Petrobras (PETR3; PETR4) suffers from Saudi Arabia's decision to drop the price of oil below US$ 30 to harm Russia/; Vale shares (VALE3) falls 10%

The disputes between Saudi Arabia and Russia over oil prices collapsing. In addition to this dispute, there is also a decline in product consumption due to the new coronavirus, which has been pushing the global economy into recession, a movement that should catch Brazil in a very fragile situation. Analysts say the crisis between the government and Congress, the target of a demonstration encouraged by President Jair Bolsonaro, scheduled for March 15, increases distrust of the country.

2019 is going to be a tough year for Petrobras. Due to the economic effects of Conav-19, there was a drop of 24% in the international price of oil. This led the Brazilian state-owned company to lose about 80 billion reais in market value on the Brazilian stock exchange B3 until 06.03.2020.

Now, with the dispute between Russia and Saudi Arabia influencing oil prices, even more, Petrobras has been hit again. Since the beginning of the year, Petrobras has seen the prospect of annual cash generation falling by 20 billion dollars.

Earlier today, the Ibovespa registered a sharp drop in Petrobras' shares (PETR3; PETR4), which fell 23%; Vale (VALE3), which fell 8%; and banks, which also fell 8% as oil prices plunged up to 30% after Saudi Arabia lowered the prices of the commodity and with projections of a drop of up to $ 20 a barrel.

According to the website Infomoney, "Petrobras' ADRs, on the NYSE pre-market, dropped by up to 20%, Vale's were down 22% and Itaú's were down by around 10% on a day of a general downturn in the stock market".

Earlier this morning, the Brent-type oil futures contract, which serves as a benchmark for the prices charged by Petrobras, dropped 19.9% to 36 dollars a barrel on the London Stock Exchange.

According to Iedi, Brazilian industry got smaller and smaller in the last 50 years

A survey by the Institute for Industrial Development Studies (Iedi) indicated that Brazil had the third-largest retraction in the industrial sector among 30 countries since 1970, trailing only Australia and the United Kingdom.

Industrial production, the main factor in the development of a country, has lost more space in the Brazilian productive structure. Currently, this sector presents numbers at the same levels as those of the 1910s.

According to the IBGE, after two years of growth, Brazilian industrial production fell by 1.1% in 2019. In the last 50 years, the participation of the Brazilian industrial sector in the national GDP has shrunk from 21.4% to 12.6%.

The El País website reports that "data released this Wednesday (March 4, 2020) reveal that the crisis that has been going on in the Brazilian industry for years has shown no signs of improvement. In the last three months of last year, the industrial sector remained stagnant and advanced 0.1% compared to the previous period.

According to El País, "the retraction further reinforces the downward trend in the participation of the manufacturing industry, responsible for converting raw materials into production and consumption goods, in GDP in recent years. In 2019, the sector that encompasses the plastics, food, beverages, metallurgy, textile industry, among others, represented only 11% of economic activity. Two decades ago, activity accounted for more than 15% of GDP. In 1970, the participation was 21.4%".

Fed cuts interest rates and Covid-19 may lead Brazilian Central Bank to rethink monetary policy and cut interest rates again in Brazil

The Federal Reserve's (Fed) decision to cut interest rates led the Brazilian Central Bank to practically discard the minutes of the institution's last meeting of the Monetary Policy Committee (Copom). In it, the Brazilian Central Bank indicated the end of the process of cutting the basic interest rate (Selic), which currently stands at 4.25% per year, the lowest level in the country's history.

Yesterday, the Brazilian Central Bank issued a new note in which it indicates that the Monetary Policy Committee (Copom) may reduce the interest rate again. This change in Brazilian monetary policy intends to further slow the country's economy, mainly due to the unfolding of the economic crisis generated by the new coronavirus (Covid-19).

Meanwhile, in Brazil, Economy Minister Paulo Guedes insists on long-term reforms (pension reform, administrative reform, and tax reform) to combat short-term economic issues (coronavirus and Fed interest rate cuts).

Concurrently, in Brazil, rains on the coast of São Paulo and Rio de Janeiro cause the death of 19 people and leave hundreds homeless. The labor market in Brazil, according to IBGE, continues to break records in the growth of informality. For this reason, according to the IBGE, "since 2016, the country has shown a drop in the proportion of the employed population that contributes to a social security institute". This may result in the effects of the Pension Reform not having the results expected by the government.

According to a study by the Instituto Socioambiental (ISA), deforestation of Indigenous lands in Brazil increased in a scary way in 2019

According to a study made by the Instituto Socioambiental (ISA), deforestation is exploding in territories with the presence of isolated Indigenous peoples in the Amazon. Data from the Instituto Socioambiental (ISA) point out that, "in 2019, the cutting of the forest in these lands grew 113%. In the total of all the Indigenous Lands (TIs), the increase was 80%". 

The figures are in an ISA report that will be presented today (03.03.2020), at the Human Rights Commission of the United Nations (UN).

