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Brazil central bank holds rates at 2.00%, says believes inflation is temporary

  
  Analysis
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Comments from Brazil’s central bank

  • Reaffirms forward guidance that it doesn’t intent to reduce monetary stimulus as long as specified conditions met
  • Latest readings in inflation were above expectations
  • Despite the expected cooling in food prices, inflation is still expected to be high
  • Inflation expectations and baseline forecasts remain below target for relevant policy horizon
  • Continues to monitor inflation developments carefully, in particular, underlying inflation
  • Soon the conditions for maintaining forward guidance may not be satisfied
  • Forward guidance removal doesn’t mean rate hike
The drop in BRL this year has certainly been inflationary and that’s unwinding now. At the same time, you can see the growing concerns about inflation.

China reportedly said to expect record amount of US soybean purchases this year

  
  Analysis
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Bloomberg reports, citing people familiar with the matter

The report says that China is said to expect a record amount of US soybean purchases this year as “lower prices help to boost purchases pledged under the Phase One trade deal”.
Adding that the total imports from the US will probably reach about 40 million tonnes in 2020, which will be around 25% more than the 2017 level – the baseline year for the deal.
That said, one of the sources did provide a caveat in saying that despite the forecast and expectation, China’s imports will ultimately be decided by soybean prices and the impact of the virus pandemic i.e. no firm commitment.
I don’t think the report here is a coincidence after customs data yesterday showed that Chinese imports of US soybeans were unusually low in July this year, while imports of Brazil soybeans surged considerably.
For some context, China’s purchases of US farm goods up until July are at just ~27% of the target implied by the Phase One trade deal.
US China

India reports record daily new coronavirus cases of 66,999 in latest update today

  
  Analysis
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That brings the total confirmed cases in the country to nearly 2.4 million

India is among the countries that have been hit the hardest by the pandemic as the struggle to balance between the health crisis and the economic fallout is particularly stark.

As for the health crisis, the bright side is that over 1.6 million of those infected has recovered from the disease. However, the spread is still outpacing the number of recoveries:
India
At the start of July, India reported ~220,000 active cases in the country. That figure is now ~643,000. The only positive – if you really want to look at it that way – is that the mortality sits at just ~1.9%. That is better than the ~3.2% seen in Brazil and the US.
In the bigger picture, as long as the health crisis worsens in India, it will have an impact on the global economic situation in general. Before the pandemic, there have been talks that India’s share of global growth might rival that of US, China in the next decade.
They were already among the top five – some would argue top three – contributors of global growth over the past few years, so any major setback to India will also be a setback for the global economy in that sense.

The Brazilian real hits all time low as it’s the worst emerging market currency this year

  
Analysis, Forex
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Hard times in Brazil

The market seems to love the idea of opening up while hating the idea of not closing at all.
USD/BRL hit a record today at 5.50. The Brazilian real is now down 26.7% on the year with hardly a bounce off the bottom.
Hard times in Brazil
What’s even worse is that the Brazilian bovespa is one among the world’s worst performing equity markets — possibly the worst. In BRL terms it’s down 31% and in USD terms it’s down 49.3%.
The latest leg down in the currency comes on increasing bets of rate cuts and proposed amendments to the constitution to allow the central bank to buy government and corporate bonds.

5 Major Trading Pitfalls

  
  Education
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2dl87puPitfall #1. Betting the farm. Let’s be realistic. Not every trade is going to be a winner. Here is a simple rule for you to remember. Never commit more than 10% to any one position. When I was trading in the pits in Chicago I heard for the first time about the “RIOTRADE”. Simply put, you take a huge position in the market. If it works out, you are a hero. If you lose, you leave home and head for Brazil. Again, NEVER BET THE FARM ON ANY POSITION.

Pitfall #2. Planting too few seeds. This one goes hand in hand with the first pitfall. The key here is diversification and following several markets. Ken watches 30 markets and looks for profit opportunities in each one as they occur. PLANT MORE SEEDS AND YOU CAN ENJOY MORE WINNERS.

Pitfall #3. Jumping the gun. Patience, patience, patience. This is perhaps one of the toughest things for traders to remember, particularly after they have taken some good money out of the market. JUMPING INTO A MARKET BEFORE ALL INDICATORS ARE POSITIVE CAN CAUSE UNNECESSARY LOSSES.

