March 10, 2014
Kenneth Rapoza – Forbes, 3/10/2014
Brazil’s GDP will come in lower than expected this year, according to the Central Bank’s Focus survey released on Monday.
The average response from economists at Brazil’s biggest investment banks suggests 2014 GDP coming in at 1.68% from a previous forecast of 1.7%. Next year’s GDP target stood unchanged at 2%. Four weeks ago, projections were 1.9% and 2.2% respectively, suggesting the nation’s economists are increasingly bearish.
On Monday, the iShares MSCI Brazil (EWZ) exchange traded fund was down 1.26%, adding to the year’s 10.83% decline. Brazil is underperforming the MSCI Emerging Markets Index.
March 10, 2014
Matthew Malinowski – Bloomberg, 3/10/2014
Brazil economists cut their 2014 key interest rate forecast for the second straight week, as 350 basis points in borrowing cost increases since last year threaten to undermine growth.
Brazil’s central bank will lift the benchmark Selic to 11 percent this year, compared with analysts’ estimates of 11.13 percent last week and 11.25 percent two weeks ago, according to the March 7 central bank survey of about 100 economists published today.
President Dilma Rousseff’s administration is combating prospects of faster inflation and slower growth. While the economy expanded more than analysts’ estimates in the fourth quarter, both consumer and industrial confidence remain low. The central bank on Feb. 26 halved the pace of key rate increases as factors including a weaker real pressure consumer prices even as demand remains uneven.
March 7, 2014
Merco Press, 3/7/2014
“Our proposal is to stimulate trade in local currencies through central banks” said Alberto Alzueta, chairman of the chamber. “The Brazilian exporter sells in reales and the Argentine buyer pays with Pesos, this will automatically increase trade and reduce demand for dollars”.
Likewise Jose Francisco Marcondes, president of the Brazil-Venezuela Federation of Chambers supports the initiative: “it is absolutely positive and adequate to organize this kind of trade which cuts us lose from the US dollar which we don’t issue and from inflation”.
The comments follow reports from Brazil’s main financial daily Valor Económico which estimates Brazilian exports to Argentina and Venezuela this year can be expected to drop by at least 4 billion dollars.
March 7, 2014
Brazil recorded its largest February trade deficit ever, deepening a trade gap this year that underscores the uncompetitiveness of local industry and a voracious appetite for imports.
The commodities powerhouse posted a trade deficit of $2.125 billion in February, the trade ministry said on Thursday, its second straight monthly shortfall.
The deficit was below market expectations for a $3.05 billion gap, according to the median forecast of 20 analysts surveyed by Reuters. The country posted a deficit of $4.06 billion in January, its largest monthly trade gap ever.
March 7, 2014
Filipe Pacheco – Bloomberg, 3/7/2014
The real declined to a one-week low a day after Brazil posted a trade deficit and foreign-exchange outflows, reducing the currency’s allure.
The currency depreciated 0.2 percent to 2.3302 per U.S. dollar at 9:48 a.m. in Sao Paulo, the biggest decline among major currencies tracked by Bloomberg after the South African rand. The real pared its weekly advance to 0.7 percent. Swap rates on contracts due in January 2017 rose four basis points, or 0.04 percentage point, to 12.41 percent, extending their increase since Feb. 28 to 15 basis points.
“The market didn’t like the trade deficit and the outflow numbers from yesterday,” Jose Carlos Amado, a foreign-exchange trader at Renascenca DTVM in Sao Paulo, said in a phone interview. “That should weaken the currency. It should get back to a lower level, around 2.34 per dollar.”
March 6, 2014
Marvin G. Perez – Bloomberg, 3/5/2014
Coffee futures topped $2 a pound in a surge to a 24-month high as drought conditions that started in January eroded prospects for crops in Brazil, the world’s top producer and exporter.
Rain will ebb after a cold front this week in Brazil’s coffee areas, Somar Meteorologia inSao Paulo said yesterday. The southeast including Minas Gerais, the top producing state, is having the driest summer since 1972, the National Institute of Meteorology in Brasilia has said. Wolthers Douque, a U.S. import company, cut its crop forecast this year by 10 percent.
Futures for arabica beans, favored by specialty companies such as Starbucks Corp. (SBUX), have surged 83 percent this year, the most among the 24 raw materials tracked by the Standard & Poor’s GSCI Spot Index. Last year, coffee tumbled 23 percent in the third straight annual loss, the longest slump since 1993, amid Brazil’s bumper crops.
March 6, 2014
Filipe Pacheco – Bloomberg, 3/6/2014
Brazil’s swap rates climbed after the central bank said that it would be appropriate to keep adjustinginterest rates given persistent inflation.
Contracts due in January 2017 rose five basis points, or 0.05 percentage point, to 12.33 percent at 11:34 a.m. in Sao Paulo. The real advanced 0.5 percent to 2.3080 per dollar today, the strongest level on a closing basis since Dec. 10.
The central bank, which slowed the pace of interest-rate increases to 25 basis points last month after six straight half-point adjustments, said in minutes of the meeting published today that it considers “the continuation of the adjustment of monetary conditions under way” to be appropriate. Policy makers have raised borrowing costs 350 basis points since April to 10.75 percent. Consumer prices jumped 5.65 percent in the year through mid-February, above the bank’s 4.5 percent target.
“The minutes show there will be a change of 0.25 percentage point in the next meeting,” Solange Srour, the chief economist at ARX Investimentos in Rio de Janeiro, said in a phone interview. “It showed that there still are concerns regarding inflation.”
March 6, 2014
Matthew Malinwoski & Raymond Colitt – Bloomberg, 3/6/2014
Brazil’s central bank signaled today it will continue tightening monetary policy as above-target inflation remains persistent. Swap rates rose.
Policy makers led by bank President Alexandre Tombini voted unanimously on Feb. 26 to slow the pace of rate increases, raising the benchmark Selic rate to 10.75 percent from 10.5 percent after six straight half-point increases. The central bank’s monetary policy will help offset inflationary pressure from a currency depreciation, officials said in the minutes of their Feb. 25-26 meeting published online today.
The central bank considers “appropriate the continuation of the adjustment of monetary conditions under way,” according to the minutes. “Currency depreciation constitutes a source of inflationary pressure in the shorter term.”
March 5, 2014
Alexandra Wexler, Jeffrey T. Lewis & Leslie Josephs – The Wall Street Journal, 3/4/2014
Brazil’s worst drought in decades is decimating crops but breathing new life into battered commodity markets.
It hardly has rained in some of the South American country’s top farming regions since the start of the year, a period when precipitation is usually the heaviest. Traders, analysts and government forecasters who were calling for record harvests in coffee, sugar and soybeans as recently as December are cutting production estimates, triggering a spike in futures prices that may translate into higher costs for consumers later in the year.
Futures prices for the arabica coffee variety are up 67% since the start of the year. Raw-sugar prices have risen 8%. Soybeans, which have been affected by drought in some areas and too much rain in others, also are up 8%.
March 4, 2014
Tim Vickery – BBC, 3/4/2014
“We’re working in conditions where the cement is not yet dry,” said Fifa secretary general Jerome Valcke as preparations for the 2014 World Cup move towards the final straight.
The strain is showing on Valcke. Fifa wanted all 12 stadiums ready by December, to give plenty of time for test events. Sao Paulo, scene of the opening game, may not be handed over until May.
Curitiba got itself so far behind that there was a real danger of the city being cut from the schedule.
At a news conference a couple of weeks ago to announce that the city had been reprieved – “We’re going to trust Curitiba while also mistrusting it,” said Sports Minister Aldo Rebelo – Valcke cut a short-tempered figure.