Brazil's Economy Continues to Falter: Inflation Soars, Currency Plunges

After the ongoing negative economic news associated with Brazil, it could be thought the worst is over and the country is close to a rebound. That's not the case though, as the vast majority of data concerning the country remains bad, or is getting worse.

The major concern for some time has been the probable loss of its investment grade rating, which when coupled with numerous other weaknesses, such as the plunge in value of the real versus the U.S. dollar (now at a 12-year low) and the increase in costs of public transportation and utilities, creates a scenario for country that will weigh on much of its economy, market and companies with exposure there.

The lending rate in the country stands at 14.25 percent, the result of efforts to rein in inflation.

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China's Communist Leaders Can't Manipulate or Save Its Stock Market

With confidence in its Communist leadership waning in regard to its ability to manage its economy and the value of its stock market, Chinese leaders have been attempting a plethora of steps to stem the plunge in its stock market. None of them have worked, and neither will the latest move to limit those shorting the market.

Effective immediately, the new rules, initiated by the Shanghai and Shenzhen exchanges, ban traders from shorting stocks on the same day. That of course increases the risk for those shorting the market, which will theoretically decrease pressure on it.

Why this won't work is the issue isn't what the short sellers are doing, it's the reason they are able to do it profitably in the first place, which is the Chinese market hasn't been able to justify it valuation, which is why it has plunged almost 30 percent since June.

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Declining Consumer Spending Pushing China Back To Infrastructure Boondoggles

Even though the official numbers from China's National Bureau of Statistics suggest consumption is moving steadily along, accounting for 51.2 percent of GDP, and following on the heels of the 12 percent boost in retail sales in 2014, there are questions these numbers may not reflect the reality on the ground.

It has been pointed out that "private surveys and results from consumer product companies" paint a different picture; one that draws the conclusion that consumer spending has been level or contracting.

Other data contributing to this as being the likely scenario are the PPI in April dropped for the 37th month in a row, and manufacturing in China, with a 49.2 reading in May (-4.6%, missing analysts expectations of -4.4%), confirms it is contracting faster than believed.

The point is the decisions and proposed spending actions and focus of Chinese economic leadership reinforces the strong probability China is struggling to not only grow its economy, but to keep it from contracting.

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