Finance & Market Bulletin - January 2023

17 Feb

17Feb

By Daniel Christian Henrique

Selic x Inflation, the fight of the month

This is a robust fight. For some time now, the Central Bank has been using the old orthodox tool of increasing the basic interest rate to combat and contain inflation as much as possible. At the first COPOM meeting in 2023, they continued the same rate as the last meetings of last year, maintaining the Selic rate at 13.75% so as not to overheat the economy and generate demand inflation (EXAME, 2023). But the current government's developmental economic policy sees problems with this and intends to keep this rate in negotiation through the CMN (National Monetary Council) with the BC (which until next year still acts independently and defines its percentage) for a possible reduction, some easing the inflation target and encouraging more business people to invest and generate greater GDP growth in the short and medium term (MINISTÉRIO DA FAZENDA, 2023; DIÁRIO DE PERNAMBUCO, 2023). Result of this change? Follow scenes from the next chapters and summaries here in our posts.

So, what about inflation in Brazil?

Speaking of which, the month of January incurred 0.53% in the IPCA, lower than the rates for January and December 2022, respectively at 0.54% and 0.62%. With the new rise in fuel prices, the transport segment was one of the most impacted in the month, with an increase of 0.55%. The biggest increase, however, was the Food and Beverages segment, with a percentage of 0.59% (INVESTIMENTOS E NOTÍCIAS, 2023; AGÊNCIA BRASIL, 2023).

Inflation in the eurozone

After record high inflation in the euro zone in 2022, there was a start to the contraction process. Moving annual inflation in January fell to 8.5%, below expectations (it reached 10.6% in October). Again, it is the price of energy that has been driving these fluctuations, receiving reductions in recent months (UOL ECONOMIA, 2023b).

Inflation in the world and low growth prospects

The UN's "World Economic Situation and Prospects for 2023" report released in January points to the projection of global inflation to 6.5%, after having reached 9% in 2022. But this is not synonymous with a return to growth, as the forecast is just 1.9% for global growth, compared to 3% last year (UN NEWS, 2023). At the World Economic Forum that took place in January, 2/3 of the main participating economists believe in a likely global recession in 2023, with 18% considering it very likely (INFOMONEY, 2023a).

Basic basket concentrates increase in the northeast

Inflation here fell, but the basic basket, which was already increasing in 2022 in all capitals, starts 2023 with more significant increases in the northeast: Recife (7.61%), João Pessoa (6.80%), Aracaju (6 .57%) and Christmas (6.47%). Among the 17 capitals of the federation, there was an increase in eleven in January (DIEESE, 2023).

And we are already going to record a record in 2023: trade balance

Good record, welcome. The trade balance reached a surplus of US$ 2.7 billion in January, a record in its historical series that began in 2006. Increased exports from the extractive and processing industries, as well as agriculture, were largely responsible for the value reached (MINISTRY DA ECONOMIA, 2023; ECONOMIC NEWS BRASIL, 2023)

Americanas melting and Magalu exploding

This was the main topic of the month in capital markets. After the announcement of a R$43 billion loss caused by "accounting inconsistencies", the company's shares were melting day after day, followed by a request for tax recovery, its exclusion from Ibov and numerous creditors panicking and going to court. Many lost, but one company benefited greatly: its biggest competitor, Magalu. The market moved towards it anticipating its capture of this loose market share, increasing its share price by 61.68% by the end of January (E-INVESTOR, 2023; UOL ECONOMIA, 2023a).

Ibov with high

January ended with an increase of 3.4% driven by the rise in global commodity prices and the relative drop in global inflation. As our Tupiniquim index has a strong presence of our commodity companies, he reflected. The low inflation in the world also encouraged foreign investments with a higher risk profile, including our stock market. The increase in the Ibov was not greater due to the Americanas capsize, leading to declines in the shares of its creditor banks that make up the index (EXAME INVEST, 2023)

And Bitcoin soars

Ibov rose, but it doesn't compare to Bitcoin's surge in January. It catapulted almost 40% in the month, in dollars. This was the best result for January in the last ten years (MONEYTIMES, 2023).

Breaker in sight

January had the highest rate of requests for judicial recovery in recent years. In total, 92 companies asked the court to postpone their payments to creditors. This represents an increase of 90% compared to January 2021 and 37.3% compared to January 2022. Furthermore, around 2/3 are MSEs. Bankruptcy filings are also on the rise, with 72 filings in the same month, an increase of 57% in one year, with around 40% being MSEs. The main reasons are related to the purposes of government stimuli and debt renegotiation deadlines offered during the pandemic period. Added to the high level of the basic interest rate, a probable crash can be predicted to come (SEU DINHEIRO, 2023; JORNAL CONTÁBIL, 2023).

Default accompanies

Not only are CNPJs at financial risk, CPFs too. January 2023 surpassed January 2018 in the record number of defaulters, going from 59.3 million to 70.1 million. To make matters worse, the debt also increased, going from R$3,926.40 in 2018 to R$4,612.30 in 2023, an increase of 19%. According to Serasa, which released the data, the biggest responsible for the increases were (guess what?): inflation, which diluted the purchasing power of Brazilians in the face of the always lagging inflationary adjustments to salaries, added to high interest rates - which made access to credit difficult (INFOMONEY, 2023b, GAZETA DO POVO, 2023).

New or used car? maybe none

According to a DataOLX report, the increase in average prices for used cars published on its platform between January last year and this year was no small feat: 9.8% - exceeding the accumulated inflation between these 12 months. Considering the average sales price, it increased by 0.4%, compared to negotiations between sellers and buyers. The main factors that contributed were the rise in prices of new cars, the pandemic, the war in Ukraine that limited electronic chips in new cars, rises in the dollar and global economic instability, increasing inflation in the world (GARAGEM360, 2023).

References:

EXAME. Copom mantém Selic em 13,75% pela quarta reunião consecutiva (2023)

EXAME INVEST. Saldo de janeiro: Ibovespa fecha mês em alta de 3,4% e dólar cai a R$ 5,07 (2023)

AGÊNCIA BRASIL. Inflação oficial fica em 0,53% em janeiro, diz IBGE (2023)

MINISTÉRIO DA ECONOMIA. Balança Comercial e Estatísticas de Comércio Exterior (2023)

ECONOMIC NEWS BRASIL. Brasil: Em janeiro, balança comercial tem superávit de US$ 2,717 bilhões (2023)

E-INVESTIDOR. MGLU3 tem 4ª maior alta da história com Americanas. Vem mais em 2023? (2023)

MINISTÉRIO DA FAZENDA. Conselho Monetário Nacional – CMN (2023)

UOL ECONOMIA. Ação da Americanas afunda 26% após pedir recuperação judicial (2023a)

DIÁRIO DE PERNAMBUCO. Haddad, Tebet e Campos Neto acertam diferenças antes da reunião do CMN (2023)

DIEESE. Em janeiro, cestas do Nordeste têm as maiores altas (2023)

UOL ECONOMIA. Inflação na zona do euro registra queda pelo terceiro mês consecutivo, a 8,5% em janeiro (2023b)