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Non-Tech : The Brazil Board -- Ignore unavailable to you. Want to Upgrade?

To: THE ANT who wrote (1242)	2/22/2013 10:58:34 PM
From: elmatador	Respond to of 2504

After a spending spree in recent years, Brazilian consumers are acquiring more conservative habits. But in a hopeful sign for the economy, they are still pressing ahead with big-ticket purchases of TVs and living room sets by relying on a tactic that is still new to many - saving. A day with Brazil's ambitious but indebted shoppers By Asher Levine SAO PAULO \| Fri Feb 22, 2013 11:10am EST (Reuters) - As Fernanda Castro waits in line to pay for a new blender at a store in a Sao Paulo shantytown, the hairdresser recounts horror stories of friends who fell into debt and struggled to get out. "I don't want that to happen to me," she said. "I avoid using the credit card now. I'm afraid of it." After a spending spree in recent years, Brazilian consumers are acquiring more conservative habits. But in a hopeful sign for the economy, they are still pressing ahead with big-ticket purchases of TVs and living room sets by relying on a tactic that is still new to many - saving. That was the picture that emerged from about 20 informal interviews that a Reuters reporter conducted recently while spending a day at the Paraisopolis branch of Casas Bahia, Brazil's No. 1 furniture and home appliances retailer. Despite a recent economic slowdown, the store buzzed with eager shoppers as its speakers blasted Brazilian country music out onto a street in Sao Paulo's largest slum. Children were jumping on an imitation-leather sofa as their mother checked out an Android phone, while a family of six was excitedly shopping together for a new washing machine. Many were members of Brazil's emerging middle class, which include the approximately 30 million people who escaped from poverty over the last decade. Yet as their stories illustrate, keeping shoppers in stores has become harder over the past year. Consumer defaults in Brazil rose 15 percent in 2012, according to credit research company Serasa Experian. About one in every six households is now overleveraged, according to a recent report by Santander. ROOM FOR SPENDING Castro can still shop, though, because her salary has nearly doubled in the past two years to 3,000 reais ($1,523) a month. That has enabled her to put money aside, a relatively new habit in a country where a painful history of inflation, which only ended in 1994, long engendered a culture of spending paychecks as quickly as possible. "I am saving a lot more to get what I want," Castro said. That is why many economists believe Brazil's consumers still have room to spend more and support an economy that has otherwise stagnated in the past two years, as sectors like manufacturing struggle. The more bullish analysts tend to see recent consumer debt woes as a painful but perhaps necessary step in Brazil's economic maturity, rather than a bubble that has burst. According to this view, many lower middle-class consumers who gained access to credit for the first time in the late 2000s and got burned by their inexperience at the turn of the decade are now slowly working their way out of debt, aided by low unemployment and high wage growth. That would be the best scenario for Brazilian companies like Casas Bahia parent Grupo Pão de Açúcar, Brazil's biggest diversified retailer, as well as discount chain Lojas Americanas and apparel sellers Cia Hering and Lojas Renner. "There are people who think we lost a vector of growth - I disagree totally," said Octavio de Barros, chief economist of Banco Bradesco in Sao Paulo. "Credit will continue to play an important role as incomes continue to rise," said Barros, who expects the growth rate of household consumption to accelerate to 4.5 percent this year from 3.1 percent in 2012. CASH IS KING (FOR NOW) Indeed, some economists believe that consumers who are now swearing off debt altogether are being a little too rash. Brazil's central bank cut the benchmark interest rate to a record-low 7.25 percent last year. As recently as 2006, rates were at high-teen levels, a legacy of the country's inflationary days. President Dilma Rousseff's government, meanwhile, has pressed banks to continue lowering spreads, the difference between what they pay in interest and what they charge for loans, to lower borrowing costs to consumers. "People will return to leveraging themselves," said Jankiel Santos, chief economist with Espirito Santo investment bank in Sao Paulo. Santos cited increasingly attractive interest rates in the banking system, where the average cost of borrowing fell in December for the 10th straight month, to 28.1 percent. That is still high by rich-world standards, but a record low for Brazil. Regardless, debt remains a bad word for people like Ronivaldo Dos Santos, a 45-year-old night watchman who was milling about the smartphone counter at Casas Bahia. "Nowadays I'd rather wait until I have money in my pocket before I buy something," he said. "I've already had my name fall onto the credit watch list, and I don't want that to happen again." Rose Rosean, a 25-year-old maid shopping for a new six-burner stove, put it more succinctly: "I'm paying cash from now on." Several customers said they were saving for even bigger purchases, such as a new car or house, a sign that confidence in the medium-term future remains high. Part of that optimism is due to a rise in employment in the formal part of the economy, rather than the black market. That has given many low-income Brazilians an unprecedented ability to look ahead and plan their finances because they can count on a regular salary. "The 'anxiety rate' of families is much lower than it was," Bradesco's Barros said. "They have never saved as much as they are saving now." RETAILERS COULD STEP IN Economists highlight several risks that could make life more complicated for consumers as they try to recalibrate their finances. Foremost among them is that Brazilian companies, discouraged by the country's recent flat economic growth, could start making large-scale layoffs. That might snowball into a bigger problem as consumers start defaulting on their debts. However, there has been no sign of this to date; unemployment has continued to fall and reached a record low of 4.6 percent in December. One pillar of support for consumer credit may be the stores themselves. Casas Bahia, like many Brazilian retailers, has its own in-house financing operation. Roberto Fulcherberguer, the company's commercial vice president, said Casas Bahia, which has spent decades working with lower-income customers, had a "very low and stable" default rate. While banks may refrain from extending credit to those without formal jobs or steady incomes, Casas Bahia takes a more personal approach. "Fathers will introduce their children to Casas Bahia, and they will get credit because I know the father," Fulcherberguer said. "He wouldn't get credit anywhere else, but I have the relationship, so I trust him." That may keep people like Jose Jucinaldo looking toward the next item on their wish lists. "I won't be making any big purchases for a while because I need to pay off debts, though I still have my eye on a bigger TV," said Jucinaldo, a cook at a Paraisopolis lunch counter. "A 32-inch Sony LCD screen. That's next." ($1 = 1.97 Brazilian reais) (Editing by Brian Winter, Kieran Murray and Lisa Von Ahn)

