Monthly Report
October, 2011
The month of October was affected by the release of better than expected economic data for the U.S. and China,
the announcement of new measures to contain the European Crisis
risis and expectation of further monetary stimulus in the
U.S., if needed, i.e. if the growth expectations for the U.S. deteriorate. Given the high pessimism that seen on the markets
in September as a reflection of increases of perceived market crash risks; these positive surprises were responsible for the
strong rally in riskier assets, with the S&P and Ibovespa indexes increasing by +10.77% and +11.50% respectively, followed
by the dollar devaluation.
This past month developments of the European Crisis continued to guide markets directions, with focus on the
attempts to prevent sovereign contagion in major economies, particularly Italy
Italy, while containing
contain
systemic risk from
European banks. The month started with the announcement that Greece will not be able to reach the IMF agreement
fiscal targets in 2011 and 2012, reinforcing concerns whether Greece would default on its debts and consequently its
sustainability (permanence) on the Eurozone.
Moreover,, October’s European economic data suggests that the Eurozone
e is at initial stages of a severe recession
which is likely to significantly undermine the resolution of its sovereign debt crisis. As a result, the European leaders
announced a new financial aid package consist
consisting of the following measures:
1. Leveraging the EFSF of 44-5x raising its firepower to € 1 trillion,
2. Recapitalizing the European banks
banks, meeting tier 1 capital ratios of 9% by 2012
3. Voluntary
oluntary exchange of Greek bonds with a haircut (nominal discount of face value) of 50% for new
bonds and
4. Continuation of secondary market short-term sovereign dept purchase program by the ECB.
Which provided short-term
term relief to highly indebted European countries despite not dealing
deal
with the structural
problems, such as the lack of competitiveness and the so called "debt trap".
In the U.S. the economic data released in October was positive and consistent with an annual GDP growth
between 2 and 2.5%, much higher than previously expected by the investment community and relieving the market´s
perspective of an imminent recession on the United States
States. Although this economic improvement was expected by the
FED, it does not see this as consistent with an economic recovery leading the institution to maintain the primary
prima interest
rate between 0 to 0.25% perr year accompanied by a commitment of not raising it
itss interest rates until mid 2013;
2013 while
remaining ready to adopt unconventional monetary easing policies should the international scenario starts to negatively
impact the recovery of the American Economy.
emonstrated on the last Federal Open Market Committee (FOMC) monetary policy meeting,
This readiness was demonstrated
when the adoption
n another round of Quantitative Easing (QE3), this time including acting on mortgages and other real
estate bonds markets – as a way of reducing interest rates for th
the
e housing sector of the economy – was widely discussed
among the members and interpreted by the markets as a viable policy to be adopted in the future if needed,
consequently boosting the markets confidence on the strength of the American economy and its institutions,
institutions certainly
influencing the rallies experienced by the global equity markets.
Despite of improvements on the American economy, we believe that the fourth quarter can be incredibly
challenging as the American Congress will vote the 2012 Federal Budget in November, in which they will discuss the
medium and long term negative impacts of the agreed budgetary cuts of $1.2 trillion over the next decade that, given the
apparent polarization of the current American Congress and proximity
roximity to the presidential elections,
elections can be quite
distressing for both Barak Obama´s administration and markets.
Meanwhile, assessments that China is undergoing a hard-landing is losing strength with the release of better than
expected industrial production and GDP data accompanied by the prospect of the termination of China´s tightening
monetary process as annual inflation declined to 6.1% in September (down from its peak of 6.5%,
6.5% reached in July) and
projection of continuous decline in the coming months. It is our expectation that China will maintain the appreciation
process of its currency in order to reduce inflationary pressures while encouraging domestic consumption
mption with the goal of
shifting future GDP Growth´s dependence away from world trade.
