Read this Thursday’s edition of the FolhaMercado newsletter (23) – 03/23/2023 – Market

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BC hardens tone despite pressure

Confirming the unanimous expectations of the market, the Central Bank’s Copom maintained the Selic rate at 13.75% per year, despite pressure from the government of Luiz Inácio Lula da Silva (PT) to reduce interest rates. Brazil continues to lead the ranking of real interest rates.

Although the decision was not surprising, what drew attention was the hard tone of the monetary authority’s statement, which did not open the door to a drop in the Selic rate at the next meeting and said it might even raise the rate again.

• Among businessmen, the sign that the Selic will remain at the current level at the next meeting raised the alert mood.

“The Committee reinforces that it will persevere until it consolidates not only the disinflation process but also the anchoring of expectations around its targets, which showed further deterioration, especially in longer terms”

• The BC refers to market inflation expectations, which have been moving away from the defined targets. In the latest projections released, the estimate for 2024 –the main target of the current BC decision– rose from 4.02% to 4.11%far from the target (3%).

• For 2025 and 2026, the longer terms, the expectation rose from 3.80% to 3.90% and 3.79% for 4%respectively.

In the text, the monetary authority still draws attention to the uncertainty about the new fiscal rule and its impact on the public debt, but claims that the reencumbrance of fuel reduced uncertainty in the result of public accounts in the short term.

The BC also mentions “adverse conditions in the global financial system”, referring to the banking crisis abroad, and a slowdown in lending here as factors that may count in favor of interest rate relief.

look here how much R$ 1,000 in savings, CDB and Treasury yield with the Selic maintained at 13.75%.

Opinion:

• Navigating the waters of high inflation and the risk of financial instability requires a delicate balance by monetary authorities, says Solange Srour.

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Fed opens door to end of cycle

In the US, the Federal Reserve (American BC) was also under pressure, mainly due to the banking turmoil that led to bankruptcy of two institutions. The authority raised interest rates by 0.25 percentage points, to the range of 4.75% to 5%, as expected by most of the market.

There, however, the statement opened the door for interest rates to stop rising at the next meeting. The Fed committee deleted the text that said “continued increases” in interest rates are likely to be appropriate, a phrase that had appeared in eight previous decisions.

• We explain here how the interest rate decision in the US affects Brazil.

The Fed ChairmanJerome Powell, said that the bank crisis made the authority consider leaving the interest rate at a standstill, but decided for a new high because he evaluated that it is still not possible to specify the effects of the turmoil in the economy.

“The banking system is safe and resilient. Recent events are likely to result in tighter credit conditions for households and businesses and will weigh on economic activity, employment and inflation. The extent of these effects is uncertain,” the Fed statement said.

in the marketsthe indication of the end of the high cycle was encouraging at first, but the indices started to retreat after Powell said in an interview that a drop in interest rates later this year is not in the scenario projected by the Fed.

• The aversion reached Brazil, dropping the stock exchange by 0.77%, to 100,220 points, while the dollar fell 0.20%, to 5.23. The trading session ended before the decision on interest rates announced by the Copom.

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Americanas plan also involves suppliers

Americanas did not spare suppliers in its RJ plan (judicial recovery).

Especially those he calls “collaborating supplier creditors”, who continue to supply the retailer after the accounting scandal. This is the case of companies such as Nestlé, Mondelez, Samsung, Positivo and L’Oréal.

As it did for creditor banks (shown here), the retailer presented conditions to suppliers in its plan:

• The “collaborating suppliers” must return to operations in 30 daysas of March 31, “in the same volumes, assortment, delivery period and conditions” agreed between the parties.

• Payment term extension for the retailer in the same way as in 2022. The condition would be valid from the payment of the supplier credit, which would be made in one go, without discount and right after the capital injection of R$ 10 billion or one year after the homologation of the RJ plan.

• “Commitment not to litigate”. In order to be a collaborating supplier, the company undertakes not to sue Americanas, its shareholders or managers in the future. The same clause appears for financial creditors.

Americanas can pay the debt at a discount if the supplier fails to comply with one of the clauses or in case of delay in deliveries. The reduction starts at 5% in case of delay for 30 days and goes up to half of the credit receivable if it reaches 150 days.

Asked about the clause prohibiting litigation, Americanas said that “litigious processes take time, in addition to burdening and eroding the situation for all those involved in the judicial recovery plan”.

More about the Americanas case

Bradesco’s defense toughens with retailer, talks about money laundering and wants access to investigation.

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Rival public app of Uber and 99 starts operating in SP

The debut of MobizapSP, a public application that should compete with companies like Uber and 99 in the transport of passengers in the city of São Paulo, is scheduled for today (23).

How will it work: the rate per kilometer driven and travel time should be similar to what is practiced by companies most of the day – no values ​​were disclosed.

There are two main differencesaccording to the city hall, one for passengers and one for drivers:

• No dynamic tariff: when the demand for travel increases in greater proportion than the supply of drivers, private apps raise the prices of rides, something that MobizapSP says it will not do.

• Administration fee: the platform will charge 10.95% per ride. In other companies, it varies – Uber says that most of the value is with the drivers, 99 rates vary between 15% and 35%.

The amount collected with the fees will go to a consortium formed by four technology companies that were responsible for the development of the platform.

• A Sheet showed that companies are the target of investigations on suspicion of embezzling public funds and paying bribes in traffic management contracts. The suspects deny the accusations, and the Nunes management (MDB) claims that the bidding respected the law.

Amobitecan association that includes transport companies by app, said that it considers the increase in competition to be healthy, but emphasizes that any company must pay the same taxes and fees as its competitors.