IC Market Espresso 15 Jul 2024

 
Zero, One, Two, or More?

Last week, the Consumer Price Index (CPI) for June 2024 came in at 3.0%, which was 0.1% lower than the consensus forecast. The last time we saw CPI readings at this level was in June 2023, exactly one year ago, when inflation was declining and moving towards the 2 percent target. Over the past year, the CPI has remained between 3.0% and 3.7%, stubbornly refusing to come back down near the target.

It’s important to note that the CPI month-over-month (MoM) data showed a decrease of 0.1%. This negative change hasn’t been seen since May 2020, shortly after the onset of the pandemic. To provide some context, in the last June, when the CPI was at 3.0%, the MoM CPI was at 0.2%. From a mathematical standpoint:

  1. A 0.2% MoM change over one year equates to a 2.4% change in year-over-year (YoY) terms.
  2. A -0.1% MoM change over one year equates to a -1.2% change in YoY terms.

In hindsight, it wasn’t evident last June that the CPI would continue to decrease. Now, let’s focus on this July.

  1. If we project using the last MoM data, it suggests a movement toward -1.4% in YoY terms.
  2. If we consider the average of the last two MoM data (-0.05%), it suggests a movement toward -0.6% in YoY terms.
  3. If we take into account the average of the last three MoM data (0.2%), it suggests a movement toward 2.4% in YoY terms.

All in all, it seems like it is much safer today to bet on lower CPI readings next month and the continuing cooling down of CPI data.

PCE data has continued to decline and is currently at 2.57% YoY and 0.08% MoM (which is equivalent to 0.96% on a YoY basis if it remains at that level).

Because the Fed has a dual mandate, or to be precise „two goals of price stability and maximum sustainable employment“, let’s look at the Unemployment rate.

At the beginning of last year, we reached a record-low unemployment rate of 3.4%, a level not seen since 1969 – the year the last good Ford Mustang was produced. However, over the past 18 months, the unemployment rate has increased and currently stands at 4.1%. The 3-month moving average of the unemployment rate is at 4.0% and has increased by 0.44% over the last 12 readings. It’s uncertain whether the Sahm rule will be applied in the next few readings.

The Sahm rule „signals the recession when the 3MMA of the national unemployment rate rises by 0.5 percentage points or more relative to its low during the last 12 readings“.

The market is currently anticipating slightly more than 2.5 interest rate cuts by the end of the year in the four remaining Fed meetings of 2024, especially with the upcoming elections in November. The data for next month is expected to be crucial.

Končar and Siemens Energy Holding Sign a Joint-Venture Investment Agreement

On Friday, Končar announced that it signed a joint-venture investment agreement with Energy Holding into production of transformer tanks. Končar will have the majority ownership with a share of 60%.

 On Friday, Končar notified via the stock exchange about signing a Joint-Venture Investment Agreement with Siemens Energy Holding. The goal of this JV is to establish a company dedicated to producing transformer tanks. Končar will have the majority ownership with s share of 60%. The production site will be stationed at Sesvetski Kraljevac.

The company emphasized the EU green transition’s strong positive effect on the Group. This JV should scale up the Group’s production of transformer tanks, setting the base for further strong growth in global market reach.

Končar vs. CROBEX10 performance [2021 – 2024]

Source: Bloomberg, InterCapital Research

Upcoming Events – July 2024

Here you can find the dates for the upcoming events of the regional companies.

wdt_ID Date Ticker Announcement Country
17 26.7.2024 WINE Purcari ex-dividend date Romania
19 26.7.2024 KOEI Končar Q2 2024 Results Croatia
20 26.7.2024 ADPL AD Plastik Q2 2024 Results Croatia
21 26.7.2024 EQNX Equinox Q2 2024 Results Slovenia
22 29.7.2024 HPB HPB Q2 2024 Results Croatia
23 29.7.2024 ARNT Arena Hospitality Group Supervisory Board Meeting Croatia
24 30.7.2024 ATPL Atlantska Plovidba Audit Committee Meeting Croatia
25 30.7.2024 ARNT Arena Hospitality Group Q2 2024 Results Croatia
26 31.7.2024 PETG Petrol ex-dividend date Slovenia
27 31.7.2024 SPAN SPAN Q2 2024 Results Croatia
28 31.7.2024 ATPL Atlantska Plovidba General Assembly Meeting Croatia
29 31.7.2024 ATPL Atlantska Plovidba Q2 2024 Results Croatia
30 31.7.2024 RIVP Valamar Riviera Q2 2024 Results Croatia
31 31.7.2024 SNP OMV Petrom Q2 2024 Results Romania
32 31.7.2024 TRP TeraPlast Q2 2024 Results Romania

Due to the nature of these events, they are subject to change (might be postponed or canceled).

Want to invest? Do not know how and where? Contact us and we will solve everything for you.