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Brazil fears third Covid wave as Bolsonaro faces parliamentary inquiry

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Brazilian president Jair Bolsonaro is undergoing a probe carried by the Congress on mismanagement of the pandemic.

Andressa Anholete | Getty Images News | Getty Images

Health experts fear Brazil’s Covid-19 catastrophe could get even worse in the coming months, while a parliamentary inquiry into the government’s response to the pandemic is expected to ratchet up political pressure on President Jair Bolsonaro.

South America’s largest country, previously renowned for demonstrating leadership during health crises, has become an international pariah amid the coronavirus pandemic. Brazil has recorded the highest coronavirus-related death toll in the world outside the U.S., is lagging in terms of vaccinations and is still without an effective and coordinated public health response to the outbreak.

An official inquiry, approved by Brazil’s Supreme Court, was opened late last month to investigate the government’s handling of the pandemic that has killed more than 430,000 people. The inquiry could pave the way to Bolsonaro’s impeachment, though analysts say political opponents of the right-wing leader may prefer to contest the president at elections in October 2022.

Bolsonaro has reportedly said he is “not worried” about the inquiry. A spokesperson for Brazil’s government did not respond to a request for comment when contacted by CNBC.

Bolsonaro has repeatedly spoken out against public health measures, which have become a political battlefield in Brazil, and continues to oppose any lockdown measures to curb the spread of the virus.

“The current unmitigated epidemic won’t be overcome without a dramatic change of direction,” said Dr. Antonio Flores, an infectious disease specialist and Covid medical advisor for aid group Medecins Sans Frontieres in Brazil.

He said that if life continues as normal “at such high daily incidence, one can only expect a new wave of cases, additional thousands of deaths and more pressure on the already stretched health system.”

A gravedigger walks among graves of COVID-19 victims at the Nossa Senhora Aparecida cemetery in Manaus, Amazonas state, Brazil, on April 29, 2021.

MICHAEL DANTAS | AFP | Getty Images

His comments echo warnings from other health experts that say Brazil could soon see a third wave of Covid infections in the coming weeks. It is feared that the country’s lackluster vaccination effort won’t be enough to prevent a new surge during the winter months of June through to September, with indoor gatherings and activities especially risky.

Flores told CNBC that all available public health measures should be stepped up “as soon as possible” and the country’s vaccination campaign needs to be accelerated. He added that an effective testing and tracing system along with coherent guidance on public health restrictions must also be implemented.

‘A decisive element of next year’s election’

As of May 12, around 15% of Brazil’s population of roughly 211 million have received at least one dose of a Covid vaccine, according to statistics compiled by Our World in Data. Chile, meanwhile, has vaccinated close to 46% of its population with at least one dose of a Covid vaccine, reflecting one of the highest vaccination rates worldwide.

Brazil’s lower rate of vaccination means millions of people nationwide, and beyond its borders, are at risk from more than 90 variants of the coronavirus currently circulating in the country — in addition to any new mutations that may emerge.

Brazil’s Covid vaccination campaign is in stark contrast to its response to the H1N1 swine flu pandemic in 2009, when it vaccinated 92 million people against the virus in just three months. The key difference this time around, analysts say, is Bolsonaro’s refusal to embrace a science-led approach to the health crisis.

This is a very dangerous government but because it was democratically elected there is very little that can be done at the moment to push back.

Ilona Szabo

President of the Igarape Institute

The Pan American Health Organization said on Wednesday that almost 40% of all global Covid-related deaths reported last week occurred in the Americas, with nearly 80% of the region’s intensive care units currently filled with patients. PAHO Director Carissa Etienne warned it was clear that transmission is “far from being controlled,” even as the U.S. and Brazil report reductions in cases, Reuters reported.

Brazil recorded more than 74,000 cases of the coronavirus on Thursday, down from a peak of over 100,000 daily infections in April. In terms of infection numbers, it remains the third-worst Covid-hit country in the world, behind the U.S. and India respectively.

