Connect with us

News

Bolsonaro’s fuel dilemma puts Petrobras chief on shaky ground

Published

on

Bolsonaro’s fuel dilemma puts Petrobras chief on shaky ground

One yr in the past Jair Bolsonaro triggered a disaster at state-controlled vitality group Petrobras by changing its technocratic chief govt with a army officer. Now the way forward for the final appointed by the Brazilian president is more and more doubtful.

With elections looming in October, the rightwing populist chief has in latest weeks lashed out at publicly listed Petrobras after it refused to cap rising petrol and diesel costs, a sore spot for voters.

A survey printed by BTG Pactual this week discovered that one in three respondents blamed the federal government — a better proportion than those that held accountable different components corresponding to Petrobras or the battle in Ukraine — for the rise in gas prices. On the pumps diesel has soared by 1 / 4 and petrol by 10 per cent for the reason that begin of this yr alone, hurting dwelling requirements, significantly in poorer communities.

Bolsonaro trails within the polls to leftwing rival Luiz Inácio Lula da Silva, an outspoken proponent of holding down gas costs. Many count on the Brazilian chief will handle the problem both by eradicating Normal Joaquim Silva e Luna as Petrobras chief and putting in a extra pliant substitute, or through the use of his presidential powers to create a gas subsidy programme.

Each choices carry potential dangers to Brazil’s largest firm and to the broader financial system. When Silva e Luna was nominated final yr, Petrobras’s São Paulo-listed inventory fell 21 per cent and Brazil’s foreign money slid towards the greenback amid fears the federal government would intervene within the firm’s pricing coverage, which tracks worldwide markets for home gas charges.

Advertisement

Nevertheless, Silva e Luna has to date resisted the stress, resulting in the dialogue within the authorities of who might change him.

“In Brazil, the problem of gas costs is all the time a political subject. It has all the time been all through Petrobras’s historical past,” mentioned Roberto Castello Branco, who was in impact fired as chief govt by Bolsonaro final yr.

“There’s a danger that Petrobras will endure extreme losses from any intervention in costs,” he mentioned, which might have “damaging repercussions on the Brazilian financial system. That is along with the short-term repercussions, which occur within the inventory market, within the alternate charge, in rates of interest.”

Cláudio Porto, founding father of vitality consultancy Macroplan, envisages two situations. The primary is a “symbolic alternate” the place Silva e Luna is changed however the pricing coverage maintained. Within the different, the final is eliminated and the corporate’s messaging and pricing coverage overhauled.

“On this case, the influence on the inventory market will likely be longer with a lack of worth for Petrobras. So long as Petrobras is state managed, it is going to be attacked all through the cycle electoral marketing campaign,” he mentioned.

Advertisement

For his half, Silva e Luna has to date refused to again down. “The battlefield is my consolation zone,” he advised Reuters. “I don’t run away from it. A person’s gotta do what a person’s gotta do.”

His give attention to shareholder worth, nevertheless, is prone to come below sustained stress within the coming weeks, with politicians throughout the spectrum united towards him.

Like Bolsonaro, Lula has questioned the apply of adjusting home gas costs in step with world greenback charges. The leftist, who served as president between 2003 and 2010, has vowed to “Brazilianise Petrobras’s costs” if he wins the election. Rodrigo Pacheco, the president of the Senate, mentioned Petrobras had a “social operate” to scale back the influence of gas costs.

But to some observers, the rhetoric is little greater than political posturing. A company governance overhaul of Petrobras following its involvement within the years-long Automotive Wash corruption scandal, together with different authorized reforms, means it’s now harder for administration and the federal government to behave in a manner that may injury the enterprise.

“The bylaws of the corporate had been improved considerably, not permitting staff or any administrators or executives to do something that financially harms the corporate. These folks could be personally liable,” mentioned Luiz Carvalho, an analyst with UBS.

