The B3, the main indicator of the Bovespa, falls after Brazilian Economy Minister Paulo Guedes threatens to resign

Today, May 24, 2019, the Bovespa Index had its third consecutive day of low. B3's main share index rose more than 1% in the morning, but lost its force in the afternoon and closed 0.30% lower at 93,627.80 points.

This fall occurred after VEJA magazine published an exclusive interview in which the Economy Minister, Paulo Guedes, said he would resign if reform proposal becomes just a "little Pension Reform".

In the week, however, the Brazilian stock market was up 4.04%.

The dollar, on the other hand, closed today at R$ 4.0152, the lowest price in 10 days. The Brazilian Real was the emerging currency that strengthened the most on Friday in relation to the US currency.

One-fifth of Brazilian families use coal to cook food because of pricing policy for household gas of Petrobras

According to a survey published by the IBGE (Pnad Contínua), the impoverishment of the population produced by the prolonged economic crisis combined with rising unemployment and the price of LPG (Liquefied petroleum gas) cylinder led one-fifth of Brazilian families to use firewood or charcoal for cooking. Today, 14 million households prepare food in this way, an increase of 27 percent or three million homes between 2016 and 2018. In the Southeast fo Brazil, growth was 60 percent.

Meanwhile, Petrobras maintains a more expensive price for cooking gas than the one practiced internally since 2018 to recover losses that the company has had in recent years. It is a monopoly that harms the Brazilian people for the benefit of foreign and Brazilian investors.

Unfortunately, this pricing policy of Petrobras is driving the poorest classes in Brazil to return to using firewood to make food. A return to the Middle Ages. It is a country where the "modernity" of the "market prices" practiced by Petrobras forces the use of firewood and coal.

In Brazil, the readjustments in the price of LPG (liquefied petroleum gas) practiced by Petrobras are quarterly and consider international price averages and the exchange rate in previous quarters. It is this policy that led thousands of Brazilians to cook between soot and smoke.

Brazilian consumer confidence index retreats for the 4th consecutive month

Getulio Vargas Foundation (FGV) released today that the Brazilian consumer confidence index declined 2.9 points in May compared to April, from 89.5 to 86.6 points.

This is the lowest level of the index from October 2018, when it stood at 85.4 points. Currently, the consumer confidence index accumulates a loss of 10 points in 4 months.

According to Viviane Seda Bittencourt, "the result of May 2019 shows a significant increase in consumer dissatisfaction with the current situation, especially among families with lower purchasing power. A change in this situation seems to be conditional on the reduction of the high levels of political and economic uncertainty observed in the country today. "

US Dollar continues high in Brazil

The rise in the dollar increases the cost of living in Brazil. Many products sold in Brazil have their prices linked to the US dollar quotation. Drugs and fuel prices are deeply affected by the dollar's price in Brazil.

Foreign capital flows are very important for Brazil. However, the slow pace of Pension Reform in the National Congress drives international investors to become more pessimistic about making new investments in Brazil.

Since May 16, the price of the US dollar in Brazil has exceeded R$ 4.00 and remained above this level. Today, the dollar is up in the Brazilian financial market.

Many analysts are saying that it will only return to a lower level if there is an improvement in the climate abroad, with a possible understanding between China and the United States, or if there is greater confidence in the approval of the Pension Reform in Brazil.

Brazilian legislature approves tax reform without the help of Jair Bolsonaro's government

Without the help of the government of President Jair Bolsonaro, the Constitution and Justice Commission of the Chamber (CCJ) of Deputies approved the admissibility of the tax reform. 

The proposal provides for the replacement of five taxes by one, the IBS, within ten years. The objective is to simplify and make more transparent the collection of taxes.

The text, authored by deputy Baleia Rossi (MDB-SP) and the economist Bernard Appy, director of the Center for Fiscal Citizenship (CCIF), goes to the special committee without any help from the government, that now is seen as an impediment to the adoption of reforms.

The Chamber of Deputies, therefore, decided to carry out its own economic agenda without any articulation by the government of Jair Bolsonaro. 

On the day Congress began to vote on a proposal for tax reform, the Federal Revenue Secretary of the current government, Marcos Cintra, declined an invitation to discuss the issue in the Chamber of Deputies. Thus, the only government representative in the area decided would not participate in the debate and approval of the reform made today in the CCJ.

After approval of the text in the CCJ, Cintra said that the government will support tax reform approved today. Cintra's speech was seen as paradoxical.

Brazilian public banks will have to return to the public coffers around R$ 20 billion in 2019

According to a report published today (January 22, 2019) by the newspaper Valor Econômico, Brazilian public banks will have to return to the Union at least R$ 20 billion in 2019.

Public banks that must return money to the public coffers are Caixa Econômica, Banco do Brasil, BNDES, Banco do Nordeste and Banco da Amazônia.

