After 20 years of negotiations, Mercosur and the European Union seal a historical agreement

After twenty years of negotiations, Mercosur (Argentina, Brazil, Uruguay, and Paraguay) and the European Union have concluded a free trade agreement between the two blocs. The new pact between the two blocs will bring together economies that together account for around 25% of world GDP and a market of 780 million people.

The free trade agreement could represent an increase of US $ 87.5 billion of the Brazilian GDP in 15 years. It covers both tariff and regulatory issues such as services, government procurement, trade facilitation, technical barriers, sanitary and phytosanitary measures, and intellectual property.

Paradoxically, the agreement is a blow to politicians opposed to globalization such as the current Brazilian chancellor Ernesto Araújo, who has already said he would fight to reverse globalization.

However, both Araújo and President Jair Bolsonaro celebrated the agreement reached today between Mercosur and the European Union.

It is very strange, to say the least, that a government in which the Minister of Economy said publicly that Mercosur would not be a priority in the new government, and the chancellor openly criticizes what he calls "globalism" and says that Europe is a "culturally empty space" is now celebrating this deal.

Inflation slows in Brazil due to the economic crisis and the truck drivers strike

Inflation fell from 4.83% to 3.84% in the accumulated of the last 12 months. However, this drop was mainly caused by the truck drivers' strike in 2018 and the economic slowdown that brought down consumption within the country.

Thus, inflation in Brazil, which had accelerated in the first four months of 2019, seems to be giving a truce in the last two months, according to data released by IBGE. After the scares of March and April, when the IPCA, official index of inflation, reached 0.75% and 0.57%, respectively, in May the rise slowed to 0.13%.

As a result, the National Monetary Council (CMN) decided to lower the inflation target by 3.5% to 2022. The target will have a tolerance interval of 1.5 percentage points, more or less, and the inflation target will be considered fulfilled if the index stays between 2% and 5%.

According to the G1 website, between 2005 and 2018, the inflation target in Brazil "was maintained at 4.5%. In the following years, it was reduced by 0.25 percentage points each year, from 4.25% in 2019 to 3.75% by 2021."

Now, the Brazilian Central Bank should seek even lower inflation. The mistake of the government here is to present absolutely no policy to combat the economic stagnation and the unemployment that reaches millions of people. As a result, this situation is likely to persist in the coming months.

An alternative to this would be to keep the inflation target at 4.25% and reduce interest rates to try to stimulate investment, but even now, this seems insufficient because of the government's delay in presenting any plan to change this scenario of economic stagnation.

The financial market in Brazil is negatively impacted by the political disagreements of the current government

The political swoops between President Jair Bolsonaro and his ministers with the National Congress are worrying Brazilian investors. The Social Security Reform has been going a long way because of the efforts of the mayor of the Chamber of Deputies, Rodrigo Maia. However, Maia and other deputies involved in the Reformation continue to have disagreements with the government of Jair Bolsonaro. Most of these disagreements arise because of the complete lack of political ability of the federal government.

According to the Folha de S.Paulo newspaper, this political disarticulation added to the "pressure of parties and the lobby of public servants impinges" the Pension Reform.

#MarchaDoPo and #Dia30VemPraRua divide Twitter in Brazil

The case of a drug seizure in Spain on a Brazilian Air Force (FAB) aircraft is sharing opinions in Brazil. Groups that support the current Brazilian government announced demonstrations for June 30, 2019 (Dia 30 Vem Pra Rua).

Already opponents and critics of the current government are calling this manifestation of March of the Dust (Marcha do Pó), in reference to the cocaine seized with the military that was part of the support team to the Bolsonaro entourage.

Even with the president and other members of the government saying that the military involved in the case should be tried "without condescension" in Spain and Brazil, there are many opponents trying to link the apprehension to the current government.

The mainstream media in Brazil, however, is pointing to the undeniable security flaw of a government packed with military personnel and a speech to combat drug trafficking.

Voting for Pension Reform postponed in Brazil; according to Ibope, Bolsonaro's popularity falls

The rapporteur for the pension reform bill, deputy Samuel Moreira, said that despite the postponement of the special committee session in the House, he believes that the Pension Reform proposal will be voted by the Chamber of Deputies before the July recess.

But with each passing day, it becomes more difficult for the vote to take place. Today, for example, Members decided to postpone the reading of the rapporteur's supplementary vote, which was scheduled for today (27.jun.2019).

The Pension Reform is struggling because of the inability of the government of President Jair Bolsonaro to participate actively and positively in political negotiations. The president of the Chamber of Deputies, Rodrigo Maia, has been the main responsible for the progress of the Pension Reform.

An example of this difficulty is the position of MP Marcelo Ramos (PL-AM), who is chair of the special committee for the Pension Reform, which reacted very poorly to the knowledge that the Minister of Economy, Paulo Guedes, said that the Congress is " a machine of corruption. " Ramos said he "has no respect" for Guedes anymore.

Ramos also said that "the government does not have an agenda, and because it has no agenda, it needs to adopt a diversionary attitude, it has no agenda to face the country's structural problem, which is 12.7 million unemployed, GDP below 1%. the way is a diversion, talk of three-pronged, gun-carrying, things that draw attention to the economic disaster that is the first six months of the Bolsonaro administration."

To make matters worse, new research indicates the popularity of Jair Bolsonaro. According to the Ibope, the rate of disapproval of the way the president governs rose from 40% to 48%. In April, 51% approved the management. Now the percentage fell to 46%.

In less than six months of government, the percentage of those assessing the government as bad has risen from 27 percent to 32 percent in June, and the population evaluating the government as good dropped from 35 percent to 32 percent. Therefore, the current government has growing disapproval.

Brazilian President Jair Bolsonaro rebuts German Chancellor Angela Merkel and says that Germans 'have much to learn' with Brazil

Brazilian President Jair Bolsonaro, who is in Osaka, Japan, for the G20 summit, rebuffed German Chancellor Angela Merkel, who expressed concern about Brazil's environmental policy and said the country's situation is dramatic. For Bolsonaro, Brazilians "have an example to give to Germany about the environment. Their industry is still fossil. It's part of coal. Not ours. They have to learn a lot from us".

According to the journalist Glenn Greenwald, "German Chancellor Angela Merkel says she views what is taking place in Brazil under Bolsonaro with great concern - as 'dramatic'- due to the threats he poses both to basic human rights and the environment".

