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"Junked" Brazil Is Falling Apart At The Seams; Cancels Bond Auction
Exactly one month ago, in the aftermath of the Chinese devaluation announcement, we made a simple prediction.
Biggest immediate loser from China's devaluation: Brazil
— zerohedge (@zerohedge) August 11, 2015
Today, following the overdue, long anticipated, and yet "shocking" downgrade of Brazil by the S&P to junk, this prediction is coming true.
First, here is the currency, which is plunging to a fresh YTD low of just below 3.91, and which has a long way to go at least according to SocGen which now sees the USDBRL rising to 4.4 over the next 8 weeks: a whopping 15% devaluation over the next 2 months!

In other words, it could get worse fast, and as Bloomberg notes the next step could be a circuit breaker: "Continued selloff in DIs would risk triggering circuit break, which kicks in when rates rise/fall 80bps vs prior day’s official BM&F fixing intraday. Trading of BM&F’s USD/BRL 1st future will be halted if price hits 4060.33, equivalent to a 6% move vs yday’s official closing at 3830.57; while spot BRL would continue to trade, liquidity likely to be very poor given dominant role of futures trading."
* * *
Next, the Braziling ETF, the EWZ, is already pricing said devaluation in and was about 5% down as of this moment.
The Bovespa futures are looking very ungreen this morning.
But the biggest risk event for Brazil and its soaring double deficits, is that suddenly the entire nation which for years was so dependent on Chinese growth and is now giving it all back in spades, is that it is about to be locked out of the markets. Here's why:
- BRAZIL TREASURY CANCELS LTN BOND AUCTION TODAY
This is the second LTN bond auction canceled in 1 week, and will lead many to ask: just how will Brazil - with its foundering economy (which we warned first about back in late 2014), and suddenly suddenly locked out capital markets, fund itself?
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The WHOLE world is falling apart
"The WHOLE world is falling apart"
Yeah, and we know where that leads.
Cancels Bond Auction
Dammit.....and I was going to show up to.
I'm even wearing a tie.....I hardly ever wear a tie.
South Americans have caught onto Bitcoin much faster than their none-too-bright neighbours in teh north. Because there, currency crisises are the norm and have been for some time. BTC showing some signs of life again teh past couple days. Now will the pansies finally realize that what ever happens with XT, that it is not "TEH END", kindly remove themselves from teh scene so we can rally? Thanks!
http://www.coindesk.com/
Their bonds just got a Brazilian Wax.
.GOV has created bitcoin and once it becomes very popular it will control you just the same as cashless society. True wealth preservation is only through physical possesion of silver and gold period. Not overseas, not in the bank, but in a place only you know.
Dona, that is teh most fucking retarded theory ever. Bitcoin is government's worst nightmare... far harder to control than gold & silver.
Anyone who says 'teh' is no friend of mine.
I'm usually not a grammar Nazi. But it is very difficult to take you seriously when you consistently misspell the word, "the". So before you go insulting people's intelligence, perhaps you might proofread and run a spell checker.
"TEH" is indeed substituet for "THE" but , been around quite awhile now = some kind of cool mispelling for the YUPIE crowd...
It is making fun of how people get so outrageously outraged that they screw up spelling. Also see 111!!11!eleventy1!11!
I'm even wearing a tie.....I hardly ever wear a tie.
Bow Tie?
My brother said long ago "Never trust a cocksucker with a bow tie".
Does your brother watch a lot of Vin Diesel movies?
Oddly enough - I once saw a Thai with a Brazilian
@Dr
"Yeah, and we know where that leads."
soup!
Just soup
Long soup and broth
Yep - more central bank intervention. Amazing what you can do with unlimited deep pockets.
It's becoming a thundering herd and South America is going full Venezuela......
They should be in great shape by the time the Olympics rolls through.
/s
pods
And people think Boston is crazy for passing on a chance to host the Olympics. Brazil just had the World Cup and the Olympics is on the way. Maybe they aren't the money makers they are marketed as?
They're definitely money makers for someone.
What do the 1916 Berlin Olympics, the 1940 Tokyo Olympics and the 1944 London Olympics all have in common?
They were cancelled.
I know why! They substituted the standard circus for another form of entertainment!
Greece should refuse to provide the Olympic flame and sue for the name, as the games have become corrupt and big business. The Ancient Greek gods are taking out on Greece
"Irate Brazilians today attacked the Olympic Village, made out of shipping containers. The athletes made a sprint for the airport. Several records were broken."
Don't worry. Janet will save Brazil in a few days.
you might be on to something there. forget about a rate hike. the fed must soon resume its overt QE (overt v hidden, which never stopped).
"The FED must..."
You simply do not understand the FED.
The FED should've saved Lehman, but it did not. Why" BEcause they didn't see it coming?
LOLOLOLOLOLOLOLOL!!
When it's time for a crash, the FED suddenly becomes "incompetent," "ignorant" etc, etc
When will the sheep finally figure this out?
The FED should've saved Lehman
Weren't the FED's shareholders Lehman's competition?
Not that I'm looking to create waves here.
What exactly do peopple mean 'saved' or 'didn't save' or 'should have saved'?
Dick Fuld isn't flipping burgers, and he never saw the inside of a jail cell.
Of course the dominant narrative is that what was done had to be done.
That 'institutions and people had to be saved'.
-Saved from themselves at the expense of institutions and people who did not have to be saved from themselves...
-That there was no choice but to impoverish a generation or two of Americans to preserve the accrued fortunes of the likes of Blankfein and Cassano are Mozillo, et. al..
It was bail out the .01% Fraudsters or 'Tanks in the streets'...
Oh, so You were told it was all to rescue your Gramma's pension?
Well fuck me! Excuse my ignorance.
