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Rhyming 2008

This note was originally published at 8am on September 12, 2012 for Hedgeye subscribers.

“History doesn’t repeat itself, but it does rhyme.”

-Mark Twain

 

Some prominent Western academic economists (Keynesians) tend to go with the “feel” thing on US and Global GDP growth. It “feels like 3-4%” is something that we’ve heard almost every year since 2006.

 

So how does it feel to you? To me, if I had to make a call on it, it definitely feels like it’s September. It feels like the sun probably rises in the East this morning too. On the year-to-date thing, I’m not sure if it feels like 1987, 2007, or 2008.

 

In September of all those years, something was different. In September 2007, growth slowed and companies started to miss. In September 2008, expectations ramped for a bigger and bigger Paulson bazooka bailout. And for those of you who remember what came after September 1987 (October 19th, down 23% in a day), it was just a blip, because stocks did close “up year-to-date.”

 

Back to the Global Macro Grind

 

If you boil down all 3 of those periods, in terms of isolating central planning expectations, it’s tough to not feel anything that rhymes more than 2008. For Hank Paulson, TARP was supposed to be $250B, then $500B, then $800B (by October Paulson was bent over his garbage can). For Bernanke, 0% rates were supposed to run until 2012, then 2013, then on January 25th he had to move the goal posts to 2014.

 

Now what? Will Buzz Lightyear Bernanke go to 2015, then infinity, and beyond?

 

Apparently the Europeans will do “whatever it takes”, so why not? It’s only going to get us $130-150 Oil and an even faster Global Growth Slowdown than when Bernanke pushed Oil to $125 (Brent) in February.

 

Expectations matter. And these central planners will be held accountable for it this time – that’s not different. On that score, here are 3 top headlines (expectations) from Bloomberg.com this morning:

 

1.       “Fed Seen Starting Qe3 While Extending Rate Pledge to 2015”

2.       “Stimulus to Reverse Commodity Bull to Bear Fastest Since 2008”

3.       “China’s Stocks Advance After Premier Wen Signals Stimulus”


Isn’t this centrally planned market thing exciting! If I’ve written this 100s of times this year, I may as well have written it 1000s and then walked right up close to you in March and yelled it in your ear with a government manufactured mega-phone:

 

POLICIES TO INFLATE SLOW GROWTH

 

Whatever the Europeans promised this morning might matter to where the last bottom-up turned macro hedgie capitulates on his European shorts, but it will not change the only thing that will change any of this – economic growth.

 

Across the board, August inflation data in Europe was as follows:

  1. France CPI +2.4% (vs 2.2% in JUL)
  2. German CPI +2.2% (vs 1.9% in JUL)
  3. Spain CPI +2.7% (vs 2.7% in JUL)

Now, remember, the Spanish government just admitted to making up their GDP growth numbers for the last few years, so don’t think for a New York day traded minute that they aren’t suppressing real-life inflation on a reported basis like Bernanke does.

 

What you have now in Europe is called stagflation (growth slows to flat/negative year-over-year while inflation accelerates sequentially month-over-month). Anyone who tells you $116 oil, $7 corn, and $60,000/yr to go to Yale is “deflationary” needs their head read.

 

To review the core components of our Global Macro Model and why we have had Growth right in 2012:

  1. Growth is either slowing or rising, sequentially (quarter over quarter)
  2. Inflation is either slowing or rising, sequentially (month-over-month)
  3. Policies to Inflate expectations are either rising or falling which, in turn, perpetuates 1 and 2

If you need to know why people who didn’t blow up in 2008 keep flowing out of Equity Funds intuitively get this, look no further than the broken sources perpetuating policy expectations: forecasters at the US Federal Reserve.

 

In our Chart of The Day, you can see team Bernanke’s forecasting track record on US GDP:

  1. Pre having to do QE2 at 2010’s low (he thought QE1 was the elixir for growth), he was certain US Growth was going to be 4%
  2. Post being wrong on what QE2 would do for US employment and economic growth, he kept dropping his estimates
  3. Currently, he’s been  wrong on what QE3 (the January 25th push of 0% to 2014) would do for US Growth by a lot

So, is Ben Bernanke a credible source? Are his academic cronies? Does he have any business perpetuating policy expectations that are built on his forecasted expectations? Or is he just doing more and more of what has not worked, hoping he gets something right?

