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Screwed by labor union, Volvo Brazil swallows R$100 million a year settlement

Posted on May 18, 2012 · Add Comment
Volvo’s 4,000 factory workers ended today in Curitiba a strike that completely shut down the plant activities for the last three days. The employees were protesting against the profit sharing program offered by the company. With today’s agreement, the workers will receive, in addition to their salaries, R$ 18,000 in bonus (“profit sharing”) plus a yearly allowance of R$ 7,000, totaling a R$25,000 a year bonus package. [...]
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Brazil’s economy shrinks in March

Posted on May 18, 2012 · Add Comment
In contrast to March’s retail sales which grew more than expected, Brazil’s Central Bank indicator of economic activity out this morning fell 0.35% mom/sa in March, surprising market estimates (+0.5%). “It was very bad. It shows that gross domestic product will have modest growth this year. The central bank will probably signal that this is a [...]
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Top Ten: Largest Latin American companies by market value

Posted on May 18, 2012 · 1 Comment
largest latam companies
Ecopetrol larger than Petrobras? A weaker Real might have helped, but who would imagine it a few months ago…  
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Chovanec says China’s real estate market is “not poised to recover” (despite Morgan Stanley’s wishful thinking)

Posted on May 18, 2012 · Add Comment
China expert and Economics professor Patrick Chovanec said the following about China to CNN in April: “No one has hit the panic button yet. Everyone is holding out hope that at some point it turns around somehow. But I also think that’s a triumph of hope over reason.” Just ask Morgan Stanley how they are [...]
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Not Bad: Brazil retail sales rise 0.2% in March

Posted on May 18, 2012 · 1 Comment
brazil retail march
Sales at Brazil’s shopping malls and supermarkets proved resilient in March, posting an unexpected advance as lower interest rates offset concerns about Europe’s ongoing debt crisis, Dow Jones reports. Retail sales in March rose a seasonally adjusted 0.2% from February, the Brazilian Institute of Geography and Statistics, or IBGE, said Thursday. The advance was greater [...]
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Deflation ahead? Mounting stockpiles at China car dealerships “threaten to deepen price cuts”

Posted on May 17, 2012 · Add Comment
Are you “shorting” BMW’s stock yet? According to Bloomberg, Chinese dealers are struggling with the rising number of unsold cars that’s threatening to deepen price cuts. Apparently, demand for cars was the slowest in the first four months since 1998. “Unsold cars are crowding dealer lots in cities from Guangzhou in the south to Xi’an to the west,” [...]
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SocGen warns of a potential “disorderly” fall of Brazil’s Real

Posted on May 17, 2012 · 4 Comments
socgen fx brazil
SocGen’s currency strategist Sebastien Galy said in a research note today exchange rate movements in the Brazilian real could soon become disorderly as retail foreign exchange investors likely unwind their bets on the currency rising amid an escalating European debt crisis. “For now, it is an orderly process, but we are now on the edges [...]
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Chart: Petrobras’ ROE falls below 2-digits for the first time since 1999

Posted on May 17, 2012 · 2 Comments
petrobras ROE 1999 2012
According to consultancy firm Economatica, in addition to the 16% drop in 1Q12 profits (to R$9.21 billion) when compared to the same period in 2011, Petrobras’ recent results show another worrisome sign: for the first time since 1999 the profitability (ROE) of the state-owned company fell below double digits to 9.7%.
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Demand for consumer credit in Brazil drops for the 6th month in a row: Down 11% in April

Posted on May 17, 2012 · Add Comment
The demand for consumer credit shrank 11.2% in April when compared to March. Overall, consumer credit demand fell 7.6% so far this year when compared to the same period last year, the highest drop since 2008, said Serasa Experian. Compared to April 2011, the indicator dropped by 9.8%, the sixth consecutive drop in an annual basis comparison. The demand for credit fell in all income groups surveyed. However, the decrease was slightly larger among consumers with higher incomes. Among [...]
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Indonesia’s widening current account and fiscal deficits are concerning, says Bofa ML

Posted on May 17, 2012 · Add Comment
indonesia widening current account deficit
Bofa ML has written a note on the widening current account and fiscal deficits faced by Indonesia. According to them, “while the magnitudes of the deficits are modest, we are increasingly concerned about the direction and speed at which the twin deficits are deteriorating. The rupiah’s prospects will be kept in check, and may face downside risk, if the [...]
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Beer & Taxes: Brazil’s 2nd largest brewer accused of evading R$600 million in taxes

Posted on May 16, 2012 · 1 Comment
petropolis itaipava
According to news site Exame, Brazil’s second largest brewer Cervejaria Petropolis is (again!) the target of a government’s crackdown on tax evasion charges. This time the company is suspected of having failed to pay over R$600 million in state taxes between the years of 2006 and 2011, according to the state of Sao Paulo’s finance secretary. Since this morning, fiscal agents are at the brewery plant [...]
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How desperate Morgan Stanley must be to make a China “bullish” claim?

