September 19, 2014
Jonathan Wheatley – Financial Times, 9/19/2014
As Brazil’s polling day draws closer, another data point emerged on Friday for the voters’ consideration: consumer price inflation is back above the upper limit of the government’s target range and shows no sign of falling back soon.
The IBGE, Brazil’s statistics office, said CPI in the month to mid-September was 0.39 per cent, bringing the accumulated rate over the past 12 months to 6.62 per cent. That was above the consensus forecast of 0.35 per cent for the month, according to Bloomberg.
Inflation is running at its fastest rate in more than a year, just as the campaign for elections on October 5 heats up. Until recently, voters seem to have paid little attention to Brazil’s weakening economy, which was in recession in the first half of this year. But a wave of bad economic data may have contributed to the recent poor performance in opinion polls of Dilma Rousseff, hoping to be re-elected to the presidency, as voters make the connection between economic mismanagement and the woeful standard of Brazil’s public services, which brought thousands of protesters onto the streets last year.
September 19, 2014
Joe Leahy – Financial Times, 9/17/2014
Arminio Fraga’s assessment of what is wrong with Brazil explains why he is the market’s choice to be finance minister after next month’s election.
“There`s a clear feeling the government is lost, it has picked the wrong model,” Mr Fraga says in an interview at his office in Leblon, Rio de Janeiro, almost within hearing distance of the Atlantic waves crashing on to the city’s beaches a block or two away.
Mr Fraga advocates a return to economic orthodoxy. A former managing director with financier George Soros and Brazilian central bank president, who co-founded his own hedge fund Gavea Investimentos before selling it to JPMorgan, Mr Fraga is one of Brazil`s most respected economists. He is seen as the country’s version of Raghuram Rajan, the University of Chicago economist who became India’s central bank governor last year.
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.
September 4, 2014
David Biller and Raymond Colitt – Bloomberg, 09/03/2014
Brazil’s central bank signaled borrowing costs will remain unchanged until at least the end of the current administration in December as policy makers are trapped between a recession and above-target inflation.
The bank’s board, led by President Alexandre Tombini, yesterday held the benchmark rate at 11 percent for the third straight meeting, removing the phrase “at this moment” from the communique in an indication the key rate will remain on hold, Andre Perfeito, chief economist at Gradual Investimentos, said. All except one of the 54 analysts surveyed by Bloomberg correctly forecast the decision.
President Dilma Rousseff is trailing in polls as inflation near the ceiling of the target range has helped to erode consumer and business confidence. Yesterday’s monetary policy decision was the last before Brazilians select their leader in October. Marina Silva, who pledges to give the central bank president autonomy to bring inflation to the 4.5 percent target, would beat the incumbent in a runoff, polls show.
August 25, 2014
Raymond Colitt – Bloomberg, 8/25/2014
Forty years ago, Marina Silva was a maid washing dishes in the jungle city of Rio Branco. Today, she is a presidential contender, counting on her personal history to appeal to poorer Brazilians even as she adopts economic positions friendly to business leaders and investors.
Silva’s entry into the contest as a replacement for Eduardo Campos after he died in a plane crash has upended the race, with polls showing her attracting previously undecided voters. To win, she needs to do more: siphon support from President Dilma Rousseff among the poor, who have benefited from 12 years of social welfare under the ruling Workers’ Party.
Silva’s pledges to slow inflation, grant central bank autonomy and undo fiscal policies that led to a sovereign credit downgrade target a different audience: supporters of Senator Aecio Neves, who appeals mostly to more affluent Brazilians. Her personal background positions her to meld this economic-growth agenda with an appeal to poorer voters, said Rafael Cortez, a political analyst at research company Tendencias Consultoria Integrada.
August 21, 2014
Kenneth Rapoza – Forbes, 8/20/2014
Brazil’s Central Bank injected another $12 billion into the economy on Wednesday following analyst projections that this year’s GDP will print at just 0.79%.
This is the second time the Central Bank has provided some form of stimulus to lenders. In July, it provided around $21 billion to banks to induce lending.
Brazilian equities have been on a tear lately no matter what the economic fundamentals suggest. The iSharesMSCI Brazil (EWZ) exchange traded fund is up 6.07% in the past five days, clobbering the benchmark MSCI Emerging Markets index by roughly 500 basis points.