The environmental policy of the Bolsonaro government should be the biggest drag on Brazil during the G20 meeting in Japan. It is not only Germany that is pressing Brazil in relation to the environmental policies of the Bolsonaro government. The French government, for example, has been one of the toughest in the talks on the trade agreement between Mercosur and the European Union. The main French argument is the fact that Brazil does not seem committed to the Paris Agreement – by which nations have committed themselves to meet pollution reduction targets.

To make matters worse, in an interview with BBC News Brazil, Brazil's Environment Minister Ricardo Salles said that the Brazilian government will insist on the message that it is necessary to explore the economic possibilities of the Amazon, diversifying the activities inside and around the Amazon Rainforest.

For most environmentalists, the minister's speech was received as more deforestation and damage to the Amazon Rainforest.

Brazilian financial market fears possible delay in voting on Pension Reform

The Brazilian financial market remains apprehensive to know if it will happen today, 27.Jun.2019, the reading of the Pension Reform report. The delay for the national political framework to discuss, vote and possibly approve the Pension Reform leaves investors in Brazil very apprehensive. Everyone already believes that the year 2019 is lost.

As the inflation framework in Brazil is not worrisome, due to the weakness of the Brazilian economy, everything indicates that in the second half the Brazilian Central Bank will cut the basic interest rates, which are currently at 6.5% per year.

The fear of some federal deputies losing the vote of the Pension Reform, since many are celebrating the feasts of São João in their respective states, can delay the entry of the Brazilian states into the new Social Security. This impasse is delaying the reading of the complementary vote of the rapporteur and federal deputy, Samuel Moreira. 

According to UOL website, "the inclusion of states and municipalities in Pension Reform is necessary because they are also breaking down. The deficit in the states reaches R$ 100 billion today and can quadruple until 2060. However, this inclusion has not yet been made basically because governors and federal deputies are afraid to displease state officials and lose votes."

The number of companies decreases for the second consecutive year in Brazil

According to the Central Business Register (CEMPRE), released today, June 20, 1919, by IBGE, the total number of companies in activity in Brazil was 5 million in 2017, the worst result since 2010, when it totaled 5.1 million. Since the beginning of the economic crisis in 2014, the number of companies declined by 74.2 thousand and the salaried population decreased by 3.2 million.

According to the IBGE News Agency, "the study shows that between 2007 and 2013, there was a continuous growth in the number of companies [in Brazil], from 4.4 million to 5.4 million. In 2014, however, this number fell by 288, 9 thousand organizations and, despite the small increase of 11.6 thousand in 2015, in the following two years the number dropped again to 64.4 thousand in 2016 and 21.5 thousand in 2017."

According to economist Laura Carvalho, the "brutal fall in growth projections" in Brazil combined with the possibility of "a new recession in the first quarter of 2019 brought to the surface the vicious circle caused by insufficient demand in the Brazilian economy."

In the first quarter of 2019, Brazil GDP fell by 0.2%. Two consecutive quarters of contraction mean a technical recession. For many economists, 2019 is already a lost year for Brazil. They believe that a possible economic recovery will only come in 2020.

Brazilian military arrested for transporting 39 kilograms of cocaine in a Brazilian Air Force (FAB) plane that was part of the entourage of President Jair Bolsonaro

According to the website El País, yesterday, June 25, 2019, at the Seville airport, the Spanish Civil Guard detained a Brazilian military man of 38 years who had carried 39 kilos of cocaine in an airplane of the FAB integrated to the entourage of the president Jair Bolsonaro.

The arrest took place during a stopover on the presidential reserve plane in Seville, southern Spain, to Osaka, where Bolsonaro will attend the G-20 meeting.

According to the O Globo, the detained military is 2nd Sergeant of the Brazilian Air Force and acts as flight commissar, providing onboard service on FAB planes.

#LulaLivreUrgente and #LulaNaCadeia are on the trending topic of Twitter as the STF decides to keep former president Lula in prison

By 3 votes to 2 against, the Federal Supreme Court (STF) has decided today to deny the proposal of Minister Gilmar Mendes to grant former president Luiz Inacio Lula da Silva provisional release.

According to the Folha de S.Paulo newspaper, Lula's defense highlighted the revelation of messages from the current Minister of Justice, Sergio Moro (who ruled Lula) and Lava Jato authorities (who investigated Lula) released by The Intercept Brasil since the last day 9.

Intercept reports, according to several politicians allied with Lula, indicate that Moro "had a personal animosity against the accused, provided evidence to the prosecution outside the case, previously combined petitions and decisions."

Layoffs outnumber hirings in Brazil

According to consultant Robert Half, in the first quarter of 2019, hirings were rescheduled in just three professions: programmers, quality inspectors, and database administrators grew their "cadres" in Brazil between January and March. Engineers had the most negative balance, with the closing of 1,003 jobs. Following are sales manager (567 closed positions), lawyer (486 vacancies closed) and financial manager (484 vacancies closed).

According to the Folha de S.Paulo newspaper, "the rate of unemployment of skilled labor — which has higher education — stood at 6.1% in the first quarter of this year, the highest since the beginning of 2017."

Thus, once again the careers in technology are armored in the face of the crisis. Hence the undeniable importance of government to understand the demands of the market and be ready to train workers and respond to changes in the labor market. However, nowadays, while the Brazilian labor market continues to look for coherent profiles with the technological revolution in progress, the country is still at odds over the teaching of technology in schools and universities. So far the government of Jair Bolsonaro has not presented any plans to meet these needs in the area of education.

In recent days, Education Minister of Brazil Abraham Weintraub has stated in an event that "there is no condition to maintain the current structure of public education."

Financial market points to Brazil's GDP at 0.87% in further reduction of growth estimate of the economy; reserve period for the purchase of Petrobras shares (PETR3; PETR4) ends today

For the 17th consecutive reduction, the Focus Bulletin, made by the Central Bank of Brazil indicated that the country's economy should grow less. The Focus Report is based on financial market estimates. According to the Focus Bulletin released today, June 24, 2011, the expectations of financial institutions for Brazil's Gross Domestic Product (GDP) in 2019 went from 0.93% to 0.87%.

Inflation expectations decline to 3.82% and the market begins to predict interest cuts. The figures presented today are the result of research conducted by the Central Bank of Brazil last week. The Selic, the basic interest rate in Brazil, is projected to 5.75% by the Focus bulletin. Currently, it is 6.5%.

