The US Senate Banking Committee has scheduled for today, Wednesday April 29, a vote on Kevin Warsh's nomination to lead the Federal Reserve. After Senator Tillis announced he was withdrawing his veto upon securing assurance that the US Department of Justice would halt an investigation against Jerome Powell, the path is being cleared for Warsh to chair the Fed. If a favorable vote is achieved today, Warsh's nomination moves to the full Senate for a vote in the coming days.

Our Take

Warsh served as a Federal Reserve Governor from 2006 to 2011 and has been critical of the institution since leaving. At his recent confirmation hearing, he called for a "regime change" in the way the Federal Reserve conducts its monetary policy. He also took the opportunity to affirm that he would act with full independence from the White House.

The Brent international oil price benchmark surpasses $114 amid the stalling of efforts to end the war in the Middle East. There is still no official response to Iran's latest peace proposal. However, according to the Wall Street Journal, US President Donald Trump asked his advisors to prepare for a possible prolonged US naval blockade of the Strait of Hormuz. The United States will thus opt to continue pressuring Iran's economy and oil exports by blocking maritime transport to and from its ports.

Our Take

Even if the disruption stabilizes in the very near term, the shock already caused has macroeconomic consequences. Higher energy prices, tighter financial conditions, and confidence effects will likely weigh on growth and earnings for months. In this regard, markets appear to be currently underestimating the persistence of these second-order effects.

The United Arab Emirates (UAE), OPEC's third-largest producer behind Saudi Arabia and Iraq, has announced it will leave OPEC on May 1. The UAE has clashed head-on with Saudi Arabia over its desire to deploy new production capacity — a tension that has been evident at various OPEC meetings in recent years and has left Abu Dhabi on the verge of formalizing its exit on more than one occasion. A move that will have no short-term effect given the Strait of Hormuz blockade, but which represents a significant blow to the cartel.

Our Take

The timing of the exit was well chosen; announcing it during a period of major supply disruptions limits the market impact. However, its departure will limit the cartel's ability to influence the global oil market once fuel flows are reestablished.

The Eurozone Economic Sentiment Indicator (ESI) recorded a sharp decline in April to 93.0 points from 96.2 the prior month, registering its third consecutive decline in an environment marked by the Middle East conflict and reaching its lowest level since November 2020. In fact, confidence has weakened across all sectors, particularly in services and retail trade.

Our Take

Behind this decline is the growing concern of companies about the potential impact that the Middle East war could ultimately have on the global economic landscape. The collapse of the economic confidence indicator raises concerns about the region's growth prospects in the second quarter.

The rebound in energy prices pushes Germany's inflation to 2.9% annually in April, slightly above the March figure. By component, the influence of energy on the Consumer Price Index (CPI) stands out, with its cost rising 10.1% compared to the same month the prior year, compared to the 7.2% increase recorded in March. This represents the largest increase in energy prices since February 2023.

Our Take

Despite the increase, the report surprises because the rise came in below the forecast 3.1%. Additionally, the core component — which excludes volatile items such as energy and agricultural products — fell two tenths on an annual basis to 2.3%.

At her appearance before the Senate Finance Committee, Victoria Rodríguez Ceja, Governor of Banxico, commented that the central bank's Governing Board will evaluate making a final rate cut at the May meeting to bring it to 6.50%. According to the official, the determinants of inflation point to the absence of demand pressures, such that the decision is motivated by a more favorable environment for bringing inflation sustainably to the 3% target.

Our Take

Within the consistency of Banxico's behavior in its recent decisions, it was to be expected that it would seek a new cut — and the last of 2026 — to the interest rate at its meeting next month. However, monetary policy must remain vigilant to prevent current shocks from contaminating other prices or affecting inflation expectations.

Corporate News

Walmex reported revenues that grew 1.7% year-on-year; 4.1% in constant currency, with Mexico growing 4.4% in a sluggish consumption environment. Same-store sales of 3.1% are explained by a higher average ticket while transactions fell 0.9% — a sign that growth is price-driven, not traffic-driven. The EBITDA margin contracted 20 basis points as administrative expenses grew above the pace of revenues. Central America was the most pressured region. The Marketplace retreated 14.4% due to seller issues.