Advertisement

Silva e Luna’s destiny is prone to be determined at a particular shareholder assembly of Petrobras in mid-April. His present time period is scheduled to run to subsequent February, though he may very well be ousted earlier than then if the federal government removes his identify from an inventory to make up the corporate’s board. The chief govt needs to be a board member, in response to company statutes.

To cope with surging gas costs the federal government might additionally create a selected subsidy. Paulo Guedes, the finance minister, mentioned this month that the federal government was finding out that chance, having already diminished a sequence of presidency taxes on gas.

However critics argue that the influence of a subsidy can be unlikely to achieve Brazil’s most needy, who have a tendency to not personal automobiles, and the programme would as an alternative quantity to higher margins for businesspeople within the gas provide chain.

Additionally they level out that the federal government is already restricted in what it could actually do, given authorized constraints on spending in an election yr.

“Many declare that the creation of a selected subsidy programme or a social programme can be categorized as an electoral crime,” mentioned Adriano Pires, founding father of the Brazilian Centre for Infrastructure.

Advertisement

The way in which spherical that is for Bolsonaro to subject an govt order, declaring extraordinary circumstances or a public calamity, he mentioned. “I believe that if the value of a barrel continues on a excessive trajectory . . . the federal government is probably going to do this.”

Continue Reading
Advertisement
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

News

Donald Trump chooses Elon Musk and Vivek Ramaswamy to lead government efficiency effort

Published

on

Donald Trump chooses Elon Musk and Vivek Ramaswamy to lead government efficiency effort

Unlock the White House Watch newsletter for free

Donald Trump has named Elon Musk and Vivek Ramaswamy to lead a “department of government efficiency”, giving the two private-sector entrepreneurs charge of a promised effort to slash rules, bureaucracy and spending throughout government.

“Threat to democracy? Nope, threat to BUREAUCRACY!!!” Musk, the world’s richest man and an ardent Trump backer, wrote on his X social media platform. “We will not go quietly, @elonmusk,” Ramaswamy wrote in another X post.

Trump said the duo would work with him and the Office of Management and Budget until July 4 2026, the 250th anniversary of the signing of the Declaration of Independence. The acronym for the new department, “Doge”, is also the name of a crypto token Musk has promoted.

Advertisement

The newly created White House advisory effort will “provide advice and guidance from outside of government,” looking for ways to “dismantle” bureaucracy, “slash” regulations, “cut” spending and “restructure” agencies, Trump said in a statement on Tuesday.

The president-elect’s decision unites Musk, the leader of Tesla, X, xAI and SpaceX, with the biotech entrepreneur who ran in the 2024 Republican primary before dropping out and endorsing Trump.

Musk, whose net worth is more than $300bn, according to Forbes, became one of Trump’s most influential supporters during the campaign and has been by his side since the election as Trump has issued a flurry of nominees, appointments and new policy goals ahead of his second term.

During the 2024 campaign, Musk publicly endorsed Trump, hosted him on X, rallied for him in Pennsylvania and bankrolled a Super Pac that spent $172mn, according to the non-profit OpenSecrets.

On the campaign trail, Musk called for cutting $2tn — which would represent a significant chunk of the $6.7tn in spending from fiscal year 2024’s budget — and said the election was crucial to cutting away regulations that would strangle his dream of colonising Mars.

Advertisement

Musk’s bet on Trump has been a boon for Tesla, the electric-vehicle maker he runs, whose stock has jumped almost 50 per cent over the past month. 

Officials appointed by outgoing US President Joe Biden pursued ambitious rulemaking agendas and tough enforcement policies throughout his presidency in antitrust, finance, climate and other areas. 

Gary Gensler, chair of the Securities and Exchange Commission, launched a broad set of rules ranging from cyber security to climate disclosures and equity market reforms. 

Lina Khan, chair of the Federal Trade Commission, and Jonathan Kanter, head of the Department of Justice’s antitrust division, have cracked down on anti-competitive conduct across the economy, and Khan has also proposed measures including a nationwide ban on non-compete agreements. 