 

I don’t know the answer to that last question. But it certainly rhymes with how a lot of bad managers, coaches, and players approach playing at the highest level too. Maybe this time is different, but for those guys it never ends well either.

 

My immediate-term support and resistance risk ranges for Gold, Oil (Brent), US Dollar Index, EUR/USD, US Treasury 10yr Yield, Russell2000 and the SP500 are now $1699-1756, $113.92-116.48, $79.74-80.97, $1.26-1.29, 1.68-1.74%, 827-846, and 1419-1445, respectively.

 

Best of luck out there today,

KM

 

Keith R. McCullough
Chief Executive Officer

 

Rhyming 2008 - Chart of the Day

 

Rhyming 2008 - Virtual Portfolio


THE HEDGEYE DAILY OUTLOOK

TODAY’S S&P 500 SET-UP – September 26, 2012

 

As we look at today’s set up for the S&P 500, the range is 28 points or -0.80% downside to 1430 and 1.14% upside to 1458. 

                                            

SECTOR AND GLOBAL PERFORMANCE


THE HEDGEYE DAILY OUTLOOK - 1

 

THE HEDGEYE DAILY OUTLOOK - 2

 

THE HEDGEYE DAILY OUTLOOK - 3

 

THE HEDGEYE DAILY OUTLOOK - 9

 

 

EQUITY SENTIMENT:

  • ADVANCE/DECLINE LINE: on 09/25 NYSE -1409
    • Decrease versus the prior day’s trading of -586
  • VOLUME: on 09/25 NYSE 755.74
    • Increase versus prior day’s trading of 20.81%
  • VIX:  as of 09/25 was at 15.43
    • Increase versus most recent day’s trading of 9.05%
    • Year-to-date decrease of -34.06%
  • SPX PUT/CALL RATIO: as of 09/25 closed at 1.74
    • Down from the day prior at 2.59

CREDIT/ECONOMIC MARKET LOOK:


BERNANKE – every Qe has been met w/ a shorter, steeper, asset price rally, but a faster correction; this is doing nothing to inspire price stability and employment; Financials (XLF) and Commodities (CRB) down -4.2% and -4.3%, respectively, since what will be remembered as a historic morning-after in US economic history (SEP 14, 2012). 

  • TED SPREAD: as of this morning 25.70
  • 3-MONTH T-BILL YIELD: as of this morning 0.11%
  • 10-Year: as of this morning 1.66%
    • Decrease from prior day’s trading of 1.67%
  • YIELD CURVE: as of this morning 1.39
    • Down from prior day’s trading at 1.41

MACRO DATA POINTS (Bloomberg Estimates)

  • 7am: MBA Mortgage Applications, week of Sept. 21 (prior -0.2%)
  • 10am: New Home Sales, Aug. est. 380k (prior 372k)
  • 10:30am: DoE Oil, Gasoline Inventories
  • 11am: Fed to purchase $4.25b-$5b notes due 9/30/2018-8/15/2020
  • 11am: Business Roundtable releases 3Q CEO economy survey
  • 1pm: U.S. to sell $35b 5-year notes
  • 1:15pm: Fed’s Evans speaks in Hammond, Indiana

GOVERNMENT:

    • Secretary of State Hillary Clinton delivers remarks at UN on HIV/AIDS, 9am
    • TeleCommunication Systems, Northrop Grumman, Lockheed Martin officials unveil new user terminal for secure military satellite communications, 8:30am

WHAT TO WATCH:

  • Spanish government bonds fall amid bailout speculation
  • Kraft Foods Group to replace Alpha Natural in S&P 500
  • Intel CEO said to tell staff that Microsoft’s Windows 8 operating system is being released before fully ready
  • Yahoo says Ken Goldman to replace Tim Morse as finance chief
  • Credit Suisse said to consider merging asset management unit
  • EADS CEO struggles to quell German skepticism on BAE merger
  • Ameriprise said to near purchase of ING asset management unit
  • Bank of America said to plan about 40 job cuts in Asia
  • IBM’s Rometty to succeed former CEO Palmisano as chairman
  • GE raises $462m from selling 7.6% stake of Bank of Ayudhya
  • Barclays unit sued over securities by U.S. Credit Union regulator
  • Cargill says looking for acquisitions to meet target growth

EARNINGS:

    • AGF Management (AGF/B CN) 8am, C$0.19
    • Progress Software (PRGS) 4:30pm, $0.23
    • HB Fuller (FUL) After-mkt, $0.53
    • Worthington (WOR) After-mkt, $0.47

