Olympic Sized Bears Eating The Real
Today’s Spotlight Market
Political turmoil is just one issue dragging down the Brazilian economy. There is a threat of impeachment against Brazilian President Dilma Rousseff. There are two possible impeachment charges pending. The first one is from a Petrobras kickback case. This gigantic corruption case has spread to many Brazilian political leaders, but not yet up to the Presidential level. There are also court findings that allege Rousseff forged government accounts and overspent on public projects before her reelection campaign.
Fundamentals
Brazil?s economy has fallen into a deep recession with an expected contraction of 2.7% for 2015 and the Brazilian Real has been in free fall. Brazil is highly dependent on commodities and the recent plunge in commodity prices have hurt. Plus, Brazil is a major exporter to China and the slowing Chinese economy has hurt Brazilian exports. Another problem hitting Brazil is the rising US Dollar.? This combined with the dropping Real will make it more expensive to pay back US Dollar denominated loans.