The Bloomberg terminal is the key to knowledge in the financial and business markets around the world. It offers the latest breaking news from the commodity market in Chicago, to the BOLSA markets here in Brazil. If something is happening involving money and public companies and interest, Bloomberg has its finger on it.
What drives Bloomberg’s growing success in the current times of dying media, crushed by advertiser pullouts and free information on the internet, is the way they deliver it. The Bloomberg terminal gives journalists, investors, stockbrokers and whoever else can afford it the insider eye to what is going on. It offers more information than six generations of encyclopedias (if they all focused on business), and the two-screen portal provides the latest and most accurate source of information across the world.
Brazil’s Bloomberg life cycle is in its infant stages, recently added to its bureau in 2010, by creating a Portuguese language service, directly tailored for the Brazilian market. The New York based media company realized that to truly make an impact in the growing economic country, Bloomberg needed to provide its information in real time, on the ground level in Brazil.
“It makes a big difference if you’re covering the country from the country,” said Lyons. She notes that the quality of information, scoops and face-to-face contact plays a huge role in readership (and sales of the Bloomberg terminal).
No one can attest to that better than Lucchesi, a senior writer in Brazil for Bloomberg. Lucchesi covers finance for Bloomberg and has written stories that have changed market forecasts and people’s wallets.
Bloomberg currently carries around 4500 terminals in Brazil and roughly 40 reporters, but Adriana Arai Lyons, the managing editor in Brazil says the company is growing. So much in fact, that in some respects they’re struggling to find reporters who can speak and write both Portuguese and English.
“I need bilingual people,” she said.
A majority of Bloomberg’s customers are located in America or are English speaking, and although Brazil is becoming more of a Latin American sanctuary of sorts for international business, it is still behind the curve when it comes to English in business.
“We are like the United States, we are a huge country. But to cover business here you need to speak Portuguese,” said Cristiane Lucchesi, a senior reporter for Bloomberg. “There is a big internal market.”
Most major companies and CEO’s do understand and speak some English, both Lyons and Lucchesi noted, however they are sometimes uncomfortable with the language in press conferences and boardrooms due to potential gaffes and embarrassments.
Lucchesi says people need to know internal credit stories, even if the company doesn’t want them public yet. The information and back room dealings that some of these companies try to do has the potential to move massive amounts of stock and bonds, she said.
While a majority of the conversation dealt with the types of stories Bloomberg deals with in Brazil, as with most journalists’ discussions the topics swayed towards accuracy and efficiency, an on-going issue in today’s instantaneous news cycle.
“Sometimes we lose [a scoop], but we’d rather lose because our reputation is on the line,” Lucchesi said.
“If you make a mistake, someone is going to lose money,” said Lyons.
Bloomberg’s reputation is what makes it so successful in the markets around the world. It is used by almost every major hedge fund and investment bank, as most of them have a dedicated Bloomberg terminal employee focused on what is happening world wide and locally.
In 2006, Brazil’s economic dynamic changed completely. Off the coast, but still in Brazilian waters, the largest deposit of oil was discovered in what has been called the pre-salt layer, and Brazil’s oil (and energy) company, Petrobras is leading the way in discovering and recovering the black gold.
To accurately portray the hold that Petrobras has on the Brazilian energy and petroleum markets is nearly impossible. In the Pre-Salt layer alone, it has complete favoritism in discovering and fracking the new deposits. While other companies like Chevron and British Petroleum have the capability to work in the Pre-Salt layer, it is only with the approval of Petrobras that they are allowed to do so.
On Wednesday, May 15, we met Carlos Henrique Dumortout Castro, a business consultant with the oil giant. Castro and Petrobras are currently pumping out 311,000 barrels of oil a day through the Pre-Salt layer and by the end of 2020 they predict the massive oil field will produce close to 2 million barrels per day.
