1. After the recession of last November and December, when the Brazilian GDP dropped 3.8%, the country's economy was able to recover at a 2.0% rate in January, a fantastic accomplishment The -0,8% negative GDP published by international news agencies is what is called in economics as "carry over", or GDP data from 2008 that shows up in the first quarter of 2009. That is because quaterly GDP is actually an average of 3 months, median November the 15th, divided by August the 15th. The last 45 days of the year are actually "carried over " to the following year.
Car production, for example, has none of these problems, every day counts. And in January car production rose 92%. Do you really believe GDP was negative 1st quarter of 2009 in Brazil? Only if you read Reuters and AP.
2. The Caixa Econômica Federal, a state-owned bank which subsidises the majority of the housing and construction market in Brazil, has lowered its interest rates for the sixth time in row this year.
3. Local governments are cutting taxes on investments. Last week, for instance, José Serra, the governor of Sao Paulo, the richest state in the federation, has announced a R$ 350 million tax exemption, with which he aims to promote more than R$ 3 billion in investments.
1. Once again, we faced good news about the recovery of the Brazilian automobile industry: sales of Volkswagen increased 16% in March.
2. FGV, a consultancy,
has forecast an increase of 3.5% of the building sector. One cannot emphasize
it enough the importance of this sector for the labor market.
3. Banks in Brazil are too profitable. The Bank of Brazil was forced to reduce profits by the Brazilian government, because it was a bad example to the privately owned banks. Remember, Obama fired GM president, owning zero % of GM stock, Bank of Brazil is owned by the Brazilian Government, and the Bank does have some monopolistic privileges, which allows for temporary reduction in interest rates.
4. Brazilian Government lends 4 billion to the IMF, money to save Europe and other failed countries.
* Internal Tourism grew 18% in January and February. Instead of traveling to Europe and USA, where everybody is depressed, and stressed, Brazilians have opted to travel internally, which means more jobs and income are conserved in house.
* Government has created a very efficient and productive housing plan, basically streamlining the bureaucratic mess, and freeing working capital, usually to carry housing until financing was approved. It reduces barriers of entry allowing thousands of new builders to enter the market.
* Automobile industry resumes sales, but there is a possibility that only 70% of Brazilians are buying, the rest are still fearful of losing jobs. If that is confirmed, that means there is a hidden 30% growth rate, which will manifest itself in the second and third quarter.
* 50% of Brazilians Banks are state owned, 40% are family owned, if you include Santander. That is conservatism and safety for every depositor to sleep well at night. Brazil is poised to be the Swiss bankers of the world, and safer.
The other 10% are foreign banks run by execuives on bonuses, leveraged to the hilt, but those are easy to pick out.
1. Employment figures for February are up, and should increase to 100.000 new jobs in March
2. Fosfertil, Brazil's main fertilizer company increased sales by 3% in January (37% annualized), which surprised everyone. Agriculture was supposed to suffer, since it is commodity driven, and fertilizer purchases was supposed to go down due to the world recession and lack of credit. Not so.
3. Car sales increased 4% during the first two week's in March, 8% projected for the month. Car sales nearly back to normal. End of automobile crisis, mainly caused by alarmist headlines.
4. The amount of bad checks decreased 28% in São Paulo. Repeat it: -28%. In a financial "crisis", it should be the other way round.
5. Jose Pastore, Brazil's leading Labour specialist, predicts only a 0,8% increase in unemployment in 2009.
6. Interest Rates Futures for Jan 2010 signals 9,75% a year, the first single digit interest rate in Brazil in 50 years!