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  • #261807

    lynchem
    Member

    Well, I did as GF to relaunch this thread & someone had to…..

    Wink
  • #261808

    Deleted User
    Moderator

    Well if Leblon’s contributions are to set the tone for 2014 Imay as well start by saying that it’s a mug’s game trying to work out the impact of internationalmonetary policy for the coming year. Banks overflow with smart,well-paid people trying to predict future interest and exchange rates and theyall get it wrong regularly. So I don’t see much point in me trying to pick anumber from the hat other than to express my wishful thinking by hoping thatthe almighty dollar and sterling drop with the same enthusiasm of high school girl’spanties during carnival.

  • #262225

    tomydd
    Member

    [QUOTE=sambasp]Posted: 30 December 2013 at 16:27
    I must say that I agree with you, without being pessimistic or optimistic.
    The real price of the usd/real for instant is much more between 2,15 and 2,40 fixing….[/QUOTE]
    Now i see more visibility ahead, may be, we can expect -30% before Rebound USD….

  • #262266

    sompmm
    Member

    Higher interest rates couldmake the real more attractive. Although with deteriorating economic conditions, the risk of Latin American Militant Leftism goes up. Generals running the economy anybody?

    Average exchange rate in 2014 of 1 USD 2.2 BRL.

    Jack_Harding2014-01-21 12:40:44

  • #262271

    celso
    Member

    Dilma will allow the real,to float to 2.80 to 2.90 to stimulate exports and help make Brazil more competitive…..

  • #262272

    miguel
    Participant

    [QUOTE=Jack_Harding]Higher interest rates couldmake the real more attractive. [/QUOTE]
    Highly unlikely. Even if the tightening cycle continues. Too much Risco Dilma. Even perennial Brazil fixed income boosters PIMCO are starting to underweight. Article in today’s VALOR that one of the prime sources of the Brazil carry trade in the past, the Japanese retail sector (Mrs. Watanable), has not been enticed, having been burned once too many times.
    Add to that continuing Fed tapering, with eventual US benchmark interest rate hikes, and there is absolutely no reason for the rational offshore investor to take on such high magnitudes of risk for such low rewards -or high losses, as the case may be.

  • #262288

    agri2001
    Participant

    In the short term I think that they will bring the dollar down to the 2.15-2.20 range to sop up all they can from the visitors to the WC.
    But on the other hand nobody ever gave a sh*t what I thought anyways so you may disregard the above LOL

  • #262291

    Deleted User
    Moderator

    [QUOTE=agri2001]In the short term I think that they will bring the dollar down to the 2.15-2.20 range to sop up all they can from the visitors to the WC.
    But on the other hand nobody ever gave a sh*t what I thought anyways so you may disregard the above LOL
    [/QUOTE]

    In the interests of ahealthy colon and advocate of regular bowel movements I feel duty bound towhole heartedly agree with your opinion about the exchange rate thereby givinga metaphorical sh*t in solidarity and full support of your thoughts. Tongue
  • #262309

    Steven
    Participant

    [QUOTE=frank4000][QUOTE=Esprit][QUOTE=agri2001]In the short term I think that they will bring the dollar down to the 2.15-2.20 range to sop up all they can from the visitors to the WC.
    But on the other hand nobody ever gave a sh*t what I thought anyways so you may disregard the above LOL
    [/QUOTE]

    In the interests of ahealthy colon and advocate of regular bowel movements I feel duty bound towhole heartedly agree with your opinion about the exchange rate thereby givinga metaphorical sh*t in solidarity and full support of your thoughts. Tongue

    [/QUOTE]

    LOLLOL.
    The 2.20 make sense but then my question would be if they let it slide, what happens when the olympics come around? what would they do to take advantage of that opportunity.

    [/QUOTE]

    By the time the Olympics roll around in 2016, Brazil will have already lost the World Cup which will be enough to get Dilma kicked out of office and there will be a new president in power. This will change the entire picture and is best left for discussion to the Exchange Rate Predictions 2016 post two years from now
  • #262313

    815
    Member

    [QUOTE=Steven][QUOTE=frank4000][QUOTE=Esprit][QUOTE=agri2001]In the short term I think that they will bring the dollar down to the 2.15-2.20 range to sop up all they can from the visitors to the WC.
    But on the other hand nobody ever gave a sh*t what I thought anyways so you may disregard the above LOL
    [/QUOTE]

    In the interests of ahealthy colon and advocate of regular bowel movements I feel duty bound towhole heartedly agree with your opinion about the exchange rate thereby givinga metaphorical sh*t in solidarity and full support of your thoughts. Tongue

    [/QUOTE]

    LOLLOL.
    The 2.20 make sense but then my question would be if they let it slide, what happens when the olympics come around? what would they do to take advantage of that opportunity.

    [/QUOTE]

    By the time the Olympics roll around in 2016, Brazil will have already lost the World Cup which will be enough to get Dilma kicked out of office and there will be a new president in power. This will change the entire picture and is best left for discussion to the Exchange Rate Predictions 2016 post two years from now

    [/QUOTE]

    From your fingertips to God’s LED 16″ display! LOL
  • #262392

    hansomehyena
    Member

    [QUOTE=GreatBallsoFire] Dilma will allow the real,to float to 2.80 to 2.90 to stimulate exports and help make Brazil more competitive…..[/QUOTE]
    Well, apparently Cristina Kirchner is doing most of the job :)

  • #262393

    hansomehyena
    Member

    [QUOTE=DANTE] [QUOTE=GreatBallsoFire] Dilma will allow the real,to float to 2.80 to 2.90 to stimulate exports and help make Brazil more competitive…..[/QUOTE]
    Well, apparently Cristina Kirchner is doing most of the job :)
    [/QUOTE]
    I meant, most of the work…stupid PC…

  • #262416

    tomydd
    Member

    Good day today in Argentina, a tecnic pic to 12 for the “dolar blue”….
    And right after this “top Market”, breaking news, declaration about
    an oficial dollar at 8 +- at the bank on your corner….
    It’s good to see that there is a pilot in BA…
    For instante, we saw today a pic at 2,435 rs/$ ….
    In the same time Dilma was speaking in Davos and on CNN …..
    Right after, back to 2,40….
    I agree with you all here, on the 2,20 ….
    i think in 9 monthes we’ll see 30% OFF on the Usd…. (Tecnical)

  • #262495

    Anonymous

    Brazil currently has the world’s most overvalued currency, according to The Economist’s 2014 Big Mac index:
    http://www.economist.com/content/big-mac-index
    The raw index, unadjusted, puts Brazil in fifth place and the real is “only” overvalued by 13.5% (it should be at 2.68 per $).
    But click on “Adjusted Index” where the GDP is taken into account and the picture changes: Brazil is now at the unenviable #1 spot in the world, with a currency that is overvalued by 72.7%. The true rate, it seems, should thus be R$ 4.07 per USD.
    Food for thought.

  • #262528

    celso
    Member

    [QUOTE=picolino] Brazil currently has the world’s most overvalued currency, according to The Economist’s 2014 Big Mac index:
      http://www.economist.com/content/big-mac-index
    The raw index, unadjusted, puts Brazil in fifth place and the real is “only” overvalued by 13.5% (it should be at 2.68 per $).
    But click on “Adjusted Index” where the GDP is taken into account and the picture changes: Brazil is now at the unenviable #1 spot in the world, with a currency that is overvalued by 72.7%. The true rate, it seems, should thus be R$ 4.07 per USD.
    Food for thought.
    [/QUOTE]
    With Fed Tapering, drought forcing purchase of fuel abroad for electricity due to lack of hydro, Petrobras buying dollars to buy over 100,000 barrios a day of imported fuel, rising trade deficits and inflation, Dollar 4.0 is coming into sight.

  • #262557

    Marc Maserati
    Participant

    [QUOTE=GreatBallsoFire] [QUOTE=picolino] Brazil currently has the world’s most overvalued currency, according to The Economist’s 2014 Big Mac index:
    http://www.economist.com/content/big-mac-index
    The raw index, unadjusted, puts Brazil in fifth place and the real is “only” overvalued by 13.5% (it should be at 2.68 per $).
    But click on “Adjusted Index” where the GDP is taken into account and the picture changes: Brazil is now at the unenviable #1 spot in the world, with a currency that is overvalued by 72.7%. The true rate, it seems, should thus be R$ 4.07 per USD.
    Food for thought.
    [/QUOTE]
    With Fed Tapering, drought forcing purchase of fuel abroad for electricity due to lack of hydro, Petrobras buying dollars to buy over 100,000 barrios a day of imported fuel, rising trade deficits and inflation, Dollar 4.0 is coming into sight.[/QUOTE]

    Not good news for me!!!!!
    -Marc
  • #262618

    celso
    Member

    Banco Safra sells dollars at Guarulhos for 2.60 Today, Buy ar 2.27. Mafia style gang at airport raping tourists. Official rate is 2.42 today 1/28/14

  • #262708

    wtdknknm
    Member

    Now around R$4 to the ¬£…….when will it go down again??

  • #262718

    celso
    Member

    [QUOTE=frank4000] Well that is how the cambios make their money.[/QUOTE]
    There are much better rates available. Usually the buy is above the official rate….

  • #262751

    Ano deve ser marcado por altas do dì≥lar e reduìßão do investimento estrangeiro no pais.
    (Read more)

  • #262763

    Third Prominent Banker Found DeadDead
    What did they know, that we don’t?
    Or perhaps the better question: What did they learn that they shouldn’t have?!? Shocked

  • #262764

    tomydd
    Member

    [QUOTE=Gringo.Floripa]
    Third Prominent Banker Found DeadDead
    What did they know, that we don’t?
    Or perhaps the better question: What did they learn that they shouldn’t have?!? Shocked
    [/QUOTE]
    Is this have to see with the chinese new year ?
    Or with Edward Snowdenlast breaking news about NSA (“UK and USA” Spy Corporate And Co)?

  • #262766

    miguel
    Participant

    Well, I doubt that the answer, at least to GF’s first query, is exclusively related to the following, since the bankers shouldhave been sophisticated enough to diversify, as well as had other sources of liquidity, to ride out increasing volatility, in the event they needed cash:

    SocGen on Emerging Markets 2014: “We are in full-blown financial contagion mode. Sell everything.”

    http://brazilianbubble.com/socgen-on-emerging-markets-2014-we-are-in-full-blown-financial-contagion-mode-sell-everything/
    miguel2014-02-01 21:28:58

  • #262946

    doctorlili
    Member

    The one big uncertainty is the USD after the QE money printing scheme blows up in everyone’s face in the next stock market crash. I expect said crash to happen in the next 6 months. At that point the USD might slip into a major inflation, and it may go worse than the BRL. I am considering balancing my portfolio by moving some into BRL and seeing what I can do there on interest or some investments … annexing another neighboring terreno perhaps. I already moved much of my retirement money into Gold EFTs, holding only the best stock … or the worst past performer of which I am still expecting a come back :( and the rest in cash. I am even considering to buy a chest of silver coins :) and burry it under junk in the basement. What else? Ah, no I don’t do bitcoin, as I think its another Ponzi scheme.

