Aurelia Butler

NEW YORK (Reuters) – On one side is a president questioning the integrity of the electoral system. On the other, a challenger warning he could roll back the country’s biggest privatization in decades.But investment bankers are sanguine about the impact of Brazil’s presidential election this year on investor appetite for upcoming deals.They say investor attention is focused on global risks such as higher U.S. interest rates and inflation or the war in Ukraine, executives say, making a presidential contest between two familiar faces seem like a manageable concern.”Given the global outlook, Brazil represents an attractive opportunity for investors as a global commodity provider, likely overriding any potential short term political uncertainty,” said Max Ritter, managing director at Goldman Sachs & Co (NYSE:GS) responsible for Latin America.Former President Luiz Inacio Lula da Silva has stuck to proven left-wing rhetoric while riding a healthy lead in the polls. However, bankers see his choice of centrist former Sao Paulo Governor Geraldo Alckmin as a nod toward the market-friendly policies he adopted on taking office in 2003.Ricardo Lacerda, founder and CEO of Brazilian investment bank BR Partners, acknowledged the risk that far-right President Jair Bolsonaro and his supporters could challenge the election result, after casting doubts on Brazil’s electronic voting system.But he said interest in mergers and acquisitions remains strong in Brazil, even as appetite for new share offerings has waned. “Some investors are looking at Brazil again after the sharp interest rates hikes boosted the real,” Lacerda said.The head of Latin America at Citigroup (NYSE:C), Eduardo Cruz, said there may be a window for renewed share issues by the end of the year, although he expects mostly listed companies selling new stock rather than a new wave of initial public offerings.Even the bankers on a deal publicly criticized by Lula say there is little sign of cold feet.Bolsonaro’s government is racing to privatize state power company Centrais Eletricas Brasileiras SA, or Eletrobras, with a share sale diluting the government’s stake and raising more than $6 billion before the October election.Lula has warned “serious business leaders” to steer clear of the deal, telling supporters at a rally that buyers taking part in privatizations under Bolsonaro “will have to talk to us.”Three bankers involved in the Eletrobras deal, who requested anonymity to speak freely, said they continue to see strong interest in Eletrobras among foreign investors. They called the comments from Lula overheated campaign rhetoric.”There are not many assets available worldwide with a strong upside potential as Eletrobras after the privatization”, one of them said. More

The information minister said last Friday ten cabinet members had resigned in order to stand in ruling party primaries which decide who from the All Progressives Congress will run for the presidency, state governorship and senate. But junior petroleum minister Timipre Sylva and the ministers of justice, labour and women’s affairs, said on Tuesday they had decided to stay in their jobs to help the president deliver his policies.The country’s central bank governor Godwin Emefiele is seeking a court order to bar the electoral commission and nation’s attorney general from preventing him from running for president without resigning his post. The matter will be heard on May 23.Nigerians will hold a general election early next year to choose a new president, state governors and house of assembly members. With Buhari prevented from seeking re-election after serving the constitutionally mandated two four-year terms, more than 20 ruling party members have declared themselves candidates. More

The staff-level agreement is subject to approval from IMF management and the executive board, which is expected to meet in June. The review’s completion would allow the disbursement to cover external financing needs, the IMF said in a statement. The IMF in December approved a three-year loan deal for Niger worth around $276 million, meant to help it recover from the effects of the COVID-19 pandemic.”Program performance until end-March 2022 was broadly satisfactory and most quantitative macroeconomic objectives were met,” said the IMF on the agreement. Economic growth is projected to rebound to 6.9% in 2022 from 1.3% in 2021 on the back of agricultural production and large-scale investment projects relating to an oil pipeline to Benin, it said. However, inflation remains elevated due to food price pressures, the IMF said. Niger lies in the semi-arid Sahel region, where armed Islamist groups linked to al Qaeda and Islamic State have destabilised swathes of territory in recent years. They have carried out regular attacks that have killed thousands of people and displaced millions.Niger ranks last out of 189 countries in the United Nations’ Human Development Index, which measures health, education and quality of life. More

The Netherlands governor, one of the ECB’s most hawkish policy makers, told Dutch television that he supports a quarter-point increase in July already mooted by several of his colleagues, but then added that a larger magnitude shouldn’t be excluded if necessary.The euro extended its rally, trading 0.8% higher at $1.0517 on Knot’s comments. Money markets are pricing in 105 basis points of tightening by December, according to swaps linked to ECB decision dates.The comments open a new line of argument on monetary policy at a time when the ECB’s resolve toward stimulus withdrawal is galvanizing fast. While the US Federal Reserve just delivered a half-point move in April, euro-zone officials have been more cautious at a time when war is raging next-door to their currency area. “The first interest-rate hike is now being priced in for the monetary-policy meeting of July 21, and that seems realistic to me,” Knot said. “Based on current knowledge, my preference would be to raise our policy rate by a quarter of a percentage point. Unless new incoming data in the next few months suggests that inflation is broadening further or accumulating. If that’s the case, a bigger increase must not be excluded either.”Asked about the extent of such a move, Knot said that “in that case, a logical next step would amount to half a percentage point.”Inflation, which is running at 7.5% in the euro zone — almost four times the ECB’s target — is the driving force, despite the war in Ukraine weighing on the continent’s pandemic recovery and prompting to some officials to warn of stagflation.The risks facing the region were laid out starkly on Monday by the European Commission, which cut its growth forecast and raised its inflation outlook, adding that in a “severe” scenario of a total Russian gas supply shutoff, the economy would barely expand.Knot said that while he doesn’t currently envisage a global recession, people will still face higher inflation in the next few months, and normalizing monetary policy is “the only option.”The momentum building among toward a rate hike has already gone beyond the first move in July, with policy makers increasingly embracing a scenario of taking interest rates above zero before the end of the year, according to officials familiar with the matter.©2022 Bloomberg L.P. More

