{"id":138472,"date":"2024-12-18T17:30:53","date_gmt":"2024-12-18T10:30:53","guid":{"rendered":"https:\/\/hotvideos24.online\/?p=138472"},"modified":"2024-12-18T17:30:53","modified_gmt":"2024-12-18T10:30:53","slug":"brazil-traders-sell-first-ask-later-as-panic-hits-markets","status":"publish","type":"post","link":"https:\/\/hotvideos24.online\/?p=138472","title":{"rendered":"Brazil Traders \u2018Sell First, Ask Later\u2019 as Panic Hits Markets"},"content":{"rendered":"<p> <script async src=\"https:\/\/pagead2.googlesyndication.com\/pagead\/js\/adsbygoogle.js?client=ca-pub-3711241968723425\"\r\n     crossorigin=\"anonymous\"><\/script>\r\n<ins class=\"adsbygoogle\"\r\n     style=\"display:block\"\r\n     data-ad-format=\"fluid\"\r\n     data-ad-layout-key=\"-fb+5w+4e-db+86\"\r\n     data-ad-client=\"ca-pub-3711241968723425\"\r\n     data-ad-slot=\"7910942971\"><\/ins>\r\n<script>\r\n     (adsbygoogle = window.adsbygoogle || []).push({});\r\n<\/script><br \/>\n<\/p>\n<div>\n<p class=\"yf-1pe5jgt\"><!-- HTML_TAG_START -->(Bloomberg) &#8212; First it was a collapse in the currency. Now the rest of Brazil\u2019s financial markets are in the cross-hairs as investors lose faith in the government\u2019s ability to contain a deepening fiscal crisis.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-1pe5jgt\"><!-- HTML_TAG_START -->Most Read from Bloomberg<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-1pe5jgt\"><!-- HTML_TAG_START -->The selloff that sent the real plunging to a record low is engulfing everything from stocks to local-currency debt to dollar bonds, with traders even piling into hedges against a sovereign default. Market watchers say extraordinary measures on Tuesday by the central bank to stem the currency\u2019s slide are little more than a temporary fix, and warn that lawmakers\u2019 moves to water down a high-profile austerity package are likely to only add to the turmoil.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-1pe5jgt\"><!-- HTML_TAG_START -->The widening rout shows how investors are increasingly skeptical that President Luiz Inacio Lula da Silva is serious about reining in a soaring fiscal deficit. Brazil is running an annual budget gap of 10% \u2014 far wider than the ones seen during the leftist president\u2019s first administration. His recent emergency brain surgery came at the worst possible time, further complicating efforts to shore up public accounts.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-1pe5jgt\"><!-- HTML_TAG_START -->\u201cBrazil has become \u2018sell first, ask later\u2019 in the current market,\u201d said Sergey Goncharov, a money manager at Vontobel Asset Management. \u201cThe fiscal concerns coupled with the central bank\u2019s reaction to the FX move triggered some panic selling.\u201d<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-1pe5jgt\"><!-- HTML_TAG_START -->The real has been the worst-performing currency in the world over the past four sessions, adding to a 21% drop this year against the greenback. The benchmark Ibovespa stock index \u2014 Latin America\u2019s largest \u2014 has fallen 3.8%. Swap rates jumped. Dollar bonds tumbled the most in emerging markets after defaulted Lebanon and five-year credit default swaps widened to their highest level in more than a year.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-1pe5jgt\"><!-- HTML_TAG_START -->\u201cIt\u2019s reached a crisis stage from a bond standpoint,\u201d said Jack McIntyre, a portfolio manager at Brandywine Global Investment Management. \u201cLula\u2019s got to say something constructive.\u201d<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-1pe5jgt\"><!-- HTML_TAG_START -->Brazil\u2019s lower house altered Lula\u2019s spending proposal late Tuesday in ways that may further unnerve investors. While they approved the plan, which awaits a vote in the Senate, lawmakers struck a proposal that would have let the government restrict the use of tax credits by companies if finances worsen. A controversial plan to change the military pension system was also punted until 2025.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-1pe5jgt\"><!-- HTML_TAG_START -->As the currency selloff spread this week, strategists rushed to abandon bullish bets on the country\u2019s assets. Over the past two days, JPMorgan Chase &amp; Co. strategists ditched their positive view on Brazil\u2019s dollar debt, while Credit Agricole SA exited its tactical overweight position on the real two weeks after entering the trade.<!-- HTML_TAG_END --><\/p>\n<p><button class=\"secondary-btn fin-size-large readmore-button rounded   yf-15mk0m\" data-ylk=\"elm:readmore;itc:1;sec:content-canvas;slk:Story%20Continues\" aria-label=\"Story Continues\" title=\"Story Continues\"> <span>Story Continues<\/span> <\/button> <\/p>\n<div class=\"read-more-wrapper\" style=\"display: none\" data-testid=\"read-more\">\n<p class=\"yf-1pe5jgt\"><!-- HTML_TAG_START -->\u201cInvestors clearly have thrown in the towel,\u201d said Olga Yangol, head of emerging-markets research and strategy at Credit Agricole. Despite positive signs on growth and actions from the central bank, \u201cthe perception is that as long as the current president is in charge, he seems to be quite impervious to market gyrations.\u201d<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-1pe5jgt\"><!-- HTML_TAG_START -->Last month Lula unveiled a plan to cut 70 billion reais ($11.5 billion) in annual spending, but it was accompanied by new income tax breaks, disappointing traders. On Tuesday, a lawmaker in charge of the spending cut plan said congress was considering watering down the proposal even further due to its potential impact on social programs.