JANUARY
Joseph Biden’s Tense Possession
The year began with one of the greatest threats to America’s long-standing, solid democracy. The 2020 presidential election had been plagued by threats from Donald Trump. The Republican stated that he would not swear in his successor, the Democrat Joseph Biden, as it said that the claim had been rigged. The moment of greatest tension occurred on January 6th. Supporters of the president were called to demonstrations in Washington on the day Congress was supposed to ratify the Democratic victory and were urged by the president to invade the Capitol and disrupt the session. The riot caused five deaths. On the 20th, Biden took office, without Trump, who took off from White House without greeting the successor.
FEBRUARY
Small profit from GameStop
The sardines devoured the sharks. In general, big investors dominate the markets and small ones try to follow their movements. That changed in February. The actions of the American retail chain GameStop, specializing in games, had been pressured down by large funds due to the company’s complicated financial situation. Through the social media platform Reddit, a multitude of small investors organized, bought the shares and caused billionaire losses to professional investors.
MARCH
BC starts raising interest rates
In 2020, central bankers around the world lowered interest rates. Brazil was no exception: in August 2020, the Selic benchmark rate dropped to an unprecedented 2% per year. However, in the country of lack of fiscal adjustment, very low interest rates represent out-of-control inflation. So, in March of this year, Roberto Campos Neto, president of the Central Bank (BC) had to start tightening monetary policy. At the meeting of the Monetary Policy Committee (Copom) that month, the Selic rate was raised to 2.75% per year. There were new increases in the next seven meetings, with the Selic closing 2021 at 9.25% per year. And rates are still expected to advance to 11.50% in the first half of 2022 before starting to retreat.
APRIL
The pandemic under analysis at the CPI
The beginning of the second quarter was agitated in the political area, with repercussions on the financial market. Led by senator Randolfe Rodrigues (Rede-AP), the opposition managed to articulate a Parliamentary Inquiry Commission (CPI) to investigate the government’s role in combating the pandemic. In 66 testimonies carried out over nearly six months, the picture that emerged was one of serious errors in combating the disease. The failures were due to both false theories such as “early treatment” and logistical barbarities, such as the one that left thousands of people in Manaus without oxygen. Upon being closed, the CPI asked for the indictment of Jair Bolsonaro and the ministers of Health Eduardo Pazuello and Marcelo Queiroga.
MAY
Historical high of iron ore
There was an unwritten rule among traders in the international commodity market. Under no circumstances, ever, could iron ore cost more than US$ 200 per ton. This unwritten rule was erased on May 8, when prices at the Chinese port of Tianjin, which serve as a parameter for the world market, reached US$ 211 per ton, the highest level in history. What justified this appreciation was the confluence of three facts: the drop in supply, due to the stoppage of mines in Australia. The strong increase in demand, due to the Chinese government’s announcement of the resumption of investments in infrastructure. And liquidity in the international market, which sustained increases in several commodities.
JUNE
Ibovespa surpasses 130 thousand points
The appreciation of commodities, especially iron ore, which moved the international markets during the month of May, was perceived in the Brazilian market with a few days of lag. On June 7, the Ibovespa, the main B3 index and the most important indicator of the Brazilian stock market, closed the trading session at 130,776 points, the highest level in history. The increase was mainly supported by shares of commodity companies, such as Vale, Petrobras and steel companies, whose prices were benefited by the increase in steel prices in international markets.
JULY
Real estate funds escape the Lion
The Real Estate Investment Funds (FII) were, along with shares, the most popular investment in recent years. At the end of 2021, B3 was celebrating 4 million stock market participants and 1.5 million FII investors. This crowd was worried for a few weeks in the second quarter. The tax reform proposal under way in Congress proposed to end the main advantage of these funds, which is the income tax exemption. However, the lobby of the real estate sector prevailed and in July it was decided that the Lion will remain with its jaws closed for these incomes. Capital gains from the sale of shares, however, remain taxed.
AUGUST
Little rain, lots of energy costs
An exceptionally dry winter, with the lowest rainfall since 1931, depleted most of the reservoirs and forced energy companies to resort to thermal generation at a time of extremely high oil prices. The result could not be different: electricity bills reached record highs. The impact on inflation rates was heavy and took the IPCA, the “official” inflation, to the double digits, where it remained until the end of the year. There was slight relief during the fourth quarter, but energy tariffs are likely to take a while to come down to pre-water stress levels.
SEPTEMBER
The default of the Chinese Evergrande
Until September, few investors outside China had heard of China’s second-largest developer, Evergrande. A behemoth employing 200,000 people, it had sold properties to tens of millions of buyers and owned everything from football stadiums to mineral water bottlers. All this thanks to a debt of US$ 305 billion, which started to go unpaid in September. The situation dragged on until mid-December, when rating agencies S&P and Fitch deemed the company in default. What happens in 2022 will set the course for China’s real estate sector, which grew absurdly on credit and will now have to cut inefficiencies.
OCTOBER
Federal Reserve toughens the game
The movement that started in Brazil in March has been reproduced on a much larger scale in the United States. The Federal Reserve (Fed), the US central bank, had been injecting $120 billion a month into the economy since April 2020 just by buying government bonds. In total, the Fed injected $4.8 trillion into the financial system. This put pressure on inflation. In November, consumer prices in 12 months had risen 6.8%, the highest level since 1982. That did. Jerome Powell, Fed chairman, announce the beginning of the withdrawal of stimulus. The decision also made it clear that US interest rates would start to rise soon, something confirmed by the Fed itself at its last meeting in 2021.
NOVEMBER
Bitcoin record quote
The year was a busy one for cryptocurrency investors. During the first half of the year, prices fell with the Chinese government’s decisions to ban mining and transactions in these currencies and also by attempts by authorities in other countries to regulate this market. However, strong liquidity and the emergence of novelties such as Non Fungible Tokens (NFT) sustained record prices for cryptoactives. In November, bitcoin reached its all-time high, with prices reaching the level of US$ 67.5 thousand. Prices retreated in the last weeks of the year, but the outlook for 2022 is promising. The growing interconnection between cryptoactives and the traditional economy makes room for the sector.
DECEMBER
Nubank’s IPO changes market rules
Despite being carried out on Wall Street, Nubank’s IPO (Initial Public Offering, IPO) was a watershed in the Brazilian capital market. Fintech without agencies (and without profit) debuted on the New York Stock Exchange worth US$ 41.5 billion, more than Itaú Unibanco, until then the most valuable financial institution in the market. What seduced investors, especially Americans, were the 48 million customers and the prospect of selling the high-tech, agility, and low-cost strategy to many other markets. In addition to Brazil, the company created by David Velez, Cristina Junqueira and Edward Wible promises to compete for clients in Latin America and India.
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