Archive for the ‘Brazil’ Category

Brazil reveals its largest monthly deficit on record

| October 31st, 2014 | No Comments »
Financial Times

By Joe Leahy

Brazil revealed its worst monthly fiscal deficit since records began on Friday, underscoring the challenges facing incumbent president Dilma Rousseff after she was re-elected on Sunday for a second term.

Brazil’s real weakened 2.14 per cent to R$2.45 against the dollar on news the overall public sector deficit in September was R$69.4bn, the worst monthly reading since the data series began in December 2001. The country also recorded its first primary budget deficit – the balance before interest payments – for the first nine months of the year, at 0.4 per cent of gross domestic product.

“These numbers suggest that, without a very strong adjustment, Brazil risks losing its investment grade status,” said Tony Volpon, economist with Nomura, in a research note titled “Fiscal Meltdown”.

Brazil’s president won re-election by one of the narrowest margins in the country’s history and now must set back in order an economy that has ... Read More

Brazil Market Okay For Now, But Investors Squeamish On Long Term

| October 31st, 2014 | No Comments »


The re-election of Brazilian president Dilma Rousseff did not wipe out local asset prices as many predicted. And even though many investment firms see the Bovespa index eventually bottoming out at 46,000 points before rallying again, the story on the long-term is still out.  For now, a short honeymoon period with the new Dilma is more likely, as the market hopes for the best and picks at stocks that took a valuation hit pre-election.

In the months ahead, however, both fixed income and equity investors have cause for concern.

Fundamentals in Brazil are deteriorating. Top down investors, those who consider a country’s macro-economic outlook before going hunting for securities, see Brazil’s deficit is almost 4% of GDP. Investors have been willing to tolerate this erosion of the government’s finances thanks to $375 billion in foreign currency reserves. Brazil has the means to service its ... Read More

Brazil shocks with interest rate hike in wake of election

| October 30th, 2014 | No Comments »

Brazil’s central bank raised interest rates on Wednesday, surprising investors with a move that signals President Dilma Rousseff could make more market-friendly policy changes after her narrow re-election victory on Sunday.

In a divided vote, the central bank’s board decided to raise its benchmark Selic rate by 25 basis points to 11.25 percent. All 43 economists surveyed in a Reuters poll this week expected the bank to keep the Selic at 11 percent.

With the hotly contested presidential race over, the central bank moved swiftly to anchor inflation expectations at a time when markets are doubtful Rousseff is willing to overhaul her policies to regain the trust of investors.

The bank said the balance of inflation risks has become less favorable since its last rate-setting meeting in early September due to more intense price increases.

“In light of that, the committee considered it appropriate to adjust monetary conditions in order to guarantee, at a ... Read More

In Brazil, reelected President Rousseff’s uphill economic battle has just begun

| October 30th, 2014 | No Comments »

By Jill Langlois

Rousseff will have to find a way to bring the business-minded population that voted for her opponent to the side of her target voters—some 40 million who were pulled out of poverty by her party over the last decade.

Brazil’s financial markets took a plunge on Monday, one day following President Dilma Rousseff’s narrow reelection, as investors continue to express doubts in Rousseff’s ability to unite a divided nation and restore confidence in the country’s economy.

After winning with 51.6% of the vote—a slim margin over pro-business candidate Aécio Neves, who brought in 48.4% in second-round voting—Rousseff will face an uphill battle to meet campaign promises to expand social benefits for the poor while improving Brazil’s economic situation.

During her victory speech, the reelected president promised to “continue to fight inflation and make improvements in the field of fiscal responsibility.” Investors, however, are waiting to see if all of this talk ... Read More

Bitter Race in Brazil Exposed Nation’s Social and Economic Fault Lines

| October 29th, 2014 | No Comments »
Wall Street Journal WSJ-01


SÃO PAULO, Brazil—President Dilma Rousseff won a second term on Sunday, defeating the conservative Aécio Neves in an acrimonious race that inflamed social and economic divisions in an emerging giant humbled by falling commodity prices.

With 99.7% of the ballots in, Ms. Rousseff had 51.6% of the vote, compared with 48.4% for Mr. Neves.

The victory was a testament to the endurance of Ms. Rousseff’s left-wing Workers’ Party, which came to power in 2003 and engineered a come-from-behind win against difficult odds. Ms. Rousseff ran as an incumbent in a country with a stagnant economy and a large population clamoring for change. Barely a year ago, protests over the poor quality of government services made her seem vulnerable.