Although the Brazilian government gives Petrobras preference in the Pre-Salt layer, Castro sees this as a “big mistake by the government”. Even though the Brazilian federal government controls the company, it does not mean Petrobras always agrees with the legislative policy it produces.
The current party in power, the Workers party, aims to grow the Brazilian domestic markets and job force without much consideration to the global impact, but Castro, and some others within Petrobras believe that this restricts the immense potential that a free and open market could hold.
“Free market is the best because you have more chances to discover,” said Castro.
He sees the Workers Party’s initiatives as counterproductive to the big picture, because it restricts competition, which allows more oil finds, and thus creates massive amounts of reserves of oil, but no revenue, he said.
“If you have to do something, do it today, it may not be there tomorrow.”
Petrobras began in Brazil as an oil monopoly but lost its monopoly status in 2002 with the Oil Law, which allowed other companies to work in Brazil. It is currently the fifth largest oil company in the world, in terms of oil and gas production, and they are growing.
Roughly every three months Brazilian laborers in places like Angra Dos Reis are building this year new oilrigs and platforms.
In the past 14 months, Petrobras has discovered 53 sources of oil in Brazil, a 64% success rate, double the industry expectations for oil discoveries. Castro associates this incredibly high success to knowledge of the Pre-Salt and Brazilian areas, giving Petrobras the edge against competitors in its own backyard. In fact, Petrobras and the Brazilian government are currently entering their 21st year with a Reserve Replacement Ratio of 103%, meaning they are finding more oil than they are using, a staggering statistic in the today’s oil consumption markets.
There is truly no way to comprehend the relationship between the Brazilian government and Petrobras in terms of American business. The Brazilian government holds the largest share in the company, 47%, with the rest of the investment carried in domestic or international trade. Petrobras is rated on the NYSE and is currently the 6th most active stock, says Castro.
This unique relationship with the government requires a lot of give and take. It allows the company to move freely through different discoveries and much more efficiently than others in the vastly bureaucratic country, however it is also limited by the state investment as well.
“If we ask for money, it is easy, if we try to raise gas prices, it is extremely difficult,” Castro joked.
We had the opportunity to meet with several people in charge of creating the infrastructure needed for the massive international crowd that will be arriving in the summer of 2016 for the Olympic games. Olimpica Municipal is in charge of the in’s and out’s for Rio 2016, and they have a lot to conquer. The entire event will take place within the city limits of Rio de Janeiro and in several areas that are in need of massive renovations to accommodate the world.
“Rio is going to be recognized as the best city of the Southern Hemisphere to live work and visit,” said Thais Oliveira of the Olimpica Municipal
Before I begin discussing the various changes set to take effect in the next several years, I’d like to say that this is a project unlike anything I’ve seen. While cities in the past have seen major facelifts due to international events, and thus great strides forward in their economies and tourism, I’m almost hesitant to believe that Brazil has the capability to accomplish such a feat. There are several pieces that place Brazil and Rio de Janeiro on the cusp of becoming a dynamic force in the global arena, including the oil finds at the Pre-Salt layers, the World Cup and Olympic games, which have the potential to blast through the glass ceiling currently restricting this country from reaching its full potential.
The original port region of Rio, home of the city’s old slave port and widely considered to be an incredible historic district, is run down. Graffiti is freckled across the yellow and blue buildings that line the street and the buildings themselves are old. The public transportation in the area is currently dismal, but in the next three years, major steps are going to be taken to develop a boardwalk with a light rail system. This is where the biggest changes and developments will be made in the next three years, with the goal of transforming a once forgotten area of the city into a hub of entertainment, shopping and dining. The 2.3 billion dollar renovation will cover a 5 million square meter area with an added four kilometers of tunnels and rail systems.
The biggest addition to the entire city is the public transportation. Rio de Janeiro is planning to reduce the transport time for its citizens by 50 percent by 2016, adding 4 new expressways and 152 kilometers of railways. This massive undertaking will reach the underdeveloped areas of Rio and is going to exist for much longer than the Olympic games.