Today, the reserve of shares on offer from Petrobras also ends. The state-owned company is on the street with an offer of shares that could reach R$ 7.672 billion. The state bank Caixa Econômica decided to dispose of all its common shares of the oil company. Of the total, up to 24% will be primarily negotiated with individuals.

Jair Bolsonaro accuses the Brazilian National Congress of emptying the Executive and supporters of the president launch the hashtag #ReajaBolsonaro

Over the weekend, President Jair Bolsonaro criticized the bill approved by Congress in May 2019. According to him, the text removes the government's powers over the appointment in regulatory agencies. "Do you want to leave me as Queen of England?" Asked Bolsonaro, referring to the monarch who is head of state of the United Kingdom, but does not exercise administrative functions. Parliamentarians denied that the Executive was void. Supporters of the president have launched the hashtag #ReajaBolsonaro (which can be translated by "come on, Bolsonaro, fight back).

According to a bill approved by Congress, the president will now appoint leaders from a triple list chosen by a commission. Text awaits the President's sanction.

The president of the Chamber of Deputies, Rodrigo Maia, responded by saying that Bolsonaro did not understand the bill.

Opposition senator Randolfe Rodrigues wrote that "the president should either change legal advice or read the approved bill before firing his machine gun at improprieties: he understood nothing! He will continue to appoint the directors of the regulatory agencies."

Therefore, the Bolsonaro administration continues to accumulate defeats in Congress, even after an attempt at rapprochement with politicians. The present government presents enormous difficulty in carrying out any type of political negotiation.

#TontosDoMBL: According to The Intercept Brasil and Folha de S. Paulo, Moro says that "fools of the MBL" made a demonstration to defend him

The publication by The Intercept Brasil website and the newspaper Folha de S.Paulo of conversations between the then judge and current Justice Minister Sergio Moro and Lava Jato's prosecutors reveal that there was an articulation to protect Moro and prevent tensions between him and STF ministers (Supreme Federal Court Brazil) could pause investigations of the task force.

In the conversations released by The Intercept Brasil, Moro speaks of a protest organized by "some fools of that Free Brazil Movement," in which protesters criticized STF minister Teori Zavascki (killed in a plane crash in 2017).

Because of this, between yesterday and today (23.Jun.2019), the hashtag #TontosDoMBL has become the most talked about topic on Twitter.

Groups like MBL, Vem pra Rua and Revoltados Online form a kind of Brazilian Tea Party and are deeply linked to the movements of the political right in the country. Until yesterday, these groups had Sergio Moro as a kind of hero.

Luciano Hang, a Brazilian businessman who owns the Havan chain of shops and a well-known Bolsonaro government supporter, celebrates recent layoffs of journalists on the SBT television channel

Luciano Hang, the owner of Havan, used social networks to congratulate the recent layoffs of journalists on the SBT television channel in Brazil. He also said the broadcaster should dispense with Rachel Sheherazade, a conservative commentator, and journalist on the channel's main newspaper. Today, 22.Jun.2019, Sheherazade said she will sue the businessman.

Hang is one of the top advertisers on the SBT channel. After Sheherazade's public response, Hang said she should "work on Cuban state TV Cubavisión, a great place for those who think like you."

Paradoxically, the business of Bolsonaro's supporter and harsh critic of the Brazilian left grew greatly during the years when Brazil was governed by left-center governments, that is, the Workers' Party.

According to Folha de S.Paulo newspaper, Hang was warned by the Labor Court of Brazil, which threatened him with a fine of R$ 500,000 if he pressured his employees to vote in Bolsonaro in 2018. This happened after Hang recorded a video in which he warned employees that he could stop creating jobs if his candidate (Bolsonaro) did not win the election.

According to Folha de S. Paulo, the problems of the businessman with the Brazilian court "are not new. Hang was the target of at least two criminal convictions for evasion of foreign exchange and tax evasion."

Toyota announces the dismissal of 840 employees at factories in Brazil

After a reduction in exports, Toyota's plants in Sorocaba and Porto Feliz, in the interior of the state of São Paulo, in Brazil, will have 840 layoffs. Most of this group is made up of employees hired for a set time for the opening of a third shift, which will cease to exist. The company said it will work with two shifts in the units as of August 5, 2019. According to the metalworkers' union, further layoffs may occur, as the company is stocked with 32 days of sales.

The factories where the layoffs are occurring are responsible for the production of the Yaris and Etios models. So far, three hundred and forty officials have already been dismissed and another 500 will not have their contracts renewed.

According to the magazine Quatro Rodas, a Brazilian automotive publication, Toyota defended itself by stating that the layoffs are the result of "a sharp drop in sales to Argentina. The neighboring country accounts for 93% of the demand for vehicles manufactured for export. turn account for 30% of production in Sorocaba."

Brazil's Agriculture Minister Tereza Cristina declares support for the election of Chinese candidate for FAO direction

Brazil's Agriculture Minister Tereza Cristina, is in Rome, Italy, for the 41st Conference of the United Nations Food and Agriculture Organization (FAO), to be held tomorrow, June 22, The entity will choose its new director-general on Sunday, June 23. 19.20. Tereza Cristina declared Brazil's support for the election of China's Deputy Minister of Agriculture, Qu Dongyue, to the post of Director-General of FAO.

For the minister, this may increase cooperation between the two countries. Tereza Cristina work to open the Asian market for Brazilian beef exports.

B3: Ibovespa sets a new record and reaches 102 thousand points

The Ibovespa traded today in a high and hit a new record, above the 102 thousand points. In the week, the main stock index of the Brazilian financial market accumulated a gain of 4.05%, the highest increase since the last week of December 2018.

The optimism of Brazilian investors is a direct result of the growing possibility of interest cuts in the United States and the increase in the voting chance of the Pension Reform in Brazil.

The Broadcast website today reported a report in which the analyst at Terra Investimentos Régis Chinchila said that the signaling that central banks in the US and other parts of the developed world can reduce interest rates is positive for Brazil.

Brazil spends 4.1% of GDP to pay interest and public debt charges in 2018

A report by the Federal Audit Office (TCU) shows that in 2018 the federal government spent $ 279.6 billion on interest and debt charges. The figure represents 10.1% of all committed expenditures (R $ 2.7 trillion) and 4.1% of GDP (Gross Domestic Product).

