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

To: DewDiligence_on_SI who wrote (1404)	10/8/2014 1:55:23 AM
From: elmatador	Respond to of 2504

Brazil’s Presidential Election, Round 2: It’s the Economy, Estúpido The economy takes center stage as incumbent President Dilma Rousseff takes on business-friendly challenger Aécio Neves in a run-off election Oct. 26 Brazil’s faltering economy will be high in voters’ minds when they return to the polls Oct. 26 for a second-round face-off in the country’s presidential election. President Dilma Rousseff, whose Workers Party has run Brazil since 2003, won 41.59% of votes cast in a first-round poll on October 5 — not quite enough to beat outright Aécio Neves, a business-friendly candidate who was twice governor of Minas Gerais state. Neves, who had been trailing in third place in polls, came second with 33.55% in the latest in a series of upsets in a volatile campaign. Neves’ resurgence can partly be explained by the worrying state of the country’s economy. The country is technically in recession, having retracted 0.6% in the second quarter of this year, and 0.2% in the first. On Tuesday, the International Monetary Fund revised its prediction for Brazil’s 2014 GDP growth down to 0.3%, from the 1.3% growth it had estimated in June. The economy takes center stage as incumbent President Dilma Rousseff takes on business-friendly challenger Aécio Neves in a run-off election Oct. 26 Brazil’s faltering economy will be high in voters’ minds when they return to the polls Oct. 26 for a second-round face-off in the country’s presidential election. President Dilma Rousseff, whose Workers Party has run Brazil since 2003, won 41.59% of votes cast in a first-round poll on October 5 — not quite enough to beat outright Aécio Neves, a business-friendly candidate who was twice governor of Minas Gerais state. Neves, who had been trailing in third place in polls, came second with 33.55% in the latest in a series of upsets in a volatile campaign. Neves’ resurgence can partly be explained by the worrying state of the country’s economy. The country is technically in recession, having retracted 0.6% in the second quarter of this year, and 0.2% in the first. On Tuesday, the International Monetary Fund revised its prediction for Brazil’s 2014 GDP growth down to 0.3%, from the 1.3% growth it had estimated in June. “In Brazil growth is very low. This puts the advance of social programs at risk,” said Ricardo Ismael, a political scientist at the Pontifical Catholic University of Rio de Janeiro. Inflation is also running above government targets, at 6.62%. Many voters, especially those in the upper classes, see Neves as a safe pair of hands. His Party for Brazilian Social Democracy ran Brazil from 1995-2002 under President Fernando Henrique Cardoso. Cardoso had won a first-round vote in 1995 after the ‘Real Plan’ he coordinated as Finance Minister ended hyperinflation. His government stabilized the economy and introduced much-needed economic reforms. But the Left attacked the party’s privatizations of state companies and lack of focus on social policies. On Monday, Rousseff resurrected that attack, alluding to “ghosts of the past” and noting that inflation had reached 12.5% in 2002. “They never put the poor in the budget. All the social policies were restricted, made for few people,” Rousseff said. Her party’s flagship income support program, the Bolsa Família, or ‘Family Purse,’ has lifted millions of Brazilians from poverty. The president has said in campaigning her opponents would end it. Neves countered with a broadside over the stagnant economy and a corruption scandal which has linked payments to politicians from the Workers Party and other coalition parties to inflated contracts from state-controlled oil company, Petrobras. His program maintains the Bolsa Família. “Brazilians are very worried with the monsters of the present,” Neves said in a speech Monday. “High inflation, recession and corruption.” Rousseff was initially favorite to win this election. But when the Brazilian Socialist Party’s Eduardo Campos, a ‘third way’ candidate

To: DewDiligence_on_SI who wrote (1404)	10/15/2014 1:05:30 PM
From: elmatador	Read Replies (1) \| Respond to of 2504

Lower Oil Prices: Good For Petrobras? Lower oil prices help Brazil’s government-controlled petroleum exploration and refining giant Petrobras. The reason is fuel prices: the government has formulas for gasoline prices are designed to protect the consumer, but are not fully responsive to oil price swings. The international price for crude oil, Brent, is down $1.09 this morning, and is hovering near $84 per barrel — a dive of $30 per barrel over four months and a low not seen since late 2010. U.S.-traded shares of Petroleo Brasileiro( PBR) are down 7.4% to $15.83 this morning. The stock has been volatile this year, much to do with the presidential election. Petrobras officials have been accused of bribing government officials. But President Dilma Rousseff used the investigation to her advantage, saying she was rooting out corruption. Of late, the odds for investor-favored opposition candidate, Aecio Neves, have been improving. Morgan Stanley has an equal-weight rating on the U.S.-traded shares and a $17 price target. Here’s what says Morgan Stanley Analyst Bruno Montanari says in a report out today: “We see lower oil prices into 2015 as a net positive for Petrobras, allowing the company and government to close the fuel price gap with less effort and lower inflation impact. However, it is imperative that Brent regains strength in the LT, as it is the key driver of Petrobras’ exploration and production NAV. … local gasoline import parity gap closing to ~8% from ~23% in the past couple of weeks. In the same period, the diesel gap (which is almost twice as important for Petrobras) also closed to ~5%, from ~15%. Under the current pricing structure, each $5 per barrel reduction in Brent prices would increase EBITDA by ~$390 million and free cash flow by ~150 million … each 10% move in gasoline prices generates 37.5bps of inflationary pressure, while diesel is less relevant at 1.4 basis points. As such, the recent commodity pullback has “saved” 54 basis points in potential inflation impact if we were to consider full pricing parity.” Here’s Montanari’s punch line: “assuming PBR becomes a functional oil company (i.e. fuel prices following the commodity), the re-basing of crude at a lower level would have a strong impact in PBR’s upstream NAV. Each $5-per-barrel reduction in long-term prices lowers our upstream NAV by $17.5 billion, or ~$2.7/ADR.” Morgan Stanley’s commodities team thinks that oil prices may not go much lower because ” much of the last leg of the downside has simply been a result of financial flows, sentiment and macro fears.” The iShares MSCI Brazil Capped ETF ( EWZ) is down 5.4% today, while the iShares MSCI Emerging Market ETF ( EEM) is down 1.7%.