The survey indicates that 42,679 hectares were illegally destroyed in 2019, the first year of the Jair Bolsonaro government, which considerably reduced environmental control policies in the country, which, in turn, contributed to the reduction of inspection, the increase in deforestation in public lands and, consequently, the violation of the rights of Indigenous peoples.

According to the report presented by ISA, "the outlook for isolated Indigenous peoples in Brazil, therefore, is devastating. With the explosion of deforestation and the destruction of forests and the advance of illicit practices, such as mining, illegal logging and land grabbing of land, the existence of these groups is seriously threatened".

Confirmation of a Coronavirus case (Covid-19) and president Jair Bolsonaro endorsing anti-democracy protests are the subjects of the most important Brazilian newspapers

The newspaper O Estado de S. Paulo states that the stock market falls 7% after the arrival of the coronavirus in Brazil. The Valor Econômico newspaper reports that coronavirus drops the stock market and companies lose R $ 260 billion. O Globo publishes that the arrival of coronavirus in Brazil causes the stock market to plummet 7% and Correio Braziliense reports that coronavirus causes losses of R$ 290 billion in just one day.

According to The New York Times, "a 61-year-old São Paulo man who returned recently from a business trip to Italy has tested positive for the coronavirus, Brazilian health officials said on Wednesday (26.02.2020), confirming the first known case in Latin America and sending a shudder through the entire region".

In addition, there is a huge criticism of President Jair Bolsonaro by a large part of the media, politicians, leaders of civil society institutions and members of the STF (Supreme Federal Court), such as Judge Celso de Mello, who said that " Bolsonaro is not up to the job if he supported an act against Congress".

According to The Guardian, "Jair Bolsonaro’s apparent endorsement of protests designed to cow Brazil’s democratic institutions has sparked outrage across the political spectrum with one lawmaker warning of a return to the dark days of dictatorship if the demonstrations are not opposed".

Evangelical preacher Ricardo Lopes Dias, who worked on a mission to evangelize Indigenous people in the Amazon, is appointed as general coordinator of Isolated Indigenous people, one of Funai's most sensitive sectors

The government of Jair Bolsonaro, through Funai (Brazilian National Indian Foundation), appointed evangelical preacher, anthropologist, and missionary Ricardo Lopes Dias to the General Coordination of Isolated Indians and Newly Contacted, the most technical position of the agency.

Lopes Dias is a theologian and served for many years in the New Tribes of Brazil Mission (MNTB), an organization that aims to evangelize indigenous people.

According to El País, the appointment of the anthropologist produced a series of criticisms made by Indigenous entities and servants of the Funai itself, who fear a change in the policy practiced in the country since the end of the military dictatorship: to protect these peoples without forcing any type of contact, as it happened before the re-democratization with the objective of "evangelizing" and "integrating" them into society.

For the Indigenous leader, Sonia Guajajara, with the indication of the evangelical preacher Lopes Dias, "the danger [for the Indigenous people] now comes from who has the duty to protect them", that is, Funai itself.

According to The Guardian, Victoria Tauli-Corpuz, a UN special rapporteur, says that Jair Bolsonaro’s ‘dangerous’ appointment of Ricardo Lopes Dias threatens remote Indigenous people. For her,  “this is a dangerous decision that may have the potential to cause genocide among isolated Indigenous people.”

According to the former Minister of the Environment, Marina Silva, "the president of FUNAI changed the internal rules of the agency so that a person outside the staff of career servants would assume a commissioned function of leadership. He appointed Mr. Ricardo Lopes Dias to be the new coordinator of isolated and recently contacted Indigenous people".

For her, "an area that requires a lot of experience and technical knowledge cannot be held hostage by patronage, at the risk of returning to a policy of the time of the dictatorship that does not respect the condition of isolation of some Indigenous peoples".

Cost of living in Brazil: January inflation is 0.21%, the lowest for January since the beginning of the Real Plan, in 1994

According to IBGE, the official inflation in Brazil, as measured by the Broad National Consumer Price Index (IPCA), decelerated to 0.21% in January of 2019, after registering an increase of 1.15% in December 2018. It is the lowest result for a month in January since the beginning of the Real Plan, in July 1994. In the accumulated of the last 12 months, the indicator registered 4.19%.

For economist Monica de Bolle, director of Latin American studies and emerging markets at Johns Hopkins University, "Brazil is experiencing a 'tropical version' of secular stagnation, with a stagnant economy, without reacting, and registering inflation contained below the target. It is not yet known what effect a reduction in interest rates could have on the economy in the current scenario".

To make matters worse, according to the International Monetary Fund (IMF), economic activity in Latin America and the Caribbean was stagnant in 2019, making it more challenging to resume growth in the region. The inflation figure for January in Brazil points to a certain stagnation remaining.