Gross debt, which accounts for the liabilities of federal, state and municipal governments, rose in March, according to data from the Central Bank (BC), released 30.Apr.2019 to R$ 5.431 trillion. The value corresponded to 78.4% of the Gross Domestic Product (GDP, the sum of all goods and services produced in the country), 0.9 percentage points more than in February. This ratio between debt and GDP is the highest in the historical series, which began in December 2001.

The same report indicates that tax waiver reached R$ 314.2 billion, corresponding to 25.6% of net primary revenue and 4.6% of GDP. According to the TCU, the waiver of social security contributions surpassed R$ 62 billion in 2018.

São Paulo Stock Exchange, the B3, rises 0.9% and reaches 100,303 points; Natura (NATU3) leads high

Shortly after Fed Chairman Jerome Powell announced that he would keep interest rates in the US between 2.25% and 2.5% a year, the Ibovespa returned to reach 100,000 points today (19.June.2019) in Brazil. 

The commercial dollar, in turn, fell 0.25% today and reached R$ 3.85 in the sale. It was the second low followed by the currency and the lowest since April 10 (R$ 3,824) in 2019.

The shares of Natura (NATU3), a cosmetics company, rose 5.3% and led the highs in the Ibovespa today, after news that the cosmetics manufacturer got in court right to a tax benefit.

Natura obtained in the Federal Regional Court (TRF) of the 3rd Region, in São Paulo, the right to exclude up to 60% of its expenses from income tax and Social Contribution on Net Income (CSLL). technological research and development of technological innovation.

Long-term unemployment grows in Brazil

According to data released by the Institute of Applied Economic Research (Ipea), the number of Brazilians seeking employment for more than two years rose 42.4% between the first quarter of 2015 and the same period in 2019. Since then, the number of people in these conditions has reached 3.3 million. The situation affects women and the North and Northeast regions more intensely. According to Ipea's assessment, unemployment should only begin to subside as of next year.

According to the Valor newspaper, the percentage of long-term unemployed in the country increased from 17.4% in the first quarter of 2015 to 24.8% in the same period this year, reaching a level of 3.3 million people.

According to the G1 website, the study concludes that the Brazilian labor market, therefore, remains quite deteriorated, with large numbers of unemployed, discouraged and underemployed.

Another defeat: Brazilian Senate committee shuns Bolsonaro's decree easing guns law

The decree for the liberation of the arms proposed by the government of Jair Bolsonaro suffers a defeat in the Senate. The text was not approved. This shows a clear separation between the customs agenda defended by the government and the economic agenda, which despite the Bolsonaro government's continued inability to negotiate politically, continues to be moving in the Chamber of Deputies, mainly the Pension Reform.

Rodrigo Maia, the president of the Chamber of Deputies, has decided to maintain the economic agenda despite the ongoing criticism he makes of the current government of Jair Bolsonaro. Maia, who is an economist, said this week that the departure of economist Joaquim Levy from BNDES was "unprecedented cowardice."

Levy resigned last Sunday (16.June.2019), a day after President Jair Bolsonaro told a news conference Levy was with "a price on his head."

Level of construction jobs in Brazil was practically stagnant in the first four months of 2019

The civil construction sector in Brazil generated 20 thousand jobs in the first four months of 2019. Data compiled by the FGV and the Civil Construction Industry Union based on Caged, the number of people employed in the civil construction sector in the period increased by 0,88% compared to the same period in 2018. The employers' union saw growth well below the expected resumption. The projection for GDP expansion in construction fell from 2.0% in early 2019 to 0.5% now.

However, if seasonal effects are disregarded, employment in the Brazilian construction industry would have registered growth of 0.08% in April (+1 954 jobs). At the end of this month, the sector employed 2,314,065 workers in Brazil. With this growth of only 0.08%, it seems that the country is far from the resumption of economic growth predicted by many analysts in early 2019.

As I have written here, this error is the result of the bet and support that many economic agents gave the Bolsonaro government. "In early 2019 financial institutions, according to this same bulletin Focus, forecasted a 2.6% growth in the Brazilian economy this year. However, this bet on the world of finance was mistakenly based on a very positive judgment of Jair Bolsonaro's ability to lead the country's economy".

Safra Plan: the government will offer R$ 225.59 billion in credits to Brazilian farmers

The Brazilian government announced today (18.jun.2019) R$ 225.59 billion for the 2019/2020 Safra Plan, which offers credits for financing small, medium and large Brazilian farmers. The value is practically the same as the previous season.

Of this total, R$ 222.74 billion is for rural credit, of which R$ 169.33 billion for funding, marketing and industrialization. Other R$ 53.41 billion for investment.

Among the main investment programs, Moderfrota, for financing agricultural machinery and equipment, will have R$ 9.6 billion, with a financing limit of up to 85% of the value of the product.

The Agriculture and Low Carbon Program will have R$ 2.096 billion available, with a financing limit of R$ 5 million per contract. The payment term is 12 years, with interest rates of 5.25% per year and 7% per year.

"Third-level advisor assumes the BNDES"

According to journalist Josias de Souza, Brazil's economy minister, Paulo Guedes, "contented himself with a domestic solution to fill the vacancy of the president of the BNDES". For Souza, Guedes accommodated "a third-level adviser" in the position of the top echelon of the Economics portfolio, was Gustavo Montezano, who has only 38 years old and served as special assistant secretary of Privatization and Disinvestment.

According to the newspaper Correio Braziliense, Paulo Guedes "ran against time to try to contain the sangria with the resignation of Levy, announced virulently by Bolsonaro on Saturday (15.Jun.2019) in the morning. The home-based solution was chosen to avoid further upheaval. The government did not want to hear a series of 'no', as many serious people were afraid of the President's rant."

Petrobras (PETR3;PETR4) announces the discovery of new natural gas fields in Sergipe and Alagoas

Petrobras discovered 6 natural gas fields in Sergipe and Alagoas. The expectation is that it will be possible to extract 20 million cubics of gás meters per day. This is the equivalent of 1/3 of Brazilian production today.

According to a report published on Sunday (16.Jun.2019) by the newspaper O Estado de S.Paulo, consultancy Gás Energy estimates that the exploration of these fields should result in R$ 7 billion in annual revenue for the oil company and its members.

