Brazil to financially smother ‘leftist’ universities

Good morning! Education Ministry to financially smother leftist universities. Pandering to the base: churches and agribusiness. Bolsonaro at Agrishow. Bolsonaro provokes another rollercoaster day on the stock market.

Education Ministry to financially smother ‘leftist’ universities

Newly-appointed Education Minister Abraham Weintraub has started a process to financially strangle federal universities which are perceived to be “ideologically opposed” to the government. The first targets are federal universities in Brasília, Rio (UFF), and Bahia. The ministry has to cut BRL 230m in spending—and more than half of this comes from these 3 institutions, which lost 30% of their budgets.

What these universities have in common is a strong left-leaning agenda. UFF hosted a controversial event “against fascism” during the 2018 campaign—aimed at Jair Bolsonaro—while the University of Brasília has recently hosted debates with Workers’ Party presidential candidate Fernando Haddad and created a political science course to analyze the “2016 coup”—as the left calls Dilma Rousseff’s impeachment.

Education Minister Weintraub is a disciple of self-described philosopher Olavo de Carvalho, the guru of Bolsonarism. He has linked homosexuality to pedophilia and left-leaning thoughts to drug abuse. He has repeatedly criticized the influence of left-leaning in Brazil’s public education system.

Go deeper: Meet Brazil’s new Education Minister, Abraham Weintraub

Pandering to the base: churches and agribusiness

In an interview published yesterday by newspaper Folha de S.Paulo, Marcos Cintra, who heads Brazil’s federal revenue service, said he wants to tax churches on their financial operations. He was quickly disavowed by President Bolsonaro—who has evangelicals among his core supporters—in a video shared on social media.

Currently, no one but revenue services themselves knows how much Brazil loses by not taxing religious institutions. It is certainly not a small amount, as recent reports point out that the city of São Paulo alone loses BRL 110m every year in non-collected property taxes from churches. The Brazilian Constitution protects all churches from taxation based on the principle of religious freedom. However, many religious leaders accumulate their net worth under the name of their church—avoiding taxes themselves.

Bolsonaro at Agrishow

During Ribeirão Preto’s Agrishow fair, President Bolsonaro spoke the language of rural producers. He promised to support armed defense against land invasions, asked for cheaper credit (more below), and admitted that he could promote a cleanup within Brazil’s environmental agencies. Throughout the day, however, he toned down his discourse, with the Justice Minister saying he is against allowing landowners to shoot trespassers.

Go deeper: The rise of Brazilian Evangelicals

Bolsonaro provokes another rollercoaster day on the stock market

President Bolsonaro has once again created havoc on Brazil’s stock exchange. During an agricultural fair, he announced a new line of credit to producers, but decided to go off script when talking to Banco do Brasil CEO Rubem Novaes: “I ask you, allow me to make a joke here. I appeal to your heart, to your patriotism, that these interest rates—seeing as you seem to be a real Christian—may be lowered a little more. I am sure that our prayers will touch your heart.”Lorem ipsum.

These comments pushed Banco do Brasil stocks down 1.8%. The government quickly responded through its spokesperson, saying that the president “doesn’t want to nor will he” interfere with interest rates. Throughout the afternoon, the bank’s shares recovered the losses, closing up by 0.04%.

Despite the official discourse, the president has already shown his interventionist face. A couple of weeks ago, he blocked an increase in diesel prices and caused Petrobras to lose BRL 32bn of market value in a single day. Last week, he even vetoed an ad featuring black and tattooed actors—and decided that the president’s office will scrutinize ad pieces from public companies from now on.

What else you need to know today

Business. Retailer Magazine Luiza announced the takeover of sportswear online retailer Netshoes for USD 62m (USD 2/share—far below the company’s share price on the New York Stock Exchange, USD 2.65). Netshoes Q1 results were much worse than expected, showing losses of BRL 332m and a lack of cash to cover its short-term debts of BRL 23m hole. Two-thirds of Netshoes shareholders must approve the deal before it becomes final. 

Lula. Globo, Brazil’s largest media group, has reportedly vetoed its journalists from reporting on former President Lula’s Friday interview with Folha de S.Paulo. None of the group’s media outlets, nor its columnists, have reported on the subject. Internally, editors have told employees that the interview “didn’t bring anything new.” That’s partially true, but the interview involved a popular former president in prison—and had been censored last year. Read The Brazilian Report’s main takeaways from Lula’s interview.

IPO. The JSL logistics conglomerate gave up on the initial public offering of Vamos, a truck and machinery leasing company. The reason was a reported lack of demand for the operation. The IPO was to be priced yesterday—and investors reportedly wanted to lower the price range from between BRL 17 and 21 per share to BRL 15. JSL then decided to pull the plug on the operation altogether.

Corruption 1. A federal court accepted the indictment of  former President Michel Temer, a former aide, and 3 other people in a corruption case. Mr. Temer is accused of receiving bribes from a company operating at the Port of Santos for decades—crafting a 2017 presidential decree especially to benefit the firm. The number of indictments against Mr. Temer has now been raised to 5.

Corruption 2. Yesterday, the Federal Police carried out search and seize operations to find evidence of alleged campaign finance crimes committed by Tourism Minister Marcelo Antônio. As chairman of the Social Liberal Party in Minas Gerais, he is suspected of using dummy candidates to siphon public money into companies connected to him.

GDP. For the 9th consecutive time, investors have lowered their GDP growth forecast for Brazil—from 1.71% to 1.70%, according to the Central Bank’s Focus Report—a weekly survey with top-rated investment firms. At the beginning of the year, economists predicted 2.53% GDP growth for 2019. Per the Treasury Department, the government registered a BRL 21.1bn deficit in March, the 2nd-worse since 1997 for the same month

Labor market. Today, official unemployment figures will be released.Valor surveyed 25 major investment firms, and all expect the rate to grow from February (12.4%), when 43,000 jobs were closed. For 12 groups, however, the new rate will be between 12.9 and 13%. Think tank Fundação Getulio Vargas projects a rate of 12.9%.

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