President Gauck praises Brazil ties in Rousseff meeting

DW/AFP, 05/14/2013

German President Joachim Gauck is in Brazil seeking to strengthen trade ties with a key German partner; he and President Dilma Rousseff have officially opened a special Germany-themed year in Brazil.

German President Joachim Gauck and Brazil’s Dilma Rousseff started Brazil’s “Deutschland-Jahr” year-long schedule that incorporates as many as 400 cultural, economic and scientific appointments in the coming months.

Gauck and Rousseff appeared at the opening of a German-Brazilian trade conference in Sao Paolo late on Monday.

The German president praised long-standing and stable bilateral trade ties. Gauck said that Volkswagen’s partnership with Brazil had proved so successful over the years that many in Brazil considered VW a “domestic legacy brand.” He also lamented that too few Germans knew that author Thomas Mann should dedicate “his artistic streak to his mother who was born in Brazil.”

Read more…

Brazil’s service sector picks up steam in April

Silvio Cascione – Reuters, 05/06/2013

Growth in Brazil’s service sector accelerated slightly in April after a surprise slowdown in the previous month, according to data released on Monday, stoking hopes of a gradual recovery in Latin America’s largest economy.

HSBC’s Purchasing Managers Index for the Brazilian services sector rose to 51.3 in April from 50.3 in March on a seasonally adjusted basis, signaling activity at service providers expanded at a slightly faster pace than in the previous month. Readings above 50.0 indicate expansion.

“Following the very weak increase in activity reported by firms in March, the April results seem more consistent with the modest recovery we believe the Brazilian economy is experiencing,” said Andre Loes, chief Brazil economist at HSBC.

Read more…

Nike’s massive BRIC opportunity: China turning around and Brazil’s World Cup and Olympics could take stock to $80

Agustino Fontevecchia – Forbes, 04/22/2013

The tide may have turned for Nike. The athletic footwear company seems poised to see continued margin expansion and the return of profitability in China over the next year.  Emboldened by recent success, management appears confident in the strength of its brand and its capacity to raise prices.  Nike also has a double whammy of an opportunity inBrazil, with the coming World Cup in 2014 and the Olympics in 2016.  The stock currently trades around $60 a share, but it could top $80 if things go their way, according to UBS ’ equity research team.

Nike has zigzagged over the past year, its stock falling precipitously and surging dramatically on any indication that margins were set to either expand or compress.  After its latest earnings report, where the company revealed margin expansion for the first time in two years, Wall Street has once again gone bullish.

In a thorough note released Monday, UBS’ Michael Binetti made the case for buying the stock, expecting solid returns over the next two years.  After meeting with management, Binetti spoke of a “very optimistic top line outlook from the company over the next few years,” pointing at “a deep innovation pipeline in premium footwear.”

Read more…

Chart of the week: Brazil’s foundations, undermined

Jonathan Wheatley – Financial Times, 04/22/2013

Brazil’s central bank is in tightening mode again, raising its policy interest rate last week after a long cycle of loosening that began in August 2011. It is worried that inflation is on the rise and less worried, apparently, about slow growth.

But behind recent numbers on inflation is another set of numbers on retail sales, which fell in February for the first time in a decade. If that turns into a trend, the very foundations of Brazil’s recent growth story will be undermined. Chart of the week takes a look.

The blue line on the chart below shows retail sales by volume, seasonally adjusted. As you can see, they have been rising almost without interruption for the past decade, undeterred by the global crisis of 2008-09 that sent so many markets around the world into a tailspin. More so even than global demand for Brazil’s abundant export commodities, it is domestic consumer demand that has underpinned Brazilian growth for the past several years.

Read more…

Brazil: The creaking champions

Joe Leahy – Financial Times, 04/21/2013

In 2010, when 60 Minutes came to Brazil to do a piece on the “World’s Next Economic Superpower”, the US television programme chose Eike Batista as the ambassador for the country.

“You know, in the last 16 years, Brazil has put its act together. This is it. Hello, time for Americans to wake up,” Mr Batista said with trademark brashness.

In retrospect, the discovery by primetime TV of Brazil’s economy should itself have been a sell signal for investors that a long boom in Latin America’s biggest economy, fuelled by high commodity prices and credit, was peaking.

Read more…

 

Brazil’s Cuban connection

Eduardo J. Gomez – America’s Quarterly, 01/18/2013

Brazil is once again seeking to enhance its international profile. But this time, rather than engaging in close partnerships with its fellow BRICS club members—Russia, India, China, and South Africa—Brazil is collaborating with a smaller nation: Cuba.

