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   Non-TechThe Brazil Board


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From: elmatador12/2/2020 1:16:00 AM
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The latest on Brazil’s economic reforms: A conversation with Economy Minister Paulo Guedes

brookings.edu

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From: elmatador12/3/2020 12:20:04 AM
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Airlines will need 5,500 aircraft with less than 150 seats by 2029: Embraer
By Pilar Wolfsteller2 December 2020

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Brazilian airframer Embraer expects the world’s airlines will require 5,500 aircraft with up to 150 seats in the coming ten years, as the industry reinvents itself after the historically disruptive coronavirus pandemic.

Passenger levels will likely return to 2019 levels by 2024, the San Jose dos Campos-headquartered company says during its ten-year market forecast presentation. Revenue-passenger kilometres will be about 19% lower over the next decade than previously projected.

But in this recovery, Embraer sees a unique opportunity for its new jets in the sub-150-seat capacity category to play a leading role in the global industry’s restructuring.

”The fallout from the pandemic signals the beginning of a new industry cycle, with many unique aspects,” writes chief executive Arjan Meijer in the company’s Market Forecast 2020 report, published on 2 December. “Unlike the previous one, which was guided by a massive supply of capacity and a focus on lowest cost-per-seat, we foresee a cycle characterised by versatility, operating efficiency and profitability.”



Source: Embraer

Embraer hopes to deliver 5,500 new aircraft by 2029

The outlook is based on several assumptions about the future of the commercial aviation industry, adds Embraer’s vice-president of marketing Rodrigo Silva e Souza.

”The commercial aviation industry will be smaller, and when it comes back we believe the growth rate will be significantly lower than what we had before,” he says. ”It will also have a different shape. Changes in the global trade flows and passenger behaviours will lead to changes in air travel overall.”

Of the 5,500 anticipated deliveries, 1,080 will be turboprops and 4,420 will be jets, Embraer predicts. About three quarters will be replacement aircraft, and net growth will be about 25%, according to the forecast.

Geographically, just under one third of those 5,500 airframes, or 1,710, will go to the Asia-Pacific region, and another 29%, or 1,600, will go to North America. European customers will take about 1,350 aircraft, or 25% of the total, and Latin America will account for about 9%, or 510 aircraft. The remaining 330 aircraft, or 6%, will go to Africa and the Middle East, Embraer predicts.

The main drivers in all regions will be right-sizing fleets for the new reality in air travel following the global health crisis, Silva e Souza says. That means bringing in smaller and more-efficient types to allow flexibility when planning airline networks and schedules.

Shifting passenger travel habits will also broadly influence air travel in the long term. New technologies such as video conferencing may take a long-term bite out of business travel, while companies could move operations away from large and expensive urban centres, since more employees are working from home.

Another trend will be increased regionalisation, and less reliance on global supply chains that had been all the rage in years past, Embraer says. This is partly due to coronavirus-driven travel restrictions.

“Expect demand to be less for long-haul travel and stronger for regional travel,” the company writes in its report. “That dynamic will create new interest in secondary, less-populated destinations which, in turn, will open new opportunities for air service with smaller-capacity aircraft.”

In China, the market will move more to a hub-and-spoke model, and the rest of the continent will likely see more point-to-point connections.

In Latin America, infrastructure projects will drive demand for improved air connections between far-flung cities across the vast continent, where Embraer’s jet segment could sell strongly, he adds.

But the economic effects of the crisis on lower-income populations could leave some people less able to afford air travel, dampening demand.

In Europe, environmental concerns are top of mind, and will likely play a larger role in that continent’s aviation market growth. However, Europe is not the only region where this customer perception is growing in importance.

“Passengers [everywhere] are beginning to be more conscious, and when they fly they look for more eco-friendly solutions,” Silva e Souza says. That will accelerate the replacement of older and less-efficient aircraft with, for example, Embraer’s new E2 family.

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From: elmatador12/4/2020 7:09:53 AM
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Foreign direct investment in mining projects in Brazil has been a long lasting trend in the past decades. However, when it comes to research and exploration compared to major producers like Canada and Australia, or even neighbors Chile and Peru, Brazil still has a long way to go.

Amidst the efforts to expand mining activity in the country, president Jair Bolsonaro presented a bill in February 2020 to allow commercial mining on protected indigenous lands, and recently unveiled the proposed Mining and Development Program (PDM) with goals for the sector in the period 2020-2023.

