March 11, 2014
Denyse Godoy – Bloomberg, 3/11/2014
Ibovespa futures rose as a bigger-than-forecast increase in industrial production and higher commodity prices boosted the outlook for Brazilian stocks.
Light SA, which generates and distributes electricity in the state of Rio de Janeiro, may be active after quarterly revenue trailed estimates. Soybean producer Vanguarda Agro SA (VAGR3) may move as it said it will post its first profit in 2014.
Ibovespa futures contracts expiring in April gained 0.8 percent to 46,150 at 9:28 a.m. in Sao Paulo. The real was little changed at 2.3493 per U.S. dollar. The Standard & Poor’s GSCI index of 24 raw materials added 0.1 percent. Commodity producers account for 35 percent of the Ibovespa’sweighting, according to data compiled by Bloomberg.
March 7, 2014
Filipe Pacheco – Bloomberg, 3/7/2014
The real declined to a one-week low a day after Brazil posted a trade deficit and foreign-exchange outflows, reducing the currency’s allure.
The currency depreciated 0.2 percent to 2.3302 per U.S. dollar at 9:48 a.m. in Sao Paulo, the biggest decline among major currencies tracked by Bloomberg after the South African rand. The real pared its weekly advance to 0.7 percent. Swap rates on contracts due in January 2017 rose four basis points, or 0.04 percentage point, to 12.41 percent, extending their increase since Feb. 28 to 15 basis points.
“The market didn’t like the trade deficit and the outflow numbers from yesterday,” Jose Carlos Amado, a foreign-exchange trader at Renascenca DTVM in Sao Paulo, said in a phone interview. “That should weaken the currency. It should get back to a lower level, around 2.34 per dollar.”
March 6, 2014
Matthew Malinwoski & Raymond Colitt – Bloomberg, 3/6/2014
Brazil’s central bank signaled today it will continue tightening monetary policy as above-target inflation remains persistent. Swap rates rose.
Policy makers led by bank President Alexandre Tombini voted unanimously on Feb. 26 to slow the pace of rate increases, raising the benchmark Selic rate to 10.75 percent from 10.5 percent after six straight half-point increases. The central bank’s monetary policy will help offset inflationary pressure from a currency depreciation, officials said in the minutes of their Feb. 25-26 meeting published online today.
The central bank considers “appropriate the continuation of the adjustment of monetary conditions under way,” according to the minutes. “Currency depreciation constitutes a source of inflationary pressure in the shorter term.”
March 4, 2014
Ilan Goldfajn – O Estado de S. Paulo, 3/4/2014
It is uncommon to have low unemployment rates in a weak economy. In general, the slowdown of the economy affects the labor market, at least after a certain period. However, in recent years, Brazil’s GDP has grown around 2% percent, while unemployment rates continued to fall to 5 % percent. This is important. After all, unemployment has a unique relevance for society. In the economy, it affects purchasing power and consumption, as well as production. Hence, unemployment is crucial for politics, for it can decide an election. But what explains this paradox between economic growth and unemployment, and what are the consequences for the economy?
According to Ilan Goldfajn, chief economist at Itaú Unibanco, one important factor to explain this phenomenon in Brazil is demographic changes, along with a declined rate of youth participating in the economy.
To read original article in Portuguese, click here.
February 27, 2014
Matthew Cowley – The Wall Street Journal, 2/27/2014
Brazil’s economy accelerated in the fourth quarter of the year but growth remains fickle as key parts of the economy continue to sputter.
The growth suggests Latin America’s largest economy was in better shape than had been expected, after preliminary data from the Central Bank of Brazil had indicated that the economy may have flirted with a recession in the second half of the year.
Although the economy continues to underperform, signs of expansion may ease some of the gloominess that have made bankers and economists increasingly negative about the prospects for 2014.
February 27, 2014
Brian Winter – Reuters, 2/27/2014
Brazil’s economy ended 2013 on a positive note thanks to strong consumer spending and investment, providing a much-needed boost to President Dilma Rousseff as she tries to rebuild her credibility with investors and win reelection in October.
