Bullish on Brazil

Flows, Sentiment, Positioning, & How This May Augur a Broader Macro Turn

Summary:

• Background on Brazilian Equities, Rates, and Inflation

• A general model for Brazilian sentiment

• Brazilian Flows

• The Setup — Sentiment & Technicals Today

• Brazil in the Bigger Picture

I recently spent two weeks visiting family in Brazil. While traveling with young kids doesn’t allow the same opportunities and time for up-close “what it’s like right now” conversations and meetings to gauge sentiment and activity, I saw enough to be able to say from a 30k-foot view that Brazil seems to be humming along. No rip roaring boom, but no depression either… just plodding along. On the other hand, I have been struck (but not surprised) by how truly terrible sentiment has become among local asset managers. But before we get into all that, a few general pointers for readers who don’t follow Brazil closely…