Investing.com — U.S. retail sales data for April, and their significance for Federal Reserve policy, are set to dominate at least the early part of the day. Earnings and guidance from Walmart and Home Depot will also shed light on the strength, or otherwise, of the U.S. consumer. Elon Musk obfuscates in an attempt to drive down the price of his Twitter acquisition, causing Twitter stock to drop further and Tesla stock to bounce. The defenders of the Azovstal steelworks in Ukraine lay down their arms, ending the longest battle of Russia’s war in Ukraine, and oil prices hit a seven-week high as confidence in Shanghai’s reopening rises. Here’s what you need to know in financial markets on Tuesday, 17th May.1. Retail sales to sway Fed?Is the U.S. consumer still spending, or has inflation and talk of an economic slowdown ahead already killed the desire to get out and have fun in a world without lockdowns? We shall all be a little bit the wiser at 8:30 AM ET (1230 GMT), when the U.S. releases retail sales numbers for April.Sales are expected to have risen 0.9%, which would be their strongest increase in three months, while core sales are expected to have grown only 0.4%, which would be their weakest increase in four months.With forecasts like that, any number of interpretations should be possible. Fortunately, there will be a handful of speakers from the Federal Reserve in the course of the day to let us know if the numbers have changed anything (there’s a hint of hope in the air that a bad number will persuade the Fed to ease up on the policy tightening front).Fed chair Jerome Powell headlines at 2 PM ET, while James Bullard and Patrick Harker will be the warmup acts and Loretta Mester and Charles Evans will be your hosts for the after-party.2. ObmuskationElon Musk said his deal for Twitter (NYSE:TWTR) can only proceed if the social media company can prove its estimates about fake and spam users. Twitter CEO Parag Agrawal had posted a long thread on Monday explaining why this is, for all practical purposes, impossible.Musk claimed, via the microblogging site (not via an SEC filing, of course), “20% fake/spam accounts” as a baseline – some four times what Twitter says. He added for good measure that the figure “could be *much* higher.”“My offer was based on Twitter’s SEC filings being accurate. Yesterday, Twitter’s CEO publicly refused to show proof of 5%. This deal cannot move forward until he does.”The news strengthened suspicions that Musk may be looking for an excuse to walk away from the deal, preferably without triggering the $1 billion break fee he agreed to. Twitter stock was down 2.6% in premarket, while Tesla (NASDAQ:TSLA) stock, which hit a nine-month low on Monday, bounced 3.7%.3. Stocks set to open higher on Shanghai reopening hopes; Walmart, Home Depot eyedU.S. stocks are set to open higher, as global growth concerns ease in response to news that Shanghai has moved a step closer to lifting a two-month-long lockdown.By 6:15 AM ET, Dow Jones futures were up 488 points, or 1.5%, while S&P 500 futures were up 1.8% and Nasdaq 100 futures were up 2.1%. The Nasdaq contract has gained for three of the last four days since touching an 18-month low last week.The retail sales data will be cross-checkable at the corporate level against Walmart (NYSE:WMT) and Home Depot (NYSE:HD) earnings, which are due early. Imperial Brands (LON:IMB), the owner of West and Winston cigarettes, rose 7.5% to a two-year high after putting its own earnings out in London earlier. Numbers are also due from Canada Goose (NYSE:GOOS), Sea Ltd (NYSE:SE), AerCap (NYSE:AER), and JD.com (NASDAQ:JD)4. Ukraine aid bill progresses as Mariupol defenders surrenderUkrainian soldiers defending the Azovstal steelwork in Mariupol laid down their weapons, allowing Russia to complete the conquest of the port city on the Black Sea. That comes a day after Russian troops successfully repulsed a Ukrainian counter-attack in the same region.Elsewhere, Turkish President Recep Tayyip Erdogan said he would oppose NATO membership for Sweden and Finland, due to their harboring his political opponents. Newswires cited defense officials as expecting the objections to be smoothed over.The $40 billion U.S. aid package for Ukraine advanced in the Senate on Monday, passing a procedural bill 81-11, despite opposition from some Republican Senators. Treasury Secretary Janet Yellen echoed some of their sentiments on Tuesday by calling for Europe to increase its aid to Ukraine.5. Oil hits 7-week high on Shanghai hopes, OPEC+ shortfallCrude oil prices hit a seven-week high as Shanghai completed a third straight day without detecting any new cases of COVID-19 in its quarantine area, bolstering confidence that it can lift its lockdown in June as signaled by local officials.By 6:30 AM ET (1030 GMT), U.S. crude futures were up 0.6% at $112.54 a barrel, while Brent crude was up 0.7% at $115.00 a barrel.  Prices were also supported by newswire reports suggesting that OPEC and its allies had pumped 2.6 million barrels a day less than planned in April, as sanctions on the Russian oil industry compounded problems with underinvestment in other members of the bloc. The American Petroleum Industry will report its weekly inventory numbers at 4:30 PM ET, as usual. More