Brazil debt crisis

M

m22au

I've noticed the underperformance in Brazil equities for many months now. This is discussed here:
http://www.bloomberg.com/news/2011-...arket-as-inflation-surges-currency-jumps.html

Bovespa:
http://finance.yahoo.com/q?s=^BVSP

Brazil ETF:
http://finance.yahoo.com/q?s=ewz&ql=1

Brazil 10 year:
http://www.bloomberg.com/apps/quote?ticker=GEBR10Y:IND

Mish has also written two articles about Brazil, mainly discussing the possible overvaluation of the Real, and a possible (consumer / business) debt crisis.

http://globaleconomicanalysis.blogspot.com/2011/07/brazil-charges-1-tax-on-bets-against-us.html

http://globaleconomicanalysis.blogspot.com/2011/07/credit-crisis-in-brazil-consumer-loan.html

US listed Brazillian bank stocks include BBD BSBR and ITUB
http://finance.yahoo.com/quotes/BBD,BSBR,ITUB

I'm more confident in shorting European (Eurozone and also UK) bank stocks, but I'll keep my eye on the situation in Brazil for any possible opportunities. I notice that BSBR was down 7.6% today.

Daal (and anyone else) - any comments on Brazil?
 
Quote from m22au:

I've noticed the underperformance in Brazil equities for many months now. This is discussed here:
More...


I have noticed it ONE YEAR ago, here on ET, before it took place (I think in one of shortie's threads towards end of summer last year).

It proves that:

1. to make money in markets, knowledge is not enough.

2. the so called "experts" are not experts but rather hindsighters.

3. that people are attracted to labels rather than facts.

4. etc
 
Quote from tradingjournals:

I have noticed it ONE YEAR ago, here on ET, before it took place (I think in one of shortie's threads towards end of summer last year).

It proves that:

1. to make money in markets, knowledge is not enough.

2. the so called "experts" are not experts but rather hindsighters.

3. that people are attracted to labels rather than facts.

4. etc
More...

tradingjournals - as I wrote above, I'm much more confident shorting Europe related stocks, hence why I haven't given serious thought to shorting Brazillian stocks.

Second, with the Real still below 1.57, roughly the level at which it peaked in August 2008, there is plenty of opportunity available to buy USD/BRL if you believe that the government / central bank will be successful in debasing the Brazillian currency.

Third, even though Brazillian stocks have fallen by a lot already, there still may be plenty of room for further (stockmarket) declines, especially given the impact of a potential credit crisis in Brazil.
 
Interested in this thread. I have read articles about foreign investors driving up the real. Also the inability to deficit spend to knock it down. But as for the rest, I'd like to learn.
 
*bump* with this from Chris Whalen:

http://twitter.com/#!/rcwhalen/status/98465463314550784

Q of the day: Is EM (especially Brazil) is a few short months away from a domestic credit crisis? View from smart city banker
 
I know real estate where I live is so expensive its ridiculous. Cost of living in general is pretty darn high. If there is a trade here is to short the Real after some kind of catalyst(Some kind of real capital flight), I bet there are a LOT of leveraged positions longing the real, anytime you have a market going up in a straight line for a long-time(specially with a nice positive carry), its going to attract speculators, the type of people who wont be loyal to their positions when shit hits the fan.
I don't like to short stocks because its a very hard game to play
 
Quote from Daal:

I know real estate where I live is so expensive its ridiculous. Cost of living in general is pretty darn high. If there is a trade here is to short the Real after some kind of catalyst(Some kind of real capital flight), I bet there are a LOT of leveraged positions longing the real, anytime you have a market going up in a straight line for a long-time(specially with a nice positive carry), its going to attract speculators, the type of people who wont be loyal to their positions when shit hits the fan.
I don't like to short stocks because its a very hard game to play
More...

Maybe this interest cut is the catalyst:

"TEXT-Brazilian central bank statement on interest rates"

http://www.reuters.com/article/2011/09/01/brazil-economy-rates-idUSN1E77U1WC20110901

"Brazil Central Bank Unexpectedly Cuts Its Overnight Rate To 12.0% From 12.5% Following Observations Of "Substantial Economic Deterioration"

http://www.zerohedge.com/news/brazi...t-rate-120-125-following-observations-substan

"Barclays On Brazil Rate Cut: "Unexpected...Unprecedented"

http://www.zerohedge.com/news/barclays-brazil-rate-cut-unexpectedunprecedented

USD/BRL = 1.6019 at the time of typing. Probably the next big test is the early August risk-off level of about USD/BRL 1.6295
 
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