The proposed bill, which is now under the appreciation of the National Congress, defines specific conditions for the research and exploration of mineral resources and hydrocarbons, such as oil and natural gas, and the use of the hydroelectric potential of rivers for electric power generation. According to the bill such activities will require the prior approval of the Congress.

On the other hand, the Mining and Development Program (PDM) aims at turning Brazil´s mineral potential into wealth for the sustainable development of the country, taking into account its socioeconomic and environmental imperatives. For such purpose, the program lists several actions, including those aimed at the generation, processing and dissemination of data on mining in all phases of the mining activity, and the stimulation of new mining enterprises.



Brazil is the fifth largest country in the world in terms of territory and its soil is rich in all sorts of minerals. Brazil is one of the main mineral exporters in the world, and currently the mining activity accounts for almost 7% of Brazil’s GDP.



Although Brazil has a great variety of mineral resources, its main resource is iron ore. The iron ore produced in the country is of the highest quality, and, as a consequence, Brazil has become the third largest iron ore producer globally. In 2015, iron ore was responsible for 60% of the total value within the mineral industry. Brazil is also the largest producer of niobium, the second largest producer of manganese, the third largest producer of bauxite and the eleventh largest producer of gold. Other important minerals are copper, nickel, phosphate, coal and potash.



The State of Pará is currently the second largest producer of ore in the country, second only to Minas Gerais, and includes Carajás, the largest open-pit iron ore mine in the world.



According to Companhia de Pesquisa de Recursos Minerais – CPRM (the Geological Survey of Brazil), the state-owned company linked to the Ministry of Mines and Energy that is responsible for the production and divulgation of geoscientific knowledge, only 26% of the country’s territory is mapped for exploration.



The country has today 58,000 areas ready for public offer but without geological research. And the excess of bureaucracy in the licensing process contributes to hinder new investments in mining. The definitive solution for such problems is within the primary concerns of the government.

To stimulate economic activity and the mining sector the Brazilian government will make available previously protected areas, covering an area bigger than Denmark of which 30% will open up for mining activities. In addition, the government plans to will increase royalties on various mineral resources. This will certainly create opportunities for foreign investors that would be willing to do business in Brazil.



It is a fact that the Brazilian economy has suffered from an economic recession over the last years, mainly due to corruption, political instability and a drop in commodity prices . However, due to ongoing economic reforms and the rise of commodity prices, the economy is recovering again causing rapid growth in the mining industry.



Currently, the main investing countries in Brazil are the Netherlands, the United States, Germany, Spain, the Bahamas, Luxembourg, the United Kingdom, Canada, France and Chile. Investments are mainly oriented towards oil and gas extraction, the automotive industry, mining, financial services, commerce, electricity, paper production, storage and transportation, and the food industry.



Brazil’s attractiveness for foreign investment is due to several factors: a domestic market of nearly 210 million inhabitants, the availability of easily exploitable raw materials, a diversified economy that is less vulnerable to international crises, and a strategic geographic position that allows easy access to other South American countries. On the downside, however, foreign investment is inhibited because of some negative factors including cumbersome and complex taxation, bureaucratic delays and heavy and rigid labor legislation.



But the government is gradually implementing reforms that will positively change this situation. As an example, the government has introduced electronic certificates of origin which reduced the time required for import documentary compliance, facilitating and simplifying the whole process. The country is currently in the process of implementing several infrastructure projects that will modernize its national highway system, the railroad network, and its main ports and airports. The number of days needed to create a company in Brazil has now dropped from 79.5 days down to the regional average of 30 days.



Brazil is also one of the leading steel producers of the world. The local steel industry uses the latest technologies in steel production. Due to easy availability of iron ore and low set-up costs, many companies are shifting their base from European countries to Brazil. Approximate 43% of the steel produced in Brazil is exported. The majority of exports go to China.



The factors that are advantageous for investors to set up in the steel industry in Brazil are:



Abundance of raw material such as iron ore, and non-renewable energy such as charcoal and coke, that is required for steel production.Labor in Brazil is cheap in comparison to OECD (Organization for Economic Co-operation and Development) countries.Availability of advanced technology in steel production.

In addition, the sound fiscal policies implemented by Brazil’s government are playing an important role in attracting foreign direct investments in the mining sector.



In short, this is an auspicious time for new investments in mining projects in Brazil. With the devaluation of the Real vis-à-vis the US Dollar and the European currencies even more attractive such investments have become. And that is why Brazil is waiting with open arms for the substantial increase of foreign direct investments in the coming years.

lexology.com

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From: elmatador12/7/2020 5:22:13 AM
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Iron prices going ballistic. Vale is going ballistic too.
mining.com

Brumadinho disaster behind, Vale is going ballistic too!


