Opinion – Marcos de Vasconcellos: Fall in industrial production and trade. How does the stock market go up?

Anyone looking, unprepared, at the Ibovespa chart, the main indicator of our Stock Exchange, can believe that Brazil has taken off.

Far from the scare of the onset of the pandemic, with a rising vaccination rate and the number of admissions and deaths for Covid-19 falling (fortunately), the rate is in the order of 107,600 points, 5.3% above the score that had a year ago.

It seems obvious that investors are bullish on the move away from the most tragic days of the pandemic. Some municipalities are already allowing circulation without masks.

But everything that seems obvious must be regarded with suspicion. And whoever goes beyond personal impressions, may encounter a harsh reality that the Ibovespa hides.

The production of Brazilian industry fell in 11 of the 15 places surveyed by the IBGE (Brazilian Institute of Geography and Statistics), in the comparison between September this year and the same month in 2020.

The most intense declines were in the Northeast Region (-13.7%), Amazonas (-13.5%), Bahia (-13.3%) and Ceará (-12.3%), according to the Monthly Industrial Survey – Regional Physical Production.

Retail sales, in turn, also registered a drop, from September 2020 to September 2021, also according to the IBGE. This represents a considerable reduction of 4.1% when we also consider the sale of vehicles and construction materials. Without these items, in the so-called restricted retail, the fall was 5.4%.

While the real economy knocks at the door with saucer in hand, the Exchange is jumping for joy with the agreement between the federal government and the so-called “centrão” to pierce the spending ceiling, approving the infamous Proposal for Amendment to the Constitution (PEC) .

Here, it must be said, the explanation is that the big players considered that approving the PEC was less bad than keeping the arm wrestling for longer. In the financial market, uncertainty is the food of loss.

Another sigh of joy, which pushed the Ibovespa up this week, came from São Paulo. The São Paulo retail market increased by 15.2% in October compared to September, finally reaching the pre-pandemic level. Investors pointed to the data as a basis for optimism, even though IBGE data show Brazil, as a whole, in another measure.

The mismatch between the real economy and the Exchange’s numbers is nothing new, but it always causes discomfort to those who seek rationality in the invisible hand of the market.

The truth is that insecurity and uncertainty have reigned in the stock market in recent days. As an example, it is worth mentioning that, between November 5th and 10th, the Ibovespa rose a little more than 2%. The number of bets on the fall of the index (reflected by the number of rentals of BOVA11 paper), in the same period, rose 57%.

At such times, it’s good to remember the investment icon, the multibillionaire Warren Buffet: operate within your own limitations, or as he calls it, your circle of competence. Just invest in what you understand. And leave emotions out of your decision making.

The release of quarterly balance sheets, made in recent days, has given a more accurate picture of companies’ prospects for the coming months. It’s interesting to see how shares of retail giants such as Via (VIIA3), owner of Casas Bahia, and Magazine Luiza (MGLU3) plummeted when the market looked at their freshest numbers.