Double-digit Selic, Facebook owner’s shares tumble and what matters in the market

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Selic returns to double digits

Fulfilling what it had ordered at the last meeting, the Central Bank’s Copom raised the Selic rate by 1.5 percentage points, from 9.25% to 10.75% per year. The rise came in line with market expectations.

For the next meeting, in March, the committee foresees a new increase, but at a slower pace, that is, below 1.5 percentage points.

What explains: the BC raises interest rates to restrict credit, curb consumption and investments and slow down the economy. These factors tend to slow the rise in prices and inflation expectations.

• At the moment, the municipality focuses mainly on meeting the 2023 inflation target (stipulated in 3.25%), for when the BC understands that monetary policy will have a greater effect.
• In the Focus report, in which the BC gathers analysts’ estimates, the forecast is that the IPCA will end this year at 5.02% (above the target ceiling) and 2023 in 3.50%.

What changes in investments? Unlike last year, when most investments lost to inflation, the combination of high interest rates and a slowdown in the IPCA should generate positive real income even for savings. The survey is from the search engine Yubb.

• Considering the Focus inflation estimate, the preferred investment of Brazilians should yield 0.75% with the IPCA discount.
• But there are more attractive applications. The incentivized debentures, exempt from IR (Income Tax), have an expected return of 10.16% per year. These securities should be analyzed with caution, due to the risks associated with them.
• Among the most conservative investments in fixed income, we highlight bills of exchange (LC) and agricultural credit (LCA) and real estate (LCI) – also exempt from IR – with a real yield of 6.21%, 4.80% and 5.20%respectively.

Opinion: monetary policy is burdened with the disregard of basic rules of fiscal responsibility, says Mauro Rochlin, professor at FGV.

Facebook owner’s shares plummet 22%

Shares in Meta, owner of Facebook, Instagram and WhatsApp, plummeted 22.9% in post-market negotiations this Wednesday after the company released its results for 2021.

The tumble size: if the shares maintain the fall in the trading session of this Thursday (3), it will be the biggest retraction since the company’s IPO, in 2012. A drop of this size takes more than Mark Zuckerberg’s company $200 billion (R$ 1.06 trillion) in market value.

As a comparison, the sum of the market value of Vale and Petrobras, the two most valuable companies on the Brazilian stock exchange, is almost $170 billion (BRL 900 billion).

What explains: Meta expects revenue for the first quarter of this year to be between $27 billion to $29 billion, below analysts’ estimate of $30.3 billion (R$ 159.4 billion).

• The profit of US$ 10.2 billion (R$ 54 billion) in the last quarter of 2021 fell by 8% in the annual comparison, pressured by investments in the development of the metaverse.
• In addition, the company also cited the “increased competition for people’s time”, who began to watch more short videos, which harms ad revenue.

Negative context: Investors’ bad mood after the results is compounded by the negative view of tech companies because of the Fed’s monetary tightening.

Brands bet on NFTs

Technological novelties such as blockchain, NFT and the metaverse have excited not only fans of crypto assets, but also brands, who are looking for ways to cash in on these tools.

In Brazil, Alpargatas, owner of Havaianas, and Pantys, of absorbent panties, are examples of companies that offered art in the format of NFTs.

Understand: the acronym for “non-fungible token” works as a certificate of ownership linked to a digital product, which can be anything from a meme to the first SMS in history. The NFTs even won a museum in the USA.

Anyone who buys a crypto asset of this type bets that they will make money from its future appreciation. Transactions are made by blockchain, a decentralized network that guarantees the security and transparency of negotiations.

Hot market: until this Tuesday, NFTs moved almost US$ 20.876 billion (R$ 110.5 billion), according to data from the Non Fungible platform.

Recently, Brazilian player Neymar spent more than BRL 6 million to buy two works from the Bored Ape Yacht Club, one of the best-known NFTs. The ace uses one of them as a profile picture on Twitter, in a novelty that the network released last month.

Marks in the metaverse: The leaf showed last November how the concept, even far from becoming a reality, has already brought money to startups and mobilizes luxury brands and big techs.

The metaverse is characterized as a digital environment in which people, represented by avatars, interact with each other or with objects.

Industry rises in 2021, but is expected to stagnate in 2022

The production of the Brazilian industry grew 3.9% accumulated in 2021, informed the IBGE this Wednesday. It is the first advance after two years of decline.

In December, it rose 2.9% compared to the previous month. The market had expected a rise of 1.6%.

What explains: much of last year’s growth is due to a low base of comparison. In 2020, industrial production had fallen by 4.5% after having already fallen by 1.1% in 2019. Factory production is still 0.9% below the pre-pandemic level.

Rising prices at the entrance to factories, the scarcity of inputs and the drop in demand generated by the high interest rates hindered more robust growth in the industry in 2021, especially in the second half of the year.

Diagnosis for 2022: industrial production should be stagnant this year, economists point out. Contributing to this scenario are the GDP forecast close to zero, high interest rates, persistent inflation and the continuity of bottlenecks in the global logistics chain.

More on the subject:

Vehicle sales fell by 38.9% in January compared to December. The month is usually bad, but the low in inventories further harmed the result.

What else do you need to know