Transition PEC, layoffs at Amazon and what matters in the market

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Transition PEC and the market reaction

After two weeks of negotiation, the vice president-elect, Geraldo Alckmin (PSB), presented this Wednesday the draft of the Transition PEC, which proposes to remove Bolsa Família from the spending cap permanently.

In numbers: the text does not present a value, but the estimates of the team of president-elect Lula (PT) point to BRL 175 billion for the social program – BRL 157 billion for the benefit of BRL 600 and BRL 18 billion of the additional BRL 150 per child.

• Without Bolsa Família under the roof, BRL 105 billion already reserved for the program in the Budget proposal may be redistributed to other actions – which must be defined in the negotiation in Congress.

Uncertain: the text does not stipulate a period for the social benefit to remain outside the ceiling, but a wing of Congress defends limiting the validity to 2023. With an eye on a middle term, the PT admits to negotiating a four-year period.

Other exceptions: the PEC also allows the government to use, outside the ceiling, resources from donations for environmental projects and allocate a portion of extraordinary revenues (obtained, for example, with signature bonuses from oil auctions) to fund investments.

The market reaction: before the presentation of the PEC, investors were already digesting the numbers. The sentiment appeared in the indicators:

• the stock market fell 2.58%to the 110,243 pointswhile the dollar rose 1.52%worth BRL 5.38🇧🇷

• In future interest rates, a good parameter to capture investors’ risk aversion, the contract maturing in 2024 advanced from 13.75% for 14.11%while the title for 2027 rose from 12.79% for 13.15%🇧🇷

What explains the bad mood? Before the results of the elections, the market already expected a hole in the ceiling of around R$70 billion to R$80 billion to increase the social benefit from the R$405 of the Budget to the R$600 of the campaign promises.

• The decision of the elected government to withdraw the entire Bolsa Família from the expenditure limit, however, ended up displeasing.

• Even if the deadline is four years, analysts believe that the government will be authorized to spend BRL 700 billion outside the ceiling in the period — value close to the estimated savings with the Social Security reform.

Opinion | Vinicius Torres Freire: Government already pays dearly for the PEC of the Transition to Lula 3.

Amazon confirms layoffs

Amazon confirmed on Wednesday that it has laid off employees in its device unit. According to the New York Times, the company’s plan is to cut 3% of its corporate team, reaching around 10 thousand employees.

If confirmed, the mass dismissal will be the largest ever recorded in the company’s history.

The layoffs are expected to focus on the Alexa voice assistant and retail and human resources divisions, the New York Times reported. The cuts must not reach the workers of the distribution centers.

Serial layoffs: Amazon is one more among the big techs to adopt a massive layoff plan to cut costs. Twitter, Meta (owner of Facebook) and Lyft are also part of the list.

• In common, technology companies are suffering from the rise in interest rates in the US and the global slowdown that should follow.

• After a boom in digital services observed in the pandemic, now is the time for the American giants to reverse hiring and control spending.

Opinion:

Musk’s ultimatum

Elon Musk sent a message to Twitter workers with an ultimatum. To be part of the “new Twitter”, where they must “work long hours at high intensity”, they have until this Thursday (17th) to confirm their desire to stay.

Anyone who does not click on a link sent to employees is fired and will receive three months of pay.

Which explains: Unsurprisingly, Musk is opposed to Twitter’s corporate culture, which until the billionaire’s takeover was known for being one of the most flexible in Silicon Valley.

• The home office model, which became optional even after the offices reopened, was eliminated by Musk in one of his first measures in charge of the network.

• The billionaire also said that Twitter will be “much more engineering-oriented” and that “to build an innovative Twitter 2.0 we will need to be extremely ‘hardcore’.

Blue seal shuttle: the newborn subscription plan that verified user profiles was only available for a few days.

• The messy launch of the new service has also raised concerns among European Union officials, according to the Financial Times.

Behind a substitute: the billionaire said on Wednesday that he should find a new CEO for Twitter after he makes a “company reorganization”. The speech comes after criticism from Tesla shareholders that he would be taking up too much of his time with the social network.

• In addition to the automaker and the bird network, Musk is also CEO of the startup SpaceX.

How was the debut of the Shein store

A queue of 7,000 people at the opening of the store that ended up causing turmoil, pieces priced between R$ 14.99 and R$ 166.95 and visitors reporting disappointment with the low variety of items.

The opening of the first (temporary) pop-up store by Chinese Shein in Brazil did not go unnoticed. The model’s debut was at the Vila Olímpia mall, in São Paulo, and lasted from the 12th to the 16th of November.

According to the company, other tests like this should be done in the country.

How it was: to control the flow of customers who lined up to visit the store, Shein organized visits lasting 20 minutes for a group of 30 to 40 people, who had the right to take four pieces each to the fitting room.

• “There are reports of people who arrived at 3 am, and some even camped out, with a tent, in line,” he told the Sheet Felipe Feistler, general manager of Shein in Brazil.

The secret in the algorithm: Shein revolutionized the fast fashion sector (previously dominated by brands like Zara and H&M) with a very well-oiled artificial intelligence.

• She tests in the app with 100 to 200 parts per model. If the demand for a certain product is heated, the robot captures the trend and production is automatically scaled.