The most unique thing about Rio preparing for the first Olympics in South America is the way they are planning on utilizing the buildings after the games are over. For instance, the handball courts they will be building will eventually be disassembled and used for public schools in the area. The Olympic Park, which will house 14 Olympic games, will become a subdivision of Rio de Janeiro after the games have concluded.
This is the first time an idea like this has come about. For those who have been to China after the Olympics that took place there, they have seen how the government in Beijing has struggled to find adequate uses for venues like the Birds Nest and the Cube. Rio de Janeiro is developing transportation, buildings and other things for the games that will become essential parts of the cities future. The goal for the Olimpica Municipal is to leave a legacy that will last in the city for the next 40 years.
With the immense addition to hotels, public transportation, and the revitalization of formerly lost areas of the city, Rio de Janeiro could very well become one of the best places to visit. I plan on trying to attend Rio 2016 to see if the plans in place will succeed, or if the city has bitten off more than they can chew.
Every city I stop in, the class requires me to write a reflection paper of my experiences, below is the transcript of my reflections about the city of Rio.
The city of Rio De Janeiro revolves around its Brazilian nationalism. Whether they admit it or not, they are proud and almost arrogant, as we are Americans. They feel as they do not need to change their language, culture or lifestyle, and why should they? As an American, I can understand their want to remain an original country, even though their originality is based on the upon a variety of different cultures. When I was told that the country was hesitant to learn different languages, I was confused, but as I walk the streets of Rio, I understand completely. Very little store shops, restaurants or barkeeps speak anything other than Portuguese and hand signs are the primary form of communication. From a first hand basis, I had to motion how to use a toothbrush to buy one at a local pharmacy.
The Brazilian culture is founded upon the pride they hold as Brazilians. There are not many other countries, other than the United States, that can relate to this persona. If the United States is a melting pot, Brazil is a stew. Their culture is filled with contradictions in the sense that, although they consider themselves one people, there is a distinct classification of race and economic status. That being said, the mix of African, European and Latin culture provide a distinct mix that no other country truly has. As we walked around the city I noticed notes of a small Mexican town, but then we would turn a corner and I would feel like we were in the bustling streets of Madrid or London. Their culture is a mix of different ethnicities and regions, and that makes Rio de Janeiro what it is.
The biggest events in the country’s history, the World Cup and the Olympics, are also causing a controversy within the city of Rio de Janeiro. While it is poised to explode in a golden age of culture and financial stability, it also has the potential to fail as well. The plans to develop the port region of Rio, as well as completely transform the rest of the city hold the capability of transforming the country into one of the most sought after travel destinations in the world. That being said, it could potentially collapse upon itself and face an economic and global disaster if the goals are not met. The undertaking to develop the port area itself is enormous, and in the time period, seemed nearly impossible. However, if they can get it done, Rio de Janeiro will be on my short list for cities to visit going forward. As I looked at the plans on Wednesday at the port exhibit, I was cautiously optimistic that it can be completed in time for the world’s biggest sporting event. That being said, I feel as the city, and country, bit off more than they can chew. The infrastructure of their garbage disposal as well as their transportation and the living and tourist destinations for the region is a massive undertaking and I am hesitant to believe that it can be accomplished in two and a half years.
The other major challenge that Brazil and Rio de Janeiro faces if they want to become a city of international charm, is their lack of internationality. The city and country are hesitant to learn English, and although they have said they are creating an English program throughout the city of Rio de Janeiro, it seems like a daunting challenge to make the entire city capable of at least understanding English on a basic level. While I have walked around in Rio I’ve noticed that nearly no one speaks English, or Spanish for that matter. To be a truly efficient and successful country, regardless of what the national language is, there needs to be a tolerance to foreign visitors. If an English speaking, or any other language, comes to Rio today, they will have a serious issue traveling the city or going to restaurants. To be a World Cup or Olympic city there not only needs to be a tolerance but also an acceptance of other cultures. I will say that there is incredible patience by the Rio employees to non-Portuguese speaking people, however if they want to thrive as an international city there needs to be multiple languages for menus, street signs and taxi cabs. It seems arrogant to say, coming from a country that is hesitant to learn other languages throughout its country, however, English is widely known as the language of the world and therefore America is in a stable place to host national events.
