Brazil

[winston]

BlackRock's Landers Says `Absolutely' Enthusiastic About Brazil By Fabiola Moura and Tom Keene

Will Landers said his BlackRock Latin America Fund is 71 percent overweight in Brazil and he’s “absolutely” enthusiastic about the country even as the benchmark Bovespa heads for its worst annual performance ever versus the MSCI Emerging Market index.

“It’s still one of the cheapest markets in the world,” said Landers, citing rising consumer spending in Brazil and gains in commodities prices. “You have a young population that’s better educated and upwardly mobile,” Landers said in a Bloomberg television interview today on “Surveillance: Midday” with Tom Keene.

Brazil’s benchmark has declined on concern global economic growth will slow and speculation President-elect Dilma Rousseff may implement economic policies that will quicken inflation.

In a Nov. 4 telephone interview, Landers predicted the Bovespa would climb to 90,000 before the end of next year, a 34 percent advance from yesterday’s close, because Brazil stocks are inexpensive and the economy is expanding. The gauge may rally to 90,000 sometime in the second half of 2011, Landers said.

Brazil’s economy will grow 7.5 percent this year and 4.5 percent in 2011, according to the median forecast in a Bloomberg survey.

Brazil has a labor shortage in some industries and needs “qualified people” for soccer’s World Cup and the Olympics.


http://www.bloomberg.com/news/2010-12-2 ... keene.html

[winston]

And what would be affected from this flood ?

Brazil death toll rises as rescuers battle floods

TERESOPOLIS, Brazil (Reuters) - The death toll from massive flooding and landslides in Brazil topped 500 on Friday as renewed rainfall threatened to complicate efforts by rescue teams to reach survivors trapped in isolated areas.

In one of the country's worst natural disasters, rivers of mud tore through towns in the mountainous Serrana region outside Rio de Janeiro, leveling houses, throwing cars atop buildings and leaving thousands of people seeking shelter.

The flooding killed at least 529 people, according to local and state authorities, but rescuers are uncovering more victims buried under wrecked homes and toppled buildings. More than 13,500 people have been left homeless.

The disaster likely caused billions of dollars in damage and has presented President Dilma Rousseff with her first crisis only two weeks after taking office.

Beyond the loss of life and property, the damage from the rains could further boost food prices in parts of southeastern Brazil, a major concern for the government.

The Serrana region is an important producer of fruit and vegetables for the Rio area but the floods have not affected Brazil's main crops such as soy, sugar cane, oranges and coffee.

Rio, famed for its beaches and Carnival, will co-host soccer's World Cup in 2014 and host the Olympics in 2016.



Source: Reuters US Online Report World News

[winston]

Brazil Will Work With Obama to Counter Rising China Imports, Official Says
By Iuri Dantas

Brazilian President Dilma Rousseff will discuss with her U.S. counterpart Barack Obama ways to counteract the threat posed by cheap imports from China, a Brazilian official said.

China’s policy of undervaluing the yuan will be discussed when Obama travels to Brazil next month for his first meeting with Rousseff since she took office Jan. 1, said the official, who is not authorized to speak publicly on the matter.

Rousseff, who travels to China in April, created a task force comprised of trade officials, diplomats, businessmen and outside experts to suggest policies to cope with rising Chinese imports. Among the options is a multilateral agreement between China and Latin American nations to boost manufacturing exports to the world’s second-largest economy, said the official.

Chinese exports to Brazil rose 61 percent last year to $25.6 billion as a 34 percent rally by the real against the yuan since the start of 2009 lowered the cost of imports.

The U.S. trade deficit with China soared 21 percent to $252 billion in the January-November period last year. China overtook the U.S. as Brazil’s biggest trading partner in 2009, as demand for the South American country’s iron ore and soybeans surged.

Global trade rules under the auspices of the World Trade Organization are powerless for dealing with the competitive edge provided by China’s currency policy, the official said. Brazil’s decision last year to raise tariffs on Chinese-made toys to 35 percent, the maximum under rules of the Geneva-based WTO, from 20 percent has not helped local toymakers, the official said.

The dollar has weakened 3.5 percent against the Chinese currency over the last two years. The real’s 39 percent gain against the dollar in the same period is the second-best performance among 16 major currencies tracked by Bloomberg after the Australian dollar.

Brazil’s $1.6 trillion economy likely grew 7.3 percent last year, the fastest pace in more than two decades, according to central bank estimates. China’s economy expanded 9.8 percent in the fourth quarter.

China is the U.S.’s second-biggest trading partner, responsible for $416 billion in trade in the first 11 months of 2010. Brazil, ranked 10th, had $54 billion in trade with the U.S. during the same period.


http://www.bloomberg.com/news/2011-02-0 ... -says.html

[winston]

Brazil seen as good contrarian bet

Brazil is underperforming all major commodity countries and is the only one to post a negative performance in the past three months.

As long as the backdrop on Basic Materials and Energy remains strong, Mr. Lapointe isn’t worried about Brazilian stocks.

He added that earnings have plenty of upside potential as the cycle has probably just begun. Meanwhile, real GDP has entirely recovered from the downturn, but earnings have yet to do so.

http://www.thetradingreport.com/2011/02 ... arian-bet/

[winston]

Not vested

International Trader: It's Too Soon to Head Back to Brazil

This will be a tough year for Brazilian equities, until the market prices in an end to inflation. Investors should probably wait for signals of an interest-rate decline, not expected until the second half, Barron's says.

[winston]

ANOTHER BEARISH SIGN FOR COMMODITIES

Everywhere we look, we see more signs to be cautious of the commodity markets right now…

For example, last week, we showed you the budding weakness in one of the great "bellwether" stocks of the commodity complex, Brazilian iron miner Vale. Today, we offer a look at the bigger picture in Brazilian stocks.

