(Bloomberg) — Good morning. Today we bring you a special edition of the Bloomberg New Economy from the B20 Forum, which started last night and continues today. View the entire program. Follow the morning live broadcast on this link and don’t miss the live broadcast on the corresponding links for morning and afternoon activities.
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US futures are signaling a weak start. The collapse of McDonald’s. And Bank of America’s CEO is urging caution.
Connection with China
In the framework of the B20 event “Bloomberg New Economy” held in São Paulo, Agriculture Minister Carlos Favaro said that Brazil should join China’s Belt and Road Initiative to counter the growing protectionism of the United States and the European Union. This idea has divided the government. President Luiz Inacio Lula da Silva is trying to attract new investment to Latin America’s largest economy. Favaro insisted his country could participate in the initiative without “causing conflict with anyone.”
growth support
Speaking on the same panel, Brazilian National Development Bank (BNDES) President Aloysio Mercadante said the bank supports economic growth and contributes to solving the country’s fiscal problems. He said Brazil had “significant” fiscal vulnerabilities and that BNDES would pay more than 40 billion reais ($7 billion) in dividends to the Brazilian Treasury to play a role in solving such challenges. He pointed out that He also added that obtaining a sovereign credit rating is essential for governments. Regarding environmental efforts, I affirm that Brazil aims to plant 6 million hectares of jungle to capture carbon dioxide.
stable inventory
Stocks were little changed and bonds fell, despite a number of closing dates, as the outlook for aggressive Fed rate cuts continued to weigh on the market. U.S. futures prices indicated a slight decline on Wall Street. Europe’s benchmark Stoxx600 index fell. 10-year government bonds fell. Crude oil fell, but gold stabilized after setting a new record.
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rapid fall
McDonald’s fell 6% after becoming the latest fast food restaurant to be linked to a serious E. coli outbreak. On Tuesday, federal health officials announced that the fast food chain’s Quarter Pounder burger has been linked to an outbreak in the United States that has sickened 49 people and killed one, mainly in Colorado and Nebraska. . McDonald’s claims that some of the illnesses may be linked to sliced onions used in its burgers from a single supplier.
BofA urges caution
Bank of America CEO Brian Moynihan urged the Fed to be cautious in cutting interest rates and not act too soon or too late. He expects the Fed to cut rates by 50 basis points by the end of the year and four more by 25 basis points in 2025, bringing the final rate to 3.25%. He believes that stronger monetary policy will benefit banks in the long term, and expects banks’ net interest margins to widen to 2.3% in the long term.
Tokyo Metro makes its big debut
Tokyo Metro shares rose 45% on Wednesday, the biggest stock market debut for a Japanese company since 2018. The operator of the world’s largest subway system has secured the country’s largest initial public offering since mobile phone operator SoftBank. Demand exceeded supply by a factor of 15, according to several major underwriters. Japan’s high dividend yield and the company’s earnings outlook make Tokyo Metro stock attractive
strategic autonomy
-Written by Eric Schatzker
Which world power would you like to have as your ally?
That’s the question asked to citizens of five Latin American countries in a recent Bloomberg survey: Argentina, Brazil, Chile, Colombia, and Mexico. Six options: United States, European Union, China, Russia, BRICS countries, or remain neutral.
The results say a lot about the current state of geopolitics and the future of everything from global trade to regional security.
In Mexico, respondents lean toward the United States, which is not surprising since the two countries share a 3,144-kilometre border and are members of the T-MEC Free Trade Agreement. Last year, nearly 85% of Mexico’s exports went to the United States.
Brazil, by comparison, has dozens of trading partners, so it has good reason not to take sides. The largest exporters, China and the United States, together account for only 42% of Brazil’s exports. In recent years, Brazil’s shipments to non-aligned countries such as Indonesia, Malaysia, Vietnam, Turkey, Thailand, and the United Arab Emirates have continued to increase.
It is no wonder, then, that Brazilian respondents were divided in their opinions. Only 36% chose the United States, while 33% (the majority of countries surveyed) supported the BRICS countries, 12% preferred to remain neutral, and 9% chose China.
In theory, neutrality is equivalent to arbitrariness. As the world divides along geopolitical lines, alignment with power blocs may come at the cost of trade and investment.
Jair Bolsonaro, who served as Brazil’s president from 2019 to 2022, admired Donald Trump and forged closer political and economic ties with the United States, which was overwhelmingly driven by sales to China. This alarmed Brazil’s major agribusiness and mining companies, which depend on the
His successor, Luiz Inacio Lula da Silva, has since returned to a more neutral position, advocating a more multilateral world order. For example, Lula had planned to travel to Russia to attend the BRICS summit and meet with Vladimir Putin and Xi Jinping, but an accident over the weekend forced him to cancel his trip.
Few countries in the Global South want to be drawn into a geopolitical conflict between the United States and China. Rather, they hope to benefit from relocation of production bases and changes in trade patterns.
For example, look at what’s happening with electric cars. The United States and Europe are increasing tariffs on electric vehicles made in China. China’s two largest electric car makers, BYD and Great Wall Motors, are building factories in Brazil and plan to hire thousands of people as they expand production.
Brazil is not alone in its support of neutrality. In the Bloomberg survey, respondents in Argentina, Chile and Colombia continue to lean toward the United States over other options. However, the non-alignment option came in second place, far ahead of China, Russia, the EU, and BRICS.
Today, the São Paulo conference will be moderated by Jon Huntsman, former US ambassador to China and Russia, and Wesley Batista, one of the two billionaire brothers who control the giant Brazilian meat industry. We are planning to take up the issue of collaboration in a panel discussion. Co-produced by JBS and Sigma Lithium Executive Director Ana Cabral.
what we are reading
Millais infuriates G20 after rejecting calls for gender equality
CDC links E. coli outbreak to McDonald’s burgers
Argentina’s largest private bank increases lending
U.S. Treasuries show pattern mimicking 1995’s ‘soft landing’
Pimco recommends against the world’s riskiest bonds
Lagarde says President Trump needs to visit ECB to learn how difficult the job is
Hidden costs outside the CPI burden millions of Americans
IMF lowers global growth forecasts, warns of risks
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–With assistance from Eric Schatzker.
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