Trade Duration: 1 week - 1 quarter (price level/action determined)

1M 25 ∆ Puts on EWZ before implied volatility surges can work as well.

Thesis: Foreign capital flight out of Brazil as Prez Bolsenaro fires CEO of state run oil co Petrobas, as his approval ratings plummet for COVID & broader economic mismanagement, with truckers striking over high fuel prices. Petrobas chief is a U of Chicago free market trained capitalist who isn't beholden to truckers, causing tensions as Bolsenaro demanded lower oil prices. He was fired with no room for negotiations. Bolsenaro‘s policies were at one point pro-market/private sector, which attracted a ton of foreign capital— once (maybe still) among Bridgewater’s largest concentrated regional holdings.

However, capital leaves when capitalism leaves in place of interventionism.

With global equities relentlessly rising, increasing number of investors want something to sell but can’t. This is the idiosyncratic market to liquidate risk off amidst risk on. This is also the “dollar strength“ play for those waiting for something to sell USD against, as UST yields continue ↑

🇧🇷 Brazil IBOVESPA Index futures gap down -5% at open just now (Mon feb 22)

...as FX takes a hit on the Real, USDBRL +2.5%

EWZ: US listed iShares Brazil ETF (market not yet open) to follow ↓

EWZ Fund Flows:

Inflows haven't been enthusiastic, but when outflows go, they flee.

Immediate term downside momentum can snowball easily just based on profit taking sell flows. Longer term loss of investor confidence in Brazil’s markets can’t... (More)

Good Afternoon Everyone!

After a long nap after staying up all night to write today's long-form publication on Brazil, I present you with today's edition of Geopolitics Today. If you haven't read it yet, I'll leave a link to it below. As hinted at by the title Russia is the big driver today in the Geopolitical news cycle as discussions concerning the nation's horrendous age demography start to happen and a surprise cabinet shakeup that might hint at a possible Putin transition. Have a wonderful Monday all of you, and I'll see you tomorrow with Tuesday's Geopolitics Today issue.

Geopolitical Mondays: Brazil - Twilight Approaches

• https://exchange.realvision.com/post/geopolitical-mondays-trade-ideas-brazil---sunset-approaches-5fa90230381a1d3e39db721d

Marines in Taiwan: First American Forces on Taiwan Soil since 1979

A contingent of US Marines stepped onto Taiwanese soil for the first time since 1979 to begin training exercises with the Taiwanese Naval Command for the next four weeks. This has a significant chance to increase already frayed tensions between the United States and China as China has already levied financial sanctions on American defense contractors who have been part of the recent Taiwanese weapons buying spree this year.

We discussed how, while American forces could return to Taiwan and how it wasn't likely in previous publications. Such proximity of US forces so close to Chinese shores would unnecessarily increase US exposure to possible conflict in Asia. However, after careful thought on this matter, such a decision would align with historical US defense policy but not anything recent.

When the Chinese Nationalists were... (More)

Early Morning Everyone,

Today's edition of "Geopolitical Monday's" will be a tad different as I've decided to combine some aspects of the Geopolitics with trade ideas. Having spent a good portion of my childhood in South America and specializing in Latin & South American affairs during my time at the university, I felt that I should return to some old stomping ground with this piece.

Today's article is on Brazil. The world's 9th largest economy, a major exporter of everything from soybeans, iron, and even airplanes from world-renowned airplane manufacturer, Embraer. All would lead many to assume that Brazil has been destined for success, but people would be wrong. In this article, I'll be going through Brazil's most important aspects that make me bearish on the nation and where there are some bullish cases.

I am not a financial advisor. Please consult a financial advisor about making any of these trades or investing in South America. These are only ideas that are being informed by the research presented.

The Banking System: Public vs. Private Banks

Like many South American countries, large segments of their economies remain in the state's control through various public enterprises in segments of the economy the state has an interest in influencing. With state-owned banks, Brazil is no different; Caixa & Banco do Brasil taking 50.7% of consumer banking market share. This may seem a bit long-winded, but explaining the similarities and differences between the two types of banks will be really important in the end.... (More)