“I think that, whereas the situation in India has worsened considerably recently, in Brazil, numbers have plateaued at a very, very high level. The country has been in a state of collapse for months actually,” Oliver Stuenkel, associate professor of international relations at the Getulio Vargas Foundation in Sao Paulo, told CNBC via telephone.

A man is vaccinated against Covid-19 by a health worker in a remote area of Moju, Para state, Brazil on April 16, 2021.

JOAO PAULO GUIMARAES | AFP | Getty Images

“What is really so fascinating is whereas (former U.S. President Donald) Trump and to some extent (Indian Prime Minister Narendra) Modi are paying a political price, Bolsonaro through a combination of factors has been able to retain fairly high political support and has not yet had to pay for it because his strategy of avoiding responsibility has been remarkably successful so far,” he added.

Analysts said the length of the inquiry into the government’s handling of the pandemic would typically be expected to take around three months, but there is scope for the process to drag on for much longer.

Stuenkel said he expected the inquiry to take around six months to complete given that “the actual goal is to hammer home the message on the evening news that Bolsonaro is to blame.”

“In essence, I think the investigation will be crucial because if the investigation cannot alter public opinion at this stage, after 400,000 people have died and after basically the permanent collapse of the health system, then basically nothing can … To me that is a decisive element of next year’s election,” he added.

What happens next?

Earlier this week, Brazil’s former health minister Luiz Henrique Mandetta — who was fired over a year ago after opposing Bolsonaro’s push to use the malaria drug chloroquine as a Covid treatment — testified before a parliamentary inquiry.

Mandetta said Bolsonaro was fully aware that the treatment had no scientific basis. Former U.S. President Donald Trump had also pushed for the use of the related drug hydroxychloroquine amid the pandemic despite a lack of scientific evidence.

“Unfortunately, this is a very dangerous government but because it was democratically elected there is very little that can be done at the moment to push back,” said Ilona Szabo, president of the Igarape Institute, a think tank based in Rio de Janeiro.

Szabo said that while she did not believe the inquiry would have “immediate” ramifications for Bolsonaro in political terms, “it is important that what is happening today has consequences in the future.”

“It will be proved that they are responsible and that most of the deaths were preventable,” Szabo said.

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GameStop shares jump after the company raises over $1B in stock sale

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A GameStop store is pictured in New York, January 29, 2021.

Carlo AllegriI | Reuters

GameStop shares climbed after the video game retailer said it sold 5 million additional shares, raising $1.13 billion in capital to accelerate growth.

The original Reddit-favorite meme stock jumped 10.6% at one point Tuesday morning after the company announced the completion of its at-the-market equity offering program that was initially disclosed on June 9. By late morning, the daily gain was about 6%. GameStop said it will use the proceeds for general corporate purposes as well as for investing in growth initiatives and maintaining a strong balance sheet.

This is the second stock sale that GameStop has conducted since the company became a star on Reddit’s WallStreetBets forum, where retail traders aimed to push stock prices higher and squeeze out short-selling hedge funds. GameStop sold 3.5 million additional shares in April and raised $551 million.

Investors have been encouraged by the moves and looked past the dilution of their stakes as GameStop took advantage of its monstrous rally this year — more than 1,000% — to speed up its e-commerce transformation.

White Square Capital, a London-based hedge fund, is closing its main fund and returning capital after suffering losses from betting against GameStop, the Financial Times reported Tuesday.

Earlier this month, GameStop named former Amazon executive Matt Furlong as its new CEO.  The company also hired several other former Amazon executives, including Jenna Owens, its new chief operating officer; Matt Francis, its first chief technology officer; and Elliott Wilke, its chief growth officer.

For its fiscal first quarter, GameStop reported narrower-than-expected losses per share and revenue that topped Wall Street estimates. As of May 1, GameStop said, it had paid off its long-term debt and no longer had any borrowings under its asset-based revolving credit facility.

