Markets digest the monetary authority’s view on the reasons for maintaining the economy’s basic interest rate and also the official inflation forecast.
The Monetary Policy Committee (Copom) released on Tuesday, 27, the minutes of its meeting held last week, when it decided to maintain the Selic rate at 13.75% per year.
The document highlights that on the domestic front, the release of the GDP showed a growth rate above that expected in the second quarter. Copom states that the data released so far continue to signal growth at the margin, albeit more moderate, and the labor market continued to expand, although without a complete reversal of the real fall in wages observed in recent quarters.
The act also highlights that in the reference scenario, with the dollar at R$ 5.20 and with oil prices following the future curve for the next six months, Copom’s inflation projections are 5.8% for 2022, 4.6% for 2023, and 2.8% for 2024.
The Committee opted again to emphasize the six-quarter horizon ahead, which reflects the relevant horizon, softens the direct effects arising from tax changes, but incorporates their secondary impacts. In this horizon, referring to the first quarter of 2024, the projection for accumulated inflation in twelve months would be 3.5%. The group, however, believes that the uncertainty surrounding its premises and projections is currently greater than usual.
Copom believes that a tighter monetary policy stance globally would have a disinflationary impact in Brazil in the medium term as it leads to the opening of the global gap and less pressure on commodity prices and goods in general. However, he points out that the possible impacts that such repricing would have on assets in the short term add uncertainty about the effect on Brazilian inflation.
Still this morning, investors are digesting speeches by the president of the Federal Reserve, Jerome Powell, and representatives of the Central Bank of England.
At 09:27, Ibovespa Futures advanced 2.14% and the dollar fell 1.44% to R$5.3121.
In the US, the Nasdaq 100 futures rose 1.59%, while the S&P 500 and the Dow Jones gained 1.34% and 1.07%, respectively.
News of the day
Nursing Floor – Congress will discuss a Proposal of Amendment to the Constitution (PEC) to increase by up to 1.5% the Municipal Participation Fund (FPM), the main source of federal transfer to municipalities, and bank the nursing floor on a permanent basis.
Elections – According to the Estadão Dados Average, calculated by the aggregator, Luiz Inácio Lula da Silva has 47% of voting intentions and Jair Bolsonaro, 33%. Considering only the valid votes, i.e., not counting whites, nulls, and undecided, Lula has 52% and Bolsonaro, 36%.
Suspicions – According to Folha de São Paulo, the Federal Police found messages on the phone of Jair Bolsonaro’s (PL) main aide-de-camp that aroused the suspicions of investigators about financial transactions made at the President’s office. The transactions would be made to pay personal bills of the presidential family and also of people close to the first lady, Michelle Bolsonaro.
Line Auction – The Central Bank will hold today sales auctions conjugated with dollar purchase auctions, in the floating-rate Selic modality. Two auctions will be held simultaneously and a maximum of US$ 1 billion will be accepted, to be distributed, at the discretion of the Central Bank, between the two.
IPCA-15 – The Broad National Consumer Price Index (IPCA-15) fell 0.37% in September, after retreating 0.73% in the previous month, the Brazilian Institute of Geography and Statistics (IBGE) reported.
Today’s agenda
Jair Bolsonaro – No official appointments.
Paulo Guedes – Lunch-meeting with the president of the Brazilian Central Bank, Roberto Campos; Meeting with the Foreign Minister, Carlos França.
Campos Neto – Meeting with Robert Citrone, CEO of Discovery Capital Management; Lunch with the Minister of Economy, Paulo Guedes; Meeting, by videoconference, with representatives of Mastercard.
Corporate News
Melnick (BVMF:MELK3) – Melnick established partnerships with four developers, aiming at the development of residential real estate projects with focus on the medium and high standard segments in the metropolitan area of Porto Alegre, in Rio Grande do Sul, and in Curitiba, in Paraná. The Company projects a potential gross sales value (PSV) of up to R$ 600 million for these developments, of which R$ 270 million will be Melnick’s stake. The implementation of the developments is subject to the typical conditions of businesses of this nature.
Movida (BVMF:MOVI3) – Movida’s Board of Directors approved the distribution of Interest on Equity (IE) in the total gross amount of R$ 55 million, equivalent to R$ 0.152055199 per share. The benefit will take into account the shareholding base of September 30 and the payment date will be January 6, “ad referendum” of the Annual General Meeting that will approve the accounts for fiscal year 2022.
CBA (BVMF:CBAV3) – CBA will exercise its right to redeem the entire outstanding balance of the Warrants of its 2024 Notes. The amount to be redeemed will be US$78,519,000.00 and is related to the Notes due on June 17, 2024.
JBS (BVMF:JBSS3) – JBS reported that its subsidiaries JBS USA, JBS USA Food Company and JBS USA Finance closed the offering of US$2 billion in Senior Notes. The offering consisted of additional 5.125% Senior Notes due 2028 totaling $400 million, 5.750% Senior Notes due 2033 totaling $800 million and 6.500% Senior Notes due 2052 totaling $800 million.
Banco ABC (BVMF:ABCB4) – The Board of Directors of Banco ABC has resolved on the distribution of interest on equity (IoC) and on the approval of the share buyback program. The gross amount to be distributed as interest on equity is R$79,942,565.39, equivalent to R$0.3620 per share. The payment will take place on October 13, based on the shareholding composition on September 30. As for the share buyback program, the goal is to acquire up to 6,700,000 preferred shares within 18 months.
Fleury (BVMF:FLRY3) – Fleury entered into an agreement today to acquire 100% of the shares issued by Retina Clinic’s units in the city of São Paulo for R$21.0 million through its subsidiary Fleury Centro de Procedimentos Médicos Avançados. The conclusion of the deal, however, is conditional on certain conditions precedent.
Petrobras (BVMF:PETR4) – The Minister of Mines and Energy, Adolfo Sachsida, said during the opening of Rio, Oil and Gas 2022, that Petrobras will sell all the refineries it has committed with Cade to divest. At the same event, Caio Paes de Andrade, president of the state-owned company, said that the company intends to invest US$ 2.8 billion in actions to mitigate carbon emissions in the next five years.
In addition, the company said that the Rota 3 gas pipeline should be delayed by ten months, and the new forecast is to start operating in 2024.
Itaú (BVMF:ITUB4) – Cubo, Itaú Unibanco’s innovation hub, more than doubled its base of startups in the roughly two years of the pandemic, illustrating how the wave of new technology-based businesses is going strong in the country, even with skepticism from venture capitalists, given the recent scenario of higher interest rates.
Weg (BVMF:WEGE3) – Weg will invest R$ 660 million over the next three years to expand its production capacity of industrial motors and electric traction in Brazil.
Hermes Pardini (BVMF:PARD3) – The Hermes Pardini Institute signed a purchase and sale agreement for the acquisition of 99% of the capital stock of CSV Central Sorológica de Vitória, in Espírito Santo, for R$ 17.8 million, which can reach R$ 19.8 million if sales targets are met.