Five hot topics for Brazil this week (April 18)

RIO DE JANEIRO, BRAZIL – The IMF and World Bank annual meeting in Washington brings together authorities such as Powell, Lagarde, Campos Neto, and Guedes. There will also be a G20 meeting. Strike continues to hold up Central Bank’s agenda. The corporate scene brings Eletrobras to the Federal Court of Audit (TCU) and Vale’s production in a shortened week due to the Tiradentes holiday on Thursday. GDP and eventual monetary relief in China are on the radar.

POWELL AND LAGARDE

The president of the Fed, Jerome Powell, and his colleague from the European Central Bank (ECB), Christine Lagarde, will participate in a panel at the International Monetary Fund (IMF) on the global economy on April 21. The week will also feature speeches by other Fed leaders, such as James Bullard, Charles Evans, the Fed’s beige book, and industrial production and housing indicators in the US.

CHINA AND COMMODITIES

Commodities like iron ore and oil may be affected by indicators and possible measures from China. The world’s second-largest economy will release Q1 GDP on the 17th, with an estimate of +4.2% over the previous quarter, and industrial and retail data for March. The People’s Bank of China will use its economic policy tools flexibly to ensure sufficient liquidity in the economy, a senior official at the institution said. “We will use monetary policy tools, including reducing the compulsory bond rate at the appropriate time,” said Sun Guofeng, head of the PBoC’s monetary policy department.

CAMPOS NETO AND STRIKE

The president of the Brazilian Central Bank, Roberto Campos Neto, will speak at an IMF event in Washington on April 18. The Minister of Economy, Paulo Guedes, also participates in the events in the American capital. On Wednesday, the meeting of G20 finance ministers and CB presidents is scheduled. Campos Neto’s latest comments have led the market to bet on a more prolonged monetary tightening, with pricing of an additional 0.75 percentage point hike beyond May.

The agenda of confirmed indicators for next week is limited to the IPC-S until April 15 and IGP-10. Central Bank indicators, such as the projections of the Focus survey and the IBC-Br, are not being released due to the employees’ strike. According to sources, the unions talk about maintaining the strike even after the government decided to raise the salaries of civil servants by 5%.

ELECTIONS POLLS

The market continues to pay attention to the electoral polls, which showed a narrowing of former President Lula da Silva’s lead over Jair Bolsonaro after former minister Sergio Moro stepped aside from the race. As the Workers’ Party (PT) still holds the lead, investors should keep an eye on news that could signal the direction of his eventual government. According to Folha, PT suggests that Lula da Silva might repeal the labor reform and no longer revise it.

VALE, ELETROBRAS, PETROBRAS

The first-quarter results season gains strength with Vale’s production report on April 19 and Usiminas’ balance sheet for the first three months of 2022 on the following day. The privatization of Eletrobras is on the agenda of TCU’s meeting on April 20. The board of directors of Petrobras has Jose Mauro Ferreira Coelho as the new president. He takes over after the previous two CEOs were removed after criticism from President Jair Bolsonaro over fuel readjustments.

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