1. Pine Economic Calendar: High speed monetary policy
September 03, 2012
BRAZIL
Industrial Production - July
Our estimates indicate that industrial activity in July must have reached 0.5% over the month
(in seasonally-adjusted terms), its second consecutive rise. As a result, if we were right in our
projections, the three-month moving average would move from -0.4% in June to -0.10% in
July. We expect an annual comparison to show a fall of 2.5%, above the level of June (-3.5%).
Industrial production – well below its trend
135
média
130 2002=100
125
120
115
110
105
100
95
90
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Produção Industrial
Source: IBGE; production: Pine Research
Our estimate is based on the following leading indicators:
1. Increases of 0.3% in the activity level indicator (local acronym INA) of the São
Paulo trade federation, FIESP, for July as well as June;
2. According to a sharp increase in the production of vehicles and light commercial
vehicles, buses, trucks and farm machinery, according to the manufacturers’
trade association, ANFAVEA (+3.8% in June and +3.6% in July);
3. The paper industry trade organization, ABPO, says there was no variation in the
distribution of boxes, accessories and cardboard trays in July following the
decline of 0.6% the previous month;
4. New increase of 2.2% in the production of crude steel, according to the Brazilian
Steel Institute, the IAB;
5. On the other hand, the industrial confidence index will start to deteriorate again
in July, according to the FGV business school, as did average energy consumption,
as shown in the figures from the system operator, the ONS, and oil and natural
gas production by Petrobras.
1

2. IPCA - August
The August index shall rise by 0.38%, slightly below the variation in July (0.43%) and in line
with the respective Amplified Consumer Price Index IPCA-15 (0.39%). If our estimate is
confirmed, the IPCA index accumulated over 12 months will remain at 5.2%, the same level as
the previous month.
“Food consumed at home” should be lower than in July, with some easing in
perishable food.
“Industrial Goods” shall return to positive territory, with a lower effect from the
reduction of the IPI tax; in any case, the core variations will remain contained during
the sales period in the ‘Clothing’ segment.
“Controlled Prices” are still feeling some pressure from the readjustment in the price
of diesel although offset by reductions in energy prices.
“Services” will show some improvement, with more moderate variations in the wages
of domestic employees.
By the end of the year, we expect some acceleration in the monthly measures (between
0.35% and 0.55%). The consumer price indices should feel some negative influence (in terms
of higher inflation) from the worsening in producer prices. However, this will not lead to any
increase in base interest rates as long as the weak outlook for world growth remains.
Monthly IPCA noted and projected – above its recent average
0.60%
0.50%
0.40%
0.30%
0.20%
0.10%
0.00%
10
11
12
1
2
3
4
5
6
7
8
9
IPCA médio (desde 2005) 2012
Source: IBGE; production: Pine Research
IGP – DI - August
The IGP-DI index in August shall fall from 1.52% in July to 1.23%, slowing in relation to the
IGP-10 (1.59%) and IGP-M (1.43%). In fact, as we have argued in recent calendars, our
estimates indicate that the IGP-10 peaked in its latest monthly rise.
The recent performance comes as a result of higher wholesale inflation, with the supply
shock from soybeans and some perishable foods, although this has begun to lose force (see
following graph). The INCC construction cost index is continuing to ease whereas the IPC,
announced this morning, showed a variation above 0.40% once again.
2

3. Wholesale agricultural prices (% m/m)
7%
6%
5%
4%
3%
2%
1%
0%
-1%
-2%
ago/12
jan/12
mar/12
abr/12
jun/12
mai/12
jul/12
fev/12
Modelo Pine IPA Agrícola
Source: CEPEA; production: Pine Research
COPOM Minute
The COPOM decision to reduce the Selic rate by 50 basis points to 7.50% p.a. came as no
surprise. The statement issued after the decision announced the change in the language we
had expected and reduced the chances of any new cut of this size at the October meeting:
“Considering the cumulative and lagged effects of policy actions implemented until the
moment, which in part reflect in the ongoing recovery of economic activity, the Copom
understands that, if the prospective scenario justifies an additional adjustment in the
monetary conditions, this movement should be conducted with extreme parsimony.”