Not to mention that dollar down means lower USD debt burden and an additional boost to their profitability too!



Metals Prices Surge as Manufacturing Kicks into High Gear

While the bitcoin vs. gold debate has grabbed the attention of metalheads recently, less precious metals like copper, iron ore, and nickel have quietly been some of the best-performing assets of the year, the WSJ reports.


https://www.morningbrew.com/daily/stories/2020/12/06/metals-prices-surge-manufacturing-kicks-high-gear?__cf_chl_jschl_tk__=6905caf25a795fb3c4d84ec401deb3d4d7a83708-1607335964-0-ASOaTCo6eg98cVZjxIsIs3rRmnFY6OyUeTZjmN2JPQP7hHf3filaZxHyUsGIoVdcGp0XyYfylpBl9odaOPWQuSP5bqYsm1HctC6vKflOcG9OUKwUeoSI6q5kGDvIhwtnWCNrc3xIJ6q3Dbz1Z5gTkLqE4PyXB4O9KbN9kM2uKLXerkTy_vetOpCxxrF4F232bX5Ki-VnuiGlTySCuTzVTgGcWzBqNpjuBbg4iGdjnutWp_pIwYVw6hFrAixxF5PyeKzRBihY24jULsJCtwzWRG-mv2wvV6C6nPoWnMpswLz5We1mHOPxWVr4dVfoTedB8af_-PUdY70VUG4a5k-97K5oj-LIjoIwe28SKTUsKjiYB7S-Y5jwJBSv_EkdeHXZ_z7_t8jyy0BGGo5i-Tq5fYVcuSbDY648XzMBb8DP196ggIb8iJWz_KxbMFmTuy1Gwhg71EP3GAOvnx7LMzuXuk4

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From: elmatador12/7/2020 5:24:04 AM
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Asians are not locking down
Oil prices near $50 on OPEC compromise, booming Asian demand
“Asian demand is absolutely roofing right now,” Amrita Sen, co-founder of consultant Energy Aspects Ltd,. said in a Bloomberg TV interview. “If this momentum continues, we could actually see the oversupply disappear a lot earlier than what we’re expecting.”
https://www.worldoil.com/news/2020/12/4/oil-prices-near-50-on-opec-compromise-booming-asian-demand

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From: elmatador12/7/2020 5:35:09 AM
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Report: Structural Bull Market For Commodities Coming

“Structural bull market”
There is no shortage of expert analyses and forecasts calling for peak oil demand, and a “lower for longer,” or even a “lower forever,” oil price outlook.


Indeed, even a growing number of oil majors see peak demand having already arrived, or arriving soon. With the heady days of rapid demand growth more or less off the table, prices have entered a long period of stagnation, a trend only magnified by the pandemic. It could take years for demand to recover, and by then, electric vehicles will take a growing share of the market.
...
Commodity boom
It all adds up to a “structural bull market on part with the 2000s,” the bank’s analysts said. In the 2000s, there was a long commodity super-cycle, driven by a weak dollar, low interest rates and fast growth from emerging markets, chief among them the BRIC countries (Brazil, Russia, India and China). Goldman Sachs says the 2020s could see a rerun of that decade long expansion, which ended in spectacular fashion in 2008.

There are a few differences this time around that work even further in the direction of a bull market. For example, developing countries (China in particular) will participate in the consumer boom, rather than simply gobbling up commodities and exporting consumer products. Another difference is that inflation risk is much higher, according to Goldman analysts. In the face of the pandemic, there is an acute social and economic crisis in the U.S., which will lead to a period of both extraordinary monetary easing and also big fiscal stimulus. And unlike in the aftermath of the 2008-2009 crisis, policy responses to the pandemic are (or should be) aimed at social need, not at fixing the financial system. That means less austerity, and more spending, which should drive commodity demand.

Against this backdrop, commodities across the spectrum could see upward pressure. A “V-shaped recovery in demand will almost certainly face tight supply across all markets,” Goldman analysts wrote. “[N]early every commodity is in a deficit, including oil today, despite lockdowns.”

The investment bank sees Brent oil prices rebounded to $65 by the end of 2021, sharply higher than most forecasters think and nearly $20 higher than the futures market currently thinks prices will be at that time.

