Brazil Election Poll 2014: President Rousseff Seen As Likely Winner Against Aecio Neves

October 24, 2014

Connor Adams Sheets – International Business Times, 10/23/2014

Brazilian President Dilma Rousseff appears likely to beat Senator Aecio Neves as Sunday’s presidential runoff nears. Recent polls show Rousseff leading Neves by about 4 percentage points in what is widely seen as a referendum on the country’s economy, Reuters reported Thursday.

Rousseff, who is seeking her second term, appears to have the momentum three days before voters go to the polls, but the result is anything but guaranteed, as her lead is close to the margin of error and Neves’ fiscally conservative policies have generated excitement among many voters. But financial markets appear to be going on the assumption that Rousseff will win, according to a Forbes analysis.

Brazil’s major polling firms, Ibope and Datafolha, show Rousseff with a lead greater than the margin of error, which is plus or minus 2 percentage points for both. Rousseff has 49 percent against 41 percent for Neves, according to Ibope, and 48 percent over 42 percent for Neves, according to Datafolha.

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Brazil $101 Billion Swaps Position Looms Before Election

October 24, 2014

Cristiane Lucchesi, Ye Xie, Josue Leonel – Bloomberg, 10/24/2014

Fourteen months after Brazil began selling billions of dollars-worth of derivative contracts to shore up its currency, the strategy is proving ineffective and raising concern in financial markets.

The real fell to a six-year low yesterday and is the world’s most volatile currency. Some analysts say the swaps, which are equivalent to selling dollars in the futures market and now amount to 27 percent of foreign reserves, are approaching critical levels. The opposition’s presidential candidate has indicated he’d discontinue their use.

“The swaps program has reached its limit and it needs urgent review since it is losing efficiency and credibility,” said Tony Volpon, the managing director and head of emerging markets research at Nomura Holdings Inc., Japan’s largest brokerage.

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How to Fix Brazil’s Broken Economy

October 24, 2014

Joshua Kempf and Mark Kennedy – Foreign Policy, 10/23/2014

The last two decades made obvious a life’s-not-fair fact: Big countries can get away with bad economic policy. Size matters to investors, global corporations, and entrepreneurs because a winning payout is large and can justify the costs of bureaucracy, compliance, and corruption.

China, India, and Brazil attract big investor dollars not because they are business paradises — check out their World Bank’s “Doing Business” rankings. To understand how business leaders think, let’s imagine you built a company with 85 percent market share in more business friendly Estonia. Congrats, they’ll say, those size revenues are in a multinational’s second footnote once removed.

Which brings us to Brazil. Despite its numerical advantages, Brazil has stagnated, and is expected to have just 0.4 percent economic growth this year. What’s wrong? Many analysts have pointed out the obvious: Brazil needs to improve its education, healthcare, and infrastructure. Few economists would disagree, but these are deeply rooted problems with decades-long solutions. Brazilians go to the polls on Sunday to select a president. What reforms can be done during one term to unleash Brazil’s charmed bequest, its size? Here’s the policies we think should be on the agenda.

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Real Drops to Lowest Since 2008 as Rousseff Leads in Voter Polls

October 24, 2014

Paula Sambo and Filipe Pacheco – Bloomberg, 10/23/2014

Brazil’s real fell to the lowest since December 2008 after polls showed President Dilma Rousseff led candidate Aecio Neves three days before the election runoff.

The real declined 0.5 percent to 2.50 per dollar at the close of trade in Sao Paulo after earlier today falling 1.2 percent. The Ibovespa tumbled 3.2 percent, leading losses among major stock benchmarks and erasing this year’s gain.

“Investors are more and more pricing in a victory for Rousseff,” Andre Perfeito, the chief economist at Gradual Investimentos in Sao Paulo, said by telephone. “Many traders are still cautious, but these polls show she is ahead, and people are considering that in trading the currency.”

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What Should Brazil’s Next President Do?

October 24, 2014

The New York Times, 10/23/2014

President Dilma Rousseff is facing a runoff on Oct. 26, in one of the most tightly contested presidential elections in Brazil. A surge in support for her main opponent, Aécio Neves, reflects widespread disenchantment among many voters with her and the ruling party.

What should the next leader of Brazil do to jump-start the sluggish economy, improve social services and fix a political system seen as corrupt and dysfunctional?

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What Will Happen Monday, After Brazil Election?

October 24, 2014

Dimitra DeFotis – Barron’s, 10/23/2014

The Brazil equity market has tumbled nearly 8% this week and has slipped into negative territory for the year.

The iShares MSCI Brazil Capped ETF (EWZ) is down more than 8% this week, and has fallen more than 7% year to date. Among Brazil equities, even shares that should be somewhat more immune to Sunday’s election have been hit hard in recent days, including airplane maker Embraer (ERJ) and meat producer BRF (BRFS and BRFS3.Brazil).

The odds are with Brazil’s incumbent Pres. Dilma Rousseff, if ever so slightly, to win Sunday’s runoff presidential election and defeat Aecio Neves, a former governor who is more conservative and the investor favorite. Here’s Societe Generale’s Benoit Anne on anything denominated in Brazil’s currency. He is on the sidelines at this juncture, even if the election outcome is a binary one:

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Brazil and its backyard

October 24, 2014

The Economist (print edition),  10/25/2014

Like voters in most democracies, Brazilians pay little heed to foreign policy when choosing leaders. Yet the presidential election on October 26th matters not just to Brazil but to the region. Over the past two decades Latin America’s giant has overcome its introversion and wielded growing influence in its backyard. And on foreign policy, as on economics, there is a clear gap between President Dilma Rousseff of the centre-left Workers’ Party (PT), who wants a second term, and her rival, Aécio Neves, of the centre-right Party of Brazilian Social Democracy (PSDB).

Brazil’s greater assertiveness began under Fernando Henrique Cardoso of the PSDB in the 1990s and continued under the PT’s Luiz Inácio Lula da Silva, the president in 2003-10. Both gave importance to the Mercosur trade block (founded by Brazil, Argentina, Paraguay and Uruguay), to South America and to ties with Africa and Asia. Both had reservations about a 34-country Free-Trade Area of the Americas, a plan that Lula helped to kill.

But there were differences, too, partly because of Brazil’s changing circumstances. Lula put far more stress on “south-south” ties and on the BRICs grouping (linking Brazil to Russia, India, China and later South Africa). In Latin America he emphasised “political co-operation”. Relations with the United States were cordial but distant, especially after Lula tried brokering a nuclear deal with Iran which the White House opposed.

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