Hey guys,
As promised now I'm bringing up an economic point of view from Brazil, economically speaking.
Lets take a first look at GDP what measure all our Production through a period of one year.
As far as you can see our gdp has been decreasing since 2010 when it reached a peak and then reverse totally in a down trend... I dont like to say it but it was caused by print and interest rate low in the rich countries what caused a massive flow of capital to emerging countries such as Brazil. In my economic point this year we are gonna have and gdp between -1% and -2%... and no expectation of any improvements next year... honestly I'm seeing reasonable recover only in 2018
Industrial Production is another chart that we must see:
It shows how out industry is behaving actually and also compared to GDP.. it's suffering harder with outflow of capital recently...one important fact is that the automobile factories in Brazil are closing hard and laying off lot of workers what take up unemployment rate and decreasing income. So We have a strong support on -10%... so a bounce can be done from there possible.
So if factories are firing its cause there's no sales out there.... lets see:
Retail sales is another part of economy that has suffered a lot with outflow of dollars... this sector is actually showing weakness and start firing workers giving the fact.... demand weak, sales weaks, profits down and unemployment up.
Unemployment chart:
Unemployment has rising since then...starting this year to pick up all cause weak gdp and outflow of capital returning mainly to the usa thats on course to raise interest rate... I see one strong resistance at 7% but I will say one thing out real unemployment rate is in average 4 times this number...why? Brazil is huge and we cant measure perfectly this data. And technical point it broke a long term trend down.
Brazilian Real currency
With all that issues about our economy .... we are suffering a lot with devaluation of our currency mainly for raise of interest rate in THE USA but also for our bad shape economy actually... so it brings us another chart Interest rate....
To try to contain this massive exit of dollars the only way government has to do is increasing interest what cause more problems cause most of things in our economy is bought over credit so we can't deal with high interest what leads to low sales and less profit and so on. However theres not other way to finance public debt if not increasing it. Give that I see interest rate reaching 15% this year and if thing doesnt improve at time..... 20% wont be a problem in middle term.
Inflation is another issue...
As we are exporter raw ... we are importers manufactured products.... in simple term... we export at 1 and import at 3. We are really dependent of dollars so dollar high also inflation cause it leads to massive increase in prices of products that mainly is not made in Brazil. Also government produces inflation spending more without having it... and who pays? POPULATION
In conclusion, with all these data is pretty clear Brazil inst the correct place actually to invest in risk instruments but safe ones like Brazilian bonds. As economy gets down.. also profits of companies and dividends...and the worst is about to come.... THE USA Didn't rise interest rate... but its coming and then you will see that mess will cause on emerging economies and particularly in this case BRAZIL.
