Effects of the Musk-Twitter Agreement, Chamber Decreases Baggage Fee and What Matters in the Market

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First effects of the Musk-Twitter deal

Elon Musk’s purchase of Twitter has spilled over into Tesla shares, which have fallen more than 12% this Tuesday, taking from the company $100 billion (or “three Twitters”) at market value.

What explains: despite having been a negative day for tech companies in general, Tesla has fallen much further. Much of the fall can be explained by the model aligned by Musk to finance the US$ 44 billion (R$ 218.5 billion) transaction.

• Of the total, US$ 21 billion (about 10% of your fortune) must come out of your pocket. He did not detail where he will get the money from, which opens up the possibility of having to sell part of his shares in the automaker. This could generate instability in the negotiations of the company’s shares.

• Musk got it too US$ 25.5 billion on financial loans. Nearly half of this will be tied to the equity stake it owns in Tesla, estimated at around US$ 170 billion. The other part will be debt issuances by their companies in the market.

• The billionaire and Morgan Stanley, which advised him in the process, are also sounding out other investors to help split the bill that the South African will have to pay.

In numbers: Twitter shares fell 3.9% to US$ 49.68, value below the offer of US$ 54.20, which indicates a foot behind the shareholders with the success of the operation. While Tesla, now worth $920 billion, leaves the select group of companies worth $1 trillion again.

Consequences: Amid the billionaire’s criticism of the social network’s moderation policies, the European Union warned Musk that the platform will have to follow the bloc’s new digital rules. If you don’t walk the line, you could be fined or even banned.

• The “anti-moderation” speech of the new owner of Twitter has also raised concern among the network’s employees. In addition to turning the work done so far into dust, they also fear that the share of their compensation in shares will be jeopardized.

• Another angst among workers is whether Musk will repeat what he did with Tesla and move the company’s headquarters from California to Texas.

Chamber drops baggage fee

The Chamber approved this Tuesday the end of charging a fee for checking luggage weighing up to 23 kg on domestic flights and a suitcase weighing up to 30 kg on international flights.

The device was one of the highlights of an approved MP (provisional measure) that relaxes rules in the air sector. Now, the text needs to be approved by the Senate before going to sanction. The validity of the MP runs until June 1st.

Remember: Baggage charges became permitted in 2016, when Anac (National Civil Aviation Agency) issued a resolution on the subject.

In 2019, Congress even dropped the additional fee, but the measure was vetoed by President Jair Bolsonaro and parliamentarians maintained the Executive’s decision.

The PM: the basic text approved this Tuesday eliminates the need for concession contracts for airlines and allows the construction of airfields without prior authorization.

It also allows companies to bar unruly passengers for up to a year.

Cryptocurrency regulation advances

The Senate approved this Tuesday (26) a bill that has been called the “regulatory framework for cryptocurrencies”, for establishing guidelines on operations made with these types of assets.

The project brings together different proposals that were being processed in the two Houses of Congress and needs the approval of the Chamber before going to presidential sanction.

What changes:

• The approved proposal provides that a government agency will have to authorize the operation, supervise and apply punishments to virtual asset brokers (exchanges).

• There is also a measure called “green mining”. It eliminates import and marketing tax rates on equipment used in crypto-related activities, as long as they only use clean energy. The high consumption of fossil energy in asset mining is a global problem.

• Crypto fraud cases will have a specific criminal classification with penalties ranging from four to eight years, plus a fine. In crimes of money laundering and concealment of assets, the penalties will be from three to ten years of imprisonment.

It’s not quite like that… At the time when the Senate approved the project that gave rise to the current one, specialists consulted by the Sheet stated that forcing a government authorization to brokers operating in the country would have little effect on money laundering crimes.

They said that the measure will hardly achieve the objective of preventing people from continuing to operate on platforms outside the country.

Market sees saltier inflation

Market projections for inflation this year and next have risen sharply since the last Focus survey released by the BC, on March 28.

Since then, the agency’s employees have gone on strike, which has now been suspended for two weeks.

In numbers:

• IPCA: for 2022, the median went from 6.86% at the end of March to 7.65%. In the projection for next year, the advance was 3.80% to 4%. The inflation target for the current year is 3.50% and for 2023 it is 3.25%, with a margin of 1 percentage point up or down.

• Selic: is estimated to end in 13.25% this year, compared to 13% in the March survey. For 2023, it remained at 9%.

• GDP: expectations are for a rise of 0.65% this year and 1% next year. In the last survey released, they were 0.5% and 1.30%, respectively.

why it matters: With the Copom meeting knocking on the door (May 3rd and 4th), the market is waiting for further signals from the BC in view of the advance in inflation expectations for 2023.

• From this meeting, the authority starts to focus only on next year’s target, considering the late effect of monetary policy.

• An increase in the Selic rate of 1 pp next week, to 12.75% per year, is already in place. The market is now waiting for an indication from the collegiate whether the cycle should stop there or go further – as most analysts project.