The end of the macroeconomic adjustment? Economic Department
Political stress and Government Yield Curve
Yield Curve - Brazil 0#DIJ: Yield 15,8 15,655 15,655 15,6 15,4 YC; 0#DIJ:; Trade Price; Realtime; 5Y 4M 19D; 14,428; YC; 0#DIJ:; Trade Price; Rolling(09/03/2016); 5Y 4M 19D; 14,428; YC; 0#DIJ:; Trade Price; Rolling(29/02/2016); 5Y 4M 19D; 15,655; YC; 0#DIJ:; Trade Price; Rolling(29/02/2016); 5Y 4M 19D; 15,655 22D - 5Y 4M 19D Lines: Pink 03/08/2016 Orange 03/09/2019 Blue 02/29/2016 15,2 15 14,8 14,6 14,428 14,428 14,2 14 13,8 Auto 22D 7M 26D 1Y 4M 2Y 1M 3D 3Y 1M 7D 4Y 1M 13D 5Y 4M 19D 3
Structural issues
Structural issues - Monetary Real Interest Rate (ex-post) (% YoY) 14 12 10 8 6 4 2 0-2 -4-6 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016* Brazil 12,31 10,11 6,79 7,85 4,44 4,84 4,5 1,41 4,09 5,34 3,58 3,54 Chile 0,84 2,69-1,83 1,16 1,88 0,28 0,81 3,51 1,56-1,6-0,65-1,26 Mexico 4,92 2,95 3,74 1,78 0,93 0,1 0,68 0,96-0,47-1,08 0,52 0,64 Colombia 1,15 3,02 3,81 1,83 1,5-0,17 1,02 1,81 1,31 0,84-0,89-1,21 Indonesia -4,37 3,15 1,41-1,81 3,72-0,46 2,21 1,45-0,58-0,61 2,61 2,86 China 3,98 3,32 0,97 4,11 3,41 1,21 2,46 3,5 3,5 4,1 3,05 2,55 5
jan/08 abr/08 jul/08 out/08 jan/09 abr/09 jul/09 out/09 jan/10 abr/10 jul/10 out/10 jan/11 abr/11 jul/11 out/11 jan/12 abr/12 jul/12 out/12 jan/13 abr/13 jul/13 out/13 jan/14 abr/14 jul/14 out/14 jan/15 abr/15 jul/15 out/15 jan/16 Structural issues - Monetary Sales Value (index) Source: FIPE/ZAP, Gradual Investimentos 230,0 210,0 190,0 170,0 150,0 130,0 110,0 90,0 70,0 50,0 São Paulo Rio de Janeiro 6
jan/08 abr/08 jul/08 out/08 jan/09 abr/09 jul/09 out/09 jan/10 abr/10 jul/10 out/10 jan/11 abr/11 jul/11 out/11 jan/12 abr/12 jul/12 out/12 jan/13 abr/13 jul/13 out/13 jan/14 abr/14 jul/14 out/14 jan/15 abr/15 jul/15 out/15 jan/16 Structural issues - Monetary Rental Index (rent / property price) Source: FIPE/ZAP, Gradual Investimentos 0,80% 0,75% 0,70% 0,65% 0,60% 0,55% 0,50% 0,45% 0,40% 0,35% 0,30% Nacional São Paulo Rio de Janeiro 7
jul/40 jul/42 jul/44 jul/46 jul/48 jul/50 jul/52 jul/54 jul/56 jul/58 jul/60 jul/62 jul/64 jul/66 jul/68 jul/70 jul/72 jul/74 jul/76 jul/78 jul/80 jul/82 jul/84 jul/86 jul/88 jul/90 jul/92 jul/94 jul/96 jul/98 jul/00 jul/02 jul/04 jul/06 jul/08 jul/10 jul/12 jul/14 Structural issues - Monetary Minimum Real Wage Source: IPEA, Gradual Investimentos R$1.400,00 R$1.200,00 R$1.000,00 R$800,00 R$600,00 R$400,00 R$200,00 R$- 8
jul/40 jul/42 jul/44 jul/46 jul/48 jul/50 jul/52 jul/54 jul/56 jul/58 jul/60 jul/62 jul/64 jul/66 jul/68 jul/70 jul/72 jul/74 jul/76 jul/78 jul/80 jul/82 jul/84 jul/86 jul/88 jul/90 jul/92 jul/94 jul/96 jul/98 jul/00 jul/02 jul/04 jul/06 jul/08 jul/10 jul/12 jul/14 Structural issues - Monetary Minimum wage - purchasing power parity (PPP) Source: IPEA, Gradual Investimentos $350,00 $300,00 $250,00 $200,00 $150,00 $100,00 $50,00 $- 9
1998 1998 1999 1999 2000 2000 2001 2002 2002 2003 2003 2004 2005 2005 2006 2006 2007 2007 2008 2009 2009 2010 2010 2011 2012 2012 2013 2013 2014 2014 2015 Structural issues - FISCAL Fiscal Result Source: BCB, Gradual Investimento 1.600.000 1.400.000 1.200.000 1.000.000 800.000 600.000 400.000 200.000 0-200.000 Total revenue (R$ mi) Total expenditure (R$ mi) Primary Fiscal Result (R$ mi) 10
Structural issues - FISCAL Tax benefits totaled R$ 400 billion 11
Structural issues - FISCAL Primary surplus projected for 2015 (% of GDP) 2 Source: FMI Data Mapper, Gradual Investimentos 1,35 1 0-1 -2-1,75-1,51-1,19-1,06-1 -0,83-0,5-0,19-3 -3,06-2,83-2,58-2,37-4 -5-5,04-6 12
