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Non-Tech : The Brazil Board

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To: kidl who wrote (1531)	3/15/2016 10:21:18 AM
From: elmatador	Read Replies (1) of 2504

investors seem convinced that the government of the unpopular, incompetent Dilma Rousseff is about to fall and be replaced by a team of reformist technocrats, apparently poised to take power. Brazil does not have economic problems. Only political ones :-) Panic has lifted and relief rally goes on, but risk-on tide may turn again The recent rally in emerging market assets has slowed somewhat but EM portfolio flows are still in “surge” territory, according to the Institute of International Finance. One big beneficiary is Brazil, where investors seem convinced that the government of the unpopular, incompetent Dilma Rousseff is about to fall and be replaced by a team of reformist technocrats, apparently poised to take power. But Brazil is far from alone. The IIF’s figures — based on a sample of seven EMs that report daily data — suggest that the euphoria is broad-based and applies to commodity and manufacturing-driven EMs alike. The IIF’s data show that the broad EM sell-off that began in the middle of last year has been more gradual but roughly as deep as the “taper tantrum” of 2013, and much less severe than the sell-off that accompanied the global financial crisis of 2008-09. They also suggest that the worst of the sell-off is behind us. But plenty of analysts have warned against complacency, and it is hard to escape the impression of markets moving with the ebb and flow of the risk-off, risk-on tide. China still faces immense challenges in rebalancing its economy in a context of high and rising levels of debt. Investors expecting Brazilians to elect a reforming government will have been sobered by the spectacle of opposition politicians being booed at last weekend’s mass protests. The IIF’s latest surge may not have long to run. © THE FINANCIAL TIMES LTD 2016 FT and 'Financial Times' are trademarks of The Financial Times Ltd.

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