Brazil’s economy is facing a bleak outlook, plagued with increasing inflation, a plunging currency and contracting GDP. The Dow Jones Brazil Index has fallen almost 45 percent in the past year. But one trader says that all those negative factors are actually creating the perfect environment for a significant bounce.
“I think we’re going to get another 10, possibly 20 percent bear market rally, of which since 2012 we’ve had four,” Larry McDonald, head of U.S. strategy at Societe Generale, said Wednesday on CNBC’s “Trading Nation.”
According to McDonald, economic challenges will force Brazil’s central bank to ease its monetary policy, which will prompt a relief rally for Brazilian stocks.