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Yahoo
5 days ago
- Business
- Yahoo
Suzano says it is not taking on debt to finance Kimberly-Clark deal
SAO PAULO (Reuters) -Brazilian pulp maker Suzano will finance its $1.73 billion acquisition of a 51% stake in Kimberly-Clark's international tissue business from cash reserves without needing additional financing, executives said on Thursday. CEO Beto Abreu told Reuters the deal, announced on Thursday, will have an "almost imperceptible" impact on the company's debt levels. Chief Financial Officer Marcos Assumpcao said Suzano has sufficient cash reserves to complete the transaction without debt. Shares in Suzano were up 6.5%, making it the biggest gainer in Brazil's benchmark stock index Bovespa, which fell 0.3% at around 3 p.m. local time (1800 GMT). Suzano expects to close the deal by mid-2026. The company will also have the option to purchase Kimberly-Clark's remaining ownership interest, starting three years after the closing without expiration. Abreu said Suzano chose to structure the deal as a joint venture rather than outright acquisition to reduce risks, avoid taking on debt and combine strengths with Kimberly-Clark. The joint venture will be incorporated in the Netherlands and will include 22 manufacturing facilities across Europe, Asia, Middle East, South and Central America, Africa and Oceania. The venture's leaders will be based in Europe and Suzano plans to focus now on developing its management structure, Abreu said. Suzano plans to pause acquisitions while it concentrates on optimizing existing business operations, he said. Itau BBA said that the joint venture structure reduces Suzano's execution risks in different geographies. JP Morgan said the joint venture will enable Suzano to scale, becoming the eighth-largest global tissue producer.
Yahoo
28-05-2025
- Business
- Yahoo
Brazilian steel companies' shares fall after government renews tariff system
SAO PAULO (Reuters) - Stocks of Brazilian steel companies fell on Wednesday after the government said it would renew for 12 months a system meant to protect the national steel industry, but that steelmakers have said is ineffective. WHY IT'S IMPORTANT The steel industry began criticizing the quota system almost as soon as it was set up last year, saying it failed to control the flow of imports, mainly from China. Under the system, as long as the import quota is not reached, steel products can enter the country if they pay import tax of between 9% and 16%. If the cap is exceeded, a 25% tariff applies, Brazilian government news outlet Agencia Brasil said. MARKET REACTION On the first day of trading following the announcement, CSN was down 4.4%, Usiminas dropped 3.6% and Gerdau fell 1.2%. Brazil's benchmark stock index Bovespa fell only 0.5%. CONTEXT The system, which has been expanded to now include 23 steel products, was already criticized by the sector for being too broad. Tuesday's government announcement retained the exclusion - also criticized by the industry - from the quota and tariff system of imports from countries that have trade agreements or negotiated special conditions with Brazil. The steel sector has urged the government to renew the scheme with the inclusion of all steel products in the 25% tariff, as the European Union and the United States have done. BY THE NUMBERS Steel imports rose 27.5% year-on-year in the first four months of 2025, reaching 2.2 million metric tons, according to data from the country's steel mills association, Aco Brasil, which did not comment on the matter on Wednesday. (By Alberto Alerigi Jr; Writing by Isabel Teles; editing by Barbara Lewis) Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
08-05-2025
- Business
- Yahoo
Trading Day: Tariff tensions cool, markets sizzle
By Jamie McGeever ORLANDO, Florida (Reuters) - TRADING DAY Making sense of the forces driving global markets By Jamie McGeever, Markets Columnist Wot's ... uh the deal? A wave of trade optimism washed over markets on Thursday as a deal between the United States and Britain, cooling global tensions and a generally less belligerent stance from Washington spurred sharp gains in equities and other risk assets like bitcoin. In my column today I dig into why the tariff chaos of last month meant macro hedge funds in April suffered one of their worst maulings in years, and why the near-term outlook remains challenging. More on that below, but first, a roundup of the main market moves. I'd love to hear from you, so please reach out to me with comments at You can also follow me at @ReutersJamie and @ If you have more time to read, here are a few articles I recommend to help you make sense of what happened in markets today. 1. Trump castigates Fed's Powell for not cutting rates,downplays inflation risk 2. Can Trump's tax cuts be made permanent? Tariffs,spending fights cloud the picture 3. Investors add Fed rate uncertainty to tariff murkiness 4. Europe braces for Transatlantic capital reverse: MikeDolan 5. 