The ‘Musk era’ on Twitter, China lockdown and inflation and what matters in the market

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The ‘Musk Era’ arrives on Twitter

After a series of back and forth, Elon Musk bought Twitter. And at the price he wanted: $54.20 per share in cash, or $44 billion (R$ 214 billion).

The company’s board of directors unanimously approved the offer, which is subject to approval by shareholders, regulators and other procedures. Twitter shares soared 5.66% on the day, at US$51.69.

What defined the business: the chain’s board was pressured by shareholders to negotiate with Musk after he cleared up one of the biggest questions surrounding the process: where the money would come from.

• Of the total, $25.5 billion will come from loans with a group of banks, while the other part will come out of their personal fortune.

• Musk’s purchase price represents a high of 38% compared to the last day of trading before the Tesla owner revealed he had bought a 9% stake in the company.

Musk’s Twitter Toughness: the bird’s net is his favorite. It is there that he conducts personal rematch campaigns and promotes his agenda.

• In 2018, he tweeted that he was considering taking Tesla private, which sent the company’s stock skyrocketing and landed him and the automaker a $20 million fine.

• Musk says his purpose in taking Twitter private is not a financial one, but says it’s the only way the platform can guarantee the free flow of ideas.

What should change?

Described as both a visionary and a madman, Musk is often confused in his statements and makes less-than-serious estimates. But he recently dropped some hints on Twitter himself and at a conference about what he intends to do on the platform.

• He wants to make the company’s algorithm an open source modeladvocating that the rules used to promote or demote content be public.

Analyze: without the same strength of networks like Facebook, Instagram and YouTube, the purchase of Musk is to take Twitter out of the hole, not only journalistic, but business, comments Nelson de Sá, columnist for Sheet.

In favor of the billionaire is his history as a manager: from the founder of PayPal, a company he sold in 2002 by US$ 1.5 billion (R$ 7.3 billion), to the entrepreneur who made Tesla the most valuable automaker in the world and created SpaceX, a startup that is now worth more than US$ 100 billion.

More about the business:

What sustains the dollar’s rise

With investors eyeing the Covid cases in China and the high interest rates in the US, the dollar maintained its high sequence in Brazil this Monday and jumped 1.49%, the BRL 4.88.

The currency came to close to R$4.95 at the highest of the day and had already skyrocketed 4.04% the day before, the highest since March 2020. Pressured by Vale and Petrobras, the Ibovespa retreated 0.35%at 110,684 points.

what explains the recovery of the dollar’s breath:

– Lower interest rate differential

• Higher interest rates in the US reduce the attractiveness of the double-digit Brazilian Selic and contribute to turning off the tap of foreign resources that had been opened in the country since the beginning of the year.

– Commodity retreat

• Another reason for the flight of dollars from Brazil is the fall in the prices of basic materials. The soaring prices since the beginning of the war in Ukraine had been benefiting Brazilian exporting companies and helped in the appreciation of the stock exchange and the real.

New lockdowns could put pressure on inflation

The total or partial confinement imposed by the Chinese government in dozens of cities in the country is already starting to generate queues in the main port of the country.

This means that new supply crises at a global level are knocking at the door and should generate additional pressure on inflation.

What explains: the Chinese authorities’ “zero Covid” policy forced a lasting lockdown in the city of Shanghai, the country’s financial center with 25 million of inhabitants.

• In addition to affecting the local economy, the measures spill over into other countries because that is where the world’s main port for cargo handling is located.

• The confinement measures make it difficult for trucks to access the goods to remove the goods from the port and also limit the number of workers, which hinders logistics on site.

• With thousands of containers backlogged and a queue of ships waiting their turn to dock, high freight costs are likely to come under even more pressure as shipping companies such as Maersk try to avoid passing through the site as much as possible.

why it matters: The sum of confinements at the beginning of the pandemic with the high demand for consumer goods generated a supply crisis that hinders the industry to this day and which is partly to blame for global inflation.

• If Chinese restrictive policies continue, or worse, are applied in other cities, as the market fears, the nodes of the global logistics chain will be tightened again.

• According to Bank of America, although authorities have begun to take action in recent days, the outages should reach the rest of the world in three to six weeks and last at least until the end of the second quarter.