Is Brazil ready to rebound in 2013?

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Brazil has never seen more constructive domestic macro conditions: record low rates, mild inflation, 5.5% unemployment and a government attempting to fix massive bottlenecks in the economy.

[caption id="attachment_65271" align="alignright" width="300" caption=""Don't call it a come back...""] Image courtesy Stefan Z.: http://www.everystockphoto.com/photographer.php?photographer_id=28753 [/caption]

Brazil's stock market has lagged other emerging markets in 2012. It could be ripe for a rebound to catch up with its peers in 2013. Signs are beginning to surface that suggest a large bullish move in Brazilian stocks as the economy recovers.

Option traders are already bidding up Call Options in the iShares MSCI Brazil Index Fund ( EWZ , quote ) pushing outstanding call levels to the highest level since February 2009. In fact just 30 minutes into trading today a single buyer of 5,000 JUN 13 58.50 Calls were purchased above the bid.

Economists polled by Bloomberg are forecasting a GDP expansion of 3.8% in 2013, and with Brazil China's largest trade partner the two economies should play off each other fairly well. We are seeing evidence of the rebound in China's factory production, which increased 10.1% last month.

Bottom line: Speculation in Brazil's rebound has Call Options hitting a four year high - right or wrong Brazilian bets are being made -- we think rightly.

To find out more tune into in for a special prime time edition of Trading The Globe with Tim Seymour this Friday December 14 at 7:30 p.m. EST on CNBC. Be sure to go to tradingtheglobe.cnbc.com for the CNBC poll. Will emerging markets outperform the U.S. market in 2013? Vote ahead of the show and we'll reveal the answer on Trading The Globe at 7:30 p.m. EST on Friday, December 14 on CNBC!



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , International , Stocks

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