  • #262960

    celso
    Member

    Fed tapering resultsnin a stronger dollar. Silver and gold drop lower and real weakens as commodity prices soften. US now producing record amounts of oil and gas. Leads to hued advantage with agriculture and chemicals. China soft weakens the commodity based countries…..

  • #262969

    doctorlili
    Member

    While this QE “tapering” would “taper” the value erosion on the Fed note, the fact that there was no inflation seems to me an artificial support on the dollar. Every dollar positive balance on the bank books is a dollar debt somewhere else. If that crashes down, what then? And when stocks crash, precious metals will go up. That’s my expectation.

    Energy produced in the US is indeed on the plus side of the dollar.
  • #263141

    What about the the £ pound sterling to Real? its(last i looked) was £1 РR$3.90 and does not look like getting any weaker. Ok if your working in UK and sending money to Brasil, but im expecting reais coming in the next week or so. Should i ask her in doors to stick it in a high interest account in Brasil and wait till Real gets stronger against £ or just take whats coming as its not going to change much over next 6 months??????

    Cheers in advance
  • #263149

    Deleted User
    Moderator

    [QUOTE=latinboy]What about the the £ pound sterling to Real? its(last i looked) was £1 РR$3.90 and does not look like getting any weaker. Ok if your working in UK and sending money to Brasil, but im expecting reais coming in the next week or so. Should i ask her in doors to stick it in a high interest account in Brasil and wait till Real gets stronger against £ or just take whats coming as its not going to change much over next 6 months??????

    Cheers in advance

    [/QUOTE]

    Historically, over the extreme long term, the exchange withthe Pound has behaved like a slow moving wave with peaks of SR$6.20 and troughsof RS$0.34. Such variables are, for the most part, irrational and thereforeunpredictable. Presently, within the extreme short term, the Pound is on adeclining trend but that is not to suggest that such will continue.

    Meanwhile the exchange rate is currently fluctuating within a3% variation band so your dilemma is to balance Brazilian interest earning counteredwith Brazilian inflation against an assumed fluctuation band within theexchange rate. I would opt for the surety of high earnings against the vagariesof the exchange rate; gut feeling I think that the Dollar strength is waning andthat usually draws the Pound with it. Further more detailed analysis such ascoin tossing or Macumba consultations with a black chicken may provide morereliable advice.

  • #263205

    Deleted User
    Moderator

    Just to add a hint of evidence that theexchange rates appear irrational because they are manipulated, the head of theUK’s financial watchdog warned that a world-wide investigation into thewheeler-dealing of the foreign exchange market is proving as serious as therecent Libor rigging. The head of the UK’s Financial Conduct Authority reportedallegations that traders had conspired to rig prices in the $5.3tn spot market.

    Read more: http://www.ft.com/cms/s/0/6d2f697a-8da8-11e3-bbe7-00144feab7de.html#axzz2srRI04SB

  • #264556

    The letter below is a satirical response by one US Congressman to a letter composed by one of his colleagues. The original letter was a rant about bitcoins. The satirical letter is verbatim to the original letter, but substitutes the US dollar for the word bitcoin.
    While satire, I think he does have a point! LOL

    Dear Secretary Lew, Chairwoman Yellen, Comptroller Curry, Acting Chairman Wetjen, Chairman Gruenberg, Chairwoman White:

    I write today to express my concerns about United States dollar bills. The exchange of dollar bills, including high denomination bills, is currently unregulated and has allowed users to participate in illicit activity, while also being highly subject to forgery, theft, and loss. For the reasons outlined below, I urge regulators to take immediate and appropriate action to limit the use of dollar bills.

    By way of background, a physical dollar bill is a printed version of a dollar note issued by the Federal Reserve and backed by the ephemeral “full faith and credit” of the United States. Dollar bills have gained notoriety in relation to illegal transactions; suitcases full of dollars used for illegal transactions were recently featured in popular movies such as American Hustle and Dallas Buyers Club, as well as the gangster classic, Scarface, among others. Dollar bills are present in nearly all major drug busts in the United States and many abroad. According to the U.S. Department of Justice study, “Crime in the United States,” more than $1 billion in cash was stolen in 2012, of which less than 3% was recovered. The United States’ Dollar was present by the truck load in Saddam Hussein’s compound, by the carload when Noriega was arrested for drug trafficking, and by the suitcase full in the Watergate case.

    Unlike digital currencies, which are carbon neutral allowing us to breathe cleaner air, each dollar bill is manufactured from virgin materials like cotton and linen, which go through extensive treatment and processing. Last year, the Federal Reserve had to destroy $3 billion worth of $100 bills after a “printing error.” Certainly this cannot be the greenest currency.

    Printed pieces of paper can fit in a person’s pocket and can be given to another person without any government oversight. Dollar bills are not only a store of value but also a method for transferring that value. This also means that dollar bills allow for anonymous and irreversible transactions.

    The very features of dollar bills, such as anonymous transactions, have created ubiquitous uses from drug purchases, to hit men, to prostitutes, as dollar bills are attractive to criminals who are able to disguise their actions from law enforcement. Due to the dollar bills’ anonymity, the dollar bill market has been extremely susceptible to forgers, tax fraud, criminal cartels, and armed robbers stealing millions of dollars from their legitimate owners. Anonymity, combined with a dollar bills’ ability to finalize transactions quickly, makes it very difficult, if not impossible, to reverse fraudulent transactions.

    Many of our foreign counterparts already understand the wide range of problems that physical currencies can have. Many physical currencies have enormous price fluctuations, and even experience deflation. 20 years ago Brazil had an inflation rate of 6281%. In 4 years (2001 to 2005), the Turkish Lira went from 1,650,000: $1 to 1.29 to $1. In 2009, Zimbabwe discontinued it’s dollar. Before it was eliminated, the Zimbabwe dollar was the least valuable currency in the world and their central bank even issued a $100 trillion dollar banknote. A person would starve on a billion Zimbabwe dollars and it took an entire wheelbarrow full of $100 billion dollars in notes to purchase a loaf of bread.

    The clear use of dollar bills for transacting in illegal goods, anonymous transactions, tax fraud, and services or speculative gambling make me wary of their use. Before the United States gets too far behind the curve on this important topic, I urge the regulators to work together, act quickly, and prohibit this dangerous currency from harming hard-working Americans.

    Sincerely,

    Jared Polis
    Member of Congress â‚Ǩ‚Äπ

  • #264558

    miguel
    Participant

    This sounds like a rant from Guido Mantega.
    But addressed to his counterpart in China.

  • #264951

    Deleted User
    Moderator

    In our sleep, the dollar value falls drop by dropupon the exchange until, in our despair, against our will, comes wisdom throughthe awful grace of God. [I’m sure thatthe Greeks wouldn’t mind a paraphrased bit of plagiarism].

    Actually I just wanted to note that the dollar isfalling, but I felt that the mention needed a little decorous and pretentious prose.R$2.295.

  • #264952

    agri2001
    Participant

    [QUOTE=Esprit]In our sleep, the dollar value falls drop by dropupon the exchange until, in our despair, against our will, comes wisdom throughthe awful grace of God. [I’m sure thatthe Greeks wouldn’t mind a paraphrased bit of plagiarism].

    Actually I just wanted to note that the dollar isfalling, but I felt that the mention needed a little decorous and pretentious prose.R$2.295.

    [/QUOTE]
    Yep!! Getting ready for the cup, its called “fleece mode”

  • #264991

    tomydd
    Member

    Maybe 2 brl to 1 usd in 3 monthes….

  • #264993

    Deleted User
    Moderator

    Arms in the air and shout, Wheeee! R$2.258

  • #265066

    agri2001
    Participant

    I wonder what type of crystal ball Pinochio, I mean Mantega, is using for his useless predictions.

    Brazil economy to average growth of 4% to 2022

    http://www.worldbulletin.net/news/132306/brazil-economy-to-average-growth-of-4-to-2022

  • #265072

    Steven
    Participant

    What’s behind the recent strengthening of the Real? Brazil’s credit rating has been cut to one step above junk and the currency gets stronger? Doesn’t make sense. Is this the government trying to manipulate the currency to bring in more dollars during the World Cup?

  • #265078

    KeithNRachel
    Member

    Perhaps the answer lies in here somewhere

    Pimco Sees Value in Brazilian Bonds

    http://www.etftrends.com/2014/03/pimco-sees-value-in-brazilian-bonds/

  • #265106

    Brazil is toast. Everything that was happening during the Lulas days looks like it was just a magic trick. A brazilian was saying the other day something about “look @ SA after the last Copa”. Economy there in the dumps still.
    I don’t think it’s just Brazil either cuz I’m hearing negativity from everywhere. Seems global. It could touch 2 reais to 1 US, I doubt it. What’re the chances that PT actually stops trying to buy votes!

  • #265117

    miguel
    Participant

    [QUOTE=minmolgeo]Perhaps the answer lies in here somewhere

    Pimco Sees Value in Brazilian Bonds

    http://www.etftrends.com/2014/03/pimco-sees-value-in-brazilian-bonds/%5B/QUOTE%5D
    Yes. As in do the opposite?
    Pimco, the outfit which ended up the biggest institutional purchaser of Eike Batista’s OGX latest bond issue, and which resulted in further contaminating what last year (but not this year) was the world’s largest mutual fund, their Total Return Fund.
    To be fair, those bonds are not totally worthless, at least not yet, and could still recover value if the restructuring continues apace. It’s just too bad then that a good chunk of Pimco’s mutual fundholders realized the unrealized loss by cashing out early, as the Mark to Market losses of that transaction, among many other significantly larger wrong calls by Bill Gross, were reflected in the NAV price. Or on second thought, prescient, to avoid further losses?
    Somewhat ironically, both Pimco and OGX are literally housed in the same building, at least here in Brazil. Pimco recently entered the local mutual funds market (i.e. new local mutufal funds marketed to locals here) and are locally headquartered in Rio, alongside Praia de Botafogo. OGX, which could not afford the rents in its former digs, “downsized,” and there they are. Not so far from Eike’s abandoned refurbishment of the Hotel Gloria, which he was recently forced to sell.
    Too harsh on Pimco? To be fair, a decade ago they placed a gutsily bold bet on the country’s sovereign bonds, in the face of potential defaults priced in with the election of a certain presidential candidate. That candidate was of course Lula, the bet was a goldmine for Pimco and its fundholders. The force behind that bet? Mohammed El Erian, who was forced out a week ago from the helm of Pimco.
    miguel2014-03-30 18:35:15

  • #265129

    Anonymous

    [QUOTE=miguel]
    Somewhat ironically, both Pimco and OGX are literally housed in the same building, at least here in Brazil.
    [/QUOTE]
    I didn’t know that, Miguel. Classy.
    (Thanks for your other insights, too.)

  • #265134

    jeb2886
    Member

    I think people misunderstand and then promote the benefits of having a world cup, summer games, winter games, etc in a specific country. It’s not a magic wand, it’s more of a massive advertising campaign, with benefits that will be seen for decades but won’t be some magic fix it all system. It will increase tourism to some degree over the coming years. Every person that visits, I’m sure will promote to their friends about the great time they had and might bring in another visitor, who will in turn do something similar. That being said, Brazil really has very little tourism outside of expats visiting, and relatives visiting. This place isn’t setup to promote tourism, unless you know portuguese, or you’re in Rio along the main beaches! So any increase in that tourism will definitely help.