These fields have placed the State of Sergipe on the world natural gas route. In five years, the state alone must move 40 million cubic meters per day of gas, a volume that corresponds to more than four times the current consumption capacity of the entire Northeast Region of Brazil.

Paradoxically, Petrobras announced this discovery days after the Federal Supreme Court (STF) has released the sale of state-owned subsidiaries without legislative approval, mainly the Associated Gas Company (TAG). The Court also dismissed the need for bidding. It is possible that Petrobras already had information about the discovery before approval.

According to journalist Luis Nassif, "a mere survey of the last few episodes proves the scandalous articulation surrounding the burning of public assets." For Nassif, "it is evident that the giant discovery completely changes the calculations on the Internal Rate of Return of TAG."

Luis Nassif believes that minority shareholders in Brazil should sue Petrobras for potential losses from this strange coincidence in the near future.

Joaquim Levy's departure from BNDES begins a difficult week for the Brazilian economy

The dispute between the Economy Minister, Paulo Guedes, and the president of the Chamber of Deputies, Rodrigo Maia, about the Pension Reform should continue in the coming days.

In addition, Joaquim Levy's exit from the BNDES brings more uncertainty to the government's economic team. Many analysts point out that Paulo Guedes would already be preparing a possible exit from the government. For political analyst Marco Antonio Villa, Paulo Guedes would be preparing his resignation due to economic stagnation and the changes made by the deputies in the Guedes proposed Pension Reform project.

Villa believes that Guedes can leave and blame the continuity of the economic crisis on the Chamber of Deputies and the Federal Senate. Despite this scenario, it seems that the House of Representatives and the Senate will continue with the Pension Reform and other policies aimed at improving the national economic picture.

The Central Bank's Focus report published today revised the GDP forecast to less than 1%, ie the economic picture continues to worsen. Analysts are forecasting cuts in the Selic rate because of Brazil's poor economic performance.

Economists interviewed by the Central Bank (BC) in the Focus Bulletin reduced for the 16th time the growth forecast of the Gross Domestic Product (GDP) in 2019. Thus, in the bulletin released on Monday (June 17, Brazilian economy for this year is forecast at 0.93%.

Request for the resignation of BNDES president, Joaquim Levy, leaves the Brazilian government even more ideologically isolated

Joaquim Levy's resignation request from the BNDES presidency left several members of the Brazilian National Congress with the impression that the economic team led by Paulo Guedes also became a "crisis plant." The president of the Chamber of Deputies, Rodrigo Maia, told Estado de S. Paulo newspaper that he was "perplexed" by the way the minister Paulo Guedes treated his subordinate. For him, Levy was a quality framework that he had to add to guarantee the reforms that Brazil needs right now.

After the resignation of Joaquim Levy, Bolsonaro government adds 19 casualties in the second step. This coupled with the number of ministers (3 in total) who have also left after untimely measures by President Jair Bolsonaro and his sons bring the number of people who left the government in the first six months of the administration to more than 20 people.

According to the magazine Exame, "the series of layoffs reinforces the tendency of the Bolsonaro government to entrench itself in more extreme positions".

Levy was the World Bank's chief financial officer between 2016 and 2018 and superintendent-director of Bradesco, one of Brazil's largest private banks, between 2010 and 2014. He was also finance minister during Dilma Rousseff's left-center government.

According to the Minister of Economy of Brazil, Paulo Guedes, the report of the Pension Reform made by the deputy Samuel Moreira (PSDB-SP) "aborted the new Social Security"

The Minister of Economy, Paulo Guedes, said today (14.jun.2019) that the opinion presented yesterday (13.jun.2019) by the PEC rapporteur (Proposed Amendment to the Constitution) of Social Security in the Special Committee, Mr. Samuel Moreira ( PSDB-SP), will force Brazil to make a new Reform in 5 or 6 years.

According to Guedes, if Congress "approves the reform of the rapporteur, which is an R$ 860 billion cut, have aborted the new Social Security. They will show [congressmen] that there is no commitment to future generations."

For Guedes, they were "privileged" public servants who pressed for cuts in the Social Security Reform and for maintaining their privileges.

Paulo Guedes's criticisms of the report presented by Rep. Samuel Moreira led the dollar to close 1.15% in Brazil, quoted at R$ 3.89991, after hitting a maximum of R$ 3.9136. The rise came shortly after Guedes criticized the Social Security report.

Cost of living in Brazil: health insurance prices rise 382% in 18 years

The price of individual health plans rose 382% in 18 years in Brazil. According to a survey by the Institute of Applied Economic Research (Ipea), between 2000 and 2018, the price of individual health insurance in Brazil grew more than double the rate of health sector inflation in the period, which was 180%. The Ipea evaluates that the National Health Agency (ANS) completely failed in the attempt to regulate the service. Ipea also proposes a new calculation methodology that considers the National Broad Consumer Price Index (IPCA) as a reference for the adjustment.

In an official statement, the National Agency for Supplementary Health (ANS) said that "it considers technically inadequate the comparisons made [by IPEA] between the index of readjustment of individual health plans and consumer price indexes, whether general, such as the IPCA, or specific".

Currently, according to ValorInveste website, Brazil has about 47 million beneficiaries of private health insurance. Over the past three years, more than three million people have stopped having health care plans because of rising unemployment and falling incomes.

Bolsonaro dismisses the third minister in only six months of government

President Jair Bolsonaro dismissed yesterday (5.Jun.2019) General Carlos Alberto dos Santos Cruz, who was in charge of the Secretary of Government of the Presidency of the Republic of Brazil. He will be substituted by another military man, Army General Luiz Eduardo Ramos Baptista Pereira.

In recent weeks, Santos Cruz has come under attack from the former astrologer and guru of the Bolsonaro clan Olavo de Carvalho and Carlos, the president's son. Olavo even directed offensive and obscene language to Santos Cruz in social media.

The departure of Santos Cruz is being seen as a blow to government approval with part of the private sector. Many businessmen question whether the decision could be the beginning of a conflict with the most pragmatic wing of the government.

Santos Cruz is a highly respected military man. He commanded troops on a mission to Haiti from January 2007 to April 2009 and also led thousands of soldiers between 2013 and 2015 at another UN peacekeeping mission in the Democratic Republic of Congo.

