After a rough three year stretch, Brazilian stocks continue to have a tough time of it early in 2014, with the Bovespa off another 2.5% today and the EWZ is down 6% YTD. The real keeps sliding as well - down 10% vs. the dollar over the last 3 months.
Of imminent concern is slowing growth and a ballooning budget deficit forcing a ratings downgrade - with analysts at both S&P and Moody's suggesting this week one could come later this year. “We don’t have fixed limits…but if debt-to-GDP ratio gets closer to 65%,” Brazil could be ripe for a credit-rating cut, says Moody's Mauro Leos (it's above 60% now). S&P meanwhile suggests the cut in the country's BBB rating could come ahead of the October presidential election.