    I’m betting we’ll see the Real strengthen as we get closer to the games, as people need to get ahold of the currency, which might drive up the value a bit. After the games, if the government is fast enough, they might be able to stop the currency from dropping as everyone converts back their Reals to USD/Euro, or it might spike for a few weeks, a few days, which will cause a run which will cause the government to take action which will take a few weeks.
    I do like the point GBF made and one I have been taking into account while bringing down money, unless the currency slides dramatically this year from 2.25-2.35 to more than 2.55 (2.35 * 9% interest), having your money in an interest bearing account will cover any losses in the value of the currency.
  • #265136

    Andrewfroboy
    Participant

    Requiring a visa (while i understand and respect their reciprocity concept) is a big hindrance to tourism as well. People from the US are not used to having to get one, I think the hassle might keep people away as well.

  • #265138

    jeb2886
    Member

    I’m going to guess that many people do research on their trip, find out about where they are going, get excited and then start to figure out what they need. Getting a visa at that point is a small hinderance. If it’s a family of 5, maybe more.

    However, I’m sure after these games, when people start hearing about Brazil they will get excited until someone mentions the visa process. I know I would be pretty intrigued about going to Brazil after talking with someone for 5-10 minutes, but after learning about the need for a visa I would probably drop it. If I had done 6-8 hours of research on my own, on where I was going, what I was going to do, what to do, what to try, the visa process would be a nuisance but I’ve already invested enough time that I am more likely to go for it.
    Personally, I think they should offer a reverse reciprocity fee. If you’re going to visit the US, you need an extra stamp of approval with some reentry docs on where you have gone to ensure you’re not bringing back anything bad. Those fees would be 5x the cost of a visa. I’m sure the government could come up with some pretty interesting fees!
    And then anyone who comes from the US, of course is free.
    Basically, if you’re going to block our citizens, we’ll make sure they don’t go there and give you any free tourism dollars to bolster your economy, while promoting your citizens to come here and bolster our economy.
  • #265143

    Steven
    Participant

    [QUOTE=andrewfroboy]Requiring a visa (while i understand and respect their reciprocity concept) is a big hindrance to tourism as well. People from the US are not used to having to get one, I think the hassle might keep people away as well. [/QUOTE]

    My neighbor, who is a certifiable nutcase, had planned on visiting Brazil for the World Cup. This is the guy that I’ve written about who thought that he would land in Sao Paulo and simply rent a car and drive from venue to venue.
    Well, it just now occurred to him that he would stand a 50/50 chance of getting killed, maimed, or definitely robbed while visiting and he cancelled his trip.
    I’m betting that the horror stories that emerge from the tourists during the World Cup will squash the tourism industry in Brazil for years to come.
  • #265144

    815
    Member

    [QUOTE=andrewfroboy]Requiring a visa (while i understand and respect their reciprocity concept) is a big hindrance to tourism as well. People from the US are not used to having to get one, I think the hassle might keep people away as well. [/QUOTE]

    I have very wealthy friends in the States who looked into coming to Brazil and said “F that noise” when they saw the visa requirement. It’s not that they don’t have the money. They just don’t like to waste it and what does Brazil have to justify the extra cost? Nothing.
    Caribbean, there they go…

    Paulistano USA2014-03-31 12:58:30

  • #265145

    815
    Member

    [QUOTE=jkennedy]

    Every person that visits, I’m sure will promote to their friends about the great time they had and might bring in another visitor, who will in turn do something similar.

    [/QUOTE]

    Or not. They could be robbed withing tens minutes of leaving their hotel in Salvador. Or any of these god forsaken cities where there will be games.
    Every person?…I think a much lesser percentage….
  • #265147

    miguel
    Participant

    Apparently they now offer a “Temporary Special Visa” for World Cup Spectators. (See separate thread.) While free of charge (somewhat surprising for all of us reciprocity monitoring folks here), they are obviously not free of the significant Custo Brasil in terms of time hassle. That alone will still deter people.
    miguel2014-03-31 13:28:30

  • #265201

    KeithNRachel
    Member

    Interesting update vis a vis Pimco …. should we feel more confident!
    http://www.bloomberg.com/news/2014-03-31/balls-rise-at-pimco-shows-gross-s-push-for-bond-returns.html

  • #265208

    miguel
    Participant

    [QUOTE=frank4000][QUOTE=minmolgeo]
    Interesting update vis a vis Pimco …. should we feel more confident!
    http://www.bloomberg.com/news/2014-03-31/balls-rise-at-pimco-shows-gross-s-push-for-bond-returns.html%5B/QUOTE%5D

    I see nothing her to inspire confidence in Brasil or Mexico. In the case of Brasil I would take a wait and see approach with regard to investing.

    [/QUOTE]
    Nor inspiring confidence in the fund company.
    Morningstar was correct to downgrade their stewardship grade to C. They need to spend much less time speaking to financial journalists and much more time working to improve investor returns. The way out of their predicament is to perform.

  • #265210

    KeithNRachel
    Member

    Taken from article in folho de SP 26/3/14 `Global Uncertainties`(http://www1.folha.uol.com.br/internacional/en/opinion/2014/03/1431177-global-uncertainties.shtml)
    El-Erian chairs Persident Barack Obams’s global development council and is now chief economic adviser to Allianz, the Munich based German multinational financial services company. Allianz Asset Management is the parent company of the US fixed income specialist, the California based Pacific Investment Management Company (PIMCO). El-Erian was CEO of PIMCO until he announced his surprise resignation in January after disagreements with Bill Gross, PIMCO’s founder. El-Erian left PIMCO in mid-March.

    El-Erain has a habit of leaving companies before the boom busts: He headed Harvard University’s US$32 billion Endowment Management Company for two years, posting a return of 23% in one year, before he returned to PIMCO in September 2007, a year before the financial crisis hit, and Harvard’s endowment shrank by 27.3%.

    PIMCO R.I.P ….. Have exhausted this avenue (thank you Miguel!)

    Foreign inflows continue to rise and real closes today at 2.619

    (http://www.bloomberg.com/news/2014-04-01/brazil-s-swap-rates-rise-with-currency-as-inflation-accelerates.html)

    Given forecast of 2.45/2.5 end of year (Q4 2014) as per most/all financial hierarchy are we now on track for 2.30/35 Q4 or is that just wishful thinking on my part? What does Mantega know that we don`t???

  • #265446

    Deleted User
    Moderator

    When will the market pull the ripcordon the dollar’s parachute? R$2.20 and still falling.

  • #265447

    KeithNRachel
    Member

    hmmmmmmmmm

    Brazil Real Gains on Speculation Bank Will let currency advance

    http://www.bloomberg.com/news/2014-04-08/brazil-real-gains-on-speculation-bank-will-let-currency-advance.html

  • #265449

    [QUOTE=Esprit]When will the market pull the ripcordon the dollar’s parachute? R$2.20 and still falling[/QUOTE]
    Perhaps to be of interest: US Threatens Russia Over Petrodollar-Busting Deal(be sure to click on “as we noted previously” link in article).
    Maybe it would be prudent to rehearse “Duck and Cover“?!? Shocked

  • #265451

    KeithNRachel
    Member
  • #265453

    miguel
    Participant

    Perhaps the market will come down to earth when investors start to price in, heaven forbid, Dilma’s actually eking out a second round win.

  • #265454

    miguel
    Participant

    Or, when they start to price in, regardless of the eventual victor, the actual scope of the economic damage already inflicted, and the lack of room for maneuver to fix it. miguel2014-04-08 12:56:12

  • #265457

    The Real went up against the US Dollar because Manteiga raised the interest rate due to “inflation”greedconcerns. Money pours in, dollar drops.
    I don’t know if they are cooking the statistics, probably are, but the cycle has changed. Emerging markets are in, or going to the crapper. Did anyone see that the GDP of Nigeria has passed South Africa? I think these Copas end up detonating the economies of these countries.

  • #265494

    “The chaos that one day will ensue from our 35-year experiment with worldwide fiat money will require a return to money of real value. We will know that day is approaching when oil-producing countries demand gold, or its equivalent, for their oil rather than dollars (or euros).

    ~ Ron Paul ~

    EDIT: Link —> http://www.internationalman.com/articles/timing-the-collapse-ron-paul-says-watch-the-petrodollar
    Gringo.Floripa2014-04-09 10:41:43

  • #265506

    Anonymous

    Nice: Ron Paul on Doug Casey’s site..!
    Good combination, GF. You are a man after my own heart.

  • #265507

    miguel
    Participant

    The linked development below should provide grist for yet another interest rate hike. According to VALOR, it’s the largest IPCA reading for the month of March since 2003, a jaw-breaking 0.92% acceleration (from February). Main culprits food/beverage & transport. When you add in the deferred pent-up increases of government controlled prices like fuel & electricity, the picture does not grow brighter.
    This will provide short-term impetus for the day- and carry- traders to speculate, especially in the currency markets, until their momentum strategies suddenly lose their momentum (risk on is risk off and they are clueless) and they lose their shirts (once again). That will occur with a China surprise, a Fed surprise, indications that the country’s Investment Grade rating is threatened, the exchange rate has reached an artificial floor threatening negative growth and when further inflation benefits are limited, an internal blow-up of Brasilia’s making, or when investors recognize that the fat risk premiums they are being offered are just not compensating the risks they are being asked to assume.
    http://www.bloomberg.com/news/2014-04-09/brazil-s-march-inflation-faster-than-every-economist-estimate.html
    miguel2014-04-09 15:49:28

  • #265510

    Deleted User
    Moderator

    When the dangersassociated with the little knowledge we think we possess allows us the humilityto set aside the cynicism and bias that afflicts all who fly too close to thesun, meaning those who have a life stake in this country, we would do well toremember one shining fact: despite the faults, foibles and failings of theBrazilian people, there remains the reality that is mother Brazil; a buxombreasted cornucopia of nature’s gifts in generous measure. Brazil managed byBrazilians is running at about 10% of its potential and, importantly, it isthis potential and therefore its collateral that can be a measure of risk. R$2.185. Sell your dollars!

  • #265513

    Kathy2012
    Participant

    I have a life stake in this country, but I sure as hell don’t keep my money here.

  • #265517

    Deleted User
    Moderator

    [QUOTE=ObviouslyGYN]I have a life stake in this country, but I sure as hell don’t keep my money here. [/QUOTE]

    It’s an interestingpoint isn’t it: where to keep one’s money, assuming that we have any. LOL

    Of course it alsodepends on what we mean when we say money. Do we mean actual cash savings or dowe mean to include everything that has monetary value: real estate or other typesof investments? It’s a dilemma that needs close analysis if we are to protectand possibly grow what we already have in spite of the deliberately inducedinflation deemed necessary by central banks as an obscure tool to help debtreduction.

    Real estate has proveditself to be a long-term growth entity yet it has also proved itself to be a fickleand emotive siren capable of leading the financial industry and banking,including private investors, into chaos and disaster. On the other hand, cashsavings is a joke in the first world because of central bank’s control overinterest rates; rates that are being artificially held on the floor tofacilitate the otherwise unsustainable government borrowing and debt levels.Debt that has the appearance of inducing growth is the new black.

