Rising Pressure on BCB for FX Intervention

The BCB reportedly stepped into the FX market last week with a spot sale of dollars that was not accompanied by a repurchase commitment or other intervention measures – the first time this has happened in a decade. The move to stem the slide in the BRL has been...

Locals see Opportunity in LATAM

We have previously highlighted that despite the global equity selloff there has been only a marginal decline in flows to emerging market equity ETFs, which suggests that investors remain committed for the time being. We have dug further into fund flows for Brazil and...

What’s with the Name Variant Perception?

Variant perception is the effort to become sufficiently knowledgeable about whatever the subject is, that at a time to be at variance from consensus, because one of the few sure ways to make money in the market is to have a view that is off consensus and have that...

Brazil: Speculators Take Profits on BRL and BRL Assets

We turned bullish on Brazil back in February.  Our leading indicators had been turning up, the effects of previous Selic hikes had begun to recede, and we expected inflation would fall, opening up the path for interest-rate cuts.  Year-to-date, Brazil has delivered...

Emerging Market Valuations Will be Compelling

A weak oil price and a strong dollar rally will put pressure on emerging markets, but valuations for many emerging markets should soon be compelling.  Emerging markets have been in a downtrend relative to the S&P since 2010.  We will likely see further weakness...