Posted on May 16, 2012 · 1 Comment
Our friend at Also Sprach Analyst responds. According to his recent post: “Even though Chinese data has proven to be a disaster, there are bound to be delusional China bulls along the way who are willing to say that the worst is over, while the worst is clearly not over.  Far from it. [...]
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Hermanos 10 vs. 0 Gringos: This is how an ex-Goldman Sachs partner lost $150M to Argentina’s government in only 20 days

Posted on May 16, 2012 · Add Comment
ypf eton park
Other titles for this post could be “This is why Gringos should not invest in what they don’t know” or “This is how Argentina screws foreign investors” or “Argentina’s government not Goldman Sachs is the real vampire squid“… According to a regulatory filing yesterday (via Bloomberg), hedge fund Eton Park Capital Management LP [...]
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SocGen Chart: Investors are extremely worried about Emerging Markets… perhaps too late?

Posted on May 16, 2012 · 3 Comments
SOCGen survey EM investors
A note from Benoit Anne of Société Générale (via FT) entitled “EM investor survey: Investors are now extremely worried” has shown the investor’s bad mood about emerging markets. Among the survey’s conclusions (see chart below): “it is quite clear that the shorter-term bullish investor on Emerging Markets has virtually disappeared”. Source: [...]
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Take This: Brazilian government considering creating its own “T.A.R.P.” to clean up public banks’ balance sheets

Posted on May 16, 2012 · 1 Comment
Brazilian-version of T.A.R.P. on its way… An article at Valor Economico today announced that the Brazilian government is considering a cleaning operation of public banks by removing toxic assets from their balance sheets, a transfer of the bad loans in the banks’ portfolios to Empresa Gestora de Ativos (Asset Management Company – Emgea). There have been [...]
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Capital Economics: “Brazil housing bubble reinforces limits to “two-speed” growth”

Posted on May 16, 2012 · 3 Comments
chart 1 composite pmi
According to London-based research firm Capital Economics, Brazil’s consumption-led development model is coming under increasing strain. In a recent Latin America report, the firm’s EM economics team led by Neil Shearing said that the country’s “credit growth is unsustainable, the housing market is overvalued and macro imbalances are starting to build.” More details of the report below: “Brazil’s [...]
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ThyssenKrupp: “Bye, Bye, Brazil”

Posted on May 16, 2012 · Add Comment
Germany’s largest steelmaker is seeking to sell its U.S. and Brazilian plants as expenses rise and North American demand slows, Bloomberg reports. According to the company, Brazil output costs are rising “disproportionately,” while the U.S. economy is showing no “major momentum.” “Since the plans for the project were made, the economic parameters both in Brazil and in the [...]
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BofA Merrill Lynch: We’re in a synchronized global slowdown and the US is not immune

Posted on May 16, 2012 · Add Comment
News headlines have been way too negative. Here is from a recent BofA ML note sent to clients: “We are in the midst of a synchronized global slowdown. Just take a look at what our economists from around the world have been writing: - From India, “Poor IP: Worst over, but pain definitely left.” - Hong [...]
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Brazil Homebuilders: 1Q earnings summary

Posted on May 16, 2012 · Add Comment
brazil homebuilders esimates valuation
The 1Q12 earnings season for the Brazilian homebuilders was “back-loaded,” with no fewer than six companies reporting results last night. Overall, according to Itau, results were negative for MRV, PDG, Rossi and Tecnisa on the margin side, as these companies struggled with projects launched in the past and deliveries, which hurt margins. Cyrela was the [...]
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(Guest Post) Brazil’s economy lags behind other BRICs

Posted on May 16, 2012 · Add Comment
gdp growth bric nations
By Jennifer Kahn. It may be a time of uncertainty for Brazil, not just because of recent disappointing economic data, but also because of a drop in demand stemming in part from Europe’s recession. The Brazilian economy grew by just 2.7 percent in 2011, a steep descent from 7.5 percent growth in 2010. Analysts’ surveyed by Bloomberg [...]
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Dollar (USD/BRL) closes above R$2,00 for the first time in 3 years

Posted on May 15, 2012 · 1 Comment
usdbrl
With the global economy in turmoil because of political problems in Greece, the dollar (USD) rose again against the Real (BRL) today, closing at above R$ 2.00 real for the first time in nearly three years. But for some analysts, however, this upward movement will only continue if the European problems get worse. “The Real is behaving well considering what is happening out there. The market [...]
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Argentines are paying 5.28 pesos per dollar in the parallel FX market, 30% higher than the official rate

Posted on May 15, 2012 · 4 Comments
According to news site El Cronista, the strict controls on the exchange rate market has made the dollar/pesos exchange to soar. The Argentinian government hasn’t made much to lower short-term pressures. In the parallel market, the dollar is trading at $ 5.82 pesos, 30% more than the official rate. Many businesses are using these values ​​to operate. More from [...]
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Dilma says that the current global crisis will last for a while