    Minuscule returns onsavings have forced money to be invested into the markets which has resulted ina casino-like overvaluation bubble in the perpetual hunt for higher yields.Consider the risk associated with borrowed money invested in a bubble to makeprofit all the while governments print massive quantities of money each monthand, following on from that, we should be gracious enough to consider Brazil riskin that context.

    We know that in thislife nothing stays the same, but what I can personally attest to is that,during the past six out of eight years, Brazil has provided returns unmatchedby the first world, a first world which is still struggling for growth whilstlicking the weeping wounds caused by an unregulated financial holocaust thatimpoverished the masses. If you’re looking for third world ignorance, greed andincompetence on a mammoth scale then look, too, beyond Brasilia to Wall Streetand the City of London. In common with the Marathon Man are all plagued by the samequestion, is it safe?

  • #265521

    Deleted User
    Moderator

    By way of demonstrationof investor’s eccentric logic, I note that Greece, that deadbeat, delinquent andanarchistic Mediterranean rot-box, has issued a five-year 20 billion euro bond yielding4.95%. And get this: the credit rating issued by the agencies place Greece atCaa3, some 7 notches below that of Brazil’s investment grade sovereign debt.Now why would anyone be crazy enough to buy such debt even if it were to yield 30%?The answer, simply, is that because of the European central bank’s commitmentto save the euro and its target destination dream of a Federal Europe, theinvestor’s know that in the final analysis it is not a Greek risk but aleft-handed guarantee of payment by the European taxpayer. Ain’t socialistdemocracy wonderful?

    P.S. Don’t tell the alreadyapathetic European taxpayers who have relinquished their ballot box power to abunch of unelected knob-head bureaucrats.

  • #265598

    Greece sounds like things are even more upside-down there than in Brazil. I was reading the other day that they have FIXED prices for books. WTF is that?
    Miguel, do you happen to have a CFA and work in the area of finance? Just curious because I saw some people people talking about it in some other forums, and they’re not a lot of people with a CFA in Brazil. I would love to sit for the test, but finding a job using it is another thing. Brazil!

  • #265601

    Espirito/a?
    hold yer horses. I bet we’ll be back at 2,25+ next week or the week after. 2,15 is the key level, but judging by Friday’s close, it doesn’t want to touch it.

  • #265603

    [QUOTE=Esprit][QUOTE=ObviouslyGYN]I have a life stake in this country, but I sure as hell don’t keep my money here. [/QUOTE]

    >It’s an interestingpoint isn’t it: where to keep one’s money, assuming that we have any. LOL>Of course it alsodepends on what we mean when we say money. Do we mean actual cash savings or dowe mean to include everything that has monetary value: real estate or other typesof investments? It’s a dilemma that needs close analysis if we are to protectand possibly grow what we already have in spite of the deliberately inducedinflation deemed necessary by central banks as an obscure tool to help debtreduction. >Real estate has proveditself to be a long-term growth entity yet it has also proved itself to be a fickleand emotive siren capable of leading the financial industry and banking,including private investors, into chaos and disaster. On the other hand, cashsavings is a joke in the first world because of central bank’s control overinterest rates; rates that are being artificially held on the floor tofacilitate the otherwise unsustainable government borrowing and debt levels.Debt that has the appearance of inducing growth is the new black.>Minuscule returns onsavings have forced money to be invested into the markets which has resulted ina casino-like overvaluation bubble in the perpetual hunt for higher yields.Consider the risk associated with borrowed money invested in a bubble to makeprofit all the while governments print massive quantities of money each monthand, following on from that, we should be gracious enough to consider Brazil riskin that context.>We know that in thislife nothing stays the same, but what I can personally attest to is that,during the past six out of eight years, Brazil has provided returns unmatchedby the first world, a first world which is still struggling for growth whilstlicking the weeping wounds caused by an unregulated financial holocaust thatimpoverished the masses. If you’re looking for third world ignorance, greed andincompetence on a mammoth scale then look, too, beyond Brasilia to Wall Streetand the City of London. In common with the Marathon Man are all plagued by the samequestion, is it safe?

    [/QUOTE]
    the bubble you mention will pop whenever the first-world countries start increasing interest rates. The problem is that no one knows except them.

  • #266116
    And the list keeps growing…. Shocked
  • #266118

    agri2001
    Participant

    [QUOTE=Gringo.Floripa]

    And the list keeps growing…. Shocked

    [/QUOTE]
    This is somewhat good news, but the cream de la cream would be if the WS bankers are rounded up and had their heads adorning the entrance to Central Park.
    Aghh! I can only dream.

  • #266119

    Marc Maserati
    Participant

    What a gory list of methods on how to take your own life. Number 5 is especially creative:

    5 – Richard Talley,the 57 year old founder of American Title Services in Centennial, Colorado, was found dead earlier this month after apparently shooting himself with a nail gun.

    Wow. Why would someone do this. What is going on?
    Time to look for conspiracy websites….
    -Marc
  • #266120

    kevin owen
    Participant

    Poor lambs, the way these bankers are being taken advantage of.
    http://www.bbc.com/news/business-27154184

  • #266122

    815
    Member

    [QUOTE=agri2001][QUOTE=Gringo.Floripa]

    And the list keeps growing…. Shocked

    [/QUOTE]
    This is somewhat good news, but the cream de la cream would be if the WS bankers are rounded up and had their heads adorning the entrance to Central Park.
    Aghh! I can only dream.
    [/QUOTE]

    That would be splendid!
  • #266147

    miguel
    Participant

    In line with the re-opening of Tavern on the Green?

  • #266154

    Steven
    Participant

    [QUOTE=miguel]In line with the re-opening of Tavern on the Green?
    [/QUOTE]

    Interesting. I hadn’t heard that. Well, I guess you hear all of the important news on Gringoes Forum.
  • #266540

    815
    Member

    http://www.infomoney.com.br/mercados/cambio/noticia/3331423/probabilidade-forte-nino-aumenta-promete-agitar-mercado-brasileiro?utm_source=newsletter&utm_medium=email&utm_campaign=nlmercados

    This is a very interesting article about how a strong El Nino (weather phenomenon)could affect the Brazilian economy and consequently the exchange rate in the second part of 2014.
  • #266566

    http://www.zerohedge.com/news/2014-05-13/russia-holds-de-dollarization-meeting-china-iran-willing-drop-usd-bilateral-trade
    Time to do one of the following my Yankee-brethren…
    1) Trade those Ben Franklins for gold, or short term, another fiat currency, like reais…
    2) Roll that Ben Franklin to either smoke or snort an illegal substance…
    3) Fold that Ben Franklin, and wipe your a$$…
    4) Duck and cover….
    Any other suggestions welcome (and needed).
    (We are soon to witness History!) Shocked

  • #266567

    Deleted User
    Moderator
  • #266584

    815
    Member

    [QUOTE=Gringo.Floripa]
    http://www.zerohedge.com/news/2014-05-13/russia-holds-de-dollarization-meeting-china-iran-willing-drop-usd-bilateral-trade
    Time to do one of the following my Yankee-brethren…
    1) Trade those Ben Franklins for gold, or short term, another fiat currency, like reais…
    2) Roll that Ben Franklin to either smoke or snort an illegal substance…
    3) Fold that Ben Franklin, and wipe your a$$…
    4) Duck and cover….
    Any other suggestions welcome (and needed).
    (We are soon to witness History!) Shocked
    [/QUOTE]

    Do you think that the real is a safer short/medium/long term “harbor” for money than the dollar? I am asking because I thought that if the dollar hit closer to 2, I’d convert a bunch of reias.
    I respect the opinions of ya’ll on this site! That’s why I ask.
  • #266595

    Deleted User
    Moderator

    Who can say,with any degree of accuracy, what can happen with long term exchange rates.Changing horses, so to speak, can have an unpredictable consequence with the onlyexception that we can confuse God with our prayers.

    The machinationsof global politics can be likened to the question of whether the hurricane iscaused by a butterfly flapping its wings on the other side of the world or bythe halitosis breath from blowhard politicians. We know that the dollar is a spentforce and is writhing in the chaos of a series of inept governments comprisingdumb or corrupt politicians installed by a yet dumber electorate culminating inthis unrepayable mountain of debt. Things cannot logically continue like this.

    Of coursepoliticians are alike the world over and survive only because they are fullyabsorbed in an identical way to that of their respective electorates: the blinkeredself-interest of gimme, gimme, gimme. The issue with the dollar is its size orcapacity. There isn’t another currency with the volume of liquidity necessaryto replace it as the reserve currency. What is needed is a change in mind-set;a need for universal trust in a basket currency having joint and several guaranteesthat would represent true globalisation; the ultimate democratic currency ifyou will.

  • #266598

    Andrewfroboy
    Participant

    The Chinese are very invested in the dollar too, a ton of their wealth and the US debt they own are in dollars, it’s not in their interest to see it collapse totally. You really think Russia’s plan to make the Ruble important will work??? You bet on the Ruble horse, I’ll take the dollar horse and we shall see who wins.

  • #266600

    Deleted User
    Moderator

    [QUOTE=andrewfroboy]The Chinese are very invested in the dollar too, a ton of their wealth and the US debt they own are in dollars, it’s not in their interest to see it collapse totally. You really think Russia’s plan to make the Ruble important will work??? You bet on the Ruble horse, I’ll take the dollar horse and we shall see who wins. [/QUOTE]

    With respect, Andrew, that’s ill-considered statement. The Rouble can in no way compete with theDollar and neither can the Yuan. Perhaps you forget the Brazil’s GDP is greaterthan that of Russia which in turn is more than seven times smaller than that ofthe US. And whilst it’s true that China holds a lot of Dollar debt it would beillogical for it to accumulate even more in the longer term which is the cruxof their problem. Whatever happens, America’s arrogant abuse of the Dollar willcause change that will happen in the slow motion of an inexorable trend suchthat countries can adjust their foreign currency reserve holdings to a basketof currencies in an orderly and prudent manner. A crash is in nobody’sinterest.

  • #266675

    celso
    Member

    Goldman says Real should be 2.70 or lower….Today in Exame and expects negative GDP for Brazil. Hard times ahead….I agree.

  • #266683

    felicidade
    Member

    Excellent topic folks! IMO higher interest rates can make the real more stronger but with deteriorating economic conditions instigated by that dike Dilma and the risk of Militant Leftism increases every day and the uncertainty of world cup nay sayers like riots. Who is really running the country? Anybody?

    The minial average 2014 : 1 USD 2.7 Real.
  • #266712

    Andrewfroboy
    Participant

    I was just saying that this is pure posturing from Russia, not anything that will have major impact.

  • #266717

    blue
    Member

    [QUOTE=Lupo1] instigated by that dike Dilma [/QUOTE]
    You want to peddle your homophobic crap elsewhere? Thanks.

  • #266793

    Deleted User
    Moderator

    Russia signs30-year gas deal with China estimated to be worth over $400bn, butâ‚Ǩ¬¶”the financial details are a”commercial secret.”400billion dollars or will it be the equivalent currency in a Roubles /Yuan exchange or infrastructurebarter?