The “extreme parsimony” would be a reduction of 25 bp, which, as the above text indicates,
would only come about from a slackening of the domestic recovery and/or of a new
deterioration on the international front. We believe the Copom’s initial option is to maintain
the Selic at 7.50% at the next meeting, with 7.25% as an alternative possibility.
The minutes to be published this Thursday will clarify this “order” of scenarios and explain
the committee’s declarations on the effects of the policies adopted to date: how comfortable
is the Copom with the “contracted” recovery of domestic activity? At the same time, the rise
in commodity prices highlighted above means we will pay special attention to the balance of
inflationary risks.
Marco Antonio Maciel Marco Antonio Caruso
Chief economist Economist
Banco Pine Banco Pine
3

4. Time Country Indicator Date PINE Consensus Previous
Estimate
Monday, 09/10/2012
Euro Zone Investor Confidence Sep/12
Brazil IPC-S (first four weeks) Sep/12
Brazil Weekly Trade Balance 09/Sep
USA Consumer Credit Jul/12
Tuesday, 09/11/2012
Brazil IGP-M (first preview) Sep/12
USA Trade Balance Jul/12
Brazil Consumer Credit Demand Indicator Aug/12
Wednesday 09/12/2012
Euro Zone Announcement of banking -
supervision proposal
Euro Zone German Court judges participation -
in the ESM
Brazil IPC-S (first four weeks) Sep/12
Euro Zone Industrial Production -
USA Mortgage Applications (weekly) 07/Sep
Brazil PIM: Employment and Wages Jul/12
- World Agriculture Supply and -
Demand (estimate)
USA Export/Import prices Aug/12
USA Wholesale inventories Jul/12
Thursday 09/13/2012
- Leading indicators Jul/12
Brazil PMC: Retail Sales Jul/12
Brazil PMC: Retail Sales Jul/12
USA PPI: Producer Price (% m/m) Aug/12
USA PPI: Producer Price (% y/y) Aug/12
USA PPI: Core Aug/12
USA Jobless Claims 08/Sep
USA FOMC meeting -
USA Monthly Fiscal Result Aug/12
USA B. Bernanke press conference -
Friday 09/14/2012
Euro Zone Consumer Prices Aug/12
Euro Zone Meeting of Euro Zone Finance -
Ministers
USA CPI: Consumer Prices (% m/m) Aug/12
USA CPI: Consumer Prices (% y/y) Aug/12
USA CPI: Core Aug/12
USA Retail Sales Aug/12
USA Industrial Production Aug/12
USA Use of Installed Capacity Aug/12
USA Consumer Confidence Sep/12
(preliminary)
USA Corporate Inventories Jul/12
Brazil A. Tombini takes part in a public -
hearing at the Senate
Brazil IBC-Br (% m/m) Jul/12
Brazil IBC-Br (% y/y) Jul/12
Euro Zone Announcement of budget cuts in -
Greece
2

5. Disclaimer
This report has been prepared by PINE Research Macro/Commodities, a research department of Banco Pine S.A. PINE Securities USA
LLC (“PINE”), a broker-dealer registered with the U.S. Securities and Exchange Commission and a member of the Financial Industry
Regulatory Authority and the Securities Investor Protection Corporation, is distributing this report in the United States. PINE assumes
responsibility for this research for purposes of U.S. law. Any U.S. person receiving this report and wishing to effect any transaction in
a security discussed in this report should do so with PINE at +1-646-398-6900, 645 Madison Avenue, New York, NY 10022.
Banco Pine refers to PINE, as well as Banco Pine S.A. and PINE Investimentos.
This report is for distribution only under such circumstances as may be permitted by applicable law. This report is not directed at you
if PINE is prohibited or restricted by any legislation or regulation in any jurisdiction from making it available to you. You should
satisfy yourself before reading it that PINE is permitted to provide research material concerning investments to you under relevant
legislation and regulations.