Posted on May 15, 2012 · 6 Comments
Brazil President Dilma Rousseff said on Tuesday at a government cermony in Brasilia that Brazil needs to be prepared for a long period of global crisis. ”The current crisis that developed countries are experiencing may take another five, six, seven years. It will end at some point, but we have much to do,” she said. Dilma also said that “we do not have their problems, but they will all end up coming out of [...]
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HSBC: The three risks for Brazilian banks

Posted on May 15, 2012 · Add Comment
In a report sent to clients, HSBC analysts Victor Galliano and Mariel Santiago wrote that Brazilian banks are threatened by three main risks. They point to the fact that investors are still concerned about the rate cuts (combined with uncertainties surrounding the new savings rules) and that the banks may experience a scenario of moderate credit growth as the economy cools off. In order to measure how these risks could have [...]
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Home ownership unaffordable to more than 60% of Brazil families, IDB study finds

Posted on May 15, 2012 · Add Comment
room for development housing markets latin america
More than half of the families in 41 of Latin America’s biggest cities cannot afford to buy a proper formal dwelling using their own means, according to a new study about housing in the region by the Inter-American Development Bank (IDB). The recently released report, “Room for Development: Housing Markets in Latin America [...]
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Chart: At current interest rates, Brazilians can’t afford to borrow any more

Posted on May 15, 2012 · Add Comment
Brazil earnings personal debt
According to Alliance Bernstein (via FT), “total earned income in Brazil more than doubled over the past decade. But personal debt rose more than 10-fold during the same period. Over the past year, the rate of non-performing loans (those more than 90 days in arrears) has crept up to about 8 per cent. [...]
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Interview with Alexandre Tombini: A “historic opportunity” to lower interest rates in Brazil

Posted on May 14, 2012 · 2 Comments
In the last few days, Brazil’s Central Bank head Alexandre Tombini shed a good deal of light on the CB’s policy agenda. Following his much-debated remarks at a CB conference in Rio last Thursday, Tombini gave a revealing interview to the Estado newspaper yesterday. In yesterday’s interview, he signaled a bold intent of testing [...]
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Private equity helps to finance (and inflate) the Brazilian housing bubble

Posted on May 14, 2012 · 3 Comments
Bloomberg has recently reported how Brazil’s homebuilders are turning to private-equity firms to finance their projects as banks withdrew most of lending after cost overruns added to rising debt burdens. As it has been noticed lately, banks are tightening credit to homebuilders after surging labor costs shrank margins and triggered costly delays. Still according to the article: “Billionaire Sam Zell’s [...]
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Plock! Prices of two bedroom apartments in Sao Paulo fall for the first time in many years

Posted on May 13, 2012 · Add Comment
The average price per square meter of two bedroom apartments in Sao Paulo fell R$ 440 in the first quarter of this year compared to the same period last year. According to Celso Petrucci, chief economist at Secovi-SP, these are the “lowest prices seen in the last few years.” Petrucci admitted that he hasn’t seen yet such a drop in housing prices. For him, the data represent a balance between the law of [...]
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European officials cancel participation in UN conference Rio+20 because of “unaffordable hotels in expensive Rio”

Posted on May 12, 2012 · 11 Comments
money-broke
Is Europe too broke or Brazil is just too expensive? Maybe both. The European Parliament has decided to cancel its participation in the Rio+20 UN conference on sustainable development. Other important countries, such as the United States, UK and Germany, will also not be present. For Europeans, believe it or not, the main problem is money (or should we say, the [...]
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  • Top Stories

    • Opinion: The Brazil Industry Problem
    • Europe dominates FDI into Brazil; Beware of Spanish crisis contagion…
    • Top 30: Here are the Latin American public companies that booked the largest losses in 2011
    • “A major housing bubble in Canada may cause international distress,” says Neville Bennett
    • Beware commodity investors: Morgan Stanley’s Sharma says “commodity.com” could cause “the next global crash”
    • Capital Economics says “Brazil property market is overvalued by 50%” but “the housing bubble will deflate slowly”
    • Opinion: Here is what 8 economists have to say about Brazil’s protectionist policies
    • Time to Sell! World’s “worst stock picker” Carl Icahn buys into Brazilian mining company
    • Krugman says Brazilian Real appreciation is not due to “currency wars” and that “shouting at developed countries” will not solve it
    • An interview with Brazilian Bubble, by Rachel Glickhouse
    • Property developer Lider files for Chapter 11 protection and seems to be the first casualty of Brazil’s real estate bubble
    • Top Ten: Forbes puts Petrobras as the 10th largest company on the planet
    • Santander in Brazil for sale; Bradesco and Banco do Brasil are potential acquirers
    • Janus Capital says the miracle is not over: “Brazil’s future remains bright”
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    • Rank Chart: Productivity by country… Brazil ranks 15th out of 17 LatAm countries
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