To: THE ANT who wrote (1242)	2/23/2013 4:52:41 AM
From: elmatador	Respond to of 2504

Brazil has exempted foreign investors from paying a financial transaction tax if they purchase real estate investment trusts traded on the country’s stock exchange. This measure announced on Thursday was taken in hopes that foreign investments would be encouraged and later support Brazil’s economic recover Brazil Introduces Tax Exemption for Real Estate Foreign Investments JANUARY 31, 2013 BY ALINA POPESCU 3 Google +1 11 2 0 0 Brazil has exempted foreign investors from paying a financial transaction tax if they purchase real estate investment trusts traded on the country’s stock exchange. This measure announced on Thursday was taken in hopes that foreign investments would be encouraged and later support Brazil’s economic recovery. In the past year, the Brazilian government has focused on determining alternative sources of funding for local businesses, the majority of which are highly dependent on loans taken from state development bank BNDES, which is the primary source of long-term funds for the Brazilian corporate segment. The newly introduced tax exception is expected to increase US dollar inflows and help maintain the strength of the local currency. Yet the main reason for the exemption was to encourage investment’s in Brazil’s real estate market. “The objective here is to stimulate long-term investment in the real estate sector,” Dyogo de Oliveira, a senior finance ministry official, told reporters in Brasilia. “This measure should not have a relevant impact on the currency.” As a result, BM&FBovespa SA’s IFIX Index that tracks the most-traded real estate investment trusts (REITs) in the Sao Paolo Stock Exchange, went up 0.62% on the day of the announcement. “On the back of low yields across global assets, these funds should arise as an interesting alternative to international investors,” BTG Pactual Group analyst Alexandre Muller said in a note. “Due to the general scarcity of good yields available in most of the financial assets … we anticipate new buyers for local real estate funds.” REITs, usually inflation-adjusted as rent contracts in the country are linked to the IGP-M (the local consumer and wholesale price index), represent a very attractive investment opportunity, contrasting with the overall slow-growth of the local market which has seen interest rates at a record low. The average local REIT offers interests of 7-8%, as compared to only 4% for a 10 year inflation-linked bond issued by the Brazilian government. This is not the first measure the Brazilian government takes to stimulate the real estate sector. In December 2012, they s reduced payroll taxes for construction firms, trying to stimulate investments. Photo - Rockmysock, Wikipedia

To: THE ANT who wrote (1242)	3/26/2013 3:10:26 PM
From: elmatador	Respond to of 2504