  • #266795

    jeb2886
    Member

    It looks like Russia is giving away it’s oil because of the ukraine crisis, in a bid to ensure it has trading partners for it in the future.

    Although it is a western piece, pushing some propaganda that Russia is in the world of hurt and giving away things. It’s hard to say what is really in that deal. Apparently it’s tied into world markets though.
  • #266817

    Deleted User
    Moderator

    [QUOTE=jkennedy]It looks like Russia is giving away it’s oil because of the ukraine crisis, in a bid to ensure it has trading partners for it in the future.

    Although it is a western piece, pushing some propaganda that Russia is in the world of hurt and giving away things. It’s hard to say what is really in that deal. Apparently it’s tied into world markets though.

    [/QUOTE]

    Russia is giving away its oil?! Oh dear, oh dear! Nothingcould be further from the truth. This sounds like a 1960’s hick Congressman’scomment from the cold war.

    Now listen up: Europe is the one in serious resource crisis.The European Union, including France,Italy and the UK, are facing critical shortages of natural resources. The UK’s own stores of oil, coal andgas will run out in little more than five years. France has less than ayear’s worth of its own reserves of oil, gas and coal. Italy has less than ayear of gas and coal, and only one year of oil. Coal is in abundance but weknow that our politicians, quite rightly, don’t want to pollute Europe the way theChinese have turned their cities into unhealthy smog ridden death traps.

    Europe’s current political agenda is shaped by an acute understandingof their existing and pressing economic fragility. So it follows that theEU is becoming ever more reliant on their resource-rich neighbours such asRussia and Norway. Russia is fast becoming Europe’s lifeline. By comparison,Russia has over 50 years of oil, over 100 years of gas and over 500 years ofcoal. The Russians, a much less quirky breed of people than the Brazilians,have this much in common with each other: self-sufficiency.

    Russia has thumbed its nose at the world when criticised recentlybecause of its excursions into the Crimea and poking a stick at the Ukraine.NB: the world only watched and made little noises and today stands red-faced becauseRussia showed its displeasure at the West’s attempt to draw in some of itsformer territories. Don’t mess with Putin; he has deplorable excesses of both personalityand national pride.

    Consider this: If Russia can lock in her resource revenuesfrom China, why would she need to sell to Europe? Scary, isn’t it. Be carefulwhat you wish for.

  • #266828

    jeb2886
    Member

    It’s a world market, whatever oil or gas China buys from Russia today will be oil and gas they don’t buy from someone else in the future.

    Russia and China are far more dependent on the rest of the world, than the rest of the world is dependent on them.
  • #266830

    Deleted User
    Moderator

    [QUOTE=jkennedy]It’s a world market, whatever oil or gas China buys from Russia today will be oil and gas they don’t buy from someone else in the future.

    Russia and China are far more dependent on the rest of the world, than the rest of the world is dependent on them.

    [/QUOTE]

    EvenI could hear the whizz as the crux of my post flew over the top of your head.

    Roughlyhalf of Russia’s GDP is oil and gas. Russia is nationalistic and isolationistand, arguably to some extent, simply has pretentions towards democracy [whateverthat is supposed to mean these days]. Russia seeks political and economic kinshipwith communist China; they are birds of a feather. Birds that are collaboratorsin their justifiable distrust of the US and everything it represents; inparticular the role and economic power of the dollar. In addition, those countriessee the US as an imperialistic threat of a type where there is a superabundance of global evidence.

    Russiais employing a two pronged approach to achieve its ambitions: namely, to stepaway from the dollar and, together with its future trading with other likemindedpartners, to deprive the dollar of the equivalent of trillion in annual trade;a first step. The second of the two prongs is to engage the prospect of it beingeconomically feasible to deprive Europe of its oil and gas which would give theEU’s unelected bureaucrats pause to curtail the EU’s fanatical expansionarymembership visions. In the final analysis, money dictates political policies.

  • #267942


    Bitcoin Legalized in California

    Of course, it should be noted that the state of California is broke. Nonetheless, this should get the Fed’s BP up a bit…. LOL
    Gringo.Floripa2014-06-30 13:50:30

  • #267945

    jeb2886
    Member

    California voted out the republicans who were stopping the budget from being balanced and balanced the budget themselves. With higher minimum wages in the state coming, tax receipts will be higher and inflation will take off a bit more, and it will eat away at their debt which costs them very little to hold at this point.

  • #267946

    jeb2886
    Member

    I did find it interesting that the cambio houses were doing 11 cents under and 11 cents over the official exchange rate, so 2.11 and 2.32, with 2.22 being the official rate. Before this, I had always seen 2.22 and 2.44 type of spreads!

    I assume it’s going to dip a bit further, as people pay off their bills and visa settles with the merchants.
  • #268070
  • #268318

    First the state of California declared Bitcoin ‘legal tender’, and now Dell Computers accepts the digital currency as a way to pay (in the US) for on-line orders.

    http://techcrunch.com/2014/07/18/dell-now-accepts-bitcoin-for-all-online-u-s-purchases/
    The Fed’s blood pressure just keeps rising! ClapLOL
    Gringo.Floripa2014-07-18 21:12:42

  • #268339

    Deleted User
    Moderator

    I’m gettingpretty pissed off about what is becoming a fashionable global purge on taxcollection. Politicians are attempting to distort the boundary between evasion and avoidance when they suggest that legal tax avoidance is an affront to acceptedmorality. What! Politicians talking about morality when they readily socialisedebt created by some of the most irresponsible crooks this side of the blackstump!

    Governmentsare becoming like truffle sniffing pigs in their effort to upturn every stonein the attempt to squeeze every drop of blood from the overtaxed and already anaemicwealth generating demographic. It’s every man for himself from here on in. I’mglad I started early.

    Esprit2014-07-21 14:31:29

  • #268340

    [QUOTE=Esprit]Governmentsare becoming like truffle sniffing pigs in their effort to upturn every stonein the attempt to squeeze every drop of blood from the overtaxed and already anaemicwealth generating demographic.[/QUOTE]
    EU executive sees personal savings used to plug long-term financing gap.
    Actual link: http://www.reuters.com/article/2014/02/12/us-eu-banks-savings-idUSBREA1B1ZI20140212
    Once the 2016 Summer Games conclude, added to the astronomic expenditures to host the Copa, there will be some steep accounts for the PT to pay off. Not a far reach of one’s imagination, that Brasil too will try this scam!

  • #268356

    ffm
    Member

    [QUOTE=Gringo.Floripa][QUOTE=Esprit]Governmentsare becoming like truffle sniffing pigs in their effort to upturn every stonein the attempt to squeeze every drop of blood from the overtaxed and already anaemicwealth generating demographic.[/QUOTE]
    EU executive sees personal savings used to plug long-term financing gap.
    Actual link: http://www.reuters.com/article/2014/02/12/us-eu-banks-savings-idUSBREA1B1ZI20140212
    Once the 2016 Summer Games conclude, added to the astronomic expenditures to host the Copa, there will be some steep accounts for the PT to pay off. Not a far reach of one’s imagination, that Brasil too will try this scam!
    [/QUOTE]

    Let me just see if I understood this correctly. They aren’t going to dip into savings accounts, per se, but create new funds that people can deposit for “long term government investments”?
  • #268391

    celso
    Member

    [QUOTE=Gringo.Floripa] [QUOTE=Esprit]<span style=”font-family: Verdana, sans-serif; font-size: 9pt; line-height: 115%;”></span><span style=”font-size: 9pt; line-height: 115%; font-family: Verdana, sans-serif; -: initial; -attachment: initial; -size: initial; -origin: initial; -clip: initial; -: initial; -repeat: initial;”>Governments
    are becoming like truffle sniffing pigs in their effort to upturn every stone
    in the attempt to squeeze every drop of blood from the overtaxed and already anaemic
    wealth generating demographic.<o:p></o:p></span>[/QUOTE]
    EU executive sees personal savings used to plug long-term financing gap.
    There have been rumblings about a national property tax, and a national wealth tax, among top PT economists to redistribute wealth in Brazil. This will happen if Dilma gets re elected.
    Actual link:  http://www.reuters.com/article/2014/02/12/us-eu-banks-savings-idUSBREA1B1ZI20140212
    Once the 2016 Summer Games conclude, added to the astronomic expenditures to host the Copa, there will be some steep accounts for the PT to pay off.¬† Not a far reach of one’s imagination, that Brasil too will try this scam!
    [/QUOTE]

  • #268393

    miguel
    Participant

    [QUOTE=GreatBallsoFire]
    There have been rumblings about …. a national wealth tax, among top PT economists to redistribute wealth in Brazil. This will happen if Dilma gets re elected.
    [/QUOTE]
    Should this happen (the constitution allows for this eventuality, enabling legislation would be required) the lowest threshold will be fairly high.
    Given the ill-begotten wealth of the PT operatives themselves. And we’re just talking here about declared wealth, of course.
    Why should they share that wealth? Just because it is ill-begotten doesn’t mean they should return it to the povao. LOL
    Of course, if Dilma somehow gets re-elected, then Brazil will have much bigger problems to fry.

  • #268458

    Andrewfroboy
    Participant

    Love The Economist’s Big Mac index, a new one just came out yesterday, they put the implied exchange rate at 2.71. Interesting tool just to compare countries.

  • #268526

    tomydd
    Member

    Look at singapore implied….they say 0,98 instead of the 1,24 Sing$ rate….
    That’s why this is really not a serious support.

  • #269450

    Serrano
    Participant

    Some might have felt a few bumps already, but fasten your seat belts gringos, an area of ‘rough air’ ahead on the radarâ‚Ǩ¬¶.
    (but that might mean needing to ascend to a higher ‘altitude’ with the exchange rate) Wink

    http://www.economist.com/news/americas/21608643-confidence-and-growth-down-public-spending-up-all-systems-slow

    http://www.focus-economics.com/news/brazil/business-confidence/business-confidence-free-fall-hits-lowest-level-over-five-years

    http://www.mises.org.br/Article.aspx?id=1854
    http://blogs.ft.com/beyond-brics/2014/08/11/brazils-growth-deeper-into-the-dumps-but-voters-happy/
    http://blogs.wsj.com/moneybeat/2014/07/18/world-cup-hit-brazils-economy/

    http://www.forbes.com/sites/kenrapoza/2014/07/27/economy-in-gutter-brazil-more-expensive-than-europe/
    It’s interesting that the little talk there’s been on here thus far about election choices, Neves isn’t often mentioned. That’s all I hear in the south. You never hear anyone speak of Marina, and if they speak of Dilma, it’s always with contempt. People were shocked, but not surprised about Campos’ death, yet even he too wasn’t really spoken of in terms of a contender, nor a choice, at least not down here. Yet I should add, that whenever I hear Neves spoken about as a choice, the term “lesser evil” is always in parenthesis.
    During both Lula elections, as well as Dilma’s first (and hopefully last), the PT never carried the south. I feel a huge disconnect here from the rest of the country. There are even some Gaì∫cho transplants in SC that keep tossing around the word “secession”â‚Ǩ¬¶..
    So how many gringos on gringoes get to vote this year? There’s this G.ringo here; Sven; Molendinar (creator of the ‘just add water’ naturalization thread); CaribJewel; hopefully Andrewfroboy, and GGTrek soon too. Who else?

