Dour Outlook For Brazil May Be Exaggerated: A Contrarian Take

July 25, 2014

Jim Cahn – Nasdaq, 7/25/2014

With the World Cup having put it in the spotlight, Brazil is getting a lot of critical attention, including reports that the country is unprepared to host the 2016 Olympics. Between those two events are the pivotal October elections, which will determine if South America’s largest country is going to stick with populist policies and price controls or start doing some very unpopular things to mitigate inflation and revitalize the stagnating economy.

Its domestic growth production is restrained in the 2% range, its foreign imbalances have grown, the currency is being hammered and even the often slow-to-react ratings agencies have cut Brazil from BBB to BBB-.

But frankly, it’s not all that bad. In fact, the outlook for certain sectors is quite good, especially consumer goods, finance and infrastructure.

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Brazil Sees $452 Million 2015 Air Subsidy as Gol Mulls Flights

July 24, 2014

Christiana Sciaudone and Anna Edgerton – Bloomberg, 7/23/2014

Brazil projects paying 1 billion reais ($452 million) in subsidies next year to entice airlines to expand their network of regional flights, a possible boost for the country’s biggest domestic carrier.

“We need to integrate the country and guarantee that 95 percent of Brazilians live within 100 kilometers of an airport,” Civil Aviation Minister Wellington Moreira Franco said yesterday in an interview in Brasilia.

Franco expects the program to be implemented next year, with funding shared among qualified carriers to meet the government’s goal of extending air service. Gol Linhas Aereas Inteligentes SA (GOLL4), the biggest Brazil-based airline, said yesterday it’s considering flying regional routes, a step that would require buying smaller jets than its Boeing Co. 737s.

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Datalogic targets Brazil

July 24, 2014

Sherri Buri McDonald – The Register-Guard, 7/24/2014

As part of its global expansion strategy, Datalogic, an Italian tech company with deep roots in Eugene, has opened a factory in Brazil.

The company has spent $2 million to build the 23,680-square-foot plant in the city of Jundiai, in the state of São Paulo. It will churn out bar code readers, mobile computers and other devices, offer technical assistance and maintenance of the equipment, and serve as a demonstration center for new products, company officials said.

It is Datalogic’s first facility in Latin America.

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Why the U.S. Is Building a Fantastical Aquarium in Brazil

July 24, 2014

Kriston Capps – City Lab, 7/23/2014

Soon enough, Brazil will be able to boast the largest aquarium in South America. When it is completed in 2015, Acquario Ceará, a new public aquarium planned for the northeastern Brazilian city of Fortaleza, will easily be the world’s most recognizable aquarium—an architectural statement piece if there ever was one. It may also be the most truly American project in the Western Hemisphere. While the backers of Acquario Ceará are aiming to create a new design symbol for South America, it will be almost entirely a product of North America.

The U.S. is designing, engineering, constructing, and even financing Acquario Ceará—a design showpiece meant to drive tourism in the state of Ceará after the World Cup. In what has to be a global first, a U.S. federal agency is building a blobitectural marvel on another continent in order to create jobs for small businesses at home.

The project is being designed by Leonardo Fontenele of Imagic Brasil, the Latin American division of the Cincinnati-based design firm Jack Rouse Associates. The key to the aquarium’s wild design is—plainly—the facility’s signature crustaceo-exoskeleton, which is being fabricated by Zahner, the same Kansas City, Missouri–based metals firm that executes titanium tapestries for Frank Gehry. The construction of the project is being overseen by International Concept Management, a small business and custom aquarium maker located in Grand Junction, Colorado. So, the otherworldly Acquario Ceará is basically a Midwestern export.

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Spotify hopes to help fight piracy in Brazil

July 24, 2014

Angelica Mari – ZDNet, 7/23/2014

Spotify hopes to become instrumental in the fight against music piracy in Brazil, according to one of the company’s top executives.

The company, which launched its streaming services in Brazil in May, expects streaming uptake will result in the music piracy decline seen in other countries where it operates, according to Head of Spotify Labs, Gary Liu.

“People tend to do whatever is easier and cheaper. Our objective is to build a product that has the same cost of the pirated product — free — but easier and better,” Liu told delegates at YouPix, an internet and digital culture event that took place last weekend.

