Brazilian President Jair Bolsonaro rang the bell at the Sao Paulo stock exchange Tuesday to mark the start of trading in shares of newly privatized electricity company Eletrobras, the second-biggest stock offering worldwide this year.
The launch dilutes the Brazilian government’s stake in Eletrobras, Latin America’s biggest electricity company, from 72 percent to 45 percent.
It is part of Bolsonaro’s plans to privatize state-run companies en masse — a promise he has largely failed to deliver on nearing the end of his four-year term and facing an uphill battle to win reelection in October.
The share offering raised around 30 billion reais ($6 billion).
Economy Minister Paulo Guedes hailed it as a victory for private-sector efficiency.
“The biggest clean-energy generating company in the world is now free,” he said at the event.
“It’s like a child who left home at 18 and is going to go out and triumph. It no longer needs the protection of the state, which was becoming detrimental.”
Bolsonaro grinned and embraced Guedes as a hail of confetti fell, but did not speak at the event.
Guedes says Eletrobras needs to invest 16 billion reais a year to maintain its market share, but was previously only managing around three billion reais a year.
Critics worry the privatization could lead to higher bills for customers.
The event drew a small protest by dozens of demonstrators outside the stock exchange.
The Bolsonaro administration has also voiced interest recently in privatizing oil firm Petrobras, the biggest company in Brazil.
The state-run firm has drawn the far-right president’s ire with a series of recent price increases that are fueling high inflation.
Tampon shortage latest sign of supply chain issues in US stores
Tampons are the latest product disappearing from store shelves in the United States, another illustration of supply chain problems that are complicating daily life, following the troubling shortage of baby formula.
Drugstore chains CVS and Walgreens confirmed in messages to AFP that some brands of tampons are temporarily unavailable in some areas.
Procter & Gamble, which makes the ubiquitous Tampax line among other products, said customers might not be able to find their usual brand in American stores.
“We understand it is frustrating for consumers when they can’t find what they need. We can assure you this is a temporary situation in the US, and the Tampax team is producing tampons 24/7 to meet the increased demand for our products,” they said in a statement.
Walgreens said it was working with suppliers to “ensure we have supply available” in all its stores.
And CVS said that “if a local store is temporarily out of specific products, we work to replenish those items as quickly as possible.”
The situation has been going on for months, but has gotten increasing media attention in the past few days.
Patrick Penfield, a supply chain management specialist at Syracuse University, says demand has increased recently in particular because of additional purchases by consumers who see the shortage of certain brands and panic that they won’t be able to get more product.
He compared it to people stockpiling toilet paper at the start of the pandemic.
There is also a shortage of certain raw materials, including cotton and plastic, he said.
“This is the third straight year where demand for cotton in the US has exceeded what US firms are producing,” Penfield said, pointing to the increased need for masks and personal protection equipment (PPE).
In addition, some factories are struggling to operate at full capacity due to staff shortages or Covid-19 spikes, he said.
But the situation is different from the baby formula shortage: initially caused by supply chain snarls and labor shortages, formula supplies dropped sharply when manufacturer Abbott shut down one Michigan plant in February and issued a product recall after the death of two babies raised concerns over contamination.
When it comes to tampons, “the factories are operating,” Penfield said, predicting a return to normal within the next six months.
In the meantime, the shortage has offered Republicans a new angle of attack against US President Joe Biden, with the Republican National Committee slamming “Biden’s war on women” on Twitter.
UK scraps subsidies for electric plug-in cars
Britain on Tuesday axed its £1,500 ($1,800) subsidy for buyers of new plug-in cars as it focuses on other types of electric vehicles, but the news drew anger from the auto sector.
“The government is today closing the plug-in car grant scheme to new orders after successfully kickstarting the UK’s electric car revolution,” the Department for Transport (DfT) said in a statement.
The grant was launched in 2011 to help encourage Britons to ditch high-polluting diesel and petrol cars.
It has since supported the sale of almost half a million electric cars, the DfT added, stressing that the subsidy was always a “temporary” policy.
