Brazil Hikes

Brazil‘s Central Bank increased interest rates on Wednesday evening to 7.5% from 7.25%.   The rate hike was not totally unexpected.  Here is what Forbes had to say,

Central Bank president Alexandre Tombini hinted several times over the last week that the monetary policy committee was “attentive” to rising interest rates. The 12 month rolling IPCA-15 inflation rate is around 6.4%, on the high end of the Bank’s tolerance band…

Wednesday initiates what will likely be a new and probably small tightening cycle. The overall tone of the monetary policy committee’s statement was surprisingly dovish, said Marcelo Salomon, an economist at Barclays Capital in New York. The decision to raise rates was split, and the two dissident votes were casted for no hikes (Directors Aldo Luiz Mendes and Luiz Awazu Pereira da Silva).

The BOVESPA is already down a stunning 13 percent for the year.

We totally got it wrong buying emerging markets last week.   Thank goodness for stops  and that’s not ketchup on our P&L.

Apr17_BVSP

(click here if chart is not observable)

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One Response to Brazil Hikes

  1. alx west says:

    #The BOVESPA is already down a stunning 13 percent for the year.

    why stunning ? its just a 13 percent..

    #We totally got it wrong buying emerging markets last w

    why would you buy weakest market ? spx/dow are all time high, but emerging/commds markets are lagging, and most of them are under 50/200avg, so what is point of buying here ? what is the strategy ? mean reversion.. so you are expecting weakest markets go up, and strongest go down ? is it kind of silly?

    wanna buy Emerging markets, wait for spx sizeable corr ~7-10 pct,, then its time

    good luck

    PS
    NEVER EVER BUY MARKETS under 200avg, or w/ 50/200 averages in reverse

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