Some pillars of regulators’ agendas have been thrown out by US judges amid fierce pushback from corporate America. Some market participants strategically filed legal challenges in venues known to be more sympathetic to business’s views.

Advertisement

The conservative majority on the US Supreme Court has also been gradually curbing the power of federal agencies, handing down a series of decisions earlier this year that made it harder for regulators to introduce rules, curtailed their use of in-house courts for enforcement and made it easier for businesses to challenge existing measures.

Continue Reading

News

Trump will nominate South Dakota Gov. Kristi Noem for homeland security secretary

Published

on

Trump will nominate South Dakota Gov. Kristi Noem for homeland security secretary

South Dakota Gov. Kristi Noem speaks prior to remarks from then-Republican presidential candidate Donald Trump at a campaign rally March 16 in Vandalia, Ohio.

Jeff Dean/AP


hide caption

toggle caption

Advertisement

Jeff Dean/AP

President-elect Donald Trump has announced he’ll nominate South Dakota Gov. Kristi Noem to lead the Department of Homeland Security.

It’s a role that holds significant weight for Trump, who campaigned heavily on the issue of immigration, pledging to carry out mass deportations of undocumented immigrants.

Said Trump in a statement: “She will work closely with ‘Border Czar’ Tom Homan to secure the Border, and will guarantee that our American Homeland is secure from our adversaries.” Homan is the former head of Immigration and Customs Enforcement. Trump loyalist Stephen Miller is expected to be deputy chief of staff and focus on immigration policy. Neither Miller nor Homan’s positions require Senate confirmation.

Advertisement

Noem, a devout Christian who is the first woman elected to serve as governor of South Dakota, is in her second term.

In his statement, Trump cited one of her notable moves leading her state: “Kristi has been very strong on Border Security. She was the first Governor to send National Guard Soldiers to help Texas fight the Biden Border Crisis, and they were sent a total of eight times.”

CNN first reported she would be Trump’s DHS pick.

Noem switched over to politics in 2006 as a state representative after helping run her family farm as a small business owner. Four years later, she headed to Washington, D.C., when she won the state’s at-large seat in the U.S. House of Representatives.

Before ultimately picking Ohio Sen. JD Vance, Trump spoke highly of Noem as he was deliberating his running mate, saying, “She’s been there for us for a long time … She’s loyal, she’s great.”

Advertisement

But Noem drew criticism earlier this year for saying that Native tribes in South Dakota benefit from the drug cartel industry — a comment that led her to be banned from all nine reservations in the state.

Additionally, Noem wrote about having met North Korean leader Kim Jong-un in her memoir, No Going Back, which she then retracted from the final copy. In that same memoir, she wrote about killing her family dog, which drew particular scorn.

Continue Reading

News

Live news: Trump gives US ambassador to Israel post to ex-governor Mike Huckabee

Published

on

Live news: Trump gives US ambassador to Israel post to ex-governor Mike Huckabee

Events to look out for on Tuesday include speeches from the Federal Reserve governor, Home Depot earnings and Spotify results:

Fedspeak: Less than a week on from the central bank’s second rate cut of the year, Federal Reserve governor Chris Waller will deliver the keynote at the Clearing House Annual Conference in New York. Separately, Federal Reserve Bank of Richmond president Tom Barkin is scheduled to speak at a summit in Baltimore. At Carnegie Mellon University, Philadelphia Fed president Patrick Harker will deliver a lecture on “Fintech, AI & the Changing Financial Landscape”.

Home Depot: Investors will be eager to find out whether the Federal Reserve’s back-to-back rate cuts, which will have an effect on mortgage rates, have made a difference to consumer appetite for home improvement projects. Home Depot, which last quarter cut its sales outlook on weakened consumer spending, is projected to report a 4.3 per cent increase in third-quarter revenues, to $39.3bn.

Other earnings: Tyson Foods will announce fourth-quarter earnings before the opening bell. Flutter and Spotify will post quarterly results after market close.

Continue Reading

Trending