Brazil

Tyler Durden's picture

Brazil Confirms What Everyone Knows: "A Currency War Has Broken Out"





From the FT: "An “international currency war” has broken out, according to Guido Mantega, Brazil’s finance minister, as governments around the globe compete to lower their exchange rates to boost competitiveness." Welcome to the new frontline. It is being played out at every 500x levered FX trade station. No prisoners are taken as those wounded are immediately shot. And the incursions have now entered stocks and bonds. Trading any assets is now retaliation against a central bank somewhere (most typically at Liberty 33 or at the Marriner Eccles building) which is engaged in open warfare against the world's middle class. And yes, the Brazil Central Bank earlier announced that it was heading unto the breach, buying yet more dollars for 1.7094 reais at auction, and has bought as much as $1 billion USD each day for the past two weeks, putting the Japanese intervention from two weeks ago to shame.

 
Tyler Durden's picture

...Promptly Followed By Brazil





The first global currency wars are now delcared fully open. Participation for all non-gold standard backed countries is mandatory.

BN  11:47 *BRAZIL CENTRAL BANK TO BUY DOLLARS IN SPOT CURRENCY MARKET
BN  11:47 *BRAZIL CENTRAL BANK TO BUY DOLLARS 3:46-3:51 P.M. LOCAL TIME

 
Tyler Durden's picture

A New Keynesian Low - Levered FX Intervention: Brazil To Buy Dollars With Proceeds From Bond Sales





When a central bank says it is effectively LBOing Keynesianism, you know it is over. Which is precisely what Guido Mantega, Brazil's finance minister has promised to do. The Latin American country which has been caught in the crossfire of developed world central bank wars, in which it is every last man for himself and he who defects first wins, has just stated it is about to defect (and just in case it is unclear, Mantega clarified that "Brazil's would act on the currency, not just a promise"). And to confirm he means business, Mantega also added that the Brazil Central Bank has no limit to buy dollars. But here's the twist - as reported by Bloomberg, Mantega, speaking to reporters in Brasilia, said the Treasury can sell more debt to increase liquidity to buy dollars.  You heard that right: debt-financed currency intervention. At least the trade surplus countries use capital generated from excess exports. Brazil is threatening to do something never before seen, which is to lever up in its FX intervention. Surely, this has to be the last boundary of Keynesian insanity.

 
Tyler Durden's picture

Busted Auction - Brazil Rejects All Offers For Its 2021 Fixed Rate Treasury Notes





Earlier today Brazil held a treasury auction for National Treasury Bills due 2011 and 2012, Treasury Financial Bills due 2012 and 2014, and most importantly Fixed National Treasury Notes due 2014 and 2021. The bulk of the easy to sell treasuries were sold, especially the 2012 LTN Bills sold to yield 12,2863%, yet curiously Brazil announced that it had rejected all offers for its 2021 NTN bonds at auction. The attached chart demonstrates just which tranche failed to place. We are trying to uncover what the Bid To Cover on the 2021 NTN was, but more curious as to what rate investors were demand for this 11 year paper that forced the TesouroNacional to balk at selling at such a "high" rate, in essence leading to a busted auction.

 
Tyler Durden's picture

CDS "Speculators" Focus Their Attention On Italy, Germany And Brazil In Prior Week





After France, Spain and Italy were the main net notional movers in the prior week, the fear about the Eurozone continues, only this time spreading increasingly to the core. While the Italy move of over half a billion in net notional increase is not surprising, as many perceive the nation as the next weakest link after Greece and Portugal, the German spike is a little surprising, although less so when one considers the failed 30 year Bund auction yesterday. Other countries that fill out the list of top 10 deriskers in the prior week include Brazil, Russia, Japan, Kazakhstan, Greece (yup, they're back), and the UK, which made the 10th spot, as CDS traders finally focus on arguably the most troubled "developed" country in Europe.

 
Tyler Durden's picture

PIMCO On The Euro, Greece, And Preferred Investments In Brazil, Poland And Russia





Pimco's Michael Gomez, who recently shared the floor with Hugh Hendry, Marc Faber and Nassim Taleb, and who was likely the key voice in Pimco's recent decision to accumulate German Bunds, shares insights on the euro, Greece and new investment opportunities. Based on this Bloomberg TV interview, it is likely that PIMCO will soon be accumulating a variety of Polish and Brazilian sovereign bonds, as well as corporate bonds in Brazil, Mexico and Russia, with an emphasis on the first. With tens of billions in dry powder, PIMCO will likely have an increasingly risky EM exposure as it departs from its traditional MBS/UST portfolio.

 
Tyler Durden's picture

Brazil's BES Investimento Pulls Bond Deal On"Market Conditions", Company Is Local Unit Of Portuguese Bank





This week showed just how jittery the IPO sentiment was, with so many IPOs pulled on "market conditions" even including perpetual cash cows such as porn sites. Now the weakness in the market is shifting to bonds. The latest casualty is Brazil's BES Investimento bank which has postponed a $350 million bond on "market conditions." We are not so sure if the reason is with "market conditions" or whether the true reason has to do with BES being a local unit of Portugues bank Banco Espirito Santo S/A. We anticipate any corporate entities that have a relation with an increasing number of European countries will soon become locked out from the capital markets.

 
George Washington's picture

"This Time, It Is Not The Usual Suspects Such As Brazil And Mexico Who Are In the Worst Positions. Instead, It Is the Industrialized Nations"





Will 2010 be the year of sovereign defaults ... or can the boys duct tape the system together until 2011?

 
Tyler Durden's picture

Obrigado Brazil!





We have complained over the past few months that there is simply way too much liquidity in the system, and that this is creating asset bubbles all around the globe. While this is quite obvious looking at the performance of the S&P 500, no matter what you may hear on CNBC or from your mutual fund manager about fundamentals supporting this move, the phenomenon has been exacerbated in emerging markets. It makes sense after all. Given that the crisis was rooted in the US and many issues haven't been seriously dealt with other than putting a little bit of lipstick on the occasional pig, a lot of money has been going abroad with the USD weakening, and emerging or commodity currencies screaming higher.

 
Tyler Durden's picture

Brazil Joins Currency Intervention Brigade: To Tax Fixed Income, Stocks 2% To "Keep Real From Rising"





Developing story, but, surprisingly, not a dollar negative for once.

 
asiablues's picture

Brazil Puts the B in BRIC





Brazilian stocks rallied, along with the nation's currency, as investment prospects brighten on the news that Rio de Janeiro will host the 2016 Summer Olympics, making the Bovespa the world's best-performing major index last Friday.
Rising commodity prices this year have led investors to buy emerging market assets where the economies tend to be more commodity-dependent. Both emerging markets and industrial metals group are outperforming U.S. equities so far this year.

 
Cornelius's picture

Warning Signs Coming Out Of Brazil





Brazil's top performing hedge fund warns of weakness in the real and potentially higher rates.

 
Tyler Durden's picture

Guest Post: China And Brazil





I'm reading two books right now, which I will deal with in two posts. The first is The Forgotten Continent by Michael Reid, the former bureau Chief for Latam at The Economist about modern Latin American history and development.

 
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