Brazil side stepped a major consumer debt balloon. Lula used the consumer to avoid the crisis of 2008. Then cut consumer credit ballooning. Then re-arraged the economy to be driven by investment in infrastructure Brazil: Humbled heavyweight By Joe Leahy Growth has stalled and the government is casting about for revival measures Robert Lima da Silva sits on the ageing motorbike he uses for his job as a courier, waiting for one of São Paulo’s torrential rainstorms to pass. “I’ve got a motorbike from 2003 and I want to change it for something newer,” he says. But he explains that repayments on his existing debts account for about two-thirds of his monthly income. “The problem is that my debts won’t let me,” he says of the planned upgrade. Brazil’s motorcycle industry reflects a wider malaise in Latin America’s biggest economy. Two-wheeler sales were growing quickly until 2011, when millions of new lower-income consumers took advantage of easy access to loans to buy a new Honda or Yamaha. Last year, however, that changed as consumer credit became harder to secure, causing production to plunge by more than a fifth. It is a trend that has continued into this year. Her government’s response has been to wade into sectors ranging from energy to telecommunications with a mixture of carrot and stick, from tax incentives to measures forcing producers to cut prices. Yet rising government involvement in business is proving divisive. On one side, those in banking and the financial markets argue that Brazil is reverting to interventionist ways that were found wanting in the past. The industrial sector counters that manufacturing will sink under high costs and rising imports unless help is forthcoming.Like many other Brazilian manufacturers, the motorcycle industry is now looking to the federal government in Brasília to help solve its problems. They know that the government of President Dilma Rousseff is desperate to revive the country’s former economic miracle. Gross domestic product grew less than 1 per cent last year, the lowest of the Brics club of emerging nations. Investors are shunning Brazil in preference for Mexico, something unthinkable only two years ago. Although she is still immensely popular, the economy is a potential cloud over Ms Rousseff’s re-election prospects next year. “We are basically talking about what is the potential growth of Brazil – how much Brazil could grow in this new world with commodities not pushing, with developed countries not growing, this is a question [for which] we don’t have an answer today,” says Roberto Setubal, chief executive officer of Itaú Unibanco, Brazil’s biggest private bank. “Clearly Brazil has to change the model.”The one point of consensus seems to be that the past decade of external tailwinds, provided by robust commodity prices and generous foreign fund inflows from loose monetary policy in developed markets, is over. Brazil needs to fuel its internal engines of growth, particularly investment. Intervention in Brazil can make or break an investor’s fortunes overnight. In March, shares of Petrobras leapt 9 per cent after the government unexpectedly allowed the state-controlled fuel company to increase diesel prices. While the government officially denies controlling petrol prices at the pump, Petrobras is forced to sell fuel from its refineries at below international levels to help control inflation, depleting cash reserves needed to develop Brazil’s giant offshore oilfields. “It was a positive surprise,” says Brunella Isper at Aberdeen, a São Paulo fund management company. “Maybe the government is signalling it is not that keen to use Petrobras any more as a tool to control inflation, which would be great if true.” The surge of interventionism dates back to 2009 when Brazil began what it dubbed the “currency war”. The government was worried that foreign speculators were pouring money into Brazil to exploit the country’s high interest rates, in the process driving up the value of the currency against the dollar and hurting the competitiveness of local industry. The episode reached a climax in 2011 when Brazil raised financial transaction taxes on everything from bonds and swaps to foreign loans in order to curb the inflows. Eventually, the real did weaken. Although the International Monetary Fund cautiously approved currency controls, various economists have questioned the currency war’s value. Nomura economist Tony Volpon argues the currency controls cut off foreign portfolio inflows and damaged investor sentiment just as the economy was slowing down in mid-2011 because of the eurozone crisis. This partly explains why Brazil screeched to a halt faster than other emerging economies – from 7.5 per cent GDP growth in 2010 to 0.9 per cent last year. Worse, the weaker currency seems to have done little to revive industry, which is plagued by high costs and wage rises that are outstripping productivity. “The imposition of capital controls led to a tightening of monetary conditions just as growth began to disappoint,” Mr Volpon said in a report. Apart from the currency, the government reverted to direct protection. The big four car manufacturers in Brazil – Fiat, Volkswagen, General Motors and Ford – won a reprieve in 2011 from competition from cheap Asian imports. Excise tax rose up to 30 percentage points on cars with less than a certain level of local content, stopping some Korean and Chinese producers in their tracks. . . . In its bid to save jobs, the government began cutting social welfare taxes for 40 industries. Companies applauded the move. But the ad hoc nature of the changes led to more uncertainty in the investment climate, economists argued. Jin-Yong Cai, the chairman of the World Bank’s private-sector arm, the International Finance Corporation, told the Financial Times: “Business looks for stability and transparency and it’s not good to give special treatment to one industry or another which in my view creates distortions.” “For Brazil, the issue is that consumer spending, which for years was the driver of growth, can no longer continue to increase at rapid rates,” said Capital Economics, a London-based research house.In the second half of 2011, the central bank began a dramatic easing cycle, bringing its benchmark Selic rate down to what is for Brazil a record low of 7.25 per cent. Yet Ms Rousseff was dismayed when banks refused to increase lending. What ensued was a messy public spat with the private banks, which resisted exhortations to increase lending, arguing that Brazilians were already too heavily indebted. After the failure of these earlier interventions to return growth to its higher track, official policy took a more strategic turn last year. Ms Rousseff began targeting Brazil’s high costs – Brazil ranks 130th out of 185 countries on the World Bank’s Doing Business survey – below Bangladesh and Russia but above India. She also began trying to boost Brazil’s low investment ratio, which at 18 per cent of GDP last year is below Mexico at 21.5 per cent and Chile at nearly 24 per cent. First came giant infrastructure programmes. More controversially, the government also renegotiated expiring electricity concession agreements to give operators the choice of extending immediately – in exchange for a sharply lower tariff – or face their contracts being put up for tender when they expired. This sent electricity stocks crashing, angering investors, but it won applause from industry associations. Critics argue the end result was that while foreign companies remained bullish last year, ploughing $65bn in direct investment into Brazil, the plethora of changes created so much uncertainty that domestic investors and foreign fund managers began withholding their money. “Excessive interventionism has a cost, it was probably 200 basis points altogether in Brazil last year of growth,” said Marcelo Salomon, economist at Barclays Capital. Others, however, see some of the interventions as important attempts to move Brazil further down the development path and tackle the notorious custo Brasil or Brazil cost. Interest rates charged by banks on some consumer products, such as overdrafts, soared into triple digits. Ms Rousseff’s campaign to lower rates was an attempt to deal with this. Brazil has the highest ratio of renewable hydropower electricity at nearly 82 per cent last year. Yet Brazilians pay among the world’s highest energy bills. The government’s intervention in electricity lowered energy costs 14 per cent this year, according to Itaú-Unibanco. The government is pursuing other reforms, too, that barely register on the investor radar: Ms Rousseff wants to double education investment to 10 per cent by 2020 and she is overseeing an improvement in the rule of law by showing less tolerance for corruption among her ministers and in her party. “Even though investors take a view that the moment you intervene it is wrong, what investors want doesn’t always necessarily imply what is good for the country itself in the long term,” says Haroon Sheikh of Netherlands-based Cyrte Investments. The history of rapid development in northeast Asia, such as South Korea’s state-led focus on education and its use of the chaebol business groups to develop value-added industries, were examples of successful interventions. Mr Sheikh adds, however, that not all intervention is good. Subsidies, local-content programmes, protection, tax breaks and cheap credit should be accompanied by strict guidelines to ensure that industries become globally competitive or cease to receive such benefits. A crucial part of successful east Asian industrial policy is “being able to let things that are not important die and focus on others”, Mr Sheikh says. . . . There is a growing sense that the most frenetic phase of the intervention may be ending. A more assertive central bank is pushing back on inflation and threatening to increase interest rates. The fuel-price rise and a promise by officials to improve returns on infrastructure projects were taken as a sign by investors that the government is still listening. The economy seems to be responding, with better growth coming through in January. Political analysts say that although a more methodical approach to economic reform is needed, Ms Rousseff will probably continue to walk a tightrope between providing concessions to politically important industries and launching more comprehensive changes. If industry begins laying off workers, it would hurt her re-election prospects and provide a boost for new presidential challengers, such as Eduardo Campos, a charismatic governor in the booming northeast state of Pernambuco. Perhaps for this reason, Marcos Zaven Fermanian, president of Abraciclo, Brazil’s motorbike and bicycle manufacturers’ association, remains confident that help could be on the way for his industry. “The state-owned banks have increased the volume of finance to our customers but there is still space for further growth,” he says. Mr da Silva may be able to upgrade that motorcycle after all. Copyright The Financial Times Limited 2013. You may share using our article tools. Please don't cut articles from FT.com and redistribute by email or post to the web.

