How a possible U.S. Fiscal Cliff could impact Brazil


Uploaded by lapressetv on 14.11.2012

Transcript:
How a possible U.S. Fiscal Cliff could impact Brazil
During this year end
a bigger reason of worries all over the world
The possibility of a Fiscal Cliff and recession n the United States
from January 2013 on
let's find out what is the Fiscal Cliff and the impact to Brazil
with the chief economist at Grdual Investimentos, André Perfeito
How are you, André?
All right.
welcome to La Presse website
Thanks
There's a very short time to the negotiations between U.S. government and Congress
to avoid the Fiscal Cliff from January 2013 on
What is the 'Fiscal Cliff'?
Well, let's remember a little bit about this story in the United States
last year, there were many discussions to raise the U.S. debt roof
and it has caused a strong political stalemate among Democrats and Republicans
even before elections
this situation remains
Republicans have the majority in the Congress
Democrats do have in Senate
But the discussion must be done there
President Obama is trying to pass a law in the Congress
which were mediated by his rival Romney
it's fiscal, one attempt to raise the government's spending a little more
giving momentum to the U.S. economy
this is subject to discussion
but when we talk about politics is difficult to project
I believe that
considering that President Obama can't be candidate anymore
and also considering thath all the situation is very dramatic
in the United States
we've seem the last U.S. data
retails sales are not so good
Labor force also without much enthusiasm
everything shows us they will find an agreement there
this is my expectation
if we've had only the Fiscal Cliff problem
it would be easy to trade during this year end
A range of problems accumulate
among them the European crisis which comes out strongly
So, how's gonna be investos' life during December?
Well, I suggest caution
There are some move in which we must spend more time trying to understand
One of them is the recent U.S.dollar high
Dollar's started to rise again
It's a little - R$ 2,07
But for such a market like ours which was virtually flat
This is a very relevant high
It starts to cause some fears
not of an inflation return,
but an inflation pressure ahead
investor's life won't be easy
we have a severe discussion on the electric sector industry
If the government desire to change the rules
in order to reduce taxes during concessions' renegotiation in the energy sector
It realy has impact on the inflation
and another very relevant issue is the gasoline price rise
Will it happen or not?
Everybody wants to know
it could be a kind of relief to Petrobras
let's say that already fulfilled the quota of patriotism
helping Brazilian economy to avoid a higher increase in the gasoline price
it's on the table and there's no easy answer to it
the trend of medium and long term
is really Bullish to the Brazilian stock exchange
considering the interest rate and the growth difference
even with a modest pace trend for next year
we have a positive and comfortable level
Foreign Capital won't come 'cause investors are afraid
André Perfeito, back to the Fiscal Cliff issue
Let's suppose the Republicans disturb Obama's life
and from January on happens allt that can result in an American recession
Which would be the consequences to Brazil, if it happens?
There are two ways of contagion in case of an U.S. recession
in the trade issue
United States is not our great partner anymore
but they have a very close relationship to China
and whatever happens to China will impact Brazil
but the main way, also related to Brazilian GDP
and to the country's activity
Brazilian entrepreneurs are very afraid
with defensive postures
it will enhance the liquidity preference
to keep capital invested instead of spent in development
Brazilian economy is a slouch
Entrepreneurs are carrying labor force for a time
without layoffs in March which cam be a serious problem
So, in an 'End of the World' scenario
with an inability of negotiations in the United States
impacting strongly in our Trade Balance
but mainly in the investments sector
what would be a disaster
Investments in Brazil must be around 20% per year
but it is arounf 12% 13%, without so much courage to rise
André Perfeito, thank you so much for joining us here on La Presse's website
Thank you.
See you next time
From BM&FBOVESPA, São Paulo, Brazil, I'm Luciene Miranda