Out Fox The $treet

As riots erupted in Brazil over the last few weeks, the stocks trading on US exchanges have collapsed. In fact, the Brazil iShares Index (NYSEMKT: EWZ ) fell from around $54 to $40 over a few weeks during June. Even worse, the index peaked out around $75 back in early 2011. Over two years later and the index still remains in a downtrend as domestic stocks soar. Another major reason for more » Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

After the markets closed tonight, Brazil cut interest rates 50 basis points to 12% from 12.5%. Wow! Guess I haven't paid enough attention to the Brazil economy as I was not expecting an interest rate cut much less a 50 basis point cut. Many an investor would probably be surprised to realize that Brazil interest rates remain as high as 12% after a big rate cut. Apparently this move caught investors off guard as the expectation was for a 25 basis point cut if at all. With inflation running around 7%, I'm surprised as well though inflation rates should moderate as material costs maxed out earlier this year. Year over year numbers will eventually subside as 2012 rolls around. This bodes well for emerging market stocks that have been rocked this year due to interest rate increases due to rapidly rising inflation fears. Some economists think China might be done raising interest rates as well which could usher a major rally in Chinese stocks that have underperformed for well ove...