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Brazil’s pain and Argentina’s gain
Weekly investor research
21 December 2015
The news from Brazil – a second sovereign downgrade, a change of finance minister and a likely delay to the impeachment of President Dilma Rousseff – is unambiguously poor, although it has the merit of hardly surprising anyone anymore. By contrast, the news out of Argentina – including a rapid return to a market determined exchange rate – was unexpectedly positive. Other notable positives included the once-in-180-years event of Ecuador repaying a bond and Putin giving strong backing for his economic team and signalling that pension reform is back on the agenda. Mexico hiked rates and successfully auctioned off a few oil fields to private investors. In the United States, the Fed finally hiked rates. The euphoria was short-lived as manufacturing, industrial and services data continue to deteriorate among increasingly poor liquidity conditions going into the holiday season.