Lula 3’s first acts in the economy, a balance of investments in 2022 and what matters in the market

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Govt coming in…

President Luiz Inácio Lula da Silva (PT) signed this Sunday (1st), shortly after his inauguration, the first measures in the economic area.

An MP (provisional measure) extends the exemption of fuels in the country, a measure created by Jair Bolsonaro (PL) with a deadline of December 31, 2022.

• Without the MP, the increase could be R$ 0.69 per liter for gasoline and R$ 0.33 per liter for diesel. It will be valid for 60 days, said Jean Paul Prates, chosen to head Petrobras.
• He also said that for diesel and cooking gas a greater continuity of exemption is being studied.

Another measure orders the withdrawal of state-owned companies from the privatization program, which mainly affects Correios and Petrobras, which were in the process of privatization.

• Lula also maintained the payment of a monthly floor of R$600 for vulnerable families. The measure previously in effect provided for this amount until December 31.

Speech: In his inauguration, the representative preached the recomposition of Budget funds, said that the government will resume stalled works and spoke of a new labor legislation. The speech also featured criticism of the spending ceiling.

Appointments: the nomination of senator Jean Paul Prates (PT) for the presidency of Petrobras, announced on Friday (30), was well received by entities in the oil and gas sector. His defense of a change in the company’s current pricing policy, however, is worrisome.

• With a long history of activity in the sector, it collaborated, for example, with the law that ended the monopoly of Petrobras, a project that was opposed by the PT. Today, he is critical of the state-owned asset sale process.
• Also on Friday, the names of Tarciana Medeiros for the presidency of Banco do Brasil and Rita Serrano for the command of Caixa were announced.

…government leaving

On the penultimate day of his term, the Bolsonaro government issued a decree to cut taxes paid by large companies, with an impact of BRL 5.8 billion in revenues for the first year of Lula’s new administration.

Understand: the decree reduces by half the rates of Pis and Cofins on the financial income of companies that adopt the non-cumulative system to collect contributions. In general, only large companies opt for this modality.

• Even if the Lula government decides to revoke the decree, the government’s coffers should feel some impact. This is because an increase in the rates of Pis and Cofins only takes effect 90 days after the publication of the act.
• The benefit is already foreseen in the 2023 Budget, but the reversal of exemptions is one of the options of the new economic team to alleviate the deficit estimated at more than R$ 200 billion.

Swing: four years after taking office under the promise of a liberal shock to the economy, former minister Paulo Guedes ended his tenure carrying a mix of achieved goals and frustrated plans that never got off the ground.

• Its critics highlight the changes in the spending ceiling to free up more spending and the frustrated expectations of reforms, but supporters highlight the improvement in indicators, such as GDP growth and the primary surplus in 2022 – the first in nine years.
• See here a summary of the minister’s management, who brought together five economic portfolios under his umbrella.

The year 2022 in investments

In a year marked by high interest rates and persistent inflation here and abroad, hedge funds delivered the best return in 2022 among the main investments available to Brazilians.

In numbers: the average annual income was 13.34%according to the IHFA, which is Anbima’s hedge fund index.

• Following the ranking, made by the TradeMap platform at Sheet, come the companies that make up the Stock Exchange’s dividend index, with a return of 12.7% in the year. In third, appears the yield of the CDI, with 12.28%.
• At the bottom end, bitcoin, which had led the ranking in the previous two years, was shot as the investment with the worst return in 2022, with a drop of 66.8%.
• Accompanying bitcoin in the top 3 negative are BDRs, receipts for shares traded abroad, with -28%and small caps, Brazilian stocks with growth potential, with -15.1%.

Which explains: Multimarket funds are vehicles that seek to protect investors by allowing a manager to invest in the most varied market segments.

• In the case of investments that lost the most in the year, high interest rates here and in the US are to blame, which make assets considered riskier less attractive.

On the Brazilian Stock Exchangecompanies in the field of production, exploration and distribution of oil and gas, commodities that became more expensive with the war, appear among those with the best performance.

• The one that appreciated the most, with an increase of 269% in the year, was Dommo Energia, Eike Batista’s former OGX.
• In a year with no IPO and a 4.7% increase in the Ibovespa, the sectors that suffered the most were education, health and retail. The stock that fell the most was Espaçolaser, with -83.5%.

In the USA, the stock market had its worst year since the US real estate crisis of 2008, after the euphoria of 2021 and in reaction to the rapid tightening of interest rates in the country. Highlights for the losses of Meta (-64%) and Tesla (-68%).

Opinion:

decline of giants

Leaders of the global advertising market, Meta (Facebook) and Alphabet (Google) already see their empire being threatened by other big techs.

In numbers: this year, the two companies should concentrate 48.4% of digital advertising in the US, the duopoly’s fifth straight drop since its peak in 2017, when it added 54.7% from the market.

• Worldwide, Meta and Alphabet’s share fell by 1 percentage point to 49.5% in 2022, in a market that moves around US$ 300 billion a year.

Which explains: despite the drop in 2022 and the forecast for 2023 to be related to advertisers reducing spending, the two companies are increasingly threatened by newcomers in this segment.

• Meta’s case draws the most attention because the company says it has lost more than $10 billion in revenue since Apple last year updated its privacy policies. The new rules made it harder to track users and target advertising.

The main threats: Amazon and Apple want to leverage their extensive data on customer consumption profiles to attract advertisers.

• Despite still having a small share in digital advertising, the year-on-year growth is impressive. The retailer went from less than US$ 1 billion in 2015 to about $38 billion this year.
• Apple has seen its ad revenues grow from $2.2 billion in 2018 to more than $7 billion this year. Some estimates suggest that it may reach $30 billion until 2026.