Brazil’s Uplifting Olympics

Roger Cohen – The New York Times, 08/15/2016

When I was a correspondent in Brazil 30 years ago inflation was rampant. It ran at an average of 707.4 percent a year from 1985 to 1989. The salaries of the poor were wiped out within hours of being paid. The country went through three currencies — cruzeiro, cruzado and cruzado novo — while I lived in Rio. The only way out for Brazilians, people joked, was Galeão, the international airport.

 Antônio Carlos (“Tom”) Jobim, the composer of “The Girl from Ipanema” (whose name is now affixed to that airport), famously observed that, “Brazil is not for beginners.” It was not then and it’s not now. It’s a vast diverse country, a tropical United States, whose rich and poor are divided by a chasm. High crime rates are in part a reflection of this divide. Flexibility is at a premium in a culture fashioned by heat, sensuality, samba and rule bending. Life can be cheap. You adapt or you perish.

Edmar Bacha, a friend and economist, had coined the term “Belindia” to describe Brazil — a prosperous Belgium perched atop a teeming India. I wrote a story about the poor kids from north Rio, far from the beaches of Ipanema and Leblon, who would get their kicks as “train surfers” — riding the tops of fast-moving trains — rather than surf Atlantic waves. Often they died, electrocuted. I will never forget the twisted corpse of one in the city morgue.

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No Rate Cuts In Brazil Until October, Maybe

Kenneth Rapoza – Forbes, 06/09/2016

Brazil’s Central Bank kept interest rates at 14.25% on Wednesday after market hours as expected, citing inflation concerns. No one expected a surprise cut anyway, as the Bank is now undergoing a leadership shift. Alexandre Tombini is out. Itau economist Ilan Goldfajn is now in. Wednesday marked the last time Tombini will take part in a monetary policy committee meeting as Bank governor.

For now, investors shouldn’t expect a rate decline until October at the earliest, says Nomura Securites analyst Joao Ribeiro.  The iShares MSCI MSCI +% Brazil (EWZ) sold off by 1.4% after market on the news.

A copy and paste statement from the Bank reads: “The committee recognizes the advances in the policy to combat inflation, especially the containment of the second order effects of the adjustments in relative prices. However, the committee considers that the high level of 12-month inflation and inflation expectations that are distant from the objectives of the target regime, do not offer space for easing of monetary policy.”

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Brazilian Real, stocks rally as traders root for impeachment

Partying on a precipice

The Economist, 01/30/2016

JANUARY is a languid month in Brazil. Beyond the hullabaloo at samba schools—practising for their bawdy annual face-off during Carnival, which starts on February 5th—business pauses while Brazilians go on holiday in the scorching southern summer. Fewer cars clog streets; more bodies throng the beaches.

Politicians customarily switch off along with everyone else. Congressmen return from their Christmas break on February 2nd, but will probably do little until after Mardi Gras a week later. Neither they nor the president, Dilma Rousseff, will be able to relax, though. A frightening mosquito-borne disease has put the health authorities on high alert (see page 42). Meanwhile, Brazil’s political and economic crises are deepening. When politicians return to work they may regret the time they took off from attempting to solve them.

Brazil’s unemployment rate rose sharply

Paul Kiernan – The Wall Street Journal, 9/29/2015

Brazil’s national unemployment rate rose sharply in the May to July period and wages declined, as the economy likely continued to deteriorate.

Joblessness rose to 8.6% in May to July from 8% in the previous three-month period and 6.9% a year earlier, the Brazilian Institute of Geography and Statistics, or IBGE, said Tuesday. Average monthly wages fell to 1,881 Brazilian reais, the lowest level, adjusted for inflation, since the September to November period of 2014.

The data released Tuesday were from a new, nationwide unemployment survey, known as PNAD, that the IBGE is currently phasing in. The old survey, which will be phased out after this year, only collected data from six major metropolitan areas.

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Brazil’s Mantega says economy speeding up; disputes critics

Reuters, 06/09/2013

Brazil‘s economy is gaining force, industrial output is rising and inflation is falling, showing that concerns about the country’s direction are misplaced, Finance Minister Guido Mantega said in the Estado de S. Paulo newspaper on Sunday.

Mantega also said he’s confident that the economy’s solid foundations, bolstered by efforts to cut taxes and spending, will eventually force the Standard and Poor’s rating agency to reverse its decision Thursday to downgrade the outlook for the country’s foreign debt rating to “negative” from “stable.”

“If it depends on the performance of the Brazilian economy, S&P will have to change their outlook,” he said.

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Record Petrobras oil find brings cost concerns: corporate Brazil

Peter Millard – Bloomberg Businessweek, 06/06/2013

Investors in Petroleo Brasileiro SA (PBR), the world’s most indebted oil company, aren’t celebrating Brazil’s biggest-ever crude discovery.

Since regulators doubled estimates for the Libra field to as much as 12 billion barrels on May 23, the state-run company’sshares (PBR) fell 5.3 percent in New York, the worst performance among 15 peers tracked by Bloomberg. The new estimates make the oil prospect Brazil’s largest as the country prepares to bring in partners to start production.

For Petrobras, more oil means more investments and debt for a company that already has the world’s second-biggest spending plan and is stretched for staff and equipment. The Rio de Janeiro-based producer will pay a multi-billion-dollar signing bonus for Libra at a time it sacrifices revenue from fuel sales as part of a government policy to curb inflation. Petrobras has sold imported gasoline and diesel at a loss since late 2010.

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