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Gen Z investing in cryptocurrency BTC, ETH and meme stocks AMC, GME

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The next generation of investors are super online ⁠— instead of traditional investments, many Gen Z and young millennial investors, from teens to those in their early 20s, are bullish on cryptocurrency and the technology that surrounds it.

This includes digital coins and blockchains, like bitcoin and ethereum; meme coins, like dogecoin; NFTs, or nonfungible tokens; and DeFi, or decentralized finance.

Some have spent the bulk of their savings on these type of investments: Nearly half of millennial millionaires have at least 25% of their wealth in cryptocurrencies, according to a new CNBC Millionaire Survey. More than a third of millennial millionaires have at least half their wealth in crypto and about half own NFTs.

Young investors have also taken part in recent meme stock rallies, which occur when retail investors buy up shares of stocks shorted by Wall Street hedge funds, like GameStop and AMC Entertainment. In part, the investors hope to force hedge funds to pay, overcoming what they see to be an inefficient system.

One reason young people have turned to alternative investments like crypto is simple: Many just don’t trust traditional investment institutions, as Allison Reichel, 23, tells CNBC Make It. They prefer to rely on their own research rather than use insights from traditional institutions, like financial advisors from legacy firms.

That includes Reichel herself. While working on her PhD in economics, Reichel is also a senior editor at crypto news site Blockworks in Washington, D.C. She started to invest “heavily” in crypto this year, and her crypto holdings account for most of her portfolio, she says. Reichel plans to hold her bitcoin and ethereum long-term.

Allison Reichel, 23, says she invests most of her income in cryptocurrency.

Courtesy of Allison Reichel

But this distrust isn’t the only thing driving young people to invest in cryptocurrencies and meme stocks. First, many have a genuinely positive outlook on blockchain technology. And second, at the same time that they feel disconnected from traditional investments, many are finding community, and sometimes fun, in the crypto space. They want to invest in what they connect with, whether it be stocks, coins or digital assets.

CNBC Make It talked to several Gen Z and young millennial investors, like Reichel, about how these factors impact where they choose to put their money, and why they’re still investing with caution.

‘I’m big on the technology’

Although some young traders bet on altcoins and attempt to turn a quick profit through buying and selling, many plan to “hodl” their favorite cryptocurrencies for the long haul.

“In any crypto, you have those super strong network effects where people believe in it so much that they’re like, ‘I’m never selling because I believe it’s the future of finance,'” Reichel says. “I see the long-term applicability and use of crypto,” she says of her own plans to hold.

That’s true of many young investors, who believe in the technology itself.

While doing research for her PhD, Reichel was inspired by how bitcoin was being used to help those in need in different countries. In Venezuela, for example, crypto was a way that families could still receive money from relatives in the U.S. during a time when the president wasn’t allowing humanitarian aid.

And although its high price may make owning bitcoin seem unattainable, Reichel points out the option to buy fractional shares called satoshis.

Similar reasons led 23-year-old Kyla Scanlon to begin investing in bitcoin and ethereum during college in 2016. “I really liked the application that [bitcoin] has for people who are unbanked. My whole life thesis is, ‘How do we create financial accessibility and equality for everybody?’ I think crypto is one step in allowing people who don’t have access to traditional methods like banks to do so,” she says.

Kyla Scanlon, 23, says she began investing in bitcoin and ethereum in 2016.

Courtesy of Kyla Scanlon

Scanlon first started trading options in high school and began working in asset management after graduating from college, which has boosted her confidence in her personal investment decisions, she says. Her core cryptocurrency holdings still consist of bitcoin and ethereum, and she also owns stock in companies like Roblox, Facebook and Etsy.

Scanlon is also bullish on blockchain technology, which is a decentralized digital ledger that documents cryptocurrency transactions and other information. “I don’t know if bitcoin will ever be like a currency, but I’m big on the technology,” she says.

