Guest Notes From The Sales Desk - Can Brazil Get Its Groove Back?

Tyler Durden's picture

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mayhem_korner's picture

Over the long run, do you really think the US will be able to outperform Brazil?

Innovation and entrepreneurship are mobile - the US is fast becoming an unfriendly state to both.  So "no" is the answer.

trav7777's picture

Brazil has a lot of lazy people and corruption.  It's why they've been the country of the future for 50 years.

Meanwhile the evil white nations just keep chugging along.

johny2's picture

man, you are full of shit. 

Buck Johnson's picture

Your correct.  Also Brazil was the next country to go to that was friendly to the west that wanted to be like the west.  So they did the same thing the West did and are cooking their own economy to become a burnt out economy.

DoChenRollingBearing's picture

A little O/T, but you see LOTS of Brazilian made goods in Peru.  LOTS of trucks!  Lots of transportation related goods.  Beer.  Other goods actually used by Peruvian manufacturers as well.

GeneMarchbanks's picture

'Yes, they are likely to have an inflation problem to deal with, particularly when the US Fed launched QE3 in earnest.'

Lets first see how that gets handled before concluding:

 

Perhaps that buying opportunity isn’t today, we’re still a long way away from the Great Reset.  But in a world where fiat currencies are devalued and consumers over-leveraged, it’s going to be commodity rich Brazil and their young population that will do the best on a relative basis.

Australia, Russia, Canada, Mongolia, Norway etc. these countries would also qualify as resource rich and have cheaper fiat to promote export.

topcallingtroll's picture

All of what you say is true but brazil has a young and growing population and little debt. None of those other countries have both.

The others you mentioned are fully valued to over valued.

Brazil appears to be undervalued based on its long term risk.

EvlTheCat's picture

topcalligtroll,

I would like to know how much you travel, and are involved in Brazil?  To find it such a good investment.

In my opinion Brazil is a debt bomb waiting to go off.  Many people I know are overleveraged with the easy credit provided to them inorder to spurr economic growth.  On top of this the ecomonic infrastructure to pursue fraud is almost non- existant.  That may be one reason your perception of debt is so low?

It may seem like a killing field for investments, and it probably is to the unscrupulous, but long term they look like the U.S. to me.  With one big difference, Brazilians thrive on unscrupulous behavior. Can you?

trav7777's picture

Brazil's problem is that they are even more wealth stratified than we are.  Professionals are underpaid compared to prices and oligarchs are overpaid.  If they want to broaden their economy, they are going to have to route less money into billionaires and more into ordinary professionals. 

Additionally, brazil is hamstrung by a huge black population which does pretty much what every other black population everywhere else does.  The cities in the south such as Curitiba are vastly different in terms of HDIs and levels of corruption and crime than further north.

Brazil, instead of limiting professional and technical immigration, should be paying for it.  Bring in more white people, asians, and indians.

TheLooza's picture

Um.  My ashole is bleeding from today's melt-up.  Why is it so much easier to lose five figures than it is to make it?  Fucxk me.

Manthong's picture

I tend to look at the positive side of things.

If I lose enough, I just get to go back to using drugs, hanging around in bars and carousing with the kind of women I gave up to get to where I am now.

JohnG's picture

This has been the case since trading began in time immemorial.

Call it.......TUITION.

NotApplicable's picture

Because you're competing against the world's premiere criminal cartel with both hands tied behind your back, while blind-folded.

Meanwhile, your so-called stop-loss order is their tree-shaking target.

Personally, I find sniffing glue to be more productive.

4shzl's picture

Meanwhile, your so-called stop-loss order is their tree-shaking target.

Always.

BRIC-layer's picture

Brasil also has one major and rather unique policy plank  going for it: an active targeting of the Gini coefficient, alone among major economies. This will continue to work wonders in the medium term when allied with it's demographic advantages.

Brasil is also relatively immune to a lot of the social pressures confronting heretofore ädvanced"economies. There is an optimism and dynamics reminiscent of the US in the 1950's in a lot of the country.

Having lived through similar crises in the 1980s and 1990s, the Brasil Banking system, as well as it's participants, are far better prepared to confront any stresses from the 2008 Depression.

trav7777's picture

I'll agree with you on the optimism.

The problem is that social spending didn't work here and won't work there to remedy fundamental aptitude gaps between populations.

The chicks are hot and like white guys.  That's enough for me to think about moving there.

buzzsaw99's picture

This from someone who all they want to do is exploit Brazil to make more clownbux. who. the. fuck. cares.

topcallingtroll's picture

Clownbux still have value for now and owning "things" such as pieces of companies with an overweight in natural resources cant hurt, even if clownbux go the way of the dodo.

moskov's picture

How about USA? not only non-productive but the biggest sinkhole ever recorded in the history of mankind

Sudden Debt's picture

I also think we'll have to wait a pretty long time for the big reset in many countries, but not for the big meltdown. 2 years at mpst is my guess unless we get brasilian like rates above 10%

CHARLIE.DONT.SERF's picture

Brazil's real estate market is way over heated.  According to this article http://www.bloomberg.com/news/2011-06-21/brazilians-buy-miami-condos-at-bargain-prices-after-45-surge-in-currency.html the average square foot in Leblon, RJ is over $1000 while it is $354 in South Beach.  Any global shock could burst that bubble as quickly as you can say "fudeu".  

