Monday, 29 December 2008

A Stone-Cold Sober Voice in Brazilian Markets, Finally ...

Check this out, dear readers:

Brazil Stocks Won’t Gain in 2009, Real May Fall 20%, Nehmi Says
By Paulo Winterstein and Laura Cassano

Dec. 29 (Bloomberg) -- Brazilian stocks may not gain next year and the real will fall another 20 percent against the dollar as a global recession curbs demand for commodities, said Victor Nehmi Filho, whose hedge fund beat 99 percent of its peers.
“The Bovespa has no strength, and I see no reason for it to have strength. People talk about this as a crisis, with a rebound. But this is more of a recession than a passing crisis,” said Nehmi, portfolio manager at Sparta Administradora de Recursos Ltda. in Sao Paulo. “There’s still room for another drop in the real in 2009, especially during the first half.”

Bloomberg reporters Paulo Winterstein and Laura Cassano were quite right by pointing out the latest bear voice, as our dear investing community stays hopeful that 2009 will be a better one. Winterstein and Cassano provided us in their story with a bit of a size and scope that makes the interviewee a worthy speaker in the matter: Nehmi´s fund this year beat 99 percent of his peers in the hedge fund industry (there are about 6,700 funds of that kind in Brazil, according to Anbid, the investment-banking and securities industry association.) It is interesting to see that there´s finally a sober guy in the domestic capital markets. Clearly, as we have pointed, the number of Brazil analysts pointing to a mild deceleration grows by the day while the number of doomers remains small (too small.) Click here to see a document on Sparta´s performance, which I found on the Internet and I suppose is public information.

One of the most prominent voices among the bears, Morgan Stanley economist Marcelo Carvalho is, contrary to most his colleagues, expecting a recession to hit Brazil in the second quarter of 2009. The dismal behaviour of certain stocks often thought as ''defensive,´´ and the fact that the central bank may cut rates as early as next month are all signs of bad times for growth.

Well, we stand by our predictions: buy more fixed-income, buy no stocks for a while. Keep your stocks positions defensive. And there´s little Lula can do to prevent the inevitable.

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