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 August Retail Sales Rise More Than Analysts Forecast

October 15, 2014

David Biller – Bloomberg, 10/15/2014

Brazil’s retail sales in August rose more than analysts forecast, as the government works to spur growth after the world’s second-biggest emerging market entered recession in the first half of the year.

Sales rose 1.1 percent after a revised 1 percent contraction in July, the national statistics agency said today in Rio de Janeiro. That was the biggest jump since July 2013 and above the median forecast for a 0.8 percent increase from 34 economists surveyed by Bloomberg.

The first sales increase since May comes 11 days before the presidential runoff election between challenger Aecio Neves and incumbent Dilma Rousseff. Shoppers’ purchasing power has become a talking point in the race after above-target inflation eroded consumer confidence and the economy shrank in the first half. In June and July Brazil hosted the monthlong World Cup tournament.

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Brazil Shares Jump, Real Surges Against Dollar After 1st Round of Presidential Vote

October 6, 2014

Jeffrey T. Lewis, Rogerio Jelmayer, and Luciana Magalhaes – The Wall Street Journal, 10/6/2014

Brazilian shares jumped and the real surged against the dollar after pro-business candidate Aécio Neves performed better than expected and placed second in Sunday’s presidential election.

Mr. Neves will face President Dilma Rousseff, who finished with the most votes, in a runoff on Oct. 26.

Investors have complained about Ms. Rousseff’s economic policies, which they say have hurt growth. For weeks Brazilian shares have risen and the real strengthened on any bad news for the president, and vice versa.

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Brazil Gets a Choice

October 6, 2014

The Wall Street Journal, 10/5/2014

The big news in Brazil’s presidential election Sunday is the rally by centrist candidate Acéio Neves to finish second. He’ll now square off against incumbent President Dilma Rousseff in an Oct. 26 runoff that will give Brazilians a choice between the failing status quo and a return to policies that had begun to lift the country out of decades of underperformance.

Only a month ago opinion polls had counted out Mr. Neves as environmentalist Marina Silva came from nowhere after the death in an airplane crash of the Socialist candidate. But Ms. Silva faded as her inexperience became a voter concern and she finished third at 21%, while Mr. Neves took 34% and Ms. Rousseff 41%, well below the 50% threshold needed to avoid a runoff.

The result is a significant comedown for Ms. Rousseff, whose left-wing Workers’ Party has ruled Brazil for 12 years and who had the support of popular predecessor Lula da Silva. Four years ago Ms. Rousseff rode the global commodity boom and the Federal Reserve-spurred capital rush into emerging markets, but in the last four years Brazil has experienced the hangover. Growth has stagnated, the economy is now in recession, and inflation is running at 6.3%.

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Brazil Central Bank Cuts Inflation Forecast on Slow Growth

September 30, 2014

Matthew Malinowski and Mario Sergio Lima – Bloomberg, 09/29/2014

Brazil’s central bank cut its 2014 inflation forecast, saying the world’s second-biggest emerging market will grow at a “disinflationary” pace over the next quarters.

Consumer prices will rise 6.3 percent this year if policy makers keep the benchmark Selic (BZSTSETA) at 11 percent, according to the reference outlook in the quarterly inflation report published today. The inflation forecast compares with a 6.4 percent estimate for 2014 in the June report. Consumer prices will rise 5.8 percent in 2015, compared with a 5.7 percent forecast in June. Policy makers also said the economy will expand 0.7 percent this year, down from the previous estimate of 1.6 percent.

“Taking into account the growth outlook for the next quarters, the committee assesses that the output gap over the next quarters will remain in disinflationary territory,” policy makers said. They reiterated inflation will converge toward its 4.5 percent target in 2016.

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Brazil bank lending dormant as new round of stimulus fails

September 26, 2014

Guillermo Parra-Bernal and Luciana Otoni – Reuters, 9/26/2014

Bank lending in Brazil slowed for a seventh straight month in August, another sign that recent measures to unlock personal credit failed to offset the impact of high borrowing costs and weak economic activity.

Outstanding loans in Brazil’s banking system rose 11.1 percent in the 12 months through August, the central bank said in a report published on Friday. According to Thomson Reuters calculations, the annual growth of bank loan books is running at the slowest pace since at least late 2003.

Lending rose 1 percent in August from the prior month, reaching 2.86 trillion reais ($1.18 trillion), the report said. Loans in arrears for 90 days or more, the industry’s benchmark gauge for credit delinquencies, remained stable at 5 percent of outstanding loans last month.

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