However, by no means are these predictions inevitable. For one, the economic malaise left over from the pandemic won’t go away overnight. Also, specific to the oil market, even if the market is technically in a supply/demand deficit, there is a historic inventory overhang that will take years to work off. Moreover, OPEC+ is still keeping 7.7 million barrels per day (Mb/d) off of the market, and it could take years for them to completely ease off of the supply curbs. There is no shortage of oil moving around; nor will there be for some years to come.

But beyond that, plenty of other analysts do not see oil demand ever returning to pre-pandemic levels. The shift towards renewables deflates the upward pressure on oil and gas, even as it could create more pressure on certain metals.

Time will well. But at the very least, with vaccines on the way, there is hope that the global economy soon escapes from its current slumber.



energyfuse.org

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To: kidl who wrote (2120)12/8/2020 4:31:14 AM
From: elmatador
   of 2177
 
Traders Quit Banks to Earn $4.8 Million Hedge Fund Salaries in Brazil


As hedge funds around the world shrink because of low returns and high fees, one country is bucking the trend: Brazil, where traders are quitting their bank jobs in droves to try their luck at potential multimillion-dollar payoffs.

Traders Quit Banks to Earn $4.8 Million Hedge Fund Salaries in Brazil
By Cristiane Lucchesi , Felipe Marques , and Vinicius Andrade

7 de dezembro de 2020, 11:00 WET Updated on 7 de dezembro de 2020, 14:58 WET


Star traders can rake in pay deals of $20 million a year

Banks are losing top executives lured by the booming industry

As hedge funds around the world shrink because of low returns and high fees, one country is bucking the trend: Brazil, where traders are quitting their bank jobs in droves to try their luck at potential multimillion-dollar payoffs.

“New asset-management firms are raising money and posting fast profits, so they have a lot to spend on traders’ compensation,” Leon Goldberg, a partner at XP Inc., Brazil’s biggest brokerage, said in an interview. “Many of them are taking talent away from competitors.”

Senior executives in Brazil are abandoning long careers at major banks including JPMorgan Chase & Co., Credit Suisse Group AG and Itau Unibanco Holding SA to create their own hedge funds and equity funds, lured by the chance for more independence and fatter paychecks. Several firms are poaching each other’s ranks as the fight for talent intensifies.

A top hedge fund trader can earn more than 25 million reais ($4.8 million) a year in Brazil, with a handful of the biggest asset-management stars hauling in as much as 100 million reais in total compensation, according to people familiar with industry pay levels. Bank executives running an asset-management unit or proprietary-trading desk rarely make more than 15 million reais, the people said, asking not to be identified discussing private compensation policies.

Hedge funds have other advantages, too.

“When you’re a partner at your hedge fund, you don’t have a compensation cap as you do in a bank,” said Ricardo Amatto, a partner at executive search firm Heidrick & Struggles in Brazil. “Also, almost all banks defer bonuses and other payments linked to performance for three to four years, while in a hedge fund you get all your money at once.”

There’s more. Partners at a hedge fund firm receive most of their compensation through dividends, Amatto said, and those payments are tax-free in Brazil. At a bank, compensation is taxed at 27.5%.

“So you can see why so many senior people left banks to become fund entrepreneurs,” Amatto said.

Among the major departures: Sylvio Castro, Credit Suisse’s former chief investment officer for the private-banking unit in Brazil, who left to create his own hedge fund. The chief executive officer at Itau’s asset-management unit departed this year to launch a new firm, after his predecessor did the same about a year before. Jorge Oliveira, a former JPMorgan executive, joined a hedge fund founded by JPMorgan veteran Giovani Silva -- replacing an executive who left to create his own company.

Brazil’s $1.1 trillion local asset-management industry is the biggest in Latin America, and it’s historically been controlled by big banks that invested customers’ funds mostly in plain-vanilla products. That was good enough when returns hovered around 14% four years ago. Now that the nation’s benchmark rate has tumbled to just 2%, below inflation, investors are more than willing to pay as much as 2.5% a year in management fees, plus 20% in performance fees, to try for higher returns at a hedge fund.

“Low interest rates are fueling growth dreams for asset managers,” said Patrick O’Grady, chief executive officer at Vitreo, an investment firm and broker-dealer with 7 billion reais under management.

That’s held true even through the pandemic, as the central bank kept liquidity flowing by injecting more than 1.1 trillion reais into the financial system. Hedge funds posted record inflows of 88.8 billion reais this year through October in Brazil, after raising 77.3 billion reais last year, according to Anbima, the nation’s capital-markets association.