Kayla Kilbride, a 24-year-old known on financial TikTok as @girlstalkstocks with over 108,000 followers, has “a growing confidence in bitcoin and ethereum specifically,” due to the capabilities of each blockchain.

Kilbride began investing in bitcoin and ethereum earlier this year, starting with small amounts here and there. She has just a few hundred dollars invested in cryptocurrency, but plans to continue to grow her holdings. In lieu of a full-time job, she currently day trades and sells NFTs of her social media content to earn income.

The risk was worth it because I liked the technology.

“As I began to understand the blockchain and the technology behind it, that is when I felt comfortable saying ‘OK, even if I invested when bitcoin was priced at $60,000 and it drops down to, let’s say, $20,000 or even lower, I can still support it, even if I lose money in the endeavor,'” Kilbride says. “The risk was worth it because I liked the technology.”

Many financial experts view cryptocurrency as a speculative, volatile and risky investment that can be susceptible to fraud.

But this doesn’t worry Reichel, Scanlon and Kilbride much, in part because they’re intentional with their investments.

Reichel is extremely bullish on bitcoin’s future value, but only invests what she can afford to lose. “I’m comfortable losing it because I make sure that I have all my bills paid,” she says. “Obviously it’s great when the gains come, but for me, [bitcoin is] truly something that I believe has the potential to revolutionize monetary regimes throughout the world.”

A distrust with traditional institutions

Of course, many Gen Z and young millennial investors initially turned to cryptocurrency as a way to avoid traditional financial institutions, but still build wealth.

Reichel, Scanlon and Kilbride, who all research on their own and invest without the help of financial advisors, say part of their distrust stems from witnessing inequitable and inefficient financial systems.

The younger generation worries about their wealth and retirement, Reichel says. They don’t want to rely on the same traditional systems that their parents did. “I think a lot of people see inefficiencies and really want to change it,” she says.

Scanlon agrees. She also believes concerns over inflation are driving some interest in cryptocurrency among young people.

And with crypto, the barrier to entry is often low.

“It’s about accessibility,” says Cooper Turley, a crypto strategist at ethereum-based streaming app Audius. “With most tokens, there is no IPO. Retail investors have the same opportunities to contribute to and earn value from early stage [crypto] projects the same way venture capitalists do.”

Cooper Turley, 25, says he began to invest in cryptocurrency in 2017.

Courtesy of Cooper Turley.

Turley, 25, invested in bitcoin and ethereum in 2017 while in college, and now, he says those investments have made him a millionaire. Turley is an angel investor in the space, he says, and also acts as an advisor for Variant Fund, a crypto venture firm.

“This paradigm shift of democratized ownership paired with 24/7 trading and always-on exchanges is far more native to an internet-savvy generation than using a brokerage,” he says.

Still, it’s important to note that there are significant downsides to crypto. Experts warn investors to be cautious when putting money into cryptocurrency; it can be extremely volatile and it’s possible to lose your entire investment.

A love of memes

Many young investors also choose to have fun with their investments by buying meme coins, like dogecoin, and meme stocks, like GameStop and AMC Entertainment.

“Crypto and meme stocks are more memorable to young investors than traditional companies,” Turley says. “Young investors care far less about the bottom line of a corporation and far more about a meme or narrative they can collectively share with their friends.”

Dogecoin, for example, launched in 2013 based on the “Doge” meme, which portrays a shiba inu dog. Its creators didn’t intend for dogecoin to be taken seriously, but it is now one of the top 10 cryptocurrencies my market cap, with a market value of over $22 billion.

Kilbride sees dogecoin as a way to introduce people to crypto. “Dogecoin, being very cheap, is affordable. It’s easy to understand,” Kilbride says, which is part the reason she bought it too. “I’ve invested more in bitcoin and ethereum because of dogecoin [gains].”

Kayla Kilbride, 24, began investing in crypto earlier this year.

