Brazil

[winston]

Not vested

IT'S NOW A BIG BEAR MARKET IN BRAZIL

The red flag of Brazilian stocks continues to fly over the commodity sector.

Several months ago, we noted the budding weakness in Brazilian stocks as a reason to stay cautious toward commodity investments. 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 also a major producer of iron ore.

All this makes Brazil a great way to gauge the market's opinion of commodity investments. When we wrote this piece in May, the market was just starting to send Brazil's benchmark index lower… which we called a "red flag" for commodities. As you can see from today's chart, things are getting worse down south.

After surging higher off its 2008 credit crisis low, Brazil's benchmark stock index traded sideways for over a year. But in the past four months, this index has plunged to new low after new low.

This week, it struck its lowest point in more than a year. We state again: 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]

DJ China Slowdown Could Force Brazil Commodity Export Shift

CAMPOS DO JORDAO, Brazil (Dow Jones)--Brazil's hard-commodity exports could take a big hit this decade as Chinese investment growth slows, but that drop may be offset by demand for agricultural commodities as the Asian country's population starts consuming more, said Michael Pettis, a professor at Peking University's Guanghua School of Management.

China has focused too much on investment in recent years while household consumption has dropped to just one-third of the country's GDP, Pettis said Saturday during an investment conference held in the southeastern Brazilian city of Campos do Jordao.

That under-representation--consumption accounts for about two-thirds of GDP in most economies-- is unsustainable as growth in developed economies slows and slashes demand for China's exports, Pettis said.

Such investment-driven economic growth was seen in the Soviet Union of the 1950s, Brazil in the 1970s, and Japan in the 1980s, with similar consequences: heavy debt loads followed by a "very difficult" transition period when they tried to rebalance their economies, Pettis said.

"The conclusion is inescapable: if China rebalances in the right way, you're going to get a huge shift in demand from non-food commodities," he said. "I'm very worried for countries like Brazil and Australia that will be very badly affected by a slowdown in China."

Mineral exports accounted for more than 25% of Brazil exports through July of this year, up from 20% at the same time last year, according to Brazil's trade ministry.

Such a rebalancing may come as soon as 2013 after a changeover in Chinese leadership. Yet Pettis said it is difficult to say if and when the new leadership will have the political capacity and will to carry out the rebalancing, noting that for consumption to account for a bigger share of the economic pie, consumption growth will likely have to rise above current levels of less than 8%--and consumption growth has never surpassed that level.

At the same time, there will likely be a plunge in GDP growth to close to 3% as investment is slashed, he forecast.

The outlook isn't completely bleak for Brazil, however, thanks to its exports of agricultural commodities such as grains and animal protein. Brazil is a leading exporter of soy, beef, sugar and coffee, and according to the trade ministry food exports accounted for about 16% of export values through July.

"Commodities that depend on investment are going to get badly hurt, but those that depend on consumption won't get hurt," he told reporters. "It's reasonable to see that in a rebalancing in China, food prices will continue to strengthen."

"Non-food commodity exports will become less important for Brazil, and food commodities will continue to be very important," Pettis said.

Source: Dow Jones Newswires

[winston]

Brazil drop rates by 50 bps. to 12%

Isnt inflation a problem for this Commodity producer ?

Big warning sign that things are not that great out there ?

[winston]

Brazilian stocks (EWZ) plummet 26% in less than three months… fresh multi-year lows for Vale and Banco Bradesco.

[winston]

HOW BAD IS IT IN COMMODITIES? BAD by Brian Hunt

To get an idea of how bad things are in the natural resource space, look no further than Brazil…

More than a year ago, we urged readers to stay cautious toward the commodity sector. Back then, commodities had enjoyed a huge rally… But as we noted, Brazilian stocks were "breaking down" to new lows.

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.

As you can see in the two-year chart of the Brazil investment fund, our warning was well-timed. Brazil has been hammered since its 2011 peak. The rally that began early this year has reversed with a huge correction… The fund now sits at a 52-week low.

China is slowing… which has hammered commodity-producer Brazil.


Source: Daily Wealth

[winston]

Brazil on track for 4% growth: Central Bank chief

Brazil is on track to post around four percent growth by year's end, with inflation expected to be around 4.5 percent, according to Central Bank chief Alexandre Tombini.

Despite a "typical cyclical downturn" and the global slowdown, "Most of us expect the (Brazilian) economy to pick up speed in the second half (of this year). There are signs of strong growth in the third quarter," he said in a conference call with the international press on Monday.

The world's sixth largest economy has been experiencing anemic growth since late last year due to the eurozone debt crisis and the sluggish US economy.

Last week, the Brazilian government said it was cutting its growth forecast for this year from 4.5 percent to three percent due to the impact of the global slowdown.

http://www.newsmeat.com/news/meat.php?a ... &buid=3281

[winston]

Brazil Announces Major Stimulus Plan To Boost Growth

The Brazilian government has unveiled a key stimulus package aimed at attracting as much as BRL 133 billion ($66 billion) in private investment into the country's infrastructure projects over the next 25 years.

'http://www.rttnews.com/Story.aspx?Id=1949001

[winston]

According to the IMF, Brazil is now growing less than the US.

Source: CNBC

[winston]

Investing in Brazil: Why the Time is Right for This Out of Favor Market by Carl Delfeld

Like everything in life, stock markets move in cycles. And nowhere is this clearer than with emerging and frontier markets.

It seems that investors either love them or hate them based on a cocktail of recent market performance, economic headlines and financial media hype.

Brazil is a wonderful case in point. Not long ago, it was the hottest market on the planet. From 2004 to 2008, Brazil’s stock market was up a staggering 350% while the S&P 500 was up 40%.

Economic growth was around 8%, its currency was soaring, commodity prices were on a roll, and foreign capital was clamoring to get into the country.

But then, as so oftentimes is the case, Brazilian policymakers got a little cocky and started to mess up markets and the momentum.

Interest rates were hiked until they topped 12.5%, with consumer rates much higher. It slapped capital controls on foreign capital inflows.

And perhaps, most damaging, it expanded its interference in Brazil’s two top heavyweights, Petrobras (NYSE: PBR) and Vale (NYSE: VALE).

http://www.investmentu.com/2012/October ... razil.html

[winston]

Big Brazilian stock fund EWZ sinks 15% over the past 12 months… meanwhile, most international funds are in positive territory.