But Brazil’s first female president won four more years by nurturing deep support among Brazil’s poor, who have benefited under a major expansion of the welfare system, and with a ... Read More

Brazilian Leaders Call for Unity after Vicious Presidential Race

| October 29th, 2014 | No Comments »
From Time

By Dom Philips

After what was the most aggressive Presidential election in recent Brazilian history, both the winner and loser have called for unity, striking a tone of reconciliation following the close of a nail-biting campaign that resulted in a second term for the incumbent, Dilma Rousseff. The Workers’ Party leader only just kept her job, securing 51.64% of the vote in a weekend run-off vote against Aécio Neves, the candidate of the center-right Brazilian Social Democracy Party who took 48.36%.

In her victory speech on Oct. 26, Rousseff, whose party has been in power since 2003, said the election had mobilized “at times contradictory ideas and emotions, but moved by a common feeling—a search for a better future.” Neves said he had “fought a good fight” and that the main priority for Rousseff should be “to unite Brazil.”

The two made common cause after a riveting ... Read More

Hopes for Rebound in Brazil Rest With Dilma Rousseff, Re-elected President

| October 29th, 2014 | No Comments »
The New York Times

By Dan Horch

SÃO PAULO, Brazil – Business leaders and market strategists are hoping that Brazil, one of the world’s largest economies, can regain its footing in the wake of the re-election of Dilma Rousseff as president.

After Ms. Rousseff’s victory, markets, as expected, swooned on Monday. Brazil’s currency, the real, fell 2.7 percent against the dollar, while the stock market fell 2.8 percent, largely in reaction to the election. For the year, the Brazilian markets have been stuck in a malaise, down 2 percent this year, after a slide of 15.5 percent in 2013.

Since Ms. Rousseff took office in January 2011, the stock market has fallen 27 percent. Taking the currency’s depreciation into account, the loss for a foreign investor, in dollar terms, has been nearly 50 percent.

Against this backdrop, the newly re-elected president must contend with a stagnant economy and a growing budget deficit while seeking to ... Read More

Brazilians close their eyes and hope for the best

| October 29th, 2014 | No Comments »
From CNN

By Rogerio Simoes

(CNN) – Uncertainty normally comes with the new. This year’s Brazilian presidential elections, though, have been like no other. After Sunday’s polls gave President Dilma Rousseff, from the left-wing Worker’s Party (PT), another four-year term with a narrow margin of victory, Brazilians embarked on a guessing exercise about what her next government will look like.

On the surface it doesn’t seem a vote for change, but the President knows it should be. There were exuberant celebrations in the PT camp and frustration in the faces of supporters of the defeated centrist candidate, Aecio Neves, from PSDB. But no one could say for sure what the result means for the next four years.

Since massive street protests in June 2013 called for change in Brazilian politics and economy, that word has been around in almost every political statement — including Rousseff’s victory speech on ... Read More

Dilma Wins, Brazil Loses

| October 28th, 2014 | No Comments »
Investor's Business Daily

Socialism: Brazil’s markets tanked after the leftist PT party’s victory — and the prospect of four more years of stagnation. It’s a warning about the dangers of dependency.

There’s no getting around it: Brazil opted to be the country of the future, as the old saw has it, “now and forevermore,” by re-electing the tired old socialist Worker’s Party candidate, Dilma Rousseff, over the strikingly dynamic center-right pro-free market candidate, Aecio Neves of the Social Democracy Party, and his impressive Green Party ally, Marina Silva. (Don’t let the party names fool you; they had a near-Reaganite platform.)

Stocks tanked 4.3% (see chart) as both foreign and domestic capital bailed out at the open. State-linked companies fell even further, with Petrobras dropping nearly 15%, while Brazil’s currency nose-dived 3%, bringing its total losses for the year to 12% as the opportunity to shift course evaporated.

It was as strong a statement of crushed hopes at ... Read More

The Market Votes on Brazil

| October 28th, 2014 | No Comments »
Wall Street Journal WSJ-01

Brazilians had their democratic say on Sunday, voting narrowly to re-elect President Dilma Rousseff of the left-leaning Workers’ Party to another four-year term. On Monday the world voted on Brazil’s choice, and this time the result was a resounding no confidence.

Brazil’s currency, the real, fell almost 2% and was trading at about 2.52 against the dollar at the end of Monday, close to its lowest point in a decade. Brazil’s main stock market index was down 2.8% to its lowest close in six months. Those markets had rallied some in the last few weeks as challenger Aécio Neves had come close to Ms. Rousseff in the polls. So the Monday selloff was a case of investors pricing in the discount of continuing bad economic policy. A Brazil credit downgrade to “junk” status is likely on present trend.

Brazil is proof that democracy is no guarantee of prosperity. A country rich in ... Read More

Brazil’s Currency, Shares Plummet on Rousseff Re-Election

| October 28th, 2014 | No Comments »

By Rogerio Jelmayer and Nicole Hong

SÃO PAULO—Investors sold Brazil’s currency and stocks on Monday after President Dilma Rousseff ’s re-election heightened concerns the world’s seventh-largest economy would keep struggling through a period of stagnation.

