Warning Signs from Brazil

BBM Gestao de Recursos issued a statement publicly warning about imminent weakness in BRL and a potential central bank reversal of recent record low rates. BBM's Beny Parnes, himself a former central banker, explains that BBM is mostly scaled out of its positions and believes that most of the wind has been taken out of BBM's big money makers from the first half of the year.

Indeed, BBM's portfolio has significantly benefitted from a 22% surge in BRL and lowered rates - a position we discussed back in March, though we overshot rates by a quarter point - but Parnes defends the paring back, citing "less opportunity" in the current environment. We agree with the sentiment despite the recent dollar beatdown since mid April. Most of the fundamental picture has been accounted for with the recent run-up but increased liquidity may provide a second wind. Emerging markets continue to be interesting, especially from a long-term view, and we'll continue to keep an eye out.

Comments

[Mike Landfa...:]

Time With Mike has two posts focused on Brazil at Khrono Stock that readers of Seeking Alpha might find interesting:
CPFL Energia (NYSE:CPL) Yields 7.6% and Trading The USD/BRL

khronostock.com/blog/m.../

Jul 30 09:00 AM

[EUARTE:]

Gad! HasEnglish left the financial pundits? What specifically is the probable R$ aganist the US$? In English por favor!

Jul 30 09:24 AM