Brazil Stocks Sink As Jim Chanos Slams Petrobras

October 22, 2014

Kenneth Rapoza – Forbes, 10/21/2014

Sometimes all it takes is a celebrity investor to say something bad about a market and the investor riff-raff go running for the door. On Monday, famed investor and regular CNBC guest Jim Chanos said Brazilian state owned oil company was not an investment, but an investment scheme. He was referring to what most Petrobras watchers already know — that the company is used by the government as a revenue stream, and as a means to control inflation as it keeps a lock on gasoline prices.

Chanos said this on a day when Petrobras shares had down their usual mega-drop, falling 6% in a day. Less than 12 hours later, the stock opened 6% lower on Tuesday following Chanos’ guidance. He’s laughing all the way to the bank this week.

And while every broker and trader on the Bovespa floor in São Paulo needs something to tell newswire reporters about the wild drop in Brazilian equities today, it is very unlikely that the recent poll by Datafolha showing incumbent Dilma Rousseff neck and neck with challenger Aécio Neves is any reason for investors to sell Brazil. Business Insider gets it. Linette Lopez wrote in a headline today that Chanos Tanked Brazil.

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Brazil must target smallholders to curb rising deforestation

October 21, 2014

Anastasia Moloney – The Guardian, 10/20/2014

Farmers with smallholdings are not responsible for most of the destruction of Brazil’s Amazon rainforest, but their contribution to deforestation is rising and must be addressed if the country is to hold on to recent gains, according to an environmental research group.

Government efforts led to a 77% fall in deforestation in the Amazon between 2004 and 2011, but progress has slowed and deforestation is rising, the Stockholm Environment Institute (SEI) said in a report.

The report said that between 2004 and 2011, landowners with more than 500 hectares (1,235 acres) of property were responsible for about 48% of the deforestation. Areas owned by smallholders accounted for 12% of the forests destroyed during the same period. However, since 2005, the contribution to annual deforestation by the largest landowners has fallen by 63%, while that of smallholders has increased by 69%, the report said.

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Brazil’s Rousseff Admits There Was Wrongdoing at Petrobras

October 20, 2014

Paulo Trevisani – The Wall Street Journal, 10/19/2014

Brazil’s President Dilma Rousseff said Saturday that there was embezzlement at government-controlled oil producer Petróleo Brasileiro SA .

The company, known as Petrobras, has been at the center of a corruption scandal allegedly involving people connected to Mr. Rousseff’s Workers Party, or PT.

“I will do all I can to reimburse the country,” Ms. Rousseff said during a news conference at the presidential residence late in the afternoon. “There was” deviation of public money, she said according to a transcript of the interview published on her official campaign website.

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Scandal Over Brazilian Oil Company Adds Turmoil to the Presidential Race

October 20, 2014

Simon Romero – The New York Times, 10/19/2014

Paulo Roberto Costa was living an oilman’s dream.

He had a house in a luxurious gated community here. He bought a yacht and drove an armored Range Rover. He had more than $25 million stashed in bank accounts in Switzerland and the Cayman Islands.

But that dream evaporated recently when the police arrested Mr. Costa and charged him with orchestrating a bribery scheme on an epic scale at Petrobras, Brazil’s national oil company, and funneling the proceeds to the governing Workers Party and its allies while enriching himself.

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Brazil Seen Running Rationing Risk Without Conservation

October 17, 2014

Anna Edgerton – Bloomberg, 10/16/2014

Brazil is running a “very big risk” by not doing more to conserve power use during a drought, according to Jose Jorge, Brazil’s energy minister in 2001, the last time the country had to ration electricity.

The opposition-aligned official and member of Brazil’s audit court said in an interview yesterday government measures to contain power prices have also restricted investment in the industry, exacerbating the effect of the drought.

Reservoirs in Brazil’s southeast, home to most of the country’s hydro-power plants, are at 22.4 percent capacity with high temperatures and low rainfall so far in October. The last time Brazil had to ration energy, when Jorge was minister, reservoirs were 21.3 percent full in October. With low dam levels restricting hydroelectric generation, distributors have had to rely on more expensive thermal plants.

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Petrobras blamed for stalling Brazilian airline growth

October 15, 2014

Samantha Pearson – The Financial Times, 10/13/2014

Petrobras’s fuel pricing policy threatens to put the brakes on Brazil’s airline industry, the world’s third-biggest domestic market and a key propeller of the country’s growth, industry associations have warned. Brazil now has the second most expensive airline fuel in the world after Malawi in Africa, making it impossible for airlines to reduce ticket prices further as the economy slows, said Eduardo Sanovicz, head of the Brazilian Airlines Association ABEAR.

“This is a fundamental barrier if Brazilian aviation is to increase its number of passengers from the current 111m,” said Mr Sanovicz, adding that fuel represents 40 per cent of Brazilian airlines’ operating costs compared with a global average of just over 30 per cent.

While taxes and currency fluctuations are partly to blame, jet fuel is so expensive in Brazil largely because the state-controlled oil company Petrobras still charged a heavy “import fee” even though more than 75 per cent of the fuel nowadays was refined in Brazil, Mr Sanovicz added.

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An environmentalist’s calculated push toward Brazil’s presidency

October 1, 2014

Paulo Prada – Reuters, 10/1/2014

In March 2003, three months into her tenure as Brazil’s environment minister, Marina Silva gathered a half-dozen aides at the modernist ministry building in Brasilia, the capital.

She told them the new government of President Luiz Inácio Lula da Silva was about to embark on a pharaonic infrastructure project for Brazil’s arid Northeast.

The project, a still-ongoing effort to reroute water from one of Brazil’s biggest rivers, had previously been opposed by environmentalists, including Silva herself. Rather than explain how she would thwart the plan, however, the former activist said she would work to make it as sustainable as possible.

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