Petrobras (PETR3;PETR4) changes its pricing policy, which will no longer have periodicity for readjustments

Petrobras announced last night that, from now on, the price adjustments of diesel and gasoline practiced by the company in Brazil will be carried out without defined periodicity. In practice, Petrobras will be able to adjust fuel values in Brazil at any time, depending on the price of a barrel of oil in the international market and the exchange rate variation.

The company also announced a 4.6% reduction in the average price of diesel in its refineries, to R$ 2.0664 per liter, as of today (13.Jun.2019).

The company had also announced, on June 11, 2019, that it would reduce the average gasoline price by 3% in its refineries. This was the second drop in the price of gasoline in the month, on June 1, Petrobras reduced the price of gasoline by 7.16%.

The problem is that the fall in the price of fuel or delay or not reaches the gas stations where people fuel their vehicles.

Caixa will sell R$ 7.2 billion in Petrobras shares

Caixa, a state-owned Brazilian bank, will sell 241.3 million shares of Petrobras, equivalent to 1.85% of the company's capital. The transaction will involve only common shares, which give voting rights to the shareholders in the meeting  (Caixa holds a 3.2% share of these shares). Of the total moved, R$ 7 billion will be with the bank. The gain estimate was made based on the share price on June 7, when the papers were traded at R$ 29.75. The offer will involve distribution in Brazil and abroad in the form of American Depositary Receipts (ADRs).

It is positive for Caixa Econômica to sell the shares. The main business of this state-owned bank is not to buy shares but to finance the construction and purchase of own houses for Brazilians. The decision also satisfies the new government, which intends to privatize parts of Petrobras after the STF's positive decision in that regard.

However, due to the adjusted balance sheets, where the currency hedge account only increases, one day this will have consequences. The Securities and Exchange Commission of Brazil (CVM), the securities market authority in Brazil, has not yet explained what will be the deadlines for companies with Petrobras to settle such an account. The minority shareholders still do not know the position of Petrobras in this regard.

Industry in Pará has the worst result in 17 years

According to the Brazilian Institute of Geography and Statistics (IBGE), the downturns in the production of mining and quarrying made the industry of Pará fall by 30.3% in April 2019, compared to March 2019. It was the biggest drop since the beginning of the historical series, and the third consecutive decline, accumulating losses of 38.8% in the period. Considering the first four months of the year, state production fell by 7.8%.

The main reasons for this decline were the risks of breaking down mining dams, such as occurred this year in Brumadinho (Minas Gerais), contamination of indigenous reserves and excessive rainfall. This contributed much to the fall in extractive production.

In addition to Pará, the states of Espírito Santo (-5.5%), Rio de Janeiro (-4.5%), Goiás (-1.4%) and Amazonas (-1.2% %). The survey also showed that 10 of the 15 sites increased production in April, with Pernambuco (8.3%), Bahia (7.4%), Northeast Region (6.1%) and Mato Grosso (5.1% ), which reversed the negative behavior of March.

São Paulo, the country's main industrial park, was up 2.4%, the most intense since June 2018, influenced by the vehicle sector.

BM&F Bovespa (B3), the São Paulo Stock Exchange, exceeds the number of one million individual investors

BM&F Bovespa, the São Paulo Stock Exchange reached, in May 2019, the number of 1.09 million individual investors. The mode of investment maintained in May the pace of entry of new investors in the wake of the low-interest rate (Selic) environment in Brazil. Thus, the growth in relation to the number of active individuals investors at the end of 2018 was about 35% so far. Continuing the trend thus, the mark of 1.5 million individuals should be reached by the end of 2019.

Despite the growth, the number represents 1.3% of the Brazilian population. To give you an idea, Brazil is very far from the US, for example, where 54% of people invest in the stock market. The growth was announced on June 10 by the São Paulo stock exchange operator.

B3 also reported that the Brazilian domestic stock market turnover in May 2019 reached 15 billion reais, an increase of 5.8% compared to the same month last year. This gave B3 26% higher contract revenue.

The Intercept: "Judge Sergio Moro repeatedly counseled prosecutor Deltan Dallagnol via Telegram during more than two years of Operation Car Wash"

The Intercept, site of the journalist Glenn Greenwald presented messages exchanges between prosecutors such as Deltan Dallagnol and the then judge and current Justice Minister Sérgio Moro about some investigated issues and possible political motivations of the investigations. The targets of the talks recently reported that they had their cell phones hacked.

According to The Intercept, leaked documents "reveals serious ethical violations and legally prohibited collaboration between the judge and prosecutors who last year convicted and imprisoned former Brazilian President Luiz Inácio Lula da Silva".

Growth forecast for the Brazilian GDP is reduced for the 15th time in a row and now stands at 1%

The financial market's estimate for economic growth in this year reached 1%, after 15 consecutive reductions. This is what the Focus bulletin shows, which is a result of the Brazilian Central Bank's research to financial institutions, released every Monday.

In early 2019 financial institutions, according to this same bulletin Focus, forecasted a 2.6% growth in the Brazilian economy this year. However, this bet on the world of finance was mistakenly based on a very positive judgment of Jair Bolsonaro's ability to lead the country's economy. With the passage of the months, this bet turned out to show that the analyzes were, for the most part, politically charged and not based on more rational forecasts of the Brazilian economic indicators.

For many analysts, Brazil is flirting with a new recession. Domestic demand continues to decline considerably and has lasted for two consecutive quarters. This has already been pointed out by Goldman Sachs.

To make matters worse, according to journalist Denise C. de Toledo, the "Preliminary Employment Indicator (IAEmp) recorded the 4th monthly drop followed in May, according to the FGV. The index fell 6.7 points in May to 85.8 points, the lowest level since June 2016 (82.2 points). Reflection of the expectation of weak expansion of the economy".

Bolsonaro's idea of creating a single currency for Brazil and Argentina is harshly criticized by economists

In his visit to Argentina, Brazilian President Jair Bolsonaro said that he and the Brazilian Economy Minister, Paulo Guedes, are starting the debate on the achievement of the "dream of a single currency in the Mercosur region, the real peso".

Bolsonaro's speech, which occurred last Friday (07.Jun.2019), was widely criticized in Brazil. The president of the Chamber of Deputies, Rodrigo Maia, has published in his Twitter account: "Is it? Will it devalue the real? Will the dollar end up worth R $ 6.00? Coming back inflation? Hope not".

