The Stock Market and Economic Activity

BRAZIL ECONOMICS - Report 11 May 2015 by Affonso Pastore, Cristina Pinotti and Marcelo Gazzano

From the way things are going now, nobody doubts that the Brazilian economy is entering a recession period. The doubt (and worry) is over how deep and how long the downturn will be. Although the recession will not be as deep as that in 2008-2009, it will probably be a good deal more persistent. Nevertheless, there are those who take a more optimistic view, and one of their arguments against a long recession is the behavior of the stock market. The IBOVESPA, after fluctuating around 50,000 points in late 2014, has since appreciated, currently sitting at almost 60,000 points. Could it be that stock market investors are anticipating some recovery on the near horizon?

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