Finance and Market Bulletin - October 2022

08 Nov

08Nov

By Daniel Christian Henrique

The world's economy and "turbulent waters"

One news that resonated heavily in October in the world's financial environment was the warning from IMF director Pierre-Olivier Gourinchas that the world economy is heading into turbulent waters by early 2023. He stressed that Europe still has greater risks in the face of the restrictions they are suffering in the energy sector, which it does not see as something that will have a brief end (CANAL RURAL, 2022)

U.S. inflation doesn't give respite... EDF also does not

The EDF was already in a wake of consecutive u.S. interest rate increases, but inflation in Uncle-Sam's land is no respite. Analysts, therefore, expected at the end of October another increase, which was confirmed in the early days of November: a new high of 0.75 p.p., entering the rate in the range of 3.75% to 4.0% per year (E-INVESTIDOR, 2022; INFOMONEY, 2022a). A possible recession has become the fear of this sixth consecutive high. In time: American recession tends to reflect recession around the world.

IPCA also in pursuit

Despite the new projection of reduction of the Accumulated IPCA until the end of the year to 5.6%, it is still above the BC target, which projected 3.5% with tolerance bands of 1.5 p.p. up or down. The chase continues, but without further selic rate hikes that since the last increase in August reached 13.75% - which is already quite high and enough to try to beat the inflationtarget by 2023, according to COPOM (BCB, 2022; TRADEMAP, 2022). The IPCA-15 (inflation preview) almost parked at zero, standing at 0.16% (EXAME, 2022). Wait for official IPCA of October.

Falling unemployment and occupancy level returning to record highs

A good news that has been remaining in 2022 is the record lows of unemployment reduction, which now reaches 8.7% in the quarter ended in September, with data released this October by pnad continuous ibge. It was a further reduction of 0.6 p.p. compared to the previous quarter and the lowest rate in the time series since 2015. Consequently, the level of occupation was also the highest since 2015, reaching 57.2% at the end of September. The number of people with a signed portfolio in the private sector (13.2 million) and employees in the public sector (12.2 million) also beat their record for their series since 2012 (AGÊNCIA IBGE NOTÍCIAS, 2022).

Ibov closes October up 5.45%

The main Index of B3 closed optimistic the month, based on the possible end of political instability after the end of the presidential elections on the last day of the month. October's highs in U.S. indices impacted by the EDF's aggressive policy on containing inflation also had an impact on Ibov's highs (INFOMONEY, 2022b; E-INVESTOR, 2022b)

Ceagesp index has strong high

October closes ceagesp's price index with a strong increase of 5.37% compared to September. It was mainly pulled by the high fruit, with an increase of 6.63%, despite the drop in vegetables that recorded a drop of 3.26% (CEAGESP, 2022).

Savings booklet... Bye!

Brazilians seem to be saying goodbye once and for all from the savings account, which even surrendering above inflation can not beat other more interesting fixed incomes. Previous months had already recorded voluminous outflows of this conservative application, but October this year broke the record of its historical series for that month by ending a net withdrawal (withdrawals - deposits) of R$ 11 billion (AGÊNCIA BRASIL, 2022).

Sales of vehicles in recovery, but not so much

Compared to October last year, it was sold 11.4% more in the same month of this year, however... 6.7% less than September. Exports improved, grew 43.5% in a year but now focused on Chile and Mexico, no longer in Argentina. The numbers were not better only due to the continuous lack of semi-drivers and roadblocks on the last working day of the month (DIARIO DE PERNAMBUCO, 2022; CORREIO BRAZILIENSE, 2022)

And the Eurozone remains on the trail of inflationary record

Another month ends, another inflationary record in the Euro Zone. October now ends with 10.7% in its annual consumer inflation (CPI), well above the 9.9% in September and above the projection of 9.7% for the month. The main components responsible for the discharge were energy again, accompanied by food, alcohol and tobacco (INFOMONEY, 2022c)

And beef exports continue to accelerate

Since last month, beef producers have been in great expectation with increased exports. October confirms this scenario, growing 126% its sales compared to October last year, raising US$ 1.225 billion in exports of 234,000 tons of processed and fresh meat (O DIA, 2022).

Basic basket goes back to price rise

After two straight months of fall, the basic basket returns to a high in 12 of the 17 capitals, with more significant increases in the capitals Porto Alegre (3.34%), Campo Grande (3.17%), Vitória (3.14%) and Rio de Janeiro (3.10%) (DIEESE, 2022)

Rural credit engrena

The 2022/2023 harvest already registers a disbursement of rural credit of R$ 148 billion by october, about 22% higher than last harvest. This amount can be split into: costing financing = R$98.29 billion; investments = 33.86 billion; commercialization = R$ 8.93 billion; and, industrialization = R$ 7.17 billion (NATIONAL AGRICULTURE SOCIETY, 2022)

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