To: THE ANT who wrote (1242)	4/1/2013 6:20:28 AM
From: elmatador	Respond to of 2504

Brazil's High Flying Real Estate Prices Outpace All Countries ranks No. 3 in the world and No. 1 in the Americas for rising home prices. Only ridiculously expensive Hong Kong and Dubai, which are not countries, have seen prices rise more. And one reason is the low cost of financing. Or at least low by Brazilian standards. Mortgage rates are at least 1.3% a month, and loan payments are generally for just 15 years. It used to be that Brazilians bought homes in cash, but not anymore. They are financing purchases with down payments. Since 2009, when Brazilians starting buying homes on debt, mortgage lending has risen five fold, by 550% between then and 2012. According to Brazil’s Institute for Economic Research, or FIPE, housing prices rolled into the end of 2012 in seven capital cities on a high note. Prices in all seven cities — from São Paulo to Rio de Janeiro — rose well above the inflation rate of 5%. At the start of the fourth quarter last year, at the end of September, Brazilian housing prices had already risen by 15% while inflation was not even half that. Looking back at September, FIPE said São Paulo real estate rose 1.5%, three times higher than the national inflation average for the month. Average price per square foot in São Paulo was R$6,806, or around $3,403. Rio was even worse and has become the most expensive city in Brazil when consider square foot pricing. In Rio, it’s over R$8,300, or around $4,000. Brazil's High Flying Real Estate Prices Outpace All Countries Avenida Paulista in São Paulo. When it comes to rising housing prices, no country in the world beats Brazil. According to Knight Frank’s Global Real Estate Index, released this month, Brazil ranks No. 3 in the world and No. 1 in the Americas for rising home prices. Only ridiculously expensive Hong Kongand Dubai, which are not countries, have seen prices rise more. So in fact, no single country has seen its housing prices rise as much as Brazil. Brazil housing prices rose 13.7% from the fourth quarter of 2011 to Dec. 31, 2012. By comparison, U.S. housing prices rose 7.3% in the same period, putting it at No. 12 in a list of 55 countries ranked by Knight Frank. The only other country in the hemisphere to make it into the top 20 was Colombia, with real estate prices rising 8.3% in 2012. Brazil stands out. And one reason is the low cost of financing. Or at least low by Brazilian standards. Mortgage rates are at least 1.3% a month, and loan payments are generally for just 15 years. It used to be that Brazilians bought homes in cash, but not anymore. They are financing purchases with down payments. Since 2009, when Brazilians starting buying homes on debt, mortgage lending has risen five fold, by 550% between then and 2012. According to Brazil’s Institute for Economic Research, or FIPE, housing prices rolled into the end of 2012 in seven capital cities on a high note. Prices in all seven cities — from São Paulo to Rio de Janeiro — rose well above the inflation rate of 5%. At the start of the fourth quarter last year, at the end of September, Brazilian housing prices had already risen by 15% while inflation was not even half that. Looking back at September, FIPE said São Paulo real estate rose 1.5%, three times higher than the national inflation average for the month. Average price per square foot in São Paulo was R$6,806, or around $3,403. Rio was even worse and has become the most expensive city in Brazil when consider square foot pricing. In Rio, it’s over R$8,300, or around $4,000. In 2012, average price per square foot in New York City was $1,294. Despite this, FIPE says there is no real estate bubble in Brazil. But that all depends on the definition. By the popular American definition, Brazilian real estate is not in a bubble. Its banks do not trade in risky mortgage backed securities. Housing loans are not packaged up into sophisticated investment products for hedge funds and the bulge bracket banks to play around with. Moreover, downpayments are actually required, unlike in the U.S. where subprime clients were able to get into a house with little or no money down, leading to a foreclosure crisis. Brazil is not even close to foreclosure crisis. Strangely enough, despite the higher prices and red hot demand, many of Brazil’s real estate developers are struggling. Homebuilder Rossi Residential reported a 2012 loss of R$206 million ($102 million) and PDG Realty did even worse, losing R$2.17 billion ($1 billion) last year. Rising material and labor costs are some of the reasons for the loss, though a lot of it seems inexplicable. Even Gafisa (GFA), the only Brazilian homebuilder traded on the NYSE, struggles to stay above $4 a share. The stock is down 25.6% over the last 12 months and a whopping 77% over the last five years, all the while Brazilian housing prices were rising to where they are today: the fastest rising single country home market in the world

