By Nigam Arora & Dr. Natasha Arora
At this time, investors are searching far and wide for inflation hedges. The reason for the search is heavy money printing and borrowing by the U. S. government. If inflation picks up, hard assets should do well. Brazil is rich in hard assets. However, buying Brazil is not as simple as it seems on the surface. Investors need to take into account several other aspects of Brazil. Here are the important ones to consider at this time.
- Coronavirus has been raging in Brazil but is beginning to subside. This is a positive.
- Brazil itself has encountered inflation.
- To counter inflation, the Brazilian central bank has been raising interest rates. Interest rates are now at 5.5% compared to near zero in the United States.
- Interest rates in Brazil are expected to rise to 7.0% by the end of the year. This is a negative.
- Elections will take place in Brazil next year. President Bolsonaro is making promises that will be very expensive. For example, he is promising a 50% increase in the Bolsa Familia, a benefit for low-income families.
- Bolsonaro’s opponent in the election is Lula da Silva. Lula is a leftist and thus investors do not like him.
Take Advantage Of Volatility
The election will create volatility. Investors should take advantage of the volatility to build both long-term positions and also engage in short-term trades. Of course, we will be giving specific signals as appropriate.
Zones
Earlier this month, Brazil ETF EWZ fell into the buy zone.
For those following the Best Way, the buy zone for EWZ remains 🔒 (To see the locked content, please take a 30 day free trial). EWZ is trading at $36.35 as of this writing.
For those following the Good Way, the Buy Now rating is a🔒. To learn more about the Best Way and the Good Way please see the Getting A Running Start Guide.
Ratings
The short and medium-term ratings on Brazil ETF EWZ are 🔒. The long-term rating is 🔒.
The short-term rating is likely to be upgraded to a 🔒 if EWZ falls.
This post was published on ZYX Emerging Markets ETF Alert.
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Nigam Arora
Nigam Arora is known for his accurate stock market calls. Nigam is a distinguished master of the macro. He is a popular columnist with over 100 million page views, an engineer, and nuclear physicist by background. Nigam has founded two Inc. 500 fastest growing companies and has been involved in over 50 entrepreneurial ventures. He is the developer of Theory ZYX of Successful Change Management and is the author of the book on Theory ZYX, as well as the developer of the ZYX Change Method for Investing.
Dr. Natasha Arora
Dr. Natasha Arora has significant expertise in investment analysis especially biotech, healthcare, and technology. Natasha is a graduate of Harvard Medical School followed by a postdoc at MIT. She has published several peer reviewed research papers in top science journals.