RobotTrader's picture

Will they?

Or won't they?

If Brazil and China announce easing measures at the same time the Eurozone comes up with a "Bazooka" plan, the meltup next week in the equity indexes could be breathtaking.

But most of you should not worry, because gold and silver will go up with it, as PM's will also benefit from the coming "Economic Boom of Epic Proportions" in 2012 - 2015.

topcallingtroll's picture

Wrongo robo.

If you wont be a troll I will.

Once some growth resumes and if europe manages to bring out a bazooka there will be a huge melt up.

Gold and silver may participate initially, but once fear is gone and people are convinced inflation is staying muted pm's will do well to eke out small annual gains.

High beta is the way to play this if you think there may be a melt up.

Brazil is high beta with excellent value and fundamentals. Cant get better than that long term.

topcallingtroll's picture

Valuations remain high?

Bullshit. EWZ has an almost seven percent yield and PE of 8.

These same fund managers are recommending Chile with a dividend yield of 1.8 percent on the main ETF. They were bullish at 76 but now are bearish at 58? Fucking idiots.

Brazil's problem is their fear of inflation and underestimation of their true growth potential. However they are lowering interest rates and high growth will resume.

The time to buy is now but dont bet the farm. Dollar cost average over the next couple of years. Hold forever. Brazil is a buy and forget investment. Check it again in ten years. The first world is japanifying. Second and third world is place to be.

Monedas's picture

Electing an ex-Communist Guerilla bitch as President is not my idea of good PR ! The New World Latins have the sickest, most conceited and myopic faith in Socialism ! They just don't get it and no one challenges nor ridicules them for it.....except for Monedas 2011 and a few other visionary comedians !

topcallingtroll's picture

There is plenty of untapped OPM to keep the socialists funded for a long time.

For the next ten years, at least, brazilian socialism and a great ROE can coexist peacefully.

NotApplicable's picture

Don't forget the upcoming UN taxing authority. Once that takes hold, Hell won't seem quite so bad, after all.

Monedas's picture

I'm really out of the loop ! What's ROE ? UN Taxing Authority ? You mean some of these "emerging" nations are going to receive taxes from other countries ? There is no end to the filthy business of Socialism ! Monedas 2011 Schweinfurt Ball Bearing Works am Main

youngman's picture

They left out corruption...and Brazil has plenty of that...and it works in a slowing economy as well as a growing economy...steal it ...its the easy way to make the millions...

spanish inquisition's picture

I am shocked. Once I started hearing about the Brazil investment miracle from supermodels and rap stars, I thought "Wow, skys the limit".

buzzsaw99's picture

when i started hearing "emerging markets" every two seconds i knew what was coming.

Monedas's picture

We need to use the Spanish Inquisition as a model for liquidating the Socialist filth ! We need to put a bounty on their heads....payable in PMs, por supuesto ! Monedas 2011 I volunteer for the death panel !

Monedas's picture

Everythings comin' up roses ! Soon Brazil's Afrikan population will exceed that of Afrika due to robust demographics in Brazil and Muslim extermination of Black Christians in Afrika ! Monedas 2011 Comedy Jihad Holocaust Hoe Down

Monedas's picture

In summation:  The Red Cross, Bleeding Heart Christian Charities and Hollywood Guilt Merchants provide food aid to Sub-Saharan Muslims....whose governments deny aid to starving Christians who wander the Savannah and get so weak they die or are easy to mow down ! I call it "Open Range Genocide"....minimal infrastructure required ! Monedas 2011 Comedy Jihad Cost Effective Genocide

forgetalpha's picture

Let's not make this complicated...

Decoupling=bullshit

BRICS=leveraged bet on equity market rebound

Brazil = not China

Reliance upon China + Chinese RE collapse = everyone is screwed

everyone is screwed = brazil is screwed

Relative value works on a consistent basis, oh wait, that's right...never

Have fun trying to explain this bloated sales pitch to an over caffinated (among other things) HF trader...or better yet, to a HFT algo. The zeroes and ones have a great history of applying relative value arbitrage to their trading strategies right?

Also...can we please stop with this nonsense that China HAS to sell all of their US Tsys in this grand fell swoop in order to save their economy and/or screw the US....screwing over one of your top trading partners has always been a great strategy....also, if China sells all of their Tsys in response to whatever retarded scenario you assume, then the greatest trade balance in modern history would be decimated in nanoseconds...you know what happens when China sells their Tsys? The greatest tool in modern economic history for global trade dominance (otherwise known as the USD peg for RMB) will be destroyed and the RMB would appreciate at an extreme rate, simultaenously destroying China's export industry and everyones paper thin margins to begin with.

Better luck next time, Brian of Fator...I hope you and the Fator Group of companies in Brazil manage to sell this obvious  sales pitch to the fat dumb and blind investors of the world, otherwise known as retail investors and the 'responsible' financial "advisors" that represent them.

Grand Supercycle's picture

SP500 weekly chart shows megaphone wedge and looks bullish.

Market consensus became clearer on Friday so back to the original bullish analysis and SP500 weekly chart reverts to bullish/neutral.

More info:
http://stockmarket618.wordpress.com