To: THE ANT who wrote (1242)	5/4/2013 8:25:56 AM
From: elmatador	Respond to of 2504

In Brazil, Strong Labor Market, Weak Economy In the U.S., the S&P is a forecast of the future. That future seems bright even if the present is rather dismal. The physical economy and the one represented by the stock market in the U.S. rarely match. In Brazil it is the same thing, only in reverse order. The actual economy on the ground is doing quite well. People are getting richer. Lower income earners making minimum wage are watching their paychecks rise by 10% or more. Unemployment is a record low, around 5.5%. Out of all the countries in the world, Brazil saw its new home prices rise more than any other country, including mainland China. Yet, the BM&F Bovespastock exchange is down, making it more reflective of week, commodity driven GDP. If one thing stands out like a sore thumb in all this boredom, it is Brazil’s labor market. There’s nothing boring about it. It’s booming. But how can the economy grow at 0.9% in 2012, yet unemployment decline? How can companies invest little in their own business, but still manage to hire? What’s going on to keep Brazilians employed when the economy is the slowest growing big emerging market? The continued tightness of Brazil’s labor market in the face of persistently slow growth has become one of the key puzzles in assessing the economy. Despite growth falling from an average of 4.1% between 2008 and 2010 to 2.2% between 2011 and 2013, the unemployment rate has continued to fall. For Tony Volpon, a managing director in charge of emerging markets fixed income in the Americas over at Nomura Securities in New York, there are distinct factors changing the demand and supply of labor in the direction of tighter conditions. The supply of labor is shifting downward due to demographic factors, as well as changes in behavior resulting from a rising premium for education. The demand for labor has risen as a response to the large, positive terms-of-trade shock that drove resources to labor-intensive non-commodity sectors. More Brazilians are staying in school. Less Brazilians are available to work. On the high end of the scale, engineers are in hot demand and can command a higher payscale than ever before. Brazil isn’t getting expensive from an employers point of view. It already is expensive. Strong labor markets can also push people out of the labor market when they consider alternatives to working, specifically staying in school. The proportion of those with nine or more years of education to those with nine years or less has almost doubled in the past decade, from 47.8% in 2001 to 80.8% in 2009, Volpon says. The proportion of youth between 15 and 24 years old not in the labor force (and thus most likely studying) has actually risen from 43% in 2004 to 47% in 2013, according to the Brazilian Institute for Geography and Statistics, better known as IBGE. Changes in trade, Brazil’s shift to an even bigger consumer society than before, with more jobs available for entry- and mid-level professional and retail service jobs, plus more young people sticking it out in college for higher pay down the road has created a super tight labor market in Brazil. So while Brazil’s economy may not growing at impressive levels, and nor is its equity market, the labor market is expected to be strong for some time. “Demographic factors and a high education premium will keep labor supply tight,” Volpon says. “Only a very severe crisis could increase the opportunity cost to staying at school sufficiently to force more youth into the labor force.” For now, Brazil’s labor market will continue to look nothing like the dismal GDP numbers and its boring Bovespa counterpart. If you could trade in Brazil’s job market instead of equities, you might be better off. This is the one aspect of Brazil’s economy that investors can count on to remain solid for years to come. YTD Performance of Brazilian Equities iShares MSCI Brazil: -2.2% Market Vectors Brazil Small Cap: -6.73% Petrobras : -2.47% Vale : -19.6% Itau Unibanco: +1.87% Cosan CZZ +0.48%: +19.87% AmBev: -1.05% Gerdau: -13.90% Gafisa: -13.98% Pao de Açucar: +25.83%

To: THE ANT who wrote (1242)	5/4/2013 8:31:47 AM
From: elmatador	Respond to of 2504