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Brazil Sells $3.5 Billion in First Dollar Bond This Year

July 24, 2014

Filipe Pacheco – Bloomberg, 7/23/2014

Brazil issued $3.5 billion of government bonds in exchange for cash and old debt securities, offering the country’s longest maturity in its first dollar-denominated offering this year.

The country issued the bonds due in 2045 to yield 5.131 percent per year, the Treasury said in a statement today. The country raised about $1.5 billion of new cash, according to a person familiar with the offering who asked not be identified because the details haven’t yet been made public. The country also swapped new bonds for outstanding securities with maturities ranging from 2024 to 2041, according to the statement.

Brazil tapped the bond market a week after Fed Chair Janet Yellen reiterated in congressional testimony that U.S. borrowing costs will probably stay low for a “considerable period,” making emerging-market assets more attractive. The Latin American country sold 1 billion euros ($1.3 billion) of seven-year bonds in March to yield 2.961 percent just three days after Standard & Poor’s lowered Brazil’s credit rating by one step to the lowest level of investment grade.

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Brazil to Spend Record $600 Million to Boost Olympic Medal Hopes

July 24, 2014

Tariq Panja – Bloomberg, 7/23/2014

Brazil’s Olympic Committee will spend a record $600 million in an attempt to secure a top 10 medals ranking when the Summer Games take place in Rio de Janeiro in 2016.

Through a combination of public and private funding, the country will prepare 400 athletes with the aim of as many as 30 medals, 13 more than the the team achieved at London 2012. For that event, Brazil, which was joint 14th place on the total medals ranking, spent $350 million. It was 22nd in gold medals.

Hosting duties gives Brazil responsibility to outperform its previous records, said Marcus Vinicius, director of sport at Brazil’s Olympic Committee.

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No Growth, No Problem For Brazil Investors As Market Beats World

July 24, 2014

Kenneth Rapoza – Forbes, 7/22/2014

Slow growth, protests, and a humiliating defeat against the Germans in the World Cup earlier this month hasn’t soured investor sentiment on Brazilian equities. Over the last four weeks, Brazil’s stock market as measured by the MSCI Brazil index has beat out the MSCI World and the S&P 500.

The same can be told when looked at three months out, with the iShares MSCI Brazil (EWZ) exchange traded fund up 8.9%, beating the MSCI World and the MSCI Emerging Markets Index.

Who cares if GDP is expected to come in under 2% again this year, or that a hotly contested election is just three short months away. Brazil is the cheapest market in Latin America.

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Brazil Trims 2014 Growth Forecast

July 23, 2014

Jeffrey T. Lewis – The Wall Street Journal, 7/22/2014

The Brazilian government cut its economic growth forecast for 2014, reflecting the sluggish expansion already seen so far this year.

The country’s gross domestic product will grow 1.8% in 2014, compared with the 2.5% projected by the government earlier this year, according to a report released Tuesday. The government also raised its forecast for inflation for the year, to 6.2% from 5.6%.

The estimate for the central government’s income excluding transfers to states and municipalities was raised by 714.5 million reais ($332.7 million), to 1.095 trillion reais, after the estimate for transfers was cut.

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Brazil Analysts Cut 2014 GDP Call Below 1% for First Time

July 23, 2014

Matthew Malinowski – Bloomberg, 7/21/2014

Brazil economists cut their 2014 growth forecast for the eighth consecutive week, as low confidence and above-target inflation curb demand in the world’s second-largest emerging market.

Brazil’s economy will expand 0.97 percent this year, compared with the previous week’s forecast of 1.05 percent, according to the July 18 central bank survey of about 100 analysts published today. That was the lowest estimate since the central bank started publishing the data.

President Dilma Rousseff’s administration is trying to combat the fastest inflation in a year without further crimping demand as she campaigns for re-election in October. The central bank last week held the key rate unchanged for the second straight meeting after having lifted the Selic by 375 basis points in the year through April. Economic growth estimates have fallen as industrial sector sentiment in July dropped for the fourth straight month, while consumer confidence hovers near a five-year low.

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