'Friends of steel': Xi and Putin pledge to standtogether against U.S. Today's Key Market Moves * Wall Street posts solid gains, the three main indicesgaining between 0.6% and 1%. Energy performs well as crude oilprices rise more than 3%. * The dollar strengthens 1% against a basket of majorcurrencies, its biggest rise in six months. * Treasury yields rise broadly, especially at the belly ofthe curve where the 5-year yield spikes 13 basis points. * Bitcoin jumps 5%, above $100,000 for the first time sinceFebruary. It's now up 35% from the 'Liberation Day' lows. * Brazil's Bovespa leaps 3% to a record high above 137000points, sentiment also boosted by the central bank nearing theend of its tightening cycle. Tariff tensions cool, markets sizzle If this week has felt like markets have been treading water, waiting for investors to take a bullish or bearish view on the next phase of the global trade war, a clear direction seems to be emerging now. And the bulls are in the driving seat. In the last 24 hours there has been confirmation of high-level U.S.-China talks taking place this weekend, a U.S.-UK trade deal, a U.S.-Ukraine minerals deal, and positive soundings from U.S. President Donald Trump that further agreements are close. The S&P 500 and Nasdaq are back above their closing levels on April 2, Trump's tariff 'Liberation Day' that sparked a market meltdown, wiped trillions of dollars off the value of U.S. stocks, and forced him to back down days later. On Thursday, Brazil's stock market rocketed to a record high, bitcoin leaped back above $100,000 and is up 35% from its post-Liberation Day lows, and bond yields shot higher. Whether this optimism is justified remains to be seen. As Federal Reserve Chair Jerome Powell said repeatedly on Wednesday, there is no clarity at all on what the economic impact of tariffs will eventually be. All we know is uncertainty has rarely been higher, and inflation and unemployment risks are rising. The U.S. central bank left policy unchanged as expected, resisting calls from Trump to lower interest rates, with Powell insisting the Fed needs more "hard" economic data before deciding its next step. But other major central banks are more worried about the risks to growth and are cutting rates. They include the European Central Bank, the People's Bank of China and, despite a surprise three-way vote split on Thursday, the Bank of England. Little wonder the dollar is trading at its highest in a month. The PBOC snapped a run of seven consecutive days fixing the yuan at a stronger level against the dollar, fixing the currency at 7.2073/dollar on Thursday. The yuan also weakened on the onshore and offshore spot markets, and goes into Friday slipping further back from Monday's highs of the year. Macro hedge funds mauled in April While many investors survived the market volatility unleashed by U.S. President Donald Trump's "Liberation Day" with only a few scratches, macro hedge funds suffered one of their worst maulings in years. HFR's benchmark composite fund index fell by only 0.5% inApril and the equity index actually rose, according to datareleased on Wednesday, but macro strategists were caughtflat-footed by the steep declines in the dollar, oil, andshort-dated Treasury yields and whiplashed by a brief, buthistoric, selloff in long bonds. Consequently, macro hedge fund strategies lost 2.7% in themonth, according to HFR, equaling the losses in March 2023 amidthe turmoil caused by the U.S. regional banking crisis. The lasttime macro strategies had a worse month was February 2018 due tothe "Volmaggedon"-fueled market turmoil. Macro funds suffered, in part, because April marked a sharpshift in correlations between several asset classes – includingabrupt reversals in some markets and accelerated moves in others– as well as a surge in margin calls and huge shifts in capitalflows as many investors reduced their U.S. allocations. BIG SHORT At the start of April, hedge fund managers' positioning inthe dollar was roughly flat, according to Commodity FuturesTrading Commission data. They had unwound net long dollarpositions worth around $35 billion in the prior two months asthe greenback fell 4% against a basket of major currencies. Macro funds started to rebuild their longs in the first weekof April, but any hopes of a dollar rebound were obliteratedfollowing Trump's tariff announcements on "Liberation Day". Thedollar fell 4.5% in April, its steepest fall since November2022, and the euro sealed its best two-month performance since2010. CFTC data also shows that leveraged funds extended theirshort positions in two-, five- and 10-year Treasury futures. The$1.0+ trillion short position, in aggregate across the threematurities, is now the highest this year, and in the five-yearcontract it is the biggest on record. Funds take these positions for many reasons such as hedgingand arbitrage plays. But those making a directional bet on ratesgot burned - yields fell in April, particularly at the short endand the belly of the curve. 