É recomendada a leitura cuidadosa do prospecto e regulamento do fundo de investimento pelo investidor ao aplicar seus recurso
recursos.
s. A rentabilidade divulgada não é líquida de impostos. Este documento foi elaborado pela Perfin Administradora de Recursos
Ltda e é meramente informativo. As informações, opiniões, estimativas e previsões contidas neste documento foram obtidas ou baseadas em fontes que acreditamos ser confiáveis. Os investidores devem estar preparados para aceitar e assumir os riscos dos
mercados em que o Fundo atua e, eqüentemente, possíveis variações no patrimônio investido. A Perfin não se responsabiliza por ganhos ou pperdas
erdas consequentes do uso deste informativo. Este Fundo de investimento utiliza estratégias com derivativos como
parte integrante daa sua política de investimento. Tais estratégias, da forma como são adotadas, podem resultar em significativas perdas patrimo
patrimoniais
niais para seus cotistas, podendo inclusive acarretar perdas superiores ao capital aplicado e a conseqüente
obrigação do cotista de aportar recursos adicionais. A rentabilidade obtida no passado não representa garantia de resultados futuros; e os investimen
investimentos
tos em fundos não são garantidos pelo administrador ou por qualquer mecanismo de seguro ou, ainda,
pelo fundo garantidor de crédito.
o. Visando o atendimento ao exigido pela Lei nº 9.613/98, quando do ingresso do fundo, cada cotista deverá nos fornecer cópia
cópias de seus documentos de identificação entre outros documentos cadastrais.
Monthly Report
October, 2011
In Brazil, the reflections of the European Crisis began to appear more incisively
incisively. With leading indicators of
economic activity, including industrial production, vehicle sales, IBC
IBC-Br
Br (Brazil´s Central Bank index for domestic economic
activity) an unemployment rate indicating that an economic slowdown is already in progress – thus further reducing
Brazil´s growth
th expectations to 3.3% in 2011 – that combined with the uncertainties of the international environment and
its negative effects on foreign trade and credit channels, led Brazil´s Central Bank (BCB) to cut its target interest rate by
50bps to 11.50% p.y. sending a clear indication that the Central Bank will continue with the process of monetary for as
long as the international
national scenario remains in distress.
Although current 12 month inflation reached 7.3% (above the upper bound of the Central Bank inflation targeting
mandate – of 6.5%), it is the belief of the BCB
BCB,, as expressed both on the last Quarterly Inflation Report and the last
Monetary Policy Committee statement, that the decline in global economic activity combined with his efforts is sufficient
suffic
enough to significantly reduce inflationary pressures, converging it close to its target (4.5% p.y.) already in 2012.
Furthermore, wee continue to have great conviction on our investment cases and we believe that the equity market
rally experienced in October was the result of isolated factors explained above,, that surprised the markets, but are not
strong enough to change the structural problems present on the global economy. Therefore we opted to continue with
wi
our hedge strategies (through the use of Ibovespa put options) given the attractiveness of this
is strategy´s
strategy risk vs. return
relationship.
We also understand that the current economic conjecture is very challenging for countries
countries,, portfolio managers and
investors in general, however we believe that these uncertainties and volatility can be translated into opportunities with
excellent return rates on a longer investment horizon, given that our assessments indicates that most of these risk and
uncertainty components are already reflected on the stock prices of companies present on our portfolio.
É recomendada a leitura cuidadosa do prospecto e regulamento do fundo de investimento pelo investidor ao aplicar seus recurso
recursos.
s. A rentabilidade divulgada não é líquida de impostos. Este documento foi elaborado pela Perfin Administradora de Recursos
Ltda e é meramente informativo. As informações, opiniões, estimativas e previsões contidas neste documento foram obtidas ou baseadas em fontes que acreditamos ser confiáveis. Os investidores devem estar preparados para aceitar e assumir os riscos dos
mercados em que o Fundo atua e, eqüentemente, possíveis variações no patrimônio investido. A Perfin não se responsabiliza por ganhos ou pperdas
erdas consequentes do uso deste informativo. Este Fundo de investimento utiliza estratégias com derivativos como
parte integrante daa sua política de investimento. Tais estratégias, da forma como são adotadas, podem resultar em significativas perdas patrimo
patrimoniais
niais para seus cotistas, podendo inclusive acarretar perdas superiores ao capital aplicado e a conseqüente
obrigação do cotista de aportar recursos adicionais. A rentabilidade obtida no passado não representa garantia de resultados futuros; e os investimen
investimentos
tos em fundos não são garantidos pelo administrador ou por qualquer mecanismo de seguro ou, ainda,
pelo fundo garantidor de crédito.
o. Visando o atendimento ao exigido pela Lei nº 9.613/98, quando do ingresso do fundo, cada cotista deverá nos fornecer cópia
cópias de seus documentos de identificação entre outros documentos cadastrais.