Wednesday, 19 June 2019

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.

Tuesday, 18 June 2019

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.

Monday, 17 June 2019

"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.

Friday, 14 June 2019

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.

Thursday, 13 June 2019

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.

Wednesday, 12 June 2019

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.


Brazil to Host World's Largest Biogas Plant, Pioneering Sustainable Energy

The Louis Dreyfus Company (LDC) marks construction commencement of the world's largest biogas plant from citrus effluents, which is loc...