According to the IMF report, Brazil may grow by 2.2% this year and 2.3% in 2021 in the Gross Domestic Product (GDP). However, after the emergence of coronavirus cases in Wuhan, China, Brazil's main trading partner, these figures are being revised downwards by the Brazilian financial market.

Government of Jair Bolsonaro excludes the participation of civil society members of the National Environment Fund council

According to the website G1, The National Environment Fund (FNMA), managed by the Brazilian Ministry of the Environment and responsible for promoting the development of sustainable activities in the country, distributing funds collected in forestry concessions, will no longer have the participation of members of civil society.

Until then, the council had the participation of representatives of the Brazilian Association of Environmental Entities (Abema), the National Association of Municipalities and Environment (Anamma), the Brazilian Forum of NGOs and Social Movements for the Environment and Development (FBOMS), of the Brazilian Society for the Progress of Science (SBPC). Now they will no longer have a say in FNMA decisions.

Paradoxically, during the presidential campaign that elected Jair Bolsonaro, one of the themes of the then-candidate and now president was "more Brazil, less Brasília". However, what is seen in government decisions is the exact opposite. By withdrawing civil society from FNMA discussions, the government is adopting a policy of more Brasilia and less Brazil.

Now, the FNMA will manage a budget of more than R $ 33 million without the participation of civil society. In 2019, the Bolsonaro government reduced the number of participants in the National Environment Council (Conama) from 22 to 4. Thus, "the more Brazil, less Brasilia" of the campaign is consolidated as an argument used to elect a government that increasingly decreases the power and participation of decision-making councils and forums in decisions and constantly and willingly distances itself from the interaction with representatives civil society.

Brazilian BC cuts Selic and rate drops to historical level of 4.25% per year

The Monetary Policy Committee (Copom) of the Central Bank (BC) of Brazil decided to reduce the basic interest rate, the Selic, from 4.5% to 4.25% per year. This is the lowest Selic rate since 1999 when Brazil adopted the monetary policy of inflation targeting.

The expectation of financial market specialists in Brazil is that the Selic will only rise again in 2021. In a statement, the Copom stated that its next steps "will continue depending on the evolution of economic activity, the balance of risks and the projections and expectations of inflation, with increasing weight for the calendar year 2021".

In general, the Brazilian financial market understood the new cut as a wise decision by the Brazilian Central Bank, as it will reduce interest rates and may positively impact the productive sectors of the economy, which, in turn, may increase the generation of jobs in Brazil. The measure also helps to lower the country's public debt costs.

Despite the Selic cut, market interest rates remain exorbitant in Brazil. According to an article published in the Jornal dos Economistas, written by the national coordinator of the Brazilian Citizen Debt Audit, Maria Lucia Fattorelli, the fault lies with the Brazilian Central Bank itself.

She believes that "the financial market charges interest as it sees fit on loans, overdraft, credit card etc. First, because there is no regulation that limits interest: it should be noted that since 2003, part of Article 192 of the Brazilian Constitution that limited real interest to 12%, above which the practice of usury would be configured ".

The water crisis in Rio de Janeiro remains unsolved

Cedae (State Water and Sewage Company) leaves 67 neighborhoods in the city of Rio Janeiro and 6 other cities in the state without water.

The Guandu Treatment Station, one of the largest in the country, stopped its activities for 14 hours due to the presence of detergent in the spring.

In total, there is no water supply in 67 neighborhoods in the capital and in six municipalities in the Baixada Fluminense, where 7 million people live.
For the sanitation specialist Renato Falcão Dantas, "the trend is getting worse", in a report published by O Globo.

In several parts of the city of Rio de Janeiro and Baixada Fluminense there is a lack of mineral water in supermarkets. Residents have been consuming mineral water for three weeks so as not to consume the muddy and fetid water that is coming out of the taps.

According to technicians, the water that is coming out of the taps is contaminated by geosmin, an organic compound formed by carbon, hydrogen, and oxygen, and produced naturally by algae.

Brazilian industrial production closes 2019 with a drop of 1.1%; informality in the labor market in Brazil is the highest in the last 4 years

Segundo a Pesquisa Industrial Mensal (PIM-PF), divulgada pelo IBGE, "a produção nacional da indústria brasileira recuou 1,1% no ano de 2019, após dois anos seguidos de crescimento em 2017 (2,5%) e 2018 (1%)".

De acordo com o gerente da pesquisa, André Macedo, "das 24 atividades pesquisadas, 16 tiveram queda no ano. A produção industrial pode estar sendo impactada pelas incertezas no ambiente externo e também pela situação do mercado de trabalho no país que, embora tenha tido melhora, ainda afeta a demanda doméstica”.

According to the Continuous National Household Sample Survey (Continuous PNAD), also published by IBGE, informality in the Brazilian labor market, that is, the sum of workers without a license, domestic workers without a license, an employer without a CNPJ, an own account without CNPJ and auxiliary family worker, reached 41.1% of the employed population in 2019. This total is equivalent to 38.4 million people, the largest contingent since 2016.