“There are still about 7 trillion reais invested in fixed-income products in Brazil, with negative real returns, so the migration to riskier assets such as stocks should continue,” said Sara Delfim, who helped found Dahlia Capital in 2018 after nine years at Bank of America Corp. “The outlook for the local fund industry remains positive.”

It’s a stark contrast to what’s happening globally. Worldwide, hedge funds this year posted almost $55 billion in outflows through October, after losing $102 billion in 2019, according to data compiled by eVestment. Investors have dumped them in favor of cheaper, passive products after years of suffering through returns that trailed benchmark indexes.

In Brazil, firms such as Genoa Capital Gestora de Recursos are reaping the rewards. Launched in June, the firm’s hedge fund amassed almost 7 billion reais for its flagship investment vehicle within two months of its inception, and is now closed for new investments. Founded by Andre Raduan, Mariano Steinert and Emerson Codogno, veteran traders at Itau’s asset-management unit, the fund charges 1.9% to 2.5% in management fees and 20% in performance fees.

Industry pioneers are also grabbing a slice. Andre Jakurski’s JGP Asset Management, which has more than 27.5 billion reais under management, posted inflows in recent years, as did Luis Stuhlberger’s Verde Asset Management, with over 46 billion reais in assets.

Though new shops are opening at a breakneck pace, their profitability and survival is hardly guaranteed.

“Asset management is a scale business,” Amatto, the executive recruiter, said. “You need to grow to be profitable and to perform. So I see many people who start with costs too high, underestimating the risks and the competition.”

Ninety new funds were created just this year, according to Anbima, but about 28 closed in the same period. To survive, some firms may need to merge to gain strength.

“There’s always room for asset managers that deliver returns,” said industry veteran Jose Tovar, CEO of Truxt Investimentos, which oversees about 18 billion reais. “The challenge is delivering -- and fast.”

(Updates with other executive departures in ninth paragraph.)

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From: elmatador12/9/2020 9:13:14 AM
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Brazilian Hedge Funds Post Record Net Inflows

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From: elmatador12/15/2020 2:13:46 AM
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Brazil eyes GDP per capita growth of 37% over next decade

According to the “Federal Development Strategy”... that is the upper end of the scale resulting from a series of “transformative” reforms and educational advances over 2021-2031 that would deliver average annual GDP growth of 3.5%.


BRASILIA (Reuters) - Brazil’s government on Tuesday outlined a long-term roadmap for the economy, based on three scenarios of economic and fiscal reforms that could lift gross domestic product per capita by as much as 37% over the next decade.

According to the “Federal Development Strategy” in the Official Gazette, that is the upper end of the scale resulting from a series of “transformative” reforms and educational advances over 2021-2031 that would deliver average annual GDP growth of 3.5%.

This would lift Brazil’s GDP per capita in U.S. dollars above that of other emerging nations such as Argentina, Poland and Croatia by 2031, and closer to Chile and Hungary, countries ranked highly in the Human Development Index.

Brazil will go into next year with a record debt and deficit around 95% and 12% of GDP, respectively, due to huge emergency expenditure this year to tackle the COVID-19 pandemic.

“Macroeconomic stability, continuing the long-term fiscal adjustment agenda and monetary policy balance, are necessary conditions for a return to sustained growth,” the government said in the decree.

According to the strategy plan, signed off by President Jair Bolsonaro and Economy Minister Paulo Guedes, the base case is for an accumulated rise in GDP per capita of 19.1% over the next decade, on annual average GDP growth of 2.2%.

After the financial damage wrought by COVID-19, “If the necessary reforms are not implemented, the likelihood of a fiscal crisis and economic growth crisis in the coming years will increase significantly,” the plan said.

The third and most bearish scenario of no fiscal adjustment or market-friendly reforms would crash the economy and public finances. “For obvious reasons, it serves no purpose to include forecasts in this scenario,” the plan said

reuters.com






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From: elmatador12/15/2020 9:15:19 AM
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Vale And Tesla: The Nickel Picture

Striking a deal with EV manufacturers individually to supply nickel, such as to Tesla, could prove mutually beneficial to both parties.

Vale aims to average 200kt in volume of nickel through 2021, increasing that to 220kt in volume, with ~60% likely in class 1 nickel.

Vale could see over half a billion USD in revenues from nickel supplied to EV in a few years' time.
Dec. 14, 2020 4:28 PM ET Vale S.A. (VALE)TSLA 8
seekingalpha.com

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