Read this Wednesday’s edition of the FolhaMercado newsletter (15) – 15/11/2023 – Market

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Heat generates record energy consumption

The heat wave that mainly affects the Southeast and Central-West of Brazil led to a new record in daily energy consumption in the country this Tuesday, surpassing the mark recorded on Monday.

In numbers: demand hit 101,437 MW (megawatts) at 2:24 pm this Tuesday. The highest level before this week had been 97,659 MW, measured on September 26 of this year.

Is there a threat to the energy system? The ONS (National Electric System Operator) guarantees that there are no supply risks.

• The hydroelectric reservoirs remain at comfortable levels for this time of year and the generation of wind and solar energy has been ensuring around 20% of demand.

• Meeting peak hours at night, when solar and wind generate less, is one of the system’s challenges.

• The ONS has been dispatching thermal plants, which sell more expensive energy, to ensure peaks are met. In the second, they contributed 10,000 MW to complement the offer.

What explains the heat wave: the sum of an atmospheric pressure block, El Niño and climate change – which increase the frequency of extreme events, experts say.

More about the heat

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Closed sale

Natura announced this Tuesday (14) the sale of the cosmetics store chain The Body Shop for around 207 million pounds (R$ 1.25 billion) for the German manager Aurelius Investment.

In numbers: the agreement also provides for an “earn-out” of 90 million of pounds (R$545 million), which would increase the business if targets were met to almost 300 million pounds (R$1.8 billion).

The amount paid now by the German manager is lower than that disbursed by Natura in 2017, when it purchased the British company from L’Oréal for 1 billion euros (R$ 5.27 billion at today’s exchange rate, without considering inflation during the period).

The Body Shop has around 2,800 stores in more than 70 countries, with products for hair, face, body and makeup.

• It was once an icon of sustainable cosmetics, with an activist stance on the consumption of beauty products, but, for Natura, the brand has aged and needs to be redesigned.

This is the second relevant sale that Natura does this year. In April, the Brazilian multinational negotiated the Australian brand Aesop with L’Oréal for US$2.5 billion (R$12.5 billion).

The company’s current strategy is to do a “detox” after having acquired these brands in the last decade, when it was betting on internationalization and ended up increasing its debt.

Now, the objective of Natura’s new management is to reduce leverage and refocus on its two large brands –Natura and Avon–, with the traditional direct sales model and integration with its four million consultants.

The integration of operations between the two brands in Latin America still presents bottlenecks. Resellers complain about the delay in the delivery of Avon products and the small quantity of Natura products available in promotions.

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Meta and Amazon against TikTok

Amazon and Meta are testing a feature to allow Facebook and Instagram users to purchase products sold by the retail giant without having to leave the social network.

Understand: the tool asks users to link their Amazon accounts to their social media profiles. This way, they can see not only the price of the product that appears in the ad, but also delivery estimates and other item details.

What explains the partnership? The two big techs joined forces to face a common enemy: TikTok.

The Chinese platform launched TikTok Shop in the US this year, a tool that allows you to purchase products that appear in short videos – sponsored or not – without leaving the app.

• The model also works for livecommerce, a model in which influencers show products that can be purchased during the broadcast.

What Meta and Amazon gain from the partnership:

• The owner of Facebook and Instagram could see a boost in its advertising revenue, with advertising paid for by companies that sell via the Amazon marketplace;

• The retailer can gain a new channel for the products on its platform, in which each sale made earns a commission.

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Scholarship at maximum of two years

Positive winds from the American market boosted the Brazilian Stock Exchange to close this Tuesday at the highest level since August 3, 2021. The daily increase was 2.28%, The 123,166 points.

• The movement also reached the exchange rate, and the dollar ended at a low of 0.93%The R$ 4.86lowest value since September 18th.

Which explains: American inflation data for October encouraged investors as soon as they were released. The price index reached 3.2% in 12 months, a drop from 3.7% in September.

• If before there was still doubt in the market about a new interest rate hike promoted by the Fed (Federal Reserve, American BC), now there is almost a consensus that the increase cycle is over.

• The discussion changed to when interest rates will start to fall in the country, and the expectation is for a cut of 0.25 percentage points in May.

Expectations for lower interest rates in the US mean greater risk appetite for investors, who withdraw resources from US Treasury bonds to seek higher returns. The scenario benefits the Stock Exchange and currencies of countries considered more risky, such as Brazil.

Also worth mentioning

↳ Vale rose 3.21% on the day, also helped by the expectation that China’s central bank will increase liquidity in the local economy. The country is the main buyer of Brazilian ore.

↳ Magazine Luiza shares closed slightly up 1.7% after starting the day down more than 10%.

• These adjustments reduced shareholders’ equity by R$829.5 millionbut the impact was partly offset by the recognition of R$ 688.7 million in tax credits in the second quarter.