Brazil’s Batista Faces Criminal Charges

September 15, 2014

Luciana Magalhaes – The Wall Street Journal, 09/13/2014

When Brazil’s best-known businessman was hit with criminal charges over the weekend involving billions of dollars in soured deals, he didn’t appear to miss a beat. Instead, Eike Batista was roaming the world scouting for business opportunities.

“Yesterday he was in Qatar,” said one of Mr. Batista’s lawyers, Sergio Bermudes, in a telephone interview Sunday. “It was a business trip.” The attorney said Mr. Batista had also planned to go to South Korea and would return to Brazil probably by Friday.

When the entrepreneur lands, he will be facing one of the biggest challenges of his life. Prosecutors in Rio de Janeiro last week charged Mr. Batista with financial crimes and requested the freezing of 1.5 billion Brazilian reais ($641 million) in assets belonging to the businessman and people close to him, according to documents posted on the public prosecutor’s website on Saturday.

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Brazil financial markets sell off on election anxiety

September 12, 2014

Reuters, 9/12/2014

Brazilian financial markets added to losses on Friday after an opinion poll showed President Dilma Rousseff and competing presidential candidate Marina Silva statistically tied in an expected second-round vote in October.

Brazilian stocks and currency have been posting losses over the past few days on fears that Silva, regarded by investors as the strongest option to avoid four more years of a government they strongly dislike, would lose her lead in opinion polls.

On Friday, the Brazilian real weakened to as much as 2.323 per dollar, more than 1 percent weaker on the day, as the Ibope pollster said Silva had 43 percent of voter support in a second-round vote, only one percentage point ahead of Rousseff.

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Some companies profit as Brazil struggles to secure power

September 12, 2014

Todd Benson and Marguerita Choy – Reuters, 9/11/2014

A small group of energy companies in Brazil are increasing revenues at a time when the country is grappling with its worst power crisis in more than a decade, taking advantage of sky-high prices to sell electricity in the spot market.

Power generators that have managed to produce extra energy in recent months or who aren’t restricted by long-term supply contracts are being rewarded with prices up to six times higher than the average cost on conventional electricity contracts.

At the same time, distributors that had to resort to the short-term market to fulfill demand increases are facing financial burdens and are being rescued by the government.

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Brazil’s July Economic Activity Increases More Than Forecast

September 12, 2014

Mario Sergio Lima – Bloomberg, 9/12/2014

Brazil’s economic activity in July rose more than economists forecast, as the central bank signals it will keep interest rates on hold in the world’s second-biggest emerging market.

The seasonally adjusted economic index, a proxy for gross domestic product, rose 1.50 percent in July from the prior month after contracting a revised 1.51 percent in June, the central bank said today in a report posted on its website. The median estimate from 30 economists surveyed by Bloomberg was for a 1 percent expansion.

Brazil’s economy slipped into recession in the second quarter as above-target inflation erodes consumer and business confidence. Moody’s Investors Service cut the nation’s credit rating outlook this week, citing “the absence of any signs of a recovery.” With presidential elections less than a month off, economic management has become central to the campaign.

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Some companies profit as Brazil struggles to secure power

September 11, 2014

Todd Benson and Marguerita Choy – Reuters, 09/11/2014

A small group of energy companies in Brazil are increasing revenues at a time when the country is grappling with its worst power crisis in more than a decade, taking advantage of sky-high prices to sell electricity in the spot market.

Power generators that have managed to produce extra energy in recent months or who aren’t restricted by long-term supply contracts are being rewarded with prices up to six times higher than the average cost on conventional electricity contracts.

At the same time, distributors that had to resort to the short-term market to fulfill demand increases are facing financial burdens and are being rescued by the government. The situation underscores the imbalances of the Brazilian power system, which has come under stress because of a prolonged drought. The energy crunch has also become a hot topic in Brazil’s presidential race, with the government facing criticism for not ensuring a stable power supply at reasonable prices.

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FGV/IBRE publishes labor market indicators

September 11, 2014

FGV News, 09/10/2014

The Leading Indicator of Employment (LIEmp) by the Brazilian Institute of Economics (FGV/IBRE) decreased 1.2% in August 2014 compared to the previous month, reaching 73.6 points, its lowest level since May 2009 – considering seasonally adjusted data. This is the sixth consecutive decline of the index, showing the continued deceleration trend of the hiring pace for the third quarter.

According to the researcher of FGV/IBRE, Fernando Holanda Barbosa Filho, “the decreases accumulated since March for the LIEmp reinforce the deceleration observed in the generation of jobs in the Brazilian labor market”. He stated that “the index is in line with the low job creation, as evidenced by the Monthly Employment Survey of the Brazilian Institute of Geography and Statistics (PME/IBGE), and the creation of new formal jobs, as shown by the indicators of the General Register of Employed and Unemployed of the Ministry of Labor and Employment (CAGED/MTE)”. Also according to Fernando, the results also indicate that this slowing trend should continue in the coming months.

The Leading Indicator of Unemployment (CIU), also calculated by FGV/IBRE, recorded the fifth consecutive increase when it changed 5.8% between July and August 2014, considering data free of seasonal influences. This was the greatest change since July 2013 (7.1%). The result shows that, in the perception of consumers, labor market conditions have worsened during the month of August.

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