Brazil: Bus Fares and Protest

From Quartz:

A $0.09 hike in the price of a single bus fare in Sao Paulo ignited the biggest protests to hit Brazil in over 20 years. As we noted earlier today, the bus fare hike was merely the last straw in a long list of public grievances about the shaky Brazilian economy. 

But it’s worth noting that Sao Paulo’s bus riders are being majorly squeezed by fares. A fare price that sounds pretty minuscule in dollar terms actually takes up a huge chunk of Brazilian incomes for those at the bottom (and presumably, those who most need to use the bus). 

The $0.09 hike brought the price of a single bus fare in Sao Paulo up to $1.47. Assuming Brazil’s city dwellers ride the bus twice daily—to and from work during the week, and to and from anywhere during the weekend—that’s $82.46 a month. For Brazilians making the minimum wage of $312.33 a month, that’s a whopping 26% of their income. 

In Brazil’s lopsided economy, public funds are propping up a public transportation system that the public can’t afford.

Uh, wow.  I'd wager that there are many Brazilians earning near the minimum-wage level.  26% of income on bus fare?  $0.09 rise in bus fares?

'Inverted' Short-Term Chinese Interest Rates

Chinese interest rates and banking sector show a possible liquidity squeeze.  As Chinese growth slows down, banking sector may begin calling in loans.  From the Sober Look link:

A spike in short term rates could dramatically dampen bank lending and slow growth even further. A prolonged spike could even put China into a recession. Many are hoping that the PBoC will deal with this issue aggressively by injecting more liquidity into the banking system in order to reduce the risk of a major credit contraction.

Future Iraq Oil Production

The Oil Drum has a good post on the future of Iraq oil production.  Last year, Leonardo Maugeri introduced people to the idea of an oil revolution.  Perhaps his best argument for such a revolution is price motivation and the behavior of the oil industry (perhaps a result of price motivation).

Many of the top dogs in energy analysis (IEA, EIA, etc) are predicting a surge in Iraq oil production over the remainder of this decade.  The future production estimates range somewhere between 6-12 million barrels per day.  These projections are restricted by any number of political and economic factors - especially concerning a recent increase in violence.  And in almost all cases, Iraq oil exports are seen flowing to Asia, and China specifically.

The projections of oil exports going to China is in-line with some of the more pure economic-oriented claims for the Iraq war, and continued growth in oil consumption is in-line with Michael Pettis' thesis that China will have to transition its economy to a service based economy.  This he argues, must be accompanied by reduced consumption of concrete, steel rebar and copper - at least the hoarding thereof.  An increase in the consumption of oil I think will be a significant part of that transition, as well as job-creating environmental reform.

Brazil Hikes Interest Rates, Higher Than Expected

From Reuters:

Brazil's central bank on Wednesday evening lifted the Selic by 50 basis points to 8.0 percent in an unanimous decision announced hours before the start of a national holiday on Thursday, which shut financial markets.

Before the announcement of the decision, many economists and investors had bet policymakers would keep raising borrowing costs at a more modest pace while economic activity falters.

Of course, the obligatory Vale 5-day stock price:

3.91% drop for Vale, so far.

I suppose a Chinese interest rate hike could be next, which will release its PMI numbers tomorrow.  So that means we will have seen Markit's PMI, the OPEC meeting, US GDP numbers, a Brazilian interest rate hike and China's PMI numbers within about a week.

Saving For a Mortgage

This was inspired by the news that personal income declined in April.

30-year mortgage rate minus personal saving rate (black; left).  Real personal saving rate (blue; right)?

Ok, the "real" personal saving rate above is not exactly true.  But I was wondering how households managed to pay off their 30-year mortgages from 1978 to 20008 while the 30-year mortgage rate exceeded the personal saving rate for all but a few months during that entire time.  I suppose cumulative savings and net worth may explain such.

A different "real" personal saving rate.

Pre-OPEC Meeting: Musings

Just because it may be a significant event, and some of the rhetoric has been amusing (or rather on track with expectations) just before Friday.

My reading list, put together in a not-so-sensationalist-like order:

I.M.F., Predicting Slower Growth for China, Urges Overhauls

The lowered forecast — the I.M.F. shaved a quarter of a percentage point off its previous projection for 8 percent growth in China, to 7.75 percent — was the latest in a string of similar reductions by analysts in recent weeks. And although the new projection remains higher than the Chinese government’s target of 7.5 percent growth, the I.M.F.’s revision and comments underlined the challenges facing policy makers as they try to revamp the Chinese economy, the world’s second-largest, after that of the United States.

Copper Falls as IMF Cuts Forecasts For Economic Growth In China

Copper fell in New York after the International Monetary Fund cut forecasts for economic growth in China, the world’s largest consumer of the metal, while some production may restart at the second-biggest mine.

What Does a Chinese "Recession" Look Like?

A drop in manufacturing will affect the middle class, because their jobs, and especially increases in wages, depend on factory expansion. Anxiety about pay almost certainly will trigger a drop in consumer activity, which is supposed to be the new engine of China's GDP growth

WTI Crude Falls on Speculation Fed to Cut Stimulus

“Equities are getting pummeled and oil is taking a hit as well on concerns about the Fed,” said Stephen Schork, president of the Schork Group Inc. in Villanova, Pennsylvania. “Once again, Ben Bernanke is a bigger determinate of what happens in the oil market than OPEC.”

Saudi Arabia's Naimi Says Current Situation Best for Oil

“This is the best environment for the market,” Ali al-Naimi told reporters today in Vienna when asked about the balance of supply and demand. “Demand is great,” al-Naimi said as he arrived at his hotel.

Greece Enters Sixth Year of Recession

On Tuesday, Greece’s battered debt ratings received a rare upgrade from Fitch which noted “clear progress” on eliminating deficits.

Brazil Economists Trim GDP Growth View, Raise 2014 Rate Outlook

Economists trimmed forecasts for Brazil's economic growth this year to 2.93 percent from 2.98 percent previously, according to the median estimate in a weekly central bank survey published on Monday.

Brazil's GDP Grows 0.6% In Q1

Brazil says the country's gross domestic product grew 0.6 percent in the first quarter of the year. The result was below the 0.9 percent market analysts had forecast.

How Low Can You Go: Asset-Backed Commercial Paper

Nose-dive?  Not time yet to attach those accounts-receivable?

Asset-backed commercial paper as percent of total commercial paper.

There's just one thing I got to know...

...how low can you go?