FT LatAm Viva For 17 March, 2017

The Ides of March By John Paul Rathbone  March 17, 2017 Brazilian financial assets delivered stunning returns last year. The Bovespa stock index rose some 40 per cent, with another 20 per cent US dollar gain on top. This year has shaped up nice too, so far. Brazilian stocks are up another nine per cent, while the real has risen by four. Such gains far outstrip the other great American “reflation trade”, where US stocks have powered ahead thanks to Donald Trump’s corporate tax cutting plans. The S&P 500 is up nine per cent last year and five per cent in 2017 – although the US rally, lately, has wilted. Might this week mark the top of the Brazilian market as well? There are good reasons it might. On Wednesday, the Ides of March, Brazilian labor unions and leftist political movements took to the streets in protest over President Michel Temer’s proposed pension reform – one of the main drivers of the market rally. Furthermore, on Tuesday, Rodrigo Janot, the Brazilian prosecutor-general, threw a cat among Brasilia’s pigeons. He filed to indict 83 lawmakers on charges stemming from the Odebrecht and Lava Jato corruption scandals. None of those lawmakers have yet been publicly named. But the list is thought to include just about every major politician to have occupied power over the past decade. The prospect of sustained or rising street opposition to the pension plan is one worry for the government’s reform agenda, and thus investors. In addition, politicians in Brasilia are increasingly uncertain where to turn to best save their skins from the corruption probes. The dilemma is binary. Should they back the pension reform in the hope of private sector support plus a stronger economy ahead of the 2108 presidential elections? Or should they reject it, and so win more immediate popular support instead? Either way, this week’s combination of events heralds bumpy times ahead for both the government’s reform agenda and the market rally. Eurasia Group, the consultancy, warns that “a stand-off has the potential to unsettle markets, and could well lead to spike in the dollar, a drop in the stock market, and economists stating in the press that the economic recovery is at risk.” Time to take profits on this reflation trade too? Chartwatch The Mexican peso rallied sharply on Wednesday after Peter Navarro, Donald Trump’s top trade advisor, softened his usual sharp criticism of Mexico and Nafta, saying he envisioned a North American manufacturing “powerhouse” that included the US, Canada and Mexico. Video of the week If the customer really is always right, the release this week by Walt Disney studio Pixar of its latest animated feature is a true sign of US-Mexican times. “Coco” tells the story of a small boy, Miguel, captivated by the musicianship of a dead guitar player, Ernesto de la Cruz. “It’s a love letter to Mexico,” said the film’s director, Lee Unkrich. Other views Grieving mothers lead to mass graves in Mexico (WSJ) Orwell for Cubans (El Pais) OAS head says Venezuela should hold elections of face suspension (Reuters) ¿Prefiere leer el FT en español? Lea una selección de nuestros artículos en español:  Tres razones por las que la globalización resistirá las rebeliones proteccionistas La rutina de los nuevos ejecutivos: drogas, hidromasajes y simulación de deportes de riesgo Cinco consideraciones con respecto a la caída de los precios del petróleo The week in review Empresas Polar: a symbol of resistance amid Venezuela crisis   Hated by country’s leaders, loved by the people, food producer has shown huge resilience during turmoil     Fast FT: Brazil makes privatisation headway with airport sales       Fast FT: Chile central bank cuts benchmark interest rate to 3%       Fast FT: Brazil's Azul sets IPO price range       Spain’s Gas Natural squares up to Colombia over seizure of assets   Energy provider threatens arbitration after order to liquidate Electricaribe     What you need to know after FOMC meeting   Dollar falls as Fed signals just 2 further increases likely in 2017     Michael Hasenstab bets against euro in populist hedge   Franklin Templeton manager shuns Europe in favour of Latin American debt     Struggling Brazilian coffee farmers turn to pepper   Drought-hit robusta growers look to an alternative crop whose price has risen sharply     Fast FT: Emerging markets currencies build on post-Fed fillip       Brazilian transport workers strike over Temer pension reforms   Attorney-general also files petition to investigate 83 politicians over corruption     Fast FT: Peso rises after Navarro says he sees 'opportunity' with Mexico       Brazilian housebuilder MRV predicts growth despite recession   Government funds have helped maintain growth among the lower middle classes     Antofagasta earnings jump 79% on rising copper price   Chilean copper miner plays down threat of worker unrest ahead of contract talks     Fast FT: Antofagasta earnings leap on copper price recovery       EM Squared: Brazil: Bacen back in charge   With inflation falling, the central bank can cut interest rates faster than expected     Brazilians suffer as country longs for better days   Unemployment is high, but investors are bullish and government sees end to recession     Copper concentrate supply hit by disputes in Chile and Indonesia   Disruptions at mines accounting for nearly 10% of world production spur shortfall     Dinant is engaging respectfully with locals   From Roger Pineda Pinel, Corporación Dinant     Mexican Senator draws line in the sand over Trump’s wall   Patricio Martínez says border is in wrong place and demands US return land