Brazil after the elections and record inflation in the Eurozone

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Good morning, Sardine Investor. This is Morning Punch, the top news of the day in the financial market, all in 5 minutes, so you can start your day with a bang.

First on Friday (October 28, 2022) IBOVESPA (the index of our stock exchange) is trading down 0.09%, concluding at 114,539 points. Vale, with futures contracts devaluing due to a negative outlook in relation to future demand, and Petrobras were the companies that contributed the most to the decline.

Before that, on the side of the biggest increases we had companies such as:

On the other hand, within the index, the largest decline was recorded by companies:

Finally, leaving the small domestic market, let’s talk about world stock markets and international market indices.

Morning call international indices

Currently in the international scenario, the world stock markets closed mostly positive. Meanwhile, the dollar was R$ 5.29, down by 0.94%. Abroad, EWZ, which represents our index in New York, as well as Petrobras’ ADRs are falling.

In the United States, the stock markets had the following results:

• DOW JONES: +2.59%
• S&P 500: +2.46%
• NASDAQ: +2.87%

On the European stock exchanges, the results were as follows:

• DAX (Germany): +0.12%
• FTSE 100 (England): +0.25%
• CAC 40 (France): -0.11%
• FTSE MIB (Italy): +0.24%

Finally, on the Asian stock exchanges:

• Nikkei (Japan): +1.78%
• Shanghai (China): -0.77%
• KOSPI (South Korea): +1.11%

Meanwhile, cryptocurrencies in the last 24h (6h58min):

• Bitcoin: +0.01% ($20,705)
• Ethereum: +1.26% ($1619)

Still in goods:

• Gold: +0.10% ($1,646.40/troy ounce)
• Brent oil (futures): -1.34% ($93.77/barrel)
• Natural gas: +6.25% (6.03 USD/m³)
• Iron Ore (Futures): +0.22% ($93.01/ton)

ECONOMIC CALENDAR OF THE WEEK

This Monday, data on the annual core CPI of the Eurozone was published, 5% above the projection and previous data of 4.8%. Here is today’s Focus and Chicago US PMI newsletter.

Tomorrow’s OPEC meeting in the US, Copoma minutes and industrial production in Brazil. In the US, Industrial PMI and September Jobs.

On Wednesday is the industrial PMI in the Eurozone and the FOMC declaration in the US.

Thursday, US import and export data and PMI.

Friday, US payroll.

Now let’s talk about stocks and shares (shares abroad).

Morning call actions

IRANI HAS CONSISTENT PROFITS DESPITE DROPPING PROFITS

Irani, a pulp and paper company that was founded in 1941 and recently went public, has now shown that its profits have fallen despite costs rising by around 20%, a drag on the producer’s good net profit result. .

The amount of R$ 95.5 million in the third quarter of 2022 shows a decrease of 2.1% compared to the third quarter of 2021. With an increase of 23.7% in operating expenses, transportation ended up significantly increasing costs, reducing the company’s profit margin. Only in administrative costs there was an increase of 26.3%, to R$ 23.3 million, which is the result of inflation.

However, the company claims that the results of the other months are solid and that this year their profit has increased by more than 30 percent, considering the previous months. In the last 12 months, there is talk of a 39% higher result.

The company also presents an investment plan to expand the production capacity of corrugated cardboard, which means about 55% of the revenue.

TECHNOLOGY COMPANIES ARE LOOKING FOR NEW MARKETS

We’ve seen a challenging move for the tech sector, and now the move seems to put Chinese tech companies on a path to face Amazon, the US giant. This is all because of what is seen in the international expansion of companies such as Pinduoduo and ByteDance (owner of TikTok), for example.

Pinduoduo is an e-commerce company in China and just launched a website in the US called Temu. Then it was the TikTok owner’s turn with the launch of IfYooou which is also heading to the UK, Spain, Italy, Germany and France.

Of course, they are looking for the success that has become Shein, worth around US$100 billion, with growth opportunities in both the US and Europe.

The move is seen as Chinese companies look for growth markets while their economy faces ongoing challenges, particularly the much-talked-about Covid Zero policy, which is already in the mix and we’ve seen a reduction, but it’s not stopping there: global macroeconomics the environment also faces demand issues while inflation worries.

And now news from the domestic and world markets:

Summary of news from Brazil and abroad

BRAZIL

There’s nothing else to talk about here but the presidential election, right? Lula won the election in a very tight competition, but abroad it seems that things are not going well when it comes to Brazilian elections. Let me explain: Petrobras ADRs and our index, EWZ, are falling and this can be reflected here.

The election could still generate a move down in our market, as we put uncertainty aside and assume that the new president should be focused on his commitment to fiscal responsibility.

Public accounts in 2023 are not forgiving, there is Auxílio Brasil on the account, as well as the old promise to correct the income tax table, another issue is the adjustment of executive servers.

In all this, a value of up to R$ 280.3 billion that does not fit into the upper limit of spending. To give you an idea, the Auxílio Brasil sent to Congress for approval was R$405. While we had growth above expectations in 2022, next year we may see a slowdown in economic activity.

MEANWHILE, THE WORLD…

Inflation in the Eurozone is a record: 10.7%, the economic bloc is recording higher energy and food prices, and a large part of this growth comes after the Russian invasion of Ukraine at the end of February this year. This increases the probability of a recession.

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Now that we’re talking about China, indicators point to a contraction as data on industrial employment, production and new orders are released.

In October, the COVID outbreaks are still hampering industrial activity, and the decline in the manufacturing PMI points to weak future demand.

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Finally, Russia made an agreement to reopen ports in Ukraine and thereby allow the flow of grain in July, but now the Russians have suspended their participation in the agreement.

Russia and Ukraine were responsible for 1/4 of the world’s grain exports before the war and now the UN is trying to contact the Russian authorities, after all it is a matter of food security for thousands of people.

Now, news on real estate funds:

Morning call real estate funds

First, in the trading session on Friday (28/10) our ifix closed with +0.04%, ‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌‌2,994 points.

Among the highest:

• BLMR: +2.68%
• NSLU11: +2.56%
• BCFF11: +2.41%

Now, into the crypto world:

Morning call crypto assets

ANOTHER STABLECOIN MELT

It is not uncommon to see declines of 60%, 90% or even more in the crypto market. Apparently, stablecoins are more prone to massive declines than previously thought. This is the case of the currency linked to HUOBI which eventually lost parity with the dollar and melted by almost 60%.

What happened is that Huobi informed the market about the removal of HUSD from the cryptocurrency list and that the asset will be converted to tether (USDT). There is no news on why the broker made such a decision, all we know is that the brokerage is going through the acquisition of the company by About Capital Management.

It is worth recalling that a few weeks ago the founder of Huobi sold shares in the stock exchange and the token jumped 25%.

That’s how ours ends Morning call. Good investments.