'SO MUCH UNCERTAINTY' Macro funds' hefty losses underscore investors' deepconfusion about U.S. policy and, by extension, the outlook forasset classes across the board. JPMorgan's quant and derivatives strategists say macro fundmanagers were actually penalized for remaining cautious. Theywere not prepared for the 'V-shaped' recovery in equities andother risk assets in recent weeks, so the recovery in macrofunds and commodity trading advisors (CTAs) has been "modest"with "little sign of a reversal", they wrote on Wednesday. This contrasts with equity-focused funds who de-risked inFebruary and March and were thus well positioned for the rapidrally seen in the last few weeks, they added. But trend-following macro fund managers could be forgivenfor retaining a "glass half empty" outlook. Trade tensions arestoking inflation and unemployment risks, and Federal ReserveChair Jerome Powell on Wednesday basically admitted that he andhis colleagues have no idea what the correct policy responseshould be because visibility is so low. "There's so much uncertainty ... there's so much that wedon't know," Powell told reporters after the central bank leftinterest rates unchanged, a message he drove home in manydifferent ways during his 41-minute press conference. He isn't alone. Consumer sentiment is nose-diving,businesses are scrapping forecasts and investor conviction isrunning low even as markets have stabilized in the last fewweeks. Macro hedge fund managers' confidence may simply berunning lower than most. The 2.7% fall in HFRI's Macro Index last month wiped out allits gains from the first quarter. A sustainable rebound willalmost certainly require longer-term trends and correlations toemerge across currencies, rates and commodities. Right now, thatlooks like a long shot. What could move markets tomorrow? * China consumer, producer price inflation (April) * Japan household spending (April) * Brazil inflation (April) * Canada employment (April) * Eight Fed officials speak at various events. They are: FedBoard Governor Michael BarrFed Board Governor AdrianaKuglerRichmond Fed President Thomas BarkinChicago Fed PresidentAustan GoolsbeeNew York Fed President John WilliamsFed BoardGovernor Lisa CookCleveland Fed President Beth HammackSt. LouisFed President Alberto Musalem Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias. Trading Day is also sent by email every weekday morning. Think your friend or colleague should know about us? Forward this newsletter to them. They can also sign up here. (By Jamie McGeever, editing by Nia Williams) Sign in to access your portfolio
Yahoo
25-04-2025
- Business
- Yahoo
Brazil's Vale sees no material impacts from trade war so far
SAO PAULO (Reuters) -Brazilian miner Vale said on Friday that it has so far not seen a material impact from the ongoing global trade war on its operations and sales, but vowed to keep monitoring it closely amid uncertain market conditions. Vale is one of the world's largest iron ore producers and has a top client in China, which has been locked in a trade dispute with the United States following President Donald Trump's sweeping tariffs. Speaking on a call with analysts after the company reported a 17% first-quarter net profit drop on lower iron ore prices, Vale executives said it was too soon to talk about the trade war's impact on prices of the key steelmaking ingredient. Chief Executive Gustavo Pimenta, nonetheless, acknowledged that a potential global economic slowdown would likely have an impact on commodity markets. Vale also said that given the uncertain market conditions, it was not the right time to discuss potential extraordinary dividend payments - a shareholder remuneration practice it has adopted in the recent past. Sao Paulo-traded shares of the mining giant slipped about 2% on Friday, among the biggest fallers on Brazil's benchmark stock index Bovespa, which was roughly flat. Sign in to access your portfolio
Forbes
13-04-2025
- Business
- Forbes
Trump's Trade War Bravado: A Capital Flow Risk Investors Can't Ignore