Hopes that Ms. Rousseff would be defeated by business-friendly candidate Aécio Neves caused Brazilian assets to rally on and off for weeks. But her victory now reduces the likelihood that Brazil’s government will aggressively pursue policies aimed at pulling the country’s economy out of a prolonged slump.

Ms. Rousseff faces the tough challenge of keeping Brazil out of a recession at a time when inflation is high and business confidence is low. Investors and analysts are questioning whether Ms. Rousseff has enough political support to push through tough reforms, such as simplifying tax laws and cutting subsidies for electricity and gasoline. Latin America’s largest economy is expected to grow by less than 0.5% this year and expanded by just ... Read More

Brazil Vote Highlights a Rift Linked to Economics

| October 28th, 2014 | No Comments »
The New York Times

By Simon Romero

RIO DE JANEIRO — One politician took to Twitter to circulate a map of Brazil with a barrier separating the relatively prosperous south from President Dilma Rousseff’s support in the poorer north — along the lines of the Berlin Wall.

During the bitter presidential race that led to her re-election on Sunday, Ms. Rousseff’s predecessor mocked the main challenger by calling him the “candidate of the bankers.”

Even as Ms. Rousseff’s supporters celebrated her victory, the divisions gripping Brazil came into sharp relief Monday. Large banks and hedge funds expressed their distrust of the president with a sell-off, pushing down Brazil’s main stock index by 3.7 percent and clipping the currency by 2.7 percent.

“We’re emerging from an election that has revealed a rift between economic classes,” said Murillo de Aragão, the president of Arko ... Read More

Apretada elección en Brasil muestra a una nación profundamente dividida

| October 27th, 2014 | No Comments »

[Traducción por IASW]

El día de ayer, la presidenta de Brasil, Dilma Rousseff, consiguió reelegirse para un segundo mandato de cuatro años. Rousseff obtuvo el 51.6% de los votos en contra de Aécio Neves, quien obtuvo el 48.4%. Rousseff libró una de las campañas más negativas en la historia contemporánea de Brasil, despertando temores de que Neves cortaría programas contra la pobreza del gobierno. No explicó, sin embargo, como pretende sacar a Brasil de la recesión económica en la que se encuentra.

El resultado tan apretado muestra a una nación políticamente, socialmente y geográficamente dividida. Anoche, Rousseff se comprometió a iniciar un diálogo y ser “una mejor presidente de lo que he sido hasta ahora.” A pesar de que Rousseff se comprometió durante la campaña a reemplazar a su ministro de finanzas, la manera en la que defendió la situación actual da pocas razones para esperar que abandonará sus políticas económicas intervencionistas ... Read More

Close vote in Brazil reveals a deeply divided nation

| October 27th, 2014 | No Comments »

Brazil’s President Dilma Rousseff won a second four-year term yesterday, defeating challenger Aécio Neves by a margin of 51.6% to 48.4%. Rousseff waged one of the most negative campaigns in memory, conjuring fears that Neves would cut government anti-poverty programs rather than explaining how she plans to pull the world’s seventh largest economy out of recession.

The close result paints a picture of a deeply divided nation—politically, socially, and geographically. Rousseff last night pledged to initiate a dialogue and to be “a much better president than I have been until now.” Although Rousseff pledged during the campaign to replace her finance minister, her stout defense of the status quo gives little reason to expect that she will abandon her interventionist economic policies in a second term.

Sunday’s results were greeted with skittishness in the private sector, which had hoped that Neves’ free-market programs might jumpstart a flagging economy. For example, Brazil’s currency the real dipped to a nine-year low.

During ... Read More

Re-Election Secured, Brazil’s President Faces Challenges

| October 27th, 2014 | No Comments »
Wall Street Journal WSJ-01

By Reed Johnson and Rogerio Jelmayer

SÃO PAULO—Brazilian President Dilma Rousseff faces two pressing challenges after winning re-election by a narrow margin on Sunday: mending a divided electorate following a rancorously partisan campaign and reviving her nation’s stagnant economy.

Ms. Rousseff, of the leftist Workers’ Party, defeated Aécio Neves of the conservative Brazilian Social Democracy Party, or PSDB, by 52% to 48%, the tightest presidential race in the nation’s history. The contest, marked by bitter rhetoric and harsh accusations on both sides, left Brazilians split along economic and regional lines.

In her 27-minute victory speech at a hotel auditorium in Brasília, the capital, Ms. Rousseff offered some conciliatory notes for the nation as a whole, calling for “peace and union.”

Still, she didn’t mention either Mr. Neves or his party by name, nor did she refer to Marina Silva, the Socialist Party candidate, who finished third in Oct. 5 first-round voting and was eliminated ... Read More

Brazil Sticks With Statism

| October 27th, 2014 | No Comments »
Wall Street Journal WSJ-01

By Mary O’Grady

An economic recession, inflation running at 6.7% and revelations of an audacious skimming scheme at the state-owned oil company Petrobras were not enough to deny Brazilian Workers’ Party (PT) President Dilma Rousseff re-election to a second term on Sunday.

