Bloomberg — Robin Brooks speaks in the sober monotones of a PhD economist who’s dedicated much of his career to calibrating fair-value models for foreign-exchange rates.
So it was a bit of a shock to Brooks, and his family, when he suddenly became a social media sensation in Brazil. But Brooks is a rarity in financial circles here: a long-term bull on the Brazilian real. And it is this unflinching optimism, even in the worst moments of the currency’s pandemic collapse, that has now made him the public face of the breakneck rally that’s turned the real into the world’s top-performing major currency this year.
To his Twitter followers in Brazil, where exchange-rate-watching is something of a national obsession, Brooks is simply “the bald guy” -- “o careca” in Portuguese. Or sometimes “the bald guy from Goldman.” He actually hasn’t worked at Goldman Sachs in five years but, anyways, this has a much better ring to it than the “bald guy from the Institute of International Finance,” where he currently serves as chief economist.
Each bullish tweet he posts on the real is immediately greeted with thousands of likes and scores of “in bald guy we trust” responses that have become something of a hallmark of his followers. The more zealous in the crowd tweet photo-shopped pictures depicting him as a boxer or GIFs lauding him as “the man, the myth, the legend.”
Brooks’s family, he says, is flabbergasted by his new stardom. “My kids say ‘What the hell? This is our stupid dad.”’
Some of his critics, of which there are plenty, use similar language to describe his analysis, too. They chuckle at how his fair-value forecast for the real -- 4.5 per dollar -- hasn’t budged in over two years despite all sorts of major twists and turns in the local economy and global markets.
And they say his bullish call has somewhat randomly had the good fortune of picking up two major forces driving the currency’s gains: A wave of aggressive interest-rate hikes by the central bank and a sudden boom in global demand for Brazil’s commodity exports.
To Brooks, though, these developments merely reflect his long-held belief that the country’s economic and foreign-trade fundamentals are improving and that the currency remains weaker than it should be even after rallying 19% this year to 4.70 per dollar. This is still a contrarian view. Most analysts surveyed by Bloomberg predict it will weaken from here.
“I keep talking about undervaluation, undervaluation, undervaluation,” says Brooks. Shortly after he first released his bullish call, the pandemic hit and investors began yanking money out of Brazil at such an alarmingly fast rate that he says he thought “the computer feed was broken.” Those outflows, Brooks says, along with the scathing criticism he was seeing Brazilians heap on their political leaders on Twitter, emboldened him. “Usually to me, that’s a good sign that, OK, this is overdone. Maybe there’s real value and the Brazilian real is too cheap.”
This also explains why some of Brooks’s most vocal Twitter fans in Brazil are supporters of embattled President Jair Bolsonaro. To them, the real’s rebound against the dollar is a sign that Bolsonaro is managing the economy well as he gears up for a tough re-election campaign.
The currency in general gets outsized attention in Brazilian society, the result of decades of runaway inflation that to this day prompt people to convert some of their cash into U.S. dollars. Brooks’s cult-figure status in the local Twittersphere is a testament to this. Many of his followers seem genuine in their belief in his genius. For others, it’s more of a tongue-in-cheek sort of thing.
Brooks actually tweets mostly nowadays about the war in Ukraine and about how sanctions are failing to truly squeeze Russia’s finances. Those tweets, though, typically garner a lot less attention than when he boasts about his Brazil call.
Born and raised in Germany, Brooks, 51, studied at the London School of Economics and Yale University before going on to work at the International Monetary Fund, Brevan Howard and Goldman Sachs, where he was the firm’s top foreign-exchange strategist.
It was during his time at the IMF that he helped create a fair-value currencies model that he uses to this day. He’s just tinkered with it a little to feed in some high-frequency data.
The model spits out estimates for him on just about every major emerging-market currency. They don’t all work out well. The Turkish lira was a contrarian bullish call, for instance, that went badly awry. And he acknowledges that his bearish stance on the South African rand looks unrealistic at this stage.
“I don’t want to claim clairvoyance,” Brooks says. “I am glad I got Brazil right.”