  • #269468

    Serrano
    Participant

    One more to add to the reading list: BACEN muda regras para bancos e injeta mais R$ 25 bilhìµes na economia
    So the Banco Central is going to become more Fed-like?!? Ruh-roh! Shocked

  • #269479

    As a Permanent Resident with an RNE, I cannot vote. Only naturalized foreigners can vote.

  • #269482

    Anonymous

    actual don’t know it may come to near by 2.19

  • #269559

    ffm
    Member

    I have two Morrocan exchange students at my school. They spent the weekend in Rio. They told me that there were kiosks buying dollars for $2.80 brl.

    Could they be mistaken??? This does not seem to make sense. Confused
  • #269560

    kenalag
    Member

    Looks more like euros…

  • #269570

    Take a R$ 50 note to exchange place in the Guarulhos airport!
    They wanted to give me US $10 for R$ 50.

  • #269574

    kevin owen
    Participant

    At Heathrow airport the other day the buy/sell spread was 4.2-3.1. These guys don’t want much!

  • #270266

    celso
    Member

    Yesterday at Salvador airport, exchange house buying dollars at 2.25, selling at 2.55. I told the lady last year the spread was 10 centavos. When you buy below the official rate, I do better at the ATM machine.
    She gave me a dumb blank look.

  • #270269

    jeb2886
    Member

    I’ve noticed that when rates change rapidly, they take a bit of time to catch up, but when they do, it’s about on par. I was lucky, I found a bunch of people heading off to the US, so I exchanged directly with them, and split the difference!

  • #270373

    ffm
    Member
  • #270377

    yeah well, another really strange thing that everything is complaining how the volatility is drying up in worldmarkets. Calm before the storm maybe.
    I see more an more “ALUGA-SE” signs every time I go out for a ride.

  • #270378

    ffm
    Member

    [QUOTE=andrew_nofro]
    I see more an more “ALUGA-SE” signs every time I go out for a ride.
    [/QUOTE]

    Me too. And some large constructions are stopping in the middle in Americana, SP……Confused
  • #270380

    caraca! I just looked at the USDBRL and it’s 2,40

  • #270383

    Serrano
    Participant

    [QUOTE=andrew_nofro] caraca! I just looked at the USDBRL and it’s 2,40
    [/QUOTE]
    Pre-election jitters of the electronic ‘herd’. If we’re lucky, we might get a repeat of the scare than ran through the herd just prior to Lula’s first win. Dilma or Marina, Socialists no matter how you flip the coin. Not reassuring for investors.

  • #270388

    celso
    Member

    Building distrust of shady Brazilian accounting. Petrobras scandal, Brazilian stagnate economy with inflation, falling commodity prices, BNDES loans! Real manipulation leading to implosion of real. Rising Gov debt with huge infrastructure, health, education and public safety problems.
    Mexico now a preferred destination for foreign capital as Brazil sinks with tax structure, trabahista laws, deepening communist rule. Neo colonial trade with China is killing local industry? Look at all the China crap in the stores bought with from iron ore and soy beans money.
    Local rich leaving for Miami. Much safer and cheaper.

  • #270398

    Steven
    Participant

    [QUOTE=The Abbot]

    Is this a “finger in the dyke”? and no, I do not mean finger blasting Dilma!!!!!!

    [/QUOTE]

    I hope that it’s not Lula’s finger. That would only leave him with eight remaining.
  • #270439

    now 2,42.
    2,60 should be the next pressure point.

  • #270441

    ^ That’s actually not in my favor, but
    Laissez le marchì© aller!

  • #270446

    jeb2886
    Member

    I’m really surprised that they let the currency slip this far with an election coming up. Even if there are heavy pressures pushing it this way, I would expect that they would pay whatever it takes to make things look rosy, at least until after the elections.

  • #270462

    kevin owen
    Participant

    I think you are giving the average Brazilian far too much credit.
    I bet if you were to stop the next 10 people you see and asked what the current exchange rate was you would just get a blank stare. The vast majority neither know nor care and don’t understand how it effects them anyway.
    Those that have a grasp on the subject realize that none of the candidates are any good. When I ask my friends who they will vote for the response is almost always a shrug of the shoulders and a does it really matter attitude. The middle class here in the South really have no one, who might win, to vote for.
    To side track for a second I am curious what the election turnout would be if it weren’t compulsory to vote.

  • #270464

    ffm
    Member

    Could it be out of their control at this point JK?

  • #270465

    jeb2886
    Member

    The thing is, the current government doesn’t want to give anything to the media or the other side to chew on. The currency rapidly deteriorating gives them something else to talk about. It’s less about people knowing or caring, and more about whether the other side will use it as ammunition. Even if something others don’t care about, people will realize it’s a sign of weakness. Especially for the current government, basically meaning they’re not in control or not in the lead in the worlds eyes.

    If voting wasn’t compulsory, it would be like the US, old white rich men voting for their interests. Trying to get the young and poor out to vote is almost impossible in the US.
  • #270467

    jeb2886
    Member

    @Abbot, Based on how quickly they reverted the last run to 2.45 to 2.25 their “magic” number, I would say they have control. However, this might be a good time for them to let it slip, where they don’t have to worry about it as much and let a “new” valuation take hold? Clearly the market wasn’t impressed at 2.45 but they were able to pull it back, maybe they want it to slip to 2.50 or 2.60 and then make that the new magic number, where they don’t have to try as hard? I have no idea how much this costs them to pull it back that far.

  • #270472

    romanji
    Member

    The strength of the US economy has a lot to do with it too. Brazil is officially in recession, and the US recently posted 4.6% growth in Q2. Inflation is around 6% for the real as well, making it a bad place to put your money vs. the US. In my opinion the real is still overvalued even at today’s rate (2.44). Fair value is closer to 3. Hold on to your dollars boys, because 2015 is going to be the year!

  • #270484

    kevin owen
    Participant

    [QUOTE=jkennedy] The thing is, the current government doesn’t want to give anything to the media or the other side to chew on. ¬†The currency rapidly deteriorating gives them something else to talk about. ¬†It’s less about people knowing or caring, and more about whether the other side will use it as ammunition. ¬†Even if something others don’t care about, people will realize it’s a sign of weakness. ¬†Especially for the current government, basically meaning they’re not in control or not in the lead in the worlds eyes.

    If voting wasn’t compulsory, it would be like the US, old white rich men voting for their interests. ¬†Trying to get the young and poor out to vote is almost impossible in the US. ¬†

    [/QUOTE]
    Of course there is something to what you say.
    However one side talks about a sliding currency, the other talks of improved export opportunities, more jobs, improved balance of payments blah blah.
    By this time 90% of the audience have glazed over.
    Talk about increasing the minimum salary, improving the bolsa familia, keeping bus fares low and keep the press reasonably friendly ( they just want to back the winner) and you are fine.
    I don’t think the average Brazilian can work out if his salary goes up 5% while inflation runs at 10% they are worse off. Let alone grapple with the intricacies of the FX situation.

  • #270533

    romanji
    Member

    More good reading on this topic:

  • #270556

    Brazil has had a good run. When the economic crises hit in ’08, the Dollar and the Euro were seen as bad investments. A lot of international investors were keen to park the money in Brazilian banks, which were far more stable at the time and had high interest rates. I read some predictions at the time that said when the Western economies started to recover in 4-5 years time, that money would be leaving Brazil (and other developing world banks) and returning to the Developed world. It’s probably already happening…

  • #270559

    jeb2886
    Member

    When the economic crisis hit, everyone ran to the USD, they didn’t run from it. Even though the US appeared to be in real trouble, if you looked at the underlying numbers it wasn’t terrible. Most of the “housing debt” had been sold off to other countries, and other funds. The banks were making money off creating the loans, so they were more or less safe. Most of the banks didn’t even need assistance, they were forced to take it to calm the public down.

    When things get good, like they are now, people start looking elsewhere for better returns. The US will return a steady amount every year, a good 7%, with 3% lost to inflation. Investors go to places like Brazil to get better retuns. If you can get 8% or 12% instead of 4% (after inflation), that’s 300% better returns, and over time that kind of return adds up.
    I think a lot of these people are realizing the returns in these countries isn’t great, because they’ve burned through all their good will and cash. The coming years probably won’t be that great for them. India is hitting wage limits, same with China. Russia is a @#$ mess. Brazil has been growing by hiring more people, not by becoming more efficient, and that has run out. There aren’t really a lot of other “safe” markets for them to go to. So they’re returning to the USD. The US is doing pretty well right now too, so they aren’t losing much by returning the money home.
    I think we’ll see the USD pick up a bit more, and the Real drop a bit more. At which point, we might see a bit of a scare for people holding Reals, that might cause a run the government can’t stop. Inflation should keep chewing away at the Real vs USD value as well.
  • #270779

    doctorlili
    Member

    Dear wise guys. Smile

    Do you have uma dica pra mim about the direction of the exchange rate in case Aì©cio makes it in the run-off? I would expect this to possibly cause the BRL to come up quickly, because of the new confidence that the B might actually become part of a BRIC boom?
    I need to know whether I should inject money now or wait a month until I actually need it.
    Thanks.
  • #270784

    doctorlili
    Member

    What do you mean? Should I wait? If Aì©cio wins the BRL won’t take a jump up? If Dilma wins it might jump down? I hope for Brazil that Aì©cio wins but I need to take my bet against my own hope in the short run.

  • #270785

    jeb2886
    Member

    So far, the BRICS aren’t doing so well. B, R, I aren’t doing so well. Not sure about the future of C and S.

    Brazil has no more people to employee really. It’s growth is going to be stagnant, there really can’t be a boom here, without growth and that comes from either higher productivity, which isn’t happening or additional people working in the economy. China has 800M workers lining up, waiting to get a job. They are also working furiously on productivity. Brazil has neither the population, or the incentives to make giant productivity leaps.
    Either way, the economy isn’t going to show great signs of growth. The dollar is probably just going to get stronger for awhile, unless the government steps in and tries to halt it. Which makes sense as well, a rapidly depreciating currency isn’t great for business either. Instability is almost as bad as uncertainity!
  • #270801

    doctorlili
    Member

    So if I understand you guys right, I should not be too worried about a huge shift. I guess I do need to worry about the upcoming greve more than that.

  • #270803

    Serrano
    Participant

    [QUOTE=Squiddie] So if I understand you guys right, I should not be too worried about a huge shift.[/QUOTE]
    According to this article (and Dilma’s statement) you SHOULD worry!
    Dilma Tells Investors “Fode-se”
    And when (more) foreign capital begins fleeing the country?!?
    (your cue to pounce Squid, to transfer in)
    Gringo.Serrano2014-10-06 21:46:53

  • #270805

    jeb2886
    Member

    I think the two are unrelated for the most part. Uncertainty is just that, things are uncertain so people aren’t sure if they should worry about losing their bosa familia, or about businesses being destroyed. Each group of people feels uncertain about the future, and thus they worry. Will they be the winners or the losers in the race? What will each candidate do differently that might impact them.

