Brazil: The ‘El Dorado’ for international migrants

October 14, 2014

Wyre Davis – BBC, 10/14/2014

The jungle state of Acre is a long way from anywhere. Tucked into the north-western corner of Brazil, it is closer to the big towns of eastern Bolivia and southern Peru than it is to the industrial heartland of southern Brazil. Yet it is through here that many migrants looking for a better life or escaping persecution in their own countries choose to enter Brazil.

On the edge of town, where the paved road runs out and where the jungle meets the last few buildings, several times a day small convoys of mini-vans come down the track and people get out.

Like new arrivals anywhere, they look slightly bewildered, trying to get an immediate bearing on their surroundings. But they have little need to worry.

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Brazil Drought Boosts Coffee Prices, Threatens Sugar Production

October 14, 2014

Brianna Lee – International Business Times, 10/13/2014

A deepening drought crisis across Brazil is hitting two of the country’s largest exports as coffee prices surged to their highest level in two years and sugar production is headed for a steep decline. The drought affecting Brazil this year is the worst the country has faced in decades, triggering alarm for cities like Sao Paulo, which has instituted emergency measures to cope with a water supply crisis.

The price of Arabica coffee, of which Brazil is the world’s top supplier, soared to a two-year high last week as meteorologists predicted low prospects for rainfall in Brazil’s coffee-producing regions for the rest of October and November.

Brazil joins other Central American countries dealing with coffee crop woes as El Salvador, Honduras, Panama and Guatemala have all dealt not only with drought but also coffee rust, a fungus that hit crops and resulted in the loss of more than $1 billion since 2011. Meanwhile, however, Colombian coffee seems to be taking advantage of the situation. Colombia’s coffee output looks set to reach a 20-year high this year.

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Wall Street, Washington, and Brazil

October 8, 2014

Julia E. Sweig – The World Post, 10/8/2014

Wall Street made its preferences known well before the first round: the markets wanted change. Anything but Dilma, and if that meant Marina Silva, then by god she would be molded into the right market-friendly container! Washington had a slightly more sanguine view of the Marina surge, but most close Brazil-watchers likewise seized on Marina as the Obama-esque “change agent” who, embodying the demands of the 2013 protests, might propel Brazil to the next phase of political reform.

Moreover, Marina’s sudden openness to agribusiness and trade deals, her gripping personal narrative, and her environmentalism suggested an opening for the Obama administration to re-kindle the near dormant embers of the bilateral relationship.

Surprise! Time to re-calibrate expectations and ask some questions. With Aécio Neves pulling in a respectable 34 percent of the vote, in an outlier scenario that he can draw enough for Marina’s votes to prevail over Dilma, what would a PSDB government signal to Wall Street and Washington?

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Brazil’s Presidential Election, Round 2: It’s the Economy, Estúpido

October 8, 2014

Dom Phillips – TIME, 10/07/2014

The economy takes center stage as incumbent President Dilma Rousseff takes on business-friendly challenger Aécio Neves in a runoff election Oct. 26. Brazil’s faltering economy will be high in voters’ minds when they return to the polls Oct. 26 for a second-round face-off in the country’s presidential election.

President Dilma Rousseff, whose Workers’ Party has run Brazil since 2003, won 41.59% of votes cast in a first-round poll on October 5 — not quite enough to beat outright Aécio Neves, a business-friendly candidate who was twice governor of Minas Gerais state. Neves, who had been trailing in third place in polls, came second with 33.55% in the latest in a series of upsets in a volatile campaign.

Neves’ resurgence can partly be explained by the worrying state of the country’s economy. The country is technically in recession, having retracted 0.6% in the second quarter of this year, and 0.2% in the first. On Tuesday, the International Monetary Fund revised its prediction for Brazil’s 2014 GDP growth down to 0.3%, from the 1.3% growth it had estimated in June.

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Brazil Stock Market Gains Not Entirely Political

October 8, 2014

Kenneth Rapoza – Forbes, 10/07/2014

Voters of Social Democrat Aécio Neves might cheer the recent rise in the Brazilian stock market as a testament to his real shot at becoming president, but there is more to Bovespa’s recent 10% gain than politics.

“The election results have had an immediate and strong impact on the market, as we can see, but this is only momentary and has no grounds for support,” says Raphael Juan, a fund manager for BBT Asset in São Paulo. “To think that politics is the savior and whatever candidate wins or loses will make everything wonderful is a grave error for short-term investors.”

Bullish market commentary during the last few days seems centered around the prospect of incumbent Dilma Rousseff’s defeat, and bearish signs centered around her victory. This narrative continued Tuesday with the iShares MSCI Brazil (EWZ) exchange traded fund up another 2.4% in intraday trade. Most news outlets are connecting the bullish Bovespa to Neves’ vote totals, with UBS saying today that he has a 50/50 shot of beating Dilma.

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Rousseff’s election strategy digs deeper hole for Brazil economy

October 8, 2014

Brian Winter and Alonso Soto – Reuters, 10/07/2014

President Dilma Rousseff’s strategy of slamming bankers and playing up class divisions may give her the edge in this month’s election but it further strains relations with business leaders just as Brazil’s stagnant economy badly needs fresh investment.

The leftist incumbent, who led the first round of voting on Sunday and now faces market favorite Aecio Neves in an Oct. 26 runoff, is using heavy government spending and some tough rhetoric to shore up her support among Brazil’s poor.

The ruling Workers’ Party has used a similar approach to win the last three presidential elections in a country with a vast wealth gap, and Rousseff is doubling down on it in Brazil’s closest and most volatile campaign in decades.

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