Brazil shocks with interest rate hike in wake of election

October 30, 2014

Alonso Soto – Reuters, 10/29/2014

Brazil’s central bank raised interest rates on Wednesday, surprising investors with a bold move that signals President Dilma Rousseff could make more market-friendly policy changes after her narrow re-election victory on Sunday.

In a divided vote, the central bank’s board decided to raise its benchmark Selic rate by 25 basis points to 11.25 percent. All 43 economists surveyed in a Reuters poll this week expected the bank to keep the Selic at 11 percent.

With the hotly contested presidential race over, the central bank moved swiftly to anchor inflation expectations at a time when markets are wondering if Rousseff is willing to overhaul her policies to regain the trust of investors.

Read more…

Another emerging markets crisis looms as Brazil opts for the politics of stagnation

October 29, 2014

Jeremy Warner – The Telegraph, 10/28/2014

The definition of an emerging market, it was sometimes said – in the days before Goldman Sachs led the stampede of Western money into the developing world – is one from which it is impossible to emerge in a crisis. Investors will know the feeling as they survey the damage to their wealth inflicted by the re-election of the centre left Dilma Rousseff as president of Brazil this week.

In dismay, the Brazilian Ibovespa was down a stomach churning 6.2pc and the Real, in precipitous decline for some years now, fell another 3pc. Investors had hoped for a return to the “Plano Real” and the pro-business agenda of Fernando Henrique Cardoso in the mid-90s to early noughties; instead it’s at least another four years of Workers Party interventionism they have to look forward to.

Brazil is not yet in fully-blown crisis mode, of the type which Latin America seems perennially prone to, but it is self-evidently already on a very slippery slope. Growth has slowed to a virtual standstill, inflation is again climbing towards double digits, and investment has slumped.

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Rousseff says Brazil will recover, avoid credit downgrade

October 29, 2014

Walter Brandimarte – Reuters, 10/28/2014

Newly re-elected President Dilma Rousseff said on Tuesday that the Brazilian economy will recover in her second term and avoid a downgrade of its credit rating.

In television interviews two days after narrowly defeating market darling Aecio Neves, Rousseff repeated her offer to sit down with business leaders to hear their views on the state of the economy and discuss changes in policy.

Earlier on Tuesday, a senior analyst at Moody’s Investors Service said the ratings agency was in no rush to decide whether to cut Brazil’s rating but could act quickly if it determines that Rousseff is not making significant changes in her second term.

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Can Brazil’s Socialist Iron Lady Defy The Markets?

October 29, 2014

John Cassidy – The New Yorker, 10/28/2014

I know, I know, there’s a lot going on: Andrew Cuomo and Chris Christie are busy making jackasses of themselves; the midterms are next week; Rex Ryan’s Jets are imploding. I wouldn’t blame you if you overlooked the news that Dilma Rousseff, Brazil’s socialist “Iron Lady,” was reëlected as the President of the world’s fifth most populous country. From what I saw, the broadcast networks barely covered it. Monday’s Times relegated the story to an inside page.

No surprise there, you might say. It’s nearly five thousand miles from New York to São Paulo, and Americans got their fill of Brazil during the World Cup. Who cares that Rousseff came from behind in the polls to defeat her opponent, Aécio Neves? Does it really matter to people outside Brazil?

It does, for at least two reasons. First, Rousseff’s victory has significant implications for the world’s financial markets. And, second, it extends Brazil’s decade-long effort to reduce poverty and inequality, which, despite great skepticism among the country’s business community (and free-market economists), has gone some ways towards spreading the wealth in what has long been one of the world’s most inegalitarian countries.

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Brazil falls nine positions in ranking of gender equality [PORTUGUESE]

October 29, 2014

BBC Brasil, 10/28/2014

Brazil fell nine positions in gender equality rankings released by the “Global Economic Forum,” a group known for their meetings in Davos, Switzerland. The country now appears at 71st on the list, when it used to be 62nd.

The organization evaluated the differences between men and women in terms of health, education, economy, and political indicators in 142 countries. Iceland ranks first, followed by other Nordic countries.

Despite having kept equal health and education levels for both men and women, Brazil fell in the rankings that measure female participation in the economy and politics. The largest drop occurred in the evaluations that considered wages and female participation and leadership in the labor market.

Read more [in PORTUGUESE]…

Hopes for Rebound in Brazil Rest With Dilma Rousseff, Re-elected President

October 28, 2014

Dan Horch – The New York Times, 10/27/2014

Business leaders and market strategists are hoping that Brazil, one of the world’s largest economies, can regain its footing in the wake of the re-election of Dilma Rousseff as president.

After Ms. Rousseff’s victory, markets, as expected, swooned on Monday. Brazil’s currency, the real, fell 2.7 percent against the dollar, while the stock market fell 2.8 percent, largely in reaction to the election. For the year, the Brazilian markets have been stuck in a malaise, down 2 percent this year, after a slide of 15.5 percent in 2013.

Since Ms. Rousseff took office in January 2011, the stock market has fallen 27 percent. Taking the currency’s depreciation into account, the loss for a foreign investor, in dollar terms, has been nearly 50 percent.

Read more… 

Re-Election Secured, Brazil’s President Faces Challenges

October 27, 2014

Reed Johnson and Rogerio Jelmayer – The Wall Street Journal, 10/27/2014

Brazilian President Dilma Rousseff faces two pressing challenges after winning re-election by a narrow margin on Sunday: mending a divided electorate following a rancorously partisan campaign and reviving her nation’s stagnant economy.

Ms. Rousseff, of the leftist Workers’ Party, defeated Aécio Neves of the conservative Brazilian Social Democracy Party, or PSDB, by 52% to 48%, the tightest presidential race in the nation’s history. The contest, marked by bitter rhetoric and harsh accusations on both sides, left Brazilians split along economic and regional lines.

In her 27-minute victory speech at a hotel auditorium in Brasília, the capital, Ms. Rousseff offered some conciliatory notes for the nation as a whole, calling for “peace and union.”

Read more…


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