Overall, the city of Rio de Janeiro is beautiful. I learn something and see something new everyday. But as I look at it from the perspective of its future, and remember Mac Margolis saying, “Brazil doesn’t know what identity it wants to take” I see a country that is either positioned for massive success or massive failure. For it to succeed it must learn to adept and change its isolated nationalistic culture and become a city of international desire, it needs to reform. If it fails to do so within the next two years, it faces massive repercussions that could be detrimental to its future.
Rio De Janeiro’s entrepreneurial spirit exists, however that being said, it is not as advanced as America’s, nor as formal. After the gondola ride over the favelas, two young boys came up to us and sold us water bottles (probably refilled from their own sink) for about twice as much as any store in the city. An 11-year-old hustled the entire group, and that is the fundamental principle of entrepreneurship: finding out how to make a quick buck.
In the early 2000’s, Brazil had a lack of initiative when it came to advancing math and science, engineering, and advanced level technical positions. But in 2006, it all changed. The pre-Salt layer was discovered off the coast of Brazil, and since then the entire country has been pushed into overdrive. Colleges are offering incentives for engineering programs, salaries are shooting through the roof, and programs like the Parque Technologico Do Rio are beginning to lay out real businesses and ideas that will help the country progress its way through the most profitable potential it has ever experienced.
The Rio Technological Park is operated by the university in Rio and is a business incubator for both small and large companies. While the focus is primarily on oil and natural gas development, Filipe Martins, the communications director for the park, says that the goal is to diversify the focus of the incubator.
The 350,000 square meter park hosts 42 companies of various shapes and sizes. GE, Siemens, EMC2 and others also house, or will house, their research centers in the park and receive various tax benefits for doing so. However, while they receive tax incentives they are also required to put 1% of their revenues towards research and development that goes towards the university and Brazil. This may seem like a small portion, but for billion dollar companies, this provides tremendous potential for growth and development in the booming country.
Oil Finder, a small business currently being cultivated within the incubator, is focused on finding the best ways to locate and then retrieve the oil located miles under the ocean.
The entire country is holding their breath for what the pre-Salt layer could hold. It has the potential to provide thousands of high paying jobs, millions of barrels of petroleum and provide Brazil the boost it needs to be a major player in the energy and economic stage. However, Brazil’s checkered past when it comes to the vast natural resources the country holds, gives cause for worry for nearly everyone involved. “Brazil’s oil and gas cannot be another cycle. In 5 years everyone would be gone, and in 10 years everything will be gone,” said Martins. “It cannot be just another cycle.”
The cycles he refers too deal with the lumber, sugar, coffee and other natural resources that foreign and domestic companies have pillaged. The rain forest in northwest Brazil was deteriorating at rapid rates, and there is just now an effort to derail the massive deforestation.
For Brazil to be successful in the oil industry worldwide, Petrobras and the Brazilian government need to carefully delegate the ways in which the oil is acquired manufactured and dispersed around the world.
There isn’t much to describe the favelas in Rio. They’re unique, and common throughout Latin America. The difference is that Brazil’s favelas are an essential part of the brazilian culture. There is no middle class. Only an extremely wealthy, a not as wealthy, and a dirt poor. The “not as wealthy” still have housemaids and cooks, babysitters and sometimes drivers. The poor life in shanties, that you can see in the photos below. At the end of the gondola ride, there was an over look and two young children played soccer and messed around with us for about an hour. They talked, we tried english they tried portuguese. There is no translation for laughter, and it was there. Th setting and the people were absolutely beautiful
One of the most humbling experiences of my life, Christo Redentor, is the massive statue above Brazil. It looks over like a majestic watchdog, but also shows humility of the Catholic country. The photos are impressive (for an iphone) but truly to get an accurate feeling of it, you need to visit yourself.
