Warming up to Brazil: Since Dilma Rousseff became Brazil’s president in January 2011, Brazil’s stock market measured in US dollars, declined by 53% through March 2014 (see Weekly Chart) due to unfriendly business policies and economic mismanagement.  In the last five months, stocks have rallied by more than 40% as Rousseff’s reelection prospects have dimmed.  Brazil’s economy fell into recession in the second quarter, providing a challenging backdrop for October’s elections.  Rousseff has two main challengers, both with more market-friendly credentials, and in a runoff election either of them would likely beat the incumbent, based on recent polling.  Until an August 13 plane crash killed presidential candidate Eduardo Campos, Rousseff’s main rival was Aécio Neves, who The Economist has described as pro-business and competent.  Following the national tragedy, however, Campos’ running mate, Marina Silva, has surged in the polls after deciding to run in his stead and is now edging out Neves.  Silva, although not as experienced as Neves, has adopted a business-friendly economic platform that “includes more fiscal discipline, consistent inflation targeting, free-floating exchange rate, updating of managed prices and rapprochement with agribusiness,” as Forbes describes it.  On August 5 we raise exposure to Latin America in our longer-term portfolios.

David Fuller's view

Here is The Weekly View.

Eoin and I have been commenting on Brazil (weekly 10-yr & weekly 5-yr) ever since the July 2013 low near 45,000 was confirmed with a very clear upward dynamic and further sharp recovery commencing last March.  Brazil has suffered from poor economic governance since Dilma Rousseff became President in 2011.  Brazil’s entry into the global bull market this year was mainly due to the probably of a change of government in the Presidential Election process which begins on 5^th October.

Here is an informative article from Reuters: Brazil squanders oil bonanza even as Rousseff declares victory, posted yesterday.  You may also be interested in Marina gains momentum, from The Economist, and also, Will Brazil elect Marina Silva as the world’s first Green president?, published by The Guardian.

The Weekly View leads with, as interesting assessment of Europe, including the need for policy action and problems with Putin’s government.