Gross domestic product expanded 0.7 percent in the fourth quarter compared to the third quarter, the government statistics institute said on Thursday. That was more than twice the amount expected by economists, and it pushed the economy to 2.3 percent growth on an annual basis for the full year of 2013.
Such growth is a far cry from the dynamic 4 to 5 percent annual levels often seen last decade, when Chinese demand for commodities helped make Brazil a star among emerging markets. Poor infrastructure, high consumer debt and sagging businessconfidence have brought Latin America’s biggest economy back to earth since then, prompting fears of a long period of stagnant growth ahead, possibly for years to come.
February 27, 2014
Paulo Trevisani – The Wall Street Journal, 2/26/2014
Brazil’s central bank raised its benchmark interest rate Wednesday to 10.75% from 10.5%, as expected, and appeared to leave the door open for more rate increases while slowing the pace of the hikes.
The move continues the bank’s yearlong fight against inflation even as rising interest rates and the poor performance of the country’s exporters jeopardize already feeble growth in an election year.
The statement accompanying the announcement was little changed from the previous statement, suggesting the bank is prepared to continue to raise the rate, known as the Selic, as necessary.
February 27, 2014
David Biller – Bloomberg, 2/27/2014
Brazil’s economy grew in the fourth quarter more than economists forecast as an increase in investment offset a drop in industrial production.
Brazil’s gross domestic product rose 0.7 percent in the fourth quarter from the prior three months after contracting 0.5 percent in the third quarter, the national statistics agency said today in Rio de Janeiro. That is above every forecast from 49 analysts surveyed by Bloomberg, whose median estimate was for 0.3 percent growth. Brazil’s GDP expanded 2.3 percent in 2013.
Today’s data will help boost lagging confidence in the world’s second-biggest emerging market, according to Jankiel Santos, chief economist at Banco Espirito Santo de Investimento. PresidentDilma Rousseff has overseen the slowest three-year growth period in a decade, with above-target inflation eroding consumer and business confidence. Policy makers led by central bank President Alexandre Tombini halved the pace of key rate increases yesterday as they work to tame inflation without further jeopardizing growth.
February 26, 2014
Daniel Altman – Foreign Policy, 2/25/2014
Less than four months from now, billions of people around the world will focus on Brazil as the World Cup kicks off in São Paulo. But some Brazilians are looking forward with as much trepidation as pride, and not just because of their soccer team’s form in recent tournaments. Under the spotlight, their economy may be revealed as much less than meets the eye.
It’s easy to beat up on Brazil these days. Its currency, the real, has lost more than 15 percent of its value in the past year, as has São Paulo’s stock market, and preparations for the World Cup are not exactly on schedule. But just a few years ago, as the world reeled from economic downturns in Europe and the United States, Brazil was the darling of the financial markets. What happened?
In the years leading up to the financial crisis, Brazil had become an attractive option for investors seeking to balance their portfolios. Stock markets in Europe, the United States, and other established economies track each other so closely as to be almost identical. For example, the DAX index of the Frankfurt Stock Exchange had a correlation of 0.95 with the Standard and Poor’s 500 index on a month-to-month basis between January 2005 and August 2008. By contrast, the correlation between Brazil’s Bovespa stock market index and the S&P 500 was only 0.73. For investors who wanted to insure themselves against dips in the big markets, some of Brazil’s stocks were a reasonable option.
February 26, 2014
Samantha Pearson – The Financial Times, 2/26/2014
Petrobras has sliced $16bn off its five-year investment plan, as Brazil’s petrol subsidies have strained the finances of the state-controlled company and turned it into the world’s most indebted oil producer.
The Rio de Janeiro-based company said on Tuesday it would invest $221bn between 2014 and 2018, down from $237bn in its previous five-year plan – one of the world’s largest corporate spending programmes.
The announcement came as the company reported that its net profit had declined to R$6.3bn ($2.7bn) in the final three months of 2013, down 19 per cent from the same period in 2012. Net sales rose 10 per cent to R$81bn from a year earlier.