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.