Sales of fully electric cars rocketed from less than 1,000 in 2011 to almost 100,000 vehicles in the first five months of this year alone.
However, the government is now switching its focus to offer subsidies on sales of new plug-in electric taxis, motorcycles, vans, trucks and wheelchair-accessible vehicles.
Britain plans to ban new sales of diesel and petrol cars in the UK from 2030, as part of its goal to reach net zero carbon emissions by 2050.
Tuesday’s announcement drew stark criticism from industry body the Society of Motor Manufacturers & Traders (SMMT).
“The decision to scrap the plug-in car grant sends the wrong message to motorists and to an industry which remains committed to government’s net zero ambition,” said SMMT boss Mike Hawes.
“Whilst we welcome government’s continued support for new electric van, taxi and adapted vehicle buyers, we are now the only major European market to have zero upfront purchase incentives for EV car buyers.”
Britain’s automobile sector had stalled last year on pandemic fallout including a semiconductor shortage.
However, greener electric vehicles now account for one in six new car sales.
That rises to just over half of all new car sales, if hybrid vehicles are included.
Fed begins meeting with massive hike possible amid price surge
US central bankers opened their two-day policy meeting Tuesday amid a blistering inflation surge that has ignited predictions the Federal Reserve will approve the biggest interest rate hike in more than 27 years.
Fed Chair Jerome Powell has signaled that policymakers were poised to implement another half-point increase in the benchmark borrowing rate this week and another next month.
But a growing number of voices are now calling for a more aggressive three-quarter point hike in response to the big, unexpected jump in the consumer price index in May, which defied widespread expectations the data would show inflation pressures easing.
A Fed spokesperson confirmed the meeting of the policy-setting Federal Open Market Committee began as scheduled at 1500 GMT. Markets will get the rate decision on Wednesday at 1800 GMT.
Officials will debate how high to raise borrowing costs amid surging prices and fears of a bout of 1970s-style stagflation if their efforts to cool the economy clamp down on growth as well.
After dropping the rate to zero since March 2020 in a successful bid to help the world’s largest economy avoid a devastating downturn and recover quickly from the impact of the Covid-19 pandemic, the Fed has raised rates twice, including a big, half-point increase last month.
Low lending rates and the boost from massive federal stimulus caused demand to outstrip supply amid global supply chain snarls, pushing prices higher, and the Russian invasion of Ukraine added more fuel to the inflation fires, sending food and fuel prices soaring.
– Credibility boost or negative surprise? –
Economists thought March was the peak of CPI, but the rate spiked in May, jumping 8.6 percent in the latest 12 months.
“Given the latest information on inflation, we believe that risk-management considerations call for aggressive action to reinforce the Fed’s inflation-fighting credibility,” Barclays analysts said in a commentary.
If policymakers decide on a giant step, it would be the first 75-basis-point increase since November 1994.
But other analysts say the massive step would be unnecessary and could be viewed as panicky, and instead project an additional half-point hike in September.
“With supply improving and demand for goods falling relative to services, margins will compress and inflation will fall much faster than markets and the Fed expect,” Ian Shepherdson of Pantheon Macroeconomics said in an analysis.
He noted that many of the factors driving the price spikes are “outside the Fed’s control, like oil prices.”
The consensus remains for policymakers to stick to the plan, and central bankers are typically loath to surprise markets, although they insist their decisions are “data dependent” and will adjust to evolving situations.
Karl Haeling of LBBW said markets are pricing in at least one 75-basis-point increase in the next three meetings, but chances of that happening this week are “50-50.”
“We believe they will probably avoid raising by 75 bps to reduce risk of an even bigger stock market plunge. But the coming barrage of Fed officials giving public comments after Wednesday will probably suggest that 75 bps is certainly possible at July’s FOMC,” he said.
Barclays said despite the element of surprise, “an aggressive move in June would provide the committee with the biggest bang for its buck, sending a resounding signal of the Fed’s resolve to guide inflation back to its 2 percent target.”
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