Read this Wednesday’s edition of the FolhaMercado newsletter (12) – 07/12/2023 – Market

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Next phase

The deal involving the purchase of game producer Activision Blizzard by Microsoft for $69 billion had an important turnaround this Tuesday (11).

An American federal judge rejected the questioning of the FTC (American antitrust and consumer protection agency) and gave the green light to the transaction announced last year as the largest in the history of games.

Soon after, the UK Markets and Competition Authority (CMA), which had rejected the deal in April, said it might pause the appeals process to consider a proposal from Microsoft that addressed its concerns.

in reaction to the two announcements, Activision Blizzard shares closed higher 10%, at $91, closer to the $95 offered by Microsoft last year. Big tech stocks closed flat.

Remember: the British authorities had refused the agreement on the grounds that it would give an unfair advantage to the Xbox manufacturer in the still incipient “cloud gaming” market (cloud games, understand here).

In the European Union, the decision was different. Officials said Microsoft’s announced deals with rivals Nvidia (cloud), Nintendo (console) and a commitment to license “Call of Duty” for Sony’s PlayStation for 10 years solve the problem.

And now? Under the agreement signed in 2022, the deal would have to be closed by the 18th of this month, which seems difficult given the dispute in the United Kingdom.

• If the companies decide to extend the deadline, the terms of the deal could be discussed again, and Activision would be able to ask for more money, analysts told the Wall Street Journal.

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Deflation in June, but…

The IPCA had deflation (fall in prices) of 0.08% in June, informed the IBGE this Tuesday.

In numbers: the fall for the month is the biggest since 2017 and the result came close to what the market calculated (-0.10%). In 12 months, inflation has advanced 3.16%.

Reaction: Most analysts see this year’s index ending up within the established target ceiling (4.75%), considering that prices should rise from here to December in comparison with the months leading up to the election last year.

What explains June inflation and market reaction:

1 – What pulled the fall: the groups food and beverages (-0.66%) and transport (-0.41%).

• In the first, highlight for food at home (-1.07%), with soy oil (-8.96%), fruits (-3.38%), long-life milk (-2.68%) and meat ( -2.10%).

• In the second, influence of the decline of new cars (-2.76%) and used cars (-0.93%), in the wake of the government program to encourage popular cars.

2 – Services are still a concern: driven by the rise in airline tickets (10.96%, after a drop of 17.73% in May), the sector rose 0.62% in June.

• The increase in service prices is closely watched by the BC because these items tend to take longer to fall – this is the main reason for the market to project a drop of 0.25 points in the Selic, not 0.50, as the government wants.

More on the June IPCA:

• Opinion | Vinicius Torres Freire: Rent, meal prepared, health plan, school: inflation is not over yet.

• In the capitals, inflation ranged from 1.11% to 4.44% in the month (see the ranking here).

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Rules on purchases from abroad generate criticism

The new taxation rules for international purchases announced by the federal government and states have generated complaints from Brazilian consumers and retailers, but for different reasons.

Understand:

– The rule: At the end of last month, the federal government announced that international purchases of up to US$50 will be exempt from August 1st, provided that the e-commerce company is part of the Federal Revenue Service’s Remessa Compliance program.

• The idea is that the platforms declare the taxes before sending the goods, to facilitate collection. Products above US$ 50 would be blocked and would only be released after payment of tax by the consumer.

• The critic: national companies say that the exemption may affect competitiveness and argue that they have to pay taxes on manufacturing the product within the country.

– The rule: states set the standard 17% ICMS rate on international purchases.

• According to Comsefaz (National Committee of Finance Secretaries), the charge will apply only to remittances above $50already including shipping, insurance and other charges.

• The critic: those who shop frequently on sites like Shein and Shopee fear price increases on orders above US$ 50. In addition to the current 60% federal import tax, there would be a 17% ICMS charge.