Brazil police arrest Worker’s Party treasurer Joao Vaccari Neto

April 15, 2015

Rogerio Jelmayer, Luciana Magalhaes – The Wall Street Journal, 04/15/2015

Brazil’s federal police arrested João Vaccari Neto, the treasurer of Brazil’s ruling Workers’ Party, or PT, as part of an investigation of alleged corruption involving contracts between state-run oil firm Petroleo Brasileiro SA PBR 1.95 % and construction firms.

Mr. Vaccari is accused of receiving “irregular donations” from companies for the party, according to a federal police spokesman. The spokesman didn’t elaborate on the allegation and said more details would be given at a news conference later Wednesday.

A Workers’ Party spokeswoman wasn’t immediately available for comment.

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More austere, accommodating Rousseff paying off for Brazil

April 10, 2015

Brian Winter and Anthony Boadle – Reuters, 4/10/2015

The “new Dilma” is starting to produce results.

By embracing power-sharing deals and budget cuts that she shunned during her first term in office, President Dilma Rousseff has begun to ease the economic and political crisis plaguing Brazil, congressional leaders and economists say.

Rousseff’s decision this week to hand formal responsibility for negotiating with Congress to Vice President Michel Temer, a leader of the Brazilian Democratic Movement Party (PMDB), was a milestone that should help ease tensions with the biggest party in her coalition and dissuade it from sabotaging her economic agenda as it did earlier this year, legislators said.

Brazil’s stock and currency markets rallied as investors hoped the more stable political climate, and new signs that Rousseff is shifting toward more market-friendly policies, will eventually help Latin America’s largest economy recover from what is expected to be a moderate recession this year.

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Greece Brightens, Brazil Darkens

April 7, 2015

Matthew Winkler – Bloomberg View, 4/7/2015

Greece and Brazil are both synonyms for economic dysfunction. So why do investors think Greece is becoming a respectable bet while Brazil remains a lousy one? Here’s a partial answer: the euro. Greece, a member of the European Monetary Union, works with a solid (if imperfect) currency. Brazil, on its own, doesn’t.

For bondholders, that’s a big deal. Greek government bonds returned 336 percent since May 2012 as Brazilian government bonds gained 24 percent, when measured in local currencies, according to the Bank of America Merrill Lynch index. Brazil’s real has depreciated 14 percent this year against the dollar, making it the worst performer among the 31 most traded currencies.

Investor skepticism also made the real the world’s least predictable currency. Its implied volatility, a measure of traders’ bets on how much its value will change day to day, jumped more than any other currency this year.

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Fateful Harvest: Why Brazil has a big appetite for risky pesticides

April 6, 2015

Paulo Prada – Reuters, 04/02/2015

The farmers of Brazil have become the world’s top exporters of sugar, orange juice, coffee, beef, poultry and soybeans. They’ve also earned a more dubious distinction: In 2012, Brazil passed the United States as the largest buyer of pesticides.

This rapid growth has made Brazil an enticing market for pesticides banned or phased out in richer nations because of health or environmental risks.

At least four major pesticide makers – U.S.-based FMC Corp., Denmark’s Cheminova A/S, Helm AG of Germany and Swiss agribusiness giant Syngenta AG – sell products here that are no longer allowed in their domestic markets, a Reuters review of registered pesticides found.

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Good News, Brazil-Watchers, Dilma Not Sacking FinMin Levy

April 3, 2015

Kenneth Rapoza – Forbes, 4/1/2015

Bloomberg gives us Brazil watchers some good news: beleaguered president Dilma Rousseff is not going to sack Joaquim Levy, the country’s newly appointed Finance Minister.

“Levy is very important for Brazil today and he stands very firm,” she said in a Bloomberg interview in Brasilia. There has been a lot of speculation of late that Levy, a former Treasury secretary and asset manager at Bradesco, would be forced to resign.

Levy is the hand picked FinMin of Dilma’s predecessor and Workers’ Party strongman Luiz Inacio Lula da Silva. Levy represents Lula’s pragmatic capitalism, which is not who Dilma is. Dilma is more of a technocrat who believes the government, her government, knows exactly what it is doing.

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Brazil’s Surprising BFFs

April 3, 2015

Mac Margolis – Bloomberg View, 4/3/2015

Brazil’s Finance Minister Joaquim Levy spent seven straight hours on Tuesday trying to convince Brazilian senators that austerity was the country’s only chance to beat insolvency and keep its sovereign credit rating from falling into junk territory. “The cost of losing investment grade would be enormous,” Levy told the Senate economic affairs committee.

So, no more subsidized utility rates, underpriced gasoline, soft loans to favored companies, tax breaks or fiscal “bicycling” — putting off this month’s bills to next month — to pretty up the government books, Levy added, deflecting broadsides with good humor and dire PowerPoint graphics.

One eloquent slide showed how foreign investment surged after the country reached investment grade in 2008 and 2009, suggesting it could also tailspin if Brazil were to tumble from grace.

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