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Does Brazil’s Industrial Production Data and Selic Rate Ring a Bell?
First the good news: After two years of a deep recession, the economic fundamentals of Brazil are showing signs of bottoming out. Industrial production has started to turn, and so have sentiment indicators, with business confidence indexes leading the way (source: Bloomberg). Particularly encouraging are the improvements in the inflation trend. Prices have been easing […]
Dump the MSCI Brazil Index (EWZ) for a hedged option, avoid the FX risk (Part 2)
Continued from Part 1 The Brazilian real has depreciated over 10% since mid-May, and will likely just get worse The U.S. dollar is likely to strengthen into Q3 2013 for several reasons. The first reason is that the tapering consensus is that the Federal Reserve will start ramping down its bond buying program around September. This will […]
Dump the MSCI Brazil Index (EWZ) for a hedged option, avoid the FX risk (Part 1)
The Brazilian real has depreciated over 10% since mid-May, and will likely just get worse Over the past three months, the MSCI Brazil Index (EWZ) has fallen 16%. The index is a dollar denominated index of the Brazilian equities market, so it’s subject to foreign exchange fluctuation. During the past three months, the Brazilian real […]
Why Brazilian consumers are becoming pessimistic
Consumer expectations surveys are helpful for analysts Consumer expectations drive the trade-off consumers make between spending and saving. Both saving and spending are important for economic growth. More spending means there’s more demand for products, so businesses increase revenues and profits. More saving, though, means banks have more capital to lend out to businesses to […]
Mexican Pesos gaining strength vs. other Latam currencies
The currencies of the two largest Latam markets are now once again regaining strength, as evidenced by the appreciation of the Mexican Peso and the Brazilian Real. Foreign exchange rates are very relevant to emerging market investors since the local markets are traded in the local currencies, hence foreign investors are exposed to currency risk. […]
Brazil PMI continues slide down
Growth in manufacturing slows to six-month low and may continue to do so Of most large emerging markets, Brazil seems to be the most promising one when compared against the BRICS and Mexico given lower valuations and less severely depressed macroeconomics. The PMI is a good predictor of short to medium-term performance and offers a lot of insight […]