David Fuller and Eoin Treacy's Comment of the Day
Category - General

    Brazil Takes Steps to Transact in Yuan as China Ties Grow

    This article from Bloomberg may be of interest to subscribers. Here is a section: 

    The announcement came during a Brazil-China business forum in Beijing on Wednesday in which government officials and company executives from both sides discussed trade and investment opportunities. Much of Brazil’s agricultural and mineral products are shipped to the Asian nation.

    Brazilian President Luiz Inacio Lula da Silva was due to be in China for an official state visit this week, but was forced to postpone after he was hospitalized with pneumonia.  

    China and Brazil also agreed to settle trade in their own currencies, without the need of an intermediary currency like the US dollar, according to a statement from the Brazilian Trade and Investment Promotion Agency. The expectation is to reduce the costs of commercial transactions with the direct exchange between Brazilian reais and yuan.

    Tatiana Rosito, Brazil’s Secretary of International Affairs at the Finance Ministry, says the goal is to boost liquidity of the Chinese currency, giving options to investors and traders.

    “It’s not a game changer in relation to the impact on short-term trade, but it has the potential to expand transactions and familiarize agents” with transactions in yuan, she said in a telephone interview.

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    LVMH, Hermes Climb to Record Highs as Luxury Lifts Europe Again

    This article from Bloomberg may be of interest to subscribers. Here isa section: 

    LVMH shares rise to a record high, contributing most to gains in the French and European indexes on Friday as analysts upgrade their estimates for the French luxury behemoth. Peer Hermes International also hits an all-time peak.

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    EU Looks at Carbon Market, Agriculture in 2040 Climate Plan

    This article from Bloomberg may be of interest to subscribers. Here is a section:   

    The measures are part of the 27-nation region’s plan to cut emissions by at least 55% from 1990 levels by 2030 and reach net zero by 2050. 

    The EU wants to be a global leader in the green shift, an increasingly challenging objective after US President Joe Biden’s landmark climate package and competition from China in low-carbon technologies and critical materials. At the same time, the bloc is grappling with an unprecedented energy crisis triggered by a cut in gas supply from Russia following the war in Ukraine.

    “It is now more important than ever for the EU to get and stay on track to climate neutrality and resilience, providing a positive example to galvanize global action and to work with our partners worldwide to develop the solutions needed for all to transition to climate neutrality,” the commission said. 

    The EU indicated an emissions cut of 75% to 80% would follow the average trajectory between 2030 and climate neutrality in 2050. Lowering pollution by more than 90% would signify “a very high ambition, close to reaching climate neutrality already in 2040,” the commission said. 

    The commission signaled it is considering various options on the evolution of the EU Emissions Trading System, the bloc’s flagship carbon cap-and-trade program. They included an extension to cover new sectors, potential inclusion of all fossil-fuel uses and accounting for carbon capture technologies.

    It also said removing carbon dioxide from the environment is indispensable and sought views on how to tackle emissions from agriculture, including putting a carbon price on greenhouse gases from the sector. 

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    MBA Chart of the Week: Estimated Total Commercial Mortgage Maturities

    This article from US REO Partners may be of interest. Here is a section: 

    This year’s survey, however, collected information on $400 billion of bank-held commercial and multifamily mortgages—23 percent of the outstanding universe. Using this year’s survey results, for the first time we are expanding our loan maturity analysis to include an estimate of the maturity profile of all commercial and multifamily mortgages—including the more than $1.7 trillion on bank balance sheets.

    The analysis estimates that of approximately $4.4 trillion of outstanding commercial/multifamily mortgages, $728 billion (16%) matures in 2023 with another $659 billion (15%) maturing in 2024. Hotels/motels see the largest share maturing in 2023 (34%) followed by office (25%). Multifamily is the property type with the smallest share of outstanding mortgage maturing this year (9%).

    Among capital sources, 26 percent of the outstanding balance of loans held by credit companies and other investor-driven lenders will mature this year, as will 23 percent of the balances held by depositories and 22 percent held in CMBS. Only 7 percent of life company loans and 2 percent of GSE/FHA loans come due this year.

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    Brazil's New Fiscal Plan Is Cautiously Welcomed by Markets

    This article for Bloomberg may be of interest to subscribers. Here is a section: 

    “The broad ideas are orthodox and the government does agree with the idea of stabilizing debt,” said Katrina Butt, a senior economist at AllianceBernstein LP. “Still, there are some unanswered questions and the government seems to bank on economic growth to be able to achieve the targets, given an increase in the tax burden doesn’t look feasible at this moment.”

    The proposal is crucial for President Luiz Inacio Lula da Silva to win over investors, who have been worried about the health of public finances since the leftist leader obtained congressional authorization to boost outlays, bypassing current spending rules that will be replaced by the new fiscal framework. Since then, concerns about swelling debts have helped to fuel inflation expectations keeping, in turn, borrowing costs high.

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    Email of the day on the Autonomies fund

    Hi, I don't understand when you say that you are "reweighting" the Autonomies portfolio.

    Is this an investment fund managed by you?

    Thanks in advance.

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