Brazil’s star, Petrbras, is hobbled by scandal and stagnation

April 16, 2014

Simon Romero & Landon Thomas Jr – The New York Times, 4/15/2014

No company has embodied Brazil’s rise like the oil giant Petrobras.

Bolstered by some of this century’s largest oil discoveries, Petrobras soared into the top ranks of global energy producers. Executives at the state-controlled company boasted that it could even outstrip Apple as the world’s most valuable publicly traded company. Political leaders here said Brazil was on the cusp of energy independence.

Now Petrobras is coming to symbolize something else entirely: the disarray afflicting Brazil’s sluggish economy and the reassessment of growth prospects in emerging markets around the world.

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Brazil and U.S., like star-crossed lovers, foiled again

September 19, 2013

Brian Winter – Reuters, 09/18/2013

Every time Brazil and the United States get to the altar, the roof of the church seems to collapse.

In 1982, U.S. President Ronald Reagan traveled to Brazil for a dinner banquet meant to herald a new era in ties between the Americas’ two biggest countries. But when Reagan raised his wine glass and toasted “the people of Bolivia,” it seemed to confirm his hosts’ worst fears: that the United States saw Brazil as just another poor country in its so-called backyard.

This week, hopes for a breakthrough fell apart once again, in even more dramatic fashion.

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Brazilian Congress overturns presidential veto

March 7, 2013

The New York Times – Associated Press, 03/07/2013

Brazil’s congress has overridden the presidential veto of part of a new law that gives a greater share of royalty revenues from the country’s vast oil fields to non-producing states.

The new law aims to share oil royalties more evenly among Brazil’s 27 states instead of favoring top oil producers such as the states of Rio de Janiero, Espirito Santo and Sao Paulo.

Congress approved the law late last year but President Dilma Rousseff vetoed the part that decreased the percentage of petroleum royalties going to producing states from 26.25 percent to 20 percent. Non-producing states that now receive 7 percent are to see their share increase to 21 percent.

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Global currency war could get nastier, warns Brazil’s Mantega

February 8, 2013

Alonso Soto and Luciana Otoni – Reuters, 02/08/2013

Brazilian Finance Minister Guido Mantega told Reuters European countries should focus on reviving their economies with more investments, rather than trying to weaken the euro to protects jobs as France has suggested ahead of next week’s meeting of G20 economic powers.

“We will continue to have this currency problem unless the global economy takes off,” Mantega said in an interview late Thursday. “The solution here is to make their economies more dynamic and jolt them out of stagnation.”

More than two years ago Mantega used the term “currency wars” to describe the series of competitive devaluations adopted by rich nations to bolster their exports amid the global slowdown to the detriment of emerging market nations.

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Brazil’s Real Surges as Central Bank Says Inflation Rate Is High

February 7, 2013

Blake Schmidt, Marisa Castellani – Bloomberg, 02/07/2013

Brazil’s real rallied the most among emerging-market currencies as the central bank said high inflation requires attention, spurring speculation that policy makers will let the currency strengthen to contain prices.

Swap rates climbed after the government reported that consumer prices increased in January at the fastest pace in almost eight years, adding to bets on a boost in borrowing costs. The exchange rate and tax cuts will help slow inflation, a central bank board member said in a phone interview, asking not to be identified because of internal policy.

“Higher inflation shoots the real up,” Joao Paulo de Gracia Correa, currency manager at Correparti Corretora, said in a phone interview from Curitiba, Brazil.

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Brazil’s Government Prods Top Banks to Help Ignite Economy

February 6, 2013

Rogerio Jelmayer – Fox Business/Dow Jones Newswires, 06/02/2013

An increase in lending is seen as essential if Brazil is to jump-start economic growth. While lending has more than doubled over the past 10 years, the pace of growth fell in 2012 and has been blamed, in part, for disappointing growth in 2012.

In 2012, lending by all banks increased 16.2% to a record of nearly 2.4 trillion Brazilian reais ($1.2 trillion). But that was the lowest expansion in years. By comparison, lending rose 19% in 2011 and 21% in 2010.

Brazilian gross domestic product expanded by only 2.7% in 2011 and by an estimated 1.0% last year. The consensus forecast for 2013 is better at 3.1% but still lags behind developing-country rivals China and India.

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Brazil Oil Giant Petrobras Blames Dollar For Collapse

February 5, 2013

Kenneth Rapoza – Forbes, 02/05/2013

Where’s is Glenn Beck‘s wacky George Soros/Petrobras conspiracy theory now? How about in the trash can, lit on fire, and burning to ashes. Brazil`s largest oil company has been an awful investment pick even for savvy Soros. And it’s not about to rise like a Phoenix from the ashes anytime soon.

Brazil’s Petrobras (PBR) is on its way to $16 a share and one of the reasons that the star of the economy has lost its shine is…the dollar. If you believe their corporate executives that is.

This has been the year that was for Petrobras’s relatively new CEO Maria Graça Foster. The market cap of Petrobras has shed billions since she took over from what many Petrobras watchers say is nothing more than a policy instrument for Brasilia to funnel money to pet projects, rather than an actual oil company drilling below sand and rock salt in the Atlantic Ocean.

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Brazil’s conundrum: the strong weak economy

February 1, 2013

Kenneth Rapoza – Forbes, 02/01/2013

If it makes any sense, Brazil`s  economy is the mirror opposite of the United States right now.  Unemployment in the U.S. is rising, and so is the market. The economy is slowly recovering from its worst financial crisis since the Great Depression.

In Brazil, unemployment is shrinking and the stock market is in decline. The economy that was supposed to grow over 4 percent in 2012, grew by maybe 1 percent. This year, it’ll probably grow by 2 percent.

Even as the economy remains weak, the currency is starting to strengthen, going from a weakness of over two to the dollar to around 1.99 Brazilian reals to the dollar on Friday.  It’s new trading rage, says Marcelo Salomon of Barclays Capital, is now 1.95 to 2.05 rather than 2.05 to 2.10.

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Worst drought in decades hits Brazil’s northeast

January 4, 2013

Caroline Stauffer – Reuters, 01/04/2013

Brazil’s Northeast is suffering its worst drought in decades, threatening hydro-power supplies in an area prone to blackouts and potentially slowing economic growth in one of the country’s emerging agricultural frontiers.

Lack of rain has hurt corn and cotton crops, left cattle and goats to starve to death in dry pastures and wiped some 30 percent off sugar cane production in the region responsible for 10 percent of Brazil’s cane output.

Thousands of subsistence farmers have seen their livelihoods wither away in recent months as animal carcasses lie abandoned in some areas that have seen almost no rain in two years.

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Latin America’s economies may grow 5.2% this year, led by Brazil, UN says

July 22, 2010

Randy Woods and Sebastian Boyd – Bloomberg, 07/21/2010

Latin America’s economies may expand 5.2 percent this year, led by 7.6 percent growth in Brazil, the United Nations’ economic unit for the region said.

The regional economy may expand 3.9 percent in 2011, the Santiago-based Economic Commission for Latin America and the Caribbean, known as Cepal for its initials in Spanish, said today. Economic output shrank 1.9 percent in 2009, it said.

Latin America will be one of the fastest-growing regions in the world this year, along with emerging markets in Asia, as programs to fight last year’s economic slowdown supplement supportive external factors such as Asian demand for the region’s metal and grain exports and easier access to credit, the commission said. The favorable backdrop may be short-lived and is unlikely to continue into next year, the unit said.

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