Brazil’s Pension Reform Clears First-Round Vote

Brazil’s pension reform is one step closer to passing after the lower house of Congress voted in favor of the bill Wednesday evening, helping restore confidence Brazil’s economy.

“The House got together to vote one of the most important reforms for the country, and we got a spectacular victory, 379 votes,” tweeted House Speaker and Chamber of Deputies President Rodrigo Maia. “Welfare is a very difficult issue, but I am happy that we will have the opportunity to re-establish fiscal balance and generate investment.”

Jair Bolosnaro, the nation’s president, was also pleased, as the reform is one of his top priority items since taking office in January. The overhaul is expected to save up to 3 trillion reis ($783 billion) over 20 years.

“Brazil is increasingly close to entering the path of employment and prosperity,” he tweeted, thanking Maia.

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The lower house’s approval is the first of four needed to pass. It will now undergo a second round of voting in the lower house. If successful, the proposal will then go to the Senate, which must also vote twice. The bill is still subject to congressional edits.

Bolsonaro’s reform seeks to shore up Brazil’s economy by raising the national retirement age while making it more stringent to access benefits. Trade unions and opposing politicians have said these actions target the poorest Brazilians, forcing them to work longer. They can currently retire in their 50s.

The president hoped to have a reform fully passed earlier in the year, but the initial proposals experienced delays and changes that caused Economy Minister and Bolsonaro’s right-hand man, Paulo Guedes, to threaten his resignation if a “watered down” version passed.

Either way, it’s quite a feat for the president considering the past four administrations have tried and failed to get a pension revamp going.

Bolsonaro believes a pension reform will pass this year.

The next vote is expected to occur before Congress breaks for recess at the end of the month.

Tags: Brazil, Brazil Pension Reform, Jair Bolsonaro, Pension, Rodrigo Maia

A stellar June performance proved there’s still hope for hedge funds yet as the industry saw its best first half in a decade.

Hedge funds gained 5.7% in the six months ended June 30, according to Hedge Fund Research (HFR). Its fund-weighted index increased 7.6% over the same duration.

Equity hedging strategies pulled the most weight for hedge funds, pushing year-to-date performance up 9.4%.

“Hedge funds posted broad-based gains to conclude the strongest first half of a calendar year, with varied and wide range of leadership including equity, technology, M&A-focused, trend following, quantitative, and blockchain/cryptocurrency exposures,” said Kenneth J. Heinz, HFR’s president.

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The S&P 500 is up 19% over the same duration, hitting 3,000 Wednesday morning upon Federal Reserve Chairman Jerome Powell’s dovish comments, which investors believe is a telltale sign of an upcoming interest rate cut.

“Many FOMC participants saw that the case for a somewhat more accommodative monetary policy had strengthened,” Powell said. “Since then, based on incoming data and other developments, it appears that uncertainties around trade tensions and concerns about the strength of the global economy continue to weigh on the US economic outlook.”

The spike is a boon for the hedge fund industry as it has suffered in recent years. Last year was a particularly tough time to be in the business, as market volatility forced many to close in what was the worst industry performance since 2011.

“It is likely that the W-shaped equity market pattern will continue throughout 2H19, with funds tactically positioned to benefit from opportunities presented leading industry performance and growth,” said Heinz.

Hedge Funds Have Worst Year in a Decade

Tags: Federal Reserve, Hedge Fund Research, Hedge Funds, Kenneth J. Heinz, Stock Market