Whoa. Two MB posters just repeated the same thing. It must be happening. And look, their posts are recommended. Give me a minute and I'll sell you my shares. Just name your price, I don't want to be caught in a fire sale. HAHAHA.
I guess PBR will go down with them then right? And of course they'll take the government down with them by tomorrow morning in coordination with the Illuminati right?
Sounds like your mood ring needs adjusting. Now why don't you go back to pinksheet bashing?
Most of it a one time adjustment forced on them by the Dilma government to combat inflation via price controls. You also forgot to mention the TBV of $20/share.
Good luck with your short. You're going to need it.
Yeah, its only the biggest electrical utility in Brazil with large government ownership. Probably going under later this week. Sell all your shares. LOL.
Silva is out.
BRL gained 0.06 against the USD this morning. I think I saw that Silva pledged support to Neves. Big turn of events. A Neves victory would be the best possible outcome for the country and the BVSP.
Good discussion. Thanks for the response, and we are probably on the same page with most of these issues. I should clarify that I definitely agree that this is not a good shorting opportunity for GFA and that it is way oversold based on fundamentals and many technical measures. I'll address the rest point by point.
1. The best means to fight inflation would be to scale back on governmental spending, social programs, and stimulus directed at propping real estate construction - a primary contributor to wage inflation. Dilma understands this and took measures to do so early in her tenure, but it has not been enough. She soon adapted her strategy to focus on energy price controls and increasing targeted corporate tax cuts. The CB recently stated they would not drop their hawkish position until inflation reached its mid-range target. That almost certainly translates to interest rate hikes.
2. Much of the growth and slowdown is attributable to the energy price controls and slowing Chinese demand. However, GFA created their own mess by getting in bed with Zell, purchasing Tenda, and ramping up construction in a high wage environment. The fact that they remained so unprofitable in an era of intense housing stimulus and low interest rates was a real wasted opportunity. I remain hopeful that the restructuring will help right the ship, but they will be operating in a much more difficult environment going forward.
Have a good weekend.
Hey Milken. I guess that remains to be seen. I think once the election is done, there will be a relief rally no matter who wins. Dlima will have to adjust pricing to keep several public companies afloat, and has stated she will implement more market friendly policies if re-elected (which I think is inevitable).
Technically, $BVSP hit the 200SMA yesterday and the currency is very close to the key $2.50 level.
"Marina is the probably the worst for VALE, since she is an environmentalist and get mining licenses could get tougher under Marina!"
Sorry, but I disagree with everything you just said Entitled.
1. The Brazilian CB intends to lower the inflation rate from the maximum limit where it sits now to the mid-range of the target.
2. Marina is determined to give the CB autonomy. Dilma has also backed away from intervening in their activities during the past couple of years after inflation became entrenched.
3. Markets hate uncertainty. Once this election is over (no matter who wins), Brazil will probably stage a relief rally. Dilma has stated she intends to institute a number of capitalistic reforms after the elections, which presumably means corporate tax cuts and less stringent price controls for PBR and the electics. It is not in the country's interest to let their utitlities become so indebted that services are compromised and/or a bailout is necessary.
Nice entry Mr Mom! The USD is heavily overbought right now which should give the BRL a bit of breathing room in the short term. The Central Bank also doubled the size of their swap program to support the currency. The BVSP is currently one of the most oversold markets in the world with a lot of good companies trading well under TBV.
The first round of the election is this Sunday. Once that's behind us, I see a bit more momentum in the future (to accelerate after the second round concludes later in October).
Nobody is thinking about the spinoff. This is basically following the RE sector around. Inflation and growth forecasts have not been good. The entire BVSP and the BRL are held hostage by this election (first round in Oct 5th).
Currency hits lately have been bad. Technically, GFA is at the bottom of a downtrend parallel channel, and poised to retest the 52week low set in November (approx $2.21). Oversold RSI. VALE is a screaming buy...
One crucial factor here is the strong, but overbought USD, which is hitting commodities and EMs particularly hard, and the long slide in the BRL. The Brazilian elections on October 5th and the second round later in the month will continue to fuel volatility in the short term. QE wrapping up in October is another big concern.
Technically, the $BVSP is sitting at its 100-SMA which will hopefully continue to hold. I can see another 10 points of downside for the $SPX before it hits support at its 100-SMA. Unfortunately GFSA3 and GFA have broken through their diagonal trend lines on the daily and weekly. All-time lows are in the $2.20s I believe. Real estate and airlines are the risk-on sectors in the $BVSP, which makes this even less desirable in a down market.
EXAME ran a great report on the companies that are trading under book. GFSA3 was actually somewhere in the middle of the ranking with other RE companies dominating the list. I am currently long VALE, EBR, and GFA.
Back to weekly support on GFSA3. I took a half position at $2.57. Also took 1/2 position on EBR at $3.05. VALE sitting on support also. Good entry point.
We are also coming off two relatively strong POMO days. One small injection on Thursday and nothing more until next Tuesday.
Great news! China also kicked in $81 billion in stimulus, which should give us another boost today
Here's what's bothering me:
1. USD/BRL still hovering near recent high.
2. There was a big POMO day yesterday and a moderate one on Monday. There is a small injection on Thursday but nothing else until next Tuesday.
3. The Fed meeting today and tomorrow pose a lot of uncertainty and risk.
4. If Scotland votes for independence, its going to jolt the currency markets and create more uncertainty.