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-1pe5jgt\"><!-- HTML_TAG_START -->The government\u2019s reluctance to follow through with cuts has left most of the heavy lifting to the central bank, which last week lifted benchmark interest rates by a full percentage point and vowed to bring the rate to 14.25% by March as they combat inflation.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-1pe5jgt\"><!-- HTML_TAG_START -->Despite the tight credit conditions, Brazil\u2019s economy \u2014 the largest in Latin America \u2014 has continued to grow, with unemployment near record lows and wages gaining. What\u2019s more, it has about $360 billion in international reserves. Lula has capitalized on the economic growth to show he\u2019s delivering on his promises to improve living standards for the poor.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-1pe5jgt\"><!-- HTML_TAG_START -->But it has also stoked concerns that the economy may be overheating, with inflation expectations having deteriorated significantly. Traders now expect rates to peak near 16.25%, which would increase the government\u2019s interest cost burden and widen the deficit even more.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-1pe5jgt\"><!-- HTML_TAG_START -->In addition to its rate decision, the bank has carried out its biggest direct interventions since the early days of the pandemic, pumping $5.8 billion into the market through spot auctions since Friday. Each time, the moves gave the real a temporary jolt that quickly faded.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-1pe5jgt\"><!-- HTML_TAG_START -->Investors said the risk of fiscal dominance, whereby monetary policy becomes ineffective, is starting to creep in.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-1pe5jgt\"><!-- HTML_TAG_START -->\u201cThe central bank is a supporting actor,\u201d said Marcos de Marchi, chief economist at Oriz Partners. \u201cThe main actor in this movie is fiscal policy.\u201d<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-1pe5jgt\"><!-- HTML_TAG_START -->For now, few investors are willing to wager when the rout will end, unless the government changes tack.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-1pe5jgt\"><!-- HTML_TAG_START -->\u201cMomentum is driving everything Brazil-related,\u201d said Gregory Hadjian, a global macro strategist at Loomis Sayles in Boston. \u201cFiscal is 100% the main problem. And a material response on fiscal is the real catalyst to turn things around.\u201d<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-1pe5jgt\"><!-- HTML_TAG_START -->&#8211;With assistance from Maria Elena Vizcaino, Zijia Song and Leda Alvim.<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-1pe5jgt\"><!-- HTML_TAG_START -->(Updates with lawmakers\u2019 moves in seventh paragraph)<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-1pe5jgt\"><!-- HTML_TAG_START -->Most Read from Bloomberg Businessweek<!-- HTML_TAG_END --><\/p>\n<p class=\"yf-1pe5jgt\"><!-- HTML_TAG_START -->\u00a92024 Bloomberg L.P.<!-- HTML_TAG_END --><\/p>\n<\/div><\/div>\n<p><script async src=\"https:\/\/pagead2.googlesyndication.com\/pagead\/js\/adsbygoogle.js?client=ca-pub-3711241968723425\"\r\n     crossorigin=\"anonymous\"><\/script>\r\n<ins class=\"adsbygoogle\"\r\n     style=\"display:block\"\r\n     data-ad-format=\"fluid\"\r\n     data-ad-layout-key=\"-fb+5w+4e-db+86\"\r\n     data-ad-client=\"ca-pub-3711241968723425\"\r\n     data-ad-slot=\"7910942971\"><\/ins>\r\n<script>\r\n     (adsbygoogle = window.adsbygoogle || []).push({});\r\n<\/script><br \/>\n<br \/><div data-type=\"_mgwidget\" data-widget-id=\"1660802\">\r\n<\/div>\r\n<script>(function(w,q){w[q]=w[q]||[];w[q].push([\"_mgc.load\"])})(window,\"_mgq\");\r\n<\/script>\r\n<br \/>\n<br \/><a href=\"https:\/\/finance.yahoo.com\/news\/brazil-traders-sell-first-ask-222643785.html\">Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>(Bloomberg) &#8212; First it was a collapse in the currency. Now the rest of Brazil\u2019s financial markets are in the cross-hairs as investors lose faith in the government\u2019s ability to &hellip; <a href=\"https:\/\/hotvideos24.online\/?p=138472\" class=\"more-link\">Read More<\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[],"class_list":["post-138472","post","type-post","status-publish","format-standard","hentry","category-business","entry"],"_links":{"self":[{"href":"https:\/\/hotvideos24.online\/index.php?rest_route=\/wp\/v2\/posts\/138472","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/hotvideos24.online\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/hotvideos24.online\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/hotvideos24.online\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/hotvideos24.online\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=138472"}],"version-history":[{"count":0,"href":"https:\/\/hotvideos24.online\/index.php?rest_route=\/wp\/v2\/posts\/138472\/revisions"}],"wp:attachment":[{"href":"https:\/\/hotvideos24.online\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=138472"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/hotvideos24.online\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=138472"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/hotvideos24.online\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=138472"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}