Tighten job market and its effects in food prices: As Brazilians celebrate newfound job security, it sometimes feels like there is always someone willing to pay sky-high prices for goods or services. Brazil's food inflation: don't blame it all on the weather(Reuters) - Brazil, an up-and-coming agricultural superpower with abundant fertile land, is struggling to provide consistently affordable food for its population. To understand how, consider the tomato. Prices of the red fruit shot up 122 percent in March from a year earlier, putting it on the cover of two national magazines, spurring reports of tomato trafficking from Argentina and igniting national outrage over how any produce could possibly cost more in the tropics than in, say, frigid Alaska. Brazil's output of export commodity crops like soybeans, corn, sugar and coffee is growing faster than anywhere in the world, and no one is warning of an imminent food shortage in a country so rich in natural resources. But Latin America's largest economy is increasingly becoming a tale of two contrasting agriculture policies. Export crops are a model of technological prowess and high yields while the farms responsible for feeding a growing consumer class have remained much the same for decades: mostly small and family-run. Weighed down by debt, vulnerable to weather damage and squeezed out of their lands by the commodity crops, these farms are the first link in a long chain of inefficiencies that made food prices soar in a country still scarred by its long history of runaway inflation - complicating President Dilma Rousseff's efforts to rekindle economic growth. "Brazil is only concerned about the agriculture that affects our trade balance," said Cyro Cury, who grows 10 kinds of tomatoes on a farm an hour outside Sao Paulo, South America's biggest city. "There is no strategy, no regional statistics. We don't deserve to be called the world's bread basket, we don't have the right policies for that," he said while examining freshly harvested tomatoes from the dozen greenhouses he manages. Some of the problems facing the small farms clustered around Brazil's largest cities, such as scarce labor and poor transport lines, are also felt by manufacturers and entrepreneurs. They make up part of the so-called Brazil cost that has choked economic growth and made doing business here so expensive. Brazil's government largely blames the recent rise in tomato, onion and carrot prices - which helped drive inflation above the upper end of the central bank's target range in March for the first time in a year and a half - on seasonal factors it can't control. "There were climate problems in some regions," secretary of agriculture policy Neri Geller said, suggesting prices would soon fall. "We have well-defined policies for these products through credit lines and intervention through minimum prices." There is a growing consensus among farmers and economists, however, that deeper structural issues, not just irregular rains, leave Brazil vulnerable to oscillating food prices at a time when few comparable countries are worried about inflation. As in many developing countries, food still accounts for a large chunk of Brazil's consumer price index - 22 percent - and fresh fruits and vegetables are widely consumed by all classes. LACK OF LABOR Chief among the factors spurring high food prices is a lack of farm workers in a country now enjoying almost full employment. After years of strong growth, services companies have lured unskilled workers away from farms by offering them better perks and a lighter workload, often inside air-conditioned shops rather than under the blazing sun. "Today the scarcest type of workers in Brazil are the unskilled workers. Farm workers live just outside the big cities and have other opportunities," said Mauro Lopes, an agronomist at the Getulio Vargas Foundation think tank in Rio de Janeiro. Unlike the large soy and sugar plantations that are largely mechanized, well-capitalized and often run by foreign firms, some 60 percent of Brazil's vegetable farms are still family run and rely on manual labor. Cury, the tomato farmer, said the scarcity of tomatoes and record prices this season are mainly due to an outbreak of a deadly fungus, fewer seeds planted as farmers emerge from debt, and the increasing difficulty finding workers. He says he would have liked to plant tomatoes in eight more greenhouses this season to help meet surging demand in Sao Paulo. But he couldn't find the additional workers for a salary of about 1,000 reais ($500) a month. Brazil is now the world's top producer of sugar, citrus and coffee, the leading exporter of poultry and beef and on the verge of becoming the top soybean grower. But land for non-export crops is increasingly scarce. Data from statistics agency IBGE shows that the area planted with rice and beans, staples of the national diet, has fallen about 30 percent since 1990, when the population was 25 percent smaller. In Sao Paulo state, an economic powerhouse that is home to 40 million people, cane fields and orange groves dominate the landscape. "There is a clear divide in Brazilian agriculture," said João Pedro Stedile, leader of Brazil's landless peasants' movement, known as MST. "There are 16 million workers in family farms; they have only 15 percent of the land, but grow 80 percent of what's consumed domestically." Cury and other farmers can't move too far from the cities in search of cheaper land and labor in the interior like their soy and corn farming counterparts because vegetables would spoil long before they arrived. "Transport restrictions are a chronic problem in Brazil," said Geraldo Barros, a professor at University of Sao Paulo in Piracicaba. "They hurt producers directly. A large part of the burden falls upon them, through lower prices (at the farm)." Though tomato prices in Brazilian grocery stores have fallen slightly since March, when they cost more than in supermarkets in northern Alaska at $8 per kilo, onion prices remain around $3 per kilo, double their price in Mexico City and three times what they cost in Lima, Peru. In addition to labor, land and transportation, there is another part to Brazil's food inflation story: a large gap between wholesale and consumer prices. "Stronger purchasing power made companies pass through all the increasing costs to consumers, and also inhibited them from lowering prices when costs started to drop at the farm's gate," said Mauricio Nakahodo, an economist with Bank of Tokyo-Mitsubishi in Sao Paulo. Though tomato producers welcomed this year's boon of higher prices, Cury said it is not making them rich. A box of his standard tomatoes costs 3.5 reais, but was selling for four times that amount at a local supermarket, he said. He said the small share of profits limits farmers' ability to increase food output for Brazilians, ensuring a cycle of high prices for years to come if nothing changes. "If we don't adopt policies for small-scale crops and guarantee nourishment, we are going to have big problems in 10 years." (Additional reporting by Alexandra Alper in Mexico City and Mitra Taj in Lima; Editing by Todd Benson and Kieran Murray)

To: THE ANT who wrote (1242)	5/11/2013 5:38:21 AM
From: elmatador	Respond to of 2504