Since assuming office in 2011, Brazilian President Dilma Rousseff has worked closely with Cuban President Raúl Castro to strengthen their partnership in the hopes of further bolstering Brazil’s economic advantages and regional influence. She is achieving this by providing financial and technical assistance to help restructure Cuba’s economy while at the same time advancing Brazil’s economic interests through strategic investments in port infrastructure. Venezuelan President Hugo Chávez’ quickly deteriorating health has created incentives for Dilma to fortify her ties with Castro, gradually replacing Venezuela—Cuba’s biggest benefactor—as Cuba’s most important ally in the region.

But instead of bullying Cuba into following Brazil’s lead, Dilma is also gaining something in return for her citizens: technical assistance from Cuba to address educational illiteracy, a long-time developmental challenge for Brazil. In so doing, Cuba benefits by displaying its impressive success in education reform, while highlighting its potential to be an amicable partner in hemispheric affairs.

Read more…

Brazil plans a shift in its strategy

John Lyons, Luciana Magalhaes, Matthew Cowley – The Wall Street Journal, 01/04/2013

Brazil is shifting gears in its effort to revive its troubled economy, away from aggressive currency and interest-rate policies to a more hands-off approach, Finance Minister Guido Mantega said in an interview.

“In 2013 we will reap what we have sown,” he said, predicting a return to strong growth after two years in the doldrums. “2013 will be calmer, with fewer measures, because they’ve been done.”

Brazil, the world’s second-largest developing economy after China, is a key bellwether for the economic health of the emerging world and a major source of growth, as Europe, the U.S. and Japan wrestle with debt woes.

Read more…

Why Brazil’s once-booming economy is losing its shine

Catherine Boyle – CNBC, 01/16/2013

Brazil, long viewed as one of the most promising emerging markets, has seen its crown slip slightly in recent months. The country has been enshrined as Latin America’s economic powerhouse for more than a decade, fuelled by vast resource wealth and investment from China.

Yet its dominance is under threat as other emerging markets compete fiercely on cost.

“The last decade was very good for Brazil,” James Lockhart Smith, head of Latin America, Maplecroft, told CNBC.

Read more…

Brazil oil auctions: they are really really happening (really)

Samantha Pearson – Financial Times, 01/10/2013

After five years of legal battles, rumours and empty promises it’s finally happening: Brazil is auctioning off its oil blocks.

The country’s energy minister, Edison Lobão, told reporters on Thursday that the so-called 11th round of 172 onshore and offshore blocks would be held in May, or even earlier if possible.

Although the government promised last year to kick off the long-awaited auctions in 2013, there were doubts it would go ahead because of disagreements over the new law governing the distribution of royalties.

Read more…

The Brazilian decade

Marc Margolis – Newsweek, 12/30/2012

About 15 years ago, on assignment in Bolivia, I met a pair of local drug-enforcement agents who were kicking back in a hotel bar. The conversation was light and easygoing, until I mentioned I was based in Brazil. “Ah, Braaaazil,” said one of the agents, peacocking for effect. “The land of ‘the biggest in the world.’” I wrote his comment off as Latino envy, that familiar jolt of resentment, which served as the subtext of many conversations about the giant of South America and the neighbors it dwarfed. The comment was also a telling expression of how people viewed the old Brazil, the hemisphere’s large underachiever, a nation that frequently waxed grandiose and then fell short of hype and expectations.

Much has changed in Latin America since then, nowhere more so than in Brazil. Stable, democratic, stylish, and self confident, this $2.5 trillion economy now has some backbone behind its swagger; it still stirs resentment among its neighbors—Brazilians are the new gringos—but not so many jokes these days. Instead, from inflation control to social welfare policies, from the campaign trail to the catwalk, the state of Latin America in 2013, and in years to come, will most likely be shaped by what happens in this restless country of 197 million. Welcome to Latin America’s Brazilian decade.

Brazil, of course, is not the only game in town. Peru leads the hemisphere in economic growth, with GDP set to expand by 6 percent this year, nearly twice the Latin American average. Under the deft leadership of Juan Manuel Santos, Colombia has strengthened trade with China, courted onetime mortal enemy Hugo Chávez of Venezuela, and even resurrected peace talks with guerrilla insurgents, turning the modest Andean nation into a magnet for investment. Chile—the stellar outlier—has practically decoupled from the continent with its established tradition of free-market policies and an aggressive export industry that long ago made the pivot to the Pacifi c. Even Mexico, while bloodied by a six-year, futile drug war, is showing signs of revival with population growth slowing, public spending under control, and a long-awaited boom in manufacturing exports finally kicking in.

Read more…