brf_300x300

Drop That Chicken! (BRFS Short)

  • Brazil’s economic and political climate are toxic for its companies.
  • BRF is closely tied to Brazil’s economy. Where Brazil goes, so does BRF.
  • BRF’s margins are being attacked on all sides which has in turn hurt its bottom line.
Brazil is a mess. With a toxic economic and political environment, it is not a good place to put your money. But that doesn’t mean you can’t profit from the those who do invest there.

Brazil is currently facing its worst financial crisis since the Great Depression. As seen in the graph below, GDP shrunk 4.5% in the 3rd quarter from a year earlier. This is the 6th consecutive quarterly contraction. It’s also the lowest number recorded since Brazil started using their new GDP system in 1996. 

André Perfeito, chief economist at Gradual Investimentos in São Paulo, had much to say about the contraction. He explained that the “[the latest GDP] report read like an obituary. There were no positive signals […] for the Brazilian economy in the next few quarters, and we still can’t say we’ve hit bottom.”

As a commodities based economy, the recent rout in prices has been a disaster for Brazil. Its economy is shrinking fast and has already lost over a million jobs this year. At the same time, inflation is running wild at over 10%. And despite the central bank’s best efforts, its currency, the Brazilian Real, continues to plummet. It has shed 33% of its value this year alone.

(Keep reading…)

 

All content on our website, emails, social media posts, comments on other websites or other material generated by Macro Ops is intended for general information purposes only. None of our content should be considered to be an invitation to buy or sell securities. No content from Macro Ops should be considered individual investment advice. Macro Ops cannot guarantee accuracy of information on the site. Contributors to Macro Ops may have trading or investing positions in the securities mentioned. You should assume that we are likely to take trading positions in the stocks, options, futures or other securities we write about. Macro Ops does not have an obligation to inform readers of a change of opinion on securities mentioned or on a change in our trading positions on securities mentioned. Macro Ops assumes no liability for losses incurred from readers trading securities that are mentioned in any of our content. Copyright © 2016 Foundation Alpha LLC. All rights reserved. - powered by Enfold WordPress Theme