Nothing in this report constitutes a representation that any investment strategy or recommendation contained herein is suitable or
appropriate to a recipient’s individual circumstances or otherwise constitutes a personal recommendation. It is published solely for
information purposes, it does not constitute an advertisement and is not to be construed as a solicitation, offer, invitation or
inducement to buy or sell any securities or related financial instruments in any jurisdiction. Prices in this report are believed to be
reliable as of the date on which this report was issued and are derived from one or more of the following: (i) sources as expressly
specified alongside the relevant data; (ii) the quoted price on the main regulated market for the security in question; (iii) other public
sources believed to be reliable; or (iv) PINE's proprietary data or data available to Banco Pine. All other information herein is
believed to be reliable as of the date on which this report was issued and has been obtained from public sources believed to be
reliable. No representation or warranty, either express or implied, is provided in relation to the accuracy, completeness or reliability
of the information contained herein, except with respect to information concerning PINE, its subsidiaries and affiliates, nor is it
intended to be a complete statement or summary of the securities, markets or developments referred to in the report. In all cases,
investors should conduct their own investigation and analysis of such information before taking or omitting to take any action in
relation to securities or markets that are analyzed in this report.
Pine Research issues its views pursuant to relevant factors necessary to recommend an investment decision and independently of any
instructions that Banco Pine might have from any covered company with which it has a business relationship.
Banco Pine does not undertake that investors will obtain profits, nor will it share with investors any investment profits nor accept any
liability for any investment losses. Investments involve risks and investors should exercise prudence in making their investment
decisions. Banco Pine accepts no fiduciary duties to recipients of this report and in communicating this report is not acting in a
fiduciary capacity. The report should not be regarded by recipients as a substitute for the exercise of their own judgment. Opinions,
estimates, and projections expressed herein constitute the current judgment of the analyst responsible for the substance of this
report as of the date in which was issued and are therefore subject to change without notice and may differ or be contrary to opinions
expressed by other business areas or groups of Banco Pine as a result of using different assumptions and criteria. Any such opinions,
estimates, and projections must not be construed as a representation that the matters referred to therein will occur. Prices and
availability of financial instruments are indicative only and subject to change without notice.
Research will initiate, update and cease coverage solely at the discretion of Pine Research. The analysis contained herein is based on
numerous assumptions. Different assumptions could result in materially different results. The analyst(s) responsible for the
preparation of this report may interact with trading desk personnel, sales personnel and other constituencies for the purpose of
gathering, synthesizing and interpreting market information. Banco Pine is under no obligation to update or keep current the
information contained herein, except when terminating coverage of the companies discussed in the report. Banco Pine relies on
information barriers to control the flow of information contained in one or more areas within Banco Pine, into other areas, units,
groups or affiliates of Banco Pine. The compensation of the analyst who prepared this report is determined by research management
and senior management (not including investment banking). Analyst compensation is not based on investment banking revenues,
however, compensation may relate to the revenues of Banco Pine as a whole, of which investment banking, sales and trading are a
part.
The securities described herein may not be eligible for sale in all jurisdictions or to certain categories of investors. Options, derivative
products and futures are not suitable for all investors, and trading in these instruments is considered risky. Mortgage and asset-backed
securities may involve a high degree of risk and may be highly volatile in response to fluctuations in interest rates and other market
conditions. Past performance is not necessarily indicative of future results. If a financial instrument is denominated in a currency
other than an investor’s currency, a change in rates of exchange may adversely affect the value or price of or the income derived
from any security or related instrument mentioned in this report, and the reader of this report assumes any currency risk.
This report does not take into account the investment objectives, financial situation or particular needs of any particular investor.
Investors should obtain independent financial advice based on their own particular circumstances before making an investment
decision on the basis of the information contained herein. For investment advice, trade execution or other enquiries, clients should
contact their local sales representative. Neither Banco Pine nor any of its affiliates, nor any of their respective directors, employees
or agents, accepts any liability for any loss or damage arising out of the use of all or any part of this report.
Any prices stated in this report are for information purposes only and do not represent valuations for individual securities or other
instruments. There is no representation that any transaction can or could have been effected at those prices and any prices do not
necessarily reflect Banco Pine’s internal books and records or theoretical model-based valuations and may be based on certain
assumptions. Different assumptions, by Banco Pine or any other source, may yield substantially different results.
This report may not be reproduced or redistributed to any other person, in whole or in part, for any purpose, without the prior
written consent of Banco Pine, and Banco Pine accepts no liability whatsoever for the actions of third parties in this respect.
Additional information relating to the financial instruments discussed in this report is available upon request.
1