-Who knew that your Gramma is Abby Joesef Cohen??!
China should save Brazil, cause they're the BRICs. This was gonna
be the combo that was going to lead the world. China can't save shit, today.
Not itself, not Brazil. Some great, new world-leading alliance. LOL.
This is when all the world competitors turn off their brains and roll out the tanks. Was nice knowing you all.
Well, cheaper reseources from Brazil for me, but damnit because I still ahve a bunch of Real in my pocket...
Real? Not very.
So far here in Colombia we are surviving...our peso is down 50%...but no effects yet..just my dog food going up in price...imported...but beer is the same price....
>> just my dog food going up in price..
Just your dog food? WTF? Nothing more important than the dog's food. One reason I stay fully stocked.
He doesn't have a dog...
Well, it did taste better than the dog food.
I have 4 big dogs..so it is a big expense for me....but meat and chicken have not gone up....pork the same price as ever....even though Colombia supposidly imports a lot of feed for animals....rum is the same price as always...car sales are slowing down...still selling way to many as the roads here cannot handle what they have now....but everyone wants a car.....they first own a moto..a small motorcycle..then they move up to a starter car...middle class is booming here..or so they think.....I think we are 2 years behind Brazil until the effects start to hit...
Keep the dogs, hopefully they have a good protective instinct. If they don't, you might want to trade them in.
My girlfriend's hair dresser is on welfare, and she raises Great Danes. She uses her food stamps to buy steaks for her Great Danes. These dogs don't eat dog food, just beef. I haven't bought a steak in years, and I've never been on welfare. If things ever become lawless around here, I'm going to eat those dogs. :^)
Quick. Show a Brazil football flag girl!
Meanwhile, Brazukas have got over "Babilonia" and are now getting into "A Regra das Jogas".
This is all that matters.
(These being the nightly prime time novellas on TV Globo.)
I have been to Brazil 3 times over the last 30 years. Last time 2 years ago after a long break. And guess what? I hardly noticed any difference. Yes, as soon as you leave a city, a couple roads had been paved, but most are still dirt. People still live in shacks. Corruption is rampant as always. Yet all Brazilians keep claiming, mantra like, that it's the country of the future. Remember Brazil, ano dos mil?
Quite so. I've been to Brazil about 25 times in 25 years. I'm here now.
The major changes in this time are the intro of cellphones and higher prices for everything. Consumer choice is limited due to highly complex import taxes which takes a brain the size of a planet to understand. They're really intended to protect domestic industry from outside competition, which means domestic R&D investment is low and productivity is low.
It's a truly corporatist economy, controlled by the bankers and big-money-industries, with the likes of Rousseff having her hands in their pockets for mutual benefits.
When Brazilians say Brazil is the country of the future, they omit the last part of that phrase: "and always will be". Or as they say here: "O Brasil, o país do futuro e sempre será".
--"and always will be"--
lol
Brazil. Who cares? US equities are green.
All that matters at this point.
Time for the state to start selling some shit. The oligarchs will own it all before this is over.
That big Jesus statue would look pretty groovy in my front yard.
I'll buy a mummified cannibal head for my son egor's birthday and spend a weekend with an amazonian if that will help.
No state funding is a good thing. They might actually have to lay off some bureaucrats or reduce welfare-destroying "welfare benefits". Brazilians can consider themselves lucky that their govt has no EU/ECB "helping" them. At least it is up to them: Marx or Mises. Let's hope they make the right choice.
Is it too late to move the Olympics back to London? Brazil cannot afford them now.
The corrupt city of London can always steal billions as needed.
London: A giant washing machine for the filthy cash of a corrupt elitehttp://www.ibtimes.co.uk/london-giant-washing-machine-filthy-cash-corrup...
London no longer has the stadiums. They have been sold off and converted to immigrant housing.
I think we should have an immigrant Olympics. I think the USA would win. We don't just have Mexicans -we've been bringing them in from all over the world - and they eat good here too -we put them to work. They all have jobs. There's a couple right outside my window at my neighbor's house mowing the lawn. Used to be white kids doing such work for summer jobs. Now our kids get to hang around the house playing video games.
"Used to be white kids doing such work for summer jobs" I used to do landscaping and maintenance of 6 to 8 rental properties for years in high school and in college... best job I had prior to graduating
You blaming our potato-chip kids on the Mexicans?
Je suis Brazil.
Hahahahahahahaha!! Brilliant!
The Olympics will also be downgraded.
Two guys in a rowboat.
Thiss depression that Brazil is going thru..you can bet they are not going to clean up the bay where all the water sports are supposed to be had.....that money will all be stolen to protect the powers that be in charge of the cleanup....corruption at its finest in Brazil....10 million to clean up the water...means to them..9 million for me and my friends and 1 million to hide the trash in the water....and not doing anything like they were supposed to....
I can't wait for one of the swimmers to bump into a human body, or maybe a cow carcass. You know it's going to happen.
Ties will make excellent washable toilet paper in the new normal!
Wow, do you put them back on after you use them until you get home to wash them, or do you just roll them up and put them in your pocket?
The budget will balance itself if more socialism is applied.
BRAZIL's economy is showing what the WORLD really looks like.
Everything in the USA, Europe and Japan is an elaborate smoke screen. Those economies are not any better, if the true state of the banking system is unleashed.
The advice from that top-level advisor in Britain ... the advice posted on ZeroHedge recently ... it's looking pretty good today. Get some food into your pantry, some spare water and gasoline, and some emergency cash in a safe place.
Send all of the progressives to live in their UTOPIA
Where is Ronald Biggs!!!!
“There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.” – Ludwig von Mises
I just can't wait :)
hairball
Brazil doesn't want US investors.
BRICS is a fine idea in theory, but in practice it is likely stillborn.