Cardboard and the late end of the election – 05/28/2023 – Marcos de Vasconcellos

The elections seem to have finally come to an end, in the eyes of the market. With practically six months of delay, investors and businessmen are able to see with some clarity the economic policy of Lula’s (PT) third term. The Fiscal Framework was approved by the Chamber and the pace of inflation calmed down.

With that, businesses and consumers are starting to get back on track. This does not mean optimism with the government, but a little more certainty in the sea of ​​traditional insecurity in Brazil. And these prospects affect prices — of things in the real economy and of stocks on the stock exchange.

To understand the perspectives of the “world of things”, there is an indicator that appears little in the news, but which I find very significant: the IBPO, acronym for the Brazilian Corrugated Cardboard Index. Yes, as the name implies, it measures the shipment of boxes, accessories and cardboard sheets.

No washing machine or computer leaves the factory without its corrugated cardboard packaging. And, as this type of cardboard takes up a lot of space to store, it is only produced when demand is almost guaranteed. Therefore, its production is a good support to try to see the future.

Well then! The total tons of cardboard shipped this year, from January to April, exceeded the volume of the same period last year. Comparing the last five years, in fact, this year’s corrugated cardboard production is second only to 2021 — when we rehearsed that first economic recovery from the pandemic.

Cardboard numbers are in good agreement with the survey carried out with industries in São Paulo, called Sensor, by Fiesp (Federation of Industries of the State of São Paulo). The latest data, from May, points to expansion in the market, in sales, in employment and in investments. This has not happened since August of last year.

The data show an industry taking a breather to get back on track. On the 29th, FGV’s Industry confidence report will be released, updated with May data. In April, that is to say, the Industry Installed Capacity Utilization Level had its biggest advance since September 2020, reaching 80.7%.

The industry, as well as market analysts, sees the approach of a possible reduction in interest rates and, with that, begins to position itself for a movement of more investments and production.

In the latest Focus report, released by the central bank on the 22nd, market specialists predict that we will reach the end of the year with an inflation (IPCA) of 5.80%, a considerable reduction in relation to the forecast made four weeks before 6.04 %. As for the basic interest rate (Selic), the forecast for a decline (from the current 13.75% per annum to 12.50% per annum) is almost taken for granted by the same analysts.

Seeing this repositioning of players on the field is essential for anyone who wants to place their bets on the game from now on.

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