Caroline Kahl

Ambition brésilienne

Is what I call Brazil´s attempt to become member of the Club of Paris. After paying back a depth of USD 17 million to Italy, maybe you are receiving a formal invitation..

McCurrencies

Happy 20th Birthday to The Economist´s Big Mac index!
(Says a vegetarian who enjoys the global "burgernomics").
As it enters its third decade, the Big Mac index is widely used and abused around the globe. It is time to take stock of what burgers do and do not tell you about exchange rates...
Only that Burger King´s recent IPO in NY was a little poor, n´est-ce-pas?

Real versus Dollar

Great article on ft.com
Real's fall versus dollar might offer clue to Brazil's prospects.
..At 49.2 per cent of gross domestic product, domestic public debt is a significant impediment to growth in Brazil.
It uses up public revenues that could otherwise be freed for investment and crowds other more productive borrowers out of the market. Reducing the ratio of debt to GDP is the priority of the economics team at the finance ministry and central bank, while improving the profile of domestic debt (making it less vulnerable to changes in external conditions and reducing the cost of borrowing) is the narrower priority of the Treasury....

Soccer Bandwagon

For somebody who does not really care about soccer it is fascinating to see who joins the World Cup soccer bandwagon. Even Goldman Sachs who recently published a report called World Cup and Economics 2006 "switched its attention from gold, shares and the dollar to which emerging economy has the best chance of lifting the trophy in Berlin on July 9". It suggests there is a limit to how much overlap there is between the beautiful game and the murky world of finance.
Curious to learn more about the "Footballing equivalents of the Brics " or "The impact of the World Cup on trading activities"? Checkt out the FT FAQ.
If you are living in Brazil be prepared that business and life may come to a standstill on certain days. Do not forget to check out the different opening hours of your bank.

Keep on going Brazil..

...besides political scandals, corruption and upcoming elections, you are on your way!
Inflation fell the past weeks besides rising prices for alcohol.
Now that the Central Bank of Brazil hopefully does not need to fear inflation anymore, everybody expects the discont rate and interest rates to fall.
The Bovespa index states record numbers, unfortunately due to the increasing investments of foreign investors taking advantage of the political crisis and falling stock quotes.
The USD is low like never before, the country risk rate for Brazil is stable at 238 points.. let us keep our fingers crossed that we reach investment grade in 2-3 years.
Just keep on going Brazil!

Choquezinho

When it comes to the theories of Macroeconomics I would classify myself as Chiacgo Girl, not too much friend of J.M. Keynes. But of course, in a country like Brazil governmental intervention is far more justified to a certain extent, more than in Europe.
Legitimate chicago boy and Brazilian Minister of Treasury, Joaquim Levy, had recently expressed that nicely in an interview with Carta Capital: 180 million Brazilians and some ministers, worried about the increasing valorization of the Real, do not seem to realise that this risk (of a stronger Real) can be reduced by spending less: Dar um choquezinho negativo no gasto público. Isto é Keynes, Marcroeconomia, Regra número 1. YES!

Record Results

Interesting weeks ahead now that companies are revealing their financial results for 2005. Petrobras announced today record breaking numbers in their history with an operating net revenue of R$ 136,6 billion/USD 58,37 billion (23% increase 2004/05) and a net profit of R$ 23,7 billlion/USD 10,12  (40% increase 2004/05), Ptx rate as of Dec 31st.
Weeks before the big news was that Brazil reached self-sufficiency in oil.
Petrobras surpassed with its net profit now Norwegian Statoil (USD 4,68 billion) but stays behind Exxon (USD 36,13 billion),  Shell (USD 22,93 billion), BP (USD 19,13 billion), Total (USD 16,02 billion) and Chevron Texaco (USD 14,06 billion), according to  CBIE.
National oil production increased 13% to 1,68 million barrels per day.

Tax Incentive

Really surprised to open the newspaper Valor Económico yesterday and coming across an advertisement of BNP Paribas promoting an investment fund dedicated to non-resident foreigners. That was fast, I thought, just one day after the Brazilian government announced its tax incentive decree. Too quick I learned today, the promoted fund does not comply with the conditions of the PM  as announced last night by the CVM (Braz. Security and Exchange Commission). Excempt from the tax incentives are also several countries considered tax paradise, check the list.
But then again, it is all about 15% witholding income tax and Brazil has closed treaties with various countries in order to avoid a double taxation.