Gustavo Franco, former president of the Brazilian Central Bank and one of the parents of the Real Plan, criticized the idea of creating a single currency between Brazil and Argentina. According to Thomaz Favaro, the Latin American director of Control Risks, the 'real peso' would bring exchange problems from Argentina to Brazil

Economic journalist Miriam Leitão was quoted as saying: "The possibility of a monetary union between Brazil and Argentina is none." For her, the countries are very different. According to Míriam Leitão, "Brazil has US$ 380 billion in reserves and balanced external accounts, Argentina depends on IMF loans to meet its exchange rate commitments. They have 55% inflation and we are returning to 4%."

The idea defended by Bolsonaro and Guedes also became the target of dozens of memes on the internet. Some people have even argued that the name of the new currency should be "surreal".

Foreigners take out R$ 4 billion and Stock Exchange (Bovespa) in Brazil, says InfoMoney

According to InfoMoney website, the foreign balance on the Bovespa was negative at R$ 4.16 billion until May. For InfoMoney, foreign investors are hesitant about Brazil. They do not want to take positions in the country before the political and economic framework shows some progress.

Construction costs in Brazil grow 0.11% in May

The National Civil Construction Index (Sinapi), released today by IBGE, grew by 0.11% in May, a result below 0.34% in April. This is the lowest rate since November 2016, when it stood at 0.10%.

The share of labor research, with a decrease of 0.21%, influenced the national index.

Nationally, the average construction cost in May of 2019 was R$ 1,131.89, of which R$ 592.48 related to materials and R$ 539.41 to labor. Compared to April, labor fell by 0.21%, while materials rose by 0.39%.

Crisis in the Brazilian industry

According to the Annual Industrial Survey, published by IBGE, the Brazilian industry cut 1.1 million jobs between 2014 when the country officially went into recession, and 2017 – a decrease of 12.5%. The remaining vacancies had wages cut by 14.7%. In addition, Brazilian industry revenue fell 7.7% in the period. Between 2008 and 2017, the segments that lost most jobs were mining coal (-38.7%), manufacturing of petroleum products and biofuels (-32.9%) and manufacturing of wood products ( -22.4%).

The Brazilian industry suffers from the economic crisis that affects Argentina and the decrease in the rhythm of sales of products to the United States. These countries are big buyers of Brazilian industrial products: vehicles, engines, parts, machines, airplanes, according to analyst Vinicius Torres Freire.

Cost of living in Brazil: inflation slows down in May 2019

According to IBGE, official inflation in Brazil slowed down to 0.13% in May 2019. It is the lowest result for May since 2006 (when the index was 0.10%) and the lowest monthly index of the year. In 12 months, accumulated Extended Consumer Price Index (IPCA) declined to 4.66% but remains above the center of the target set by the government for 2019, which is 4.25%. The exchange rate returned below R$ 4.00 and economic growth is still stagnant. This leads many analysts to bet on an interest rate cut by the Brazilian Central Bank.

The fall in the index was influenced by the deflation of 0.56% in the price of food and beverages. On the other hand, raised housing prices, which rose 0.98%. Health and personal care were also villains in the month, up 0.59%. Fuel expenses also weighed more on Brazilian families' pockets in May. Gasoline, for example, increased 2.60% in the period.

Bovespa B3 opens higher today after the Ibovespa closed down yesterday

The main indicator of the São Paulo Stock Exchange, B3, opened higher today (06.Jun.2019), after having retreated more than 1% the day before. The recovery occurs because of the relatively benign scenario abroad.

Yesterday, Ibovespa had shown a fall due to new disagreements between the National Congress and the government of Jair Bolsonaro. The approval of the supplementary credit, aimed at allowing the government to continue to spend above the spending ceiling, was postponed again. This left the Brazilian financial market nervous and the reaction was a downturn on the Stock Exchange (Bovespa). Yesterday, the Ibovespa had a 1.75% drop, the highest since May 16, 2019.

Another factor that displeased the Brazilian financial market was the announcement of possible distancing of the current government from liberal policies. Yesterday, according to Bloomberg, the government of Jair Bolsonaro assumed that it could demand further flexibilization of the limit of public expenses after the ordeal of the Pension Reform. That would throw down the commitment of the minister Paulo Guedes's team to fiscal balance.

Brazil murder rate is one of the biggest in the world in absolute terms

Brazil had 65,600 murders in 2017, reveals Atlas of Violence by Ipea and the Brazilian Forum of Public Security. The survey considers records of the Mortality Information System, produced by the Ministry of Health.

The report warns of violence against youth, blacks, women and the LGBTI + population.

75% of homicide victims in Brazil in 2017 were black, according to the Atlas of Violence. Within a decade (from 2007 to 2017), the rate of blacks murdered rose by 33.1%. The murder was also the cause of half of the deaths of young people in Brazil in 2017.

This was the first time the Atlas of Violence included statistics on violence against the lesbian, gay, bisexual, transgender, transvestite and intersex population.

Another report produced by the Indian Missionary Council (CIMI) analyzed in 2018 data for the year 2017. The CIMI report also showed an increase in violence against indigenous peoples in Brazil. In cases of indigenous murder, the year 2017 registered 110 cases.

Brazil is also a country where there is a lot of violence against journalists. In 2018, the index increased by 36%, according to a report by the National Federation of Journalists (Fenaj). According to a survey, 227 journalists were verbally or physically attacked. 64 journalists were killed in their practice in Brazil between 1995 and 2018, according to a report by the Public Prosecutor's Office.

According to the magazine Superinteressante, Brazil has had more homicides than all of these countries in 2015: USA, Canada, Morocco, Algeria, Tunisia, Libya, Egypt, China, Mongolia, Malaysia, Indonesia, Australia, New Zealand, South Korea, Belgium, Netherlands, Luxembourg, Germany, Italy, Switzerland, Denmark, Norway, Sweden, Finland, Estonia, Latvia, Lithuania, Poland, Czech Republic, Slovakia, Austria, Hungary, Belarus, Ukraine, Romania, Moldova, Bulgaria, Slovenia, Croatia, Bosnia and Herzegovina, Serbia, Montenegro, Albania, Greece and Macedonia.

Caixa reduces interest rates in an attempt to rekindle the Brazilian real estate market

Caixa, the Brazilian state-owned bank and one of the five largest banks in the country, announced today (5.Jun.2019) the reduction of interest charged on real estate financing and the equalization of the rates practiced in the SFH (Housing Financial System) less than R$ 1.5 million – and in the SFI (Real Estate Financial System) – for higher value properties.