Courtesy of Kayla Kilbride

“Meme stocks take away those super scary aspects of finance,” Reichel says. “When you think about the stock market, the typical picture is all of these older guys in suits who have been running it for years.” That’s not true for something like dogecoin.

There’s also the feeling that seemingly everyone is getting in on the action. Though many meme coins are entirely speculative, very risky and sometimes fraudulent, it can be difficult to not jump in on the trades. “It can be hard with all the FOMO (fear of missing out), because you see all these coins taking off,” Reichel explains.

For Turley, “the best example of a meme coin I’ve invested in is unisocks, or $SOCKS, a digital token representing a claim on a physical pair of socks,” he says.

But sometimes, it’s about more than fun. For many, the rallies of meme stocks like GameStop and AMC symbolized standing up to big-name Wall Street hedge funds, a desire that stems from a feeling of “a lack of access for the ‘little man,'” Kilbride says.

To Scanlon, “there’s this underlying resentment because our parents were able to have a 60/40 stock/bond portfolio and be fine and retire with no worries at all. But that’s not the case for this generation.”

Yet despite putting money into “fun” investments, these young investors still aim to be somewhat careful.

For Kilbride, that means avoiding any coins that seem sketchy. “When there’s so much hype … a lot of people are getting tricked, a lot of other people think it’s funny, but when you don’t have so much [money] where you can just lose, it’s too dangerous,” she says.

‘I invested as part of the community’

While traditional investments feel inaccessible to the next generation of investors, many are finding a sense of community in alternatives like cryptocurrency and meme stocks.

“I say the C in AMC stands for community, because I think that’s what [the frenzy] is about,” Scanlon says. “Post-pandemic, I think there’s a sense of loneliness. People are finding community within the stock market, in the Discord servers, in Reddit. People are just craving community because we don’t have that in the same way that we used to.”

Buying into things like GameStop and AMC is partially about being a small part of the movement, Kilbride says.

“When GameStop first rallied back in January, I invested as part of the community. I did not invest very much and I invested near the top, just to hold the line. I was like, ‘I want to purchase to be able to print it out and frame it on my wall,'” she explains.

Companies that maybe never perform that well were having this crazy moment. I was like, ‘I want to be part of this.’

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YouTube secures a big win in the EU over copyright

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YouTube’s logo is seen against the flag of the European Union.

Omar Marques | SOPA Images | LightRocket | Getty Images

LONDON — The European Union’s top court on Tuesday ruled that Google’s YouTube and other online platforms should not be held liable for copyright-infringing uploads in certain situations.

As things stand, online platforms “do not, in principle, themselves make a communication to the public of copyright-protected content illegally posted online by users of those platforms,” the European Court of Justice said.

However, YouTube and other platforms could still be held liable if it “has specific knowledge that protected content is available illegally on its platform and refrains from expeditiously deleting it or blocking access to it,” the ECJ added.

The EU recently introduced copyright reforms aimed at making its rules fit for the digital age. One part of the law which drew significant controversy at the time meant that YouTube, Facebook and other platforms would have to install filters to block users from sharing copyrighted material.

Tuesday’s ruling focuses on old copyright rules in the bloc. The case arose from a lawsuit from music producer Frank Peterson against YouTube over the uploading of recordings in 2008 over which he claimed to hold the rights.

The news marks a win for YouTube and other content-sharing sites, which have long tussled with artists and musicians over how to compensate them fairly for work that gets distributed on the web.

YouTube has clamped down on copyright violations over the years, a move that has drawn the ire of some popular creators on the platform. Tensions over YouTube copyright action escalated in 2020 as the company increasingly automated content moderation due to coronavirus lockdown restrictions.

A YouTube spokesperson said the company paid over $4 billion to the music industry over the past 12 months, with 30% of that sum coming from monetized videos.

“YouTube is a leader in copyright and supports rights holders being paid their fair share,” the spokesperson said Tuesday. “That’s why we’ve invested in state of the art copyright tools which have created an entirely new revenue stream for the industry.”

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