The Brazilian market -- as reflected by broad ETFs like EWZ -- fell for six days in a row, inching back a bit finally on Monday. Is this an entry point or a warning sign for technically oriented investors?
This is the longest losing streak for [[EWZ]] since mid- to late August. While it does present an opportunity to come back into Brazil at a 6% lower level, it also demonstrates that Brazil is getting a lot more complicated as a macro story.
Inflation is alive and well in this historically inflation-prone country, but with the current account deficit already so high, it will be difficult to eradicate -- especially if Dilma Rousseff is on the level when it comes to her vow to slash local interest rates. Either rates have to come up or the government needs to dramatically launch into an austerity program of its own.
In any event, Brasilia needs to make some fiscal adjustments once Dilma takes the reins of office January 1. Otherwise, we might all end up looking back at the Lula era as a kind of golden age.
Disclosure: No positions