Sunrise Over El Dorado : Alianza : December 19th 2018 Edit name

DAILY THOUGHT : On arriving in Boston airport last week on a frosty morning I was greeted by an empty taxi rank - my hosts later advised me that Uber is now the way, likewise in New York, all this an extension of what I have found in other places including London & Mexico to name but two and whilst the exact structure and details of the business are being slowly worked out in some cases compare that to Colombia where vehicles are burnt and drivers assaulted by hostile taxi drivers - this week there was also the case of a driver losing his licence for 25 years in mysterious circumstances......maturity required....

MARKETS

Again holiday shopping volume of USD23mn as the COLCAP closed close to unchanged (+0.04%) at 1336.14pts - the day was somewhat saved by the closing auction which lifted the index 0.48% with 13% of the day's total volume. Performing well were MINEROS (+5.13%) , PFDAVVNDA (+3.36%) and CONCONCRETO (+3.03%) whilst PFAVH (-2.86%) ,PFGRUPOSURA (-1.63%) and ECOPETROL (-1.39%) went the other way.

The Peso finally fell below 3200, having been helped by comments out of the US on Monday this time is was the oil sector which proved the key factor leading to a close of 3206, down 0.82% on the day with volume of USD1bn.

The bond market was quiet with most maturities close to unchanged, the 2032 was up 1bp at 7.26% whilst the 2020 & 2024 were only marginally changed on the day at 5.09% & 6.2% respectively.

TAX REFORM

Well the Senate at least have completed their work with 124 points (112 original + 12 extra) whilst the Congress like a schoolboy who didn't do his homework will be back early this morning having approved just 49 points, of course we are talking about a much bigger chamber to organize. One big surprise in the Senate was the reappearance and approval of the special tax for financial institutions which means as opposed to having their Corporation Tax cut from 37-33% next year they will remain at 37%, for 2020 & 2021 they will pay 3% extra - the tax will only be in place for 3 years total. That will cause much consternation because the last 'temporary tax' on the financial sector was the 2/1000 imposed on financial transactions in 1998, which became 3/1000 then 4/1000 and is still being levied 20 years later. I am no constitutional expert and am not sure what happens if the Congress says no to this item, who has claim ? I am sure I am not alone but this morning when Congress gets to work we should have more clarity.

OCTOBER IMPORTS

Whilst Exports rose healthily in the most recent reading they were outstripped by Imports which jumped 31.1% YoY to USD5.16bn versus the estimate of USD4.9bn - all the main sectors including Agriculture (14.3%) & Combustibles (+38.9%) rose however the stand-out performer was manufacturing which rose 33,3% & contributed over 80% of the increase. This area was driven by Aircraft (+341%), Transport Vehicles (+69%) & Cargo Vehicles (+87%) also the local propensity to sit on the celphone all day was highlighted by an extra USD58mn in imports during the month. These are the highlights but throughout the manufacturing sector we saw increased purchases including electronics (+27%) & industrial equipment (+20.8%) - for a country supposedly on its knees in terms of confidence there is a disconnect and as I wrote yesterday this may be just a temporary blip when it comes to confidence and needs perception to catch up to reality. The Trade Defict was predictably higher than expected although the USD1.157bn registered was the largest in 18 months - although we have had only one Surplus since September 2014. These are certainly glass half full numbers.

IN BRIEF

One of the key persons at the centre of the investigation which leads all the way up to the DOJ in the US is the former head of the ANI Luis Andrade and he has now left the country for the US where he also holds nationality, the terms of his arrest do not prohibit this although the judge appeared surprised to put it politely that he wasn't in court yesterday. Depending on which publication Andrade is there for some vacation with the family or is looking to organize security for himself - he is after all a key witness to all that has occurred - either way he publically stated he has every intention to continue with the legal process. The idea here is not to draw conclusions but instead highlight that this case and all of those involved is going to remain headline news for the foreseeable future.

Another story that will remain in the headlines for the foreseeable future are regarding the allegations, now backed up by at least one arrest, that during the 2017 strike the pilots were bugged. This story has been rumbling along but has been somewhat overshadowed by headlines regarding United and Brazil - however the revelation that a member of the Fiscal's office has been arrested as part of the investigation has brought the whole situation back into focus.