I’ve thought about not writing to comment the latest bullish posts on “Brazil” by the otherwise interesting blog Reformed Broker. In one post, he argues that if he had a gun to his head to pick one market to be invested in for the next 10 years, with no option to get out before these 10 years are over, he would pick Brazil. In another post he shares “analysis” that shows how buying “Brazil” after 20% drops has had great “performance” in ages past. For the sake of foreigners seeking to know more about this, here are a few comments.
A Financial Times article highlights the surreal nature of Brazil’s “Mensalão” judgement, so easily lost on us locals. Just a few days later, a commission of our Congress buried yet another investigation of its peers. We have much to learn, much to do. Can’t rest a single second.
Two quick articles: a relatively thorough article in the Financial Times about Brazil’s construction and infrastructure boom in the next few years, and a cautionary tale about things that “happen all the time” – until they don’t.
The agenda for the 2012 Rio Investors Day conference is now online, and I will cover both days of the event next week (Monday and Tuesday). The “single track” design favors breadth over depth, but given the intended audience it’s probably for the best. All in all it’s a great initiative and a well-organized event. Check back next week for the notes!
Two recent stories in US newspapers highlight the huge per-capita spending of Brazilians in the US. While one piece focuses on tourists in NY and retail sales, the other focuses on Florida and also mentions Brazilians buying up real estate. The big point: the taxation making imports so expensive in Brazil as to justify, in some cases, the airfare and hotel expenses.
The Financial Times’ Beyond Brics blog has posted an article by PUC-Rio professor Marcio Garcia, and it’s a very sober look at what this country has been through in the years since it was included in the “BRICs” by Jim O’Neill. Much more importantly, however, is the warning about what we must still do if we are to succeed in the future.
Brazil’s efforts to influence its Latin America neighbors are not always well-received. That by itself isn’t a problem, at least not beyond the stated and unstated strategies and goals behind such initiatives. Reaction will always occur as one group or another feels threatened/ left behind. However, it is important to keep an eye on the trend. Much has been said about Brazil having “lessons to teach” other LatAm countries, and we have been skeptical given increased government spending and intervention in the economy – alongside rising inflation. Brazil has done well, no doubt, but let’s keep our minds open to our own problems before we try to “export solutions”.
Three recent stories with one theme in common: the rise of the middle class and the availability of credit. Looking at banks or diversified financials top-down is not our specialty, yet it’s part of gauging risks. Keeping this in mind, one of the articles is bullish and points to recent reports showing that credit here has actually accelerated in September, despite talks of banks – and financial authorities – reining in loan growth. The other two articles are also bullish but still reflect, in a way, the difficulties of sustaining such growth.
Two very public comments by high-level Brazilian authorities regarding currency wars: one by the highest possible authority – our President herself, in an editorial piece in the Financial Times. Another by our finance minister, Guido Mantega. Regardless of what one thinks about the global financial crisis and the state of macroeconomic policies each country should follow amidst the turmoil, it’s hard to see what diplomatic, political or practical gains could be achieved through this kind of rhetoric via the global press vehicles.
This article was just published in today’s Financial Times: “Brazil hosts a homecoming”. A few expats coming back do not necessarily a trend make, but we’d say that 1) it’d be nice to see the reversal of the brain drain of the last few decades, and 2) it makes sense in a “Brazil is the new China” way given the number of CVs by foreigners seeking to work in Brazil that firms like ours have been receiving in the last 1-2 years.