Our Take

Walmex's quarter concentrates in a single report the main risks facing Mexican retail in 2026: a more cautious consumer that responds to prices but does not increase visits, currency pressure in regional markets, and accelerating expenses that outpace revenue growth. The most notable negative surprise was the Marketplace, which management itself had flagged as a strategic priority.

Alsea reported sales growth of 1.4% (+5.8% in constant currency), with consolidated same-store sales of 4.1%. Mexico led with sales growth of +4.9% and same-store sales of +3.5%, while South America retreated 10.7% due to currency effects. EBITDA grew 1.8% with a margin 10 basis points higher, supported by Mexico's performance and peso appreciation on dollar-denominated input costs. Digital sales grew 16.1% to 7.8 billion pesos, representing 41.2% of consolidated sales.

Our Take

The operational reading of Alsea's quarter is genuinely positive. Mexico is accelerating, the digital channel is gaining penetration, and leverage continues to improve. The decline in net income is non-recurring. The challenging consumption environment and currency pressure in South America are the factors to monitor over the coming quarters.

Grupo México reported revenues of US$5.565 billion, a 32.7% year-on-year increase. Consolidated EBITDA advanced 49.6% with a margin of 59.6%. The growth is explained by higher prices for copper, silver, molybdenum, and zinc, partially offset by a 2.8% decline in copper volume due to lower ore grades in Peru.

Our Take

Grupo México's results were positive, with the sharp reduction in cash cost standing out, driven by higher silver and molybdenum credits. Global copper demand is structural — factors that could continue to push industrial metal prices higher.

Orbia reported first-quarter revenues of US$1.963 billion (+8% year-on-year), with growth across all segments. Reported EBITDA was US$259 million (+31% year-on-year) with a margin of 13.2% (+225 basis points). However, the growth includes a favorable base effect from non-recurring costs; on an adjusted basis, EBITDA was practically flat and the margin retreated 114 basis points. The company reiterated its 2026 EBITDA guidance of between US$1.1 and US$1.2 billion, trending toward the high end of the range.

Our Take

Orbia's quarter requires attention — while EBITDA growth beat estimates, it shows stable but not truly expanding operating profitability, with a significant base effect. The Iran conflict introduces a double-edged dynamic for Orbia, with higher PVC prices benefiting Polymer Solutions in the short term, but a slowdown in global demand in the second half of the year could pressure its downstream businesses.

Coca-Cola FEMSA reported mixed results in Q1 2026. Revenues grew 1.1%, though excluding currency effects the advance was 6.0%. Gross profit advanced 4.5% with a 150 basis point margin expansion, benefiting from lower sweetener and PET costs. Operating income fell 2.3%, pressured by restructuring expenses, resulting in a 50 basis point contraction in operating margin. EBITDA remained practically stable with an advance of 0.9% (margin of 18.9%), though on a comparable basis it grew 6.1%.

Our Take

The results reflect a contrasting dynamic: Mexico remains under pressure from the weak consumption environment and the IEPS increase, while South America — particularly Brazil, Colombia, and Argentina — offsets with solid volume and margin growth.

NXP Semiconductors was rising around 16% in pre-market trading after publishing second-quarter revenue guidance significantly above consensus estimates, signaling that demand for its chips for data centers and industrial equipment is recovering from the automotive industry's down cycle. Seagate Technology was advancing 18% after reporting results and a forecast that broadly exceeded estimates, driven by demand for AI application storage.

UBS reported first-quarter results that beat consensus estimates, with its equity and currency trading division recording a particularly strong quarter thanks to the volatility generated by the Iran conflict. Shares were rising more than 5% in Zurich. The bank reaffirmed its goal of increasing shareholder distributions during the year. In contrast, Deutsche Bank fell after reporting higher provisions for bad loans and a key capital strength metric below estimates.

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Quote of the day

"Greatness is not what you have, but what you give."

— Nelson Mandela