    Instability is caused more by actions of people. Yanking things one way, then someone else coming in and yanking them in a different way.
  • #270811

    romanji
    Member

    Here’s another aspect to this: widespread currency manipulation by the major banks (http://dealbook.nytimes.com/2014/10/06/big-banks-face-another-round-of-u-s-charges/?hp&action=click&pgtype=Homepage&version=HpSum&module=first-column-region&region=top-news&WT.nav=top-news). The jury is still out on exactly how much this has effected the price of the real, but my guess is this has contributed to the inflated price of the real vs. the dollar over the past few years. http://brazilianbubble.com/world-economics-brazil-real-still-overvalued-by-19/

  • #270820

    ffm
    Member

    12% inflation next year?!?! What’s THIS do to the exchange rate fellas?

  • #270823

    Anonymous

    now that we’ve all had our heart attack……. ;-)

  • #270831

    Serrano
    Participant

    A little review of previous cycles of inflation in this country is in order. History can, and often does, repeat itself.

  • #270853

    romanji
    Member

    [QUOTE=Gringo.Serrano]
    A little review of previous cycles of inflation in this country is in order. History can, and often does, repeat itself.
    [/QUOTE]

    For anyone interested in seeing the history of inflation in Brazil, here is a nifty little chart that will show you inflation each year all the way back to 1980: http://www.tradingeconomics.com/brazil/inflation-cpi
  • #270855

    doctorlili
    Member

    For me it’s only a short term issue right now, as I will buy a house in the Rocinha or Vidigal next month. So what hyper inflation will strike next year doesn’t terribly matter to me, I stay fairly short on BRL cash holdings.

  • #270861

    Serrano
    Participant

    An interesting read: How Brazil Beat Hyperinflation
    @Squid: You’re going to entrench yourself in Vidigal?! You’re an intrepid soul senhor! Amazing views from there! Boa sorte!!!

  • #270925

    doctorlili
    Member

    Gringo Floripa, I have no lead to Vidigal, my namoradinha has a friend, she lives there. I don’t have too high hopes I will find something. In Rocinha I have a specific prospect set as my default expectation. It too has vista do lagoa e mar. It’s great and I understand the local culture somewhat and it has been tested by a fellow gringo whom I trust a bit. Vidigal, I don’t know. It is more frontal with sea view, and a quick distance from the beach, that’s a great plus. But I am worried about being exposed to the society without my own social connections. So, I take any dica anyone may share about Vidigal.

  • #271111

    Luca
    Member

    Classic price movements.

    USD/BRL rejected twice at 2,50 in the last couple of sessions. But the retracements are shorter each time.

    Chances are that it will shoot through 2,50 on the third try, accelerate a bit as shorts give up, then come around to find support at what was previously resistance, and then head for new highs.
    If it cant hold 2,50 as new support, we are looking to drift back down to the 2,20s again.
  • #271158

    [QUOTE=tbird]Classic price movements.

    USD/BRL rejected twice at 2,50 in the last couple of sessions. But the retracements are shorter each time.

    Chances are that it will shoot through 2,50 on the third try, accelerate a bit as shorts give up, then come around to find support at what was previously resistance, and then head for new highs.
    If it cant hold 2,50 as new support, we are looking to drift back down to the 2,20s again.

    [/QUOTE]
    That looks like Greek to most people here.
    I was hoping for a drop sooner than later ’cause I need to convert some Reais to dollars. But I don’t think that’s going to happen.

  • #271164

    celso
    Member

    [QUOTE=frank4000] When dilma is kicked out the exchange rate will rate to 2.10-2.20 to dollar. If she wins hello 3 to 1
    [/QUOTE]
    Dilma will win. Here comes 4.0.

  • #271165

    jeb2886
    Member

    We blew through 2.50 today!

    The currency is going to devalue no matter who wins. It’s not like there is a huge amount of the budget that they can redirect towards growth or making the country stronger. It’s all allocated out right now, the changes would be minimal. And the new party would need to take over all the bribes and kick backs, unless anyone thinks they would turn those around and use them for the public instead!
  • #271217

    If they want to see growth, a good start would be to throw out the CLT.It’s not worth it to sign carteiras. During my walk to work, and throughout the day, I see plenty of fools that have employees and very few customers. You know they are hemorrhagingmoney. The question is how long are they willing to lose money before they call it quits??
    jkennedy, if they turned down the corruption a few notches, maybe there would be more money for growth-related projects. A good start would be to the BR highway system into a real highway system.

  • #271230

    jeb2886
    Member

    I’ve always wondered about those places, I’m not sure they are hemorrhaging money. They pay around R$30/day for those employees. They probably pay another R$100 in rent. But profit is so high that they can make money off 3-4 sales a day they’re making.

    What amazes me is those restaurants up here in the northeast that are like way the @#$ out there. Just hidden, I drive past them while I’m lost and trying to figure out how to turn around, with nothing else around me. But again, I guess if they can get one family or a couple eating a day, they’ll make their R$30 to survive… but those places are just unreal in how hidden they are and isolated..
    Roads need to be built during the recession and high inflationary periods because they’re so expensive that this is about the only time anyone will stomach them, at least on the scale you’re talking about!
  • #271255

    jkennedy, hemorraging money, I’m afraid so.
    There was a place that opened up close to where I live. They paid 2 employees to play on Facebook all day long. After one year, they closed. His loss, according to him: R$ 90k. He blamed it on the employee that should have been beating the streets. Rely on employees? HAha, what a fool!
    If you’re talking about high profit, like clothing stores, then maybe yeah, ok, but I’ve seen several close recently too.
    Take something like a lanchonette, for example.
    Rent – R$ 3.000
    2 employees – R$ 2800 (with encargos, likely more)
    ì°gua – R$ 100 (or more)
    luz – R$ 100 (or more)
    material de limpeza – R$ 100 (likely more)
    aluguel da mì°quina de cartão – R$ 50 (likely more)
    conta bancì°ria – R$ 35 (likely more)
    telefone – R$ 35 (likely more)
    How many hamburgueres assados, empadas, and nasty espetinhos do you have to sell to pay for all that at R$ 3 a pop??These people opened in an area that is already saturated with lanchonettes AND the movimento is slow right now. To me, that’s just crazy.

  • #271256

    jeb2886
    Member

    I didn’t mean new businesses that have no experience, I meant established ones. Ones that have clearly been around for many years, yet still seem to make it through all the hemorrhaging.

    We have an inlaw who did something similar. Opened up a clothing store, hired an employee and sat back. Failed after a year or so as well.
    Based off your numbers, roughly 10 per hour to break even, assuming no material costs. Probably 12-13 per hour with material costs included. Of course that is an even distribution throughout the whole day, they require about 100 per day. That isn’t 100 customers, but 100 R$3 items. I’m sure several people come in there and order 2-3 and a drink, 10 of those customers a day, and you suddenly just need 60-70 items sold throughout the rest of the day.
  • #271257

    Luca
    Member

    [QUOTE=andrew_nofro]
    Take something like a lanchonette, for example.
    Rent – R$ 3.000
    2 employees – R$ 2800 (with encargos, likely more)
    ì°gua – R$ 100 (or more)
    luz – R$ 100 (or more)
    material de limpeza – R$ 100 (likely more)
    aluguel da mì°quina de cartão – R$ 50 (likely more)
    conta bancì°ria – R$ 35 (likely more)
    telefone – R$ 35 (likely more)
    [/QUOTE]

    Spot on. Our employee (min wage plus sales commission) ends up costing R$ 50 per day including encargos. Thats every day, not every work day.
    And there are more:
    Taxes – in my business we end up paying around 10% of top line sales over the course of they year. The government doesn’t care if you make money as a small business owner. They even tax you on your expenses (ICMS).
    Accountants fee – usually one minimum salary.
    Commission for using the mì°quina de cartão, item often overlooked in budgets – R$500 or more
    Freight charges.
    Other variable costs such as sacolinhas de plì°stico, other types of embalagem
    Annual business licenses
    Insurance
    Even things like changing the fire extinguisher every year
    Lots of other smaller items but that add up
  • #271260

    [QUOTE=tbird][QUOTE=andrew_nofro]
    Take something like a lanchonette, for example.
    Rent – R$ 3.000
    2 employees – R$ 2800 (with encargos, likely more)
    ì°gua – R$ 100 (or more)
    luz – R$ 100 (or more)
    material de limpeza – R$ 100 (likely more)
    aluguel da mì°quina de cartão – R$ 50 (likely more)
    conta bancì°ria – R$ 35 (likely more)
    telefone – R$ 35 (likely more)
    [/QUOTE]

    Spot on. Our employee (min wage plus sales commission) ends up costing R$ 50 per day including encargos. Thats every day, not every work day.
    And there are more:
    Taxes – in my business we end up paying around 10% of top line sales over the course of they year. The government doesn’t care if you make money as a small business owner. They even tax you on your expenses (ICMS).
    Accountants fee – usually one minimum salary.
    Commission for using the mì°quina de cartão, item often overlooked in budgets – R$500 or more
    Freight charges.
    Other variable costs such as sacolinhas de plì°stico, other types of embalagem
    Annual business licenses
    Insurance
    Even things like changing the fire extinguisher every year
    Lots of other smaller items but that add up

    [/QUOTE]
    ì≠ì≠ì≠ì≠, and I forgot about the other stuff!! It’s really very expensive. I have a very detailed spreadsheet with EVERYTHING. It’s huge. There are so many costs.
    You are a true optimist/dreamer jKennedy. I even know buteco owners who have been in business for 10 years++ that seem as if they are going to close any day now. You would think that caxaìßa would keep them in business. Here’s this buteco owner, I’m talking about:
    rent – R$ 1000
    water – R$ 100
    employees – doesn’t have
    inssqn – R$ 725/12 = R$ 60,41
    taxes – around 10%
    profit margin – 100% – 200%
    profit margin (beer) – 30%
    * He used to sell several porìßìµes every day. Now it’s just a few a week
    * Movimento (what the heck is that in English?) has gone waaayy down
    * That’s his only money-generating activity so he needs the money to pay for living expenses
    * Average
    I also know a Brazilian they call “Smiles“. At the first of the year, I mentioned crisis. He said “What crisis? Crisis is only in your head.” The other day I saw him and he said that he is looking for a job in a different area Shocked
    And I’ll bet you $1 that all of these guys I’m talking about voted for Dilma.

  • #271261

    jeb2886
    Member

    There are of course a lot more expenses than we incorporated into the example above! I knew tbird would toss in a bunch of extras ;) But in reality, even he makes a “decent” income from his business. Maybe not for what he was looking for, but probably compared with any kind of work the average brazil would get in his city, he’s probably doing 2-3x better than them.

    This isn’t about a business making masses of money, but the costs to break even, with the pricing model they use here, and the expenses of rent/employees being so much lower than anywhere else, but prices and margins being so much higher.
  • #271267

    Luca
    Member

    While I agree that there is some abusive pricing going on here and there mostly due to lack of competition, cartel-like arrangements or just plain greed and ignorance, generally speaking the operating margins (not to be confused with profit margins) have to be high; you’ve got no choice but to pass on the business’ costs and expenses to your customers.