Brazil is one of the ultimate destinations for investors who want exposure to commodities. Its state-operated oil company Petrobras has found a series of giant offshore oilfields in the past decade. Brazil is a major producer of agricultural commodities like soybeans, cattle, corn, coffee, and sugar. It's a major producer of iron ore. Much of this production heads to China, Brazil's largest trading partner.

Below is a two-year chart of Brazil's benchmark stock index, the Bovespa. As you can see, this index enjoyed a big surge higher in 2009… a surge that stalled and moved sideways for over a year. And in just the past few weeks, the trend officially turned down when the index hit its lowest point in 10 months. It's another red flag flying over the commodity market.

Source: Daily Wealth

[iam802]

Brazil Cuts Tablet Makers A Tax Break, As China's Foxconn Eyes A Move

http://www.fastcompany.com/1755056/braz ... adlines%29

Brazil's President Dilma Rousseff has signed a provisional bill that would allow manufacturers of tablet PCs to sidestep a 9.25% social-security tax and benefit from a reduction in the industrial-production tax, which would drop from 15% to 3%. These are significant moves, and potentially could make up for some of the shortcomings of Brazil's complex legal and tax systems, which act as a barrier to high-tech firms opening facilities in the country.

These tax breaks are about the whole high-tech industry, but they're really only aimed at one company: Honhai, or Foxconn. The China-based firm had been making overtures about a move to Brazil, but had been demanding concessions including tax breaks--it's poised to invest some $12 billion in the South American nation, specifically to diversify and change how Apple's products are manufactured and distributed around the world.

There are a few wrinkles, centering on how much of a product is made in the nation in order to qualify for the new regulations, but it's almost certainly going to work to attract Foxconn as well as stimulate other local firms to join in (national maker Multilaser has revealed plans to make a regional tablet costing less than $496).
Foxconn's potential expansion into Brazil has been given a well-timed push, courtesy of a tragic explosion in a new plant in Chengdu, China. This facility had been quickly constructed to boost iPad production, and fine dust particles are being blamed for the explosion that killed three people and injured many more. Unfortunately, the new plant was actually situated in Chengdu to make life easier for workers--many of whom had previously traveled from China's more remote provinces for the promise of well-paid work in Foxconn's older factories, a situation some claimed was responsible for a spate of suicides among its workforce. All of Foxconn's polishing facilities have now been shut for an inspection to make sure their dust extraction systems are working well, and the explosion and subsequent shutdown is said to cost Apple some 500,000 iPads.

[winston]

BRAZILIAN STOCKS ARE SINKING

Our unusual "China gauge" is still pointing lower…

In the past month, we've studied the soggy price action in Brazilian iron miner Vale… and the weakness in the Brazilian stock index. We follow these assets because Brazil is hugely leveraged to China's consumption of natural resources. If China hits a rough patch, Brazil hits a rough patch.

Like most resource plays, Brazilian stocks skyrocketed off their 2009 lows. The benchmark Bovespa index gained 90% in less than two years. Some individual names, like Vale, gained more than 180%. But as you can see from our updated chart, the Bovespa's uptrend "stalled out" in early 2010, chopped sideways for a year, and has now turned lower. The index just hit its lowest point in 10 months.

We can't know if this is the start of a "whopper" China-driven correction in commodity investments. But we can say Brazil's weak trading action has our "antennae" up. If commodity investments are to gain in 2011, they'll need Brazilian stocks at the front of the pack. Right now, they are lying down and playing dead.

www.dailywealth.com

[winston]

BEARISH ACTION FROM A COMMODITY LEADER

"Lower highs and lower lows." That's the story in the commodity sector right now. To illustrate this story, we once again turn to the Brazilian stock market…

Regular readers know we regard Brazil as one of the great destinations for commodity investment. Its state-operated oil company, Petrobras, has found a series of giant offshore oilfields in the past decade.

Brazil is a major producer of agricultural commodities like soybeans, cattle, corn, coffee, and sugar and a major producer of iron ore. Much of this production heads to China, Brazil's largest trading partner.

Brazil's large commodity exposure makes the action in its benchmark stock index – the Bovespa – a good way gauge the market action in commodity shares. In 2009, the index climbed 100%. But since its peak last November, the Bovespa has been locked in a bearish series of "lower lows and lower highs."

We state once again: We can't know if this is the beginning of a big commodity downtrend… But we can say Brazil's weak trading action has our "antennae" up. If commodity investments are to gain in 2011, they'll need Brazilian stocks at the front of the pack. Right now, they are at the rear and lagging.

www.dailywealth.com

[winston]

THE BIG RED FLAG FLYING OVER COMMODITIES

Bearish action in the commodity market to begin the week: Brazilian stocks are slumping.

In mid-May, we noted the declining Brazilian stock market as a reason to stay cautious toward commodities in general. Back then, Brazil's benchmark index had slumped to a 10-month low around the 64,000 level.

As we noted then, Brazil is one of the ultimate destinations for investors who want exposure to commodities. Its national oil company, Petrobras, has found a series of giant offshore oilfields in the past decade.

Brazil is also a major producer of agricultural commodities like soybeans, cattle, corn, coffee, and sugar. It's a major producer of iron ore. Much of this production heads to China, Brazil's largest trading partner. If China catches a cold, so does commodity-leveraged Brazil.

As you can see from today's chart, things are still bearish in Brazil. The benchmark stock index just struck its lowest low in over a year… and is closing in on a multi-year low of 58,000.

We state again: For commodity stocks in general to make headway in 2011, they'll need Brazil at the forefront. Right now, it's holding up the rear and heading lower.

Source: Daily Wealth