Wall Street Layoffs, Higher Gas, and What Matters in the Market

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Layoffs come to Wall Street

Judging by the first few weeks of 2023, layoffs should mark the first half of the year in the US. After big techs like Amazon, Microsoft, Alphabet – and more recently, Spotify– announced cuts, the next sector to be hit must be the big Wall Street banks.

• The wave of shutdowns in the US financial sector is expected to be the biggest since the housing financial crisis of 2008-2009.

What explains: it is a combination of the reversal of the hiring made in recent years, mainly in the recovery from the pandemic, with the high interest rates that discourage operations on the Stock Exchange and end up taking important revenues from these institutions.

• Before the cuts, banks cut their employees’ massive bonuses. Gratuities had skyrocketed in 2021, when American indices reached maximums and IPOs flooded the Scholarships out there.

• In 2022, IPOs decreased by 66%, reducing the trading volume by US$ 517 billion (R$ 2.7 trillion).

The predicted cuts on Wall Street:

• Together, Goldman Sachs, Morgan Stanley and Bank of New York Mellon are expected to lay off about 6,500 employees. Citigroup and Bank of America have yet to announce cuts.

• UBS, which has held off hiring in recent years, may be the only major bank to not only avoid a wave of layoffs, but also promote hiring.

Americanas unlocks R$ 1.2 billion

Americanas achieved an important victory in court this Tuesday, by unblocking BRL 1.2 billion in your account held by BTG Pactual.

• On the last day 18, the bank had obtained a writ of mandamus to freeze the value and protect itself from a possible default by the retailer.

This Wednesday, the same judge reported that he reversed the previous decision because of the “new fact” of the judicial recovery (RJ) of the retailer.

• He stated, however, that until the merits of the decision are judged, the funds must be “allocated exclusively to the cash flow of the business activity, under penalty of criminal responsibility.”

Why it matters: by getting BRL 1.2 billionthe retailer gives a breather to its cash, which was R$ 250 million last Thursday (19), when it entered into judicial recovery.

• Without access to bank financing and with suppliers demanding cash payment to release the goods, having cash in the cash register becomes even more important for the company’s current situation.

Broken relationships: The two largest private banks reacted this Tuesday to the letter from the trio of billionaires from Americanas.

In the document, Lemann, Telles and Sicupira stated that “not even these financial institutions [credoras] nor PwC have ever reported any wrongdoing”.

• Bradesco states that the accounting governance of companies is the exclusive attribution of its management, including the Board of Directors.

CVM consults rivals: the Securities and Exchange Commission questioned companies in the retail sector about the accounting of debts to pay suppliers, known as “drawn risk”, which is at the origin of the hole in Americanas.

• Magazine Luiza and Via, two Brazilian retail giants, had already told their shareholders that these operations were accounted for in the balance sheet.

most expensive gasoline

Today (25) the high of 7.4% in the average selling price of gasoline at Petrobras refineries. It is the first readjustment announced by the state-owned company after the inauguration of President Luiz Inácio Lula da Silva (PT).

• The company’s directors and board, however, still do not have those appointed by the new government.

In numbers: the average price will go from R$ 3.08 to R$ 3.31 per liter. Considering the mixture of anhydrous ethanol in the product sold at gas stations, the price will increase by BRL 0.17says Petrobras.

Which explains: the readjustment was already expected by the market in view of the lag in relation to the prices practiced in the international market.

• This Tuesday, the average price of gasoline in the country was 14%, or R$ 0.49 per liter, below the import parity, a concept that simulates how much it would cost to bring the product from abroad. The calculations are from Abicom (importers association).

New President: after having his name validated by Petrobras’ internal committee, the choice of senator Jean Paul Prates (PT-RN), made by Lula, will be analyzed by the board of directors this Thursday (26).

USA vs Google – part 2

The US Department of Justice has filed another lawsuit against Google, this time alleging that the company abuses its dominance of the digital advertising market.

Understand: the US body’s process targets Google’s platform that negotiates ads on other sites and applications, which generate a commission for the company.

• An Alphabet spokesman told the Wall Street Journal that the lawsuit “attempts to pick winners and losers in the highly competitive advertising technology industry.”

It’s the second complaint federal antitrust lawsuit filed against the Alphabet company.

• The first was made in 2020 and accused Google of anti-competitive dominance of the search market, citing a negotiated deal with Apple to become the default search for the Safari browser. The trial is scheduled for September.

US vs big tech: the administration of US President Joe Biden has taken the country’s large technology companies to court.

More about Google and big techs:

• See how the popularization of ChatGPT sparked a red alert at Google, with executives fearing that the chatbot could revolutionize the industry and leave the most famous search engine behind.