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from Photographers' Blog:

Brazil’s Highway of Death

By Nacho Doce

As Marcondes walked to his truck, his wife and mother said goodbye with the words, “Be careful and may God be with you.” I knew why they talked that way; the highway that he was going to take from Rondonopolis to Sorriso in the fertile state of Mato Grosso is nicknamed the “Highway of Death.”

GALLERY: BRAZIL'S TRUCKING LIFELINE

Marcondes and his father, also a truck driver, know it very well. It’s the highway famous for frequent accidents, where drivers pay little attention to the law and the narrow single lanes mean that trucks nearly touch as they pass each other in opposite directions.

This road that bisects unending plantations of cereal grain is full of potholes caused by thousands of fully loaded trucks a day, each weighing nearly 70 tons.

It was a Brazilian movie that sparked my interest in the lives of truck drivers here, and I wanted to see if they were really as portrayed. Shortly after seeing it, a Reuters journalist coincidentally proposed a cross country trip by truck to report on the cost of transporting Brazil’s riches - soybeans and corn - from the grain belt to the biggest seaport, Santos, on the Atlantic coast.

from MacroScope:

Has the Brazilian FX market lost its swing?

Tiago Pariz in Brasilia also contributed to this post.

Brazil's Trade Minister Fernando Pimentel was the latest authority this week to fire warning shots in a resurging currency war. The government is "focused" on keeping the real at its current level of 2 per U.S. dollar, he told journalists after a meeting with fellow ministers and businessmen.

Using market rules, we are going to try to keep (foreign exchange) rates steady every time the currency is under attack.

from MacroScope:

When interest rates rise, credit growth should… accelerate?

Latin America has defied one of the most elementary rules of macroeconomics in the past decade, Citigroup economists Joaquin Cottani and Camilo Gonzalez found in a report.

Lower interest rates reduce the cost of money and therefore should encourage businesses and consumers to borrow, as we've repeatedly heard from analysts and government officials for decades. Puzzlingly enough, credit growth accelerated after central banks in countries like Brazil and Peru raised rates, and slowed when borrowing costs fell. Why is that?

from MacroScope:

Latin America: the risks of being too attractive

Ironically, an increase of capital inflows to Latin America in the last few years due to unappealing ultralow yields in industrialized countries and the region's relative economic success is posing a threat for development, according to a recent paper that provides wider background to BRIC criticism of the latest U.S. Federal Reserve´s quantitative easing.

The article, written by Argentine economists Roberto Frenkel and Martin Rapetti for the World Economic Review - an international journal of heterodox economics -  warns about the possibility of a Latin American variant of the so-called “Dutch Disease”. This is a situation where a country suddenly finds a new source of wealth that makes its currency more expensive, hurting local exports and causing traumatic de-industrialization.

from Global Investing:

Record year for emerging corporate bonds

The past 24 hours have brought news of more fund launches targeting emerging corporate debt;  Barings and HSBC have started a fund each while ING Investment Management said its fund launched late last year had crossed $100 million.  We have written about the seemingly insatiable demand  for corporate emerging bonds in recent months,  with the asset class last month surpassing the $1 trillion mark.  Data from Thomson Reuters shows today that a record $263 billion worth of EM corporate debt has already been underwritten this year by banks, more than a fifth higher than was issued in the same 2011 period (see graphic):

The biggest surge has come from Latin America, the data shows, with Brazilian companies accounting for one-fifth of the issuance. A $7 billion bond from Brazil's state oil firm Petrobras was the second biggest global emerging market bond ever.

from Photographers' Blog:

Brazil’s homegrown Gaudi

By Paulo Whitaker

The last time I took pictures in one of Brazil’s favelas my luck was very different. That was in Rio de Janeiro in 2010, when I was covering a police invasion of the Alemão slum. A bullet perforated the windshield and hit me in the shoulder as I sat transmitting pictures in the backseat of a taxi. Fortunately, I recovered quickly.

By contrast, this time I shot a feature story about a gardener cum architect in São Paulo’s second-largest slum, Paraisopolis. Although Estevão Silva da Conceição's creation draws an immediate comparison to one by Spanish Catalan architect Antoni Gaudi, he had never heard of Gaudi nor seen any photos of his work before building his own home here.

from Global Investing:

Emerging Policy: Rate cuts proliferate

Emerging market central banks have clearly taken to heart the recent IMF warning that there is "an alarmingly high risk"  of a deeper global growth slump.

Two central banks have cut interest rates in the past 24 hours: Brazil  extended its year-long policy easing campaign with a quarter point cut to bring interest rates to a record low 7.25 percent and the Bank of Korea (BoK) also delivered a 25 basis point cut to 2.75 percent.  All eyes now are on Singapore which is expected to ease monetary policy on Friday while Turkey could do so next week and a Polish rate cut is looking a foregone conclusion for November.

from David Rohde:

How a place like Brazil can be a job creator for the U.S.

VITORIA DE SANTO ANTAO, Brazil – Last year, Kraft built a gleaming new factory on the outskirts of this town in northeastern Brazil. When I visited it last month, my heart sank.

The state-of-the art, $80 million facility seemed to be yet another example of the inevitable shift of jobs from a declining America to emerging powers like Brazil, China and India.

from David Rohde:

The BRIC laggard

SAO PAULO – For decades, Denis Dias’s parents could never break into Brazil’s middle class. They started a bakery and a pizzeria in the 1970s and 1980s, but the country’s economic instability and hyper-inflation consumed their businesses and their hopes. His father ended up owning a newsstand. His mother worked as a maid. And Denis attended dilapidated state-run schools.

Over the last 10 years, Denis and at least 35 million other Brazilians have achieved their parents’ dream. Denis is a corporate lawyer at a Brazilian energy company and a new member of Brazil’s middle class, now 100 million people strong. Denis, his company and his nation have ridden the exports of iron ore, soy, oil and other natural resources to prosperity.

from Global Investing:

This week in EM, expect more doves

With the U.S. Fed having cranked up its printing presses, there seems little to stop emerging central banks from extending their own rate cut campaigns this week.

The most interesting meeting promises to be in the Czech Republic. We saw some extraordinary verbal intervention last week from Governor Miroslav Singer, implying not only a rate cut but also recourse to "unconventional" monetary loosening tools. Of the 21 analysts polled by Reuters, 18 are expecting a rate cut on Thursday to a record low 0.25 percent.  Indeed, in a world of currency wars, a rate cut could be just what the recession-mired Czech economy needs. But Singer's deputy, Moimir Hampl,  has muddled the waters by refuting the need for any unusual policies or even rate cuts.  Expect a heated debate (forward markets are siding with Singer and pricing a rate cut).

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