Youngsters at school, low unemployment rate: Brazil's Multi-Billion Dollar Education Industry: Shaping Futures, Changing Lives, and Minting Billionaires Post co-written with Luke Barbara, an American entrepreneur based in São Paulo, Brazil. Brazil’s role as a global superpower is on an upward trajectory and the country will make numerous important contributions to the world in the 21st century. Many of these contributions will come from, and almost all will be connected to, a sector that gets little attention in mainstream media – academia. So much attention is focused on the Brazilian government’s domestic and foreign policies, home-grown businesses such as Embraer and Petrobras , and the global mega events including the 2014 Soccer World Cup and the 2016 Olympics Games. Many people outside of academic circles have never heard about Brazil’s universities and the important role they play in the country’s success story through education, thought leadership, and technological innovation. It is important for all business leaders and global influencers with a desire to understand Brazil to familiarize themselves with Brazilian academia’s higher education institutions. Opposite to the United States, most of the top universities in Brazil are public and offer free tuition to those who pass their rigorous and highly competitive entrance examinations. The University of São Paulo (USP) is consistently ranked as the top university in Latin America by U.S. News & World Report and the other two state universities in São Paulo, UNESP and UNICAMP, are also academic powerhouses with global distinction. Top Brazilian higher education institutions have strong interplay with government, corporations, and technology creation. The epitome of successful collaboration between academia, government, and business is the relationship between the Technological Institute of Aeronautics (ITA) and aircraft manufacturer Embraer. In the 1950s, the Brazilian government embarked on an ambitious mission to build a national aviation industry. The government commissioned the creation of ITA along with the Brazilian General Command for Aerospace Technology (CTA), which is tantamount to the Federal Aviation Administration (FAA) in the USA. The powerful combination of ITA as a technology-focused university and the government agency CTA successfully gave rise to the formerly state-owned Embraer, which has since been privatized. Today, Embraer is a $6 billion highly successful global aviation company and ITA is dubbed by many as the “MIT of Brazil.” Brazil’s academic prowess extends beyond aviation technology into many diverse areas. It should come as no surprise that business is one of the main areas. Globally recognized Brazilian business schools include Fundação Getulio Vargas (FGV), Fundação Dom Cabral, and USP’s FEA. Increasingly, Brazilian professionals are passing up the opportunity for a foreign MBA to instead attend business school in their own country. Academia is fueled by the exchange of knowledge and collaboration between researchers, students, and institutions. Brazilian academic institutions have long-standing partnerships with top universities around the world and new initiatives are launching with increasing frequency. Brazilian academia needs the knowledge, talent, and pollination of ideas from other institutions and researchers around the world. Mutually, it contributes in this exchange by sharing Brazil’s creativity, innovation, and thought leadership with rest of the globe. Recognizing the increasing importance of Brazil, foreign higher education institutions are rushing to establish themselves more firmly in Brazilian soil. Some of these are building on longstanding involvement in the country and others are making their first foray into Brazil. Harvard’s David Rockefeller Center for Latin American Studies has established an office in the São Paulo metropolis and the University of Southern California recently launched a Trojan Outpost focused on recruiting Brazilian students. A notable longstanding collaboration between Brazilian and American higher education institutions is the 49 year history of partnership, research collaboration, and student exchange between USP’s Luiz de Queiroz College of Agriculture (ESALQ/USP) and The Ohio State University (OSU) focused primarily on agricultural sciences and technologies. A unique aspect of this collaboration is a Brazil-USA dual doctoral Ph.D. degree program in the area of Translational Plant Sciences, which is a tripartite collaboration between ESALQ/USP, OSU, and Rutgers University. Furthermore, Ohio State’s President Gordon E. Gee was recently in Brazil in anticipation of the 2014 launch of the OSU Global Gateway Brazil. His visit included the renewal of a long-standing collaboration agreement between USP and Ohio State, the launch of a $1.4 million fund in collaboration with the State of São Paulo’s research agency FAPESP, and meetings to foster new partnerships with Brazilian academic, corporate, and governmental institutions in diverse focus areas ranging from advanced manufacturing to social sciences to genetics to agriculture. The Ohio State University Global Gateway Brazil will serve as an academic embassy with four pillars of focus; increasing two-way exchange of students, connecting alumni to each other and the university, fostering academic research collaborations, and partnering with companies for research and talent development. Higher education is also big business in itself. According to The Economist, only 10% of the universities in Brazil are offering free tuition for very limited and highly sought after spots. This created a market opportunity that entrepreneurs answered and grew into a multi-billion dollar industry for private higher education institutions focused, not on academic research, rather on providing a college education to the increasing number of degree-seeking students. In April, Brazil’s two largest private tertiary education companies announced a merger to create the world’s biggest for-profit operator by market capitalization, valued at about $6 billion, with 1 million students. Kroton Educacional, part-owned by US-based private equity Advent International, will pay $2.48B for rival Anhanguera Educacional Participacoes, part controlled by BlackRock from the US. The deal demonstrates the highly lucrative potential of private higher education and is set to enrichen the dealmakers. Educational business opportunities extend beyond private higher education into areas such as language schools and test preparation. Earlier this year, Abril Educação, majority-owned by Brazilian billionaire Roberto Civita, agreed to pay about $440M for Wise Up, an English language school group. In 2012, HIG Capital and Actis also invested in other language schools in the country. Entrepreneurs Claudio Sassaki and Eduardo Bontempo left their investment banking careers to found Geekie, a company focused on personalized learning and preparation for Brazil’s rigorous ENEM university entrance exam. Geekie recently raised growth capital from Fundo Virtuose, owned by the Brazilian billionaire family Gradin. Brazil severely needs to improve its educational ecosystem to meet the skill, knowledge, and innovation requirements of a country striving to improve the quality of life for all of its citizens and to climb higher on the world stage. This mammoth challenge will require a combination of public, private, and combined collaborative initiatives. Some entrepreneurs and investors are betting heavily that Brazil’s emerging middle class will be willing to open their wallets to invest in their future through education and training. These risk-takers know something that will be taught in the business classes in their universities: the best way to become wealthy is to find a real, urgent, and large-scale need and to provide accessible, effective and competitive solution(s). One emerging example is that of UniBr, which has over 10,000 students and controls 14 institutions, mainly in small towns located nearby São Paulo, Brazil’s financial capital. UniBr appears small compared to the mega-sized leading education groups, but it’s showing promising growth in a consolidated sector. Paulo Cesso, UniBr’s director, noted that “less than 15% of the Brazilian population aged 18 to 24 is enrolled in universities, compared to greater than 86% in the US.” Opportunity and necessity are calling and diverse parties including Brazilian public universities, foreign academic institutions, and education entrepreneurs are all answering the call and playing their part in transforming Brazil through education. World politics, business leadership, energy production, and food security are just a few of the many areas where Brazil will not only contribute but probably also lead globally in the 21st century. Global influencers and business leaders should understand the importance of Brazilian academia and actively engage with the higher education institutions that are creating the ideas, technologies, and leaders who will shape Brazil and thus the world.

