This week Brazil’s debt was downgraded to junk status by S&P. It was only a few years ago that the BRICS economies were forecast to dominate the world. [Brazil-Russia-India-China-South Africa] The cycle has long since turned and now commodity-exporting nations are rapidly deteriorating.
Brazil won’t be the only major economy to be downgraded. Watch for panic and a liquidity crisis should one of these large nations default. Commodity debt default is the primary threat to the US stock market and could plunge the world into recession.
Note the below chart of the Brazil stock index…its price is now below that of the 2008 recession.
Harbinger of things to come?
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