The funds are part of R$ 86 billion in loans that the institutions received from the federal government as a capital increase during the management of Dilma Rousseff (2011-2016).

According to the publication, the money returned will be used to crush the public debt. In 2019, the government is allowed to stay in the red by up to R$ 139 billion.

Brazilian government announces thousands of state layoffs

In the midst of one of the biggest crises in the history of the Brazilian labor market, the current government announced a severe cut of personnel in Brazilian state-owned companies. The measure is expected to reach more than 25,000 employees by the end of 2019, according to data from the companies and the Ministry of Economy compiled by the "G1" website.

The federal government has already approved seven programs of voluntary dismissal or incentive retirement in companies such as Correios and Embrapa. The official projection is that the downsizing will bring savings of about $ 2.3 billion annually to public coffers.

In the short term, reducing public service employment, particularly during the current time of severe financial crisis, adds workers directly to the Brazilian unemployment lists. It is a measure that reduces consumption and further affects the economy, amplifying the effects of a possible return to recession.

Currently, unemployment reaches 13.4 million Brazilians. Of these, 3 million have been for 2 years or more without formal employment.

Income inequality in Brazil is the highest in seven years

According to a survey by the Brazilian Institute of Economics of the Getúlio Vargas Foundation (Ibre/FGV) released today, income inequality reached the highest level in seven years. The Gini index, which stood at 0.627 in the first quarter of 2019, is the highest since the first quarter of 2012, the beginning of the historical series when the number was 0.608. According to the Gini index, when the closest to 1 more unequal is the country.

The main reasons are the upward unemployment rate, hitting 12.7% in the first quarter of 2019, and the prolonged effects of the recession that began in 2014.

The projected GDP growth in 2019, which is around 1% according to several analysts, will not change this picture. Therefore, the picture of inequality must remain in Brazil at least until 2020.

Brazilian government actions to stimulate job creation undergo cuts

A survey of the Open Accounts Association points out that 25.2% of resources aimed at stimulating job creation. The largest contingency was in the amount allocated to the integration system of employment, labor, and income, which lost R$ 44.8 million. The project to modernize and expand the service network of the unemployment insurance program, of the Brazilian National Employment System, lost R$ 9.6 million. The resources for public registrations in the area of work and employment were reduced by R$ 4.1 million.

The note on contingency in government actions aimed at job creation was seen as discouraging by many economic analysts. Especially when Brazil is experiencing an increase in the number of people looking for work and the federal government decides to cut R$ 59.2 million on actions to stimulate the opening of new jobs in the market.

Jair Bolsonaro moves towards political radicalization

According to the newspaper Folha de S.Paulo, "the text distributed by the President of Brazil, Jair Bolsonaro, to the allies was read by leaders of other Brazilian parties as a nod to radicalization." For politicians of those parties, Bolsonaro wants to return to the command of Brazilian politics using his public support.  According to Folha de S.Paulo, audiences on the internet of Bolsonaro supporters say that "the rotten part of the Congress and Senate, plus the STF (Federal Court of Justice) with the support of Globo Network, are uniting to try to overthrow the captain (Bolsonaro) and we will not let."

Many Brazilian political analysts are comparing the text published by Bolsonaro with the resignation letter of former Brazilian president Jânio Quadros, who also tried, through a text that spoke of "hidden forces" that made it impossible to administer Brazil, win the support of the population. The strategy did not work. Former president Fernando Collor de Mello also tried something similar and the shot backfired. In none of these cases, the presidents gain popular support.

Other analysts believe that this new Bolsonaro strategy was prompted by fears of what might happen in the ongoing investigation of the Rio de Janeiro Public Prosecutor's Office, which may involve Michelle Bolsonaro and Flávio Bolsonaro, the president's wife and son.

Brazilian government self-destructs

Even with the consensus in the Brazilian society of the need for reforms, the government of Jair Bolsonaro proved completely unable to advance the reforms. Today, the president has published a text in which he affirms that Brazil is an "ungovernable" country.

The government of Jair Bolsonaro sold the idea of would go government without doing any political negotiation. This uncompromising stance coupled with the numerous errors and corruption scandals involving ministers and people close to the president put the current government on the path of growing unpopularity.

Brazil's current fiscal framework is unsustainable. The expectation of the approval of a Pension Reform still keeps the economic scenario minimally stabilized. If this does not happen, the trend is that the Brazilian economic scenario will get much worse.

Now comes the news that the National Congress intends to officially take center stage in the discussion on Pension Reform. Deputies of the Special Commission advocate abandoning the government project and instead put a substitute - alternative text to the Proposed Amendment to the Constitution (PEC) number 6 for voting. They do not want to approve the Reform proposed by President Jair Bolsonaro, who has a bad relationship with Congress.