Read this Monday’s edition of the FolhaMercado newsletter (7) – 08/07/2023 – Market

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Fiscal targets at risk

In addition to predicting that the government will not meet the fiscal target set for this year, analysts and economists interviewed by the Sheet already calculate that the target set for 2024 should also not be achieved.

In numbers: the new fiscal framework provides for a primary deficit (expenditure above revenue, excluding debt interest) for the central government (National Treasury, Social Security and Central Bank) of 0.5% of GDP this year and zero in 2024.

• There is still a margin of tolerance of 0.25 percentage points, plus or minus.

• In July, the government revised the 2023 primary deficit estimate to BRL 145.4 billion (1.4% of GDP)—nearly double the target threshold.

• For 2024, analysts and economists project deficits between 0.4% (BRL 40 billion) and 1.6% (BRL 160 billion).

Which explains: specialists say that the government is not managing to reach the necessary volume of revenues to deal with reducing the deficit in the accounts.

• It should be remembered that, unlike the spending ceiling, which established a limit on expenses, the fiscal rule of the Lula government (PT) is more dependent on the Union’s tax collection capacity.

• Between January and June of this year, total central government revenues fell by R$63 billion and net revenues by R$53 billion. Expenses rose by R$ 47 billion.

Is there a solution? The framework hasn’t even been approved by Congress yet – it was changed by the Senate and returned to the House –, but analysts say the government will have to review it to be able to stabilize the country’s debt.

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Buffett doubles bet on the US

What did American mega-investor Warren Buffett do after Fitch downgraded the US credit rating? He continued buying Treasury bonds, showing no concern for the country’s financial health.

In numbers: the cash position of Berkshire Hathaway, the billionaire’s company, rose to $147 billion at the end of the second quarter, according to the balance released on Saturday.

• The amount invested in cash came close to the historic record of US$ 149 billion reached in 2021, which also shows the megainvestor’s caution with the American stock market.

Although Buffett is recognized for his investment in stock exchange companies, they do not represent Berkshire’s main asset, as recalled by Michael Viriato on the blog De Grão em Grão.

More about investments

• Privatization process should boost Copel shares on the Stock Exchange, say experts.

• Now that the interest rate cut has arrived in Brazil, the Ibovespa is “chocho”. What seems like a contradiction actually makes sense, writes columnist Marcos de Vasconcellos.

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Startup of the Week: Educbank

On Mondays, the chart shows an x-ray of a startup that recently announced a fundraising.

The startup: Founded in 2020, fintech is aimed at the education sector, guaranteeing institutions the payment of tuition without default.

In numbers: Educbank raised BRL 70 million in debentures, and will pay CDI plus 6.5% per annum with maturity in 2026.

• Last year, the company received a contribution of BRL 200 million in a round led by Vasta, Cogna’s basic education company, whose shares are traded on Nasdaq.

Who invested: only institutional investors, such as fund managers, bought securities issued by Educbank.

What problem does it solve: the company guarantees cash flow to schools by assuring the payment of monthly fees, assuming cases of default.

• In exchange for funding, schools are charged a fee, which is defined according to a risk analysis carried out by the startup.

Why it stands out: fintech cites the number of 40 thousand private basic education schools in the country to show the potential of the market in which it operates. It plans to reach a volume of BRL 1 billion in funding over the next 12 months.

• Last year, 24% of parents delayed payment by at least 30 days or canceled the transaction 30 days after the installments were due. The survey was carried out by Sponte with 3,000 educational institutions.

market numbers

The month of July had the highest volume of investments in Latin American startups in the year. They were $803 million (BRL 3.9 billion) in the period, an increase of 68% compared to the previous month and a decrease of 9% compared to the same month of 2022, when the market was more heated.

With $295 million (R$ 1.43 billion) raised, Brazil accounted for 37% of the total invested in July. For the country, however, January remains the best month of the year, with US$ 321 million.

The data is from Sling Hub, a data intelligence platform about the startup ecosystem in Latin America.

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Company registers iris to form ‘Global RG’

The Orbs, silver spheres with a camera and eye reading sensors used by Worldcoin to read and register the iris of humans, remain in São Paulo until today (7). The city for now is the only one in the country with the tool.

• The project by Sam Altman, CEO of the ChatGPT company, offers 26 Worldcoins for those who submit biometric data and create a “world ID”.

• On Sunday night, cryptocurrencies were worth BRL 273 (BRL 10.50 each) and 2.2 million of people had registered.

Understand: Altman’s project uses the iris because it is one of the few features of humans that lasts for life and whose pattern has a chance of repeating itself once in every 1 billion people —in the case of digitalis, it is one in 40 million .

As Ronaldo Lemos said in last week’s column, Worldcoin proposes not only to create a virtual identity, something that most countries have not achieved, but also to be the channel for a future basic income program.

• Altman has already said that the benefit could go to people whose jobs have been eliminated by artificial intelligence.

How it works: the collection procedure lasts about two minutes.

After downloading the World App and validating it with a cell phone number, you must accept the terms of use and biometric collection, decide whether the company can store your data and pose for the machine to capture images of your face and iris.

For registration, the user earns a Worldcoin. About two hours later, you also receive a participation coupon valued at another 25 Worldcoins.

Yes but… The company does not disclose what biometric data is sensitive and the risks involved in sharing it.

Only in the Worldcoin Foundation Sensitive Biometric Data consent form does it say that this consent also allows sending the data to the US and Europe for algorithm training.

in noteWorldcoin claims it has built a robust privacy program with advice from a respected privacy consultancy.
“Worldcoin respects all laws and regulations of the countries in which it operates, which includes the LGPD”, says the company.