong tech sector performance.
• ADP reported a reduction of 32,000 jobs in September, the largest decline since March 2023.
• Consumer confidence fell more than expected, while President Trump announced an agreement with Pfizer to voluntarily lower drug prices.

Europe

• UK GDP slowed to 0.3% in Q2 (vs. 0.7% in Q1), in line with expectations.
• German inflation accelerated to 2.4% YoY, the highest since February, while unemployment rose by 14,000 to 2.98M.
• The European Union plans to double steel tariffs to 50%, aligning with the U.S. against Chinese overcapacity.

Asia

• Japan: Industrial production fell 1.2% MoM, while retail sales dropped 1.1%, the first contraction in over three years.
• China: Manufacturing activity contracted for the sixth consecutive month, awaiting new stimulus measures and clearer U.S. trade relations.

Latin America

• Brazil: Public finances exceeded expectations; debt held at 77.5% of GDP, and the primary deficit was ~BRL 17B (~USD 3B), lower than projected.
• Mexico: Fitch plans to raise Pemex’s rating from BB to BB+ after a USD 10B bond buyback, highlighting closer ties with the sovereign. The government emphasized economic resilience and projects 2.3% average growth in 2026.

“In investing, what is comfortable is rarely profitable.” — Robert Arnott

Important Events:

• U.S.: Fed officials’ speeches — October 7–10
• U.S.: Fed minutes — October 8

Monitor