Brazil’s financial history has been filled with fluctuation and panics as well as currency changes and uncertainty. Very few Americans have had the chance to witness the political and economic changes first hand, and one of the only journalists who has been present in the country since the beginning of these changes is Mac Margolis. He began in Brazil in the 1980’s doing freelance work for Newsweek and other companies. The big question he asked himself, not knowing the language, culture or anything else was “can I survive?”
“Brazil’s national gadget was the price gun,” Margolis said. The inflation was rising at insane rates, nearly 2500% annually.
“What is fairly unique is the chronic and prolonged period of hyperinflation,” said Margolis. “There have been episodes of hideous hyperinflation in the world, but I don’t know that there have been many countries that have had triple digit inflation or quadruple digit inflation for a decade or decade in a half.”
The country developed a strategy, besides constantly changing currency, called indexation. The basic principle behind the program was to raise the wages exponentially with the inflation rates. It proved to be ineffective.
In 1994, they switched the currency to the Real, which remains in place today. The biggest change from the previous currencies, said Margolis, involved three small changes that from the past the proved to curb the inflation: getting the government to curb their spending, backing the Real with something substantial (the dollar, in which case they initially held it at a 1:1 ratio), and finally eliminating indexation from the Brazilian economy. Initially it proved to be effective, and the Brazilian Real is trading at a 2:1 ratio with the dollar, but recently inflation has risen again.
As their political and economic situations remain stable, Brazil’s federal government is starting to examine their role in the world stage, on several different platforms. The former president, Lula, spent much of his time developing Brazil’s reputation with foreign entities, sometimes to the disliking of the United States, but doing so nonetheless.
Now, Brazil is in the position to explode economically with the discovery of the Pre-Salt layer and the hosting of the worlds two biggest sporting events, the Olympics and the World Cup. But, to prove success, Margolis believes they must first figure out what Brazil wants to be seen as internationally, before they can be considered a real player at the world’s table.
“Brazil wants to be known as a world power, most naturally it’s a regional power,” Margolis said. “[Brazil] doesn’t know what kind of power it wants to be.”
Tuesday (May 14)—Rio De Janeiro, Brazil—I have been in the city on the coast for the past two days. I apologize for my lack of immediate postings to my site, however the internet at the hotel I am staying at is iffy at best, and I only have access about once a day. The past two days have been filled with new sites, experiences and culture that I couldn’t begin to truly describe. This city is filled with the speed of New York and Chicago, but the style of a European city. There is food vendors and shops, music and restaurants. There is so much going on in the city that it truly is overwhelming. I am going to try and sum up my past three days so far, in a couple of paragraphs to help you all understand where I’ve been and what I am doing, however I am also working on more extended write ups for the interviews that I did with Newsweek’s Mac Margolis, the longest tenured foreign correspondent currently in Brazil, and Rio’s Technological Park, which operated with the public university, to research new ways to help the ever growing issue of oil and natural gas. I also will have a couple of slide shows set up from my visit to Christo Redentor on Sunday, and the gondola ride over a favela today, Tuesday.
I am a lapse Catholic, to say the least. I rarely attend church and I would need to sit in confession for several hours before my sins are forgiven. But, the visit to Corcovado Mountain, and the Christo Redentor was truly one of the most humbling experiences of my life. The pure site of an outstretched Jesus Christ watching over an entire city is mind blowing, and its not the size or sheer awe of a statue of that magnitude that makes a difference, but the beauty of the whole perspective. I have seen oceans, mountains, massive skyscrapers and beautiful sunsets, but absolutely nothing compares to the 360-degree view on top of Corcovado Mountain. I tried to take a panoramic picture of the top, but I deleted it. It doesn’t do it justice.
