Highlights Market-based geopolitical analysis is about identifying upside as well as downside risk. So far this year upside risks include vaccine efficacy, coordinated monetary and fiscal stimulus, China’s avoidance of over-…
Brazilian president Jair Bolsonaro’s decision to replace Petrobras’ CEO is dashing hopes of Brazil’s return to economic orthodoxy. The president’s action came amid fears of a truckers strike on the back of…
BCA Research’s Emerging Markets Strategy service remains negative on the BRL. Brazilian stocks will only become a clear buy after their risk premium reflects fiscal challenges better. Rising resource prices and the…
Highlights Preserving the fiscal spending rule is becoming economically unviable and politically unfeasible. Breaking the fiscal rule – the most likely scenario in our view – will push up the risk premium on Brazilian…
The Brazilian economy has managed the pandemic relatively well this year due to generous fiscal spending. However, fiscal constraints now threaten to derail the recovery. Fiscal sustainability, an issue even prior to the…
On Monday, Paulo Guedes, Brazil’s economy minister, argued that the Brazilian real has likely overshot its equilibrium level of around USD-BRL = 5. The chart above highlights the divergence that has developed between the…
BCA Research's Emerging Markets Strategy service reiterates that within EM benchmarks, investors should structurally underweight Brazilian equities, local currency bonds and sovereign credit. Barring dramatic policy…
Highlights Barring dramatic policy actions, the ratio of public debt to GDP in Brazil is set to rise both continuously and significantly. Authorities can only gratify either the government’s creditors by tightening…
Brazilian share prices and the currency have benefited from the global risk-on environment and rising commodities prices. However, the domestic backdrop remains extremely challenging as BCA Research’s Emerging Markets…
Chart I-1Brazilian Share Prices And Commodity Prices Move In Tandem A FOMO (fear-of-missing-out) mania has pushed equity prices higher around the world. Brazilian stocks, currency and credit markets, likewise, have been staging…