COMMODITY/GROWTH EXPECTATION (HEADLINES FROM BLOOMBERG)

  • Oil Falls to Seven-Week Low on Demand Outlook, Stockpile Gain
  • Billionaire Rinehart Sued for Ownership of Pilbara Ore Mines
  • Sugar to Extend Bearish Run in Third Year of Glut, ISO Says
  • Copper Drops on Concern Global Stimulus May Fail to Spur Growth
  • Gold Gains in London on Signs of Demand in Euros, Indian Rupees
  • Soybeans Drop on Brazilian Conditions, U.S. Harvest Progress
  • Iron Ore Unlikely to Rebound as China Slows, Shale-Inland Says
  • Rebar Falls in Shanghai on Concern Housing Curbs May Sap Demand
  • Palm Oil Set for Biggest Quarterly Loss Since 2008 on Stockpiles
  • AngloGold Operations Halted in South Africa as Strikes Spread
  • Natural Gas Pipelines to Expand U.S. Supply Glut: Energy Markets
  • China Coal Inventory Drop Suggests Destocking End Is Nigh
  • Paraguay Reclaiming Energy From Brazil in Franco Industrial Push
  • Cargill Says Grain Rally Means No Shortage
  • U.K. Farms Face Organic Wheat Seed Shortage as Rain Spurs Blight

THE HEDGEYE DAILY OUTLOOK - 4

 

 

CURRENCIES


USD – get the Dollar right, you’ll get most things beta right; that’s the story of the last 7 trading sessions (stocks down for 6 of 7 with the USD straight up on the bounce off its TAIL support line of $78.11). Right here the USD is immediate-term TRADE overbought; Euro 1.28 immediate-term TRADE oversold, so we bought stocks into the close yesterday, including AAPL.

 

THE HEDGEYE DAILY OUTLOOK - 5

 

 

EUROPEAN MARKETS


THE HEDGEYE DAILY OUTLOOK - 6

 

 

ASIAN MARKETS


JAPAN – the BOJ has plenty of experience to show into Krugman, Bernanke, and the Princeton School of Keynesian Fiscal Cliffs; remember Japan’s additional 10 TRILLION Yens in “stimulation” last wk? never mind a 1.5 day rip like Bernanke had, Japan only had 1 day – expensive!; Nikkei down another 2% last night, down -13.2% since #GrowthSlowing started, globally, in March.

 

THE HEDGEYE DAILY OUTLOOK - 7

 

 

MIDDLE EAST


THE HEDGEYE DAILY OUTLOOK - 8

 

 

 

The Hedgeye Macro Team


THE M3: STUDIO CITY; SMOKING BAN; ANGELA LEONG; WAGES; EXTRA DAY OFF

The Macau Metro Monitor, September 26, 2012

 

 

INVESTORS STEP UP INVESTMENT IN STUDIO CITY Macau Business

MPEL said it has reached an agreement with its partners in the Studio City project to invest an additional US$350 million (MOP2.8 billion) total in equity capital toward the venture.  An option in the agreement allows Melco Crown’s partners six months to deliver their 40% share of the US$350 million.  If not, the gaming operator will increase its stake in Studio City to 67% from 60% by investing the full US$350 million amount itself, Melco Crown said.

 

ANGELA LEONG TO RUN FOR NEXT AL: CASINOS YET TO INTRODUCE CONCRETE MEASURES FOR SMOKING BAN Macau Daily Times
SJM CEO Ambrose So told the media that operators are yet to come up with concrete measures to comply with the new smoking ban law.  The reason for the lack of measures was that the government did not consult the industry earlier, so that operators did not have enough time to make the necessary preparations.  While stressing that they supported the smoking ban, So also pointed out that the gaming industry is “special”, and the government should consider how to better enforce the ban inside gaming venues.

 

Angela Leong, Managing Director of SJM, said she expected the competition in the gaming industry to become more intense as more neighboring countries and regions joined the business, but she was confident that SJM would continue to play a leading role as its new project in Cotai is expected to give the company an additional competitive edge.  Leong also confirmed to the media that she has opted to run again in the Legislative Assembly (AL) election scheduled for next year.

 

NO WAGE RISES EXPECTED FOR GAMING Macau Business

SJM CEO Ambrose So says he does not see a significant increase in salaries for staff in the gaming industry taking place in the coming years.  Average monthly earnings for employees in the gaming industry increased 22% from MOP14,491 (US$1,811) in June 2007 to MOP17,740 in June this year, according to government statistics.