To: THE ANT who wrote (1242)	5/29/2013 10:17:14 PM
From: elmatador	Respond to of 2504

Brazil raised interest rate to 8% from 7.5% stepping up the pace of a tightening cycle to battle high inflation as Latin America's largest economy struggles with slow growth. ELMAT: if my theory is right GDP will go up as capital gains from fixed income is accounted for. Brazil opts for steeper interest rate hike to curb inflation. Wed May 29, 2013 9:20pm EDT * Central bank raises Selic rate by 50 bps, surprises market * Steep hike comes after weak GDP print in Q1 * Decision was unanimous, bank used bold language By Alonso Soto BRASILIA, May 29 (Reuters) - Brazil's central bank raised its benchmark interest rate on Wednesday to 8 percent from 7.5 percent, stepping up the pace of a tightening cycle to battle high inflation as Latin America's largest economy struggles with slow growth. The bank's monetary policy committee, known as Copom, voted unanimously to hike its Selic rate by 50 basis points. The decision followed disappointing first quarter growth that prompted markets to price in a milder 25-basis-point increase. In a short statement, the bank said the "decision will contribute to lowering inflation and ensuring that the trend continues next year." The bank removed previous references to "caution" in future decisions, indicating that policymakers could continue to deliver aggressive rate hikes to stem a surge in prices. The steeper hike could help the central bank and its chief Alexandre Tombini regain some of its lost credibility to fight inflation and ease high inflation expectations that some fear could halt much-needed investment and erode consumption. "Excellent, we welcome the move. It helps the central bank regain its credibility and anchor inflation expectations," said Alberto Ramos, economist with Goldman Sachs in New York. "Well done all across. Consistent message and unanimous decision." Brazil is one of the few major world economies currently raising interest rates as strong demand, high production costs and infrastructure bottlenecks keep inflation closer to the upper end of an already high official target range. Tombini had signaled he may step up the tightening cycle, dropping previous references to "cautious" rate hikes and instead adopting more incisive language, saying the central bank will "do what is necessary, in a timely manner" to slow inflation. Brazil's economy fell short of forecasts once again in the first quarter, growing just 0.6 percent from the previous quarter. The weak data increased the likelihood of the third straight year of sub-par growth, underscoring Brazil's struggle to return to the boom years of the past decade. The GDP reading put added pressure on Tombini, who faces the difficult task of taming inflation without undermining an economic rebound that is taking longer than expected to materialize. A sharp weakening of the local currency, the real, on Wednesday raised fears of more inflationary pressures ahead as imports become more expensive. President Dilma Rousseff, a pragmatic leftist who is up for re-election next year, has sought to resurrect Brazil's economy with a flurry of stimulus packages, cheap credit and tax breaks for targeted industries. A prolonged tightening cycle, however, could make it harder for the economy to kick into higher gear. The last time the central bank raised the Selic by half a percentage point was in January of 2011 when a newly inaugurated Rousseff raced to tame a surge in activity that led the economy to grow 7.5 percent the previous year. Also new to the job as head of the central bank, Tombini raised rates by an extra 125 basis points before abruptly reversing course in August of 2011. Since then economic activity seemed to be the main focus of the administration with the central bank slashing the Selic by 525 basis points as the Brazilian economy nose dived to grow only 0.9 percent in 2012. CLOUDY INFLATION OUTLOOK Even after all those rate cuts, the recovery failed to fully materialize while inflation has come back with force after a brief reprieve in 2012. In May, annual inflation eased slightly after briefly piercing the official target range ceiling of 6.5 percent. Inflation is expected to remain high in coming years in a country scarred by bouts of hyperinflation less than two decades ago. Naggingly high inflation threatens to foil Rousseff's crusade to shore up the once-booming Brazilian economy before her bid for a second term in office next year. If price expectations recede following the steep rate hike, the central bank could be tempted to end the tightening cycle at its next meeting on July 10, some economists say. "The statement implies that if inflation starts a downward trend in the 45 days before the next Monetary Policy Committee, the rate can stay at 8 percent," said Newton Rosa, chief economist with Sulamerica Investimentos in Sao Paulo. Annual inflation slowed to 6.46 percent in the month to mid-May, just a shade below the target range ceiling of 6.5 percent but way above the bank's self-proclaimed target of 4.5 percent. The bank's own projections put inflation above 4.5 percent until the first quarter of 2015. High inflation has forced Brazil to run counter to emerging markets from Mexico to Poland where central banks have slashed rates to stimulate domestic activity as the global economy remains lackluster.

To: THE ANT who wrote (1242)	4/13/2014 3:04:51 AM
From: elmatador	Read Replies (2) \| Respond to of 2504

Brace for BRL jack up "...when the Fed and the ECB took steps to lower interest rates during the financial crisis, foreign investors rushed into the emerging markets, driving up their currency values and making their exports less attractive. Draghi said, "We look at spillover" effects on emerging markets. "It's good to be aware of the impact of our action. http://www.stevenspointjournal.com/usatoday/article/7640853 ECB preparing to unleash unconventional monetary policy in a bid to fight low inflation. http://www.siliconinvestor.com/readmsg.aspx?msgid=29485771 The Europeans will easy like there is no tomorrow!