    In the example of the bakery two things come to mind. They need a lot of employees to overcome the low productivity. Turnover and absenteeism is a challenge; you need to hire 12 or 13 people to make sure you have the 10 employees on duty that you need. This expense is passed on to consumers.
    Waste, theft and mysterious disappearance is a big item for bakeries. I have a case study across the street from my shop. The owner is going crazy, and he has been at it for decades. As much as he motivates his employees, as much as he pays above average salaries, they just steal from him all the time. Big pieces of ham weighing 15 kg will disappear over night, etc. This expense is passed on to consumers.
    These are things that may not sound that relevant but if you sit down and put everything on paper, you begin to really understand why businesses charge so much here- everything is passed on to consumers.
    Not to mention the taxes that are levied on top line sales, not on bottom line profits.
    So while the operating marging can be high * probably 200% in bakeries * the profit margin is often only 10-15%.
    That may still look high. But we have to remember the opportunity cost. Return on investment has to be high considering the risk and considering that you can get 10% a year by investing in very low risk government bonds.

    tbird2014-10-29 17:22:22

  • #271268

    jeb2886
    Member

    This is I totally agree with. But this is also where better business skills can make a huge difference.

    If that bakery has a 200% operating margin, if he can figure out how to remove 5 or 6 employees, or how to remove some of the stealing, he can massively increase his profits.
    This is pretty much inline with how I’ve speculated a lot of these business have been run for years. The US has operating margins of 20%, with 10% profits. Here, it can be 200% with 10%. Obviously not everything can be solved, but the person who can solve some of those issues stands to make out like a bandit.
  • #271277

    [QUOTE=jkennedy]This is I totally agree with. But this is also where better business skills can make a huge difference.

    If that bakery has a 200% operating margin, if he can figure out how to remove 5 or 6 employees, or how to remove some of the stealing, he can massively increase his profits.
    This is pretty much inline with how I’ve speculated a lot of these business have been run for years. The US has operating margins of 20%, with 10% profits. Here, it can be 200% with 10%. Obviously not everything can be solved, but the person who can solve some of those issues stands to make out like a bandit.

    [/QUOTE]
    jkennedy, I recommend you open up a business in Brazil. It’s a lot harder to make out like a bandit. Profit margins can be 1000%. There are still so many things to pay for. Like I said, I have a very detailed spreadsheet. You have to scroll down due a lot due to the sheer number of expenses.
    One thing I forgot to mention that is really bothersome: recissìµes. If I were that bakery owner, I would probably have already comitted suicide. Employee decides he wants to move to another city. The owner has to come up with R$100 – R$800 reais. With 15 employees, there is going to be a lot of turnover. That’s going to kill cashflow some months.
    A bakeryis a good example. There is one near me that has been open for 20 years, but the owner decided to sell it/give it away this year. The same for a franchised English course and some miscellaneous other small businesses. If they were making money, they wouldn’t sell.
    I guess the point I’m trying to make is WHY have a business where you are taking in 100.000/month but 99.000 is going out the door??? I see a lot of that happening around here.

  • #271278

    oh yeah, while I’m at it:
    I know there is a lot of cartel-like behavior here, but there is a limit.
    There is a bakery, bakery A, right outside my door that sells mini-cachorro quentes. They are OK, but they are so expensive that I would rather wait and buy a bag full from another bakery that is on the other side of town whenever I go over there. (( Bakery A loads them with cheap catupirry to make them heavier and very expensive, but it’s overkill)).
    My decision isn’t based on Bakery A’s high profit margin. It’s a decision between 3 of his for a bag full from the other place.

  • #271283

    Luca
    Member

    [QUOTE=andrew_nofro]

    One thing I forgot to mention that is really bothersome: recissìµes. If I were that bakery owner, I would probably have already comitted suicide. Employee decides he wants to move to another city. The owner has to come up with R$100 – R$800 reais. With 15 employees, there is going to be a lot of turnover. That’s going to kill cashflow some months.
    [/QUOTE]
    jkennedy is right in suggesting that there is a lot of poor management. And not making provisions for recissìµes is a common mistake. Brazilians who have no financial education just have a heck of a hard time with the concept that you should set a side money for something that may or may not happen at some unknown point in the future.
    For someone making around R$ 1000/month you have to set aside approximately R$ 200/month* to cover future expenses with recissão. I have set up a separate savings account where I leave the money untouched. When my employee leaves, I just cut a check- no worries.
    Lots – if not most – of small business owners don’t do that. They have the “we’ll deal with it then” attitude, and use the money for other purposes. And then when the employee leaves, they don’t have the cash to deal with it. So they take an expensive bank loan, or go out of business. My accountant told me that she sees it happen every month.
    The other very common mistake is where the business owners dont keep the company’s money separate from his own money.
    * EDIT: R$ 200 includes provision to pay for 13o, fì©rias, adicional fì©rias, and FGTS on 13o, fì©rias and adicional fì©rias + multa FGTS em caso de demissão por justa causa + aviso prì©vio (1 month salary)

    tbird2014-10-30 07:58:36

  • #271284

    Luca
    Member

    [QUOTE=andrew_nofro][
    I guess the point I’m trying to make is WHY have a business where you are taking in 100.000/month but 99.000 is going out the door??? I see a lot of that happening around here.
    [/QUOTE]

    Yes, many of these businesses who actually have decent sales run on incredibly tight cash flows. Every small “imprevisto” has the potential to put them out of business.
  • #271288

    Bank loans to cover recissìµes. That’s crazy, given the taxa de juros here.
    One other aspect that hasn’t been mentioned:
    People think that business owners are swimming in money. Even where I live, some guys that do OK were tied up and held at gunpoint while their houses were being looted. They were lucky they weren’t killed.
    As a business owner, you have to deal with risk, taxes, employees, a ton of other stuff– and at the end of the day, a bandido can steal whatever you have leftover. Sorry to talk about doom and gloom, but that’s the reality I see out my window.

  • #271298

    jeb2886
    Member

    Your views are coming from a gringo though. If you HAD to make money, would you rather work for a minimum wage somewhere, or start a little bakery. If you have a sweet government position bringing in 10K/month, that is the way to go for most, but if you’re options are finding work in a smaller city or in the northeast, then it’s not quite as black and white.

    People who have “houses to be robbed” are swimming in money, compared to their employees!
    Start a business in the US, where 90% go under within a year. At least here you can make mistakes, correct them and surive while you’re doing it. One mistake in the US, and you’re out of business. Forget to advertise, advertise in the wrong spot, don’t get a sweet location or don’t negotiate a contract properly and you’re done.
    It definitely isn’t easy, but you need to also compare it with the other options out there.
  • #271460

    Serrano
    Participant

    PUTA MERDA, 2.55 today!!! Shocked
    And my printer is broken… no way to create some Franklins! Cry

  • #271463

    Anonymous

    2.55? Damn! I’ve got to buy 1500 dollars soon, so I’m going to be taking a pounding. OUCH!

  • #271464

    jeb2886
    Member

    If it’s 2.55 today, you’ll be paying 2.75 at the cambio’s….

  • #271465

    Mkamerling
    Member

    Every time I look at the exchange rate these days I want to cry. The Real is fast becoming a worthless currency. I have a trip to Europe coming up and need to travel to the US in the first half of next year(before May). I am not sure if it is better to buy currency now or wait and hope it improves.
    I understand that nobody here has a crystal ball, but could someone who understands the markets explain to me how they think the Real will perform over the next few months against the Dollar and the Euro.

  • #271489

    jeb2886
    Member

    It isn’t a worthless currency, it’s just an overvalued currency. When everyone was playing devalue their currency, brazil was keeping theirs steady. The estimated value is about 3:1 for the USD, so I would expect to see that at some point in the future. However, the government isn’t without any defenses here and can, and will slow it down. If it gets going too fast, it spooks investors, it also makes business a nightmare because you don’t know where your profit margins are if you are importing/exporting. Should you ramp up business, or slow it down. I suspect it will continue going this direction for quite awhile, but it will have lots of pull backs as the government pulls the handbrake every once in awhile.

  • #271495

    Serrano
    Participant

    [QUOTE=jkennedy]The estimated value is about 3:1 for the USD, so I would expect to see that at some point in the future.[/QUOTE]
    Perhaps even higher: http://www.bloomberg.com/news/2014-10-27/goldman-sachs-sees-brazilian-real-s-fair-value-tumbling-by-2017.html

  • #271502

    jeb2886
    Member

    Yeah I could see higher. I really don’t know how lower oil prices are going to affect brazil, petro exports are going to bring in less money for sure. It says brazils total exports for petro are about 8.3%. The bloomberg report said brazil was running a higher trade deficit right now, and that the government had spent 102B since August to prop up the real.

    On top of an overvalued currency, those things aren’t great. No idea how much they will impact the numbers though.
    Looking at that graph, some of those exports are amazing. I always thought Brazil was a huge exporter of beef and chicken — but looking at that graph, soya is as much as those two combined! Soya oilcake (wtf is that?!) is as much as beef?
    I guess what could really hurt Brazil is a bumper crop of soy in the world, or a massive drop in prices there!
  • #271503

    celso
    Member

    [QUOTE=Gringo.Serrano] [QUOTE=jkennedy]The estimated value is about 3:1 for the USD, so I would expect to see that at some point in the future.[/QUOTE]
    Perhaps even higher:  http://www.bloomberg.com/news/2014-10-27/goldman-sachs-sees-brazilian-real-s-fair-value-tumbling-by-2017.html
    [/QUOTE]
    I agree 100% with Goldman about the Real going to at least 3.5.
    Brazil is now losing lots of money on the 100 Billion currency swaps, and with commodity prices falling, the real will fall faster to equilibrium.

  • #271504

    Those analysts are usuallywrong. After all, if they were right, everyone could sit at home in their skivies watching Bloomberg, CNN, Globo and become billionaires without even having to work.
    This one is really tough, though, because of the obvious situation Brazil is in.

  • #271512

    Moony
    Member

    Agree! I’ve been here 27 yrs watching this novella and the Laws of Economics don’t work the same here because the government lives and operates in a different World; not a Real World.

    When they predict, put it in your calendar and see if they got it right. Few do, which makes it a Vegas crap shoot.
  • #272097

    pippydoo
    Member

    well-paid people trying to predict future interest and exchange rates and theyall get it wrong regularly.
    samsung tab 4 10.1 schutzhìºlle
    Momentsa2014-12-17 03:33:22

  • #272105

    Marc Maserati
    Participant
  • #272115

    jeb2886
    Member

    This devaluation isn’t really something Brazil has done, but something the US has done. Which could make for an interesting time!

    The Real was poised to devalue regardless, with the higher inflation rates, but now it’s being hit with the USD going up pretty fast and strong.
    If there is something Brazilians don’t understand, it’s global markets! They are going to see their currency devaluing and think they are becoming more 3rd world like, and being “mistreated” by the US! I can just see the conversations I’m going to have over the coming years…
    Could be interesting to see if the government tries to support the currency, going against two pretty strong trends.
  • #27057

    lynchem
    Member

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