With 99% of the vote counted, the incumbent led with 51.56% of the vote against challenger Aécio Neves, of the Social Democratic Party of Brazil, with 48.44%.

Ms. Rousseff ran as the anti-market, welfare-state candidate, which may be why she fared far better in the poor, dependent north than she did in the prosperous agricultural heartland and here in Brazil’s largest city, where the economy relies heavily on services and value-added manufacturing.

Like the U.S., Brazil has its upper-class, urban voters who feel virtuous backing state intervention in other peoples’ lives and supporting Cuba’s military dictatorship. But there is also an aspirational Brazil—which is made up of risk-taking entrepreneurs, globally competitive farmers ... Read More

Brazil’s presidential election: A riven country

| October 27th, 2014 | No Comments »
The Economist

By J.P.

IT WAS a wild ride. After a tight and tetchy race, marked by innumerable twists and turns, Brazil’s left-wing president, Dilma Rousseff, was re-elected on October 26th to a second four-year term with 51.6% of valid votes. Aécio Neves, of the centre-right opposition, notched up 48.4%. It is the fourth election in a row won by her Workers’ Party (PT). But her margin of victory is the slimmest in Brazilian electoral history.

Perhaps Ms Rousseff’s victory was inevitable. Only three Latin American presidents have lost re-election bids in the past three decades. Odds are stacked in favour of incumbents, with all the machinery of power and patronage at their disposal. Ms Rousseff can point to record-low unemployment, rising wages and falling inequality under the PT’s watch. But Mr Neves, whom The Economist had endorsed as the better choice, put up a valiant fight, arguing, with good reason, that progress has ... Read More

Rousseff’s pick for Brazil finance minister is key to regaining trust

| October 27th, 2014 | No Comments »
The Globe and Mail-01

By Raymond Colitt

Brazilian President Dilma Rousseff will have to quickly appoint a new finance minister from outside her party to show she is ready to scrap policies that fuelled inflation and slowed growth, political analyst Andre Cesar said last night.

“She has to give a clear and rapid signal,” Cesar, an independent political consultant, said by phone from Brasilia following the vote. “There’s not much time.”

Rousseff said in September she would replace Finance Minister Guido Mantega in a second four-year term, which she won yesterday. Rousseff vowed in her victory speech to take “urgent actions” to boost economic growth and to fight inflation with “rigor.”

Since Rousseff announced she would appoint a new finance minister, local media and investors have speculated on a roster of names, including her current chief of staff Aloizio Mercadante, Coteminas Chief Executive Officer Josue Gomes, BRF SA Chairman Abilio Diniz and her former deputy Finance Minister Nelson ... Read More

Brazil Real Falls to Nine-Year Low as Rousseff Win Dims Outlook

| October 27th, 2014 | No Comments »

By Filipe Pacheco

Brazil’s real dropped to a nine-year low on speculation Latin America’s largest economy will remain stalled and inflation will stay above target after President Dilma Rousseff won re-election.

The real decreased 2.6 percent to 2.5394 per dollar at 10:18 a.m. in Sao Paulo, the weakest level on a closing basis since April 2005. The drop was the biggest since November 2011 and the largest among all of the global currencies tracked by Bloomberg. The benchmark Ibovespa equity index lost 5.8 percent.

“The natural reaction by investors, at this moment, is to sell, with considerable nervousness prevailing,” Camila Abdelmalack, an economist at CM Capital Markets in Sao Paulo, said in a telephone interview. “The currency should depreciate, along with the Ibovespa declining.”

One-month implied volatility on options for the real, reflecting projected shifts in the currency, was the world’s highest. Analysts and traders predicted that the real ... Read More

Watch out! Brazil markets slide after elections

| October 27th, 2014 | No Comments »

By Nyshka Chandran

Brazilian markets plunged more than 5 percent to seven-month lows on Monday as investors expressed disappointment over Dilma Rousseff’s victory in Sunday’s runoff vote.

Rousseff triumphed against opposition leader Aecio Neves with 51.6 percent of votes in what has been called one of the closest campaigns in Brazil’s history.

“Growth in Ms. Rousseff’s first term in office was already the weakest under any president since the early 1990s and, in the absence of a major shift in policy in her second term, we expect more of the same over the next four years,” said Neil Shearing, chief emerging markets economist at Capital Economics, in a report ahead of the open. He expected stocks, bonds and the currency to fall.

Brazilian stocks were on track for their worst day in three years, with state-run oil company Petrobras down 13 percent, and banks’ shares falling 4-6 percent. Brazilian 5-year credit default swaps rose ... Read More

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