I am a chicken when it comes to heights. I am not comfortable with the top of mountains and so just getting to the top of the mountain was an adventure in itself. But the most rewarding and photogenic (see photos below) was the site of a nun standing underneath the statue, praying. As a photographer, you pray for opportunities like that, when images can be so powerful that they do not need a caption. That’s the best way to describe the Christo Redentor experience, powerful. The religious aspect is one that is hard to place words on, but it is there. The congregation of language and ethnicity, class and country is picturesque. Brazil has not over sensationalized the tourism aspect, but there are places to buy t-shirts and shot glasses. Overall the experience is something you can photograph, but to actually understand the magnitude, it is essential to see it yourself.
Mac Margolis has been in Rio since the 1980’s. During that time period he has seen around six different forms of currency, and watched a country develop from an irrelevant South American travel spot, to the soon-to-be world player that it is becoming.
“Brazil wants to be known as a regional [and world] power,” Margolis said in an interview on Monday. “It doesn’t know what kind of power it wants to take.”
That fits the entire country perfectly. This city, Rio, this country has the ability explode onto the world stage on economic, cultural and diplomatic levels, but it seems hesitant to jump. It abstains regularly on issues dealing with Iran and North Korea in the United Nations and it is a very nationalistic country when it comes to the world economy. Brazil is hosting the World Cup and Olympics in the next 4 years, and hopefully that could be the kick start it needs, Margolis said.
The entrepreneurial conversation is still in its infant stages in Brazil, unlike America, where it is a staple of American business culture. Not to say that the American spirit of entrepreneurialism is more effective, it is just more evolved. The Brazilian entrepreneur is focusing his efforts on the oil and gas developments on the Pre-Slate oil and natural gas deposits off the coast, which is one of the largest finds of fossil fuel in history.
Rio’s public university hosts a major technology park in the city. The incubator science park, LFRD has a plethora of different small businesses and start-ups working on different technologies to harness the tremendous potential this natural resource deposits holds. At the same time, it hosts multi-national companies like GE, EMC2 and Halliburton research centers. The centers are dedicated to developing technology for the natural gas deposits located in the Pre Salt layer. The 2006 discovery of the Pre-Salt layer has spurred an inundation of scientific and technological thinking that never before existed in the South American country.
The World Cup and the Olympics have the potential to thrust this country off in to a renaissance-like period of culture, economic stability and growth, and Empresa Olimpica Municipal, the company in charge of designing Rio’s Olympic games from the ground up, is in charge of the whole project. Currently, the city of Rio De Janeiro is in a state of limbo, but is also in the position to jump into the upper echelon of world destinations. The goal of Olimpica Municipal is to provide the springboard for Rio and the country. They are developing the Olympic Park, which after the games, will become a major urban residential district, and along with numerous other projects, have reforested several of the mountains around Rio De Janeiro, that have been destroyed over the city’s troubled history. The legacy of this Olympic games is leave buildings and transportation that can be enjoyed and utilized by the community for decades ahead.
The last stop on Tuesday was a gondola ride in the favelas. The United States has its own share of poverty, that’s definite, however Brazil’s poverty is indescribable. The “houses” (and I use the term lightly) literally rise out of the mountain side, and are so close together that the sidewalks are barely a foot wide. The trip took us over several of the favelas, providing a birds eye view into the living situation for a majority of the Brazilian people in Rio. At the end of the line, there was a viewing platform overlooking the favelas, and two brothers, ages 11 and 6, were playing soccer. We were met with laughs and soccer balls; make shift conversations and high fives. The pictures we took were incredible, but the moment is truly one I’ll never forget.
Tomorrow, the group and I meet with Petrobras, Brazil’s state owned oil company. Currently, they are one of the largest oil companies in the world, and are poised to become an international powerhouse in energy. After the discovery of the Pre-Salt, and the preferential treatment by the Brazilian government in awarding zoning contracts to Petrobras, they are set to become the largest manufacturer and distributor of fossil fuel in the world.