 

PUBLIC WORKERS GET EXTRA DAY OFF ON GOLDEN WEEK Macau Business
The government today announced it would give public workers a special grant for exemption from work on October 3.  That means public workers will have a five-day break during the National Day Golden Week.  The leave period starts on Saturday (September 29) and continues until Wednesday (October 3).


Early Look

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SPLS: LED ZEPPELIN

Takeaway: $SPLS The risk is severe in this 'change everything' move. 8x EPS may look great, but not if the real multiple is 30x.

 

SPLS used 10,155 characters in its mammoth press release. It would have been easier to simply say, ‘we’re changing everything’ and top out at 25. The risk embedded in this model is severe.


Struggling retailers are like people with severe obesity – it takes them a long time to get so ill. SPLS is now officially obese with its press release surrounding how it is going to change the company, but we’re astonished with how quickly it got there. After all, SPLS has already been known as having one of the best management teams in retail. Heck, I even sourced analytical talent on my own team from SPLS, and yes, I can say that there are a lot of very smart people there.


But those classic rock faithful (and no to our interns, Nirvana is not Classic Rock) will know that Keith Moon, drummer from ‘The Who’ told Jimmy Paige that his new band will go over like a Led Zeppelin. That’s what SPLS smells like here. But without the success of selling 200 million albums thereafter…


Think about it…when you put great people in a terrible industry – not only mass big box retail – but big box office supplies retail where they have two bleeding competitors in Office Max and Office Depot and compete with everyone from Wal Mart to Radio Shack, to Best Buy to Ikea, then the job will win 9 times out of 10 and the ‘great person’ will walk away a winner only 10% of the time. Not good odds.


Let’s look at what this company is trying to do

  1. integrate its retail and online offering, 
  2. increase investment in its online businesses,
  3. reorganize its operations,
  4. implement senior leadership changes,
  5. initiate a multi-year cost savings plan, and
  6. restructure its International Operations

Let me just say that any ONE of these is an undertaking that is so incredibly risky. But to do all six simultaneously? There is absolutely no shot of this working out – at least not without some more severe pain before they see relief.  There are two things that bother us the most.

  1. That they think they can do this while cutting costs. Mark our words, there has never been a retailer that has made changes like this to ‘accelerate growth’ while cutting costs and has had the strategy work. One of them is trying now. It rhymes with KC Blenney. And no, I’m not saying that to be sensationalistic. This could be another JCP. It’s business is actually less defendable than JCP’s is. The problem at JCP is that the model is so expensive. But the idea is a good one. Here, I’m not even sure what the idea value proposition is.
  2. We should have seen this, at least in part. When looking at the company’s percent of sales coming from on-line, 31% sales growth came from on-line in the four years ending calendar 2009. Despite the added boost from acquiring Corporate Express in 2008, the contribution of on-line to total growth slowed from an average of 8% per year over four years to only 2% in each of the last two topping out at 42% of sales vs. 40% 3-years prior and 27% 6-yrs ago. The company simply stopped spending on its fastest growing business. Hate to break it to them, but spending again now means they possibly benefit in 2 years. Not today.
  3. In the interim, these reorg costs will be steep, and very dynamic. All competitors will be salivating over this.

The stock looks so cheap. But valuation need not apply. They own less than 3% of their stores, and have little else to monetize a breakup value. Maybe an Ackman-type steps in and makes noise, but the company is already making a ton of noise on their own. You can hardly argue complacency to any sane Board member or sympathetic activist. But doesn’t 8x earnings look great? Not if the real multiple is 30x. Maybe they should move to Plano.

 

SPLS: LED ZEPPELIN - SPLS Reg Grwth Comp

 

SPLS: LED ZEPPELIN - SPLS Online perc

 

SPLS: LED ZEPPELIN - SPLS StoreProd2 empl

 

SPLS: LED ZEPPELIN - SPLS Store prod1

 

SPLS: LED ZEPPELIN - SPLS rev comp

 

 


Idea Alert: URBN

Takeaway: $URBN is back on the long side of the Real-Time Positions today. Price changed, the research didn't.

 

Keith added URBN back on the long side of the Real-Time Positions today. The research hasn’t changed – it's the price that did.


