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Good morning people!
On the eve of the announcement of another $ 1 trillion tax package in the United States, interest on 10-year Treasuries rose to 1.74%.
Of course, more activity generates more inflation and therefore more interest. The market is stressed, no doubt.
US stock markets corrected the day before and Wall Street futures today (31) flirt with a positive tone at the open.
Europe opens the day in a mixed way, alternating the stock markets between stability and negative mood.
Brazil, after taking off from the international yesterday (30), could see another good day for risk assets, although we have numerous challenges, such as correcting some accounting aberrations in the 2021 Budget.
Institutional noise tabajara
The departure of the commanders of the Armed Forces left a bitter taste in the mouth of many people, with a tone of institutional noise on the horizon.
The market paid little attention. He was more concerned about the 2021 budget, which needs to be corrected. The feeling that remains is that the greater influence of Congress in the government is positive, since it would open more space for Paulo Guedes.
There is a political crisis in the air, it is undeniable. It was not 100% trained now, but the moment and the current Executive have deepened it, without a doubt.
Bolsonaro, however, brought crisis elements into play in the military wing. The situation is institutionally delicate and terrible for attracting foreign funds. Again, if the economic team still has a say at the end of the day, the market will continue to depend on Brasilia.
The problem is that the Ministry of Economy threatens to dissolve if the ceiling is not reached. Perhaps even Brazil will give up on Brazil if that happens. All that, more than 3,600 deaths a day … The short term is confusing.
Biden would not know how to be president of Brazil
Today, the White House is expected to announce another fiscal package, this time focused on infrastructure. The encryption?
$ 3 trillion, which already includes a 28% increase in corporate tax rates – the pandemic bill reaches everyone – reversing the big Trump-era tax cut (they weren’t quite as high as in Obama era) in another move by Biden to accelerate America’s post-pandemic economic recovery.
Imagine if Biden were president of Brazil and not of the United States. Where would you get the money from? Man spends like never before in history.
The new stimulus package, although positive for the economy, reinforced fears of higher inflation in the market, causing long-term interest rates to rise.
The measure strengthens the dollar, especially against emerging currencies, which tend to be more volatile, sensitive and exotic.
The truth is that the US has everything to fly in 2021:
I) more than 100 million doses of the vaccine have been administered and Biden wants 200 million at the end of his first 100 days;
ii) Growth of 6.5% in 2021, with unemployment of 4.5% until the end of the year; and
iii) gigantic sequential tax packages.
And this global trade there, huh?
The World Trade Organization (WTO) must publish its trade projections for 2021 today (31).
Last year, markets saw global trade fall by as much as 32%, depending on the base and the applied methodology (other measured indicators fall between 9% and 13%, which, although large, are more modest than 32 %).
Of course, forecasting models, which are not very efficient in settings like today’s, seem inclined to underestimate people’s ability to adapt to a crisis: revisions happen frequently and overwhelmingly upwards.
In 2021, however, trade is expected to be supported by changes in the consumption pattern, from services to consumer goods and, in a second moment, back to services. This reversal should be seen towards the end of the year, starting in the second semester.
Write it!
Abroad, it is convenient to monitor euro area consumer price inflation indicators, which were in line with expectations and did not negatively surprise risk assets at the beginning of the day.
In the long term, inflationary pressures appear moderate, although there are shocks in the short term.
In the US, the agenda is full: start of the presentation of payroll data – the main one is for Friday (2) -, Purchasing Managers Index (PMI), home sales and energy data .
In Brazil, as a result of more corporate results, the market will be attentive to the news from Brasilia, which has surprised us on a daily basis.
To guide the fiscal discussion, based on the Budget review, today we will have data on the Brazilian public deficit and the debt / GDP ratio. The unemployment rate must also be presented, which is still at worrying levels.
What changes in my life?
Will it be in this second quarter when the world would begin to return to “normality”?
For a year, humanity has seen its behavior change in a brutal way, it is worth mentioning that no model foresaw how we would adapt so well to the exposed conditions, although we often like to complain.
The truth is that, in the face of the crisis, we were forced to isolate ourselves, to protect as many lives as possible (a minimum and acceptable sacrifice in the face of the death of thousands of people per day). As a result, our economy has changed its profile. We become natural consumers of goods and accelerate structural changes in the labor market.
Thanks to the change, much of the demand has stagnated. It is estimated that Americans, for example, have accumulated $ 1.5 trillion in surplus savings, which should be generated in the economy as soon as possible. Consumer spending plummeted in 2020, but is expected to rise during 2021, starting most strongly in the second quarter.
As life slowly returns to normal, we see evidence of this movement in the main indicators of the economy, which already show somewhat the use of this powerful demand. Holidays, concerts, dinners, travel and clothing should be very affected segments.
Be careful!
If you had the opportunity to take all your doubts about the Carteira Universa live with me, with Felipe Miranda and the Vitreo and Empiricus teams that are in charge of this fund, would you take advantage of it?
If your answer is “Yes”, this invitation is especially for you.
It is as follows: today at 7 in the afternoon I will be at Live monthly Universa Portfolio together with Felipe Miranda, Kiki, João Piccioni and Fernando Ferrer. In this direct we will answer everything about this fund.
But only for those who are live, interacting there with them.
If you have any questions to answer about this entire portfolio assignment, we see this as an excellent opportunity to practically have a very high-level and extremely focused “free class” with these two teams of beasts.
This invitation is special for those who participated in the cycle “Seu Investidor Profissional”. This monthly live is an important ritual for the shareholder, Carteira Universa, which has this entire team working as “its professional investors”. It is a must.
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We will see you there.
[EU QUERO PARTICIPAR DA LIVE SOBRE O CARTEIRA UNIVERSA]
A hug,
Jojo wachsmann
