Brazilian PMI Accelerating Nicely Again (EWZ, BZF)

Even though traders are a little cautious about China’s ability to keep growing while it tames local price pressures, Brazil seems to be managing to expand quite nicely without feeding inflation.

The HSBC purchasing managers index for Brazil surged to 52.4 in December, revealing that the country’s relatively underappreciated industrial sector started expanding again in the last few weeks following several months of flat to negative growth.

This is great news for traders who hoped to see the underperforming country back in good shape after its recent brush with a currency-driven slowdown. Brazilian exporters were previously suffering as the real surged against other global monetary units, but now it looks like the country’s steel mills and manufacturers are ready to get back in the game.

This is great inauguration news for incoming president Dilma Rousseff as she works to put her own stamp on the country’s economy. While Dilma has stated that she wants to see much lower interest rates in Brazil, this will be impossible unless it manages to generate robust growth without appreciable inflation.

As it is, the country has delivered encouraging news on the inflation front, and now it looks like the growth may be emerging too.

If so, good news for broad ETFs like the iShares MSCI Brazil ETF (NYSE:EWZ) if not exactly encouraging in the short term for the real or the WisdomTree Dreyfus Brazilian Real ETF (NYSE:BZF):

Written By Tim Seymour From Emerging Money

Emerging Money provides insightful and timely information about the increasingly important world of Emerging Market investments. CNBC Emerging Markets Contributor Tim Seymour leads the team of Emerging Money to bring you cutting edge global news and analysis.

About Tim Seymour: Tim is a founder of Emerging Money. He is a founder and Managing Partner at Seygem Asset Management, and The Emerging Markets Contributor to CNBC. Seygem Asset Management focuses on investing throughout the global emerging markets asset class. With a view that emerging and developing economies will continue to outpace the economic growth and advancement of developed economies, Seymour has devoted a career to investing in the dominant markets of tomorrow, today. Seymour’s career has included significant experience in both alternative asset management (hedge funds) and capital markets, having launched two hedge funds, and built the largest Russian broker dealer in the USA. Seymour started his career at UBS, focusing on international credit (cash, swaps, forex) in a specialized hedge fund group (New York). Seymour completed the firm’s training program after graduating with an MBA in international finance from Fordham University. Seymour received his undergraduate degree at Georgetown University.

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