Structural issues - FISCAL Gross Debt (% of GDP) (forecast for 2015) Source: FMI, Gradual Investimentos 120 100 104,5 80 69,9 65,3 60 52 51,1 50,9 48,4 44,4 43,2 40 20 35,9 32,1 26,5 22,4 20,4 18,1 0 13
Structural issues - FISCAL CPI (% YoY) Source: BCB, Gradual Investimentos 20,0% 18,0% 16,0% 14,0% 12,0% 10,0% 8,0% 6,0% 4,0% 2,0% 0,0% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 CPI Administered Services 14
Structural issues - FISCAL Nominal interests - Consolidated Public Sector R$ 600.000 10% 9% R$ 500.000 8% R$ 400.000 7% 6% R$ 300.000 5% 4% R$ 200.000 3% R$ 100.000 2% 1% R$ 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 0% Accumulated 12 months - R$ (mi) % GDP 15
Signs of Adjustment
Signs of Adjustment Industry Confidence Index - FGV Consumer Confidence Index - FGV Commerce Confidence Index - FGV Services Confidence Index - FGV 17
mar/03 jul/03 nov/03 mar/04 jul/04 nov/04 mar/05 jul/05 nov/05 mar/06 jul/06 nov/06 mar/07 jul/07 nov/07 mar/08 jul/08 nov/08 mar/09 jul/09 nov/09 mar/10 jul/10 nov/10 mar/11 jul/11 nov/11 mar/12 jul/12 nov/12 mar/13 jul/13 nov/13 mar/14 jul/14 nov/14 mar/15 jul/15 nov/15 Signs of Adjustment Average Real Income (% YoY) Source: IBGE, Gradual Investimentos 20,00% 15,00% 10,00% 5,00% 0,00% -5,00% -10,00% -15,00% -20,00% Rendimento Médio Real Rendimento Médio Real - com carteira Rendimento Médio Real - sem carteira 18
Signs of Adjustment Currencies (index) (100=01/01/2004) 150 140 130 120 110 100 90 80 70 60 50 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Yen Euro Mexican Peso Swiss Franc Brazillian Real 19
dez/95 jul/96 fev/97 set/97 abr/98 nov/98 jun/99 jan/00 ago/00 mar/01 out/01 mai/02 dez/02 jul/03 fev/04 set/04 abr/05 nov/05 jun/06 jan/07 ago/07 mar/08 out/08 mai/09 dez/09 jul/10 fev/11 set/11 abr/12 nov/12 jun/13 jan/14 ago/14 mar/15 out/15 Signs of Adjustment Direct Investment in Brazil (US $ mi) (12 months) Source: BCB, Gradual Investimentos R$160.000,00 R$140.000,00 R$120.000,00 R$100.000,00 R$80.000,00 R$60.000,00 R$40.000,00 R$20.000,00 R$- NET Income Outcome 20
Cenário - Internacional Monetary War
Monetary War Assets of the central banks (US $ billion) $12.000 $10.000 $8.000 $6.000 $4.000 $2.000 $0 jan-05 jan-06 jan-07 jan-08 jan-09 jan-10 jan-11 jan-12 jan-13 jan-14 jan-15 FED BOJ BCE Total Source: Bloomberg, Gradual Investimentos. 22
Monetary War Yield 2 years bonds (%YoY) 8 7 6 5 4 3 2 1 0 jan-07 jan-08 jan-09 jan-10 jan-11 jan-12 jan-13 jan-14 jan-15-1 Germany USA Italy Spain Source: Bloomberg, Gradual Investimentos. 23
Monetary War Yield 10 years bonds (%YoY) 6 5 4 3 2 1 0 USA Germany Source: Bloomberg, Gradual Investimentos. 24
Monetary War PIB chinês (% a.a.) Fonte: Thomson Reuters, Gradual Investimento 15 13 11 9 7 5 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 25
Monetary War Exportações Chinesas (em US$ bi) Fonte: Thomson Reuters, Gradual Investimentos. 25 20 15 10 5 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Exportações (em US$ bi) MM12 26
Monetary War Reservas Internacionais - China (em US$ bi) Fonte: Thomson Reuters, Gradual Investimentos. 4500 4000 3500 3000 2500 2000 1500 1000 500 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 27
Forecasts 2016 2017 end of the period
29
Contacts Economic Department André Perfeito, chief economist aperfeito@ Rafael Gonçalves rgoncalves@ Ouvidoria/SAC: 0800 655 1466
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