Now the two systems will practice rates ranging from 8.5% per year to 9.75% per year. Interest on the SFH (which also allows the use of FGTS funds) now ranges from 8.75% per year to 9.75% per year. In the SFI, they range from 9.75% to 11%.

For customers who do not have a direct relationship with the institution (counter), the maximum rate went from 11% per year to 9.75%.

The FGTS is an account intended for Brazilian workers. It's a cash reserve. Practically, a saving. The fund seeks to ensure the worker in difficult situations, such as dismissal without just cause and also in the acquisition of a property. The FGTS is a right guaranteed by the Brazilian Federal Constitution that every employer pay monthly.

The financial market in Brazil continues to believe in the economic team of the current government, even with the continuous negative results of the economy in 2019

Speaking at the Finance and Taxation Commission of the Chamber of Deputies, Brazil's economy minister, Paulo Guedes, defended the pension reform as the only way to reposition the country on the path of growth. The speech was viewed positively by the Brazilian financial market. Guedes said that it is necessary to disinfect the public machine and "slow down hiring" of more public servants.

The minister's speech was well received by the financial market, so much so that at the end of yesterday (04.jun.2019) the Stock Exchange (Bovespa) closed close to the high of the day. Therefore, Brazilian financial actors continue betting on the economic team of the current government, even after the continuous negative numbers of the economy.

As I have already written here, "the truth is that the Brazilian Financial Markets (analysts and economists) and the Brazilian businessmen bet very high on a government that was not able to respond to the height to that bet".

Many analysts and economists continue to make the same error of analysis and do not see or do not want to see the undeniable distance between the speech and the actual capacity of the current government to deliver reforms and public policies capable of taking Brazil out of the crisis.

Guedes again confuses some things. The creation of a digital government, where some services are being offered via the internet, does not necessarily mean hiring fewer public servants. When compared to other OECD countries, the level of public servants in Brazil is much lower than in most other countries. The country lacks, for example, the necessary number of doctors, teachers, and police to meet the basic needs of the country.

BTG Pactual, Brazil's largest investment bank, announces it will make an offer to sell 48 million units

BTG Pactual SA, Brazil's largest investment bank, announced today (05.Jun.2019) it will initially sell 48 million units as part of a secondary stock offering with restricted efforts. According to the note, the bank itself will be the lead coordinator, along with Morgan Stanley, Bradesco BBI, UBS, and Banco do Brasil.

BTG announced this decision after entering the retail force with its digital platform of investments and disputed this market in Brazil. In May, the bank announced the creation of a new business unit to play all its initiatives in this segment. This area will be led by Amos Genish, former president of Vivo and Telecom Italia.

Brazil: the plague of unemployment

In Brazil, the scourge of unemployment, for many people,  has been replaced by that of depression. More and more Brazilians are becoming mentally ill. Since 2017, according to WHO, Brazil has the highest rate of anxiety disorder in the world. The country also has a population depression rate among the highest five on the planet.

Atualmente, o Brasil está passando por crises de depressão e ansiedade. A população brasileira é a mais ansiosa e estressada da América Latina, segundo a Organização Mundial de Saúde. 9,3% da população brasileira sofre de transtornos de ansiedade.

In the current economic crisis that affects Brazil, this situation only worsens. Compared with the rest of the world, the Brazilian people are the ones who rely less on returning to work. According to a survey by consultancy Michael Page disclosed by the newspaper O Estado de São Paulo, 60% of Brazilians expect to return to the market in three months. This percentage is lower than Turkish, Portuguese and Italian workers, for example - the global average is 64%. As for salary increase, Brazil is also less confident: it ranked 21st among 37 countries, with 59% positive responses, and below the global average (61%).

This sentiment occurs even after the unemployment rate in Brazil fell to 12.5% in the quarter ended in April of 2019, according to data from the Brazilian Institute of Geography and Statistics (IBGE). This is a slight decrease compared to the rate of 12.7% recorded in the quarter ended in March.

The problem is that this drop is very small when we think about the universe of unemployed people in Brazil. Currently, unemployment still reaches 13.2 million people in the country. Despite the decline, the underutilized population - a group that brings together the unemployed, those who are underemployed (less than 40 hours a week worked), the discouraged (who gave up looking for work) and those who might be employed, but do not work for different reasons – reached 28.4 million, a record number of the historical series started in 2012.

Rodrigo Maia, the president of the Brazilian Chamber of Deputies, denies that he has made a political agreement with President Jair Bolsonaro

In an interview with the newspaper O Globo, Rodrigo Maia, the president of the Chamber of Deputies of Brazil, denies that he has made a political agreement with President Jair Bolsonaro. 

According to Maia, no pact was signed. Just a conversation. The president of the Chamber of Deputies also said that the current government does not have a formulated agenda. Meanwhile, Brazil would be headed for "social collapse".

Today, the deputy that is writing the report for the Pension Reform, Samuel Moreira (PSDB-SP), said that he seeks alongside Rodrigo Maia, "build a majority before submitting the report." Moreira said he should present his text until next Thursday.

To make matters worse, in the difficult economic scenario, Brazil suspended today meat exports to China after an isolated case of "mad cow". The suspension of trade, according to the Ministry of Agriculture, is provided for in the bilateral protocol signed by the two countries in 2015. Also according to the Ministry of Agriculture, the suspension is temporary until the Asian country completes the evaluation on health information already transmitted by Brazil about the episode.

Projection of the Brazilian GDP for 2019 reduces for the 14th consecutive week

According to the Focus Bulletin, a report produced by the Brazilian Central Bank, the Brazilian GDP growth estimate for 2019 was reduced for the 14th consecutive week. The new forecast, according to the report that refers to the projections made by financial institutions in Brazil, the GDP of 2019 should stand at 1.13%.

Four weeks ago, the expectation was 1.49% of GDP growth in Brazil. This is the lowest projection since January 2019.

According to economist and partner of the consultancy Tendências, Alessandra Ribeiro, "the numbers of the first quarter reinforced the picture of a weak economy" in Brazil.

The chief economist of Fator Bank, José Francisco de Lima Gonçalves, believes that the investment in Brasil "is performing poorly and I do not see how this can be reversed this year and next year."