Last Week in LATAM: October 21-25, 2013

Brazil (Bullish): Brazil sells $3.2 billion of 12-yr bonds to healthy demand as investor sentiment improves after the Fed delays monetary tightening. A part of the issue was used to refinance higher paying bonds at lower rates, thus improving the countrys debt costs. i (Neutral): Brazils auction of the Libra oilfield to a consortium of international energy companies is a step towards opening the countrys cornucopia of oil resources to private investment. However, already dealing with domestic protests (see below), Rousseff risks further alienating the populace who fear foreigners are taking Brazils wealth. Can Petrobras take the lead on this ambitious project?ii iii (Bearish): Consumer confidence renews its decent. Fundao Getulio Vargass indicator declines from 114.9 to 111.7 in Octoberiv. Higher interest rates (see below) risk a slowdown in consumption. (Bearish): Brazils unemployment rate rises to 5.4%, a tick above expectations. Because the unemployment rate still remains near historic lows though, wage pressures are set to continue, implying that the cycle of rate increases has not endedv vi. (Bearish): Brazilian riots continue, focused on poor public transportation. Most of the unruliness was caused by an anarchist group, the Black Bloc. At least 78 people were arrested when the protests turned violent.vii (Bearish): The IMF, in its Article IV report, states that the countrys choppy growth will continue. Projections for 2013 and 2014 call for growth of 2.5% and 3.2%, respectively, the report said. But inflation will remain stuck at an annual level of 5.8% both years, the same level as seen in 2012The IMF, in its report, showed special concern for Brazil's deteriorating fiscal position.viii

| Rodrigo C. Serrano, CFA | SIPA | Columbia University Master of International Affairs 14 Candidate | New York City, NY | 01-305-510-0181 | rcs2164@columbia.edu

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Brazil'Consumer'Condence'

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Source: FGV

Chart: RCS Investments

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 Mexico (Bullish): Mexicos Chamber of Deputies approves the constitutional amendment needed to create a national social safety net, comprised of unemployment insurance and social security programs. Furthermore, a more streamlined customs law, designed to reduce government red tape for international commerce, and a reform to simplify the tax code are currently being negotiated. The positive reforms continue. ix (Bearish): Retail sales plunge 2.2% YoY, their largest drop since March vs. expectations of a gain of 1.2%x, leading Banxico to cut rates for the third time this year to 3.5%. Analysts now see Mexican economic growth for 2013 at a paltry 1.2% vs. 1.4% estimated beforexi
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Mexico'Retail'Sales'

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Source: INEGI

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Chart: RCS Investments

(Bearish) Indeed these despondent forecasts are endorsed by a similar setback in Mexicos monthly global economic activity index (IGAE). The metric logged a growth rate of 0.84%, more than a full percentage point below expectations of 1.87% and worse than last months reading of 1.25%. (Bearish): The weak state of the economy is likely to persist according the Conference Boards leading indicatorxii (Bullish): At least the lowest inflation rate since the beginning of the yearxiii will give central bank officials plenty of room to ease monetary policy to support the recovery.

Disclaimer: Please first consult your financial advisor for all important investment related decisions

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 i http://en.mercopress.com/2013/10/24/brazil-sells-3.2bn-dollars-in-new-global-bonds-toimprove-the-best-yield-curve?utm_source=feedly ii http://www.csmonitor.com/World/Americas/2013/1023/Brazil-oil-auction-forces-Rousseffto-reconsider-Petrobras-s-role iii http://en.mercopress.com/2013/10/21/brazil-auctions-35-year-production-rights-to-giantoffshore-libra-oil-area?utm_source=feedly iv http://www.nasdaq.com/article/brazil-consumer-confidence-drops-in-october----fgv20131023-00235 v http://www.nasdaq.com/article/brazil-raises-selic-rate-to-95-gives-no-sign-of-end-toincreases-20131009-01131 vi http://www.nasdaq.com/article/brazils-unemployment-rate-monthly-wages-rise-inseptember-20131024-00413 vii http://en.mercopress.com/2013/10/26/brazil-s-main-city-again-rocked-by-riots-andvandalism-over-transport-facilities-and-costs?utm_source=feedly viii http://online.wsj.com/article/BT-CO-20131023-711649.html ix http://economia.terra.com.mx/noticias/noticia.aspx?idNoticia=201310250222_EFE_1887549 2 x http://www.cnnexpansion.com/economia/2013/10/21/las-ventas-minoristas-bajan-14 xi http://www.cnnexpansion.com/economia/2013/10/25/banxico-recorta-la-tasa-a-350 xii http://www.prnewswire.com/news-releases/the-conference-board-leading-economic-indexlei-for-mexico-increases-229099521.html xiii http://money.msn.com/businessnews/article.aspx?feed=OBR&date=20131024&id=17032782

Disclaimer: Please first consult your financial advisor for all important investment related decisions