In this week’s issue: Brazilian Real gains more value in 2019 than any other currency. Are foreigners short-selling Brazil’s stock market?
The week in review
- Embraer. President Jair Bolsonaro gave the greenlight for the Boeing-Embraer merger. The two companies will create a joint venture (of which the American planemaker will hold an 80% stake). The deal will not involve Embraer’s defense nor executive jet divisions. This piece of news pushed Embraer’s stock up 2.57%, but S&P has threatened to downgrade the company.
The ratings agency believes the deal will weaken the company and its credit quality, due to the higher volatility of future profits.
- Venezuela. President Nicolás Maduro was inaugurated for a third consecutive term this week. Workers’ Party’s chairwoman Gleisi Hoffmann went to the ceremony, while the Jair Bolsonaro called Mr. Maduro “illegitimate.” The Ministry of Foreign Affairs said that the country’s Congress (which has questioned the president and declared its Speaker the interim president) is the institution that really should detain power.
- Inflation. For the second straight year, Brazil’s official inflation rate finished the year below the target set by the Central Bank. In 2018, prices rose by 3.75% (against a 4.5% target). Low inflation should allow...