Here’s our note “URBN: Feel the Love” we posted on 9/11:

 

Several brokers were out this morning echoing URBN's positive comp trajectory commentary in its 10Q filed last night, and how it supports the turnaround story that is taking place. We usually step back and re-evaluate when we see so many uniformly similar comments about a name that we have been positive on – especially when the stock is up 50% since May when we added to the Hedgeye Virtual Portfolio. But the reality is that when looked at in context, the Street is still not too bullish on URBN at all. In fact, there are 32 firms that ‘cover’ URBN, and as the first chart below indicates, we’re currently looking at the lowest ratio of Buy ratings, and highest ratio of Sell ratings in the recent (5-year) cycle. While some will consider the 9% of the float being short as too low for URBN (ie suggesting that investors are a step ahead of analysts), we'd look at others like Macy's where short interest is sub 2% -- which is an absolutely unsustainable level. That's makes investors' bearish bets on URBN look more significant.


Idea Alert: URBN - URBN Sent

Source: Factset


Aside from looking at sentiment we need to take this announcement for what it is – a sequential improvement in a high-return concept that has a lot of upside.


Here’s what we said back in May around the time we got more heavily involved…


“Let’s not bend any facts here. The quarter stunk. URBN took 8.6% sales growth and morphed it into a 10.1% EBIT decline. But relative to expectations, it was slightly better. One comped a comp (Urban), while the other (Anthro) comped down on the easiest compare of the year. There were definitely puts and takes. But the big take-away came from simply listening to this management team.


They sounded so extraordinarily focused on the conference call – such a stark contrast to the URBN of six months ago. Seriously…go back and listen to the past two calls. Night and day. That’s what you get when you bring in the founders to save the day.


The message is simple.

  1. Hire all the right talent.
  2. Empower each of them to come up with a concise plan, to which they will be held accountable.
  3. Give them the financial and human resources to achieve the plan.

Along the way, they’ve got shared services initiatives (DC just going up for 3Q) that should allow URBN to leverage the back-end across concepts while investing in areas like mobile and digital to more efficiently flow product and reach new
customers.


They don’t really give comp forecasts – which is great bc forecasting comps is ridiculous. They simply focus on the process to put up the numbers, and hold themselves accountable to execute. Anyone reading this knows that I (McGough) rarely throw out public kudos to management teams, but the bottom line is that listening to these guys is like listening to a company with $10bn in revenue, not $2.5bn.


There’s still wood to chop here, no doubt. But we’re coming up with estimates about 20% above consensus. If we’re right, then URBN is trading at about 7.1x our next year EBITDA estimate. If you want to short that, knock yourself out.”


The stock is certainly much more expensive today, but we arguably underestimated the extent to which estimates needed to go up. When estimates are headed higher (as they still have to go) it’s a fool’s game to bet against a high-return growth retailer.


Idea Alert: URBN - URBN RevEbit


IDEA ALERT: BUYING BRAZILIAN EQUITIES (EWZ)

Takeaway: We are now long Brazilian equities in our Real-Time Positions signaling product.

SUMMARY BULLETS:

 

  • We are now long Brazilian equities in our Real-Time Positions signaling product and continue to believe Brazilian stocks are a buy on weakness with respect to the intermediate-term TREND duration.
  • On our proprietary GIP factoring alone, Brazilian equities look almost as attractive as they did to us back in early MAY – particularly from a GROWTH perspective, where our models continue to point to a back-half ramp in real GDP. For a variety of factors, the risk of a material ramp in INFLATION over the intermediate term appears to be receding.
  • Risks to our positioning include: a sharp-selloff in “risk assets” across the Global Macro universe, as asset prices realign with their fundamentals. Moreover, a sharp, policy-induced selloff in the BRL vs. the USD remains a risk, though also receding on the margin relative to our previous expectations.

 

Earlier this afternoon, Keith bought the iShares MSCI Brazil Index Fund in our Real-Time Positions signaling product. Though we haven’t published an official stance until late last week, we did frame up the bull/bear debate on Brazilian equities in our AUG 30 note titled: “CONSTERNATION IN BRAZIL” (8/30). To recap, our interpretation of the bull thesis was as follows:

 

  1. On our proprietary GIP factoring alone, Brazilian equities look almost as attractive as they did to us back in early MAY – particularly from a GROWTH perspective, where our models continue to point to a back-half ramp in real GDP.
  2. Needless to say, it remains to be seen whether or not the Brazilian government’s aggressive year-long stimulus efforts will provide the intended boost to growth without spurring a measured ramp in INFLATION.

