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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Most Brazilian Stocks Advance as Vale Rallies on Commodity Gain

July 22, 2014

Ney Hayashi – Bloomberg, 7/22/2014

Most Brazilian stocks climbed as higher commodity prices buoyed raw-material producers including mining company Vale SA.

The gauge for material stocks on the MSCI Brazil Index gained the most in a week. Trucking company JSL SA rose after saying gross sales increased 20 percent in the second quarter from a year earlier. Petroleo Brasileiro SA, the state-run oil company, fell amid speculation that a nine-session rally may have been excessive.

The Ibovespa was little changed at 57,644.02 at 12:05 p.m. in Sao Paulo, with 46 of its 70 stocks higher. The index rose 3.6 percent in the previous two sessions after a voter poll showed reduced support for President Dilma Rousseff’s bid for re-election amid a stalled economy.

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Brazil and Africa: the southern link

July 22, 2014

Claudia Valenzuela – Public Finance International, 7/22/2014

Growth, opportunity and potential have ricocheted across Brazil and the African continent in recent years. While other more mature markets are only just beginning to click into gear after the financial crisis, the economies of Brazil and Africa have enjoyed better times as a result of rising popularity with foreign investors, and burgeoning domestic markets driven by an expanding middle class and abundant natural reserves.

Africa, in particular, is picking up the pace. It’s perceived attractiveness relative to other regions has improved dramatically over the past few years, according to EY’s recent Africa attractiveness survey, moving from the third-from-last position in 2011 to become the second most attractive investment destination in the world. Its total share of global FDI projects has also reached the highest level in a decade, with investors increasingly looking across the continent and to new sectors.

An African horizon

While separated by the vast expanse of the southern Atlantic Ocean, the fact that, millions of years ago, Africa and Brazil were joined in a single landmass, and continue to share similarities in soil and climate, serves as a far more apt geographic metaphor. The increasingly close relationship between the two began during the Presidency of Luiz Inácio Lula da Silva, who himself traveled to Africa 12 times in the 1990s, visiting 21 countries in the process. This pattern has continued under his successor, Dilma Rousseff, who, for example, visited Angola, Mozambique and South Africa during her first year in office.

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Emerging-Market Stocks Rise as Brazil Gain Outweighs Russia Drop

July 22, 2014

Julia Leite and Natasha Doff – Bloomberg, 7/21/2014

Emerging-market stocks rose for a second-day as Brazilian state-run companies gained on speculation a new government will boost economic growth, outweighing declines in Russian shares.

Indonesia’s benchmark rose for a second day before the release of presidential election results tomorrow. The Micex Index fell the most since March in Moscow as President Vladimir Putin faced mounting international pressure after the downing of the Malaysian passenger jet in Ukraine. The Shanghai Composite Index declined amid concern new share sales may divert funds from existing shares.

The iShares MSCI Emerging Markets ETF advanced 0.3 percent to $44.31. The Brazilian state-controlled oil producer Petroleo Brasileiro SA led the Ibovespa to a four-month high in Sao Paulo as a voter poll dimmed the prospects for President Dilma Rousseff’s re-election bid.

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Laif Meidell: Brazil drought pushes up coffee index

July 22, 2014

Laif Meidell – Reno Gazette-Journal, 7/21/2014

From the start of the year through Monday, the Standard & Poor’s GSCI Coffee index has risen 56.18 percent following the worst drought in decades to hit Brazil. Specifically, earlier this year, the state of Minas Gerais, Brazil, where roughly half of the country’s coffee is grown, experienced less than 40 percent of the normal amount of rainfall in the first half of the year.

Even with prices up this year, Brazilian coffee growers exported 21 percent more coffee in June than a year ago. Although, large stockpiles left over from last year have been able to help meet the recent demand, roasters appear to be buying now in anticipation of potential crop shortfalls in 2015. According to coffee growers, lack of rainfall not only affects the size, shape and weight of the coffee beans this year, but will also hurt next year’s harvest.

The nearly 20 percent decline in coffee prices from this year’s April peak, may be creating what some believe to be a buying opportunity in coffee for those roasters and others worried about 2015. This week coffee is back at the top of our commodity list with the S&P GSCI Coffee index gaining 5.19 percent over the past five trading days.

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Brazil bank bonds rally on cut in liability estimates

July 22, 2014

Davide Scigliuzzo – Reuters, 7/22/2014

NEW YORK – Bonds of Brazilian banks rallied on Tuesday after prosecutors in the country slashed the banks’ potential liabilities in a landmark court case over the profits they made on savings accounts more than two decades ago.

The attorney general office reduced its estimate of the gross profits the banks made from depositors during that period to BRL21.87bn from BRL441.7bn, according to Reuters.

The announcement, made on Monday after the market close, sent bonds of most Brazilian lenders sharply higher on Tuesday.

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Brazil Boosts Security in “Pacified” District

July 22, 2014

Latin American Herald Tribune, 7/22/2014

Brazilian authorities on Monday strengthened security in a cluster of Rio de Janeiro shantytowns that were officially pacified four years ago after decades as a bastion of drug traffickers.

The additional police presence follows a violent weekend.

A police officer was wounded, two vehicles were burned and a police base was attacked on Sunday night by suspected drug dealers who evidently were acting in reprisal for the death of a young man during a gunfight and the jailing of one of their associates, Rio state police said.

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