Pitfall #4. The hope trap. This is one of those pitfalls that goes completely against human nature and it is the biggest account killer. What I am talking about is hanging onto a losing position in the desperate hope that it will turn around. A SIMPLE SOLUTION IS TO ALWAYS PLACE A STOP ON EVERY MARKET POSITION AND DO NOT CANCEL IT! (more…)

2009 Country Stock Market Performance

  
Analysis, Economy, Education, Global Indices
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Below we highlight the year-to-date percentage change (local currency) for the major equity indices of 82 countries.  So far this year, 71 of the 82 countries are in positive territory, and the average change of all countries is 33.27%.  With a gain of 20.76%, the S&P 500 is 13 percentage points below the average, yet it’s the second best G-7 performer behind Canada so far in 2009.

The BRIC countries (Brazil, Russia, India, China) have been standouts this year.  Russia is up the most out of all countries with a gain of 126.71%.  Brazil, China, and India are all up more than 70%.  Along with Russia, the Ukraine, Argentina, and Peru are up more than 100% year to date.

Eleven countries are down so far in 2009.  Ghana is down the most at -48.26%, followed by Puerto Rico (-40.56%), Bermuda (-38.36%), and Costa Rica (-35.37%).
2009 country stock market

UK And US Among Top 5 Weekly Sovereign Deriskers

  
Analysis, Economy, Education, Forex
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The week’s biggest (sovereign) CDS movers have been released, and we have some new entrants in the most endangered species list. While by now nobody will be surprised that the UK is a consistent top 2 player (coming in this week with $319 million in net notional derisking, this making it the 8th week or so the country has made the top 3), only behind Italy and its $452 million in net notional, and just in front of last week’s #1 Brazil, the presence of the United States at #4 should be a little unsettling. It has been months since the US appeared in the top 5. And just like in the long gold case, the same types of existential questions once again arise when the interest in US CDS picks up: who gets to pay off your contracts in the case of an event of default? Elsewhere, the presence of Korea and Turkey (or Australia) in the top 10 should not come as too surprising. On the other end, short covering was violent in CDS of Spain, Hungary and Portugal – Europe’s newest lepers. Is the CDS community concerned the EU can actually pull out a rabbit out of the hat that actually works for once? Hardly. The top 10 reriskers also saw the inclusion of France and long-forgotten insolvent Greece.

5 Major Trading Pitfalls you must avoid at all costs!

  
  Education
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5pitfallsPitfall #1. Betting the farm. Let’s be realistic. Not every trade is going to be a winner. Here is a simple rule for you to remember. Never commit more than 10% to any one position. When I was trading in the pits in Chicago I heard for the first time about the “RIOTRADE”. Simply put, you take a huge position in the market. If it works out, you are a hero. If you lose, you leave home and head for Brazil. Again, NEVER BET THE FARM ON ANY POSITION.

Pitfall #2. Planting too few seeds. This one goes hand in hand with the first pitfall. The key here is diversification and following several markets. Ken watches 30 markets and looks for profit opportunities in each one as they occur. PLANT MORE SEEDS AND YOU CAN ENJOY MORE WINNERS.

Pitfall #3. Jumping the gun. Patience, patience, patience. This is perhaps one of the toughest things for traders to remember, particularly after they have taken some good money out of the market. JUMPING INTO A MARKET BEFORE ALL INDICATORS ARE POSITIVE CAN CAUSE UNNECESSARY LOSSES. (more…)

Bad NEWS Continues For BRAZIL

  
Analysis, Education
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BRAZIL2Brazil’s economic growth continues to disappoint.

After data in December showed Brazil’s economy shrank in the third quarter of last year for the first time since 2009, the central bank’s IBC-Br index, a monthly proxy for gross domestic product, showed economic activity fell 0.3 per cent in November from a month earlier.

The market had been expecting an increase of 0.1 per cent for November.

The surprise contraction comes just two days after the central bank voted unanimously to raise its benchmark Selic rates by a larger-than-expected 50 basis points to 10.5 per cent.

The aggressive move is aimed at tackling the country’s high inflation, which hit 5.91 per cent last year. (more…)

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