Brazil’s housing and credit bubbles: the next shoe to drop?

Investors in Brazil are understandably focussed on the economic implications of the recent change in Finance Minister and the impeachment proceedings against President Rousseff. But we think the way in which the country’s credit and housing bubbles play out will have a larger bearing on the economy’s performance next year. So far, both seem to be deflating gradually. But signs that either is starting to unravel in a more disorderly way would lead us to become even more bearish on the prospects for 2016.