Blood In The Streets: Is It Time To Buy Brazil?
Buying the panic?
Brazil has just suffered one of the most violent election-driven market crashes in history. Equities plunged 17% intraday, the currency collapsed and bond yields exploded. But here is the twist: previous Lula-related panics have ultimately been buying opportunities. With valuations resetting, real yields offering extraordinary carry and the sell-off itself potentially forcing fiscal reform, the setup is becoming increasingly interesting. We look at the recovery case, the Brazil versus Mexico trade and why options may be the smartest way to play the next big move.