Aerial front view Container cargo ship full carrier container with terminal commercial port ... More background for business logistics, import export, shipping or freight transportation. Speaking at a National Republican Congressional Committee (NRCC) dinner on April 8, President Donald Trump didn't hold back in defending his aggressive tariff policy. Trump proudly mocked foreign leaders by saying, 'These countries are calling us up, kissing my a**. They are dying to make a deal.' Classic Trump bravado. Even if you're a MAGA die-hard, it's important to recognize that many living overseas aren't happy with President Trump. Global sentiment toward America appears to be shifting. Read a few opinion columns in international publications and you'll see what I mean. In January net purchases of US equities by foreign central banks plummeted $28 billion. This was a rather dramatic change in trend, as shown below. Source: Reuters It's interesting and at least slightly disturbing to see that foreign capital was aggressively fleeing the US in January. Keep in mind, that was before President Trump humiliated President Zelensky in front of the world, and before Trump unveiled his thorny tariff numbers in the Rose Garden. President Trump is following through on his campaign promises to create a more isolationist America. An unintended consequence could be a broad repatriation of capital from the US to the rest of the world, and that's an investment risk most investors aren't adequately positioned for. No single country outperforms forever. The US has beat the rest of the world's stock markets for a very long time, and this year is likely to be a turning point. Source: Bloomberg The magnitude of US equity outperformance has been staggering since 2010. Whenever mean reversion occurs, it could be a long way down. Valuations are an expression of investor sentiment. It would be easy for foreign investors to justify selling US assets on a valuation basis, because US assets trade at a hefty premium. For example, the S&P 500 trades at a forward P/E ratio of 20, which dwarfs Europe's STOXX 600 at 13, and Brazil's Bovespa at 7. Source: Bank of America Global Investment Strategy Comparing individual stocks sometimes helps clarify a fundamental disparity. Siemens (SIEGY), a German industrial giant, is one company that stands to benefit from the shifting tides. Siemens competes in growing markets driven by digitalization and the energy transition, while its industrial equipment generates steady aftermarket revenue. Siemens offers investors better value and growth prospects than many S&P 500 firms. For example, why buy Honeywell at 19 times earnings when you can buy Siemens at 15? Siemens is expected to grow earnings 18% this year compared to only 7% EPS growth for Honeywell. Other investors may want to rotate money from the US to a country like Brazil. Brazil is rich in natural resources and has positive demographic tailwinds. Itau Unibanco (ITUB), a high-quality Brazilian bank, is expected to grow earnings 11% this year. Why not sell a US bank like JPMorgan, which is expected to see its net earnings fall 9% this year, and buy a stock like Itau that has superior growth potential? Itau trades at 1.6 times book value compared to 2 times book for JPMorgan. The spark for a durable leadership rotation at the macro level is usually a mix of attractive valuations and a fundamental catalyst that reverses sentiment. Flows follow. Interestingly, global leadership inflections tend to occur during bear markets. The MSCI World Index, which includes both the US and foreign developed markets, experienced declines exceeding 20% in key years when global leadership cycles reversed, i.e. 1990, 2002 and 2008. The MSCI World fell almost 17% between February 19 and April 8. It could easily exceed the 20% drawdown threshold to qualify as a bear market later this year. Earnings expectations are still too high and that may be the next shoe to drop. Is 2025 going to be the next big shift in global capital flows? Passive investing works fine when the world isn't changing much. The problem for passive investors is this is one of those rare times when the world is dramatically changing. If international equities continue outperforming like they have been year-to-date, passive investors will be caught dramatically offsides. For instance, consider a typical 55-year-old Vanguard client's target date fund, like the Vanguard Target Retirement 2035 Fund. Per Vanguard's allocation models, it might hold: Point is: passive portfolios are heavily weighted to the US. The passive investing style is a mind numbingly simple. It's a strategy that systematically invests in the biggest winners from the past (i.e. the biggest market cap stocks). Some of the largest US companies have bigger market caps than entire European countries. The gap has grown so wide between the US and international markets, it will take a very long time for passive index funds to catch up to the trade if international stocks take over the leadership baton. Bottom-line: President Trump's tariff-driven bravado, while rallying his base, risks igniting a seismic shift in global capital flows that investors cannot afford to ignore. Make sure you don't get caught flat footed. Disclosure: I own shares of Siemens and Itau Unibanco in client accounts I professionally manage. This material in this article is not intended to be relied upon as a forecast, research or investment advice.