 

To point #1, intermediate-term Brazil’s GIP outlook is among the healthiest across the dozens of countries we track from a Global Macro modeling perspective. Brazil, having gone through “the soup” earlier and more aggressively than many other economies in the current cycle, appears poised to be well out front leading any global growth acceleration over the intermediate term – albeit from small numbers – on the heels of one of the world’s most aggressive fiscal and monetary stimulus efforts in the YTD.

 

IDEA ALERT: BUYING BRAZILIAN EQUITIES (EWZ) - 1

 

To point #2, we received world late last week that our initial fears of accelerating inflation over intermediate-term may have been overblown – at least from a reported standpoint (from our WEEKLY ASIA & LATIN AMERICA WRAP-UP):

 

  • What Happened (9/19): Brazil’s government plans to change the CPI index to decrease the effect of its notorious indexation policies (price increases tied to price increases that beget future price increases). Moreover, Mantega did mention that the electricity cost reduction as well as the recent and pending tax cuts will help keep a lid on Brazilian CPI in 2013.
  • Why This Matters: While it’s hard to take Mantega’s word on CPI at face value, we wouldn’t rule out them altering the way inflation is calculated to help the government achieve the government’s political goals (the US government has mastered this technique). While this is morally bad and has very dour unintended consequences from a long-term perspective, it would remove a fair amount of inflation risk over the immediate-to-intermediate term – which would keep the Brazilian central bank on hold, and, more importantly, the market’s POLICY expectations along with it. After at +19% melt-up from its YTD bottom on JUN 5, I’m getting constructive again on the Bovespa. Shame on me, as my interpretation of these fundamentals has likely been primed by the market reaction leading into and through QE. That being said however, Brazil’s GIP outlook (attached) looks fairly robust from a trend perspective, so that does provide incremental cover for continued gains in Brazilian equities. Brazilian stocks are now officially a buy on weakness from our purview. For more details on our internal bull/bear debate on this asset class, refer to our AUG 30 note titled, “CONSTERNATION IN BRAZIL”.

 

Additionally, it increasingly appears that QE3 was nearly priced in from an inflation expectations perspective, delivering little more than a 2-day pop in “risk assets”, including global commodities markets. To the extent the trend of lower long-term highs across key commodity prices continues, we’d expect to see continued dovish revisions to inflation expectations in Brazil.

 

IDEA ALERT: BUYING BRAZILIAN EQUITIES (EWZ) - 2

 

Given our below-consensus outlook for global GROWTH with respect to the intermediate term, we do realize the inherent risks of being long the high-beta Brazilian stock market at the current juncture – particularly with its exposure to the Inflation Trade (69% of the Bovespa Index is Energy, Basic Materials and Financials stocks). That said, however, we’d be remiss to ignore the fact that during the Global Financial Crisis the Bovespa Index bottomed in OCT ’08 – well ahead of other global equity and commodity markets – as rapid, state-directed credit expansion helped mitigate the effects of the Great Recession upon the Brazilian economy. It’s worth noting that Brazil scores very well on our proprietary Stimulus Space Index (methodology here).

 

IDEA ALERT: BUYING BRAZILIAN EQUITIES (EWZ) - 3

 

Another risk we see to being long Brazilian equities is BRL depreciation relative to the USD – particularly of the sharp, POLICY-induced variety. To this point, in an interview in London last week, Brazilian Finance Minister Guido Mantega reiterated his aggressive stance against QE3 and reminded investors that Brazil could implement possible measures such as raising cross-border IOF tax rates and politically pressuring the central bank to incrementally lower the benchmark SELIC interest rate, as well as have them accelerate reverse currency swaps – all with the intent of promoting a lower exchange rate amid what Mantega himself dubbed an international “Currency War”.

 

Again, it appears increasingly less likely that the USD puts on a sustained down move from here over the intermediate term as the Fed’s POLICY potency appears to be fast losing steam. While that does increase the likelihood we’d see BRL depreciation over that duration, a sharp, policy-induced selloff in the BRL vs. the USD like we saw earlier this year appears less likely.

 

Darius Dale

Senior Analyst


Daily Trading Ranges

20 Proprietary Risk Ranges

Daily Trading Ranges is designed to help you understand where you’re buying and selling within the risk range and help you make better sales at the top end of the range and purchases at the low end.

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